- FTSE 100 and 250 climb to record highs as sterling sinks on the currency markets after the EU's chief Brexit negotiator Michel Barnier said that divorce bill talks are in a "state of deadlock"
- UK banks heed Mark Carney's warning on ballooning credit and rein in unsecured lending but default rates on credit cards and other unsecured lending rise
- Division at the US Federal Reserve over persistently weak inflation pulls down the dollar
Markets wrap: FTSE 100 & 250 hit record all-time highs
The pound sliding on currency markets after EU's chief negotiator Michel Barnier said that Brexit divorce bill talks are in a "state of deadlock" has pushed the FTSE 100 up to a record all-time close at 7556.24.
The blue-chip index bested its May record after gaining 0.3pc, underpinned by its big overseas earners climbing higher while the mid-cap index has also pushed up its best ever level at 20,251.24 on a 0.4pc gain.
Meanwhile, the Bank of England's latest survey on consumer credit showed that the UK's banks are heeding governor Mark Carney's warning of "pockets of risk" in consumer credit and reining in unsecured lending. The survey showed that banks expect to tighten conditions further in the coming months but defaults on unsecured credit picked up in the third quarter.
IG market analyst Joshua Mahony said on today's record highs:
"The continued ascent of the FTSE has had much to do with the negative effect of the disjointed Brexit negotiations, with daily updates seemingly highlighting just how unsuccessful the initial rounds of talks have been.
"The current ‘deadlock’ shows little signs of being broken, with both sides unwilling to budge in their stance and combative positions. As time ticks on, the chance of a hard Brexit are heightened."
IMF head Christine Lagarde: I can't imagine a 'no-deal' Brexit
Christine Lagarde, managing director of the International Monetary Fund, has said that she cannot "not imagine" a no-deal Brexit scenario.
The movement of people and aviation logistics were not covered by the World Trade Organisation (WTO) rules that would come into force should a deal not be agreed by March 29 2019, Ms Lagarde said, as she explained that such a scenario was unthinkable.
"[I] cannot imagine that would happen," said the leader of the world's lender of last resort, speaking at the IMF's annual meeting in Washington DC.
"For the people themselves, what does that mean? WTO does not provide for those," the former French finance minister added.
Royal Mail wins legal injunction to block strike
Royal Mail has won a High Court injunction preventing next week’s planned 48-hour strike by postal workers.
The firm had applied to block the industrial action orchestrated by the Communication Workers Union after claiming it was “unlawful” because the union had failed to follow previously agreed upon dispute resolution procedures.
CWU disagreed, calling Royal Mail’s legal challenge “underhanded” and “a deliberate attempt to misinterpret and use the agreement to stop postal workers exercising our right to strike”.
Royal Mail had given CWU a deadline of 12 noon on Monday to call off the strike, which was planned for October 19 and 20.
N Brown enjoys a plus-sized sales boost
The boss of N Brown has said she wants to "move the conversation on" from the company's four-year-long transformation from a catalogue business to an online retailer after reporting a jump in half-year sales.
The retailer recorded a 5.6pc increase in overall sales to £453.3m for the 26 weeks to September 2, partly driven by a surge in sales of its plus-sized Simply Be range.
The division grew sales 21pc compared to a year earlier on the back of a 'Curve' marketing campaign, which targets women size 16 and above, and a new denim collection. Meanwhile N Brown's JD Williams label, which is fronted by Lorraine Kelly, rose 12pc to push up total ladieswear sales 9.5pc compared to the year before.
Sterling begins to recover; CBI says lack of progression is 'deeply concerning'
Great question to David Davis & Michel Barnier: "You both pride yourselves on being good negotiators, what are you doing so badly wrong?"— Jane Merrick (@janemerrick23) October 12, 2017
#Brexit Michel Barnier We have done a lot of talking this week and as usual we are no further forward despite the great expense.— Merlin (@Drysdaleboy1) October 12, 2017
Sterling has now plateaued against the dollar at a 0.5pc loss for the session and is clawing back some of the ground lost against the euro after the EU's chief negotiator Michel Barnier said that talks over the Brexit divorce bill are in a "state of deadlock".
The CBI director-general Carolyn Fairbairn commented that the lack of progression was "deeply concerning" for businesses in the UK and the rest of Europe.
"Both sides must show the leadership and determination to get the talks moving more quickly because jobs and investment across Europe depend upon it.
"The need to agree transition and start moving to discussions on the final deal by the end of the year is of paramount importance to firms."
Hurricane season begins to fall out of US labour statistics; Dow Jones nudges down
There's just a little bit of data from the US to keep you updated with this afternoon.
US jobless claims dipped to 243,000 last week, the lowest figure since hurricane season began to distort economics data across the Atlantic.
Pantheon Macro chief economist Ian Shepherdson commented that he is "baffled by the absence of any visible effect" on the figures for Puerto Rico, given the extent of the devastation on the island.
He added that claims are heading back to the pre-hurricane trend, confirming that a strong labour market remains.
US markets have just opened and after rallying on the more dovish Federal Reserve meeting minutes last night, the Dow Jones has nudged down into the red early on.
UK green strategy open to powering more offshore wind than planned
The Government has left the door open for a bigger than expected boom in offshore wind power in the next decade to power low-carbon economic growth.
Ministers are hoping to tackle the UK’s lagging productivity and boost economic growth by betting on the low-carbon sector, which in recent years has brought a surge in skilled jobs across the country.
Offshore wind power has emerged as a key success story in the green growth agenda and the strategy outlines plans to consider going further to support the sector by rolling out more than the 10GW capacity of offshore wind initially planned for the 2020s.
The strategy paper, which contains more than 50 major policies and plans, said that “provided costs continue to fall” the Government would consider opportunities for additional projects beyond the 10GW cap in order to support high-value jobs and a sustainable UK industry, which can export goods and services around the world.
Booker bats off criticism of its deal with Tesco as profits rise
Wholesaler Booker has defended its deal with Tesco in the wake of fresh opposition to the deal by delivering a 9pc jump in half year profits on the back of strong growth in its catering business.
Booker boss Charles Wilson said that the company's proposed £3.7bn takeover with Tesco was on track to complete by "early 2018" and it continued to be "business as usual" for the company until the deal completed.
Last week seven of the UK's largest wholesalers called for thecompetition watchdog to block the deal as it threatened "the survival of the independent retailer".
Mr Wilson shrugged off the criticism and said he believed that customers "will benefit from better choice, better prices and services" if the Tesco deal completes. The UK’s Competition and Markets Authority is expected to finalise its provisional findings by the end of this month.
Reports that China's digital currency crack down will ease lift bitcoin to its highest ever level
I must admit I was, and still am, one of the sceptics on bitcoin but if I had bought in at the start of the year my bitcoin would be 436pc more valuable. That incredible rally, which took a small stumble in September, has taken the digital currency to its highest level ever today at $5233 per bitcoin.
Regulatory woes subsiding on reports that "China may be ready to allow trading again, albeit with tighter regulation" has lifted the cryptocurrency to record peaks, according to ETX analyst Neil Wilson.
"The prospect of Goldman Sachs trading Bitcoin is also driving buying as this might give it a toehold on Wall Street that could bring it into the mainstream and attract fresh inflows of capital.
"And there does seem to be growing appetite among investors to allocate part of their portfolio to Bitcoin as an alternative/complementary safe haven to gold. We’ve also got the prospect of an upcoming fork that could be helping spur demand."
Watchdog provisionally clears Just Eat's take out of Hungryhouse
Just Eat’s planned £200m purchase of rival Hungryhouse has been given provisional clearance by watchdogs who feel the deal will not constrain competition.
The Competition and Markets Authority (CMA) has been chewing over the merger since May when the approach was first made and initially had concerns about the possibility of both customers and restaurants suffering a worse deal from the tie-up.
In June, Hungryhouse complained that the CMA had adopted an “unduly narrow frame of reference” in terms of which type of businesses it considered to be rivals that was “driven by an overly cautious approach”.
Just Eat and Hungryhouse allow customers to order food from local takeaways but orders are delivered by staff from the individual restaurants, unlike rivals including Deliveroo and UberEats, whose drivers ferry meals to consumers.
Lunchtime update: Pound sinks on Brexit 'deadlock'; banks rein in unsecured lending
Sterling has sunk back into the red after the EU's chief Brexit negotiator Michel Barnier said that the UK and EU have reached "a state of deadlock" on the divorce bill, describing the setback as "disturbing".
The pound had clawed back lost ground on the dollar after the Federal Reserve's meeting minutes showed that the central bank's policymakers remain concerned about inflation but stumbling negotiations with the EU have pulled it back below $1.32 against the greenback.
Elsewhere, the Bank of England's latest prognosis on consumer credit showed that the UK's banks are heeding governor Mark Carney's warning of "pockets of risk" and reining in unsecured lending. Although defaults on unsecured credit rose in the third quarter, the survey showed that banks expect to tighten conditions further in the coming months.
Here's Mike Van Dulken's take on the stock markets in Europe this morning:
"European equities remain pretty flat into the second half of the week, even after more highs in the US and Asia. But this is excusable as investors digest a US Fed confused by absent inflation despite low unemployment.
"We are also no nearer clarity on Catalan independence with Spanish PM Rajoy giving separatist leader Puigdemont five days to clarify his call. If a catalyst is required, traders are likely looking to US banks to spice things up with earnings today through Tuesday."
Bitcoin hits record high
HSBC shares didn't budge an inch on that unsurprising announcement but what is moving this morning is digital currency bitcoin.
The incredibly volatile cryptocurrency has hit $5184 per bitcoin, its highest ever price ever this morning. The bubble appeared to be bursting last month when the price sank below $3400 as China stepped up its crackdown on trading platforms. In just one month it has rallied 31pc before spiking this morning.
Analysts are describing the rise as a 'hookers and blow formation', where your heart rate rises without any warning signs. Quite the charmers those traders.
John Flint announced as the new HSBC chief executive
Here's the CV of the new HSBC chief: pic.twitter.com/x7vo6tfEah— Adam Samson (@adamsamson) October 12, 2017
The UK's biggest bank HSBC has just announced that John Flint, the company's current chief executive of Retail Banking and Wealth Management, will take over from Stuart Gulliver as the group's chief executive in February 2018.
The company's chairman Mark Tucker said on Mr Gulliver's replacement:
"John has broad and deep banking experience across regions, businesses and functions. He has a great understanding and regard for HSBC's heritage, and the passion to build the bank for the next generation.
"Through the search process, John has developed with myself and the Board a clear sense of the opportunities and priorities that lie ahead."
Energy price cap could run until 2023 in Government clampdown on suppliers
The Government's controversial plan to cap energy prices will apply to around 18 million accounts that use standard variable tariffs at least until 2020 and possibly beyond, according to officials.
The Energy Bill is due to be presented before Parliament later today, and will begin the process of putting in place an absolute market-wide cap on energy supplier tariffs in the most severe intervention in the energy market since its privatisation.
Under the plans homes in England, Wales and Scotland on Standard Variable Tariffs (SVTs) and other default tariffs will have their prices capped at least until the end of 2020, and for potentially as long as until 2023.
Clamping down on unsecured lending a "spectacular U-turn by the banks
Credit Conditions Survey suggests lenders have taken heed of FPC's warnings. Relationship with official figs far from perfect though. pic.twitter.com/X0oKCIB17e— Capital Economics (@CapEconUK) October 12, 2017
Reining in unsecured lending is "a spectacular U-turn" by the UK's banks, according to Thistle Finance's Mark Dyason.
"Increasingly, people are looking at secured loans as a way to bring down their debt over a longer time period and at a more affordable rate.
"While the rates on secured loans today are considerably more competitive than they were pre-crisis, and many have no early repayment charges, people should always seek advice before entering into this type of finance as it puts their home at risk.
"The key is for people to remain in charge of their credit costs and not let the repayments rule their pay packets."
Ministry of Greggs
To tell the truth, we can get some pretty dry press releases here. This one from Greggs is certainly not one of them so let's include it for the sheer boldness of trying to get a business journalist to report on it.
Bakery chain Greggs has been diversifying its selection of products to bump up growth but it appears it's now expanding into the nightclub sector.
A Birmingham Greggs branch was transformed into a nightclub for a 'Welcome Back to Uni' party last night, complete with free sausage rolls, booze and DJs.
With Deltic pulling out of the takeover battle for Revolution Bars a few days ago, maybe it's time for a new player to enter the fray.
Eurozone industrial production accelerates in August
Eurozone industrial production growth accelerated to 1.4pc in August with Europe's engine room Germany leading the way on the Continent, Eurostat has revealed this morning.
The expectations-beating figures suggest that the sector had a "pretty strong third quarter", according to Capital Economics European economist Jack Allen.
"At the national level, there was an especially large increase in output in Germany, while it also rose in Italy and Spain. That offset declines in France and the Netherlands. By sector, euro-zone output of capital goods rose by a particularly strong 3.1%, which bodes well for business investment in the near term.
"All in all, the overall economy seems to have performed fairly well in Q3. We have pencilled in a slight slowdown in quarterly GDP growth from 0.6% in Q2 to 0.5% in Q3."
Bank of England Credit Conditions Survey key takeaways
BoE's surveys shows further expected tightening in unsecured credit availability by lenders...(line shows expectation for next 3m) pic.twitter.com/MyccRXeTNt— Mohammad Jamei (@mjjamei) October 12, 2017
#BoE Lenders reported that the availability of unsecured credit to households decreased in Q3 and expected a significant decrease in— Shaun Richards (@notayesmansecon) October 12, 2017
- UK lenders reined in the availability of unsecured credit to households in the third quarter and anticipate a sharp decrease on availability in the future.
- Banks tightened credit scoring criteria on granting both credit cards and other unsecured lending while the proportion of applications in this area declined significantly.
- Default rates on credit cards increased slightly and rose significantly on other unsecured lending.
- Demand for secured lending dipped but remained unchanged on credit card lending.
UK banks rein in unsecured lending but default rates rise
UK banks reined in unsecured lending in the third quarter and are expected to tighten availability further in the future, the Bank of England's Credit Conditions Survey just released has shown.
Default rates on credit cards and other unsecured lending are on the rise but banks heeded Mark Carney's warning on ballooning consumer credit with unsecured lending availability falling at its fastest pace since 2009 as banks tighten up credit scoring criteria.
The Bank of England warned a few weeks ago that British high street banks could lose as much as £30bn from defaults on credit cards and personal loans credit as the £200bn consumer debt pile grows at an alarming pace.
The central bank's Financial Policy Committee warned that ballooning consumer credit is a "pocket of risk" but acknowledged that the quality of consumer credit has improved.
Centrica the biggest laggard on the FTSE 100 ahead of energy price cap draft legislation
About 10 minutes after vehemently defending the free market at her speech at the Conservative Party conference just over a week ago, Theresa May announced the biggest government intervention in the energy sector since it was privatised and the draft legislation for the energy price cap is due to unveiled in front of parliament later today.
Since the announcement, British Gas owner Centrica's shares have sunk 9.7pc and the energy provider is languishing at the bottom of the FTSE 100 yet again today.
I haven't seen one expert say that this is a good idea but it's undoubtedly political catnip so here we are.
Head of energy at Comparethemarket.com Peter Earl argues that it is "a short-term solution" which "will not fix the broken energy market".
"For a sustainable, functional market, consumers need to be engaged. There are over 17 million households on standard variable tariffs missing out on over £5.5 billion in savings every year. We need to encourage customers to move on to cheaper, fixed tariffs and save hundreds of pounds a year.
"One way to do this is the introduction of an energy billing revolution. People are confused by an overload of energy jargon in their bills and so forcing energy suppliers to adopt a simple, standardised, jargon-free bill format is an essential step."
Pound extends winning streak against the dollar on Fed inflation worries
The pound is extending its winning streak against the dollar to a fourth day as the greenback sinks on the currency markets after the Federal Reserve's latest meeting minutes showed that the US central bank's rate-setters remain concerned that inflation is not just being pulled down by "transitory factors".
US stocks soared up to record highs on the slightly more dovish stance at the Fed but the market is still pricing in a 75pc chance of an interest rate hike at December's meeting.
Increasing interest rates pulls down inflation and the central bank's concerns are "subduing expectations of aggressive interest rate rises and maintaining investor optimism that global central banks wills continue to do whatever it takes to remain supportive of markets", according to Rebecca O'Keeffe, head of investment at Interactive Investor.
Agenda: Fed inflation concerns help pound rebound against the dollar; ballooning credit under the spotlight
The divide at the US Federal Reserve over persistently weak inflation has knocked the dollar overnight with sterling clawing back yesterday's losses against the greenback to advance 0.3pc to $1.3245.
Minutes from the Fed's latest monetary policy meeting showed that policymakers across the Atlantic are still on course to vote for another interest rate hike at December’s gathering but the Federal Open Market Committee warned that the weakness in inflation might not just be the result of "transitory factors".
This morning, the Bank of England’s latest prognosis of ballooning credit is under the spotlight with the central bank's governor Mark Carney warning recently of "pockets of risk" in rapidly growing consumer debt.
A host of speakers from the central banking world are due to speak today with the Bank of England's chief economist Andy Haldane appearing at the 'Rethinking Macro Policy' conference this evening and ECB president Mario Draghi and Jerome Powell, the frontrunner to be the next Fed chair, also scheduled to speak.
The FTSE 100 has opened flat with British Gas owner Centrica retreating early on ahead of the Government's energy price cap bill.
Full-year results: WH Smith
Interim results: Booker Group, N Brown, Sky
Trading statement: Hays
Economics: BOE Credit Conditions Survey (UK), Core PPI m/m (US), Unemployment Claims (US), PPI m/m (US), Industrial Production m/m (EU), Final CPI m/m (GER)