Maybe Britain should have a national identity crisis more often. The FTSE 100 became the first big European index to enter into bull market territory when it closed at 6,682. It’s up 7% year-to-date but more than 20% from the intra-day lows in February. Take that you merchants of Brexit doom!
I’m still not certain this is a signal you can trust about what Brexit means long term for the UK economy. The future is still unknowable. And Jean-Claude Juncker appears to be a vengeful man. But what can you know based on yesterday’s price action?
You have an index of multinational British large capitalisation stocks that earn a fair portion of their cash overseas. They also benefit from a weaker pound. Between the eternal “hunt for yield” and the occasional “flight to safety”, liquid large caps are a nice little fortress of solitude for distressed capital.
The index was also helped by some clarity on the political scene. Home secretary Theresa May – she of the “snooper’s charter” advancing the cause of the surveillance state – is set to become the UK’s 54th prime minister on Wednesday. The pound and the FTSE 100 both rallied when MP Andrea Leadsom pulled out of the race and David Cameron whistled his way out of Downing Street.
May said she aimed to “make Brexit a success.”
That sounds an awful lot like she’ll invoke Article 50 of the Treaty of Lisbon. That would begin the up to two-year process of negotiating the UK’s exit from the European Union and putting a new trade arrangement with the continent in place. May’s ascension to the top job and some definitive action on Article 50 will give the markets something they’ve been lacking since 23 June – certainty.
Mind you it’s still not a done deal. You’ve probably seen reports of legal challenges to Brexit. Hordes of lawyers are ready to make the case that a referendum has no binding authority on Parliament. According to wire service reports, the lawyers are prepared to argue that only Parliament, which is sovereign, can legally (and constitutionally) trigger Article 50. The government of the day has no such power, they claim.
How about that? After all that time cosying up to Brussels, the hold-out Remainers are now relying on the sovereignty of Parliament to prevent Britain from asserting its own sovereignty. What a world.