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Pound hits one-month lows as hopes for Brexit deal fall apart

Louis Ashworth
Boris Johnson (right) and Angela Merkel - REUTERS

5:03PM

Wrap-up: Pound takes a plunge as deal hopes hit the rocks

Number 10 suggests the chances of a deal have vanished Credit: GEOFFROY VAN DER HASSELT/AFP

That’s a wrap! The pound sunk to its lowest level in more than a month against the dollar and euro, after an apparent breakdown in Brexit talks.

In theory, there isn’t that much reason for today’s shift. The Prime Minister’s hands are theoretically tied by the Benn Act, so unless the Government goes down an unprecedented (and illegal path), traders’ minds will be focused on the longer-term question: if a General Election comes, what is a better options out of Johnson, who is expected to run on a no-deal ticket, and Jeremy Corbyn?

With the go-caveat that there could be a deal looking like an increasingly long shot, analysts may well focus more strongly on this dichotomy in the coming weeks. It will be a test of nerves for the markets, however — especially for currency traders.

As for stock markets, they’re already in a sad place, with even the stoic-looking FTSE shedding three-quarters of a percentage point amid chunky losses. Wall Street is looking very sour, so where it goes from here could depend a lot on what sounds come out of the China and the White House this evening.

That’s all from me today — thanks for following along. I’ll be back tomorrow morning with the latest news on business, markets and economics. Join me then!

4:43PM

Full report: IMF boss warns of debt timebomb

Here’s an extract from Economics Editor Russell Lynch’s full report on IMF head Kristalina Georgieva’s comment earlier this afternoon:

Kristalina Georgieva’s first speech in Washington as managing director of the international lender of last resort blamed the tariff battle between the US and China for bringing global trade growth to “a near standstill”. 

The IMF chief urged central banks to keep interest rates low “where appropriate” to tackle the weakest growth in almost a decade, but she also voiced alarm over the potential side-effects of the stimulus.

4:21PM

Round-up: Brussels calls for fiscal stimulus, Burberry faces £100bn sales hit from Hong Kong disruption, Uber warns over tax hikes

Hong Kong police taking position as protesters gathered outside the Mongkok police station yesterday Credit:  NICOLAS ASFOURI/AFP

With less than ten minutes left of trading, it looks like some fairly ugly losses will stick across Europe. Here are three more of the day’s top stories:

3:48PM

 Ireland reveals no-deal budget

Irish Finance Minister Paschal Donohoe Credit: LORRAINE O'SULLIVAN/REUTERS

Here’s a report on Ireland’s latest budget (unveiled earlier today), from my colleague Michael O’Dwyer:

Ireland has unveiled a €1.2bn (£1.1bn) package to keep businesses afloat in the event of a no-deal Brexit. 

Finance minister Paschal Donohoe presented the plan, which would return the state's finances to deficit, as part of the country's annual budget announcement today. 

“This is a Budget without precedent... A budget that has been developed in the shadow of Brexit,” Donohoe said. 

“This does not mean that no-deal is inevitable. But equally we stand ready if it does happen. It is a challenge Ireland has the measure of.”  

If implemented, the measures would see a swift return to fiscal deficit for Ireland, which only returned to surplus in 2018 after a decade-long battle to get the public finances under control following a state bailout of commercial banks during the financial crisis. 

3:41PM

Wall Street losses surpass Europe

US stock exchanges have dropped further in recent minutes, put them ahead of Europe overall at 1pc to 1.2pc down. In contract, Europe’s biggest losers — Italy and Spain — are both off about 1pc. The euro has slipped slightly, but the pound remains the standout currency — though possibly for the wrong reasons.

3:22PM

New IMF chair: Slowdown could force government to co-ordinate fiscal actions

New International Monetary Fund Managing Director Kristalina Georgieva Credit: JONATHAN ERNST/REUTERS

Kristalina Georgieva, who has just taken over as the new Managing Director at the International Monetary Fund, used her first major address as the organisation’s leader to sound the alarm over the global economy, and say governments may have to synchronise fiscal stimulus to avoid a global slowdown.

Speaking in Washington, Ms Georgieva said the global economy was in a “synchronised slowdown”, and said nations had to find a way to coordinate a response. She said:

This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade. Next week we will release our world economic outlook which will show downward revisions for 2019 and 2020.

3:10PM

Round-up: BHP talks up ‘social value’, EasyJet shares hit turbulence, Hong Kong ditches LSE bid

Workers from BHP Billiton's Escondida, the world's biggest copper mine, gather outside the company gates during a strike Credit: Juan Ricardo/Reuters

Here are three of the day’s biggest business stories, including our latest on HKEX’s aborted bid for LSE:

3:01PM

Stock market bleed deepens at Wall Street joins the fray

Across global stock markets, the losses are only growing larger, as an apparent Brexit breakdown mixes with trade war nerves.

All of the US’s major indices have shed more than a point, with the picture even worse across Europe. The FTSE 100 is outperforming at about 0.5pc down, but that has to be seen against the backdrop of a weakened pound.

Across Europe and the Americas, no major indices is in the green for the month so far: does this mean Red October has arrived?

2:53PM

Best of Money: Afternoon round-up

Greta Thunberg has forced the question of how we treat our planet into the spotlight Credit: JIM URQUHART/REUTERS

 Here’s a round up of the best coverage from Telegraph Money today:

2:41PM

Electrocomponents leads FTSE 250 risers after meeting expectations

Electronic components lie in a heap Credit: Sascha Schuermann/Getty 

The biggest riser on the FTSE 250 today is Electrocomponents, which is up about 3.2pc currently after saying it was growing and making market share gains in Europe, the Middle East and Africa despite wider uncertainty.

The electronics distributor said it anticipates its gross margin will fall year-on-year by around 0.8 percentage points. It said a “more modest” year-on-year decline was expected in the second half.

Its chief executive, Lindsley Ruth, said:

Our relentless focus on customer service, digital leadership and sales force effectiveness has been key in driving market share gains even in these more uncertain markets. We continue to invest in strategic initiatives to position the Group to deliver sustained growth over the longer term.

2:15PM

Here’s how the pound is moving compared to major peers today...

It is bright red across the board for sterling, despite some less-than-stellar performances for the euro and dollar.

Credit: Bloomberg

2:11PM

Pound hits one-month low against the dollar

The pound just squeaked to a one-month low against the dollar, hitting $1.2205 as hope that a Brexit deal can be reached evaporate following reports of this morning’s call between Prime Minister Boris Johnson and Angela Merkel. Sterling is now at a month low against the dollar and euro.

2:07PM

Full report: Recruiter shares stumble on global slowdown  worries

Pagegroup and Robert Walters both warned profits will be hit by Brexit and protests in Hong Kong Credit: Suzanne Plunkett/REUTERS

Completing a little run of full reports on this morning’s market-moving events, here’s my colleague Hannah Uttley on recruiters PageGroup and Robert Walters, both of which have seen their share price take a hit today. Hannah writes:

Pagegroup and Robert Walters said that firms are putting off hiring new workers due to Brexit turmoil and increasingly violent pro-democracy protests in Hong Kong.

The pair also warned over trade tensions between China and the US, which have made some overseas firms think twice before investing further in existing operations within the countries.

1:57PM

US factory gate inflation falls

US producer price inflation has fallen to its lowest level-year on year since 2016. The measure, which track the price of outgoing goods at factory gates, indicates manufacturers are having to cut prices somewhat, indicating lowered demand. The dollar has weakened slightly in the wake of today’s PPI numbers.

1:52PM

Full report: UK shakes up tariff plans in preparation for Brexit

Lorries are seen queuing up at the port of Dover Credit: DANIEL LEAL-OLIVAS/AFP

Here’s more from Economics Editor Russell Lynch on those tariff plans (see 10:29am update):

Observers might be forgiven a sense of deja vu, as the DIT published its original schedule days before the March 29 Brexit date was postponed. Under current trading arrangements, around 80pc of goods by value come into the UK tariff-free. Today’s tweaks follow six months of industry representations, although furious farmers are still in the firing line.

1:44PM

Nissan picks China executive as new chief executive

Makoto Uchida is currently head of the car giant’s Chinese operations Credit: Kyodo News

New from Japan: Nissan has selected Makoto Uchida, the head of its China business, as its new chief executive — filling the hole left by Hiroto Saikawa’s exit last month.

Mr Uchida was selected because of his close understanding of the car giant’s oversees markets, sources told the Wall Street Journal.

The move comes after an international scandal that began when former Chairman Carlos Ghosn was arrested last year.

The new boss has a full in-tray: the Japanese car firm faces falling sales, a restructuring plan, and continued tensions in its alliance with France’s Renault.

1:22PM

Full report: UK economy nears ‘productivity recession’

The manufacturing sector suffered a sharp decline in productivity during the second quarter Credit: OLI SCARFF/AFP

My colleague Tom Rees has a full report on this morning’s productivity figures. He writes:

Productivity contracted 0.5pc year-on-year in the second quarter as the economy stumbled, capping off 12 months of no growth in output per hour, the Office for National Statistics revealed. 

The latest slump reflects the continuation of the UK’s jobs miracle in the second quarter even as GDP slipped back. The “productivity puzzle” has plagued the economy since the financial crisis but has worsened in the last year as Brexit uncertainty holds back business investment.

12:28PM

Pound hovers near one-month low against the dollar

The pound is hovering just above its lowest intraday level against the dollar in a month. Sterling has had a wild ride over the past two months, and appears to be today entrenching a drop that began in mid-September.

12:15PM

US stock futures sink on reports Washington could restrict capital flows to China

Futures trading on Wall Street (which indicates how the markets will open) has taken a sharp turn of the worse in recent minutes, as storm cloud gather over the upcoming US-China trade talks.

As of a few minutes ago, futures were indicating a chunky drop of over 200 points from the Dow Jones Industrial Average.

Ahead of the Chinese delegation’s arrival in Washington on Thursday, Bloomberg reports that the US government is considering levying restrictions on investment into China, including a focus on stopping US government pension funds from pushing money into the country’s businesses.

11:56AM

Losses deepen across Europe as Brexit talks look set for collapse

The picture is only getting worse across Europe, with several of the continent’s  blue-chip bourses now surpassing losses of 1pc.

Credit: Bloomberg TV

11:48AM

Donald Tusk: Brexit not about ‘some stupid blame game’

Looks like I may have posted slightly too soon then: this tweet from European Council president Donald Tusk certainly looks like a gauntlet being thrown down.

The pound has extended its its losses against the euro, and is just inches from a month low against the dollar. 

The FTSE 100 is still holding flat (remember, many London-listed companies don’t have a large exposure to the UK itself, and actually benefit from the pound being weaker), while the mid-cap (and more Brexit-exposed) FTSE 250 is down about 0.75pc.

11:44AM

Berlin refuses to comment on Johnson call claims as Juncker spokesperson says EU position is unchanged

Berlin, according to reports, has declined to offer further detail on the phone call between Angela Merkel and Boris Johnson this morning, so it looks like we only have Number 10’s side of the story to go on currently.

Meanwhile, the Democratic Unionist Party had labelled the idea of keeping Northern Ireland in the Customs Union (as was allegedly discussed) is “beyond crazy”:

For the EU’s part, Mine Andreeva, a spokesperson for outgoing European Commission President Jean-Claude Juncker, has said the bloc wants a Brexit deal and has not changed its position.

11:19AM

Sterling suffers as no-deal showdown looms

The pound has extended its losses against the euro in recent minutes, although it appears to have found a resting place around 0.6pc down against the dollar. Markets.com’s Neil Wilson says:

Sterling is under the cosh again as hopes of a deal between the UK and EU fade. The last flicker of hope was snuffed out this morning after a call between the PM and chancellor Merkel of Germany left the process at an impasse.

The news across the wires is that Merkel said a deal will only work if NI stays in the customs union. No 10 said this demand is impossible and that the EU is not engaging seriously.

It’s become clear a deal cannot be done, with the wording from Number 10 that a deal is ‘essentially impossible not just now, but ever’. Stalemate. We are now heading towards the Revoke versus No Deal showdown. 

11:15AM

Bloomberg: Germany and London will be hit ‘especially hard’ by Deutsche Bank cuts

A man leaves the Deutsche Bank building in central London with some belongings on July 8  Credit: Leon Neal/Getty 

Deutsche Bank will make about half its 18,000 planned jobs cuts in Germany, while its London offices will be hit “especially hard”, reports Bloomberg, citing anonymous sources.

The German lender has not yet fully detailed where the axe will land as it undertakes major restructuring plans, but it looks like retail units in its home country will be bearing much of the brunt.

11:06AM

Reactions to Johnson/Merkel call mixed

Here are more responses to reports about the call between PM Boris Johnson and Chancellor Angela Merkel this morning. It looks like we might be waiting a bit longer for Germany’s side of of the story.

11:01AM

Pound drops to lowest level in a month against the euro

Bad news for hopes of a Brexit deal, and some better-than expected figures from German have dragged the pound to a one-month low against the euro (it is at its lowest level against the dollar since last Tuesday).

That drop puts it near an overall fall against the currency for the year:

10:57AM

European share losses extend after Brexit talks stall

Europe’s stock exchanges have sunk deeper into the red following those reports of stalled Brexit talks, with all major bourses on the continent now off more than 0.5pc on the day.

In London, the FTSE 100 has returned to being flat, with a weaker sterling offering some support the index’s exporters.

10:45AM

Sky: Prepare for no-deal showdown

Sky News’ political editor Beth Rigby tweets:

 While Christopher Cook (formerly of the BBC and now part of Tortoise) says:

10:42AM

Follow updates from Westminster on our politics live blog...

 

10:34AM

Javid: Recruitment process to replace Mark Carney at Bank of England is ‘on track’

Outgoing Bank of England governor Mark Carney Credit: Simon Dawson/Bloomberg

Chancellor Sajid Javid has told MPs the process to appoint Mark Carney’s replacement as Bank of England Governor is “on track”.

In a letter to the Treasurt Select Committee, Mr Javid wrote:

You asked for an update on this important recruitment process. It is on track. In terms of the appointment itself, we will make an announcement in due course, ahead of the start of the next Governor’s term on 1 February 2020.

I would like to assure you that the Committee will have the opportunity and time to scrutinise the successful candidate after the appointment has been made but before the individual has taken up the role.

Mr Carney has previously signalled he would be willing to remain in the role if the Government desired him to do so.

10:29AM

FSB says new Brexit tariff plans aren’t enough

HGVs queue at Dover port Credit: Andrew Matthews/PA

The Federation of Small Businesses has responded to adjusted post-Brexit tariff plans unveiled by the government this morning.

Adjustments have been made to the charges on HGVs, bioethanol and clothing.

The Department for International Trade said the new tariffs were introduced in order to:

  • lower tariffs on HGVs entering the UK market, striking a better balance between the needs of British producers and the  SMEs  that make up the UK haulage industry, ensuring that crucial fleet replacement programmes that help to lower carbon emissions can continue

  • adjust tariffs on bioethanol to retain support for UK producers, as the supply of this fuel is important to critical national infrastructure

  • apply tariffs to additional clothing products to ensure the preferential access to the UK market currently available to developing countries (compared to other countries) is maintained

Mike Cherry, chairman of the FSB, said:

While these tariff adjustments will be good news for businesses in certain sectors – particularly smaller firms in our vital haulage industry – the cold hard fact remains that two thirds of small businesses that fear the impacts of no-deal feel they cannot prepare for this outcome.

The average cost of preparation to small exporters and importers of putting contingencies in place is £3,000.

Fundamentally, small firms are crying out for two things at this point: a pro-business Brexit deal and financial assistance to help manage the costs of uncertainty. The urgent issuing of £3,000export vouchers is a must.

It’s also important to stress that these tariffs only apply to the 12 month period after a no-deal scenario. What small businesses really want – with confidence currently suffering an unprecedented losing streak – is a return to an environment where they can plan three, five and ten years in advance.

10:15AM

Kuenssberg: Feels like chance of Brexit deal this month ‘just died’

Here’s more from the BBC’s Laura Kuenssberg: 

 There may be reason to be sceptical of the claims, however. The Telegraph’s James Crisp tweets:

10:10AM

BBC: Merkel tells Johnson Brexit deal ‘overwhelmingly unlikely’ if Northern Ireland is not in Customs Union

The pound has dropped sharply following this tweet by BBC Politics Editor Laura Kuenssberg:

Sterling is about 0.6pc off against the dollar compared to yesterday’s close. 

10:03AM

Figures highlight UK’s productivity ‘puzzle’

UK productivity fell at its fastest rate since 2014 Credit: DANIEL SORABJI/AFP

Reflecting on those downbeat productivity figures, the ONS’s statisticians write:

This sustained period of declining labour productivity represents a continuation of the UK’s “productivity puzzle”, with productivity since the economic downturn in 2008 growing more slowly than during the long period prior to downturn.

Despite occasional periods of growth, this sustained general pattern of stagnation contrasts with patterns following previous UK economic downturns, when productivity initially fell, but subsequently recovered in a relatively sustained fashion whilst returning to the previous trend rate of growth. 

A breakdown of which sectors contributed to the decline shows non-manufacturing and construction couldn’t offset a wider slip:

Credit: ONS

9:52AM

Productivity drop is worst in five years

Reuters’ Andy Bruce tweets:

9:49AM

UK productivity slipped during quarter of contraction

Labour productivity in the UK (measured as output per hour) slipped by 0.5pc compared to the same quarter last year, after two consecutive quarters of stagnation.

 The Office for National Statistics says:

Both services and manufacturing saw a fall in labour productivity growth of 0.8pc and 1.9pc respectively, compared with the same quarter in the previous year.

9:42AM

LSE: We remain committed to Refinitiv tie-up

London Stock Exchange Group has responded to HKEX’s decision to pull its takeover bid — confirming its intention to push ahead towards a tie-up with data giant Refinitiv, that would position the company as a major player in the financial data sector. LSE said:

LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv. Regulatory approval processes are underway and shareholder approval for the transaction is expected to be sought at an Extraordinary General Meeting in November 2019. The transaction remains on track to close in H2 2020.

9:34AM

China: ‘Stay tuned’ for US tech blacklist response

A  spokesperson for China’s foreign ministry has told reporters to “stay tuned” for the country’s response after Donald Trump’s administration placed eight Chinese tech giants on a blacklist.

AI startups and security firms were placed on the list, which was unveiled shortly ahead of trade talks between the two countries.

9:14AM

What will ‘Red October’ means for stock markets?

 Are you ready for a tough October’s trading?

The tenth month of the year is often to deadliest for financial markets, reports Tom Rees for today’s Think Tank. He writes:

Market volatility in October is on average 25pc higher than other months, according to Goldman Sachs, meaning sharp swings are more likely than usual. Furthermore, six of the top 10 biggest historical drops in US stocks have occurred this month, including the Wall Street Crash in 1929 and Black Monday in 1987. 

Goldman analyst John Marshall argues that high October volatility “is more than just a coincidence” and in fact reflects that this month marks a “critical period” for investors and companies just before the end of the year.

Read more here: Could Red October torpedo your stocks again?

9:05AM

EasyJet shares fall, analysts highlight lack of forward guidance

Shares in EasyJet have fallen about 5.5pc so far today, despite the company unveiling ‘solid’ profit figures in a confident-sounding update to the City this morning.

Bloomberg notes that the update was light on guidance for 2020, which appears to have left some analysts feeling let down. Goodbody writes:

Combining with the company’s decision not to hold a meeting or hosting a conference call, this could be seen a disappointing.

8:56AM

FT: Odey fund lost 12.7pc last month

Crispin Odey’s fund is shorting several British firms Credit: REX

Crispin Odey’s European hedge fund lost 12.7pc amid last month’s market turbulence as bets against the pound and financial firms came back to bite, the Financial Times reports.

The paper says:

Mr Odey, founder of London-based Odey Asset Management, lost 12.7 per cent in September in his European hedge fund, according to numbers sent to investors and reviewed by the Financial Times.

That left his fund down 18.1 per cent for the year. September proved a major challenge for hedge funds, many of which have been riding rising stock and bond markets this year.

The Brexit-backer’s losses were offset somewhat by the payoff from a bet against Metro Bank.

That make deal some damage to a popular conspiracy theory that has been doing the round on Twitter:

8:44AM

Sterling weakens as euro strengthens

The pound has weakened slightly this morning, as the euro strengthens following better-than-expected industrial data from Germany.

Seasonally-adjusted German industrial production increased by 0.3pc month-on-month in August, against estimates of a flat figure.

That is one of the first glimmers of positive industry news to emerge from Europe’s largest economy in a while — and investors have the added positive motivation that they know stimulus is coming from the European Central Bank.

8:29AM

PageGroup plummets after profit warning

Recruitment slowed down in several of PageGroup’s key markets Credit: ANDY RAIN/EPA-EFE/REX

Shares in PageGroup have dropped by around 15pc this morning, after it downgraded its profit expectations in the face of political and economic uncertainty.

The FTSE 250 recruitment firm said slowing growth in the US and Germany, Brexit uncertainty and ongoing disruption in Hong Kong has reduced its growth during the third quarter, as companies delayed permanent hiring decisions. It said:

Given the heightened political and macro-economic challenges seen in the quarter, together with our limited forward visibility, we currently expect 2019 operating profit to be in the range of £140m to £150m

Its chief executive, Steve Ingham, said:

Looking ahead, the deterioration in trading conditions seen during Q3 across the majority of our regions is anticipated to continue.

8:22AM

LSE Group drops nearly 7pc after Hong Kong exchange pulls bid

The withdrawal of HKEX’s interest in LSE has brought the latter’s shares down a peg, as hopes of a buyout fade. It fell nearly 7pc at the open, but has pared back those losses a little:

8:19AM

EasyJet hails ‘solid’ performance as rivals suffer from strikes

Easyjet planes at Geneva airport Credit:  FABRICE COFFRINI/AFP

EasyJet has said it expects profit before tax to land in the upper half of its estimates, after strike disruption placed pressure on industry rivals during the summer.

My colleague Michael O’Dwyer reports:

 

The budget airline boosted passenger numbers by 8.6pc to 96 million after increasing its capacity by 10.3pc to 105 million seats. However load factor — the proportion of available seats sold — will fall 1.4pc to 91.5pc for the full year, easyJet said. 

EasyJey’s chief executive Jonah Lundgren said:

As a result of our self-help initiatives and the increased demand due to disruption at British Airways and Ryanair, we anticipate achieving headline profit before tax for the full year 2019 of between £420m and £430m, in the upper half of our previous guidance range.

7:39AM

Hong Kong/LSE: The numbers behind the failed deal

HKEX chief executive Charles Li Credit: Anthony Kwan/Bloomberg

Hong Kong's stock exchange has been forced to scrap its £32bn bid for the London Stock Exchange. 

The proposed deal was met with scepticism by investors and suspicion among politicians.Even if the deal's economics had been made to work, there would have been plenty of regulatory hurdles to jump, as we have explained previously on Telegraph Business. 

Here are some of the key numbers behind the two companies:

 The failed bid may yet have a legacy in shaping the UKs approach to regulating foreign takeovers in the future. Our Mergers and Acquisitions reporter Vinjeru Mkandawire took a look previously at how the Hong Kong bid had sparked debate on the rules regarding foreign takeovers: 

7:21AM

Agenda: Hong Kong abandons bid for London Stock Exchange

The LSE has been the subject of frequent M&A interest over the past two decades Credit: Chris J. Ratcliffe/Bloomberg

Good morning. The Hong Kong Stock Exchange has dropped its multibillion-dollar bid for the prized London Stock Exchange Group, which would have created a global markets titan. We'll be bringing you all the latest news on that story which broke overnight. 

Elsewhere, official German data yesterday showed a drop in industrial orders in August but the news failed to shake European stocks, which pushed higher to close in positive territory. US stocks however fluctuated throughout the day ahead of a meeting between the US and China later this week.

5 things to start your day

1) The Conservatives risk trashing their reputation for sound financial management after experts warned that day-to-day spending is set to surge to levels promised by Jeremy Corbyn’s Labour party. Boris Johnson’s new Government is “now adrift without any effective fiscal anchor” and will break its budget rules in its first full year, the Institute for Fiscal Studies said.

2) Could Red October torpedo your stocks again? While traders will be praying to escape unscathed, doomsayers (and admittedly some financial journalists) are rubbing their hands with glee. The previous years when October proved brutal stand long in the memory. 1929, 1987, 2008, 2018 - and now 2019? 

3) Walmart plays nice: How retail giant is battling its image problem. The retail behemoth, which started life as Sam Walton’s Five and Dime store in Bentonville, Arkansas in 1950, has not always enjoyed the best of reputations.

4) The Turkish lira slumped to its lowest level against the dollar in more than a month following Donald Trump’s threats to “totally destroy and obliterate” Turkey’s economy. The currency fell as much as 2.1pc to 5.8178 (81p) against the dollar yesterday, its lowest level since September 3.

5) A Hong Kong raider targeting the London Stock Exchange may be forced to rack up massive debts as it scrambles to sweeten its £32bn bid in the face of sceptical investors. Hong Kong Exchanges and Clearing has only won the backing of one shareholder among the top 10 since making its audacious offer for the London market (LSE) last month, sources said.

What happened overnight

Hong Kong’s bourse on Tuesday dropped its unsolicited $39 billion bid for London Stock Exchange Group (LSE), conceding it hadn’t won over LSE management for a move that could have transformed both global financial services businesses.

The surprise approach, made last month, had threatened to upend the LSE's own $27 billion plan to buy data and analytics company Refinitiv. The Hong Kong exchange had said the LSE would have to ditch the Refinitiv purchase for its offer to go ahead.

In a statement on Tuesday, Hong Kong Exchanges and Clearing Ltd (HKEX), said it still believed the combination of the two exchanges would be "strategically compelling".

In the markets, meanwhile, Asian shares inched up, with Chinese shares making modest gains after a week-long holiday, though investors remained cautious over US-China trade talks after President Donald Trump said a quick trade deal was unlikely.

Japan's Nikkei climbed 1pc while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7pc, led by gains in tech shares in South Korea and Taiwan.

South Korea's Samsung Electronics rose 1.2pc after its profit guidance. The semiconductor firm said its third-quarter operating profit likely fell 56pc on a downturn in global memory chip prices, but that was better than what analysts had anticipated.

Taiwan's stock index gained 0.7pc to hit five-month highs while Hong Kong shares extended gains after the territory's leader said she had no plans to use the emergency regulation ordinance to introduce other laws.

Shanghai shares rose 0.3pc after the week-long break though gains were led mainly by defensive shares ahead of the crucial trade talks.

Coming up today

Turbulence puns are well-worn when it comes to the performance of Britain’s airlines, but easyJet truly has been flying through a storm in recent months: a sharp oil price spike following the attack on Saudi oil facilities, offset by a wider fall; the collapse of rival Thomas Cook; major rivals hit by strike action; and difficulties faced by several of its sector rivals.

After a record loss in the first half of the year, it could be on course for a record profit in the second, says Hargreaves Lansdown’s Nicholas Hyett. “Take fuel out of the equation, and other operating costs are one of the important areas in which airlines can influence their own destiny,” says Hyett.

“The focus on reducing non-fuel costs looks set to deliver better results in the second half, having fallen 4pc in the third quarter. That’s despite an improved pay deal for staff, and sustainable progress here would set easyJet up well for next year.”

Preliminary results: YouGov

Trading update: EasyJet, Electrocomponents, Ferrexpo

Economics: PPI (US)