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Britain’s divorce from the EU was once again in disarray after the House of Commons speaker John Bercow refused to allow politicians to vote on Brexit on Monday.
U.K. stocks moved modestly higher on Monday, while the pound pulls back as Prime Minister Boris Johnson fights to get his Brexit deal passed ahead of an Oct. 31 deadline.
European stocks traded modestly higher on Monday, with banks in the lead as investors braced for another week of Brexit headlines, while SAP AG gained on results.
Johnson’s spokesman said the U.K. government is hoping to hold a new vote on its Brexit deal Monday. Earlier Monday, the pound sterling reached a five-month high at $1.30, and domestic stocks in the U.K. continued to have a good day.
European stocks were in the black on Monday, but just barely as investors weigh up a busy weekend of Brexit developments. Hopes that a deal is going to happen is pushing up the banks.
On Saturday, Bank of Japan Governor Haruhiko Kuroda said the BOJ will “certainly” reduce short- to medium-term interest rates if needed to ease monetary policy. This suggests that deepening negative rates will be the primary tool to fight heightening overseas risks.
European shares opened slightly higher on Monday, indicating that investors remained hopeful that Britain would be able to avoid a disorderly exit from the European Union, even as British lawmakers delayed a crucial vote on the withdrawal agreement. The British government insisted on Sunday the country will leave the European Union on Oct. 31 despite a letter that Prime Minister Boris Johnson was forced by parliament to send to the bloc, requesting for a Brexit delay. The pan-European STOXX 600 index rose 0.2% after finishing nearly flat last week, hurt by some weak quarterly results and conflicting Brexit headlines.
(Bloomberg) -- The job isn’t done yet. The British Parliament decided to extend what markets hate most: uncertainty. What’s next? Likely a delay, even if U.K. Prime Minister Boris Johnson’s vowed to leave by Oct. 31. Johnson will on Monday ask the House of Commons to support his deal a new “meaningful vote.” It’s going to be a long week, but judging by the contained reaction of the pound and the flat FTSE 100 futures this morning, the market is pricing some hope of a resolution in the coming days.U.K. domestic-oriented stocks are first in line. They have surged over the past six sessions, and had been tipped to outperform if the deal would have been approved over the weekend. Looking at the chart below, they still have plenty of room on the upside before returning to their pre-Brexit referendum level. Morgan Stanley strategists write that a reduction in Brexit uncertainty should lead to a re-rating in U.K. stocks as the market becomes “investable again.” While U.K. mid-caps offer 10% upside, small caps offer an even better risk-reward as they trade at 10-year valuation lows relative to mid-caps, the strategists write.The FTSE 100 and 250 have performed closely in line over the past months, but the recent surge in the pound has boosted the mid-cap FTSE 250 while holding back the exporters-heavy FTSE 100. The former’s relative performance is at its highest correlation with the pound since September 2016.Digging deeper, domestic banks, housebuilders and retailers are key sectors to consider this week. Shares of U.K. high-street lenders have been among the hardest hit by Brexit uncertainty.RBS, which Bloomberg Intelligence’s Jonathan Tyce calls the poster child for no-deal risk fears, as well as Lloyds, have rallied strongly in recent sessions but remain about 5% and 15% from their pre-Brexit referendum levels respectively.British housebuilders have also been under pressure amid Brexit uncertainty and Morgan Stanley predicted last month that the group could gain 20% if a deal was reached, or drop 18% in a no-deal scenario. Those with big exposure to London, like Crest Nicholson and Taylor Wimpey, have been hit the hardest, still down 26% and 13% respectively since the referendum. HSBC analysts said earlier this month Taylor Wimpey is best placed to gain from a post-Brexit market bounce back.U.K. retailers too have suffered. The FTSE 350 General Retailers Index is still down about 17% since the referendum. Dispersing Brexit clouds may help improve consumer confidence, a strong barometer for the retail sector. Gains in the pound may help supermarkets in particular, such as Marks & Spencer, Sainsbury’s and Tesco.In the event of an U.K. general election, caution might be required for utilities and other stocks likely to be targeted by a potential Labour government. Jeremy Corbyn has vowed to nationalize swathes of Britain’s water and energy firms, along with the railways and postal group Royal Mail.Outside of domestic-oriented U.K. shares, euro-area equities could also be a major beneficiary to a vote in favor of the deal this week. The soaring pound has been a key driver of the Euro Stoxx 50 outperformance, with correlation back near 2017 highs.No matter what happens at the end, multinational groups listed on the FTSE 100 are set to track the pound, with the benchmark rallying if sterling drops and vice versa. FTSE 100 members derive more than 70% of their revenues from abroad. Diageo is one such stock to watch, with Jefferies analysts estimating that every 1% move in sterling against the dollar is worth about 0.5% of the beverage group’s EPS.In the meantime, FTSE 100 futures are flat, Euro Stoxx 50 futures are up 0.1%, while S&P 500 contracts are up 0.2% ahead of the European open.SECTORS IN FOCUS TODAY:Watch trade-sensitive equities after China’s top trade negotiator offered positive signals that talks between Washington and Beijing are progressing toward a partial trade deal.Watch German property owners after governing parties in Berlin struck a deal to freeze rents in the capital for five years. Watch Deutsche Wohnen, Berlin’s largest residential apartment owner, along with other German real estate names including Vonovia, TAG Immobilien, ADO Properties, Adler Real Estate, LEG Immobilien and Grand City Properties.COMMENT:“We have been advocating a bullish equity stance, driven, among other factors, by the belief that the trade drag will ease and that one could see Brexit clarity as early as this month, with the risk of No-deal exit fading,” JPMorgan equity strategists write in a note. “We anticipate an inflection in PMI momentum and look for a continued bounce in bond yields. This is behind our recent reversal of preference for U.S. over Eurozone and the expectation that market leadership will broaden into cyclicals and Value style.”NOTES FROM THE SELL SIDE:Sandvik is raised to buy from neutral at Citi after its 3Q earnings beat on Oct. 18. Citi says it’s stayed on sidelines, instead seeing Volvo as resilience top-pick. But broker now adds Sandvik to its “value-resilience camp”. Separately, SEB also raises Sandvik to buy.COMPANY NEWS AND M&A:SAP Confirms 2019, Mid-Term Ambitions After 3Q Profit IncreasesWirecard Commissions KPMG to Carry Out Independent Audit (1)Shell to Sell Egypt Assets in Western Desert to Focus on GasAdvent Nears Guarantees on Cobham Deal: Telegraph (Oct. 20)Telenor Grameenphone 3Q Revenue NOK3.84B vs NOK3.34B Year AgoBawag to Start EU400 Million Buyback Offer for 11% of Stock (1)Sartorius Stedim Ups Sales View, Buys Parts of Danaher Life (2)Roche’s Tecentriq-Avastin Combo Shows Overall Survival IncreaseTECHNICAL OUTLOOK for Stoxx 600 index:Resistance at 395.1 (July high); 397.9 (June 2018 high)Support at 382.8 (50-DMA); 378.5 (200-DMA); 365.5 (50% Fibo)RSI: 57.2TECHNICAL OUTLOOK for Euro Stoxx 50 index:Resistance at 3,636 (February 2018 high); 3,687 (January 2018 high)Support at 3,519 (76.4% Fibo); 3,466 (50-DMA); 3,403 (61.8% Fibo)RSI: 59.3MAIN RESEARCH AND RATING CHANGES:UPGRADES:EDP raised to overweight at JPMorgan; PT 4 eurosGetinge raised to hold at SEB Equities; PT 143 kronorNorma raised to outperform at MainFirst; PT 40 eurosPearson raised to hold at Deutsche Bank; PT 600 penceSandvik raised to buy at CitiSandvik raised to buy at SEB Equities; PT 190 kronorYara raised to buy at Handelsbanken; PT 410 kronerDOWNGRADES:Assa Abloy Cut to Sell at Pareto Securities; PT 220 kronorBobst cut to underperform at MainFirst; PT 48 Swiss francsDanone cut to sector perform at RBC; PT 72 eurosDeutsche Boerse cut to reduce at Oddo BHF; PT 130 eurosGroupe Open cut to hold at Portzamparc; PT 12.10 eurosICADE cut to neutral at Invest Securities SA; PT 83.50 eurosJulius Baer cut to neutral at CitiKiadis Pharma cut to hold at Jefferies; PT 2.50 eurosKiadis Pharma cut to sell at KBC Securities; PT 3.50 eurosPremier Oil cut to outperform at RBC; PT 125 penceSchaeffler cut to neutral at Oddo BHF; PT 8 eurosWirecard cut to neutral at MainFirst; PT 150 eurosYara cut to hold at Arctic Securities; PT 400 kronerYara cut to sector underperform at Scotiabank; PT 320 kronerINITIATIONS:HelloFresh Rated New Reduce at Kepler CheuvreuxMARKETS:MSCI Asia Pacific down 0.3%, Nikkei 225 up 0.3% S&P 500 down 0.4%, Dow down 0.9%, Nasdaq down 0.8%Euro down 0.08% at $1.1158Dollar Index up 0.07% at 97.35Yen down 0.02% at 108.47Brent down 0.3% at $59.2/bbl, WTI down 0.2% to $53.7/bblLME 3m Copper up 0.2% at $5820.5/MTGold spot up 0.2% at $1492.4/ozUS 10Yr yield little changed at 1.75% ECONOMIC DATA (All times CET):11am: (EC) 2018 Govt Debt/GDP Ratio, prior 85.1%\--With assistance from Kit Rees, Joe Easton and Erin Roman.To contact the reporter on this story: Michael Msika in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, Namitha JagadeeshFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Lansdowne Partners, one of Europe’s biggest and most influential hedge funds, is betting that financial markets are on the brink of a reversal that will see a big fall in “idiotic” bond prices, a slump in technology stocks and a revival in UK equities. to fund spending, which could upset bond prices and some of the best-performing stocks of recent years. The portfolio overhaul is likely to mean a significant increase in Lansdowne’s exposure to UK equities, the person said.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The weekend’s developments in the U.K.’s path to exit the European Union have left equity and sterling investors with yet more uncertainty, with outcomes ranging from a delay, a chaotic departure or -- if Prime Minister Boris Johnson succeeds in his latest plan -- an exit with a deal on Oct. 31.“Financial markets closed last week on an optimistic tone with hopes of resolution and certainty to the Brexit outlook. These hopes have been dashed,” said David Page, Senior Economist at AXA Investment Managers. The pound may see “knee-jerk weakness” on Monday, according to AMP Capital Investors Ltd., while the U.K.’s domestically-exposed FTSE 250, which gained 5.2% over the past six trading days, will also be in focus.Still, losses for the pound and U.K. domestic equities may be limited as a no-deal exit looks less likely, according to Credit Agricole strategists, who recommend using sterling dips as a buying opportunity.With another dramatic week in U.K. politics ahead, here’s what market participants are saying about the latest developments.Alberto Tocchio, Colombo Wealth SA“We are back to square one unfortunately and the market is not going to like it on Monday. The pound will fall back after recent strength and European markets should lose at least 1%.”“On the positive side, Chinese top trade negotiators said that talks with U.S. are making progress and both sides are working toward a partial trade deal. This might partially offset the negative side effect of no-Brexit deal on Monday.”David Page, AXA Investment Managers“Gains in sterling, mid-cap equities and U.K. gilt yields look likely to face an early retracement over the coming week. Insofar as broader global assets, including U.S. Treasury yields had also moved on these developments, we can expect to see some retracement of these moves as well.”“Volatility associated with Brexit uncertainty looks set to remain elevated over the coming two weeks at least. However, we continue to view the prospect of a “no deal” exit on 31 Oct. as unlikely and an eventual extension to Article 50 still, on balance, appears the most likely outcome.” Oliver Harvey, Deutsche Bank“The next focus for the market will be votes next week on the legislation needed to implement the government’s Withdrawal Agreement. There will be a second opportunity for MPs to get the deal done. We retain our constructive outlook on the U.K., and long sterling and short U.K. real yield recommendations.”Joshua Mahony, IG GroupThe Letwin vote has been seen as a proxy for the meaningful vote on Johnson’s Brexit deal, so “markets are understandably treating this result with disappointment.”“It has been clear that there is no majority in Parliament for anything other than opposition for a no-deal Brexit, and thus it is evident that Brexit could yet only occur once we have seen a general election. For traders, the hope of greater certainty has been dashed, with Parliament looking ever more likely to push for an extension into 2020.”Stephane Barbier De La Serre, Makor Capital Markets“The (weekend’s) developments by no means imply that Brexit will necessarily not happen by Oct. 31. It just strongly increases the odds of further status quo aka uncertainty, the thing markets just hate the most.”He expects in coming days U.K. stocks to “brutally relinquish most of their recent gains”, with FTSE 250 down about 5%, while FTSE 100 to be more or less unchanged, cushioned by exporters’ negative correlation with the pound.\--With assistance from Kit Rees and Macarena Munoz.To contact the reporters on this story: Sam Unsted in London at email@example.com;Ksenia Galouchko in London at firstname.lastname@example.org;Joe Easton in London at email@example.comTo contact the editors responsible for this story: Beth Mellor at firstname.lastname@example.org, Blaise RobinsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
It’s another big week for the global financial markets, Corporate earnings, Brexit, trade and economic data in Focus. It’s also Draghi’s last media show…
Canada leads the week’s election action when prime minister Justin Trudeau’s Liberal party seeks to hold on to power on Monday. Argentina also holds the first round of presidential elections this coming Sunday — though there is a distinct possibility that Peronist opposition candidate Alberto Fernández will secure outright victory. The same day regional elections in the eastern German state of Thuringia and Umbria in central Italy will be seen as gauges of the national mood.
U.K. Prime Minister Boris Johnson grudgingly asked the European Union late Saturday to delay Brexit after the British Parliament postponed a decision on whether to back his divorce deal but the defiant Johnson also made clear that he personally opposed delaying the U.K.’s exit, scheduled for Oct. 31.
U.K. Prime Minister Boris Johnson has sent a request to the EU for a delay to Brexit - but without his signature. The request was accompanied by a second letter, signed by Mr Johnson, which says he believes that a delay would be a mistake. The PM was required by law to ask the EU for an extension to the 31 October deadline after losing a Commons vote earlier Saturday. EU Council President Donald Tusk tweeted that he had received the extension request.He did not provide details of its content, but added that he will now consult EU leaders "on how to react". Hours after losing a cvote in a historic Saturday session in the House of Commons, the prime minister ordered a senior diplomat to send an unsigned photocopy of the call by MPs set out in the so-called Benn Act, passed last month. A senior Downing Street source said that the hard copy and email copy of the letter would be conveyed by Sir Tim Barrow, the UK's representative in Brussels.
A defiant Prime Minister Boris Johnson said Saturday that he would resist attempts to delay Britain’s departure from the European Union beyond the end of the month, though he appeared to have no choice but to seek an extension after Parliament postponed a decision on whether to back his Brexit deal.
In a major blow to British Prime Minister Boris Johnson, U.K. lawmakers voted Saturday to postpone a decision on whether to back his Brexit deal with the European Union, throwing a wrench into government plans to leave the bloc at the end of this month.
British MPs on Saturday passed an amendment 322-to-306 that will delay Brexit until Parliament passes the bill implementing the withdrawal agreement. The so-called Letwin amendment will have the effect of postponing a vote on the withdrawal agreement negotiated by U.K. Prime Minister Boris Johnson with the European Union and will force Johnson to ask the EU for an extension. Proponents of the Letwin amendment say it will prevent a no-deal Brexit from occuring on Oct. 31.
Brexit is no easier to write about than to invest around. When writing about the London market it is impossible, however, to avoid Brexit. The past three-plus years have trained investors to always view the UK as divided between domestic earners and exporters.
(Bloomberg) -- Boris Johnson is talking to MPs as he tries to build a majority in Parliament for the Brexit agreement he reached with the European Union on Thursday. But rebels expelled from his own Conservative Party are moving to postpone the decisive vote -- forcing the prime minister to seek a further extension from the bloc.French President Emmanuel Macron added to the pressure on MPs weighing how to vote when he told reporters in Brussels that a further extension shouldn’t be granted if Parliament rejects the deal.Must read: Two Crisis Phone Calls Unlocked the ‘Impossible’ Brexit DealKey DevelopmentsJohnson meeting with cabinet in LondonJohnson Sells Brexit Deal to Parliament Before Knife-Edge VoteDUP reaffirms its 10 MPs will vote against Johnson’s dealJudge Rejects Bid to Block Saturday’s Debate (5:35 p.m.)A Scottish judge rejected an attempt by legal activist Jolyon Maugham to block Saturday’s vote. The lawyer, who successfully got the courts to quash the prime minister’s prorogation of Parliament, had sought to argue that Johnson’s plans violated an existing law that prevents Northern Ireland being put in a separate customs union to the U.K.Hammond Seeks Assurances (5:25 p.m.)Former Chancellor of the Exchequer Philip Hammond warned he can’t back Johnson’s deal in its current form because it could be used to trigger a no-deal Brexit in 2020.Writing in The Times of London, Hammond says he wants assurances from the prime minister that the government won’t crash the U.K. out of the EU without a deal at the end of the transition period.“I haven’t come this far seeking to avoid no deal in 2019 to be duped into voting for a heavily camouflaged no-deal at the end of 2020,” he wrote. “But I am not a lost cause!”Labour MPs Propose Referendum Amendment (4:40 p.m.)Labour MP Peter Kyle has proposed an amendment that would give Parliament’s backing to a referendum on any deal agreed with the EU.The proposed change is to a motion requesting Parliament’s permission to leave without a deal which might be proposed by the government on Saturday if it fails to win backing for Boris Johnson’s agreement.“Tomorrow government will ask us to vote on two motions. First, on the new deal. Second, if that fails, for permission to leave with no deal,” Kyle said. “Should the deal fail to get a majority, MPs will move forward and be given the chance to vote” for the amendment, he said. However, ministers could opt not to move the no-deal motion.The proposed change would add to the motion that Parliament “rejects leaving the European Union without a deal and believes that any final decision on the future relationship between the U.K. and the EU should be subject to a confirmatory referendum before exit day,” Kyle said in a posting on Twitter.Letwin Says Amendment is ‘Insurance’ (4:15 p.m.)Former Tory minister Oliver Letwin said he will back Johnson’s deal and his amendment (see 3:15 p.m.) is simply an insurance policy to stop the U.K. accidentally crashing out without a deal if the necessary legislation isn’t completed in time.“My aim is to ensure that Boris’s deal succeeds, but that we have an insurance policy which prevents the U.K. from crashing out on Oct. 31 by mistake if something goes wrong during the passage of the implementing legislation,” Letwin said in an email. “Nothing in my amendment or in the Benn Act itself in any way delays the actual departure of the U.K. from the EU immediately following the ratification of the Withdrawal Agreement.”SNP Indicates Support for Vote Delay (3.30 p.m.)Nicola Sturgeon, leader of the Scottish National Party, suggested her party would vote for a proposal to delay the vote on Johnson’s deal until after Saturday. The amendment, drawn up by former Tory Oliver Letwin and Labour’s Hilary Benn, would withhold approval for the Brexit deal until the bill which implements it is law (see 3:15 p.m.).“We will ultimately vote against this deal but we would be sympathetic to something that would make sure it doesn’t get through tomorrow,” Sturgeon told reporters in London. She said an extension to the Oct. 31 deadline followed by a general election or a referendum would be her preferred outcome.Saturday May Not Seal the Deal (3:15 p.m.)Boris Johnson may not even get the chance to put his Brexit deal to the vote on Saturday, with support growing for a move by an alliance of former Conservatives and opposition Members of Parliament to delay the decision by a week or more.Former Tory minister Oliver Letwin and Labour MP Hilary Benn have put down an amendment to Johnson’s motion which would withhold approval for the Brexit deal until the bill that implements it is law.If it is passed, Johnson would be unable to put his deal to the vote, leaving him in a situation where he’s obliged by law to seek a delay to Brexit.Don’t Assume EU Extension, Varadkar Says (2:30 p.m.)U.K. lawmakers should not assume the EU would grant another Brexit extension if it’s requested, Irish Prime Minister Leo Varadkar warned, noting such a move would need unanimous consent from EU members. The current proposal is the final offer, he added.Speaking to reporters in Brussels, Varadkar said he “cannot see the European Union coming back for another set of negotiations” if the British Parliament rejects this plan. Asked what the alternative is if this deal is shot down in Westminster, he responded that “plan B is no deal.”Macron Says U.K. Mustn’t Get Delay If Vote Fails (2 p.m.)French President Emmanuel Macron said the U.K. should not get another extension to the Brexit process if Boris Johnson loses the vote on his Brexit deal in Parliament on Saturday.“I don’t think a new extension should be granted,” Macron said at a press conference after a summit of EU leaders in Brussels. “The Oct. 31 deadline must be met.”BNP: U.K. Stocks Could Drop 10% If Vote Lost (12:20 p.m.)Stocks with heavy exposure to the U.K. economy could wipe out the rally seen over the past week if MPs reject Boris Johnson’s Brexit deal on Saturday, according to BNP Paribas.The bank forecasts downside of as much as 10% for the FTSE 250 index in such a scenario, with the exporter-heavy FTSE 100 gaining amid weaker sterling, strategists including Edmund Shing wrote in a note to clients.Johnson Goes on Charm Offensive (12 p.m.)With Saturday’s vote looking incredibly tight, Boris Johnson and his team are spending the day trying to persuade MPs from all parties to back his Brexit deal.Labour MPs are being offered more assurances on workers’ rights in the Withdrawal Agreement Bill, which would be brought to Parliament next week if Johnson wins on Saturday, according to a person familiar with the discussions.The Prime Minister’s personal focus is on winning around hard line Brexiteers in the European Research Group, and that operation is starting in earnest today, the person said.The government currently thinks about 17 or 18 of the 21 rebels who were expelled from the Tory party last month will back the deal, the person said. Many of them are seeking a way back into the party and want assurances any MP who votes against the government this time around will also be expelled.DUP Affirms Opposition to Deal (10:30 a.m.)Sammy Wilson, the DUP’s Brexit spokesman, extinguished any hopes his party will pivot toward supporting Johnson’s deal. “We will definitely be voting against it,” he told Sky News.Wilson said he’s disappointed Johnson “folded to the unreasonable demands of the EU,” especially since the DUP had given him a “fair degree of latitude” on temporary Northern Irish regulatory alignment with Europe.While acknowledging tariffs on goods coming into Northern Ireland from the U.K. would be refunded if they are proven not to have entered the Republic of Ireland, Wilson said the cash-flow problems this would create for local businesses would be damaging.At Least 10 Labour MPs Back Deal, Mann Says (Earlier)As speculation mounts over the way votes will fall on Saturday, Labour’s John Mann said at least 10 Labour MPs are likely to vote for Johnson’s deal. Asked on Ireland’s RTE radio how many of his party would back Johnson’s Brexit proposal, Mann responded that he expected the total to be in the “double digits.”Mann, who will vote for the plan, supported former prime minister Theresa May’s deal and is a vocal critic of Labour leader Jeremy Corbyn, who has called for Labour MPs to reject the deal.Earlier:Johnson Sells Brexit Deal to Parliament Before Knife-Edge VoteLondon Bankers Ready for Wave of Debt Deals If Johnson Wins Vote\--With assistance from Peter Flanagan, Joe Easton and Helene Fouquet.To contact the reporters on this story: Robert Hutton in London at email@example.com;Jessica Shankleman in London at firstname.lastname@example.org;Greg Ritchie in London at email@example.comTo contact the editors responsible for this story: Tim Ross at firstname.lastname@example.org, Thomas PennyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The British pound was nearly steady Friday ahead of Parliament’s knife-edge’s vote on the Brexit deal agreed by U.K. Prime Minister Boris Johnson and the European Union.
(Bloomberg) -- Conflicting Brexit headlines keep coming and Boris Johnson’s ability to pull off a deal remains in doubt. But this isn’t stopping stock investors from taking a bet on the U.K. economy.The Vanguard FTSE 250 UCITS exchange-traded fund, which tracks the index of mid-cap companies that are more sensitive to domestic growth and benefit when sterling is stronger, has attracted about 81 million pounds ($104 million) so far this week, the largest inflow since January, according to data compiled by Bloomberg.Ever since speculation emerged on Tuesday that the European Union and the U.K. are nearing a deal, the ETF’s underlying FTSE 250 Index has been outpacing its FTSE 100 counterpart of larger companies, many of which are international exporters that suffer when the pound rises. This is also visible in fund flows, with the iShares Core FTSE 100 UCITS ETF attracting just 14 million pounds since Monday, down 85% from the previous week.“The FTSE 250 is more domestic and benefits from improved domestic growth prospects,” said Lars Kreckel, global equity strategist at Legal & General Investment Management in London. “It’s reflecting the changing probabilities” of a Brexit deal.JPMorgan Chase & Co. strategists Mislav Matejka and Prabhav Bhadani raised U.K. domestic stocks to overweight on Monday, saying they appear attractively priced and can ride increased consumer confidence and corporate spending as clarity over Brexit grows.Consumer ConfidenceIf Johnson succeeds in getting the Brexit deal through Parliament on Saturday, BNP Paribas strategists including Edmund Shing say that the FTSE 250 will rise at least 5%. They estimate a drop of as much as 10% if the deal falls through.It’s an important turning point for scorned U.K. equities that are the most vulnerable to the state of economic growth. Prior to this week, Vanguard’s FTSE 250 ETF had barely seen any inflows since June, whereas record flows were heading to BlackRock Inc.’s FTSE 100 ETF.Investors have been avoiding U.K. equities for years and the country’s stock market is the least popular in the world, according to the latest Bank of America fund manager survey released on Tuesday. In a monthly poll that ended Oct. 10 -- before the optimistic Brexit deal reports -- respondents forecast British stocks as having the lowest chance of outperformance among major equity markets over the next decade.U.K.-focused equity funds saw their first weekly inflows in a month in the seven days through Oct. 16, attracting $184 million, according to EPFR Global data.Despite the ETF inflows and a brief rally, uncertainty continues to haunt U.K. stock traders. Johnson is now battling to sell his new Brexit deal to skeptical members of the U.K. Parliament before a crucial vote on Saturday. French President Emmanuel Macron added to the pressure when he told reporters in Brussels that a further extension shouldn’t be granted if Parliament rejects the deal.(Updates with weekly flows data from EPFR in the penultimate paragraph.)To contact the reporter on this story: Ksenia Galouchko in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, John Viljoen, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
European stocks weakened Friday after the release of data showing a slowdown in Chinese growth and a warning from French automaker Renault.
The FTSE 100 company, which owns the Crowne Plaza and Holiday Inn brands, said that overall revenue per available room — the industry’s preferred metric — fell 0.8 per cent in the three months to the end of September. For Greater China, the drop was 6.1 per cent, due to a 36 per cent fall in “revpar” in Hong Kong. Pro-democracy protests in Hong Kong have escalated since they started in spring and this week, the city’s chief executive Carrie Lam declared that Hong Kong was in a “technical recession”.
Global stocks retreated Friday after China posted its weakest quarterly economic growth rate in three decades, underscoring investor concern for a trade-related slowdown in major markets around the world and re-centering focus on the fate of ongoing trade talks between Washington and Beijing.