|Day's Range||7,137.84 - 7,234.40|
|52 Week Range||6,536.50 - 7,727.50|
Ashtead’s stock sank 7.1% on Tuesday after the equipment rental company warned about the impact of “challenging market conditions” on its U.K. business.
The British pound climbed further on Tuesday, with the currency extending gains on the expectation the Conservatives will win a majority in Parliament during the general election on Thursday.
The main U.S. stock indexes were lower as investors awaited signs of progress on trade ahead of Sunday, when new tariffs on imports from China are to take effect.
European stocks lost ground on Tuesday for the seventh time in nine sessions, as the perilous state of U.S.-China trade talks lingers above the market.
U.K. GDP was flat in the three months ending October, the Office for National Statistics said Tuesday. There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April, the statistics agency said. The ONS also reported a 1.3% drop in industrial production in the 12 months ending October, and a 2.1% drop in construction output in the 12 months ending October. The British pound was at $1.3152 vs. $1.3143 on Monday.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Sterling’s rally will be limited even if U.K. Prime Minister Boris Johnson wins a parliamentary majority in the general election and finds a way to pass the withdrawal bill by Jan. 31. That’s because the clock is ticking on a trade agreement in a transition period that runs out at the end of 2020. Any longer-term economic and Brexit uncertainty can increase the chance of a Bank of England rate cut next year, which would weigh on the currency and prop up gilts.Markets Live strategists and writers explore some of the many potential outcomes of the Dec. 12 vote, and how they would play out for U.K. assets:Scenario 1: Conservative MajorityResult: Boris Johnson’s Conservatives get more than 325 seats in ParliamentUnder this base case, cable struggles for further upside beyond 1.32 and EUR/GBP has a tough time making headway down toward the 0.83 handle. Gilts initially sell off, with 10-year fair value about 0.9%Short-term sterling gains to sustain declines in the export-heavy FTSE 100, but its trajectory is also determined by U.S.-China trade talks and commodities. Smaller, domestic U.K. companies may be some of the biggest beneficiariesBut this initial reaction is buffeted by the threat of a no-deal exit amid concerns over reaching a trade agreement next year, especially if the government takes a hard-nosed approachPound options are pricing 1.2815 downside risk, with a 68% certainty factor; this is also likely if the Tories win a wafer-thin majority. Further repricing of Brexit risks would send cable back to the 1.24-1.28 range that prevailed in 2Q/3Q 2019Front-end rates will likely keep pricing of 50% odds of a 2020 rate cut. With a cliff-edge Brexit not out of the question and weak economic conditions, the Bank of England stays cautiousScenario 2: Little ChangeResult: Another hung Parliament as Tories fall just short of a majorityThis outcome likely prolongs political and economic uncertainty that has crippled the pound since June 2016 and undermines passage of the withdrawal billCable quickly falls to the 1.22-1.28 range seen before the withdrawal pact was agreed with the EU. Options suggest cable around 1.25Short-end implied yields drop, and a BOE rate cut could easily be priced for as soon as Jan. 30, especially if no U.S.-China phase-one trade deal is passedGilts rally, with the 10- and 30-year segments driving gains and flattening the yield curve. Inflation breakevens rise, with the five-year climbing toward 3%Domestic stocks such as banks, homebuilders and real estate take a hit from Brexit uncertaintyScenario 3: Yes Prime Minister ... Corbyn?Result: Conservatives win fewer than 300 seats and Labour loses some seats as well. While Labour may be able to form a government with support from other parties, a condition from the coalition could be a prime minister other than Jeremy CorbynGovernment seeks another Brexit extension to hold a second referendumThis is the worst-case scenario as investors would demand higher risk premiums for fear that the government will nationalize everything from railroads to utilities and telecoms. Ambitious spending plans roil the pound, spur long-end yields higher and breakeven rates also climbCable tests 2019 lows near 1.22, a figure also supported by options pricing, and 1.20 a worst-case scenario. The wild card is a pound rally on hopes of Brexit being revokedShort-end rates mirror the scenario where the Tories couldn’t assure passage of the withdrawal bill. Expect a BOE rate cut to be priced for early 2020U.K. utilities and stocks such as Royal Mail are likely to plunge on nationalization concernsTo contact the reporters on this story: Heather Burke in London at email@example.com;Laura Cooper in London at firstname.lastname@example.org;Richard Jones in Berlin at email@example.com;Ven Ram in London at firstname.lastname@example.org;Eddie van der Walt in London at email@example.comTo contact the editors responsible for this story: Kristine Aquino at firstname.lastname@example.org, Heather Burke, Stephen KirklandFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Wall Street futures rebounded Tuesday after the Wall Street Journal reported that the U.S. and China could agree to delay tariffs scheduled to kick-in on December 15.
US stocks and Treasury yields slid in early trade, taking a cautious response to media reports Washington and Beijing had signalled a Sunday deadline for the imposition of new round of tariffs on Chinese imports could be extended. Trade negotiators from the US and China have indicated in recent days that December 15 is not necessarily the final date for duties to increase on $165bn of imports if a so-called “phase one” deal is not reached beforehand, the Wall Street Journal reported about an hour out from Wall Street’s opening bell on Tuesday.
Equipment rental group Ashtead plans to refocus its UK business after a sharp fall in half-year profits. Profit fell 32 per cent to £30m at the British A-Plant business, helping to push the company’s share price down 8 per cent in morning trading on Tuesday. The FTSE 100 group, which rents out industrial and construction equipment such as concrete mixers and diggers, reported overall underlying rental revenue of £2.4bn, up 13 per cent on the same period in 2018.
The Conservative Party lead over the Labour Party has narrowed to 6 percentage points for the Dec. 12 general election in the U.K., according to the latest ICM poll published by Reuters. The Conservatives, led by Boris Johnson, stayed at 42%, while Labour moved up 1 point to 36%. The general rule of thumb is that a 7-point margin of victory is needed to avoid a hung Parliament. The pound traded at $1.3151, from $1.3138 on Sunday.
Tullow Oil shares lost more than half their value on Monday, after the oil and gas company cut guidance and its chief executive resigned, in otherwise-sluggish London markets. The FTSE 100 index (UK:UKX) slipped 0.2% to 7,225.56, weighed down as the British pound continued to rise. The pound (GBPUSD) gained 0.2% to $1.3169, as a weekend poll from the Financial Times showed a 10 percentage-point lead for the ruling Conservative Party over the Labour Party ahead of the Dec. 12 general election.
It’s beginning to feel a lot like Christmas. Which is to say it’s a quiet mid-December morning—the stock market ticking lower, but not by enough that anyone would really notice.
European stocks are struggling for traction as the week kicks off, with some losses in the drug sector and a plunge in Tullow Oil shares. The ECB and the Fed will both meet this week.
European stocks were off to a weak start on Monday, as investors appeared to pause after gains late last week triggered by stronger-than-expected U.S. jobs data.
European stocks fell on Monday as worries about a Chinese economic slowdown and the U.S.-China trade war outweighed Friday's strong U.S. jobs data, in a quiet start to trading before several big events later in the week. The Federal Reserve meets on Wednesday and new European Central Bank chief Christine Lagarde holds her first policy meeting on Thursday, which will also see a parliamentary election in Britain, with the results due on Friday.
It may seem as if the U.K. has been mired in political turmoil forever, but the deadlock over Brexit and the country’s future may just be broken this week when the public goes to polls.
Wall Street futures slip lower as investors gather themselves for a big week of global event risks including two central bank decisions and a make-or-break U.K. general election.
It’s a big week ahead, with the ECB, the FED, trade, and the UK General Election in focus. Expect the stats to play second fiddle in the week.
The U.S. market surged in early trading after a blowout labor report. Activity may have slowed but labor markets and consumer health remain strong.
Cautious optimism about U.S. employment numbers released later today prevailed over news that fall of German industrial production in October was worse than expected.
European stocks rose on Friday, as cautious optimism about U.S. employment numbers to be released later in the day prevailed over news that the fall of German industrial production in October proved worse than expected. The spotlight was on life insurer Phoenix Group, which agreed to acquire rival ReAssure from SwissRe for £3.2 billion, to be paid in cash and shares. Phoenix Group shares rose 0.95% to £7.46 on the news.
(Bloomberg) -- A week from now investors will know three things: the name of the U.K. prime minister, the likely path of Brexit and whether their gamble on Britain’s infamous election polling has paid off.The prospect of a Jeremy Corbyn-led Labour government is quickly being priced out of the market. The pound has climbed against the dollar five days straight through Thursday, up 9% since August when it closed at a more than three-decade low. In stocks, utility companies which would be nationalized under Corbyn’s socialist agenda are rising.Traders are betting on a Conservative Party majority as the market’s preferred outcome -- one predicted by every poll. These forecasts have been wrong before, and some asset gains are starting to look overdone.Ahead of the Dec. 12 vote, here are some key moves:Sterling jumped the most against the dollar since mid-October on Wednesday and hit the highest level versus the euro in more than two-and-a-half years as polls showed the Tories holding their lead over Labour.But investors can glean a deeper insight in the options market, where the price of contracts to exchange currencies in the future shows how much volatility the market expects. Pound-dollar options indicate that expectations for post-election swings next week have jumped the most since 2016 as traders look to capture the aftermath of the vote.Risk reversals, which protect against pound declines, show the most bearish sentiment since the June 2017 election. That may have something to do with the fact the pace of pound gains looks extreme. The pound’s 14-day relative-strength index hit 72 this week. A reading above 70 is usually a sign that an asset price has risen too far, too fast and is poised to retreat -- or at least pause.Before this week, sterling’s RSI breached 70 only three times in the past year, and each occasion preceded a decline. The pound slipped 0.2% as of 8:39 a.m. in London on Friday.While all this plays out, some British stocks are hurting. The pound’s rapid appreciation is no help to the benchmark FTSE 100 Index, which comprises global corporations that reap revenues in foreign income. The Stoxx Europe 600 Index is up 8.9% since sterling’s August low. The FTSE 100 has fallen by almost 1%.Yet one sector is having a good run. Corbyn has pledged to nationalize water and energy providers, a risk which overshadowed the first half of the year for U.K. utility stocks. But as Labour has lagged in the polls these companies have recovered against European counterparts.\--With assistance from Todd White.To contact the reporters on this story: Sam Potter in London at email@example.com;Vassilis Karamanis in Athens at firstname.lastname@example.org;Sam Unsted in London at email@example.comTo contact the editors responsible for this story: Sam Potter at firstname.lastname@example.org, Sid Verma, Cecile GutscherFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.