- Stock markets fall slightly, with pound sat slightly up after week of surging strength
- London Stock Exchange shrugs off tough Hong Kong battle to post sales jump
- InterContinental hit by Hong Kong protests
- Logistics firm Wincanton weighs offer for troubled Eddie Stobart
- What does Boris Johnson’s Brexit deal mean for UK business?
- Ryan Bourne: Left and Right must confront uncomfortable truths about the economics of healthcare
Wrap-up: Markets close downbeat after muted day
That’s all, folks. After a hectic past week that saw a major sterling comeback and a twelve-month high for the FTSE 250, today was (possibly mercifully) mixed.
The FTSE 100 closed down 0.44pc, under pressure from a rising pound, while the FTSE ended the day almost perfect a flat – with a 0.57p drop registering as a 0pc move.
Tomorrow is set to be a mega day in Parliament, but the reaction on the markets won’t be felt until a little later – and it’s anyone’s guess which way things will go.
That’s all for today. We’ll likely be kicking off Monday’s live blog early, to bring you the latest on how the pound shifts. See you then!
Monzo denies unfairly freezing accounts
Fintech bank Monzo has denied that it unfairly froze customer accounts in the wake of accusations made in a BBC Watchdog report on Thursday night, my colleague James Cook reports. He writes:
The BBC One programme criticised the start-up for freezing accounts without explanation, leaving some customers struggling to pay bills and buy food.
One mother told Watchdog: “It's been really stressful because it's put us into rent arrears; it's actually put a bit of a strain on our relationship as well. How do you explain to a four-year-old that there's no food in the house because of a bank?”
However, chief executive Tom Blomfield said on Friday that Monzo was no “more or less exposed than any other bank”.
He said Monzo could not tell customers why their accounts had been frozen because of a law that prevented banks “tipping off” customers to potential criminal investigations into their finances.
US stocks slip as European shares hit session low
In the US, stock indices are performing poorly, with the biggest losses landing on the tech-heavy Nasdaq, down 0.6pc after weak Chinese data.
Things are turning a little more sour in Europe as well, with the continent-wide STOXX 600 hitting a session low of 0.4pc down a few moments ago. A pretty neutral day might be giving way to some downbeat sentiment.
Andy Critchlow: Saudi Aramco – from mega float to mega flop
Saudi Aramco’s leaders are constantly talking up how close its float is – but in reality, the $2 trillion listing seems further away than ever, writes Andy Critchlow.
Tepid oil prices, the fraught politics of the Middle East and the demonisation of fossil fuel producers in response to climate change fears have all made the initial public offering (IPO) a mission impossible.
That raises pressure on the oil giant to to deliver for investors, who are getting frsutrated with delays and excuses. Andy adds:
A highly paid army of bankers, financial advisers, consultants and public relations consultants drafted into the kingdom have once again failed to deliver the Aramco IPO on schedule.
- Read his full piece here: Saudi Aramco’s blockbuster IPO looks doomed to failure
Markets unmoved as Macron and Varadkar rule out Brexit extension
French President Emmanuel Macron and Irish Taoiseach Leo Varadkar have both made comments in recent minutes, respectively ruling out and playing down the prospect of a further Brexit deadline extension if the deal is defeated tomorrow.
‘Plan B is no deal’— JPCampbellBiz (@JP_Biz) October 18, 2019
Judging by the lack of reaction that has caused on the markets, traders aren’t hugely convinced. In part, they may be remembering that Mr Macron struck the same tone back in March – but relented when a request for an extension landed.
Northern Irish businesses speak out ahead of Brexit vote
With just over a day until a crunch Brexit vote in Parliament, one group who will be feeling particularly nervous are Northern Irish businesses, who face the complexity of hybrid customs zone if the proposals are passed by MPs.
My colleague Michael O’Dwyer visited the border, to understand the concerns on the ground. He writes:
For businesses here, the stakes could not be higher as MPs prepare to voteon whether to accept Boris Johnson’s Brexit deal with the EU. If passed, the status quo will be preserved for 14 months, handing them a degree of certainty and buying time for preparation. A no-deal Brexit would up-end their whole business model.
- You can read his full piece here: High stakes for Northern Irish businesses ahead of Brexit deal vote
SFO: Our Libor manipulation probe is over
The Serious Fraud Office has announced the closure of its investigation into Libor rigging, which began seven years ago and has resulted in charges of conspiracy to defraud being brought against 13 people.
Libor, or the London Interbank Offered Rate, has been used since the Eighties as a benchmark for lending between banks.
However, the rate was tainted in 2012 when traders were found to be fixing it and in 2014 ICE took over the administration of the rate from the British Bankers’ Association.
The counter-fraud body says:
In October 2014, Peter Johnson pleaded guilty to manipulating the US Dollar Libor , the first criminal conviction for a Libor offence in the UK. Jonathan Matthew, Jay Merchant and Alex Pabon were convicted by a jury of the same charges in July 2016. In August 2015, Tom Hayes was convicted on eight counts of conspiracy to defraud in relation the manipulation of Japanese Yen Libor .
Between January 2016 and April 2017, six individuals were acquitted by jury of manipulating Yen LIBOR and two acquitted of manipulating US Dollar Libor .
Parts of the SFO’s investigation into Euribor, the Euro Interbank Offered Rate, are still open.
Round-up: China slowdown, Luke Johnson gets windfall from Elegant Hotels buyout, state pensioners get pay rise
It’s bit of a slow one, I’m afraid. Though the mood music is mixed on Brexit, there are signs of bigger global rumbling from China. Here are some of the day’s top stories:
- China’s slowdown shows world cannot rely on Beijing bailouts any more: China’s economic growth has slowed to its weakest in decades, and the rest of the world should be worried.
- Luke Johnson bags bumper payday from Marriott swoop on Elegant Hotels: Former Patisserie Valerie boss Luke Johnson is in line for a multimillion-pound payday after Marriott International swooped on luxury resort operator Elegant Hotels.
- State pensioners to get £351 pay rise: Pensioners are in line for an income boost next year because of big pay rises for British workers.
BoE’s Ramsden: Interest rates could rise if MPs back deal
The first Bank of England policymaker to comment in the wake of Boris Johnson’s new Brexit deal has said that interest rates will rise if MPs back the prime minister.
Deputy Economics editor Tim Wallace reports:
Sir Dave Ramsden said “limited and gradual” hikes would most likely be needed as economists predict that a deal would unleash pent-up investment and revive growth.
The deputy governor predicted that Parliament removing damaging uncertainty for businesses would trigger “some pick-up in investment” and “hopefully” boost flagging productivity.
Rate hikes would relieve some of the pressure put on savers after a decade of ultra-low interest rates.
Sir Dave’s words are likely to have increased enthusiasm around the pound somewhat, with the currency still up on the day by a mild amount (up 0.2pc since midnight).
Markets still muted
European stocks indices are mostly in the green, albeit narrowly, with the FTSE 100 posting minor gains despite the pound staying up at just under $1.29.
‘No chance’ of Woodford returning fees
Scoop from Telegraph Money this morning: my colleague Jonathan Jones reports Neil Woodford has no intention of reimbursing investors for the fees they have been charged, despite renewed pressure to do so.
Calls for the fallen star trader to return fees to investors have grown after the total collapse of Mr Woodford’s flagship fund earlier this week. Jonathan reports:
However, he is understood to have dismissed these calls, nonchalantly suggesting there was no reason to do so. A person familiar with the matter said: “Neil is not going to give money back to investors. Why should he? He has been paid to do a job, whether you think it's a good or bad job does not matter.”
Read more here:
It is a fresh, potentially ugly twist in a saga that has come to a dramatic head in the past week. Mr Woodford was removed from running the Equity Income portfolio by fund administrator Link. He also served notice on his Patient Capital investment trust and Income Focus fund and announced he would close Woodford Investment Management.
A reminder: if you have been impacted by the fallout, you can contact our journalists using the means below:
Avast shares rise after solid results
Cybersecurity firm Avast is leading risers on the FTSE 250 today, up nearly 6pc after post growing sales in the third quarter.
The company’s revenue rose by 9pc, once the figures were adjusted to account for the removal of its managed workplace workplace and business divisions.
Ondrej Vlcek, the Prague-headquartered firm’s chief executive, said:
We continue to successfully execute our growth strategy, underpinned by our platform distribution model and our global installed base of more than 435m users.
The company reaffirmed its outlook for the full year.
Jefferies analyst Julian Serafini said:
Avast’s 3Q results continue the company’s track record of consistent execution of both growth and profitability since its IPO in early 2018.
Evraz shares drop as company unveils spending plans
Russian mining firm Evraz is one of the biggest fallers on the FTSE 100 today, down nearly 3pc after revealing it is considering three major investment projects.
The company said its earnings would take a $350m hit as it tries to improve efficiencies at several of its sites.
The company said it expected global steel demand to continue improving, but warned that a slowing European industrial sector and US-China trade tensions would have an impact.
Its shares are down around 46pc since hitting an all-time high in June.
Wincanton weighs up offer for Eddie Stobart
Britain’s biggest logistics company has entered the race to buy scandal-hit trucking firm Eddie Stobart, my colleague Oliver Gill reports. He writes:
Wincanton, which warehouses goods for some of the world’s most prominent brands, is “undertaking a diligence exercise on Eddie Stobart and its asset”, it said in a short statement on Friday.
A formal offer is yet to be made.
The announcement raises the prospect of a bidding war with Eddie Stobart’s second-largest shareholder DBAY Advisors, which was this week given more time to review the lorry company’s books – but must submit an offer by Oct 28.
- Read more here: Logistics firm Wincanton weighs offer for troubled Eddie Stobart
Super Saturday: Everything you need to know
Markets are looking fairly frozen at the moment, as traders play wait-and-see.
Because the crunch vote will take place at the weekend, markets will not feel the impact until Monday morning – but currency traders will already be getting ready for potential movements.
Barclays says trading teams will be staying later and getting in earlier to help people trade through the fallout, with extra staff on call.
Meanwhile, our news team has broken down the key things you need to know about the vote. Daniel Capurro reports:
Parliament is expected to sit on Saturday in what could be one of the most important Commons’ sessions of the entire Brexit process. It will consider the Brexit deal that Boris Johnson has secured in Brussels.
Parliament has only sat on a Saturday on three occasions since the outbreak of the Second World War, and even before then it was a rare occurrence.
The last time the House of Commons convened on a Saturday was after Argentina invaded the Falklands in 1982.
- Here’s what you need to know: Super Saturday: Why is Parliament sitting this weekend and when will the Brexit vote take place?
Hong Kong protests weigh on InterContinental
Civil unrest in Hong Kong has cost InterContinental Hotels about $5m (£3.9m) in lost income, my colleague Oliver Gill reports. That has sent it shares down about 3pc:
The Holiday Inn and Crowne Plaza owner also bemoaned weaker business bookings on the Chinese mainland for a worse than expected slide in sales.
Revenue per available room, a key metric in the hotels industry known as RevPAR, fell 0.8pc in the three months to September, InterContinental said on Friday.
- Read more here: InterContinental hit by Hong Kong protests
Bank of England to publish annual stress test results on December 10
The Bank of England has unveiled its timetable for the UK’s annual stress tests, which will be released on December 10.
The test, which the Bank is keen to emphasise are not a form of forecast, tests the seven major UK banks and building societies:
...assesses the resilience of the UK banking system to deep simultaneous recessions in the UK and global economies, large falls in asset prices and a separate stress of misconduct costs
Threadneedle Street wonks are currently crunching through the data, which comes from Barclays, HSBC, Lloyds, Nationwide, Royal Bank of Scotland, Santander UK and Standard Chartered.
- You can more here.
Even if the deal passes Parliament, there’s a battle ahead to secure a trade deal
Here’s more on the potential trade implications of Boris Johnson’s Brexit proposal.
Leaving the customs union under Johnson also means “appropriate and modern” rules of origin – a potential headache for businesses forced to prove the provenance of their goods in order to avoid tariffs.
Theresa May’s declaration that the UK “will consider aligning with Union rules in relevant areas” is meanwhile nowhere to be seen in the declaration’s section on regulation, as Johnson favours a free-trade agreement with the EU rather than the tighter customs union relationship.
That sets the stage for a tough period of further intense talks, with no guarantee of big wins for the UK:
That deal will be tough to negotiate in a 14-month transition period as decades of frictionless trade come to an end, the CBI warned. Businesses were already unhappy with the first doomed withdrawal agreement’s scant regard for services, given the sector accounts for 80pc of the UK’s overall economy. But the looser relationship envisaged on goods and the potential for shifting standards will complicate talks in which timescales are already tight.
Peter Holmes, of the UK Trade Policy Observatory at the University of Sussex, said Johnson was seeking a more “distant” relationship but warned: “The more divergence in standards, the more complex the negotiations.”
Fellow TPO expert Michael Gasiorek also warned of the threat of another potential cliff-edge at the end of 2020, adding: “From a business point of view, there is much less certainty than there was with Theresa May’s agreement.”
Our Economics Editor Russell Lynch put it best in his opinion piece yesterday:
For the PM, this deal is but a single battle won in a campaign stretching years into the distance.
- You can read his full analysis here: This deal doesn’t get Brexit done – it’s just the end of the beginning
MPs: We are still waiting for economic analysis of Brexit proposals
The Treasury Select Committee has reiterated its call for the Government to release an economic analysis of the various Brexit paths, ahead of Saturday’s crunch vote.
They last asked for an update in July – the Bank of England gave its analysis in September, but there have been nothing from the horse’s mouth.
TSC chair Catherine McKinnell MP said in a press release:
It is unacceptable that the Committee has not received this information from HM Treasury. It appears to be an attempt to avoid scrutiny. If the Chancellor does not provide the Committee with an update, we can only assume that the existing analysis stands.
I have asked the Chancellor, therefore, if the Government does stand by the existing analysis, or if not, to provide the Committee with a new or updated economic impact assessment of the new Withdrawal Agreement and Political Declaration
When MPs vote on the Government’s new deal on Saturday, we should do so with as much information as possible.
The @CommonsTreasury is still waiting for updated economic analysis on Brexit proposals requested three months ago. MPs are being asked to vote on a Brexit deal on Saturday without all the relevant information - the Govt must provide it urgently pic.twitter.com/LvMWMZYKRp— Catherine McKinnell (@CatMcKinnell) October 18, 2019
Zuckerberg digs in over free speech
Let’s make a brief Transatlantic foray: Facebook has effectively given up on bringing its services to China, its chief executive Mark Zuckerberg has confirmed, signalling a decisive end to the social media giant’s ambition to enter that market.
Our US Tech Reporter Laurence Dodds says:
In a speech at Georgetown University in Washington DC, he said that Facebook had tried and failed to reach agreement with the Chinese government over internet censorship and government access to users' personal data.
The 35-year-old founder used his address to position Facebook as a guardian of free expression, warning that critics of Western tech companies should be wary of allowing them to lose control of the internet to less liberal Chinese services.
He also criticised the “dangerous” trend of opposition to free speech inside Western democracies, saying that too many people had come to believe that their “political objectives” were so important as to justify the suppression of their opponents’ opinions.
Ah, Mark. Admitting it would probably cause Facebook stock to tank, but a speech shows the controversy-prone chief executive has finally accepted China is not going to let Facebook waddle in to its gated internet, no matter how pliant the social media giant plans to be.
That’s possibly good news, given it isn’t exactly running things without a hitch in the rest of the world (these articles are all just from October, read more here):
- Fury as Facebook pays just £28m of UK tax despite record £1.7bn revenues
- Facebook's Libra fallout: what next for cryptocurrency investors?
- Nick Clegg to be summoned to Parliament to give evidence on Facebook encryption
- Facebook encryption will create ‘lawless’ world online, warns agency charged with protecting children worldwide
- Mark Zuckerberg confident of winning break-up battle with Elizabeth Warren, leaked Facebook tapes reveal
Of course, British businesses are already at the top of their game...
Morning folks! It's Saturday, which for me is fry up day! �� What's on your Saturday breakfast menu? Daniel ��— Sainsbury's (@sainsburys) October 18, 2019
Anyone temporarily excited by that tweet from the UK’s third-largest supermarket will be disappointed to learn that, yes, it is still Friday.
Johnson: Brexit will ‘provide the certainty businesses need’
The Prime Minister wrote to businesses yesterday, laying out the reasoning behind his deal and saying:
We are an entrepreneurial and outward-looking nation whose successful businesses are at the heart of creating the prosperity with which we can build world class public services, crucial new infrastructure and a fair, safe, greener society.
You can read the letter in full here.
Brexit: What does the deal mean for businesses and your money?
Anew Brexit deal is here, which means there are new pages of proposals to pour through and plenty to consider for the world of business which, in general, has been begging for the uncertainty to end.
Naturally, our journalists have been pouring over the details, to figure out what the deal means for British firms, and what its economic impact could be.
Here’s an extract:
The Northern Ireland logjam may finally be unlocked, but a line-by-line analysis of Johnson’s political declaration on future relations with the EU is a more hawkish affair than the one drawn up by his predecessor Theresa May 11 months ago. This is not the “Brexit in name only” that May’s deal was labelled last year.
His non-binding declaration makes one concession in the mention of the “level playing field” for competition, which the PM was said to oppose. But omissions include the “close as possible” trading relationship on goods in the May text, while also gone is the previous talk of “building and improving on a customs territory”.
I’ll feed parts of their report into the blog today, but with so much at stake, I’d call it a must-read this morning.
And if that has whet your appetite for more in-depth coverage, here are some other pieces to read this morning:
- Four funds that will soar if Brexit is done by Oct 31
- How a Brexit deal will boost the economy – in five charts
- Europeans also set to lose out from Boris Johnson’s Brexit deal
Have your say
There’s a lot of detail to chew through today, so please do chip in to the comments section if you have any questions about what the deal means, and we’ll try to get you an answer! You can also email me via email@example.com.
Markets open downbeat
A downbeat open for European markets, with the FTSE down, feeling extra pressure from a slightly stronger pound.
The FTSE 250 is almost totally flat:
Former M&S chair on Brexit: ‘this deal is now the best deal we’ll get’
Speaking on the BBC’s Today programme this morning, Lord Rose of Monewden, chair of Ocado and former chair of Marks & Spencer, said people “want to move on” and offering measured support to Boris Johnson’s new Brexit deal.
Lord Rose, who campaigned for a Remain vote, said:
This deal isn’t ideal. There isn’t a lot of difference between what Theresa May had and what Boris Johnson’s got this morning but this deal is now the best deal we’ll get and certainly it is better, absolutely, than a hard Brexit and I think we’ve just go to move on.
As we discussed yesterday, the parliamentary arithmetic will present a challenge for the Prime Minister, so – given the vote will be while markets are closed on Saturday – headline-hungry traders may be more focused on whispers about how crucial swing-voting MPs may be leaning.
Clearing services helps LSE boost revenues by 10pc
Just over a week after seeing off a bid from Hong Kong Exchanges and Clearing, the London Stock Exchange has revealed it boosted third quarter revenues to £521m, an increase of 12pc against the same period last year.
The group was boosted by strong growth in its clearing services division, which increased sales by a fifth.
It also announced that finance boss David Warren will step down. However, he will remain in place until next year until the proposed $27bn purchase of data provider Refinitiv is completed.
LSE chief executive David Schwimmer took the opportunity this morning to plug the merits of the Refinitiv deal once again. He said:
Together, we will create a multi-asset class capital markets business and bring world class data content, management and distribution capabilities to our customers on an open access basis. The transaction offers substantial strategic and financial benefits to our shareholders, customers, employees and other stakeholders.
Agenda: Can Boris Johnson sell his deal?
Good morning. We have a deal. Or we will if MPs back it tomorrow, which is far from a sure thing. The pound had a wild ride yesterday as the drama in unfolded in Brussels.
Sterling hit a five-month high during the day as a new Brexit deal between the UK and EU was unveiled, but pared back its gains as doubts grew over whether the prime minister will be able to get the proposals through Parliament during a crunch vote later today.
It was a mixed day for London shares, with the FTSE 100 and FTSE 250 both grabbing mild gains.
5 things to start your day
1) The shape of Britain's future outside the EU: If the PM can steer his agreement through a historic House of Commons weekend sitting today, UK plc must prepare itself for a much more hands-off relationship with the EU27. Here we examine the impact of Boris Johnson’s deal on the business landscape and wider economy.
2) Chancellor Sajid Javid is refusing to publish a shortlist of candidates for the job of Bank of England Governor because he fears it would throw financial markets into turmoil. Mr Javid refused to make candidates’ names public in a letter responding to cross-party calls from MPs for a more transparent appointment process.
3) For Jean-Claude, a Belgian chocolatier with a quaint shop nestled in the cobbled labyrinth of Bruges, Brexit is merely a puzzle to trouble bureaucrats in Brussels. But Jean-Claude should know that while a damaging no-deal looks to have been averted, negotiators in Brussels have just signed off on a deal that will likely make him worse off.
4) Britain’s tea drinkers are a dying breed as younger customers desert the traditional builder’s brew in favour of trendier alternatives, the owner of PG Tips has warned. A growing shift among younger consumers toward herbal tea and coffee means that PG Tips and Lipton maker Unilever is struggling to grow the brands in developed countries such as the UK and US.
5) Mark Zuckerberg signals Facebook won’t return to China as he calls on tech firms to defend free speech: In a speech at Georgetown University in Washington DC, he said that Facebook had tried and failed to reach agreement with the Chinese government over internet censorship and government access to users’ personal data.
What happened overnight
China’s third-quarter economic growth slowed more than expected and to its weakest pace in almost three decades as the bruising US trade war hit factory production, boosting the case for Beijing to roll out fresh support.
The Chinese economy grew just 6pc year-on-year, marking a further loss of momentum from 6.2pc growth in the second quarter.
China’s trading partners and investors are closely watching the health of the world's second-largest economy as the trade war with the US fuels fears about a global recession.
Asian stocks stumbled after the data, reversing gains made on the UK and European Union striking a long-awaited Brexit deal.
The disappointing Chinese data came as Japan's core inflation slowed to near 30-month lows in September, raising expectations that the Bank of Japan could add to its already massive monetary stimulus. The Nikkei rose 0.2pc. In Hong Kong, the Hang Seng index eased 0.6 percent.
Sterling, which had enjoyed its biggest rising streak since October 1985 and hit a five-month high on the back of the Brexit deal, gave up ground on Friday morning amid doubts that the agreement would receive parliamentary approval. The pound eased 0.31pc to $1.2848.
Coming up today
InterContinental Hotels will issue a trading statement, and the backdrop is “hardly favourable”, says Hargreaves Lansdown’s Emilie Stevens. As well as a broad exposure to a slowdown in the Chinese economy, the company is likely to have felt an impact from the continued disruption caused by protests in Hong Kong. InterContinental has been focused on expansion, but needs to prove it can fill rooms as well as build them.
Full-year results: Dechra Pharmaceuticals
Trading statement: London Stock Exchange Group, InterContinental Hotels
Economics: IMF meeting