23 May 2018

@Stu7Tay

23 May 2018

Good morning,

MPs might have failed to persuade Mark Zuckerberg to add a London date to his ‘apology tour’ of Europe, but an episode of The Mark Carney Show in parliament yesterday did more than enough to write this morning’s headlines.
 
Speaking at a session of the Treasury select committee, the governor of the Bank of England delivered a series of gloomy economic assessments, for which he laid the blame firmly at Brexit’s door.
 
Growth is lower by almost 2% than the bank forecast in May 2016, amounting to around £40 billion. This is despite eurozone and US economies being stronger than expected and the bank having injected a stimulus in the wake of the vote to leave the EU, including an emergency cut in interest rates. The major headline though was that households were at least £900 a year worse off, “which is a lot of money” Carney told us, incase we weren’t sure.
 
The Canadian economist, who will stand down from his position when his term comes to an end in June 2019, also set out what is likely to be in store for the British economy in the coming months. He told MPs that he expected a "sharp pick-up" in business investment when a Brexit agreement is struck and for the economy to lift this quarter, believing that stagnation in the first three months was caused by “temporary and idiosyncratic” factors, including the unseasonal cold weather. One such consequence of this upturn is that a gradual rise in interest rates is in the offing.

News

Donald Trump has claimed a change in attitude from Kim Jong Un after he met Xi Jinping is to blame for the possible delay or cancellation of a much-heralded summit on June 12 between the US and North Korean leaders. Some commentators have claimed that Trump’s decision to apply pressure to Beijing is a tactic to absolve his own administration of any blame that loose talk has undermined the summit in Singapore. (£)
 
Sajid Javid will today tell police that he is 'standing with' them, as the new home secretary delivers his first speech to the Police Federation. The federation, which represents rank-and-file officers across England and Wales, are notorious for giving home secretaries a frosty reception. Javid is expected to take a different approach to Theresa May, who was heckled in 2012 after telling officers to stop "crying wolf" about the impact of budget cuts.

New figures by the Office for National Statistics have shown that public sector net borrowing, excluding banks,dropped by £1.6bn year-on-year in April, to £7.8bn, the lowest figure for April since 2008. Economists had anticipated a figure of £8.6bn, according to a poll for Thomson Reuters. (£)
 
Predictably, the governor’s comments were seized on by both camps in the Brexit debate. Open Britain, the grassroots campaign against a hard exit, called his performance a ‘must watch’, while Brexiteers delivered a fierce rebuttal led by Boris Johnson, with the foreign secretary under no doubt that it was “absolutely not the case that Brexit has damaged the interests of this country”. Notably, Philip Hammond did not contest the forecast when speaking in the Commons later in the afternoon.
 
Judging by the fevered reaction to Carney’s performance, it would seem that Michael Gove’s prediction in 2016 that “people in this country have had enough of experts” remains more than a tad premature.

Business & Economy

Barclays has been quietly exploring a possible merger with rival banks, including Standard Chartered, in response to pressure from an activist investor, according to two people close to the situation. The possible combination with StanChart, which has a £25bn market capitalisation, is only one of many contingency options being “kicked around” by Barclays directors as it looks to respond 5.4 per cent interest in the bank acquired recently by activist investment fund Sherborne. (£)
 
Marks and Spencer has suffered a steep fall in annual profits, with pre-tax profits dropping to £66.8m from £176.4m last year. A major factor for this 62% drop was a one-off charge of £321m to cover the cost of its decision to close 100 stores across the UK.
 
Stacey Cunningham has been appointed the president of the New York Stock Exchange, the first female to hold the role in its 226-year history. Cunningham started at the NYSE as a summer intern in 1994 and has also worked at Nasdaq, the technology-focused stock exchange. NYSE is the world’s largest stock exchange, handling about $50 billion trades a day in companies that are collectively worth $19.6 trillion. (£)

 

Markets

What happened yesterday?
The FTSE 100 forged ahead once more yesterday, posting another record close for the index. It closed 18.3 points or 0.23% higher at 7877.5, having reached 7,800 for the first time on Monday. At one point during yesterday’s trading it was at 7,903.5, a new all-time intra-day high.
 
US stocks also continue on an upward trajectory as the US and China step back from the brink of a trade war. The Dow Jones opened 34.26 points, or 0.1 per cent higher at 25,047.55, as news broke that the Chinese government would cut import duties on passenger cars as a further concession to the States, with Washington and Beijing nearing a resolution to save Chinese telecoms group ZTE from US sanctions.
 
On the currency markets, hawkish comments on the outlook for UK rates from Bank of England Monetary Policy Committee member Gertjan Vlieghe saw sterling rise 0.1% against the dollar at $1.3438 having been up as much as 0.5% over the course of the day.

Finals
Assura
Dairy Crest Group
Great Portland Estates
HICL Infrastructure Company Ltd
Marks & Spencer Group
OptiBiotix Health
Severn Trent
Vedanta Resources
 
Interims
Hollywood Bowl Group
Britvic
easyHotel
Ixico
Sanderson Group
Stride Gaming
ZPG Plc

Int. Economic Announcements
(12:00) MBA Mortgage Applications (US)
(15:00) New Homes Sales (US)
(15:30) Crude Oil Inventories (US)

AGMs
Access Intelligence, Allied Minds, Antofagasta, Bakkavor Group, Boku, Inc (DI) Reg S, Bovis Homes Group, Cabot Energy, Central Asia Metals, Fundsmith Emerging Equities Trust, Ferguson, Gamma Communications, Golden Prospect Precious Metals Ltd., Hilton Food Group, Keller Group, Lamprell, ICG-Longbow Senior Secured UK Property Debt Investments Ltd, Medica Group, Mercantile Investment Trust (The), MTI Wireless Edge Ltd., N4 Pharma, NAHL Group, Norish Units, Polypipe Group, Restaurant Group, Satellite Solutions Worldwide Group, Smart Metering Systems, St James's Place, STM Group, XLMedia, Xeros Technology Group

UK Economic Announcements
(09:30) Consumer Price Index
(09:30) Producer Price Index
(09:30) Retail Price Index
(11:00) CBI Distributive Trades Surveys

 

Columns of Note

In his weekly Financial Times column, Martin Wolf looks at the implications of Italy’s new populist leaders for the EU. He concludes that, economically, there is a real danger that the country crashes out of the eurozone and defaults, causing significant damage to the economy. Wolf also summarises that, on a political level, it would be difficult for the other member states to bring Italy to heel in the same way it could with Greece given that Italexit is a genuine prospect. (£)
 
Writing in the Guardian, Gaby Hinsliff examines the downfall of Ken Livingstone and asks such a shrewd, likable politician become such a liability. Hinsliff concludes that the former London mayor has either lost his once-canny ability to read the mood of the public or is “listening to a Labour party very different from the one he joined half a century ago”.

Parliamentary highlights

TODAY
 
House of Commons 
Oral questions
International Development (including Topical Questions)
 
Prime Minister’s Question Time
 
Ten Minute Rule Motion 
Terminal Illness (Provision of Palliative Care and Support for Carers) - Bambos Charalambous
 
House of Lords
Oral questions
Restoration of devolved institutions in Northern Ireland - Lord Lexden
Additional support for the tourism industry - Lord Foster of Bath
Allegations of genocide by Turkey against Kurds and Yezides of Afrin province in Syria - Lord Hylton
Direct rail services between London and Lincoln on the East Coast Main Line - Lord Cormack
 
Short Debate
Evacuation, search and rescue plans for large UK passenger ships operating in distant locations - Lord Berkeley
 
Scottish Parliament
 Portfolio Questions
 
Economy, Jobs and Fair Work
Finance and the Constitution
 
Scottish Conservative and Unionist Party Debate: Education: Subject Choices
 
Scottish Conservative and Unionist Party Debate: Housing

TOMORROW

House of Commons
Oral questions
Transport (including Topical Questions)

Business Statement
Business Questions to the Leader of the House - Andrea Leadsom

Backbench Business
Debate on a Motion on the Persecution of the Ahmadiyya Muslim Community - Siobhain McDonagh

House of Lords
Oral questions
Ensuring the Commonwealth Communiqué’s commitment to eradicate forced marriage is realised and assessing its inter-relationship with forced conversion - Baroness Berridge
 
Supporting the Palestinian Authority in its complaint against Israel to the Committee on the Elimination of Racial Discrimination - Baroness Tonge
 
Report of the independent review of the application of sharia law in England and Wales - Baroness Cox

Scottish Parliament
General Questions

First Minister's Questions