FTSE 100 shares fall as Covid-19 worries trump hopes for Boris Johnson Brexit breakthrough
Shares were set to fall today as concerns about the impact of Covid-19 outweighed hopes of a breakthrough on Boris Johnson's Brexit trade talks with the EU.
Reports that EU negotiator Michel Barnier was prepared to begin negotiating on detailed legal treaty texts later this week has given rise to some optimism that a deal can be reached by mid-November, although that message will clash somewhat with the govenrment's efforts this week to push UK companies to invest in no-deal preparations.
Many companies, already hurting from Covid, are taking the gamble that it is not worth spending on such measures because the EU and UK politicians would not be irresponsible enough to allow Britain to crash out without an agreement. Government officials are concerned that would mean chaos at borders and in supply chains if a deal cannot be done.
As coronavirus appeared to be spreading faster in the US, markets there had a difficult session yesterday, and that is expected to spill over into Europe today, adding to concerns about the economic impact of more lockdowns here.
The daily ebb and flow of news of a possible multi-trillion dollar bailout for coronavirus affected businesses and households in the US took a turn for the worst as a deadline for today on the talks set by House Speaker Nancy Pelosi approached.
As Michael Hewson of CMC Markets said: "The lack of action is especially concerning given reports that coronavirus cases are rising in excess of 5% or more a day."
The FTSE 100 was set to fall 20 points to 5864, with Germany's Dax down 74 at 12,780 and France's Cac-40 10 down at 4919.
Insurance company shares should gain after the Financial Times reported the government was looking to ease EU regulations after Brexit.
Insurers have long complained that rules known as Solvency II have added too many restrictions to the amount of policyholders' money they can invest in long term projects such as infrastructure.
While intended to make insurers more financially safe, they actually prevent them taking benign risks that would benefit the UK economy, insurers have long warned.
Boohoo may have a bounceback after shares crashed following news that its auditor was quitting. The company is facing serious questions over its Leicester supply chain and lost a fifth of its value yesterday. Several analysts have commented the issue has been overcooked by the markets.
Oil company shares will also be in focus amid a flurry of takeover activity.
Last week saw Premier Oil merge with a North Sea rival and yesterday Conoco Philips tied up a deal to buy shale player Concho for $13 billion. The Wall Street Journal later reported that Pioneer and Parsley Energy were in $10 billion merger talks. Companies are merging to make savings to cope with the lower oil price.
