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FTSE closes higher as Brexit deal is reportedly imminent

Kumutha Ramanathan
·Contributor
·2-min read

Watch: More areas could be in Tier 4 from Boxing Day as coronavirus cases rise

The FTSE (^FTSE) reversed losses on Wednesday as markets became increasingly confident a Brexit deal has been reached and will be announced soon.

The FTSE 100 (^FTSE) closed higher 0.7% in London. Its European peers were also heading higher. Germany’s DAX (^GDAXI) gained 1.3% in Frankfurt and the CAC 40 (^FCHI) was also higher 1.1% in Paris. The Europe-wide Stoxx 600 index (^STOXX) was up 1.1%.

US markets were mostly in the green at around 4.50pm in London, with the S&P (^GSPC) higher 0.5% and Dow Jones (^DJI) also up 0.7%. The Nasdaq (^IXIC) was flat.

The outline of a post-Brexit trade agreement has been reached, according to Bloomberg sources. As expected, FTSE-listed banks and housebuilders went from strength to strength on the news. The pound has been surging on the news, up 1.1% against the dollar (GBPUSD=X) to $1.3508 and up 0.8% against the euro (GBPEUR=X) to €1.1077 by late afternoon.

“With Christmas within touching distance (socially-distanced, of course), markets are beginning to make new strides to the upside, bolstered by reports that a trade deal might actually be done before everyone sits down to their festive turkey on Friday,” said Chris Beauchamp, chief market analyst at IG.

UK health secretary Matt Hancock also announced on Wednesday afternoon that much of the nation was entering harsher Tier 4 restrictions as COVID-19 infections rise rapidly due to new strains of the virus.

WATCH: Where is the new coronavirus variant in the UK?

READ MORE: More of UK moved into Tier 4 as second new strain of COVID-19 discovered

In the US, president Trump said on Tuesday that the stimulus bill that had been agreed to by both Republican and Democratic camps after months of negotiation in Congress was “a disgrace” and that he wanted to increase the “ridiculously low” $600 checks for individuals to $2,000.

The news had put pressure on European markets in early trading. It was feared that Trump would push for more on stimulus measures that would lead to a spending increase. His concerns could also impact whether the bill was passed at he exerts pressure on congressional leadership or takes it upon himself to veto the legislation.

U.S. President Donald Trump speaks about early results from the 2020 U.S. presidential election in the East Room of the White House in Washington, U.S., November 4, 2020. REUTERS/Carlos Barria     TPX IMAGES OF THE DAY
US president Donald Trump's comments on the latest pandemic relief bill could potentially delay or stop its passage. Photo: Carlos Barria/Reuters

Asian markets were rather muted to Trump’s threats over the stimulus bill. Japan’s Nikkei (^N225) gained 0.3% at market close, the Hong Kong Hang Seng (^HSI) was up 0.9%, and the Shanghai Composite (000001.SS) was up 0.8%. South Korea’s KOSPI (^KS11) headed up 1%.