By Dave Morris
London markets drifted lower as Brexit uncertainty continued and geopolitical tensions lifted oil prices.
How did markets perform?
In the U.K., the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.65% was down 0.3% to 7,423.1, after closing Friday up 0.6%.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0365% recovered some of Friday’s loss, rising 0.1% Monday to $1.3061. On Friday it had fallen 0.5%.
Crude oil was up again after a strong ending to the week Friday. Brent crude was $70.34 per barrel, up 1.4% from Friday’s close, while West Texas Intermediate (WTI) was at $63.08, 1.6% higher than Friday. Brent and WTI were respectively trading 2.3% and 2.8% higher than their close a week ago.
What’s moving the markets?
Brexit talks between teams led by U.K. Prime Minister Theresa May and opposition Labour Party leader Jeremy Corbyn were set to continue Monday despite Labour’s statement Friday that the Conservative government had not offered to compromise on any of its major issues. With optimism waning, focus turned to the European Council’s emergency Brexit summit Wednesday. EU leaders signaled that the Brexit extension May requested won’t likely be considered long enough unless it comes with a detailed plan, but a longer extension could finally drive Conservative Brexiteers over the edge. As things stand, the U.K. is set to leave without a deal on Friday, though few in the British media expect such an outcome.
An escalating battle between government and rebel forces in Libya added to a wealth of factors driving up oil prices. Ongoing production cuts by Organization of the Petroleum Exporting Countries (OPEC) had bolstered prices in recent months, but the triple whammy of positive economic data out of the U.S. and China, encouraging trade talk news and now Libyan conflict threatening production seems to have pushed major benchmarks into a new range. Jasper Lawler, head of research at London Capital Group, said that while recent factors had largely affected supply: “[Friday’s] better than forecast U.S. jobs data will be lifting demand expectations. Right now, there are plenty of reasons to assume that the current strength in the oil market is here to stay.”
On Sunday, U.S. National Economic Council director Larry Kudlow reassured investors on a number of fronts. Appearing on CBS’ Face The Nation , Kudlow said that the previous week’s U.S.-China trade talks were productive. “We’re closer than we ever have been before,” Kudlow said. He also softened some of the government’s rhetoric around potential border closures with Mexico over immigration, and signaled positively on the new North America-wide free trade deal.
What stocks are active?
Financials bore the brunt of the selling Monday, with asset manager Hargreaves Lansdown falling 1.8%, financial information company London Stock Exchange PLC /zigman2/quotes/206625606/delayed UK:LSE -0.44% dipping 1.5% and asset manager Standard Life Aberdeen PLC /zigman2/quotes/200883281/delayed UK:SLA -0.42% down 1.2%.
U.K.-listed miners Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO -0.78% and Antofagasta PLC /zigman2/quotes/200173667/delayed UK:ANTO +1.26% led a modest rally in commodity stocks, buoyed by U.S.-China trade talk progress. Both companies’ shares were up 0.3% Monday.