Mar­kets brace for May los­ing vote on Brexit

Irish Independent - - News - John Mul­li­gan

IN­VESTORS and cur­rency traders are brac­ing for a mar­kets show­down next week, with UK Prime Minister Theresa May on course to lose the crunch vote on her Brexit deal.

Fail­ure to get the deal across the line will cre­ate a wave of un­cer­tainty for world stock mar­kets, with ster­ling likely to come un­der pres­sure.

Ire­land’s main stock mar­ket in­dex rose 1pc yesterday, re­coup­ing just some of Thurs­day’s 3.1pc drop that wiped €2.5bn from the com­bined value of its con­stituents.

The Iseq Over­all In­dex has slumped more than 20pc over the past year.

IN­VESTORS and cur­rency traders are brac­ing for a mar­kets show­down next week, with UK Prime Minister Theresa May on course to lose the crunch vote on her Brexit deal.

Fail­ure to get the deal across the line will cre­ate a wave of un­cer­tainty for world stock mar­kets, with ster­ling likely to come un­der pres­sure.

Ire­land’s main stock mar­ket in­dex – the ISEQ Over­all In­dex – rose 1pc yesterday, re­coup­ing just some of Thurs­day’s 3.1pc drop that wiped €2.5bn from the com­bined value of its con­stituents.

Yesterday, shares in com­pa­nies in­clud­ing build­ing ma­te­ri­als gi­ant CRH and pack­ag­ing gi­ant Smur­fit

Kappa rose.

The ISEQ Over­all In­dex has slumped more than 20pc over the past year, knock­ing €19.2bn off the value of stocks on the Ir­ish mar­ket.

In the past week alone, €3.4bn has been sliced from the value of stocks on the in­dex.

In­su­la­tion maker Kingspan edged less than 1pc higher even as Opec and other partners agreed a larger than ex­pected cut in oil pro­duc­tion.

Crude oil prices surged as much as 5.8pc in Lon­don, raising the risk that the deal could anger US Pres­i­dent Don­ald Trump, who had urged the group of pro­duc­ers to keep taps open and prices low.

The oil agree­ment also comes in a week that Meng Wanzhou, the chief fi­nan­cial of­fi­cer of Chi­nese telecom­mu­ni­ca­tions gi­ant Huawei, and the daugh­ter of its founder, was ar­rested in Canada and faces ex­tra­di­tion to the United States.

That has in­ten­si­fied con­cerns of a trade war be­tween the US and China – which had en­tered a dé­tente – be­ing reignited af­ter the two coun­tries had ap­peared on track to re­solve it.

Mean­while, some traders be­lieve the tur­moil next week fol­low­ing the Brexit vote could be so in­tense as to be in­stru­men­tal to the Brexit process it­self.

While mar­ket re­sponse and pres­sure on ster­ling could be more muted than that when the UK voted to leave the EU in the 2016 ref­er­en­dum, some banks are tak­ing no chances.

Mar­kets in Europe will be closed when the out­come of the UK par­lia­ment’s vote is known next Tues­day around 7pm, but cur­rency mar­kets op­er­ate 24 hours a day.

A fail­ure to get the deal passed could her­ald more un­cer­tainty over the Brexit process and big mar­ket swings may fol­low. Some com­men­ta­tors sug­gested that heavy mar­ket losses could even con­vince the UK’s MPs to back Ms May if she tried for a sec­ond Brexit vote.

‘Lock­ing in growth’: In­com­ing Air­bus CEO Guil­laume Faury and Avolon CEO Dómh­nal Slat­tery

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