Pound starts crucial week on the front foot, jumping 0.7pc to above $1.32 against the dollar; Bank of England expected to hike interest rates for the first time in a decade on Thursday FTSE 100 nudges down into the red.
housebuilders struggle on bearish sector note EasyJet rises after sealing deal for £35m of insolvent airline Air Berlin’s assets HSBC reports 448pc jump in pre-tax profit as pivot towards Asia begins to bear fruit IBEX 35 in Madrid soars 2.4pc on Catalonia crisis relief rally as new poll shows pro-independence parties trailing 6:13PM Markets wrap: Spanish stocks soar as independence hopes dwindle Ousted Catalan leader Carles Puigdemont has fled to Belgium S tocks have soared in Madrid today as hopes of Catalan independence slipped away over the weekend.
New figures suggesting that pro-secession parties are behind in the polls ahead of December’s snap regional election boosted equities on the IBEX 35 and pulled down Spanish government bond yields.
Back in the UK, the FTSE 100 has nudged down into the red as the pound climbs in anticipation of an interest rate hike in Thursday’s Bank of England meeting.
Meanwhile in today’s sole major economics release, UK households continued to borrow in September to smooth out the squeeze on real incomes, Bank of England consumer credit statistics showed.
Net consumer credit dipped slightly to £1.
6bn in September, a higher-than-expected figure, while mortgage applications fell to a three-month low, indicating that the housing market is unlikely to pick-up soon.
IG’s chief market analyst Chris Beauchamp gave his take on today’s action:
“It would be too easy to blame the 50-point Dow drop on ‘Indictment Day’, as the Dow and S&P 500 falter, but the Nasdaq’s push to fresh highs suggests that stocks are taking only a passing interest in the admittedly major developments in the Russia-Trump saga.
Pre-BoE buying has continued to lift cable, on expectations that we will get a rate nudge this week, ‘hike’ being too strong a word for what is merely a small move upwards in borrowing costs.
“However, the pound’s strength has been enough to keep the FTSE 100 in check as it looks to build on last week’s bounce from the lows. Catalonia, having been independent for about five minutes, now boasts a ‘government in exile’ as Puigdemont moves to Brussels to escape the clutches of Spanish law officers.”
5:34PM Concierge to the wealthy Ten Lifestyle eyes Aim flotation The online concierge Ten, which helps wealthy individuals sort their lifestyle and travel plans, is eyeing an Aim flotation T he growing number of high net worth individuals willing to pay for someone else to help them make lifestyle and travel decisions has prompted concierge Ten to seek a stock market flotation.
The London-based company is eyeing a listing on the junior Aim market in a bid to raise £40m and help it continue its domestic growth as well as increase its overseas footprint.
It said it expected the number of high net worth (HNW) individuals – the market it primarily targets – to rise from 13.
6m globally in 2016 to 18.7m in 2026 and that demand for its services, such as finding a gift for a loved one or helping organise a holiday, would continue to grow.
4:56PM How would Catalonia go about creating its own currency? Catalonia’s government is learning from Estonia about a hi-tech banking system T he Catalan independence vote has drawn parallels with the Greek crisis of 2015 – including speculation the region could form its own currency.
During the upheaval in Greece in the summer of 2015, the spectre of a ‘Grexit’ was on the horizon that would have entailed it withdrawing from the eurozone.
Even before Greeks voted in a referendum against the deal laid out by its creditors, preparations were already under way to prepare for this by creating a new currency, a version of its old drachma.
In an echo of the Grexit crisis, the Catalan Government is planning contingencies so that it can go it alone, separate from the Spanish banking system. But its preparations make it different from Greece’s moment because the Catalans could be looking to set up a cryptocurrency .
Read Isabelle Fraser’s full report here
4:27PM Spanish stocks soar as independence dream slips away Catalan leader Carles Puigdemont S tocks are soaring on the IBEX 35 this afternoon as separatists’ dream of independence begins to slip away in Catalonia.
While ousted Catalan leader Carles Pugidemont flees to Belgium, an opinion in El Mundo has indicated that pro-independence parties could struggle to retain a majority in the region’s parliament at December elections.
The IBEX 35 is on course for its best day of trading in over a year, jumping 2.7pc, while Spanish government bond yields have dived.
CMC Markets analyst David Madden said this on today’s action on the markets in Spain:
“It is a fairly quiet day in Europe with the expectation of the Spanish market, which has enjoyed a strong rally.
The IBEX 35, is the by far the biggest gainer in Europe as the Catalan President, Carles Puigdemont, has fled the country.
“It says a lot about the Catalan separatist movement if its leader has ducked out of Spain.
Mr Puigdemont wants to evade the Spanish authorities as he runs the risk of being arrested. A poll over the weekend suggested the Catalan nationalists could lose their majority in the upcoming December election. Investors are now less fearful about Catalonia breaking away from Spain, and they are quickly snapping up Spanish stocks.”
3:58PM HSBC boss warns of lack of ‘clarity’ on Brexit transition Mr Gulliver said the bank’s major presence and separate EU banking licence in France allowed it to hold off from doing “anything precipitous” on Brexit T he outgoing chief executive of HSBC Stuart Gulliver has warned of the dangers of an empty Brexit transition deal and said the bank would wait “as long as we possibly can” before deciding whether to move up to 1,000 staff from the UK to France.
After posting profits and revenue growth for the nine months to September, Mr Gulliver said HSBC had not experienced any “material” negative impact from Brexit so far but wanted swift clarity on the UK’s terms of withdrawal.
He warned a transition deal devoid of detail would only provide false comfort to the City: “When it comes to international clients, what they’re really keen on is to have clarity.
“A transitional period without clarity may just postpone investment. What matters is the timing of precision around the UK’s relationship with the EU post-Brexit.”
Read Iain Withers’ full report here
3:31PM US stocks make sluggish start to the week; personal spending growth spikes U.S.
Personal #Spending jumps 1% in September (MoM). The biggest gain in personal consumption since August of 2009! #GDP pic.twitter.com/nFm73zGIEI
— Grant Glenn,CFA,CFP® (@GrantSGlenn) October 30, 2017 T he opening bell has rung in New York and equities across the pond have made a sluggish start to the week with the Dow Jones and S&P 500 edging down into the red.
Pharma giant Merck is dragging most on the Dow Jones , plunging 4.
7pc to a one-and-a-half-year low after it withdrew a regulatory application for a cancer drug in Europe.
Personal spending rebound
On the economics front from the US, personal spending growth rebounded to its highest level since August 2009 in September while personal income growth nudged up to 0.4pc.
Although that spike in personal spending looks impressive, the rebound in consumption is largely down to distortions created by hurricane season, which has affected data from the US for the last month or so.
Capital Economics US economist Paul Ashworth explained how the figures were impacted:
“The surge in nominal consumption was principally due to a 14.
7% m/m increase in spending on new motor vehicles, as the replacement of the 300,000 plus vehicles destroyed in the hurricanes began.
“In addition, the hurricane-related spike in energy prices translated into an 11.
9% m/m increase in spending on gasoline.”
2:52PM Assets of the world’s rich to hit $145 trillion by 2025 as an aging population starts saving The neo-classical terraces of Eaton Square in Belgravia in London. The Victorian-era houses were designed for the wealthy T he amount of money being invested by the world’s super-rich is set to grow more than 70pc by 2025 as money pours in from emerging markets and an older population.
9 trillion of assets currently being managed by investment firms, which make money by charging clients a fee based on an percentage of their assets, is expected to swell to $145.4tn by 2025 as personal wealth rises in emerging economies and pension savings increase.
Asset and wealth managers are “filling the financing gaps” in the pensions industry as governments step back, PwC said, predicting that the sector could manage 42.1pc of the world’s wealth by 2025.
Read Lucy Burton’s full report here
2:30PM Consumers still confident enough to borrow, but mortgage numbers fall The number of people getting mortgages fell in September, but there was strong growth in unsecured forms of credit T he housing market has slowed slightly but consumers are still feeling confident enough to take out unsecured loans, according to data released on Monday by the Bank of England.
The number of mortgage approvals fell to 66,232 in September, a drop compared to the previous month and also lower than July’s six-month high of 69,360.
However, levels of consumer credit remained strong.
There was a slight fall in the growth of borrowing in September, to 9.
9pc, down from 10pc in August, but net unsecured consumer credit increased by £1.6bn in September, marginally above the average seen in the previous six months, and just above economists’ expectations of £1.5bn.
Read Anna Isaac’s full report here
2:19PM Could the Bank of England get cold feet? Mark Carney and the MPC have signalled a rate hike in the past and failed to deliver T he markets are now pricing in a 86.
7pc probability of an interest rate hike on Thursday and last week’s solid GDP growth reading should provide the central bank’s policymakers the impetus to pull the trigger but doubts still remain.
With wage growth still sluggish, retail sales struggling and uncertainty over Brexit lingering, there is still a “small but significant chance the Monetary Policy Committee’s members get cold feet”, according to ETX Capital analyst Neil Wilson.
JP Morgan Asset Management global market strategist Mike Bell believes that the Bank of England is making the decision against a backdrop of political uncertainty and weak growth.
“Inflation is high predominantly because of the fall in sterling caused by the Brexit referendum result not because of a strong domestic economy.
“The ongoing Brexit negotiations put the Bank of England in a challenging position: they have to try and set monetary policy based on the medium term outlook for the economy when the economic outlook has rarely been so uncertain and opaque.”
1:48PM Brent crude extends two-year high Brent crude has hit its highest level in two years A fter hitting a two-year high on Friday, oil prices are extending their gains today with Brent crude pushing towards the $61 per barrel mark.
Prices burst through the $60 per barrel barrier on Friday on expectations that OPEC and other major oil producers will extend the production cap next year.
London’s mid-cap producers are all advancing off the back of the higher prices today with Tullow Oil, EnQuest and Premier Oil all rising over 4.5pc.
1:14PM Goldman Sachs boss Lloyd Blankfein has another dig at Brexit on Twitter Goldman Sachs chief executive Lloyd Blankfein G oldman Sachs boss Lloyd Blankfein has had another dig at Brexit on Twitter, posting a picture of the investment bank’s under construction European headquarters in central London with the suggestion it may have to lie partially empty.
The £300m building near Ludgate Circus, a stone’s throw from St Paul’s Cathedral, covers 1.3 million square foot and houses giant floor plans suitable for hundreds of investment bankers and is close to completion.
But Mr Blankfein has raised the prospect it may not be fully occupied because of Brexit.
Alongside an aerial photograph of the building site, he tweeted: “In London. GS still investing in our big new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control.
Read Iain Withers’ full report here
12:27PM Lunchtime update: Consumer credit holds firm; HSBC sinks despite 448pc jump in profit Net consumer credit held up at £1.6bn in September U K households are continuing to borrow to smooth out the squeeze on real incomes, Bank of England consumer credit statistics showed this morning.
Net consumer credit dipped slightly to £1.6bn in September, a higher-than-expected figure, while mortgage applications fell to a three-month low, indicating that the housing market is unlikely to pick-up soon.
Ahead of the Bank of England’s “Super Thursday”, the pound is buoyant on currency markets, jumping 0.5pc higher against the dollar to $1.
3180 and nudging up 0.2pc against a rising euro.
Elsewhere, the FTSE 100 has nudged down into the red with HSBC’s 1.6pc retreat following its earning dragging on the index most.
The banking heavyweight reported on a 448pc surge in statutory pre-tax profit with its pivot towards Asia boosting earnings.
12:04PM Glencore set for bumper profits in trading arm despite mining woes Glencore is now reckoned to be the second largest independent oil trader in the world G lencore has shrugged off production problems in various parts of the world to inform investors that its lucrative trading business will make even more profit than expected this year.
The FTSE 100 mining giant’s oil and commodity trading network is closely watched by analysts as it generates a large chunk of its annual profits.
Profits in this division are now likely to be between $2.6bn and $2.8bn before interest and tax for the full year, Glencore said.
It is the second time this year it has upgraded guidance for its so-called “marketing” business, having initially pencilled in earnings of between $2.1bn and $2.4bn for the year.
Glencore, along with its mining peers, has been buoyed by higher commodity prices this year, which have boosted margins across the industry.
Read Jon Yeomans’ full report here
11:48AM Signal of a tightening cycle at the Bank of England could drive the pound higher Bank of England governor Mark Carney S terling is climbing on the currency markets ahead of this week’s crucial meeting at the Bank of England but, with an interest rate increase to 0.5pc being increasingly priced into the pound, traders will be looking for further clues on the next steps for Mark Carney and the Monetary Policy Committee.
Will the BoE signal the start of some type of tightening cycle or will the hike just be a correction of the post-EU referendum cut to 0.
ING foreign exchange strategist Viraj Patel gave his take on what could drive the pound later this week:
“What could really drive the pound higher is if the Bank signals that this is more than just a ‘one-and-done’ move and instead the start of a gradual tightening cycle.
“Gradual is a pretty fluid concept – and while the next rate hike will inevitably be data-dependent, this laissez-faire forward guidance won’t stop markets from bringing forward their expectations for additional BoE rate hikes.
11:25AM Consumer credit is still ‘too high for comfort’ According to the Bank of England total unsecured consumer credit in the UK rose to £204.2 billion in September.
— Shaun Richards (@notayesmansecon) October 30, 2017 T he Bank of England will be disappointed that consumer credit has been “pretty sticky” in recent months and is “too high for comfort”, EY ITEM Club’s chief economic advisor Howard Archer said on today’s dip to £1.6bn in net consumer credit.
“The BoE sees unsecured consumer borrowing as a significant risk to the economy and has warned that banks risk become complacent in their lending behaviour.
“The latest credit conditions survey did at least indicate that banks are becoming more cautious in their behaviour by making less unsecured credit available to consumers and tightening lending standards.”
11:06AM Akzo Nobel confirms £23bn plan to merge with US rival Axalta Dulux-maker Akzo said the deal would “create a leading global paints & coatings company” D ulux-maker Akzo Nobel has confirmed it is in talks about a potential $30bn (£22.8bn) “merger of equals” with US rival Axalta.
The Dutch chemicals giant said it was “currently in constructive discussions regarding a merger”, which would “create a leading global paints and coatings company”.
Akzo is the world’s second-largest paint manufacturer, while Axalta, formerly part of Dupont, is the fifth-largest.
Axalta’s shares soared as much as 22pc on Friday amid speculation of a merger, but Akzo’s dipped 1pc this morning to 76.5p after it confirmed that talks were taking place.
It has been suggested that Akzo is pursuing the potential merger in an effort to avoid another takeover attempt by PPG Industries.
Akzo rebuffed three offers from the US giant earlier this year, the largest worth £23bn, on the grounds they undervalued the business and “[demonstrated] a lack of cultural understanding”.
Read Jack Torrance’s full report here
10:58AM UK economic senitment nudges up but consumer confidence struggles Confidence has deteriorate in the retail and consumer sectors, says Pantheon Macro W e have a little bit more economics data for you from this morning but it’s probably not going to get the pulse racing.
The European Commission’s Economic Sentiment Indicator for the UK edged up to 110.
7 in October as confidence returned to the services and construction sectors.
However, the figures also showed that retailers were their least confident since July 2016 and that consumer confidence has nudged down.
Pantheon Macro UK economist Samuel Tombs commented:
“The drop in the consumer indicator was driven by a perceived rise in the risk of unemployment and a decline in saving intentions. Meanwhile, the net balances of food and general retailers planning to raise prices over the next three months remained high in October, albeit less so in the food sector than in September.
“On past form, however, the most intense phase of price rises should be over soon. We still look for CPI inflation to peak at 3.1% in Q4, before falling back to 2% by the end of 2018.”
10:39AM Market update: EasyJet jumps after snapping up Air Berlin assets; housebuilders retreat on bearish sector note EasyJet has snapped up £35m of Air Berlin assets I t’s probably about time we had a look at what stocks are moving in London this morning and why.
Housebuilders are languishing at the bottom of the FTSE 100 after a bearish sector note from Barclays said that expectations may have run ahead of themselves on the Government’s proposals to sink more funds into Help to Buy.
HSBC has dipped 1.
1pc despite reporting a 448pc surge in statutory pre-tax profit and stronger-than-expected revenue. A slight $0.
1bn fall in adjusted pre-tax profit appears to have done the damage this morning with the statutory figure distorted by last year’s earnings being pulled down by a one-cost from the disposal of its Brazilian unit.
EasyJet has jumped 2.6pc after sealing a £35m deal for insolvent airline Air Berlin’s assets while B&Q owner Kingfisher is leading the index after Goldman Sachs gave it a “buy” stamp.
Markets have started the week “with a high degree of scepticism”, commented IG market analyst Joshua Mahony.
He added that optimism is in short supply with such much to be decided later on this week.
Mr Mahony said:
“It comes as no surprise that we are seeing such risk-aversion ahead of a week that sees central bank rate decisions from the BoJ, BoE, and FOMC, alongside economic data points that culminate in Friday’s US jobs report.
“With the pound gaining ground this morning, it makes sense to look at last week’s ECB meeting for inspiration, with markets choosing to buy the rumour, and sell the fact.”
9:58AM Mortgage approvals and net consumer credit nudge down UK ‘Mortgage Approvals’ fall in September $Gbp pic.twitter.com/ijZHa0jmxt
— Sigma Squawk (@SigmaSquawk) October 30, 2017 M ortgage approvals dipped to a three-month low in September but the housing market held up better than economists were expecting, Bank of England statistics just released have shown.
A total of 66,200 mortgages were approved last month, a slight slowdown from August’s figure, while net consumer credit also came in slightly lower at £1.6bn.
The lending figures show that the economy should be able to hold onto a “decent amount of momentum in the near term”, according to Capital Economics’ UK economist Paul Hollingsworth.
6bn rise in consumer credit was down only slightly from August’s £1.8bn rise, and higher than the consensus expectation, suggesting that households are still confident enough to borrow in order to smooth their consumption while their real incomes are being temporarily squeezed.
“There doesn’t appear to be anything in these figures that would prevent the MPC from raising interest rates on ‘Super Thursday’.”
9:29AM IBEX 35 erases Friday’s plunge Catalan president Carles Puigdemont S pain’s benchmark stock index, the IBEX 35, is the sole big mover this morning, gaining 1.6pc in a fairly muted start to the week in the rest of Europe.
The index has basically just erased Friday’s 1.5pc loss after Madrid took away Catalonia’s autonomy and removed Carles Puigdemont as head of the regional government.
The index has yo-yoed its way through the crisis in Spain and, with the issue still not resolved, is unlikely to settle any time soon.
CMC Markets analyst Michael Hewson gave his take on events over the weekend:
“Events in Catalonia are likely to take centre stage early on this week after developments over the weekend.
“The triggering of article 155 by Madrid in response to the declaration of independence by the Catalonian parliament has not only split Catalonia but it has also made Prime Minister Rajoy’s own position much more precarious, given some unease amongst some members of the Spanish parliament, particularly the Basques.
9:17AM HSBC 448pc profit jump flatters performance HSBC chairman Douglas Flint T hat 448pc jump in third quarter pre-tax profit at HSBC is the quite the headline grabber but the figure has been distorted by its earnings last year being pulled down by a one-off costs from the sale of its Brazilian business.
More importantly for the UK’s biggest bank is that its pivot towards Asia is beginning to pay off with 70pc of its profit coming from the region.
With HSBC’S business largely focused on China/Asia(70%), there is a strong case for the ‘local bank’ to have Head Office in HK & not London
— David Buik (@truemagic68) October 30, 2017 T he underlying numbers are not quite as flattering to the progress made by the bank, according to Hargreaves Lansdown analyst Laith Khalaf.
“Profit in the third quarter actually fell backwards slightly, as operating costs rose faster than revenues.
“The retail and commercial banking arm performed pretty well but have been let down by a weak showing in the investment banking division. However this is against a backdrop of a market-wide downturn in fixed income trading, and actually HSBC has held up better than many of its competitors.
8:56AM HSBC profits climb as Asia shift pays off The bank said more than 70pc of its adjusted profit for the year to date had come from Asia B ritain’s biggest listed bank HSBC has posted revenue growth across all its main global businesses as its “pivot to Asia” strategy continues to drive healthy profits.
The lender reported adjusted revenue growth of 2pc to $13bn (£9.
9bn) for the third quarter, beating analyst expectations.
Adjusted pre-tax profits fell marginally by $0.1bn to $5.4bn, but over the first nine months of the year they were still up 8pc at $17.4bn.
The strong results came despite the bank booking more than $770m of exceptional costs for the quarter, including $101m spent on setting up a ring-fenced UK retail bank to comply with new regulations.
With one-off costs and currency impacts stripped out, HSBC posted a $3.8bn leap in pre-tax profits to $4.6bn for the third quarter, as it made a one-off loss on the sale of a business in Brazil last year.
Read Iain Withers’ full report here
8:33AM Agenda: Pound begins landmark week on the front foot; HSBC’s profit soars John Flint will take over as HSBC boss next year T he pound has started a landmark week on the front foot on currency markets, erasing Friday’s retreat to nudge up 0.
4pc against the dollar to $1.3160.
Sterling’s movement in recent months has been dictated by expectations of an interest rate increase at the Bank of England before the end of the year and last week’s stronger-than-expected GDP reading for the third quarter has paved the way for a hike at the Bank of England’s Monetary Policy Committee meeting on Thursday, its first in a decade.
Markets start in jitter mode to week, waiting for announcement on who will helm Fed.
Get boost by tech, but dampener by China delev concerns pic.twitter.com/6rwIbJCtfb
— Holger Zschaepitz (@Schuldensuehner) October 30, 2017 I t’s a quiet start to the week’s economics calendar with only mortgage approvals data to tempt traders this morning. Today’s dearth of data is the outlier in a week packed full of key releases, however.
The Federal Reserve meet on Wednesday in a prelude to a possible December interest rate increase, the Bank of England convene the following day for a crucial monetary policy vote and a healthy smattering of economics data is also due, including US labour statistics, PMI readings and EU GDP growth.
Meanwhile on the stock market this morning, the FTSE 100 has nudged down into the red early on with housebuilding stocks struggling most. The UK’s biggest bank, HSBC, has nudged down despite reporting a surge in profit as its overhaul begins to bear fruit.
Interim results: HSBC
Full-year results: Lok’n Store Group, Artilium
Trading statement: Glencore
AGM: Ideagen, Mirada
Economics: Mortgage approvals (UK), Net lending to individuals m/m (UK), M4 money supply m/m (UK), Core PCE price index m/m (US), Personal spending m/m (US), Personal income m/m (US).