FTSE 100 investors again pending Brexit

September 10, 2020 13:30

Trade the FTSE drop

The FTSE 100 registered falls close to 1% in the hours leading up to the emergency meeting that the vice president of the European Commission, Maros Sefcovic, plans to hold today with his British counterpart Michael Gove. The meeting comes after Prime Minister Boris Johnson opened the possibility of violating some parts of the United Kingdom's exit treaty from the European Union.

The European Union could take legal action if Johnson goes ahead with his threat. These tensions, together with the uncertainty still generated by the economic recovery from the coronavirus, have led many investors on the London Stock Exchange to sell on a day when Morrison supermarkets recorded falls of more than 4% after announcing semi-annual losses.

FTSE100 daily chart

Source: Admiral Markets MetaTrader 5. FTSE100 daily chart. Date range: December 19, 2019, to September 10, 2020. Accessed on September 10, 2020. Please note that past performance does not guarantee future performance.

Caution dominates the London index in a recession scenario as the British economy contracted between April and June by 20.4%, the second consecutive negative quarter. In this context, the FTSE has accumulated losses of more than 20% so far in 2020. In the last five years, the London index has only closed one year with setbacks: 2018, with a fall of 12.48%.

It is precisely this recessionary scenario that is leading many analysts to become optimistic about Brexit. They are convinced that the United Kingdom and the EU will reach an agreement before December.


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