Stock markets have started out in a defensive mode this morning with the FTSE 100 falling more than 60 points. Donald Trump is in the headlines once more as his latest executive order signed late on Friday has caused a furore around the globe. However it is unlikely that the weakness seen in the markets is a direct result of this, with a more plausible explanation being some profit taking after strong recent rises.
UK public backlash against Trump
A petition calling on the UK government to cancel Donald Trump’s planned state visit has reached 1 million signatures in a development that could well leave PM Theresa May stuck between a rock and a hard place. The most controversial executive order of the new US president’s first week in office suspends entry of all refugees for 120 days, and blocks entry to the US for up to three months for citizens of seven Muslim-majority countries, causing widespread outrage. The timing of the order - shortly after a meeting with Mrs. May - and the subsequent global outrage poses a potentially major headache for the UK PM as she looks to secure a trade deal with the world’s largest economy. With negotiations centralising on the fact that the UK can act outside the EU imminently, a positive agreement with the US would be significant bargaining chip but Mr. Trump’s conduct threatens to damage the PM’s popularity both at home and abroad. Downing Street has already stressed its position had not changed on the US President’s trip but with the rising levels of opposition Theresa May could soon be placed in a difficult position where she needs to make a call that will leave people unhappy whatever her decision.
FTSE slides in early trade
Banking stocks are falling this morning and are one of the biggest contributors to the broader decline in the UK’s leading stock index. Barclays and RBS are amongst the biggest fallers and whilst Lloyds is a relative outperformer, it still remains lower by around 1% at the time of writing. Lloyds may be holding up slightly better after the Government has stated that more than 90% of the £20.3bn used to bailout the bank has now been recouped. The announcement was made as the UK Financial Investments said it has sold a further 1% stake in Lloyds, which reduces the taxpayer’s holding to less than 5%. With the majority of stocks on the FTSE 100 in the red, Vodafone stands out as a green shoot with the telecommunications company higher by almost 3% after it announced merger talks were under way with its Indian unit.