The FTSE 100 fell and the pound slipped again as Brexit talks continued, with Prime Minister Boris Johnson set to fly to Brussels for last-ditch talks.
The London stock index was down 0.5 per cent, hitting 6,521 points. The FTSE 250 – made up of smaller firms – was also down 0.5 per cent.
Yesterday, a falling pound helped the FTSE outperform its European rivals. A lower pound makes the overseas earnings of the index’s constituents worth more in relative terms.
Sterling slipped less dramatically today after recovering overnight. It was last 0.4 per cent lower against the dollar at $1.332. It was down 0.5 per cent versus the euro at €1.099.
On the continent, Germany’s Dax index was 0.5 per cent lower. France’s CAC 40 was down 0.9 per cent and the Europe-wide Stoxx 600 was off by 0.5 per cent.
FTSE 100 on edge amid Brexit talks
With time fast running out for a Brexit deal to be reached, Johnson and European Commission president Ursula von der Leyen yesterday failed to reach an agreement after one-on-one talks.
Johnson will now travel to Brussels to try to help thrash out a UK-EU trade deal. FTSE 100 and sterling investors are anxiously awaiting news from talks, amid warnings that they could break down altogether.
“We expect the pound to remain sensitive to headlines and developments surrounding this landscape,” said Charalambos Pissouros, senior market analyst at JFD Group.
“Anything suggesting that the differences-gap is narrowing is likely to prove positive for the currency. While reports pointing to more stalemates could push it lower.”
As investors are focused on Brexit, the UK’s NHS today gave the first dose of the Pfizer/Biontech coronavirus vaccine.
Stocks rallied sharply in November amid hopes that normal life would return next year. Supply problems have limited the number of vaccines available, but markets remain optimistic about 2021.
Stocks subdued as infections rise
In the US, stocks were set to open lower, according to futures prices. Bloomberg reported that US lawmakers are set to postpone a Friday night deadline for passing a $908bn (£681bn) stimulus bill.
Infections have consistently hit new record highs in the US in the last few weeks, causing states to bring back restrictions.
Europe is also battling the second wave. France was set to miss a target set by President Emmanuel Macron that would let it lift restrictions, as cases remain high.
On the FTSE 100, travel firms and lenders were among the biggest fallers. The declines highlighted investors’ residual worries about the global economy.
“A host of indicators suggest stock markets around the globe are stretched to the upside, and probably vulnerable to a near-term correction,” said Chris Beauchamp, chief market analyst at IG.
“But for now sellers do not seem to be able to summon up the necessary momentum to provide the spark for a big drop.”