Another vote or two

Tuesday’s meaningful Brexit vote did not offer any resolution but instead has paved the way for a series of votes that will keep the markets in a limbo for the rest of week. Having overwhelmingly voted against Theresa May’s deal MPs now have to go back to the ballot box Wednesday to decide whether there will be a hard Brexit or a delay to Britain exiting the EU. If the latter, another vote will be required on Thursday to decide on how long the delay will be. 

The FTSE is still trying to make up its mind whether this is a positive or a negative development and is yo-yoing around the flat line this morning. A slew of company news including a change in the leadership structure at Standard Life Aberdeen and an increase in full-year profit at Morrisons is helping the London index to remain in the black. 

Morrisons’ results were one ray of light because the supermarket chain is the first of the UK’s big four to report earnings. Lower consumer spending, tighter competition, the flight to online shopping and the looming Brexit have created a tough trading environment but figures provided by Morrisons raise hopes that other supermarkets will turn in better numbers too. 

Pound unfazed by rejected Brexit deal 

The pound barely shifted after MPs voted against Theresa May’s deal last night and the same remains the case this morning. The currency has nudged marginally higher against the dollar and the euro on the assumption that there will be no hard Brexit. This will be for the MPs to decide at a vote later Wednesday which won’t be held along party lines but instead will be a free vote, that is, MPs will be allowed to vote in line with their own, rather than party view. 

Sterling is holding up comfortably above $1.31 as investors bet against a hard Brexit but there is likely to be volatility in the market for the rest of the week as it remains to be seen how long a potential Brexit delay will be. 

No-deal Brexit vote to overshadow the Spring Statement

In amidst that chaos the Chancellor will attempt the impossible: to deliver a coherent Spring Statement. What would normally be a significant event for the markets as the Chancellor reflects on the economic growth of the country this year will be overshadowed by what is happening in Parliament. Nevertheless, based on January data the government’s tax income is likely to have worked some way towards reducing the budget deficit. Economic growth remains woefully subdued, at about 0.2% last month, which will make it less likely for the Chancellor to end austerity measures. This would normally be a negative for the pound but a no-deal Brexit vote will trump that.