Yahoo Finance What to Watch: Pound slips on Brexit fears, BP and Shell benefit from oil rally, and BAT shares dive
Here are the top business, market and economic stories you should be watching today in the UK, Europe and abroad:
Pound slips on Brexit fears
The pound is falling against the dollar (GBPUSD=X) and euro (GBPEUR=X) on amid growing fears that a Brexit deal before Christmas is unlikely.
Jim Reid, research strategist at Deutsche Bank, said in the bank’s Monday macro strategy note to clients: “Brexit feels like its entering a crucial stretch and Friday was a bad day for the UK government, with the weekend headlines not offering much additional joy.
“Pro-remain Tory MP Jo Johnson resigned and suggested he wouldn’t support the deal in its current form. The weekend media suggests there could be others refusing to vote in favour along those lines, with the Sunday Times suggesting four such pro-remain government resignations are possible.
“Basically the deal as it stands is being criticised by both remain and leave Conservatives and also by the DUP. Meanwhile, the Labour party opposition is highly unlikely to vote for it. So a deal being reached with the EU still seems the easy part of the equation.”
The pound is down 0.9% against the dollar to 1.2843 and down 0.2% against the euro to 1.1412 at 10.02am.
BP and Shell benefit from oil rally
Shares in oil majors BP and Shell are rallying on Monday morning after Saudi Arabia announced plans to cut oil supply to support prices.
The Saudi Energy minister said on Sunday that the Kingdom would cut its oil supply by 500,000 barrels per day in December to support prices. This was followed by comments on Monday suggesting a cut of as much as 1 million barrels per day could be needed.
US oil (CL=F) and Brent crude futures (BZ=F) were both up about 1% in early morning trade on Monday following the news.
The oil price rally helped support oil company stocks in Europe. BP (BP.L) shares were up 2.2% in London after an hour and a half of trade, and Royal Dutch Shell’s B share price was up 1.9% at the same time.
BAT shares collapse on menthol cigarette ban fears
Shares in British American Tobacco (BATS.L) collapsed as much as 11% in early trade in London on Monday after reports that the US could ban menthol cigarettes.
The Wall Street Journal reported on Friday that the US Food and Drug Administration is considering banning menthol cigarettes, citing senior agency officials. It comes amid a crackdown on e-cigarettes in the US, with officials concerned that these new products are being marketed to children. The EU has already introduced plans to ban menthol cigarettes by 2020.
BAT owns Newport, the best-selling menthol cigarette brand in the US. Barclays analysts said in a note to clients on Monday that as much as 55% of BAT’s US cigarette sales and 25% of its total earnings before interest and taxes come from menthol products.
BAT shares had recovered some of their earlier losses at 9.45am London time and were down 7.8%.
European markets
European stock markets were mixed on Monday after a muted session overnight in Asia. Britain’s FTSE 100 (^FTSE) was up 0.2%, boosted by the weak pound as the majority of its constituents report earnings in dollars. Germany’s DAX (^GDAXI) was down 0.7%, France’s CAC 40 (^FCHI) was down 0.1%, and the Euronext 100 (^N100) was down 0.1%.
Asian markets were subdued overnight. Japan’s Nikkei 225 (^N225) was more or less flat, Hong Kong’s Hang Seng index (^HSI) was up 0.1%, but China’s benchmark Shanghai Composite (000001.SS) was up 1.2%.
What to expect in the US
US stock futures were pointing to a quiet open in the US. S&P 500 futures (ES=F) were down 0.04%, Dow Jones Industrial Average futures (YM=F) were down 0.1%, and Nasdaq futures (NQ=F) were up 0.2%. The VIX volatility-tracking index (^VIX) was up 5.5%.
With files from Reuters.
