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FTSE 100 static in the headlights of the approaching no-deal Brexit

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If the FTSE 100 were a microphone, a stand-up comedian would be tapping it this morning, asking, “Is this thing on?”.

Despite the rapidly approaching Brexit negotiations deadline, London’s benchmark of blue-chip shares is set to open little changed, in line with sterling, which has stabilised on foreign exchange markets.

“With UK/EU trade talks extended to the weekend, both the EU and the UK have started to prepare the ground for a no-deal outcome.

“EU Commission President Ursula Von Der Leyen outlined a number of contingency plans, or mini deals, which included various measures to deal with aviation safety, air and road connectivity, as well as fisheries, in order to ensure no disruption on the 1st January 2021.

“Prime Minister Boris Johnson also put the UK on notice for a no-deal outcome, saying that he was sceptical about the prospect of an agreement,” reported Michael Hewson at CMC Markets.

US markets eased yesterday with the Dow Jones industrials down 70 points at 29,999 and the S&P 500 off 5 points at 3,668, after US weekly jobless claims rose to 853,000, which was well above the consensus forecast of 725,000.

In Asia this morning the Nikkei 225 in Tokyo and the Hang Seng in Hong Kong have gone their separate ways; the former is down 86 points at 26,624 and the latter is 106 points heavier at 26,516.

In London, the end of the week will be marked by trading updates from engine maker Rolls-Royce and housebuilder Bellway.

Rolls-Royce Holdings PLC (LON:RR.) finally got its mammoth £2bn rights issue away a few weeks ago and investors will want to know if the money is to be used just to batten down the hatches during the pandemic or whether the company has more inventive plans in mind.

The market will also be interested in management’s view on the outlook for the aviation markets following recent news of coronavirus vaccines, which could help pull the air travel sector and its engine customers out of their slump.

There may also be interest in whether the company could be in place to benefit from the recent multi-billion defence spending package unveiled by the UK government, as well as any updates on the company’s efforts to secure £217mln of government funding to build 16 mini nuclear power stations as part of a consortium of firms.

Bellway PLC (LON:BWY) will provide an update on the period since its July year-end, having said with its final results in October that the new financial year had got off to an “exceptionally strong” start.

With house reservations up by 30.6% to 239 per week in the nine weeks since August 1, 2020, the FTSE 250 builder said sales completions should total around 9,000 for the full year.

A couple of worries are looming on the horizon; a “no-deal” Brexit has had most UK-focused companies worried this week while further down the road the stamp duty holiday is set to end.

Around the markets

  • Sterling: US$1.3315, up 0.2 cents
  • 10-year gilt: 0.203%, up 6 basis points
  • Gold: US$1,838.50 an ounce, up 90 cents
  • Oil: US$50.26 a barrel, up 1 cent
  • Bitcoin: US$17,943, down US$409

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