FTSE 100 falls back as Brexit negotiations drag on
The FTSE 100 fell back this morning after the French government threatened to veto a Brexit trade deal if EU negotiators gave further concessions to the UK.
London’s premier index dropped 0.4 per cent start as trading opened, while the FTSE 250 of midcap companies picked up 0.1 per cent.
Brexit talks are ongoing between the UK and EU, with rumours that a deal could be reached in the next couple of days.
However, the EU’s chief negotiator Michel Barnier warned that the two sides were still stuck over the issue of fishing rights.
There is now less than a month before the transition period ends on 1 January.
Sterling clung on to the $1.34 mark thanks to broad dollar weakness, but derivative markets were flashing red on fears over the negotiations.
Once again, the FTSE outperformed its fellow European markets. The German DAX was down 0.2 per cent, while the CAC fell 0.1 per cent.
Today’s subdued open followed a slow day of trading yesterday, with the FTSE picking up 1.2 per cent in all.
The small gain came despite the fact that the UK became the first country in the world to approve Pfizer and Biontech’s coronavirus vaccine.
That led to hopes that the market could see a repeat of its record November, when it gained 14 per cent in a rapid rally.
But until a Brexit deal is agreed – or not – it seems likely that traders will continue to hedge their bets.
Oil stocks fall as traders await Opec meeting outcome
BP and Shell were among today’s biggest fallers, with traders anxiously awaiting the result of today’s meeting of the Opec+ oil production alliance.
Saudi Arabia, the bloc’s de facto leader, is leading the charge to extend record production cuts into next year to keep oil prices stable.
But other members of the group, such as Russia, are questioning the need to do so.
The cartel had been expected to rollover its existing 7.7m barrel per day – eight per cent of global supply – until March.
Global benchmarks Brent Crude and West Texas Intermediate were both down around one per cent this morning as the market braced for the outcome.
It was Saudi Arabia and Russia’s inability to agree on output policy that initiated April’s price collapse, and after six months of clawing back the losses, traders will be hoping to avoid a similar situation.