By Victor Reklaitis, MarketWatch
The U.K.’s main equity gauge finished slightly higher Monday, getting a boost from the pound’s drop after fresh Brexit posturing.
Investors also assessed another dose of earnings reports.
How markets are performing
The British blue-chip gauge is showing a drop of 0.3% for the year to date.
What’s moving markets
Liam Fox, the U.K.’s international trade secretary, said in a Sunday Times interview over the weekend that there is a 60% chance that the country will crash out of the European Union without a deal with the bloc.
Brexit-related worries tend to weigh on the pound, and so sterling lost ground Monday. The British currency was down about 1.3% against the dollar in August, and it remains far below the $1.50 level that it was trading at before the June 2016 vote in favor of leaving the EU.
A softer pound can boost the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.
Worries about global trade tensions remained part of the investing backdrop, after U.S. President Donald Trump over the weekend tweeted that American tariffs are “ working far better than anyone ever anticipated .” That came after China on Friday threatened to slap tariffs on $60 billion of American goods if the White House goes ahead with its plans to impose new levies on Chinese products.
Meanwhile, China’s Global Times newspaper said Beijing is ready to dig in for a “protracted war” with the U.S. over trade. Equity strategists have warned that the escalating trade fight could weigh on global economic growth.
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What are strategists saying?
“At the weekend, Liam Fox, the secretary for international trade, revealed the possibility of the U.K. leaving the EU without a trade deal is 60-40,” said David Madden, an analyst at CMC Markets UK, in a note.
“Mr. Fox might have been taking a tough line in a bid to gain leverage over the EU negotiators, but traders aren’t taking any chances and have been selling sterling.”
Stocks in focus
Shares in Just Eat PLC ended the session down 1.5% for one of the FTSE 100’s biggest drops after the food-delivery company posted first-half results. It was a bittersweet period, as the company delivered a profit fall but raised 2018 revenue guidance, a Dow Jones Newswires report said.
Tesco PLC ’s stock /zigman2/quotes/203761082/delayed UK:TSCO -2.36% /zigman2/quotes/207784767/composite TSCDY -1.32% edged down by less than 0.1%, giving up an early gain. The British grocery chain and French peer Carrefour SA /zigman2/quotes/208564127/delayed FR:CA -0.51% confirmed they have entered into a long-term strategic alliance, as they hope to use their buying power with suppliers to cut prices.