FTSE underperforms as Brexit worries resurface

Joshua Mahony MSTA Scope Markets

Brexit fears come back into play amid a fresh round of talks scheduled for next week. Meanwhile, a welcome decline in jobless claims fails to spark the S&P 500 into fresh highs for now.

FTSE underperforms on Brexit and furlough worries
Initial jobless claims drop below 1 million
Brexit fears likely to drive FTSE and GBP underperformance

UK listed stocks are underperforming today, as traders look ahead to a double whammy of resurgent Brexit fears and an October end to the furlough scheme. With stocks coming off a strong run, today provides a breather despite an impressive jobless claims report out of the US. With initial jobless claims dropping below one-million for the first time since March, there is a feeling we are finally moving into a more normalised state of affairs despite the absence of a fresh stimulus bill. With both sides seemingly at a stalemate over the next stimulus package, it does provide a potential future boost for bulls to look ahead to. While the S&P 500 has retreated just below all-time highs, there is a feeling it is a case of when, not if, we see that breakout take place.

Brexit talks look set to resume once again next week, with the continued stalemate expected to bring further anxiety of UK traders despite an optimistic tone from negotiators. The UK chief negotiator David Frost signalled the potential for an agreement by September, although the prospect of an all-encompassing deal in such a short space of time seems optimistic at best. While the pound has been gaining ground against the dollar over recent months, there is a distinct possibility that we will see these Brexit fears dictate price action in the absence of a deal.

Author

Joshua Mahony MSTA

Scope Markets

Joshua Mahony is Chief Markets Analyst at Scope Markets. Joshua has a particular focus on macro-economics and technical analysis, built up over his 11 years of experience as a market analyst across three brokers.

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