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Friday, December 2, 2022
Stocks & Shares

FTSE 100 falls as France demands tougher rules on UK

FTSE 100

France is joined by the Netherlands and Denmark, who have all claimed Michel Barnier has been too soft

The FTSE 100 was set to fall today as France’s President Macron threw a spanner into the Brexit trade negotiations by demanding tougher terms on the UK.

Shares on the index were set to lose some of yesterday’s strong gains, partly due to concerns over the talks.

France is joined in its hawkishness by the Netherlands and Denmark, who have all claimed EU negotiator Michel Barnier has been too soft, particularly over fish quotas.

The British side has recently seen new lobbying from Conservative Eurosceptics not to make any last ditch concessions to get a deal over the line.

However, one official told the Financial Times a deal could be signed over the weekend.

Following another strong day of gains in which the FTSE jumped a further 1.2%, early calls on the IG Index spread betting platform were predicting the index would slip back a slight 21.5 at 6437. CMC Markets traders were calling it down 30.

A quiet start was expected for European trading generally despite growing hopes of a prolonged bull market.

The latest sign of that was seen in the interest rates markets, which saw investors pull their bets that the UK could go into negative rates territory next year.

Positive news on vaccines was seen as making negative rates far less likely. It has been a reversal of the trend set in September when the Bank of England started admitting it was considering following the European Central Bank down below zero.

The improving rates sentiment should be good for bank stocks.

Bullish signals have been in the ascendant elsewhere, with insurance group Conduit raising more than £800 million in one of London’s biggest stock market flotations.

Conduit is one of several new  insurance and reinsurance companies being set up to gain from expectations of higher prices in 2021 as the industry bets on healthier economies.

Hedge funder Bill Ackman’s Pershing Square might see its UK shares gain today after its promotion to the FTSE 100 was confirmed last night. Inclusion in the premier index means more tracker funds have to buy stock, theoretically driving the price up.

Pershing Square shares have gained after Ackman’s team played the Covid pandemic with near-perfect precision, being early to bet that insurance against companies defaulting on their debts would jump, then ploughing the profits from that into buying shares before the recent rally.

Homeserve will be pushed out of the index in its quarterly reshuffle.

European stocks did not share in the UK rally. While that looked like it was due to Britain’s speedy takeup of the Pfizer vaccine, in fact it was largely because gains in heavyweight mining, energy and banking stocks, which gained across the world.

The FTSE 250 stayed flat like most of its European peers, CMC Markets pointed out.

The flat start predicted for UK stocks may be pipped up by yet more strong economic news from China. Its services industries were shown growing at their fastest pace for five months.

If only the same could be said in Europe. PMI surveys out today are expected to show contraction across Spain, Italy, France, Germany and the UK.

Retail sales data for the Eurozone out later should be more optimistic with an October score of 0.8% against September’s minus-2%.


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