The UK’s political tectonic plates are shifting and the country could have a new Prime Minister in less than a month after Theresa May agreed to discuss the timetable for her departure in early June. This coupled with increasing hostility coming from China in the wake of the US ban on Huawei and the ramp up in sanctions on Iran is keeping the FTSE firmly in the red.
Shares in food delivery firm Just East dropped to the bottom of the FTSE 100 after Amazon agreed to back rival Deliveroo with a round of funding worth $575 million. Smaller rivals Takeaway.com and Delivery Hero were also hit as Amazon positions itself in the fast growing food delivery market with other major contenders like Uber Eats.
Pound nudges lower with politics as the dominant driver
Currency moves are fairly delicate this morning with the pound slightly weaker against the dollar and the euro. The two main prompts for the decline came from economic data showing that car sales in Britain declined by over 4% in April compared with German car sales which were down 1.1%, and from unsuccessful domestic political wrangling.
Theresa May’s talks with Labour seem to be teetering on the brink of collapse hours after the PM agreed to set the timetable for her departure in June. Before that the European elections next week will inject some volatility into currency trading especially as polls show that the Liberal Democrats are in the lead to win the vote, which is seen as the country’s opportunity to show its stance on Brexit.
Oil firmer, possibly for months ahead
Brent crude is again flirting with the $73 mark this morning, trading up 0.37% since the market opened but just a touch below yesterday’s highs. The rising tensions in the Middle East and the drone attacks on Saudi facilities earlier this week are fueling a market which has already been rendered tighter than usual by sanctions on Venezuela and Iran and the disruption of Russian exports because of contamination . Forward prices indicate that the tightness could increase further in the second half of the year.
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