- The pound repeatedly re-establishes four-month highs against the dollar
- Sterling also hits a new five-month high against the euro
- FTSE 250 wobbles as investors weigh up holdings in domestically-exposed shares
- Neil Woodford: Rise and fall of a star fund manager
- Jeremy Warner: Climate change could be the spark that sets global productivity on fire
With no Brexit deal announcement expected tonight, let's wrap things up here for the evening.
Thank you for following along!
We will be back tomorrow with all the latest business and market news (unless of course there are any surprises before then!)
'Dyson should stick to vacuum cleaners', says Volvo chief as he launches first electric car
The boss of Volvo has said that Sir James Dyson should “go back to making vacuum cleaners” following the British inventor’s aborted attempt to build an electric car, my colleague Alan Tovey reports.
Håkan Samuelsson, chief executive of the Swedish car company, said the billionaire’s decision last week to abandon a £2.5bn move into the automotive world highlights just how difficult the sector is.
Launching Volvo's own first all-electric vehicle, Mr Samuelsson said: “He underestimates how hard the car sector is to enter.
“There may be room for niche players but many of them underestimate the challenge.
“As well as research and development, you need production expertise, the welding parts together, and most importantly the whole global service network to support vehicles.”
Pound falls slightly on news
Sterling is still up against the dollar and the euro for the day but has dropped slightly on the news that the deal won't be settled tonight.
It is now 0.48pc higher against the dollar at $1.2826 and 0.08pc up against the euro at €1.1586.
VAT holding up agreement
No10 insiders saying it doesn’t feel like a deal will be struck tonight. Apparently VAT and DUP are still proving tough to solve.— Sebastian Payne (@SebastianEPayne) October 16, 2019
Michel Barnier is still updating EU27 ambassadors.— Jennifer Rankin (@JenniferMerode) October 16, 2019
He has told them everything agreed except VAT (as widely reported).
Still huge uncertainty for EU about whether rest will stick in London.
"It's always nothing is agreed until everything is agreed," says one source.
Bank of England hopeful Helena Morrissey says next Governor must be more positive on Britain and keep rates above zero
The next Bank of England Governor must be positive about Britain’s future, encourage Government investment and keep interest rates above zero, Dame Helena Morrissey has said.
She is a Brexiteer, star fund manager and potential candidate to replace Mark Carney, though she has not commented on her own chances of getting the job.
"The incoming Governor must truly believe that Britain has a bright future. It’s the combination of strengths that marks us out: great design and fintech, the best legal framework for deals, green finance expertise etc," said Dame Helena, writing in the Spectator.
Oh, never mind... look's like it won't be happening tonight folks
Simply not clear if that means there's no way forward yet or just a case of extending talks into tomorrow cos they need a bit more time - will clarify as soon as have more— Laura Kuenssberg (@bbclaurak) October 16, 2019
So as I just said on @itvnews, now no chance of Brexit deal tonight. Not at all sure about what that means for what can be agreed by EU leaders on Thursday and Friday— Robert Peston (@Peston) October 16, 2019
Govt source says no Brexit deal tonight, because of unresolved issues with both the DUP and EU: "Everyone will be working into the night but there won’t be a deal this evening".— Tom Newton Dunn (@tnewtondunn) October 16, 2019
Hold tight... A Brexit announcement is imminent
Hearing from UK sources that a big #Brexit announcement is imminent...— Samuel Stolton (@SamuelStolton) October 16, 2019
Dragons' Den Peter Jones eyes rescue plan for Jessops stores
Dragons' Den TV star and businessman Peter Jones is mulling a rescue plan for the property arm of Jessops, having bought the collapsed camera chain six years ago.
Mr Jones is poised to draft in administrators at Resolve, a restructuring firm, for JR Prop Limited, which manages Jessops' leasehold property estate, including the majority of its 46 stores.
The move could lead to store closures in months ahead, putting 500 jobs at risk.
Government primed to wrestle Northern rail from German operator
Ministers are laying the groundwork to renationalise one of Britain’s biggest train franchises, wrestling it from the clutches of Germany’s state rail operator, my colleague Oliver Gill reports. He writes:
Transport secretary Grant Shapps told a parliamentary committee on Wednesday that the Government is planning to bring Northern rail into public ownership.
The network's performance has been hit by strikes, bungled timetable changes and delays to vital upgrades of tracks and trains.
Northern’s poor performance “cannot continue”, Mr Shapps said.
The comments confirm expectations that the Government’s Operator of Last Resort (OLR) is limbering up to step in.
Quick market update
The pound is now 0.65pc higher against the dollar, trading at $1.2848 and it 0.17pc up against the euro at €1.1597.
Here's a quick look at how commodities are doing...
Macron on Brexit
French President Emmanuel Macron said: "I'd like to believe a deal is being finalised."
"Our hope, our goal is to be able to endorse an accord that I hope will be reached in the coming hours. The echos we've had are positive," Macron said of crunch talks among EU officials.
French Pres. Macron: Brexit Agreement Is Being Finalised— LiveSquawk (@LiveSquawk) October 16, 2019
M&G hires City law firm to examine sexual harassment allegations
Fund manager M&G has hired City law firm Baker McKenzie to investigate allegations that one its senior managers sexually harassed junior female colleagues.
The unnamed fund manager is accused of targeting women at the firm’s London headquarters with sexually explicit text messages and inappropriate comments, Bloomberg reported on Wednesday, citing sources claiming to have witnessed the behaviour.
The allegations were reported by Gavin Finch, the same Bloomberg journalist who earlier this year uncovered widespread sexual harassment and bullying across the Lloyd's of London insurance market.
More on Netflix...
Michael Hewson at CMC Markets says:
"Is the bubble starting to bust for Netflix and its share price, already down sharply from its highs this year, we could see it revisit the lows seen at the end of last year when it traded at $231.50, before peaking at £378 in May this year, if today’s latest numbers show further signs of slowing, after a disappointing update in July.
"With Disney and Apple set to launch cheaper packages as we head into year-end, Netflix management may well have some hard choices to make when it comes to pricing if there are clear signs of subscriber churn away from them, and towards the two new high profile kids on the block."
"Quite simply the streaming market is becoming more and more crowded, and while for now Netflix can justify its premium price, due to its much greater content, the deep pockets of Apple and Disney could well change that in the years ahead."
How's it looking across the pond?
Stocks on Wall Street are in the red at the moment, with the Dow Jones unchanged and the S&P 500 0.11pc behing.
The tech-heavy Nasdaq is currently 0.30pc lower.
The mood on Wall Street is muted as President Trump said that China have started purchasing agricultural goods, but a trade deal won’t be signed until he meets China’s Xi Jinping in November.
Also, Netflix will be releasing its third-quarter numbers after the market close today and is trading almost 1pc down at $281.64.
The streaming services’ popularity seems to be running out of steam as its July update revealed poor subscribers numbers. The US customer base dropped by 126,000, which was nowhere near the gains of more than 350,000 that traders were expecting. On an international basis, it added 2.83 million new subscribers, undershooting forecasts.
Don’t worry Neil Woodford, there is life after a business calamity – just ask Gerald Ratner
Despite building a jewellery empire that spanned 1,500 stores and made profits of £125m a year, Gerald Ratner isn’t known for his success in business – but for a major gaffe made during an after-dinner speech in 1991.
In a joke that would catapult Ratner to infamy and result in £500m being wiped from the value of his company, the Ratner Group, the chief executive said of his stock: “People say, ‘How can you sell this for such a low price?’ I say, ‘Because it’s total crap’”, adding that his stores’ earrings were “cheaper than an M&S prawn sandwich but probably wouldn't last as long”.
Hi everyone, thanks for following along with Louis today.
I'll be taking you into the evening and keeping an eye on all thing Brexit (among other things of course).
This is the latest from Reuters. They are saying there's a deal agreed, apart from on VAT...
LEVEL PLAYING FIELD, CUSTOMS ARRANGEMENTS, N. IRISH CONSENT ALL AGREED IN EU-UK TALKS - EU SOURCES— Andy Bruce (@BruceReuters) October 16, 2019
VAT PROVISIONS NOT DONE YET, OVERALL AGREEMENT OF UK GOVERNMENT STILL NEEDED
Handover: Pound upbeat after day of shivers and shakes
With everything to play for in the next few hours, the pound is looking strong – back up near those four- and five-month highs against the dollar and euro.
Banks are getting ready for a potential frenetic night: at Barclays, traders will be in the office earlier and staying later and extra staff will be on call to help clients.
JCRA’s Andy Scott says:
It's a tense situation for those having to trade GBP as market swings of 100 pips in one direction, can reverse in a matter of seconds when headlines cause shifts in sentiment. As can be seen from the current level of Sterling, the market is fairly optimistic that a deal will be reached over the coming days.
It wasn’t such a glorious day for Britain’s main stock indices:
- The FTSE 100 closed down 0.61pc at 7,167.95
- The FTSE 250 closed down 0.05pc at 20.187.96
There’s still some way to go. So I’m going to hand over to my colleague LaToya Harding, who will cover things heading into the evening.
- As a reminder, you can also follow the political nitty-gritty here: Brexit deal latest news: Donald Tusk says deal is ready, but there are ‘certain doubts on the British side’
UK lags as EU car sales accelerate
The gulf in consumer confidence levels between the UK and the rest of the Continent has been highlighted by the latest data on new car sales across Europe. My colleague Alan Tovey reports:
Registrations of new cars across all of Europe jumped 14.5pc in September compared with the same month a year ago, hitting 1.249m, according to European Automobile Manufacturers’ Association (ACEA).
However, new car sales in the UK in September edged up just 1.3pc to 343,255, despite it being a new registration plate month, traditionally a big driver of sales.
Although the five major markets – Germany, France, Italy, Spain and the UK – in the 27-member group all registered growth, Britain lagged behind. The others recorded double-digit rises, led by Germany, where sales rose 22.2pc to 244,622.
Cars are one of the biggest household purchases and seen as a good barometer of consumer confidence.
On a year to date basis, Europe-wide car sales were down 1.6pc to 11.77m, while the UK was off by 2.5pc at 1.86m.
Hipgnosis buys Timbaland’s back catalogue
Time for a slighty off-beat story now: The producer behind smash hits including Nelly Furtado’s Maneater and Cry Me a River by Justin Timberlake has sold his back catalogue to Hipgnosis Songs Fund in one of the firm's biggest deals to date.
My colleague Chris Johnston reports:
Timbaland (also known as Timothy Mosley) has written and produced multi-million selling albums and singles for the likes of Missy Elliott and Aaliyah as well as Furtado and Timberlake in a career spanning three decades and his unique hip hop-influenced production style and sound has continued to influence artists today.
Hipgnosis, which listed on the London stock exchange in July last year for £200m, has bought 108 albums and songs from Timbaland including tracks he wrote and produced for artists including Rihanna, Drake, Jay-Z and Madonna.
- Read more here: Hipgnosis Songs Fund snaps up Timbaland catalogue
Wall Street slightly lower
Over in the US, Wall Street is looking slightly sleepy, just the wrong side of flat. Trade tensions, friction with China over Hong Kong and some iffy retail figures aren’t enough to have prompted a big drop, however.
Should we double the inflation target?
After some pretty lacklustre inflation figures this morning, economists are asking why the Bank of England is falling short of its 2pc target rate.
There’s one proposal that might work, writes Economics Editor Russell Lynch: raising the target. The theory goes (in layman’s terms), that a higher target would give ratesetters more room to cut interest, and therefore increase the chance of hitting the original target if you undershoot.
Makes sense? There’s definitely some logic in it, writes Russell. He says:
Discussion of the 2pc target is rare among Bank of England policymakers, so it was notable that two Monetary Policy Committee members have broken cover on the topic in the space of a fortnight.
I’m going to leave the rest with him, because it is a complex issue and is best read in full (I don’t want angry Monetary Policy Committee members showing up in the comments).
- Read it here: Should we double the inflation target to 4pc?
Pound holds slightly up
The pound is still hugely volatile today, with the most solid bit of news to cling on to being European Council President Donald Tusk’s claim that we should know what is going on some time between roughly 9pm and 10pm (potentially bad news for anyone who wants to make a newspaper tonight).
SpreadEx’s Connor Campbell says:
Let’s be clear, there is still a huge amount of uncertainty surrounding what is going on Brexit-wise – not least because any agreement between the UK and EU still would need to get past some rather substantial parliamentary blockades.
However, most of the noise being made at the moment is positive. Donald Tusk claimed that ‘everything should be clear’ in seven to eight hours, while Irish Taoiseach Leo Varadkar reiterated his belief that ‘an agreement may be possible’, even if it requires an extension past October 31 to be fully worked out. The DUP remain one of the key question marks, especially since Arlene Foster denied the party had accepted the latest proposals around 2pm, as do the hardest of the Tory Brexiters.
German conservatives entrench dedication to ‘black zero’
Anyone hoping for a new, fiscally-interventionist Bundestag might have to accept a bit of disappointment: the country’s ruling conservatives have reaffirmed their dedication to ‘black zero‘ – a balanced budget. Reuters reports:
“The Union (party) stance is clear: We stick to the black zero,” Chancellor Merkel’s chief budget lawmaker Eckhardt Rehberg said after Bloomberg reported that the Chancellor’s Christian Democrats were softening their opposition to fiscal stimulus measures.
Germany’s economic institutes earlier this month called on Berlin to ditch the ‘black zero’ if the growth outlook for Europe’s largest economy should deteriorate further.
Primark: Don’t buy our products on Amazon
Primark has urged shoppers to avoid buying its wares on Amazon after it emerged that some of its Harry Potter and Disney themed products are being sold for ramped-up prices, my colleague Laura Onita reports. She writes:
The discount retailer does not sell online. However, third party sellers, who typically buy items in bulk and then sell them for a profit, have started flogging Primark products on the platform.
A Primark spokesperson said: “We do not have a commercial partnership with Amazon and any Primark products which appear on the site are being re-sold by third parties, at higher prices. We encourage our customers to visit us in our stores to find the best value.”
A Primark Harry Potter Gryffindor beanie is being sold for £9.99, while Minnie Mickey Mouse socks are £9.95.
- Read more here: Primark warns shoppers not to buy its wares on Amazon
US retail sales fall for first time in seven months
Retail sales in the US fell for the first time in seven months, raising worries about whether the strength of consumer demand might be waning.
That fall was unexpected, and suggests cracks may be appearing in a key pillar of the US economy, and may add to calls for a rate cut. My colleague Tom Rees reports:
Are American shoppers starting to buckle as the global slowdown finally reaches the country’s shores? Retail sales suffered a shock 0.4pc month-on-month tumble in September, stoking fears that crucial US consumers are tightening their belts as confidence is sapped by the trade war and slowing growth.
It is difficult to understate how important US shoppers are to growth with consumer spending accounting for 70pc of the world’s biggest economy. ING economist James Knightley says the sinking sales boosts the case for a third interest rate cut at the Federal Reserve. He explains:
“Given this growth backdrop and the fact recent inflation indicators show signs of softening and the University of Michigan consumer inflation expectations series hit an all-time low, the Federal Reserve will be increasingly nervous about hitting its inflation target.”
Capital Economics’ Andrew Pierce adds:
Overall, the retail sales figures support our view that economic growth is slowing – we expect a further slowdown to 1.0pc annualised in the fourth quarter, ultimately prompting the Fed to cut rates by 25bp one more time at its December meeting.
One way of looking at today’s Brexit headline shifts...
Currency markets seem to think @tconnellyRTE is twice as credible as @DUPleader. Pound jumped 0.8% following Connelly's tweet, but only dropped 0.4% after Foster's denial.https://t.co/rNAoR0N3bThttps://t.co/SNVSLZGMwcpic.twitter.com/HRloMmg7x1— Peter Thal Larsen (@peter_tl) October 16, 2019
IMF warns of $19 trillion corporate debt pile
A second economic punch from the IMF after yesterday’s growth predictions: the group has warned a $19 trillion corporate debt mountain built up by reckless lenders seeking higher returns threatens to topple over and deepen the next recession.
My colleague Tom Rees reports:
The global lender of last resort sounded the alarm on a boom in corporate lending in the US and China, with debt classified as high-risk accounting for almost half of the market in the world’s two biggest economies.
The IMF said in its Global Financial Stability Report that in eight major economies including the UK, debt-at-risk – or money owed by companieswhich cannot cover the interest payments with profits – would hit $19 trillion in the next downturn, or 40pc of the total amount owed by businesses.
- Read more here: IMF sounds alarm over $19 trillion corporate debt mountain
Arlene Foster strikes back...
The DUP leader has responded directly that RTE report, labelling it “nonsense” – tensions seem to be spilling over slightly.
'EU sources' are talking nonsense. Discussions continue. Needs to be a sensible deal which unionists and nationalists can support. https://t.co/CpugVBfyBZ— Arlene Foster (@DUPleader) October 16, 2019
That has a knocked the pound back down a bit, though it is still up on the day currently.
Grant Shapps: Northern Rail could be nationalised
The government has told Northern (aka Arriva) to submit proposals on how it can make its service better, or face losing its role operating the northern rail franchise.
Speaking to the Transport Select Committee, Transport Secretary Grant Shapps confirmed he is looking at whether management of much of the north’s rail systems should enter public hands.
He said that he had also written to the Operator of Last Resort (OLR), which would takeover if Northern lost the franchise.
Northern Rail’s passenger numbers have fallen after it made error introducing a new timetable last year.
Mr Shapps told MP writing to the company was a “first step”.
We had a hugely wide-ranging session with the Secretary of State for @transportgovuk this morning, covering roads, rail, aviation, Brexit, taxis, buses, cycling, high-speed rail, e-scooters and much more. ��♀️��♀️����✈️��️����— Transport Committee (@CommonsTrans) October 16, 2019
�� Watch the session back here: https://t.co/JvGrjtmPJXpic.twitter.com/JxvlAu6oHr
Pound leaps after report says ‘main stumbling block’ to Brexit deal is gone
RTE’s Tony Connelly tweets:
BREAKING: two senior EU sources say the main stumbling block to a deal has been removed with the DUP accepting the latest proposals on consent... Optimism a deal can now be done...— Tony Connelly (@tconnellyRTE) October 16, 2019
That has sent the pound back a four-month high against the dollar, and five-month high against the euro:
Second Woodford firm suspended
Sorry for not having brought you this one sooner – in among this morning’s Brexit talk spasms, another of Neil Woodford’s funds was closed to investors.
My colleague Harriet Russell reports:
Savers were blocked from pulling their nest eggs out of Mr Woodford’s Income Focus Fund by corporate supervisor Link, which has placed the fund under a rolling 28-day suspension, matching terms applied to the Woodford Equity Income Fund earlier this year.
Link has vowed to update investors within the next two weeks on plans for the fund. It has the power to appoint a new manager, transfer the assets into a different fund or wind it down altogether.
Round-up: Crisps are getting more expensive, Asos shares back in fashion, rare disease drug firm raises $56m
Here are some of the day’s biggest stories:
- Petrol gets cheaper but the price of crisps is going up: Petrol prices fell in September despite turmoil in the global oil markets, helping to keep a lid on living expenses and support the economy – although the cost of crisps ticked up.
- Rare disease drug firm Healx founded by Viagra creator raises $56m: A rare disease drugs firm co-founded by the discoverer of Viagra has raised $56m (£44m) to use artificial intelligence for finding new medicines.
- Asos shares back in style despite plunging profits: The boss of Asos vowed to stay on despite a significant drop in profits as the online fashion giant showed signs of recovery after two profit warnings.
Auto Trader dips amid weak motor sales figures
Car-selling site Autotrader is one of the biggest fallers on the FTSE 100 today, down around 3pc currently.
Its price has tended to move quite strongly on Brexit news (presumably, sales are expected to increase once Brexit uncertainty has been lifted).
There are a couple of other factors though: this morning’s inflation figures suggested softness in the second-hand car markets (“where prices fell by 1.4pc between August and September compared with a rise of 1.4pc a year ago”), and the Financial Conduct Authority’s plans to crack down on unfair car finance loan commissions, announced yesterday.
Liberum analysts were bullish on Autotrader in a note two days ago, writing:
There has been some concern recently over AutoTrader’s stock levels and this had, pre-Friday’s bounce on positive Brexit news, impacted the shares. However, we think the concerns are overdone and expect the company to reiterate at its interims on November 7th that the FY is on track.
An assortment of smoke colours are emerging from Brussels and Westminster, none of them white just yet – risky business for any spot traders riding the latest headlines.
NEW: Senior EU diplomat says “now too late” to give formal approval to Brexit deal at Summit.— Adam Parsons (@adamparsons) October 16, 2019
New from lobby: Cabinet now meeting at 2.30pm rather than 4pm. No 10 says not to read too much into this - PM and others have "very busy diaries today, this is the time that best fits"— Emily Ashton (@elashton) October 16, 2019
Cabinet meeting brought forward to 2.30pm now rather than late afternoon. Another sign it will no longer be asked to sign off any deal.— Tom Newton Dunn (@tnewtondunn) October 16, 2019
RTE: Barnier says deal may be done today
The pound has pushed back up again, following a series of tweets from RTE’s Tony Connelly:
2/ However, there still outstanding issues, so this could go right to the wire.— Tony Connelly (@tconnellyRTE) October 16, 2019
He reports VAT, consent mechanisms and “level playing field” provisions are all causing issues within talks.
7/ The meeting of EU ambassadors, whom Barnier will brief, is still scheduled for 14hr CET, suggesting that the timings are still on course— Tony Connelly (@tconnellyRTE) October 16, 2019
The pound was briefly up on the day in the wake of Mr Connelly’s first tweet, but is now hovering slightly down.
Huawei revenue jumps after solid phone sales
Chinese technology group Huawei has lifted its revenue by over 24pc to 610.8bn yuan (£67.5bn) in the first three quarters of the year despite intense trading pressure from the US, reports Natasha Bernal. She writes:
Huawei said it has signed more than 60 commercial contracts for 5G telecom networks with leading global carriers, half of which are with European customers building ultra-fast fifth generation systems.
The company’s net profit margin grew by 8.7pc during the period.
Several 5G networks in the UK have launched with Huawei technology in the last few months, despite concerns expressed by MPs over national security.
Here’s how markets look
Thinks are pretty downbeat across Europe, with the latest lines on the wires suggesting Brexit talks are at an impasse.
Competition watchdog sets December 11 deadline for Deliveroo decision
The Competition & Markets Authority has set a December 11 deadline to decide whether to launch a full-blown probe into Amazon’s plans to invest $575m into delivery firm Deliveroo.
Until then, it will determine whether the investment might lead to a “substantial lessening of competition“ in the food delivery sector.
- Here’s more: Amazon under fire over $575m deal with Deliveroo
FTSE 250 losses pass 1pc, pound drops sharply against dollar and euro
The Brexit wobbles are continuing, with two chunky downwards twitches since trading opened this morning. The pound fell as much as 1pc against the euro and dollar a few minutes ago, though it pulled back quite quickly from those drops.
The FTSE 250, however, is having a worse day. After standing out yesterday amid high investor spirits, it is now off about 1pc as sentiment worsens.
Reaction: ‘The link between unemployment and inflation in the UK is broken’
Here’s some reaction to this morning’s headline CPI inflation figures. Capital Economics’ Andrew Wishart called them “surprisingly subdued”, writing:
Unchanged CPI inflation of 1.7pc in September was weaker than either we or the consensus had forecast (consensus 1.8pc) as falls in utilities and transport inflation offset a rebound in services inflation.
Indeed, services inflation returned to 2.5pc after dropping to 2.2pc in August, suggesting that was indeed a one-off. But falls in inflation in the transport category, from 1.4pc to 0.6pc, and housing and utility price inflation, from 2.4pc to 2.0pc offset this. The fall in transport inflation was largely due to a fall in inflation in second-hand car prices, consistent with consumers having held off big ticket purchases while Brexit uncertainty is at its highest.
Erik Norland from CME Group adds:
UK inflation came in below consensus at 1.7pc YoY for September. This, combined with the soft labour market data yesterday, should bias the BoE towards easing policy in coming months.
UK consumers might see a small uptick in inflation later this year owing to the weakening of the pound over the summer. This could add perhaps 0.2–0.3pc to inflation late this year or early next year. Even so, it would be below the BoE’s target and any bump in inflation could quickly disappear if the pound rebounds if, and when, a solution is found for Brexit.
Finally, it is remarkable how low inflation is despite sub-4pc unemployment. This indicates that the link between unemployment and inflation in the UK is broken and that the BoE could probably allow unemployment to fall significantly further before wage pressures begin to cause inflation. This phenomenon is not unique to the UK but appears throughout Northern Europe, the US and Japan as well.
House price rise beats expectations, appears steady
The other big bit of data from the ONS today: house prices rose more than expected in August despite the gloom and uncertainty, increasing by 1.3pc.
The ONS says:
Average house prices in the UK increased by 1.3pc in the year to August 2019, up from 0.8pc in July 2019 but remain below the increases seen this time last year. Over the past three years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.
The lowest annual growth was in London, where prices fell by 1.4pc over the year to August 2019, followed by the South East where prices fell by 0.6pc over the year.
Breaking the UK down by countries, ENglish house prices remain the highest:
On a regional level, the North East was the English region with the highest annual house price growth, with prices increasing by 3.3pc in the year to August 2019:
Transport ceases to be large contributor to inflation rate
Here’s more from the ONS:
The contribution from transport has fallen since April 2019 meaning it no longer provides one of the larger contributions to the CPIH 12-month inflation rate. Having fallen to 0.07 percentage points, the contribution in September 2019 is practically one-tenth of the 0.68 percentage point contribution transport had in September 2018. Within transport, the contribution from motor fuels in September is negative for the second month in a row, reflecting a fall in price of 2.1pc on the year.
No change in CPI inflation - 1.7%y/y in September. Core inflation (excl.'s food & fuel) did tick up from 1.5%y/y to 1.7%y/y. Main downward push came from motor fuels, main upward push from household goods, hotels & rec. & culture goods. RPI fell from 2.8%y/y to 2.4%y/y. pic.twitter.com/cSSjrdkTsC— Rupert Seggins (@Rupert_Seggins) October 16, 2019
Furniture prices offset falling fuel prices
Here’s what the Office for National Statistics has to say about those numbers:
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.7pc in September 2019, unchanged from August 2019.
The largest downward contributions to change in the CPIH 12-month inflation rate, between August and September 2019, came from motor fuels, second-hand cars, and electricity, gas and other fuels.
These downward movements were offset by upward movements from furniture, household appliances, hotel overnight stays, and from recreation and culture items.
The Consumer Prices Index (CPI) 12-month inflation rate was 1.7pc in September 2019, unchanged from August 2019.
Correction: Apologies, I misread the core and headline figures initially – headline CPI was flat at 1.7pc, while core rose to 1.7pc from 1.5pc. I have corrected my previous post.
Break: UK inflation stays at 1.7pc
Just in: UK headline consumer price index inflation stayed at 1.7pc in September.
The Bank of England’s target is 2pc.
Rio Tinto’s iron ore business bounces back
Shares in Rio Tinto are down slightly this morning, despite the company saying its iron ore shipments rose by 5pc in the third quarter, buoyed by rising demand from Chinese steelmakers.
The London-listed miner, which is part of the FTSE 100 index, said it had recovered from problems at one of its key Australian mining locations, after an “operational” error earlier this year led to the overproduction of low-grade material.
Its chief executive, Jean-Sébastien Jacques, said:
We have delivered improved production across the majority of our products in the third quarter, with a solid result at our Pilbara mines driving increased sales of iron ore into robust markets.
Is a Brexit deal coming?
It’s still a shaky time to be trading the pound, with sterling volatility (implied by the cost of hedging against price movements) hitting a three-year high yesterday.
Traders (like the rest of us) will be watching for white smoke from Brussels today, but the latest word via Bloomberg is that UK officials are feeling downbeat, with the DUP resisting proposals that would see Northern Ireland left in a separate custom arrangement to the rest of the UK.
As a reminder, the Prime Minister faces a pretty major hurdle getting any agreed terms through Parliament, where his majority is shot:
As ever, the Telegraph’s hugely well-informed Europe Editor Peter Foster has been breaking down the latest details. Here’s an extract from a Twitter thread he wrote this morning:
It might also be worth considering that the history of UK-EU negotiations so far is a tale of big, headline promises....that bit by bit slump back to earth. Gravity takes over, in politics as well as trade. /6— Peter Foster (@pmdfoster) October 16, 2019
Turkey bans short-selling in seven banks
From slightly earlier this morning: Turkey has banned short-selling in seven of its banks, include one that is the focus of a US fraud and money-laundering case.
The decision comes into effect on Wednesday, according to a statement. No information was given on when the ban would end. The ban also applies to short positions closed within the same day, Capital Markets Board said in a separate statement.
Turkey temporarily bans short-selling in 7 banks— Fercan Yalinkilic (@FercanY) October 16, 2019
▶️Including Halkbank (Down 7.2% at the open) against which the U.S. brought a criminal case for fraud and money laundering for allegedly violating Iran sanctions
▶️Bank index down 4%https://t.co/0wPWRwXabepic.twitter.com/S3G05wjeOL
Asos shares jump most in seven months after beating earnings expectations
Shares in Asos are up just under 15pc currently, having gained as much as 21pc earlier – its biggest intraday jump since March.
The online retailer beat City estimates for its profit, with figures RBC analysts deemed “reassuring”.
The online retailer’s profits slumped by more than two-thirds last year after restructuring costs and operational problems took their toll. But Nick Beighton, chief executive, insisted it had been a “pivotal” year for the retailer, saying it had invested heavily in its business.
Markets in the red
London trading has been open for just under half an hour now, and the mood is fairly anxious. The FTSE 100 is flat, while the FTSE 250 – seen as more exposed to Brexit risk – is down a solid 0.63pc.
When I wrapped up yesterday’s blog after after markets closed, I said it was best to do so while things were still neat.
I was certainly right in the case of Neil Woodford, whose investment empire effectively imploded in the hours after the bell last night.
- Here’s our analytical read on his denouement: The rise and fall of Neil Woodford: what happened to the man who couldn't stop making money?
You can read our key coverage on the saga using the links below:
Pound takes a breather
Sterling is at €1.1567, down fractionally, and at $1.2785, up 0.16pc, as crunch Brexit talks continue today.
Michael Hewson of CMC Markets has a cautionary note:
All it took was the mere whisper that EU and UK negotiators might be on the cusp of a possible Brexit breakthrough to propel, not only the pound up to its highest levels against the US dollar since May, but also sent the German DAX to its best levels in over a year...
Of course, all of this optimism over a Brexit deal could well come to nought, after all how many times have we been down this road in the last three years, as talks have faltered over the Gordian knot of Northern Ireland.
Agenda: Brexit, Brexit, Brexit
Good morning. Yesterday the FTSE 250 surged to its highest level in more than a year as investors piled into domestically-focused stocks on hopes of a Brexit breakthrough.
The mid-cap stock index closed up 1.34pc points as traders bought shares in retailers, landlords, high-street lenders and restaurants amid a relief rally that spilled onto international markets.
Meanwhile sterling hit a five-month high against the euro and a four-month high against the dollar yesterday, following reports that EU and UK negotiators were on the verge of a Brexit breakthrough. The pound touched as high as $1.28.
5 things to start your day
1) Neil Woodford has announced the “highly painful” decision to close his investment firm, following a disastrous day for the once-star fund manager. Fund supervisor Link ousted the disgraced fund manager from his flagship equity income fund early on Tuesday morning, announcing it would be wound down after Mr Woodford failed to raise sufficient funds for it to safely reopen in December.
2) How not to spin the worst jobs numbers in four years: This month saw the biggest quarterly fall in employment for four years. Unemployment up. Pay growth slipping. So spare a thought for Mims Davies - the employment minister in the Department for Work and Pensions, for anyone unfamiliar with the name - who was sent to man the barricades.
3) Thomas Cook’s former bosses have attacked ministers for standing on the sidelines as it raced to secure lifeline funding - while other European countries scrambled to offer support. Appearing in front of MPs yesterday, chief executive Peter Fankhauser revealed ministers from Germany, Spain, Turkey, Bulgaria and Greece had personally contacted him to offer support in the days before the world-renowned travel company collapsed.
4) Deeper interest rate cuts could be needed if Boris Johnson is forced to delay Brexit, Bank of England policymaker Gertjan Vlieghe warned yesterday. Interest rates are currently stuck at 0.75pc after just two rises in 12 years, forcing savers to accept tiny below-inflation returns on their bank deposits.
5) A rare disease drugs firm co-founded by the discoverer of Viagra has raised $56m (£44m) to use artificial intelligence for finding new medicines. Healx uses AI to examine potential beneficial side effects of existing treatments which could also treat rare ailments.
What happened overnight
Asian shares inched higher while sterling came off five-month highs in volatile trade on Wednesday as investors looked to whether Britain can secure a deal to avoid a disorderly exit from the European Union.
Officials and diplomats involved in negotiations said that differences over the terms of the split had narrowed significantly.
The news lit a fire under European and US equities, which jumped about 1% on Tuesday. The pound rocketed to $1.28, a level not seen since May 21.
The pound has strengthened nearly 5pc over the past week as investors rushed to reprice the prospect of a last-minute Brexit deal before the end-October deadline.
Still, the pound lost steam in Asia, falling 0.3pc to $1.2752, as uncertainties remained on whether a deal will be sealed at a make-or-break EU summit on Thursday and Friday and if Boris Johnson can get it through parliament.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4pc while Japan's Nikkei jumped 1.5pc, hitting 10-month highs.
Australian shares added 0.9% while South Korea's KOSPI index climbed 0.6pc, maintaining gains after South Korea's central bank cut its policy interest rate for the second time in three months, matching a record low to address mounting deflationary pressures.
In Hong Kong, the Hang Seng index ended the morning 2.02 points up at 26,505.95.
Coming up today
Asos has had a poor year, with shares nearly 60pc below where they stood this week in 2018. The severe markdown was brought about by a pair of profit warnings, which the company pinned on issues including investments, competition, stock problems, economic worries and operational issues. That’s a fairly comprehensive list, so analysts will likely just focus on the broad strokes in its full-year results today; how sales are faring, and how the margins look.
Interim results: Rio Tinto
Preliminary results: Nanoco
Full-year results: Asos
Trading statement: Arbuthnot Banking Group, Mediclinic, Secure Trust Bank, Segro
Economics Inflation: (UK and EU)