9 May 2018


9 May 2018

Good morning,

“A profound mistake”. “Misguided”. “A matter of regret and concern”.

Those are just some of words used to describe President Trump’s decision to withdraw the US from the Joint Comprehensive Plan of Action – the nuclear agreement with Iran.

By withdrawing from the agreement, Trump has put himself on a collision course, not only with Iran, but with his international allies. The other signatories – the UK, France, Germany, Russia and China – have stressed their continued support for the deal and urged the the US not to obstruct its implementation.

However, the suggestion of John Bolton, the US national security adviser, that European companies doing business with Iran will have to finish within six months or face US sanctions suggests that little heed will be paid to their concerns.

How Iran reacts will dictate the ongoing viability of the deal.

Meanwhile in the UK, companies are continuing to pursue short term growth returns in the face of pallid economic growth.

Vodafone has agreed to buy large parts of Liberty Global in an €18 billion deal that will expand the UK telecoms operator’s footprint in Europe and help it take on Deutsche Telekom, operator of the T-Mobile brand. The entities included in the transaction are thought to include German cable group Unitymedia and three smaller eastern European assets.

Virgin Money says it is “in the process of reviewing the proposal” from CYBG who made a takeover move to become the biggest UK challenger bank yesterday. The combined group would be valued at £4.4 billion. Shares in Virgin Money and CYBG rose 9.89% and 1.13% respectively as investors cautiously welcomed the news.


MPs will have a vote on retaining key aspects of the European single market via membership of the European Economic Area – the so-called “Norway model” – following the government’s 13th Brexit defeat in the House of Lords. The rebel Labour amendment, moved by Lord Alli, was passed by 245 votes to 218 after 83 Labour peers and 17 Conservatives defied the whip. The government will seek to reverse the amendement when the bill returns to the Commons.

The Information Commissioner’s Office is investigating the Metropolitan Police’s gang database, after a report by Amnesty International alleged that the Gang Violence Matrix is “racially discriminatory” and breaches human rights law. The database was set up following the 2012 London riots and holds information on 3,800 persons of interest. Amnesty’s report found that the database tracks a disproportionate number of minorities, as well as 1,500 people who have been assessed as posing no danger of committing violence. The Met contends that the matrix helped "prevent young lives being lost".

Cocaine can be delivered more quickly than a pizza in parts of England and Scotland, according to the 2018 Global Drug Survey. Of 1,000 cocaine users in England, and more than 500 in Scotland, more than a third said they could get the drug delivered within half an hour. The report which is compiled annually surveyed 130,000 drug users in 44 countries, including 5,000 in the UK, about recreational drug use and its health impact.

Business & Economy

Argentina is seeking assistance from the International Monetary Fund to support its struggling economy, according to President Mauricio Macri. The Argentinian peso has lost a quarter of its value over the past year and the central bank raised interest rates from 33.25% to 40% last week. The move marks the latest chapter in a fraught relationship between the South American country and the IMF. Argentina defaulted on its debts 17 years ago and although its last IMF loan was paid down in 2006, the country had, until now, cut ties with the international body.

The boards of Shire and Takeda, a Japanese company, are holding a series of investor meetings to convince shareholders of the merits of a £45 billion takeover of the FTSE 100 company after one of the biggest deals in the pharmaceutical industry was struck.


The week ahead
The value of global stocks changed little yesterday as markets absorbed the news that the US is to pull out of the nuclear agreement with Iran.

In the US, the benchmark S&P 500 was down 0.03% to 2,671.92, with losses amongst utilities and telecoms reversed by gains in defence stocks. Northrop, Raytheon and Lockheed Martin were boosted by the President Trump’s announcement, gaining 3.83%, 2.55% and 2.04% respectively.

Closer to home, the FTSE 100 was down 0.02% to 7,565.75. Shire was the best performer on the main index, rising 4.63% after Takeda agreed to buy the pharmaceutical manufacturer.

Kingfisher also had a good day, climbing 2.35%, after Morgan Stanley said that the retailer could be target for activist investors.

At the other end of the spectrum, Fresnillo was the biggest faller, dropping 2.44%. Sainsbury’s also saw a reversal in some of the gains made since it announced a proposed merger with rival Asda, shedding 1.96%.

Virgin Money led the way on the FTSE 250 after CYBG confirmed its all-share takeover offer. Virgin Money was up 9.89% and CYBG gained 1.13%. However, First Group plummeted 12.16% after Apollo Global Management abandoned takeover plans for the transport group.

On the currency markets, the pound was up 0.45% against the euro to €1.1419 but fell 0.04% against the dollar to $1.355.

Aberdeen New Thai Investment Trust, Deltex Medical Group, Mirriad Advertising

Compass Group, Imperial Brands, TUI AG Red Shs (DI)

Q1 Results
EVS Broadcast Equipment SA, Coca-Cola HBC AG (CDI), Hellenic Telecom Industries SA ADS

Trading Announcements
Barratt Developments, G4S, Greggs, IFG Group, Wetherspoon (JD), Marshalls, OneSavings Bank, Provident Financial, Renishaw, Vertu Motors

Ascential, Schroder Asian Total Return Investment Company, British Smaller Companies VCT 2, Capital & Regional, Cello Health, Dairy Farm International Holdings Ltd. (Singapore), Ebiquity, Grafton Group Units, Greggs, Henderson High Income Trust, Hong Kong Land Holding Ltd. (Sing.Reg), IFG Group, IGas Energy, Mandarin Oriental International (Singapore), Mobeus Income & Growth Vct, Marshalls, Provident Financial, Patagonia Gold, Rentokil Initial, Standard Chartered, Ten Entertainment Group, Tomco Energy, Virgin Money Holdings (UK)

International Economic Announcements
(12:00) MBA Mortgage Applications (US)
(13:30) Producer Price Index (US)
(15:00) Wholesale Inventories (US)
(15:30) Crude Oil Inventories (US)

Columns of Note

In the Financial Times, Martin Wolf examines President Trump’s trade ultimatum to China, concluding that no sovereign power could accept the humiliating demands made by the US. He states that “the US administration is either so foolish that it does not understand this or so arrogant that it does not care”. Wolf argues that a renewal of the lapsed multilateral trade negotiation, built around opening up the Chinese economy, would be a win-win, which the Europeans and Japanese should support. This, he says, would isolate the US, which is “what must happen when a leader turns into a self-regarding bully”.

In The Telegraph, Rob Wilson critiques the Resolution Foundation’s report from its Inter-Generational Commission. Whilst accepting that there is inequality between the generations, particularly with regards to getting on the housing ladder, he argues that the report fails to understand that the older generation is not inherently selfish and wants to help their younger family members. However, they do not need the government telling them how to do that. Wilson says the solution is “letting people keep more of what they earn; reducing debt burdens on poorer families; and by relentlessly reducing barriers to people wanting the opportunity to strive and get on in life”.

Did you know?

Today marks the 153rd anniversary of President Andrew Johnson’s proclamation which officially ended the American Civil War. The conflict is the bloodiest in American history, with 620,000 men losing their lives in the line of duty – two per cent of the population at the time. To put that in context, if the war were replicated with today’s population, 6.5 million would have died.

Parliament highlights


House of Commons

Oral Questions: Northern Ireland

Prime Minister’s Question Time

Ten Minute Rule Motion: European Union Withdrawal Agreement (Public Vote) - Gareth Thomas

Legislation: Data Protection Bill [Lords] - remaining stages

Motion: Relating to a Statutory Instrument on Education (Student Support)

House of Lords

Oral Questions

Impact of Brexit on the economy of the North East of England - Baroness Quin
Recommendations in the 'Manifesto to Strengthen Families' - Lord Farmer
How many young asylum seekers have been required to cease studying as a condition of immigration bail - Baroness Hamwee
Fighting and loss of life in the Syrian province of Idlib - Lord Hylton

Legislation: Automated and Electric Vehicles Bill - Committee stage (day 1) - Baroness Sugg

Scottish Parliament

Portfolio Questions: Health and Sport

Scottish Labour Party Debate: NHS Tayside Public Inquiry

Scottish Labour Party Debate: Waiting Times


House of Commons

Oral Questions

Digital, Culture, Media and Sport (including Topical Questions)
Attorney General

Select Committee Statement: Third Report of the Health and Social Care Committee and the Sixth Report of the Education Committee, The Government's Green Paper on mental health: failing a generation, HC 642 - Dr Sarah Wollaston

Backbench Business

Debate on a Motion on Redress for Victims of Banking Misconduct and the FCA - Martin Whitfield
Debate on a Motion on Compensation for Victims of Libyan-sponsored IRA Terrorism - Mr Laurence Robertson

House of Lords

Oral Questions

Stopping children being recruited into gangs - Baroness Kennedy of Cradley
Ensuring there is sufficient funding for local government children's services - Lord Bassam of Brighton
Government efforts alongside the BBC as part of the review of the Childhood Obesity Plan for Action - Lord Brooke of Alverthorpe
Ensuring grandparents have a more effective legal right to see their grandchildren - Lord Farmer


Modern Slavery (Victim Support) Bill [HL] - Third reading - Lord McColl of Dulwich
Civil Liability Bill [HL] Committee stage (day 1) - Lord Keen of Elie

Scottish Parliament

General Questions

First Minister’s Questions

Scottish Government Debate: A Route Map to an Energy Efficient Scotland