U.K.’s main stock benchmark on Tuesday traded firmly lower, along with other major European bourses, as questions about Brexit tensions and growing concerns about global growth, particularly in China, knocked markets lower.
Doubts about Prime Minister Theresa May’s ability to lead the U.K. toward an orderly exit from the European Union, if at all, headlined concerns for British investors. A pickup in strength in sterling against the pound added to pressure on U.K. multinational corporations.
How markets are performing
The FTSE 100
traded off 0.9% lower at 6,977.63, after closing out Monday’s trade in the red. The benchmark is on track to fall four of the past five sessions.
The British pound
rose to $1.2997, compared with $1.2966 late in New York on Monday.
What’s moving markets
According to the Financial Times, the EU’s Chief Brexit Negotiator Michel Barnier was advocating a softening of language related to a border in Northern Ireland, which has proved a roadblock to forging a trade deal with Britain as its attempts to exit from Europe’s trade bloc.
Northern Ireland has been a sticking point in trade negotiations because the territory is part of the U.K. while the Republic of Ireland is an EU member.
The latest developments come as May has been fighting for her job as members of her own party have grown frustrated over Brexit efforts. Some, however, believe that the prime minister will find a way to emerge from this political turmoil and secure a Brexit pact.
Contributing to Tuesday’s woes were Asian concerns. China’s Shanghai Composite Index
declined a day after enjoying one of its biggest single-session gains in more than two years, renewing fears that the second-largest economy in the world may not be able to stave off an economic slowdown that has been exacerbated by trade spats with the U.S.
China is a big user of natural resources, and negative news from that country can hurt the FTSE 100’s mining constituents.
What are strategists saying?
“There’s no specific headline driving [British pound] price action this morning, the domestic political risk subsiding for a day is not enough to say “everything’s fine.” Always remember that the political commentariat operate on short news cycles and sometimes in doing so miss the bigger picture,” wrote Jordan Rochester, strategist at Nomura, in a Tuesday research note.
“It does show that our view that this was just noise and Theresa May will find a calculated way through was probably the right one,” he said.
Stocks in focus
Shares of St. James’s Place PLC
lead losses, down 4.3%, on the FTSE 100
Gambling operator GVC Holdings PLC’s stock
was among the worst performers on the session, off 4.2%.
Shares of British American Tobacco PLC
rose 1.8%, adding to sharp gains on Monday. Meanwhile shares of miner Fresnillo PLC
advanced 3.3%.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.