The FTSE 100 was set to rise today at the start of a week that will be dominated by Brexit trade talks under Boris Johnson.
The UK-EU talks are clearly in focus ahead of the Prime Minister’s 15 October deadline. Both sides say progress has been made in the negotiations but issues around fish quotas remain a major sticking point.
Expect markets and the pound to ebb and flow with every leak and rumour coming out of the talks this week as traders react to the rising and falling prospects of Britain crashing out of the EU on basic World Trade Organisation terms.
Friday’s dismal GDP reading highlighted how fragile the UK recovery from the Covid-19 crisis is, and further disruption from a bad Brexit will only worsen the situation.
Figures today showed only one in eight businesses feels ready for Brexit, with Alok Sharma today urging them to act now as there is “no time to waste”.
Investors will be hoping for more clarity on the outlook for monetary policy when Bank of England governor Andrew Bailey talks this evening at the Citizens Panel Open Forum.
The FTSE 100 is expected to build on Friday’s recovery with a 10 point gain to 6026, with similar gains to be seen in France and Germany, according to CMC Markets trading data.
Chinese stocks raced ahead after the state news agency reported official plans to boost the tech-heavy Shenzhen region. Xinhua described the plan as creating “a socialist pilot zone with Chinese characteristics” to be built over the next five years. President Xi Jinping is expected to visit the area this week.
That was being deciphered as meaning more liberalisation of the area, famed as the base for Huawei and other major Chinese technology firms. The city of Shenzhen was turned into a special economic zone 40 years ago
The report sent the Chinese CSI 300 Index up 2.4% at a time when stocks in the region are already benefiting from hopes of a more harmonious Joe Biden presidency.
Hong Kong’s Hang Seng index also gained nearly 2%.
Shares in Pearson could be in for a rocky week as big shareholders are reportedly pressing for chairman Sidney Taurel to quit. They are, according to the FT, angry over the big pay package he has offered new chief executive Andy Bird.
The pay deal includes a private equity style element where he can buy $3.75 million shares in return for an award of $9.4 million if he hits certain performance targets.
Taurel has said he needed to pay the money to lure Bird into the job as he has spent his career on US-style pay deals, latterly at Disney.
UK fund managers will be in focus amid merger talk across the sector as BlackRock kicks off the third quarter earnings season in the US. BlackRock and Vanguard’s cheap, simple tracker funds have swept up millions of customers in recent years, making life for smaller funds increasingly difficult and forcing them to consolidate. Last week, Eaton Vance was bought by Morgan Stanley for $7 billion and more deals are expected for the likes of Janus Henderson and Invesco.