“For now, the prime minister’s success in agreeing what looks like one of the softest possible versions of Brexit with the majority of her Cabinet has been cautiously welcomed by the markets, with sterling steady and UK equities called higher this morning, in line with the rest of Europe.” — Ian Williams at Peel Hunt.
Sterling is trading steadily and London stock markets are expected to rise alongside their European peers as traders attention turns again to the politics of UK’s departure from the EU.
The pound remains higher overall after news of the resignation of David Davis as Brexit secretary, although it is off earlier peaks reached after Theresa May secured agreement from the cabinet from what has been seen as a “soft Brexit” plan. Sterling is up 0.1 per cent at $1.3301 into the start of full European trading, under the $1.3225 touched earlier.
According to opening calls from London Capital, the FTSE 100 will open up 0.5 per cent. The yields on UK government debt is steady, with the 2-year gilt ticking up 1 basis point to 0.751 per cent. That on 10-year debt is flat at 1.268 per cent, leaving both in the middle of recent trading ranges.
European bourses are also expected to rise, after Asian stocks picked up the baton from a strong close on Wall Street.
Frankfurt’s Xetra Dax 30 is set to rise 0.5 per cent, with the CAC 40 in Paris set to gain 0.6 per cent.
Hong Kong led Asia-Pacific stocks started higher following Wall Street’s gains on Friday sparked by better than expected US jobs data. The Hang Seng index climbed 1.5 per cent to a one-week high.
Mainland Chinese equities also gained, with the CSI 300 of Shanghai and Shenzhen stocks up 2.1 per cent.
Japan’s Topix index rose 1.1 per cent as technology stocks advanced 1.8 per cent and industrials added 0.9 per cent.
In Australia, the S&P/ASX 200 gained 0.2 per cent as the basic materials sector rose 1.2 per cent. Miner BHP Billiton climbed 2 per cent after Reuters reported that BP was in the lead to buy its US onshore oil and gas assets.
US stocks rallied on Friday after the non-farm payrolls report for June beat forecasts with 213,000 jobs created during the month, providing a distraction from US-China trade tensions. The S&P 500 closed up 0.9 per cent and the Nasdaq gained 1.3 per cent.
There is a wider trend for a weaker dollar. The index tracking it is down 0.2 per cent and at its lowest level since mid June.
The euro is up 0.2 per cent at $1.1772 and the yen is unmoved at ¥110.44.
The yield on 10-year US Treasuries is up 2 basis points to 2.84 per cent, while the yield on 10-year Japanese government bonds is up 1bp at 0.028 per cent.
Brent crude is 0.5 per cent higher at $77.47 while US marker West Texas Intermediate is 0.4 per cent stronger at $74.07 a barrel.
Gold is up 0.6 per cent at $1,261 an ounce.