28 April

@AdamDShaw

28 April

Good morning,

 

In the latest round of escalating rhetoric surrounding North Korea, US President Donald Trump has described tensions on the Korean peninsula as his biggest global challenge and warned that “we could end up having a major, major conflict with North Korea”.

 

Much of the basis for international diplomacy is the assumption that the leaders of other countries are rational. Kim Jong Un defies this logic (some would argue that Trump does too) which is what makes the situation increasingly precarious. One miscalculation by either side could be disastrous; whilst the US and South Korea would win any war, the devastation and loss of life on both sides makes that scenario almost unthinkable.

 

Closer to home, election campaigning – both local and general - continues. Yesterday, Theresa May addressed a rally in Leeds where she urged voters to back the Conservatives and strengthen her hand ahead of talks with the rest of the EU. Following comments from German Chancellor Angela Merkel, the Prime Minister claimed the 27 EU countries are “lining up to oppose” Britain. Who could have predicted they would do that?

 

Meanwhile, UKIP leader Paul Nuttall has confirmed that he will stand as a candidate in the general election, without yet revealing which constituency, Boris Johnson’s sister Rachel has joined the Liberal Democrats to fight against a “hard Brexit”, and Jeremy Corbyn had to be rescued by an aide after attempting to address supporters with his back to the camera.

 

NEWS

It has been reported that yesterday’s arrest of a suspected terrorist on Whitehall was an intelligence-led operation. According to The Guardian, authorities were tipped off by a member of the Muslim community who was concerned about the suspect’s behavior. Officers tracked the man and swooped close to Westminster underground station – just yards away from the scene of last month’s attack which left five people dead – with the suspect found to be carrying several knives.

 

In a separate incident which police say is not connected to yesterday’s arrest, a woman in her twenties has been shot by police and four people detained in an anti-terror operation in north-west London and Kent.

 

Marine Le Pen is making up ground but still faces an uphill struggle in her bid to become French President. According to the latest poll, Le Pen now has 41% support – up two points – whilst her rival Emmanuel Macron, the former economy minister, is sitting at 59%. Le Pen was campaigning in Nice yesterday in a bid to attract votes from supporters of conservative François Fillon who was eliminated in the first round. 

 

Allies of Boris Johnson have expressed fears that he could be removed from the cabinet in a post-election reshuffle if, as expected, Theresa May secures a substantial majority. The Telegraph cites one friend of the Foreign Secretary who says that if May has a large majority, she will not need him to sell Brexit anymore. 

 

BUSINESS AND ECONOMY

Royal Bank of Scotland reported a profit of £259 million in the first three months of 2017, the bank’s first quarterly profit since Q3 2015 and reversing a loss of £968 million in the same period last year. The bank, which is still majority–owned by the UK Government, attributed this improvement to its cost-cutting plan, which it described as ahead of schedule. Last week, Chancellor Philip Hammond admitted that the Government was prepared to sell its 72% stake in RBS at a loss. It was acquired in 2008 at a cost of £45bn.

 

Car manufacturers are “sitting on their hands” rather than investing in the UK, as they do not believe a trade deal with the EU will be struck within the next two years, according to Michael Hawes, chief executive of the Society of Motor Manufacturers and Traders. Hawes was speaking at an event in Brussels to launch the EU car industry’s position on Brexit.

 

One of those car manufacturers was said by MPs to have shown "a reckless disregard for safety" in allowing customers to keep driving its cars after a fire risk was identified. MPs on the Transport Select Committee said it was "morally reprehensible" for Vauxhall not to warn customers sooner of the fault in its Zafira model. Vauxhall was also too slow in general to take action over the fires, which came to prominence in 2015, according to the committee.

 

Barclays chief executive Jes Staley has suffered another blow after a corporate governance firm recommended that shareholders do not back his re-election to the board. Institutional Shareholder Services, which counts many British investors as clients, said that because Staley is under regulatory investigation for breaking rules to protect whistleblowers, investors should abstain from the vote at the company’s AGM on 10th May. However, Staley is still thought highly likely to be re-elected.

 

MARKETS

What happened yesterday?

The pound hit a seven-month high against the dollar yesterday, up as far as $1.2917 at one point but later falling back slightly to $1.2893.

 

Analysts attributed this primarily to Theresa May’s strong lead in the polls ahead of the general election but there was also disappointment over the lack of detail surrounding Donald Trump’s tax reform plans for the US.

 

The FTSE 100 ended the day down 51.55 points, or 0.71%, at 7,237.17.

 

Legal & General, ITV and Informa were some of those that were trading lower but private hospital group Mediclinic bucked the trend and jumped 17.5% following the decision of the Abu Dhabi government to drop the need for a 20% co-payment for treatment at private clinics.

Finals

Vimetco NV GDR (Reg S)

 

Q1 Results

Barclays, Compagnie de St-Gobain SA, Royal Bank of Scotland Group

 

AGMs

Alpha Pyrenees Trust Ltd., Aberdeen Smaller Companies Income Trust, BBGI SICAV S.A. (DI), Byblos Bank SAL GDR Reg S), EMIS Group, HSBC Holdings, Laird, Mincon Group, O’Key Group GDR (Reg S) (WI), Ultra Electronics Group, M Winkworth

International Economic Announcements

(09:00) IFO Business Climate (GER), (09:00) IFO Expectations (GER)

 

EGMs

BBGI SICAV S.A. (DI)

 

UK Economic Announcements

(00:01) GFK Consumer Confidence, (09:30) Index of Services

 

International Economic Announcements

(09:00) Current Account (EU)

 

COLUMNS OF NOTE

First daughter Ivanka Trump and Jim Yong Kim, president of the World Bank, have co-written an article for the Financial Times urging the public and private sectors to invest in the economic empowerment of women, which they argue could add billions to the global economy. Perhaps Ms Trump’s calls could be directed closer to home; just four of the 25 people who sit in her father’s cabinet are female, after all.

 

In The Guardian, Caroline Lucas MP praises the decisions of Liberal Democrat party members in Brighton Pavilion, and Green party members in Brighton Kemptown, not to stand candidates in those constituencies at the forthcoming general election. She argues that a progressive alliance between Labour, the Liberal Democrats and the Greens is the only way to beat the Conservatives and calls on Jeremy Corbyn and Tim Farron to sit down and make an electoral alliance work. 

 

DID YOU KNOW?

The crack a whip makes is produced when a section of the whip moves faster than the speed of sound creating a small sonic boom.

 

PARLIAMENTARY HIGHLIGHTS

TODAY

House of Commons

 

No business scheduled

 

House of Lords

 

No business scheduled

 

Scottish Parliament

 

No business scheduled