So the letter was delivered by Sir Tim Barrow to Donald Tusk at 11.20am GMT. The response was solemn, though respectful, but hardly conclusive. I thought PM May was very statesmanlike and conciliatory, but very factual and to the point, always stressing that the relationship with all member countries in Europe must be maintained. Though it is unrealistic to expect any real progress with negotiations before the French elections, it appears the month of May is the earliest date that opening salvos will be made. PM May wants trade negotiations to coincide with withdrawal terms. I think she might be lucky to achieve that. The one issue I do not hold with is the negative tone of the media – This looks too difficult. This is so complicated! Folk need to understand – we bring a great deal to the party such as defence, trade and financial prowess. We should not be shrinking violets in these negotiations.
So how did the markets react? Frankly positions were taken months ago such as the value of Sterling – still down 17% against the Dollar since 24th June 2016. Sterling drifted to $1.2370 in Asia but has recovered to $1.24.25. The FTSE has added 20% in value since June last year courtesy of the fact that 60% of the constituent stocks produce Dollar earnings. However it is fair to say that expectations from the Trump administrations have provided significant momentum. If he fails to deliver over infrastructure spending and tax cuts mind your eye. There could be a correction!
The FTSE started positively adding 20 points but soon gave up the ghost and at 1.45pm the FTSE is down 10 and 7330. Miners and oils lead the early rally but soon gave back their modest gains. Of those companies to post numbers, Saga failed to pass muster – -2.25%, Tui AG -0.7% and James Halstead +1%. The only interesting news was the collapse of the Deutsche Boerse deal to merge with the LSE. However since the LSE’s share price is up 2.45% at 3098p. When CEO Rolet took over it was £10. He’s done a great job and few would be surprised if he did not trigger a relationship with someone like CME – good synergy with global derivatives.