(Alliance News) - Stock prices in London are set to open flat on Wednesday following more drama in Westminster last night, with it now looking unlikely the UK will leave the EU at the end of the month.
IG says futures indicate the FTSE 100 index of large-caps to open 2.29 points lower at 7,210.20 on Wednesday. The FTSE 100 index closed up 48.85 points, or 0.7%, at 7,212.49 on Tuesday.
"The Brexit saga took another twist yesterday evening, and looks set to be reflected in today's European open," said Michael Hewson, chief market analyst at CMC Markets.
"Having rallied on optimism that we might finally be coming to the end of the beginning of this long running saga, the DAX had risen to its highest levels in over a year, however last night's setback in the House of Commons means the uncertainty is set to go on for quite a bit longer, and as such we look set for a lower European open this morning," said Hewson.
UK Prime Minister Boris Johnson must now wait to hear from the heads of the EU27 after his plans to fast-track his Withdrawal Agreement Bill through the Commons before the Halloween deadline hit the buffers.
MPs voted to back Johnson's deal in principle by 329 to 299 on the second reading of the Bill, the first time the Commons has been prepared to support any Brexit deal.
However, there was anger in Downing Street after MPs rejected, by 322 votes to 308, Johnson's plan to push through the legislation approving his deal with the EU in just three days. The development makes Johnson's promise to take Britain out of the EU by October 31 "come what may" difficult to fulfil and means Brexit could be delayed until next year.
The result leaves the prime minister effectively at the mercy of EU leaders who will decide whether to grant Britain a further extension, and for how long, in order to allow it to leave with a deal. European Council President Donald Tusk said he would recommend they agree a further delay in order to avoid a no-deal Brexit.
A No 10 source indicated that if the prime minister was forced to accept a delay until the new year, he would push for a general election instead.
"The big question now is whether the prime minister pulls the bill completely, or whether he perseveres with the bill in the hope it is not amended to death, before pulling it completely, and trying to push for an election on the deal itself," said CMC's Hewson.
Sterling was quoted at USD1.2856 early Wednesday, sharply lower than USD1.2958 at the London equities close on Tuesday.
In the US on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.2%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.7%.
In Asia on Wednesday, the Japanese Nikkei 225 index is up 0.1%. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is 0.9% lower.
In Tokyo, shares in SoftBank were down 3.0% after the Japanese technology investor agreed to provide a "significant" funding package of USD8 billion to the owner of workspace rental firm WeWork.
SoftBank will provide We Co with USD5 billion in new financing as well as launching a tender offer at USD19.19 per share of up to USD3 billion for existing shareholders in the firm. SoftBank also will accelerate its existing commitment to fund USD1.5 billion for We Co.
Following closure of the tender offer, SoftBank will have an 80% economic ownership of We Co. SoftBank will not, however, have a majority of the voting rights and thus We Co will not become a subsidiary of the Tokyo-based firm.
In the UK corporate calendar on Wednesday, there are annual results from IT infrastructure firm Softcat, third-quarter production figures from gold miner Fresnillo and Chilean miner Antofagasta, as well as third quarter results from financial services firm Quilter.
In the economic calendar, there are UK mortgage approvals at 0930 BST and EU consumer confidence at 1500 BST.
By Lucy Heming; lucyheming@alliancenews.com