LONDON MARKETS: FTSE 100 Logs Gains On U.S. Tax Optimism; Pound Jolted By Brexit News
04 Dezember 2017 - 07:15PM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
U.K. construction output at strongest in five months
U.K. blue-chip stocks pushed higher Monday, with bank shares
taking part in broad-based gains seen as being set off by the
passage of a tax overhaul package in the U.S. Senate.
Meanwhile, the pound was sent on a roller-coaster ride after the
U.K. and EU failed to reach an agreement on key Brexit issues at a
lunch in Brussels, although they said progress has been made.
What markets are doing: The FTSE 100 index ended 0.5% higher at
7,338.97, partly rebounding from a 1.5% loss from last week.
The pound made big swings during the day, trading as high as
$1.3539 and as low as $1.3414. Sterling traded at $1.3475 at the
time of the London market close, down from $1.3478 late Friday in
New York. Against the euro, sterling bought EUR1.1364, more than
EUR1.1330 on Friday.
What's moving markets: The pound traded firmly higher early in
the day following reports that an agreement on avoiding a
post-Brexit hard border between the Republic of Ireland and
Northern Ireland was getting close ahead of a key meeting between
U.K. Prime Minister Theresa May and European Commission President
Jean-Claude Juncker in Brussels. The Irish border is one of the
three issues London needs to make "sufficient progress" on in order
for the EU to move Brexit talks along to trade and a potential
transition period.
However, the pound pulled back in the afternoon after May and
Juncker said they hadn't been able to reach an agreement as two or
three issues are still undecided.
"But we will reconvene before the end of the week and I am also
confident that we will conclude this positively," May said after
the meeting in Brussels.
Meanwhile in the stock market, U.K. and European equities
started the week in rally mode, rising alongside sharp gains for
U.S. stocks
(http://www.marketwatch.com/story/dow-futures-soar-200-points-as-markets-get-ready-to-rally-on-tax-plan-progress-2017-12-04)
after the U.S. Senate passed the Republican-sponsored tax reform
proposal
(http://www.marketwatch.com/story/senate-passes-tax-bill-advancing-top-republican-priority-2017-12-02)
almost entirely along party lines on Saturday.
The Senate move increases chances that proposed tax changes will
signed into law by President Donald Trump. That would fulfill
long-running anticipation in markets over the past year that the
Trump administration would usher in what Republicans have touted as
business-friendly tax changes. The House and Senate now must agree
on a single tax bill before it can be sent to Trump to sign.
Read:Trump celebrates tax-bill victory as opponents vent their
fury via #TaxScamBill
(http://www.marketwatch.com/story/trump-celebrates-tax-bill-victory-as-opponents-vent-their-fury-via-taxscambill-2017-12-02)
Read:U.K., EU move closer to breakthrough in Brexit talks
(http://www.marketwatch.com/story/uk-eu-move-closer-to-breakthrough-in-brexit-talks-2017-12-04)
What strategists are saying: "A day of rumors, claims and
counterclaims has left U.K. investors reeling. As the session winds
down in London it looks like, contrary to previous reports, that
there will not be a deal between the U.K. and the EU," said Chris
Beauchamp, chief market analyst at IG, in a note.
"We knew Brexit would never be simple, but just how complicated
it would be is still a surprise," he added.
Stock movers: Bank shares world-wide have been pushed higher
throughout the past year on expectations of lower taxes in the U.S.
Many overseas banks have business interests in the U.S.
In London, shares of Barclays PLC (BCS) (BCS) popped up 2.6%,
Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) put on 1.5%, and
Lloyds Banking Group PLC (LLOY.LN)(LLOY.LN) ended up 1%. HSBC
Holdings PLC (HSBA.LN) (HSBA.LN) picked up 0.4% and Standard
Chartered PLC (STAN.LN) tacked on 0.6%.
Meanwhile, Sky PLC (SKY.LN) rose 2.8% on reports that there's
been a restart in talks by Sky stakeholder 21st Century Fox Inc.
(FOX) (FOX) for the potential sale of some of its assets to Walt
Disney Co. (DIS). Those assets could include Sky.
Building higher: House builder shares stayed aloft after IHS
Markit/CIPS said its construction output PMI for November hit 53.1.
The reading, the highest in five months, outstripped the 51.0
consensus estimate from FactSet.
"Once again, resilient house-building growth helped to offset
lower volumes of commercial work and civil engineering activity,"
said Tim Moore, associate director at IHS Markit, in a note.
Shares of Barratt Developments PLC (BDEV.LN) finished 0.9%
higher, Persimmon (PSN.LN) gained 0.6% and Taylor Wimpey PLC
(TW.LN) moved 1% higher. Berkeley Group Holdings PLC (BKG.LN) rose
0.9%.
"Construction firms reported that heightened economic and
political uncertainty continued to hold back commercial development
activity," said Moore.
(END) Dow Jones Newswires
December 04, 2017 13:00 ET (18:00 GMT)
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