U.K. stocks traded higher on Thursday, rebounding from its worst loss in more than two weeks, with Sky shares leading the charge north as the bidding war for the broadcaster intensified.
Investors were also waiting for a government white paper on Britain’s plans to extricate itself from the European Union to gauge whether to prepare for a “no-deal”, or hard Brexit, outcome.
What are markets doing?
The FTSE 100 index UKX, +0.89% climbed 0.8% to 7,651.01, clawing back parts of its 1.3% loss logged on Wednesday. The drop—its worst since June 25—came after the U.S. said it plans to hit Chinese imports with another $200 billion in tariffs, intensifying a trade fight between the world’s largest economies.
The pound GBPUSD, -0.0151% rose to $1.3219 from $1.3205 late Wednesday in New York.
What is driving the market?
Stocks in the U.K. and Europe traded higher as investors continued to watch developments in the trade spat between the U.S. and China. Late Wednesday Bloomberg reported that U.S. and Chinese officials are open to resuming high-level trade talks, which could end with a bilateral solution and avoid an economical deleterious trade clash.
Back in the U.K., the government is set to publish its 120-page report on Brexit later on Thursday. The document will lay out in more detail Prime Minister Theresa May’s plan for the U.K.’s future relationship with the European Union, which was agreed at a Cabinet meeting last week.
The plan, however, sparked a revolt in the government’s inner circles, with both Foreign Secretary Boris Johnson and Brexit minister Davis Davis resigning in protest over May’s vision.
In other U.K. news, U.S. President Trump is slated to arrive in Britain on Thursday for a two-day visit.
What are strategists saying?
“While England’s World Cup journey has been a welcome distraction for many of us analysts here in the City—there was a major (ironic) reality check last night when the most recent country to join the EU triumphed over the first country to leave the EU. We have the ‘joy’ of focusing our attention back onto the latter story today—with the U.K. government set to release its Brexit White Paper,” said Viraj Patel, FX strategist at ING, in a note.
“As we’ve been noting, the devil will be in the details (which may take a while to digest)—but for GBP’s initial reaction over the coming days, one should focus on the EU’s response to May’s Brexit plan. If Brussels feel that they can work with Downing Street, then GBP/USD could drift back to 1.33-1.34. If not, then there are major risks of a sharp fall to below 1.30 as risks of a ‘no deal’ Brexit pick-up,” he added.
Shares of ITV PLC ITV, -0.93% fell 2.6% after England’s defeat in the World Cup soccer final. Chris Beauchamp, chief market analyst at IG, said ITV’s decline came as “investors cut back on the stock on expectations that advertising revenue will be lower than would have been the case with England in the finals.”