Sat, 31 Oct 2020

The British pound sank on Friday, boosting the London stock market after UK Prime Minister Boris Johnson warned he was ready to walk away from European Union trade talks and prepare for a "no-deal" Brexit.

Sterling slid underneath $1.29 after Johnson accused the EU of failing to negotiate seriously - and declared Britain should "get ready" for an Australia-style agreement based on World Trade Organisation rules from January "unless there is a fundamental change of approach" from Brussels.

It comes after an EU summit this week demanded Britain urgently gives ground on fair trade rules to unblock post-Brexit negotiations.

"Sterling fell sharply on comments from PM Boris Johnson calling for the UK to prepare for a no-deal exit in January and accusing the EU of not negotiating seriously," said Markets.com analyst Neil Wilson.

Johnson's comments fuelled gains on the London stock market, with it gaining 1.3% in early afternoon deals.

A weak pound lifts the share prices of companies listed on the FTSE 100 index that make large earnings in dollars.

"A weak pound has been good for the multinationals on the FTSE 100, while some better earnings have lent support to European stocks" overall, said Rabobank anlayst Jane Foley.

"However, fresh Covid-19 restrictions continue to cloud the outlook," she told AFP.

Europe's major stock markets rebounded sharply from Thursday's sharp sell-off sparked by tightening coronavirus lockdown measures.

In the eurozone, Frankfurt's main stocks index won 0.8% at the half-way stage - with industrial giant Thyssenkrupp jumping 15% to €4.77 after British rival Liberty made an informal bid for its steel activities - but without disclosing a price.

Paris gained 1.5% despite a looming Covid-19 curfew in the French capital.

In commodities, oil prices recoiled on stubborn energy demand fears ahead of a meeting of key crude producers next week.

Traders were keeping tabs also on developments in Washington as lawmakers struggle to find agreement on a new stimulus for the beleaguered US economy, with a disappointing jobs report highlighting the need for action.

With polling showing him well behind in the White House race, President Donald Trump said he was open to a bigger stimulus than the $1.8 trillion offered last week, as he seeks to close the gap with Joe Biden.

Asian stock markets closed mixed Friday, dampened by news that Wall Street finished in the red for a third day.

Source: News24

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