Week in Review: FTSE 100 down as Brexit negotiations reach boiling point

FTSE NEWS

The FTSE 100 ended the day down by the tiniest of margins on Thursday (10 September) as tensions erupted in the Brexit trade deal talks (see below for more). News of a fresh spat between the UK and European Union caused the pound to tumble 1.79% to €1.08, which provided some support to a FTSE 100 packed with dollar earning companies. London’s blue-chip index ended the day down 0.16% at 6,003.32.

• On Monday (14 September), BP publishes its annual Energy Outlook report, which will focus on projections for the sector to 2040.
• Nielsen and Kantar publish separate supermarket shares figures on Tuesday (15 September).
• The Office for National Statistics (ONS) publishes house price and inflation data on Wednesday (16 September).
• On Thursday (17 September), the Bank of England’s Monetary Policy Committee will decide the path of UK interest rates at its monthly meeting.
• The ONS publishes sales data for the retail sector for August on Friday (18 September).

SECTOR IN FOCUS

US tech firms suffered their worst sell-off in six months this week as investors looked to cash in on the sector’s recent gains.
The tech-heavy Nasdaq Composite index fell for three straight sessions between Thursday last week and Tuesday this week (Monday was a public holiday in the US and therefore its stock market was closed). It means the index is now more than 7% off its record high, which was achieved just prior to the sell-off.
Electric car giant Tesla Inc (TSLA) lost more than a fifth of its value in a single day on Tuesday, while other names such Apple Inc (AAPL) and Microsoft Corporation (MSFT) also suffered heavy share price falls.
The three firms have recovered some of their losses since then but all of them remain down from where they were before last Thursday (3 September).
Commentators speculated that the sell-off came about because of investors’ fears about the sky-high valuations of many technology firms. Others predicted the correction would likely be temporary.

ECONOMIC UPDATE

The odds on the UK and EU striking a trade deal have been slashed after a fresh spat broke out between both sides.
Policymakers in Brussels were left seething after the government’s new internal markets bill seemed to contradict the terms of the Brexit withdrawal deal signed by Boris Johnson earlier this year.
Critics argue the bill breaks international law and is an attempt to abandon promises made by the UK Government to avoid a hard border with the Irish Republic.
Under the terms of the withdrawal agreement, Northern Ireland will remain as part of the EU’s customs union for goods in a bid to stop a hard border with its southern neighbours.
However, the bill is seen by many as an attempt by the UK government to renege on this commitment, which has caused tensions to rise.
As a result, betting exchange Smarkets has slashed the odds on a trade deal between the UK and EU from 67% a month ago to 50-50 now.
Without a trade deal, tariffs will be applied to goods going between the UK and EU, which many believe will hurt both sides economically.

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COMPANY ANNOUNCEMENTS

16 September – Housebuilder Redrow plc (RDW) warned in June that profits would be “substantially below” last year’s due to coronavirus and the costs associated with reducing its exposure to London’s property market. It reports its full-year results on Wednesday (16 September).

17 September – Retailer Next plc (NXT) announced a better-than-expected recovery in the second quarter, giving investors hope of a strong showing when it reports its interims on Thursday (17 September).