Brexit back on the agenda

In mid-morning trading the FTSE 100 is 5 points lower, as Brexit nervousness keeps investor optimism in check.

• May to thrown down the gauntlet to the EU

• Madrid and Barcelona still at loggerheads

• US dollar resolute despite weak NFPs

UK markets are trading slightly lower this morning as investors await a speech to the Commons by the Prime Minister on that ever-popular topic, the Brexit negotiations. Her speech in Florence failed to open the door to the expansive negotiations the UK hoped would follow, and with her position in the party undermined by that speech to the party conference last week, Mrs May is now looking to shore up her position with a less-than-subtle threat to walk away from talks. As a result, while European markets are clocking up a few modest gains, the FTSE 100 and its mid-cap counterpart are both shedding some ground. Not that this should unduly worry the stock market bulls, who have seized control of global markets so decisively over the past month. The fourth-quarter has got off to a roaring start, and with US earnings season now all but upon us it is only natural to see a pause for breath.

The Catalonia crisis rumbles on, as Madrid and Barcelona warily eye each other as they mull their next move. Given the notable lack of international support, Catalonia seems to have overplayed its hand, and as businesses desert Barcelona the central government seems to hold almost all the cards. Another 1% gain for the Ibex this morning suggests investors expect a resolution to the standoff. Away from Catalonia the other issue is whether Friday’s non-farms data is going to put a lid on the dollar’s rally – most think it unlikely, with the Fed likely to look beyond the poor number to an economy that seems to be powering ahead in the three key areas of employment, inflation and wages. Ahead of the open, we expect the Dow to start at 22,764, down 9 points from Friday’s close.