Britain’s FTSE 100 stock index has escaped the European trend downwards due to the pound falling after the government lost another Brexit vote yesterday.
European stock markets have opened broadly lower as investors face up to another Brexit delay and weigh up the weak fourth quarter revenue forecast of US chipmaker Texas Instruments – a bellwether stock for economic growth.
The pan-European Stoxx 600 index was 0.13 per cent lower by 10am UK time. France’s CAC 40 was down 0.34 per cent, while the German Dax index was just 0.05 per cent higher.
Britain’s FTSE 100 was ahead of the bunch, however, having risen 0.38 per cent. The index was helped by a decline in sterling, which has fallen 0.6 per cent in the last 24 hours to around $1.285. A lower pound makes the overseas earnings of FTSE 100 companies worth more.
Sterling’s fall was driven by the failure of Prime Minister Boris Johnson’s government to win a crucial vote on a “timetable motion” that would have allowed the PM’s new Brexit deal to become law in a matter of days.
The defeat came despite Johnson’s historic victory just minutes earlier, when he achieved backing in principle for his deal in the House of Commons. This is something Theresa May tried and failed three times to do.
“The likelihood of a Brexit deal has risen, but crucially the outcome that investors feared the most, a no-deal Brexit that could have pulled GBP/USD down to 1.12, seems less likely now than at any time in the last few months,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“If, as now seems likely, we move in the direction of a general election, we expect GBP/USD to settle in a 1.26–1.32 range. If the Brexit deal eventually passes, we would expect GBP/USD to rally to 1.35.”
Asian stocks were dragged down overnight following US chipmaker Texas Instrument’s sales outlook, which fell well short of Wall Street estimates. The poor outlook spooked investors, who took it as a sign of the effect the US-China trade war is having on global growth.
The Shanghai composite index closed 0.43 per cent lower, while the Hong Kong Hang Seng finished down 0.82 per cent. Japan’s Nikkei 225 ended its day 0.34 per cent higher, however.
(Image credit: Getty)