Closing summary
Equity investors on both sides of the Atlantic are in positive mood this afternoon.
The FTSE 100 is outperforming all major indices, up 1.6% or 117 points at 7,485. As many of the company’s included in the index have significant earnings abroad, the UK’s leading index tends to benefit from a weaker pound.
And the pound is certainly weak today. Early losses driven by a rejection of Theresa May’s Chequers plan by EU leaders were extended when the UK prime minister gave a live statement from Downing Street.
Traders took fright when a clearly angered May said Brexit negotiations had reached an “impasse”, signalling an increased likelihood of a no-deal outcome.
The pound is on course for its biggest one-day fall in 2018 against the dollar, down 1.5%. It is down 1.3% against the euro.
More reaction to Theresa May’s Brexit statement can be found here:
In other, news Bloomberg reported that Uber is in talks to buy online food delivery firm Deliveroo for at least $2bn. The report sent shares in rival Just Eat down more than 4%, making it the biggest faller on the FTSE 100.
That’s all for today. Thank you for all your comments, and please join us again on Monday.
The bell has rung on Wall Street and the Dow Jones has opened at a record high of 26,753.
The S&P 500 has also hit a new record high of 2,937.
The pound is on course for its biggest one day drop this year against the dollar.
The pound plummeted following Mrs May’s speech, trading down 1.3% versus the US dollar at 1.31.
— Press Association (@PA) September 21, 2018
Against the euro, sterling was down 1% at 1.11. pic.twitter.com/cQHyuoyu3p
Pound extends losses as May says Brexit talks at an 'impasse'
Sterling is lower as Theresa May delivers her statement on Brexit.
The Prime Minister in defiant tone says Brexit talks have stalled because the EU has rejected the UK’s proposals without offering alternatives.
She says the government will continue to work on preparations for a no-deal outcome.
The pound is now down 1.2% against the dollar at 1.2% and down 1% against the euro at €1.1151.
Statement might be delayed
— Laura Kuenssberg (@bbclaurak) September 21, 2018
The pound’s fortunes have not been helped by the news that Theresa May will make a live announcement from Downing Street at 1.45pm.
Sterling is down 0.9% at $1.3153 and 0.7% at €1.1180.
Statement confirmed for 1.45 live inside Number 10
— Laura Kuenssberg (@bbclaurak) September 21, 2018
Craig Erlam, an analyst at the currency firm Oanda, says the fall in the pound could be much worse:
The pound is paring its gains on Friday after the EU rejected Theresa May’s Chequers proposal, casting doubt on a compromise being found despite the UK being only months from leaving the block. Clearly traders don’t view this as too significant a setback or I would expect the drop off in the currency to be much larger and the rejection hardly comes as a surprise given that officials have publicly criticised the proposal in the past.
That said, reports do suggest that EU officials have taken a harder line against May following her insistence that it’s Chequers or no deal. Clearly they believe this is a bluff and haven’t taken to kindly to such a stance so late in the day.
May now faces a tough challenge in returning to the UK ahead of the Conservative party conference no closer to a deal than she was before, leaving her with a massive target on her back as certain colleagues look to position themselves as a better alternative.
The FTSE 100 is outperforming its main European peers, up 1% at 7,438.
But the FTSE’s gain is the pound’s loss. Sterling has lost further ground against both the dollar and the euro.
The pound is down 0.6% against the dollar at $1.3183, and down 0.5% against the euro at €1.1205.
Connor Campbell from Spread Ex gives his take:
The pound came crashing down from Thursday’s highs as Friday went on, no longer able to ignore Theresa May’s Brexit faceplant in Salzburg.
The rather abrupt rejection of the infamous Chequers deal by the EU, alongside a brewing Tory rebellion in the UK, has sterling once again mulling over a potential ‘no deal’ Brexit, with the added seasoning of a potential Conservative leadership challenge at some point down the road.
The FTSE, never the pound’s biggest fan and already in a good mood, spring-boarded off these losses to rise more than 80 points, grazing 7450 for the first time since September 5th.
Turning to this afternoon and the Dow Jones is set for another record-breaking session. The futures have the index adding 60 odd points after the bell, a move that would see it open above 26,700 for the first time in its long and storied history.
Fitch cuts global growth forecasts on trade war 'reality'
Fitch has cut its forecast for global growth in 2019, blaming protectionist US polices and the trade war with China.
It now expects the global economy to grow by 3.1% next year, down from its June forecast of 3.2%. So not a huge downgrade, but a downgrade nonetheless.
It cut its China growth forecast for 2019 to 6.1% from 6.3%. The ratings agency said it was maintaining its forecast for US growth at 2.6%, despite strong economic data, because of trade tensions.
Brian Coulton, Fitch’s chief economist, explains the downgrades:
The trade war is now a reality .
The recently announced imposition of US tariffs on a further $200 billion of imports from China will have a material impact on global growth and, even though we have now included the 25% tariff shock in our forecast baseline, the downside risks to our global growth forecasts have also increased.
Howard Archer, chief economic advisor to the forecasting group EY Item Club has an alternative view and thinks Philip Hammond might have increase borrowing if he is to fund an NHS spending increase.
Public sector borrowing came in at £6.8bn in August, £2.4bn higher than a year earlier. However, over the first five months of the fiscal year, borrowing was still £7.8bn lower than the same period of 2017-18.
There will be one, possibly two, more releases before the Office for Budget Responsibility finalises its forecasts for the Budget. Although borrowing continues to run well below 2017-18 levels, the fact that revenue growth is only running in line with its previous forecast and the likely temporary nature of the undershoot in spending means that major changes to the OBR’s projections are looking increasingly unlikely.
This means the Chancellor may need to use revenue raising measures, or tolerate higher borrowing, in order to fund the extra spending planned for the NHS.
Updated
The UK’s deficit was higher than expected in August, but the government is still on track to meet its full year borrowing target of £37bn according to Andrew Wishart at Capital Economics.
He explains:
Borrowing was higher than expected in August, marking the end of a run of strong figures. Despite the rise in borrowing in August, it is still on track to come in below the Office for Budget Responsibility’s (OBR’s) forecast over the fiscal year as a whole.
We remain content with our forecast for borrowing be £34bn in 2018/19, below the £37bn forecast by the OBR. And we think that the fiscal watchdog is likely to revise its forecast down in November, giving the chancellor room to deliver the promised increase in health expenditure without having to increase taxes or make cuts elsewhere.
HSBC has announced it will be taking down its banking app on Sunday morning to carry out “essential maintenance”.
Interesting timing...
With all the problems with the online services of UK banks - Barclays, Cashplus, Co-op Bank, RBS - HSBC has picked an interesting time to take its mobile banking app down. All we need now is for Lloyds to go down and it's a straight flush of UK banks https://t.co/kCxg8anfXt
— Harry Wilson (@harrynwilson) September 21, 2018
UK's budget deficit rises more than expected
The government borrowed more than expected in August, after disappointing tax receipts, a boost to the state pension, and a contribution to the EU budget.
Figures published by the Office for National Statistics showed borrowing was £6.8bn over the month, £2.4bn more than August 2017 and double the £3.4bn forecast by City economists. Not great news for the chancellor, Philip Hammond, who will be thinking about spending options ahead of his autumn budget.
The broader picture is better however, with borrowing in the first five months of the fiscal year totalling £17.8bn, £7.8bn less than in the same period in 2017 and the lowest in 16 years.
Worse-than-expected reading for the public finances - ahead of the autumn budget (date still yet to be announced...) https://t.co/gzGCcluoSU
— Richard Partington (@RJPartington) September 21, 2018
In the latest technical glitch for UK high street banks, NatWest, RBS and Ulster bank customers are unable to access their bank accounts through the app and online this morning.
Hannah Maundrell, editor in chief of money.co.uk, says:
Frustrating times for Natwest customers this morning, especially ahead of the weekend. Banks really need to pull their socks up because this keeps happening again and again. It’s really not good enough when so many customers are being encouraged to bank online.
It’s worrying when your bank can’t keep on top of their IT systems – customers shouldn’t panic though – Natwest customers can still use telephone banking and they are trying to fix the issues, but if you’re worried about any of your payments being affected speak to Natwest ASAP.
Pound falls on renewed Brexit concerns
The pound is under pressure this morning, hit by renewed fears that Britain will leave the EU without a deal.
Sterling is down 0.3% against the dollar at $1.3222, and down 0.3% against the euro at €1.1225.
Here’s the latest on Brexit negotiations.
Reports that Uber is in talks to buy Deliveroo have hurt food delivery rival firm Just Eat this morning.
Shares in Just Eat are down 5.8%, making it the second biggest faller on the FTSE 100 (after Smiths Group).
Uber is in early talks to buy food-delivery company Deliveroo for several billion dollars https://t.co/ecCW0BkxYp
— Bloomberg (@business) September 20, 2018
European markets open higher
Trading is underway in Europe and all major markets are up, following those record closes on Wall Street on Thursday.
- FTSE 100: +0.8% at 7,424
- Germany’s DAX: +0.7% at 12,407
- France’s CAC: +0.3% at 5,469
- Italy’s FTSE MIB: +0.7% at 21,531
- Spain’s IBEX: +0.3% at 9,616
- Europe’s STOXX 600: +0.3% at 384
NatWest customers locked out of online accounts
NatWest is the latest bank to have problems with its online and mobile banking services.
The bank says this morning that it is “working hard” to fix the issues after customers complained.
We’re aware of some issues on our Online and Mobile Banking services and are working hard to fix them. Telephone Banking and ATMs are available. Sorry and thanks for your patience.
— NatWest (@NatWest_Help) September 21, 2018
On Thursday, millions of Barclays customers were unable to access their accounts online for several hours after the high street lender to suffered a technical glitch.
And last but not least, TSB is still recovering from a botched IT upgrade in April that left up to 1.9 million digital customers locked out of accounts.
Updated
Uber in talks to buy Deliveroo, Bloomberg reports
The ride-hailing service Uber is in early stage talks to buy the food delivery firm Deliveroo, according to a report by Bloomberg. Deliveroo competes with Uber Eats, Uber’s food delivery business.
The news agency writes:
A bid for London-based Deliveroo, last valued at more than $2 billion, would mark a major attempt by Uber to dominate the food-delivery business in Europe. An acquisition price is unknown. Any offer would need to be considerably above its latest valuation, according to people with direct knowledge of Deliveroo plans.
The talks could fall apart, in part because Deliveroo and its investors have been reluctant to relinquish independence, said the people, who asked not to be identified because the information is private. Spokesmen at Deliveroo and Uber declined to comment.
Uber Chief Executive Officer Dara Khosrowshahi has made the company’s food-delivery business a top priority ahead of a planned initial public offering in the second half of 2019.
Markets shrug off trade war fears; Uber in talks to buy Deliveroo
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Asian markets have followed Wall Street higher today, as investor fears over a full-blown trade war between China and the US subsided.
Japan’s Nikkei rose 0.6% to hit an eight-month high, while the Hang Seng in Hong Kong was up 1.3%.
It followed a record high close for both the Dow Jones and the S&P 500 on Thursday, as investors focus on positive company earnings and concerns ease over trade tensions.
David Madden, market analyst at CMC Markets explains:
The Dow Jones and S&P 500 hit all-time highs yesterday as fears surrounding the US-China trade standoff subsided. The tariffs that were announced by both sides during the week were deemed to be not as harsh as originally suspected.
The US in particular showed restraint, but that was partially so the Trump administration would have more ammunition should they feel it is required down the line. Now that the latest series of tariffs are out of the way, investors fell back into their bullish routine. Stock markets in Asia overnight were dragged higher by the positive move on Wall Street.
Markets in Europe are also expected to open higher:
European Opening Calls:#FTSE 7394 +0.36%#DAX 12380 +0.44%#CAC 5468 +0.30%#MIB 21493 +0.49%#IBEX 9634 +0.52%
— IGSquawk (@IGSquawk) September 21, 2018
In other news, Bloomberg is reporting that Uber is in early stage talks to buy Deliveroo, the food delivery service, for several billion dollars. More on that soon.
Also coming up...
- At 9.30am BST we get UK figures for public sector finances in August.
