Brexit headlines continued to fuel volatility in the pound on Monday as traders watched and waited. May was attempting to drum up backing for the Brexit deal, this time from business leaders, whilst disinters from her party attempted to draw together enough support for a leadership challenge. With insufficient letters submitted so far for a vote of no confidence, Theresa May is still clinging onto power.
Feeling some support from Michel Barnier and Theresa May’s lobbying, sterling edged higher across the morning, quickly reversing a knee-jerk dive sub $1.28. Theresa May’s comments that the Brexit transition period would end prior to the next general election in May 2022 sharply moved the pound. Whilst extending the transition period is an alternative, it is not one that Theresa May is looking to exercise. Yet despite the slip the pound recovered an was trading cautious 0.2% higher at the time of writing.
Traders will continue to focus on Westminster, however, Mark Carney appearing before the Treasury Select Committee tomorrow could provide a welcomed distraction. Views on the UK economy are expected along with a grilling over the central bank’s plans for a no deal Brexit.
House Builders Struggle On Lower House Prices
Despite a mildly stronger pound and a softer start on Wall Street, the FTSE pushed higher across the session. Housebuilders were noticeably trading against the trend following disappointing house price data. According to Rightmove, house prices across the UK fell 1.7% month on month in November and were down 0.2% year on year; the first annual decline in 7 years. Brexit uncertainty in addition to stretched buyer affordability is eating away at house prices, with the Christmas lull arriving earlier than usual. Barratt Developments traded 1% lower whilst Persimmon was off 0.5%.
Apple Heading Back To Bear Market Territory
The Dow fell on the open, led lower by Apple amid growing concerns over iPhone production orders. Semiconductor shares added pressure to the broader US market, whilst the Nasdaq dived over 1.8%
Owing to weak demand, Apple has reportedly cut production orders on 3 models unveiled just recently in September. Given the importance of iPhone sales to Apple’s bottom line, investors are understandably nervous. Following Apple’s results and its decision to no longer give a product sales break down, investors have been wary of iPhone numbers. This latest development has confirmed investor fears. Shares in Apple sunk 3% in early trade, adding to 5% losses to the share price last week. Across this month alone, Apple share price is off some 14% and moved towards bear market levels, a 20% decline from its recent high that took the market cap to over $1trillion.