Friday looks set to be another choppy day for the markets with the FTSE 100 sliding at the open.
The fresh falls came despite some degree of stabilisation in the oil price after significant falls earlier in the week.
The pound has battled back modestly to head towards $1.28 but the initial exchanges between the UK and EU on Brexit do not appear to have calmed investors’ nerves enough for the currency to mount a major climb.
Betting companies are in the spotlight today after the UK competition watchdog opened an investigation into their practices.
From the PA –
The European Central Bank has put forward proposals that would enhance its oversight over euro clearing, adding to fears that London is set to lose its grip on the multibillion pound market following Brexit.
The ECB has tabled a prospective legal amendment that would give it a "significantly enhanced" role in regulating the lucrative market, which settles business and trade conducted in the EU currency.
The amendment would provide the ECB with "clear legal competence" in the area of central clearing, which is currently dominated by London firms such as LCH.
The ECB said: "These powers include a significantly enhanced role for central banks of issue in the supervisory system of central counterparties (CCPs), in particular with regard to the recognition and supervision of systemically important third-country CCPs clearing significant amounts of euro-denominated transactions."
It added that the change will allow "the Eurosystem" to monitor and address risks associated with central clearing activities that could affect the conduct of "monetary policy, the operation of payment systems and the stability of the euro".
The move comes after the European Commission put forward legislative reforms that would impose stricter supervision of the bloc’s derivatives market and could force operators to leave London as a result of Brexit.
EU institutions and member states had raised concerns over the fact up to 75% of euro-denominated interest rate derivatives are currently cleared in the UK, which will no longer be supervised by EU regulators once it leaves the bloc.
Thoughts of Connor Campbell, analyst at Spreadex –
‘Despite Brent Crude avoiding another serious decline– the black stuff is holding just above $45 per barrel – the lack of a substantial recovery means the commodity sector continued to be the main focus this Friday.’
‘With both BP and Shell trading at 7 year lows – the oil giants both fell 1% after the bell – the FTSE didn’t stand much chance of a positive open, slipping another half a percent. It’s been a pretty bleak week for the UK index, shedding around 150 points from Tuesday’s intraday peak as the latest oil crisis drew focus from the sterling-sapping/FTSE-boosting political uncertainty that was the main market driver in the previous fortnight.’
‘As for the pound, Theresa May’s unofficial Brexit discussions about the rights of EU and British nationals at dinner with Merkel and co. yesterday evening, alongside a final hawkish hurrah from departing Bank of England Monetary Policy Committee member Kristen Forbes, gave the currency a boost this Friday. Cable jumped half a percent to cross $1.27, while a 0.3% rise against the euro left sterling just under 88p.’