London markets crept higher in anticipation of Brexit clarity before Wednesday’s European Union emergency summit.
How did markets perform?
The U.K.’s FTSE 100 UKX, +0.23% rose 0.2% to 7,469.2, adding to its Monday gain of 0.1%.
The pound GBPUSD, +0.1761% is up 0.4% at $1.3105. It rose 0.3% Monday.
What’s moving the markets?
London Capital Group head of research Jasper Lawler dubbed the confluence of a European Central Bank policy announcement, U.S. Federal Reserve committee minutes and the EU’s Brexit summit “Super Wednesday”. That might be slightly overdoing it, as none of the three are expected to produce big surprises. Economists predict the ECB will hold firm on rates, and that there will be few details of the latest round of Targeted Longer-Term Refinancing Operations (TLTROs) to stimulate bank lending. The Fed minutes are arguably more compelling given the political pressure from the Trump administration that has recently emerged, but the central bank is unlikely to back down.
Investors looked ahead to the EU emergency summit on Brexit with a degree of trepidation. Focus shifted from unproductive talks among teams led by U.K. Prime Minister Theresa May and opposition Labour Party leader Jeremy Corbyn, to rumors that EU leaders would demand a heavy penalty for a longer Brexit extension. The Times reported that the U.K. will be forced into a no deal if May cancels coming European elections, or if the country tries to block or disrupt EU decisions during the extension — both of which would likely enrage the Conservative party’s ardent Brexiteers.
Which stocks are active?
Brexit rumbles on but at least one long-running British saga has finally ended — namely Sports Direct boss Mike Ashley’s pursuit of luxury retailer Debenhams PLC DEB, +0.00% . The board rejected Sports Direct’s offer to underwrite an equity issue of £200 million, and said it “anticipates making a further announcement during the course of the day following further discussions with its lenders. The stock was halted at the time of the announcement.
Neil Wilson, chief market analyst, Markets.com, said: “It seems the lenders have taken control and shareholders are facing total wipe-out...The entire saga has been rather acrimonious and it does look like the Debs board was never going to accept any proposal from Ashley, whatever he was prepared to do for the company.”
Financials rose broadly Tuesday, after Monday’s rise in U.S. government bond yields. Royal Bank of Scotland Group PLC RBS, +0.75% rose 1.4%, Prudential PLC PRU, +1.35% was also 1.4% higher and Standard Chartered PLC STAN, +1.39% was up 1.1%.
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