The London market woke up to a new start despite a battering late Thursday as the UK’s political future hung in the balance.
Possible Brexit outcomes are narrowing down
After hours of unforgiving debate in the Commons, Thursday Parliament did not move a single step closer to approving PM Theresa May’s hard-fought draft Brexit deal. If anything, it was blatantly clear that almost none of the MPs supports the current proposal, all for different reasons. The draft will now go to the EU for approval on 25 November and then for a final vote back to the Commons in early December, but the number of possible outcomes is starting to narrow down. The PM made it clear that she will see the deal through and will not opt for a re-vote on Brexit which means that – providing she survives the next month as the leader of the party – MPs will be left with only two options: vote for the proposal that is currently on the table or opt for a Brexit with no legal safety net, possibly a solution too scary for many MPs to contemplate. If May’s political leadership is challenged, then all options are on the table including a re-run of the referendum.
Consequently, the market this morning is looking for company news rather than Brexit news, until something new emerges from Westminster. A motley crew of firms is on the rise, particularly bottling and packaging companies like Smurfit Kappa, Coca-Cola HBC and DS Smiths. Gambling firm GVC Holdings is also among the gainers.
Investors welcome worst-case Brexit preparations
Given the high level of uncertainty, any preparations for a worst-case hard Brexit outcome are being welcomed by the market as in the case of if Rolls Royce, which said it was taking steps to ready itself for this type of scenario. In contrast, BT has got into a tangle with the UK telecom regulator over overcharging its phone and broadband customers and alongside Virgin Media which ended up being fined over £13 million for early exit fees at its subsidiary EE.
For the moment, the pound is holding against the euro and the dollar, up 0.08% and 0.21%, but given the lack of clarity on Brexit, the UK currency market is set to remain volatile over the coming sessions.