U.K. stocks finished in the green Thursday, rebounding from its worst loss in more than two weeks, with Sky shares leading the charge as the bidding war for the broadcaster intensified.
Prime Minister Theresa May delivered a so-called white paper that outlines Britain’s plans to extricate itself from the European Union, which she said “delivers on the Brexit people voted for.”
What are markets doing?
The FTSE 100 index UKX, +0.78% climbed 0.8% to 7,651.33, clawing back parts of its 1.3% loss logged on Wednesday. The drop—its worst since June 25—came after the U.S. said it plans to hit Chinese imports with another $200 billion in tariffs, intensifying a trade fight between the world’s largest economies. Still, the U.K. benchmark has closed higher five of the past six trading sessions.
The pound GBPUSD, +0.1287% rose to $1.3219 from $1.3205 late Wednesday in New York.
What is driving the market?
Stocks in the U.K. and Europe traded higher as investors continued to watch developments in the trade spat between the U.S. and China. Late Wednesday Bloomberg reported that U.S. and Chinese officials are open to resuming high-level trade talks, which could end with a bilateral solution and avoid an economical deleterious trade clash.
Back in the U.K., the 120-page report on Brexit lays out in more detail May’s plan for the U.K.’s future relationship with the European Union, which was agreed at a Cabinet meeting last week.
The plan, however, sparked a revolt in the government’s inner circles, with both Foreign Secretary Boris Johnson and Brexit minister Davis Davis resigning in protest over May’s vision.
In other U.K. news, U.S. President Trump arrived in Britain on Thursday for a two-day visit.
What are strategists saying?
“As we’ve been noting, the devil will be in the details (which may take a while to digest)—but for GBP’s initial reaction over the coming days, one should focus on the EU’s response to May’s Brexit plan. If Brussels feel that they can work with Downing Street, then GBP/USD could drift back to 1.33-1.34. If not, then there are major risks of a sharp fall to below 1.30 as risks of a ‘no deal’ Brexit pick-up,” said Viraj Patel, FX strategist at ING, in a note. Sterling’s reaction thus far has been muted after the release of the Brexit white paper.
Shares of Sky PLC SKY, +3.41% rose 3.4% after Comcast Corp. CMCSA, +1.61% raised its takeover offer for the British broadcaster, heating up the bidding war with 21st Century Fox Inc. FOXA, -0.63%
Shares of ITV PLC ITV, -1.04% fell 1% after England’s defeat in the World Cup soccer final. Chris Beauchamp, chief market analyst at IG, said ITV’s decline came as “investors cut back on the stock on expectations that advertising revenue will be lower than would have been the case with England in the finals.”
Outside the FTSE 100, ASOS PLC ASC, -10.46% tumbled by 11% after the online clothing retailer cut its guidance as sales growth slowed.