Scottish referendum weighs on markets

Heading into the close the FTSE 100 is down 35 points, at 6820, as the Scottish referendum shakes London to the core.

Canary Wharf
Source: Bloomberg

Scottish-based banks under pressure

In London, the Scottish question has dominated the trading session. Not since the bad old days of the credit crisis have the Scottish-based banks been under as much pressure.

The City of London, for too long, didn’t even entertain the notion that Scotland might leave the union, and now that the YouGov poll shows the ‘Yes’ campaign in the lead, the attitude is cut and run, companies that have exposure to Scotland are about as popular as an RBS banker. IG is offering a binary bet on the outcome of the referendum, and it is currently indicating a 23% chance of a ‘Yes’ vote, up from a 15% chance last week.

Boeing lifted by Ryanair order

The Dow Jones is trading at 17,115, down 21 points on the day, in what has been a relatively quiet trading day across the pond. Boeing is flying high after Ryanair Holdings placed a $11 billion order with the aircraft manufacturer.

As the Alibaba IPO date draws nearer interest in our binary bet on what the market capitalisation will be has picked up, and it suggests a market capitalisation of $203 billion, down from $226 billion last week. 

Brent below $100 level

Copper has rallied 1% in today’s session on the back of China’s trade surplus reaching a record high; traders were not fazed by the noticeably weak import levels which contributed to the trade surplus. Brent has dropped below $100 per barrel for the first time in 15 months. The cooling of geopolitical tensions in Ukraine and the Middle East, along with concerns over demand levels, have weighed on the commodity. 

GBP/USD at 10-month lows

The pound is the talk of the town for all the wrong reasons. We are ten days away from the Scottish referendum and the pound has fallen to a ten-month low versus the US dollar. The surge in support for the ‘Yes’ campaign has sent tremors through the City of London, and traders are dumping the pound as they face the possibility that Scotland might leave the union. The pound is trading at $1.6164, down 1% on the day; in light of the latest YouGov poll some option traders are predicting sterling will fall to $1.57 in the coming months. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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