FTSE 100 to tumble as sterling jumps as Rishi Sunak could extend stamp duty

Asian shares tumbled sharply, following US markets’ rocky session, with China down more than 2% and Japan and Australia down more than 1%.

The FTSE was set to open down 47 points at 6571.3 – a fall of 0.7% – according to prices being quoted before the market opened on IG Index.

Hong Kong also fell sharply this morning – down 2% – with the stock exchange operator Hong Kong Exchanges and Clearing tumbling more than 9% at one point.

HKEX, which owns the London Metals Exchange, tumbled on a local media report the territory would be increasing stamp duty.

While that would be bad for HKEX, it could benefit London significantly, because Hong Kong has won a lot of business from tech companies floating there which the London Stock Exchange would keenly like to gain.

Wall Street triggered the selling yesterday as tech stocks sold off sharply, leaving the tech-rich Nasdaq index down nearly 4% at one point and the S&P 500 off nearly 2%.

Those tumbles were reversed after Federal Reserve chairman Jay Powell said he had no plans to tighten America’s super easy monetary policy with interest rate rises or the like. US share indices ended up slightly higher by the close of play.

London is also expected to be weaker because of the dominance of oil stocks on the FTSE 100, and the price of crude was having a slightly weaker day.

Also, the pound has been rising on reports Chancellor Rishi Sunak could extend stamp duty holidays on property deals by another three months, propping up the housing market further.

Sterling is now at its highest level since April 2018, also still being helped by the longer term factor of the government’s Christmas Eve Brexit deal, which assuaged fears of a damaging no-deal end to the transition period.

The pound’s strength hits multinational firms’ profits and share prices when overseas earnings are translated back into sterling.

One of the features of the US markets boom has been the surging number of Special Purpose Acquisition Vehicles (Spacs), which raise cash from investors and list shares on the stock market, then buy private companies. A total of $127 billion has been raised this way in the past year, mostly in the US.

Former London Stock Exchange chief Xavier Rolet, Vote Leave founder Matthew Elliott and Clive Black, head of research at Shore Capital, have today called on the UK to do the same, the Financial Times reported.

In a submission to the government’s review into how UK financial rules can change to benefit the City post-Brexit, they declare London Spacs would help raise funds for UK and European tech companies, who tend to be the reason for Spacs being launched.

Currently, Amsterdam has been stealing a march on London because it has more flexible rules on listing shares.

Bank of England governor Andrew Bailey and other policymakers are to be grilled this afternoon by the Treasury Select Committee with their view on current market conditions to be closely scrutinised. Rising government bond yields and inflation expectations have led to talk that central bankers could get more hawkish on interest rates.

Bank policymaker Andy Haldane has been extremely bullish about an economic bounceback. The famously free-thinking economist is speaking later at a seminar on the changing world of work.

On CMC Markets, the Dax index in Germany is being called down 30 at 13,834, France’s CAC-40 down 16 at 5763.

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