Cookie Policy

We use cookies on our website and have placed these on your computer. By continuing to use our website you consent to this. For more information, including how to change your cookie settings and to disable our non-essential Google Analytics cookies, please refer to our Cookie Policy. If you do not wish to be reminded of this on each visit, please use the close button.

Newsround: FTSE flat as Brexit chaos unfolds

16 November 2018

Tags: Macro Economics

FTSE News  

The FTSE 100 regained some ground after initially getting caught in a global sell-off as investors worried about a potential ‘no-deal’ Brexit following a backlash to UK Prime Minister Theresa May’s draft Brexit deal.

The proposed deal led to a sharp drop in the pound and several resignations, including Brexit Secretary Dominic Raab, while Jacob Rees-Mogg submitted a letter of no-confidence, putting May’s leadership at risk. By close on Thursday (15 November), the FTSE 100 traded only 4.3 points higher at 7,038.

Next Tuesday (20 November) there are updates on the US housing sector with reports on building permits and housing starts. There is also a meeting of OPEC and other oil rich countries scheduled, which may address the recent significant fall in the oil price. Next Wednesday (21 November) monthly US durable goods orders data is released. This shows the total value of new purchase orders placed with manufacturers for durable goods and is a leading indicator of industrial production. Next Thursday’s (22 November) planned testimony from Bank of England Governor Mark Carney and his colleagues before MPs could be closely watched amid the current Brexit tensions. Friday (23 November) sees a series of purchasing managers’ index surveys on the Eurozone economy.


Sector in focus

The news of Brexit secretary Dominic Raab’s resignation on Thursday (15 November) after the Cabinet had given tentative backing to a draft Brexit deal the night before put pressure on two of London’s more domestic-focused sectors.

Housebuilders suffered some serious share price damage as a trading update from Bovis Homes (BVS) referencing Brexit uncertainty looked eerily timely. While sales rates and house prices achieved were in line with expectations and roughly flat year-to-date, the company notes an increasing number of buyers are choosing the part-exchange option. Bovis saw its shares fall sharply and the rest of the sector followed suit, including Persimmon (PSN), Barratt Developments (BDEV) and Taylor Wimpey (TW.). Other real estate related stocks were also on the back foot with commercial property investor British Land (BLND) a notable victim.

Banking stocks also reacted negatively to the news. As the most domestically-focused stocks in the FTSE, banks and housebuilders bore the brunt of the sell-off in June 2016 following the original vote to leave the EU. If investors felt that the risks of a ‘no-deal’ Brexit have risen with the news on Raab, it’s logical that these stocks were the worst affected by selling pressure.


Economic Update

In a fast-moving situation it is hard to know exactly what will happen in the coming seven days regarding Brexit, but sterling is likely to be volatile as, at the very least, there is a possibility of a leadership challenge to Theresa May. If May can hold on, then the next key date currently in the diary is a special EU Brexit summit which has been tentatively pencilled in for 25 November ahead of a likely vote in Parliament on the deal in mid-December.


ETF Watch 

If the pound falls the FTSE 100 typically performs strongly as it boosts the relative value of overseas earnings, which dominate those generated by index constituents. Investors can get low-cost exposure to the FTSE 100 through iShares Core FTSE 100 (ISF), which has an ongoing charge of just 0.07%. 


 Company Announcements

20 November – First half numbers from online electricals play AO World (AO.) are due just ahead of the crucial Black November retail sales event and, of course, Christmas. The results, themselves are already pretty much known thanks to a trading update alongside the announced acquisition of mobile phone retailer MPD on 9 November, although this will offer a further opportunity for management to spell out what they see as the benefits of the deal.

20 November – Full year results from EasyJet (EZJ) will follow a period of turbulence for the share price caused by industrial action in France and a downbeat tone on guidance for the current financial year given in September. The spotlight is likely to fall on whether the company intends to follow up apparent interest in struggling Italian airline Alitalia and on fuel costs.


Five Top Tips from the Pensions Experts

We’ve asked five experts from the world of SIPPs and pensions for their top tips on how you can make the most out of your SIPP and retirement investments. Click through to read their insightful top tips.

Read more

Writer: Tom Sieber Tags: Macro Economics

You can start investing today through any of our account options:

Dealing Account

Access a wide range of global investments in this flexible, unrestricted account.

Find out more

Stocks and Shares ISA

Take advantage of tax free investing with our Stocks and Shares ISA today.

Find out more

Self-Invested Personal Pension (SIPP)

From great value to best-in-class, access the SIPP to suit your needs through our extensive network of providers.

Find out more

I've still got questions!

Our experts are on hand to help at our UK based Customer Experience Centre on 0345 0700 720

Selftrade does not provide investment advice. This article is the authors view and is not the view or opinion of Selftrade and Selftrade accepts no liability for any loss caused as a result of the use of this information. The opinions expressed are those of the author at the time of writing and should not be interpreted as investment advice.

The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance. We do not provide advice or make recommendations about investments. If you have any doubts about the suitability of an investment, you should seek advice from a suitably qualified professional adviser.

If you have a Stocks and Shares ISA, make sure you get the best value for your investments. We are ranked top for price on large portfolios (Platforum, 2018).

Open an account today and we’ll cover any transfer fees up to £100.*

*T&Cs apply.

Open a Stocks & Shares ISA

Find out more