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Pound hits $1.30 on Brexit deal hopes

Louis Ashworth
John Bercow ruled a second meaningful vote on Boris Johnson’s Withdrawal Agreement would not be allowed today - REX

4:52PM

Wrap-up: FTSE ekes out gains despite pound pressure

Credit: Bloomberg TV

Markets are closed – and it was a decent day for European stocks, which almost all ended in the green.

Even the FTSE 100 managed to grab some gains, despite pressure from pound (which, when strong, tends to hit the earnings of international on the blue-chip index).

In the end, markets had little to react to on the Brexit front, but continued gains for sterling and on the FTSE 250 suggest that there is still a feeling among traders that a no-deal exit has been avoided.

That’s all for today. I’ll be back tomorrow, when MPs will begin to vote on the statutory implements needed to implement Boris Johnson’s Withdrawal Agreement.

More importantly (for this live blog, at least), we also have a slew of interest corporates reporting. See you then!

4:39PM

Pound holds just under $1.30 as London markets close

Markets closed in London a few minutes ago, so I’ll bring you a wrap-up of where things ended up shortly.

The pound has been unable to keep its grip on $1.30, so unless there’s a substantial movement in the Commons (where they are deep in discussions currently), it is unlikely anything will substantially shake it from here. Plenty of time left for that though...

4:11PM

Woodford investors won’t get ‘Brexit bounce’

Investors in Neil Woodford's failed funds had been hoping a conclusion to Brexit would boost the value of their holdings Credit: Jeff Gilbert

Investors in Neil Woodford’s failed Equity Income fund could be denied the opportunity to benefit from any recovery in the stock market because of a change in strategy by the fund's new manager, reports Telegraph Money’s Richard Evans.

He reports:

The fund’s existing quoted holdings are to be sold and the proceeds reinvested in a mixture of index-tracking instruments and cash.

Depending on the levels of cash chosen by the new managers at BlackRock, which was appointed when the fund’s administrator, Link, sacked Mr Woodford, investors may not get the full benefits of any rise in the markets between now and the return of the first money to savers, due in January.

3:43PM

Bercow: Motion will no be debated today

Over in the Commons, Speaker John Bercow has said it would be “repetitive and disorderly” to hold another meaningful vote today, and said it will not be allowed. The pound is fairly unaffected, still just under $1.30.

3:29PM

Javid: No Brexit economic assessment coming, says democracy ‘cannot be measured in spreadsheets’

Chancellor Sajid Javid has apparently rejected calls for the Government to disclose its economic assessments of the possible Brexit models.

Writing to the Treasury Select Committee, he refused to commit to disclosing the Treasury’s numbers, despite repeated requests to do so. In his letter, he said:

My last point is to say that trust in democracy and bringing an end to the division that has characterised this [Brexit] debate over the past three years, [sic] is something that cannot be measured solely through spreadsheets or impact assessments.

Rest assured I will continue to utilise spreadsheets heavily on this blog, despite the Chancellor’s claims.

3:23PM

Experian shares slip as Bottomline merger faces watchdog probe

Shares in consumer credit reporting company Experian are down slightly today, after the Competition and Markets Authority said it would begin a fully-fledged, phase 2 probe into its plans to merge with Bottomline Technologies.

Bottomline had been given the opportunity to make changes to avoid an “in-depth” probe, but failed to reassure the watchdog. 

3:04PM

Northern Irish firms ‘will have to complete export declaration forms’ to send goods to rest of UK under Johnson deal

Brexit Secretary Stephen Barclay was giving testimony to the House of Lords’ EU Committee earlier. Including among the discussion was this point, highlighted by Labour peer Stewart Wood.

Awkwardly enough, Baron Wood adds, the Commons leader Jacob Rees-Mogg backed a law aimed at preventing this exact outcome:

Politico’s Eleni Courea adds:

2:50PM

US stocks advance on trade war hopes

Wall Street has opened slightly higher Credit:  JOHANNES EISELE/ AFP

US shares have advanced at open, with the benchmark S&P 500 up about 0.45pc. The Dow Jones Industrial Average is flat, while the tech-heavy Nasdaq, which is seen as especially exposed to trade relief, is up 0.5pc.

2:42PM

Watchstone boosted as legal battle ends

Watchstone, the insurance firm formerly known as Quindell, will receive a major cash boost after it settled a £637m claim against it for just £11m, my colleague Michael O’Dwyer writes:

The £11m sum will be taken from a £50m pot of cash that was being held in escrow until the dispute was resolved.

The agreement will release £39m plus interest to Watchstone that had been tied up in a closed account pending the outcome of the case. A nine-week High Court trial had been due to start on Monday. 

2:28PM

Reckitt announces new chief financial officer

A selection of products produced by Reckitt Benckiser Credit: Stephen Hird/REUTERS

Reckitt Benckiser announced Jeff Carr as its new chief financial officer this morning, to replace Adrian Hennah, who will retire after seven years in the role.

Carr from his current role as CFO at food retailer Ahold Delhaize, where he has been since 2011.

Laxman Narisimhan, the consumer goods company’s chief executive, said:

Jeff has a record of transformational strategic and operational leadership, consistent performance delivery, strong capital allocation discipline and with building strong teams; all of which lead to long-term shareholder value creation.

The company’s shares are down about 1.5pc currently:

2:21PM

European shares extend gains

Some solid ground is being made on Europe’s stock markets today, with Brexit still on ice and signs of a possible thaw in US-China tensions. Wall Street is set to rise slightly when it opens in just under ten minutes’ time.

Credit: Bloomberg TV

2:10PM

Rank Group rises after analyst says firm has ‘significant momentum’

Rank Group operates Mecca Bingo Credit:  Jeff Gilbert

Rank Group one of the biggest risers on the FTSE 250 today (behind Capital & Counties), after some positive analyst commentary.

Shore Capital’s Greg Johnson gave the company, which operates Grosvenor Casinos and Mecca Bingo, had been through a “rewarding six months”, adding that its transformation plan “is delivering significant momentum”, that was highlighted by its first-quarter trading statement last month.

Shares are up just over 6pc currently:

1:32PM

Full report: Nick Candy confirms interest in Capital & Counties

My colleague Vinjeru Mkandawire has a full report on developer Nick Candy’s under-consideration bid for landlord Capital & Counties. She writes:

A possible bid comes as the company prepares to sell most of its Earls Court development, which is jointly owned with Transport For London. 

Capco unveiled plans last year to separate the troubled residential asset from its Covent Garden estate.

Earls Court has lost half its value over the past four years amid a downturn in London’s luxury housing market, uncertainty surrounding Brexit and rows with Hammersmith & Fulham council.

1:26PM

Brexit: What’s coming up?

It’s another crunch/crisis/make-or-break day on the Brexit front, as the Government tries to push for a meaningful vote on Boris Johnson’s Brexit deal.

The deal, which would see Northern Ireland aligned with southern Ireland on customs, and require a customs barrier in the Irish sea, was not properly put the test of a vote on Saturday.

Analysis by the Telegraph suggests the PM could eke a narrow victory, but it would be close:

Speaker John Bercow will decide whether to allow a second vote on the deal at around 3:30pm. As things stand, he is unlikely to do so: the vote would be too similar to the one on Saturday, so it could be dismissed as an attempt to test the same proposals without the Letwin Amendment attached.

The Labour Party hopes to attached an amendment calling for a customs union amendment, which would bring the entire UK into a “permanent and comprehensive UK-wide customs union with the EU” (if the wording of a similar attempt earlier this year is followed). 

Again, that could be incredibly close, and swing entirely on how the Liberal Democrats and DUP decide to vote. If the amendment were attached, it is quite possible the Government would pull the entire vote.

12:56PM

Sterling on track for best month since financial crisis

The pound is back over $1.30 once again, keeping it on track for its best month since 2009 (when the financial crisis was causing major money-market swings).

Optimism around foreign exchange traders, which has been high for nearly a fortnight on hopes a no-deal Brexit can be avoided, appears to have returned today: though it looks like, for now, $1.30 is about as high as anyone wants to push it.

Analysts have predicted the currency could jump to as high as $1.40 if a deal is reached.

12:41PM

Glaxo gets windfall from vaccines sale

GlaxoSmithKline is set to rake in more than £800m from the sale of two travel vaccines to Danish biotechnology firm Bavarian Nordic, my colleague Hannah Uttley reports. She writes:

Offloading rabies drug Rabipur and Encepur, a vaccine for viral infection tick-borne encephalitis, will give the FTSE 100 drugmaker an upfront payment of €301m (£254m) and as much as €495m in additional payments if the drugs meet certain targets. 

The remainder will come from the sale of inventory over the duration of the supply arrangement. 

Chief executive Emma Walmsley has been pushing to simplify GSK’s business by spinning off and selling divisions since taking the reins in 2017. 

12:07PM

Net positioning against the pound has fallen since early August

The pound has been on a wild rise since Boris Johnson become Prime Minister

With the pound at a five-month high, traders who had been short-selling the currency might have had their fingers burnt over the past couple of months.

In this form, foreign exchange shorting involves buying and selling futures positions, essentially bets on how the currency will move.

Net positioning on sterling has been downbeat for most of the past five years, hitting its highest level in 2017, and nearly reaching that point again in early August. The data show investors have cut their bets since then, in line with the pound’s resurgence.

This chart shows the value of the pound against the total net futures positions: so the more negative the number of positions, the more bearish the outlook for traders.

11:50AM

Archway landlord told to offer rent guarantees

A number of small businesses after based within railway arches Credit: Heathcliff O'Malley

Britain’s largest small business landlord has been urged to give guarantees over rents to thousands of retailers in railway arches after the release of a tenants' charter on Monday failed to allay fears, my colleague Oliver Gill reports. He writes:

The Arch Company, a joint venture between investment managers Blackstone and Telereal Trillium, has been told “there is a lot more to do” by representatives of about 5,000 businesses amid concerns that big rent increases could force them out of business.

The agreement comes after Network Rail bundled up and sold the arches in a deal worth £1.5bn. As part of the deal the two investment firms committed to a “tenants-first charter”.

11:24AM

Bundesbank: German recession unlikely to be deep

Germany’s Bundesbank has said it doesn’t expect the country to enter a deep recession, but acknowledged Europe’s largest economy most likely contracted again in the second quarter.

The country’s economy shrunk by 0.1pc in the second quarter. If it slipped again over July, August and September, it will have entered a technical recession.

In its latest monthly report, the central bank said:

German economic output could have shrunk slightly again in the third quarter of 2019. A recession in the sense of a significant, broader and long-lasting decline in output with underutilised capacity is currently not in view. 

11:18AM

Where will the pound move from here?

With the pound now coasting along just below its five-month high of $1.30, money markets will be closely scrutinising events unfolding in Westminster

In their Brexit briefing today, UBS analysts say:

Parliament’s rejection of a deal may see the pound giving back some of its recent gains, but as investors assess the prospect of a General Election, we expect GBPUSD to settle in a 1.26 to 1.32 range. The coming days will be important for assessing sterling's upside potential beyond that range.

Here’s how that would look in the longer term:

They believe a no-deal Brexit would pull the currency down as low as $1.12, but said the chances of such an outcome are “lower than they have been for many months”.

10:38AM

Full report: Smith & Nephew boss quits after pay row

Namal Nawana is steping down as chief executive of Smith & Nephew Credit:  HENRY THOMAS

Here’s more on Namal Nawana’s prompt exit from Smith & Nephew. My colleague Michael O’Dwyer reports:

Mr Nawana will step down as chief executive “by mutual agreement on 31 October 2019 to pursue other opportunities outside of the UK”, the FTSE 100 company said. 

It was reported in June that Smith & Nephew, which can trace its roots back to 1896 at a pharmacy in Hull, was exploring switching its listing to the US, where there are fewer restrictions on executive pay.

10:29AM

CapCo: No approach yet from Candy Ventures

CapCo owns most of the Covent Garden area Credit: Shomos Uddin/Getty 

Capital & Counties has noted the announcement of a potential offer under consideration by Candy Ventures (see 8:47am update), but said it had not yet been approached by any party.

In a statement, CapCo said:

The Board of Capco has noted the announcement by Candy Ventures that it is in the early stages of considering a possible cash offer for the company. At this stage there has been no approach made to the company by Candy Ventures or any other party.  

The Board has full confidence in the company’s strategy and management to continue to deliver significant shareholder value. The company is well advanced in executing the separation of its two prime central London estates Covent Garden and Earls Court.

10:21AM

A $19 trillion global debt bubble may be about to burst

Economists are presaging another global financial crisis

 A global corporate debt time-bomb is starting to cause concern at top institutions, my colleague Tom Rees reports. He writes:

The International Monetary Fund warned on Wednesday that a $19 trillion debt pile could be ready to blow in the next recession.

It warned in its Global Financial Stability Report that debt-at-risk – money owed by companies that cannot cover interest payments with earnings – would surge to 40pc of total corporate debt in eight major economies, including the UK.

The lender of last resort was stress-testing a recession half as severe as the last, but predicted that debt-to-risk levels would surpass those seen in the financial crisis.

10:03AM

Thomson Reuters says succession planning just ‘good governance’

Thomson Reuters Chief Executive Jim Smith Credit: Chris Helgren/REUTERS

Thomson Reuters, the global business information service, had said it is “fully supportive” of its chief executive Jim Smith, after the Financial Times reported the company had begun searching for a successor.

The FT said search firm Spencer Stuart had been appointed to draw up a shortlist of potential candidates, with a source telling the paper that the headhunting process was still at an early stage.

In a statement released late last night, Thomson Reuters said:

The Board of Directors considers succession planning and benchmarking for all key executives a matter of good governance. Hence, the Board and management continuously assess internal candidates and work with search firms to scan the external market.

Its chairman, David Thomson, added:

The Board is fully supportive of Jim Smith and his management team. We are aligned on strategy and direction. And, we are working closely with management to achieve continued success for years to come.

9:54AM

Petra Diamonds on track for production target, but revenues slump

Petra operates the Cullinan mine in South Africa Credit: Philip Mostert/Handout

Small-cap miner Petra Diamonds reported a 23pc decline in revenues in its first quarter results, which it blamed on “lower diamond prices and volumes”, as well as a “poorer product mix” from its Finsch, Williamson and Koffiefontein sites.

Despite the setbacks, it said it remained on track to hit its production targets.

Peel Hunt analyst Peter Mallin-Jones called the figures a “good start”, adding:

Adjusting for the seasonal inventory build, indications are that even at present prices, the group is roughly cash flow neutral, a more positive position than we feel the market has given it credit for.

Richard Duffy, Petra’s chief executive, said:

We have reported another quarter of solid operational performance putting us on track to achieve our full year production target of ca. 3.8 Mcts. The diamond market remains challenging, however we will benefit from the sale of the exceptional 20.08 carat Type II blue diamond from Cullinan recovered at the end of the quarter. 

The company said its Project 2022 review, aimed at increasing its cash flow, was “progressing well”.

Its shares are currently down slightly:

9:44AM

Jefferies: Micro Focus could still be a good M&A target

Following an apparent confirmation that Canadian software firm Open Text will not be making a swoop for Micro Focus, analysts at Jefferies say the latter might still be a good target for an acquisition by a large firm. They write:

We believe that the business could be of interest to other mature infrastructure software vendors or to financial sponsors, which would be consistent with the company's strategic review and goal of maximizing shareholder returns.

9:39AM

Pound hovers near $1.30 as it loses some lift

The pound has been steady climbing since 8am, and is now up 0.7pc so far today (0.6pc on Friday’s 6pm fix price). It touched $1.30 a few minutes ago – its highest level since May.

Here’s a reminder of how much the currency has climbed in the past two months:

9:30AM

Micro Focus shares drop after takeover hopes fade

Micro Focus shares fell in August after it warned over sales Credit: Michael Nagle /Bloomberg

Shares in software firm Micro Focus are down more than 7pc currently, after it dismissed reports that Canadian rival Open Text was weighing up a takeover bid.

Bloomberg reported Open Text was mulling an offer on Friday, but the company later said it was “not considering a potential acquisition”.

In an update to the City today, Micro Focus said it:

...notes the announcement by Open Text Corporation confirming that it is not considering a potential acquisition of Micro Focus.

Micro Focus’ share price collapsed in late August after it warned over sales.

9:08AM

Pound rises as London takes the reins

The pound, which has spent most of the morning slightly downbeat after some initial volatility as money markets opened in Oceania and east Asia, is now slightly up on the day at around $1.296, having risen steadily since London traders arrived at their desks just over an hour ago:

Combined with a slightly advance in the Brexit-exposed FTSE 250, that suggests traders are fairly upbeat about the next potential moves in Britain’ exit from the European Union.

Political Correspondent Harry Yorke reports:

Boris Johnson is braced for a showdown with John Bercow amid fears that the Commons speaker could reject a fresh attempt to hold a meaningful vote on the Brexit deal. 

The Speaker will this afternoon rule whether a second attempt to pass the Government's motion can go ahead following the aborted attempt on Saturday. 

However, he is expected to rule that the same motion cannot be moved again, meaning that Mr Johnson will have no choice but to begin trying to push through the legislation required for the UK to leave the EU. 

8:57AM

Why big banks are chasing fintechs

The fintech sector could soon become overcrowded if big banks enter the fray

My colleagues James Cook and Lucy Burton have taken a close look at the fintech banking sector, where upstarts with apps and brightly-coloured cards are disrupting a space long occupied by several giant lenders.

They report:

The rise of banking apps such as Monzo, Revolut and Starling Bank have caused traditional lenders (dismissively referred to as “incumbents” by the start-ups keen to displace them) to take alarm.

With Monzo already amassing three million customers in the UK and Revolut gaining eight million around the world, traditional banks are now plotting their fight back against the upstarts.

So, who will win out – the fleet-footed challengers, or the big banks?

8:47AM

CapCo shares jump as Candy confirms offer

Property developer Nick Candy Credit:  Simon Dawson/Bloomberg

Shares in Capital & Counties are up around 7pc currently, after a consortium led by property developer Nick Candy confirmed it is considering a cash offer for the FTSE 250 business.

Mr Candy has held talks with Saudi Arabia’s Public Investment Fund over financing the deal to take over the property development company, the Sunday Times reported.

CapCo said:

There can be no certainty that any offer will be forthcoming, nor as to the terms of any such offer.

The firm, which was demerged from the group that became Intu Properties in 2010, is focused on sites in West London including around Covent Garden and Earls Court. Its market cap is about £2.3bn according to Bloomberg data, with shares around half of where they stood at their 2015 peak.

8:34AM

Smith & Nephew and Just Eat shares far

Shares in Smith & Nephew and Just Eat are both down this morning.

The former said it would bring in a new chief executive for the second time in 18 months, which Shore Capital analyst Adam Barker said would be taken negatively.

Meanwhile, Just Eat shares are down about 4pc after it posted higher sales but warned that “softer consumer spending” could hurt its results.

Prudential shares are down more than 10pc, with the drop prompted by its demerger of M&G.

8:28AM

European equities advance at open

European shares have opened trading slightly higher, with hopes that the US-China trade war may be nearing a resolution offsetting continued Brexit uncertainty.

 Chinese Vice President Liu He said “substantial progress in many aspects” had been made during talks over trade, laying the ground for a phase one agreement between the two warring economies.

Credit: Bloomberg TV

8:24AM

Prudential completes demerger of M&G

Britain's largest insurer spent £350m to split from M&G Credit: Stephen Hird/REUTERS

Prudential has completed its demerger of M&G, formerly its UK and European savings and insurance business and fund management arm.

In an announcement this morning, the Pru said M&G shares have been admitted to the London Stock Exchange.

My colleague Harriet Russell reported last month:

Investors in Prudential will be entitled to one new share in M&G as part of the split. 

There are no plans for the separate company to raise new money when it lists, nor does it plan to issue any guidance around what the shares might be worth. 

Paul Manduca, Chairman of Prudential, said:

This has been a complex transaction and I would like to thank everyone for their hard work. The Board believes the demerger will help Prudential and M&G to become more closely aligned to the interests of their customers and shareholders.

He added that Prudential wishes M&G “every success in its new life as an independent business”.

8:11AM

FTSE 100 climbs slightly

The FTSE 100 has advanced cautiously at open, and is just up 0.2pc at 7,164.55.

8:10AM

Smith & Nephew sheds second boss in 18 months

Smith & Nephew makes instruments for wound management and surgery Credit: Michael Buholzer/REUTERS

Medical equipment company Smith & Nephew has announced its chief executive Namal Nawana will step down on November 1 after about a year and a half, to be replaced by Roland Diggerman.

Mr Nawana will provide advice on the transition until the end of the year. He only joined the firm in May 2018.

Smith & Nephew said the decision has been taken “by mutual agreement”.

Mr Nawana said:

There is clear momentum behind our strategy laid out last year, underlined by the Company's performance generated by our team during 2019. I am proud to be leaving Smith+Nephew in a strong position for the next phase of its development.

Mr Diggerman, who has spent his career in medical technology, will receive a base salary of just over £1m a year, and be eligible for bonuses:

...an annual Cash Incentive Plan opportunity of 150pc of base salary, annual Equity Incentive Plan opportunity of up to 65pc of base salary and Performance Share Plan awards of up to 190pc of base salary.

The company added it still sees “positive momentum across the business”.

8:00AM

Just Eat sales jump

Just Eat is preparing for a merger with Dutch rival Takeaway.com Credit: fergusburnett.com 

Just Eat has reported a 25pc increase in revenues to £248m and 16pc rise in sales as it prepares for a merger with rival food delivery firm Takeaway.com.

The FTSE 100-listed company said its UK sales has increased by 8pc as demands for its deliveries increased. However, it said “broadly softer consumer spending backdrop and changing consumer preferences” had both produced pressure.

Its board restated guidance for the full year, ahead of a annual general meeting vote in December when investors will be given the chance to vote on its merger plans.

Peter Duffy, its interim chief executive, said:

Our UK marketplace business is a strong and clear leader; however, we are seeing a structural shift, with increasing demand on our platform from customers for broader cuisine choice and more meal occasions, led by quick service restaurant chains.

7:16AM

Agenda: Expect turbulent trading, analysts warn

A aerial view of anti-Brexit demonstrators in London on Saturday Credit:  LED BY DONKEYS/REUTERS

Good morning. City traders are bracing themselves for a bumpy week after MPs on Saturday delayed approval of Boris Johnson’s Brexit deal, introducing what analysts said were  “lots of possible points of turbulence for the market”.

Sterling is expected to take a hit this morning, wiping out some of the gains over the past week that took it close to $1.30.

Traders will also be looking ahead to tomorrow when Mr Johnson is expected to force another vote on his Brexit deal.

5 things to start your day

1) Mervyn King, the former Governor of the Bank of England, warned yesterday that Brexit has dragged on “far too long” and was preventing Government from addressing underlying issues within the UK economy.

Speaking at the International Monetary Fund’s annual meeting in Washington, Lord King said Brexit was getting in the way of tackling issues besetting the global economy, which is at risk of becoming engulfed in “a great stagnation” of low growth while low interest rates were encouraging high levels of debt.

2) US private equity firm Advent International is close to committing to guarantees with the Government to ensure its £4bn takeover of Cobham wins ministers’ approval.

The undertaking come as the deadline for an investigation into the security implications about the sale of the aerospace and defence company nears. 

3) The American private equity owner of the Royal family’s IT supplier is lining up a sale of the business, which has offered tailored services to the Queen for nearly a decade.

Pulsant is being put up for sale by buyout firm Oak Hill Capital Partners, in a deal that could fetch bids in the region of £340m, City sources said.

4) Figures released from Rightmove today have suggested the seasonal bounce in Britain's house prices failed to materialise, as “thousands of potential sellers” held off putting their homes on the market.

  • For more on what's going on in the market, read our piece on why the Brexit deal will reverse Britains property market slump here. 

5) Meanwhile, in Europe, regulators are considering relaxing self-driving laws under pressure from Tesla. Rules that limit the abilities of Autopilot, its driver-assist system, could be eased under proposals tabled by the company last month.

What happened overnight

The pound fell 0.7pc to $1.2897 after the political impasse over Brexit continued. Further volatility is expected this week as parliament gears up for a series of further votes and amendments. We'll keep you up to speed with all the latest twists and turns and what they mean for markets. 

These are the main moves in markets overnight:

  • Japan’s Topix index added 0.4pc at the 3 p.m. close in Tokyo
  • Hong Kong’s Hang Seng Index was flat
  • The Shanghai Composite slipped 0.4pc
  • Futures on the S&P 500 Index rose 0.1pc after the index lost 0.4pc on Friday

Coming up today

It’s expected to be a quiet start to the week on the corporate reporting front, though we will get markets’ reactions to the latest Brexit twists.

Trading statement: Petra Diamonds, Trifast