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FTSE 100 rises and pound tumbles to two-week low as Brexit fears return

  • Pound skids to two-week low as Brexit fears resurface

  • S&P and Dow hit record highs on Trump's policy comments

  • European bourses close higher, but gains limited by weak insurance sector

  • Dollar edges higher as market awaits details on Trump's tax plans

  • Trump to talk about infrastructure spending plans in speech to Congress on Tuesday

  • LSE merger with Deutsche Börse in doubt

5:32PM

Market report: Trump's policy comments boost shares in CRH

CRH, the biggest producer of asphalt for highway construction in the US, rallied in afternoon trading after US President Donald Trump said he would propose a budget that would ramp up spending on infrastructure and defence.

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In a meeting with governors, Trump said he would talk about his plans for infrastructure spending in a speech to Congress tomorrow. “We’re going to start spending on infrastructure big.”

Shares in CRH, which derives 50pc of its revenues from the US, bounced 77p, or 2.9pc, higher to £27.44, while its peer Ashtead advanced 14p to £16.49.

CRH

The world’s third-largest defence contractor BAE Systems inched up 3p to 618p on Trump’s plan to propose a substantial increase in public safety spending. Over a third of BAE’s sales come from the US. Just last week, the FTSE 100 company said it expects an earnings boost from the US defence budget.

However, Chris Beauchamp, of IG, cautioned: “The disappointment that could set in if the president fails to provide much more light threatens to erode more of the gains seen since the election.”

BAE systems

Distribution group Bunzl also eyed a boost from Trump’s plans to encourage businesses to manufacture more locally. The US accounts for around 60pc of the group’s revenue.

Speaking to Reuters, chief executive Frank van Zanten said: “If Trump is bringing industry back to the US, we will end up selling more gloves and boots and safety products.”

The group also reported full-year adjusted pre-tax profit growth of 16pc to £478.2m, beating forecasts of £470.6m, as it benefited from the pound weakness in the wake of the Brexit vote. Shares jumped 74p to £22.45.

Bunzl

Elsewhere, valve-control systems maker Rotork surged to the top of the mid-cap index, up 10.4p to 246.2p, after it reported an 8pc rise in full-revenue to £590.1m and hiked its dividend by 0.05p to 5.1p. The FTSE 250 company also pinned its hopes on a Trump bump, highlighting that the US President is encouraging shale and pipeline activity.

Rotork share price

On the wider market, the FTSE 100 made modest gains, up 9.3 points, or 0.13pc, on the day to 7,253.

Its gains were limited by insurers which tumbled after the Ministry of Justice cut its discount rate for personal injury claims to -0.75pc from 2.5pc. The move to lower the rate will likely increase the size of lump sum pay outs and hurt insurers' profits. Direct Line predicts full-year profits will be impacted by £215m-£230m, while Admiral estimated it will take a hit of £70-£100m.

Direct Line shares

In its wake, shares in Direct Line plunged 26.1p to 338.5p, Admiral fell 46p to £18.24. However, RSA Insurance ticked 2p higher to 597p after Canaccord Genuity hiked its rating to “buy” from “hold” and Morgan Stanley raised its price target to 650p from 614p.

Meanwhile, London Stock Exchange came under pressure, down 35p to £30.90, after  it said it believes the EU Commission is "unlikely to provide clearance for the merger” with Deutsche Boerse.

LSE

Goldman Sachs cut Smith & Nephew’s rating to “neutral” sending shares 5p lower to £12.01. In a wider note on European medical technology, the US investment bank said it no longer believes the London-listed group can re-accelerate its organic revenue growth by more than 5pc given structural and competitive headwinds.

Elsewhere, National Express accelerated 5.8p to 357.7p on the back of a rating upgrade by Liberum. Gerald Khoo, of Liberum, said: “Exiting UK rail has highlighted the lower risk profile of the group relative to its peers.” Separately, Morgan Stanley lifted its price target by 2pc to 430p citing strong performance in its North American, Spanish and Coach businesses.

National Express

Mining stocks also made gains as copper prices edged higher on the back of production stoppages at the world’s two biggest mines. Anglo American rose 16p to £12.69, BHP Billiton climbed 17.5p to £13.26 and Rio Tinto closed up 25p to £33.41.

Anglo American

On Aim, provider Totally raised £18m in an “oversubscribed” placing sending shares 1.3pc higher to 58.5p. The proceeds will be used in its ‘buy and build’ consolidation strategy as it aims to become “the leading provider of out of hospital healthcare in the UK”.

With that, its time to close for this evening. I'll be back again with more markets coverage from 8.30am tomorrow. 

4:41PM

S&P and Dow hit record highs on Trump's policy comments

The S&P 500 and the Dow Jones Industrial Average edged up to record intraday highs on Monday, after President Donald Trump's said he would make a "big" statement on infrastructure on Tuesday.

In a meeting with state governors on Monday, Trump said his administration would be "moving quickly" on regulatory reforms and that his tax plan would be released after a proposal on Obamacare.

Trump's first address to a joint session of Congress on Tuesday evening is being closely watched by investors for clues on how he planned to carry out his agenda of boosting economic growth.

"If we have a market that is willing to accept a roadmap that says we are going to repeal and replace Affordable Care Act and then have some form of tax reform by the August recess, I think the market will continue to be supportive," said Art Hogan, chief market strategist at Wunderlich Equity Capital Markets in New York.

Trump's promise a few weeks ago of a "phenomenal" tax announcement helped rekindle a post-election rally, driving the main U.S. markets to record highs.

But with details scant on how he planned to implement his agenda, investors have turned wary and the markets have traded range-bound.

Report from Reuters

4:38PM

European bourses close higher but gains limited by insurers and exchange stocks

European bourses closed higher but gains were limited by insurers and exchange stocks. In afternoon trade, infrastructure-related stocks rallied after Trump said he would talk about his plans for infrastructure spending in a speech to Congress tomorrow. 

At the closing bell: 

  • FTSE 100: +0.13pc

  • DAX: +0.26pc

  • CAC 40: +0.14pc

  • IBEX: +0.24pc

UKX

 Chris Beauchamp, of IG, said: "A relatively quiet session has seen the FTSE 100 claw back some of the ground lost on Friday, but not much. The gains seem relatively tentative, with a clear sense of nervousness ahead of a speech to Congress by President Trump which, it is hoped, will fill in some of the blanks in his policies; thus far we have traded on hope, but this cannot last for ever. The disappointment that could set in if the president fails to provide much more light threatens to erode more of the gains seen since the election.

"Once again key risk sectors such as energy and mining are leading the way in the US; over the past few days these have lagged, so their revival bodes well for the market. Durable goods  orders were stronger, although the core number missed expectations, but all investors are acutely aware that Mr Trump’s speech could change everything, and thus the impact has been limited." 

4:12PM

Trump infrastructure promise gives stocks an afternoon lift 

US Donald Trump said he would propose a budget that would ramp up spending on defense, but seek savings elsewhere to pay for it.

In a meeting with governors in which he said he planned to propose a substantial increase in public safety spending. Trump also said he would talk about his plans for infrastructure spending in a speech to Congress on Tuesday.

CRH

"We're going to start spending on infrastructure big." 

In its wake, shares in CRH rallied 3.3pc. 

Michael Hewson, of CMC Markets, said: "Markets in Europe spent most of the day tap dancing on the spot with little in the way of direction, until comments by US President Trump changed that when he said he would be spending large sums of money on infrastructure and defence spending, with the details likely to be fleshed out in tomorrow’s speech to US lawmakers. This helped pull European markets back into the green offsetting concerns about the potential unravelling of a major M&A deal." 

3:33PM

BMW weighs moving production of new electric Mini away from the UK

Electrically powered Minis could be built outside of Britain as BMW considers the future of its massive plant in Oxford.

The German company is launching an all-electric Mini in 2019 and is currently deciding where to base production of the new vehicle.

The company’s Cowley plant had been seen as the leading contender for the work but worries over the impact Brexit could have on UK exports and manufacturing are understood to have put its position in doubt.

German media reported that production may be directed to BMW’s sites in Regensburg or Leipzig, attributing the claims to sources within the company.

A plant in the Netherlands already produces convertible versions of the Mini and this could also be in the running.

​Read the full story here

3:18PM

US pending home sales fall to lowest level in a year

Contracts to buy previously owned US homes dropped in January on a shortage of inventory in the Midwest and West regions, the National Association of Realtors said this afternoon.

The NAR said its pending home sales index, based on contracts signed last month, fell 2.8 percent to 106.4. The pending home sales index for December was revised up to 109.5.

Analysts polled by Reuters had forecast a 0.9pc increase in January. The index last month, however, was still 0.4pc higher than in January 2016.

Buyers are easily outnumbering sellers in several metro areas, NAR chief economist Lawrence Yun said in a statement.

"Most notably in the West, it's not uncommon to see a home come off the market within a month," Yun said.

Across the nation's four regions, contracts in January increased 2.3pc in the North and edged up 0.4pc in the South. That contrasted with declines of 9.8pc in the West and 5pc in the Midwest.

Report from Reuters

2:46PM

Wall Street opens lower as technology stocks weigh

US stocks opened in the red this afternoon as technology stocks weighed. Investors were also eyeing Trump's address to a joint session of Congress, which takes place later today, for clues on his proposed tax reform and plans to overhaul the Affordable Healthcare Act. 

At the opening bell: 

  • Dow Jones: -0.09pc

  • S&P 500: -0.11pc

  • Nasdaq: -0.19pc

2:43PM

Pound the biggest faller on major FX markets today

The pound is on track for its steepest one-day fall in three weeks. 

2:18PM

Primark woos British shoppers but ABF warns sterling benefit to fade

Shares in Associated British Foods have dipped 0.2pc to £26.06 after it revealed the post-Brexit vote pound slump will boost its operating profits by £50m. Our retail editor Ashley Armstrong reports: 

Primark owner Associated British Foods has revealed that the pound's slump will boost operating profits by £50m in the first half of the year, but the benefit from sterling's weakness will taper off towards the end of the year.

John Bason, ABF finance boss, said that the group had not seen any evidence of shoppers reining in their spending following the EU referendum vote in June.

ABF

"We have been consistent that Brexit poses opportunities as well as risks," he said.

Primark recorded a 2pc lift in UK like-for-like sales during the 16 weeks to January 7, helped by more normal winter weather. In September the discount fashion retailer posted its first ever sales slump after an "autumn that was too warm and an Easter that was too cold", said Mr Bason. 

Read the full story here

2:02PM

US stocks poised to open lower 

US stocks are poised to dip into the red when the opening bell sounds on Wall Street this afternoon as investors await Trump's address to a joint session of Congress for clues on his proposed tax reform and plans to overhaul the Affordable Healthcare Act. 

Here's the opening calls courtesy of IG: 

Connor Campbell, of SpreadEx, said: "Looking to the US open and the Dow Jones seems set to take its cue from the European indices, the futures suggesting a 15 point fall after the bell. And while that still leaves the Dow at or around 20800, it marks the index’s latest failure to substantially break above that level." 

1:48PM

Buffett says he's 'always working' and looking at deals or acquisitions, but nothing is 'close' to happening

Back to Warren Buffett's appearance on CNBC earlier. Speaking to CNBC, the billionaire said that he is "always working" and looking at deals or acquisitions, but added nothing is "close" to happening. 

His comments come just over a week after Buffett-backed Kraft-Heinz was forced to dramatically pull an audacious £115bn takeover bid for Unilever, after it was vigorously defended by the FTSE-100 giant.

1:45PM

US core capital goods orders unexpectedly fall in January

New orders for US-made capital goods unexpectedly fell in January after three straight months of strong gains, but did little to change views that manufacturing was recovering from a prolonged slump amid rising commodity prices.

The Commerce Department said that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.4pc after an upwardly revised 1.1pc increase in December.

These so-called core capital goods were previously reported to have increased 0.7pc in December. There were declines in orders for primary metals and electrical equipment, appliances and components, as well as computers and electronic products. Orders for machinery and fabricated metal products rose.

Economists polled by Reuters had forecast core capital goods gaining 0.5pc last month. January's drop in core capital goods orders likely reflects caution among businesses as they await details of the Trump administration's proposed tax reform.

Shipments of core capital goods fell 0.6pc  last month after jumping 1.6pc in December. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.

A 6.0pc surge in demand for transportation equipment buoyed overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, which leapt 1.8pc last month.

Durable goods orders decreased 0.8 percent in December.

Report from Reuters

1:39PM

Forget Brexit talk, its Trump that really matters for the pound this week

Forget the return of Brexit jitters, Trump is the bigger driver of the pound in the near-term, Kathleen Brooks, of City Index, cautioned today. 

She said: "The immediate risk to the pound could come from President Trump’s address to Congress on Tuesday. The dollar and the US bond market seem to have lost faith in Trumpenomics, 10-year US Treasury yields fell to their lowest level since November on Friday and the dollar index is 2pc away from its December high.

"If Trump can put flesh on the bones of his pro-growth economic plans, then US bond yields could rise and drag the dollar with them, if he fails to do this then we could see further dollar weakness. Yields also don’t support today’s decline in the pound." 

The chart above showcases the GBP/USD and the UK-US 10-year yield spread, this usually moves in a similar direction, but in recent days the pound has fallen while the UK-US yield spread has actually risen. If this corrects itself then the pound could recover, Brooks highlights.

"So, don’t put too much stock on Brexit headlines and Monday’s price action. Trump’s speech is a far more important risk even this week, and could determine whether we see further weakness back to 1.20 or if we get a recovery rally back towards 1.27 in GBP/USD. The real price movement is likely to happen late Tuesday/ early Wednesday, Trump will talk at 0200 GMT. Set your alarm clocks on Tuesday night and get ready for this week’s most important event for sterling."

1:13PM

Pound remains weak even after Downing Street says there should be no second Scottish vote

The pound is still down by 0.4pc trading just at $1.2411 against the dollar even after a British government spokesman said there should be no second Scottish referendum on independence. 

"The question is not whether there could be a second referendum, it is whether there should be one - and the clear answer to that is no," the spokesman said.

"The threat of one is creating unnecessary uncertainty and division."

 The comments come after The Times reported that Scottish nationalists were preparing to demand a fresh vote, possibly as early as next month. 

12:56PM

Half-time update: European bourses pare gains as insurers weigh

European bourses pared gains by lunchtime as insurers and exchange operators tumbled into the read. 

Here's a snapshot of the current state of play in Europe: 

Mike van Dulken, of Accendo Markets, said: "European equities are pretty flat into the new week, investors awaiting elaboration, if not confirmation, of major US tax changes from Trump to justify a near 3-month rally since his election. A USD off overnight rebound highs, however, has evaporated what was initially helpful GBP and EUR weakness, the GBP having dropped on fears of another Scottish referendum on independence due to Brexit. This while European politics (FR, NL) keep things spicy and M&A optimism suffers further from competition demands looking set to scupper an LSE-Deutsche Börse merger. " 

12:52PM

Bunzl tops FTSE 100 with 'strong' performance boosted by weak pound

Shares in Bunzl bounced 2.3pc to the top of the blue chip index this afternoon after its full-year adjusted pretax profit rose 16pc to £478.2m. Industry editor Alan Tovey has the details: 

Outsourcer and logistics group Bunzl topped the FTSE 100 leaderboard after posting a market-beating rise in annual profits.

The company, which supplies items such as carrier bags for supermarkets and hard hats for builders across the world - reported a 16pc rise in adjusted pre-tax profits to £478m, up from £411m last time round.

Bunzl

A consensus forecast of analysts had predicted profit of £470m for the year to the end of December. On a statutory level, pre-tax profit rose 12pc to £362.9m.

The news pushed the shares up 2.3pc in lunchtime trading.

However, the performance was boosted by the pound’s weakness in the wake of the EU referendum, with the rise at constant currency exchange rates a more modest 6pc.

Revenue enjoyed a similar lift from the fall in sterling. At the reported level it was £7.43bn, up 14pc, but stripping out foreign exchange benefits, it was up 4pc.

Read the full story here

11:57AM

Warren Buffett says his Apple stake is now worth about $17bn

Speaking to CNBC this morning, billionaire Warren Buffett has said his stake in Apple is now worth $17bn.

His interview with CNBC comes just over a week after Buffett-backed Kraft-Heinz was forced to dramatically pull an audacious £115bn takeover bid for Unilever, after it was vigorously defended by the FTSE-100 giant.

On Saturday, the billionaire denounced “Wall Streeters” for charging “high fees” and urged ordinary investors to buy low-cost index funds.  In his famed annual letter to Berkshire Hathaway shareholders, the Oracle of Omaha said: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.  

11:53AM

UK insurers hit back at 'crazy' personal injury rate change as share prices tumble

The Ministry of Justice has changed the rate at which compensation payments are calculated in personal injury claims. Here's our full report by Julia Bradshaw: 

UK insurers have attacked as "crazy" Government plans to change the way personal injury compensation pay-outs are calculated, a move that will wipe millions off the profits of the country’s largest insurance companies.

The Ministry of Justice announced this morning that it will cut the discount rate – a calculation used to determine lump sum compensation to claimants who have suffered life-changing injuries - to -0.75pc from 2.5pc.

The new rate will take effect from March 20. It is the first time it has been changed since 2001. The move will cost the insurance industry millions of pounds and send premiums higher for customers. The announcement caused shares across the industry to plummet by as much as 7pc.

Admiral 1-day share price

Huw Evans, director general of the Association of British Insurers, which represents the industry, called the move a “crazy decision” by Lord Chancellor and Justice Secretary Liz Truss.

“Claims costs will soar, making it inevitable that there will be an increase in motor and liability premiums for millions of drivers and businesses across the UK,” he said.

Read the full story here

11:43AM

Sturgeon to call for a second referendum?

David Cheetham, of XTB, thinks the volume of sterling being offloaded this morning remains "fairly small", despite reports the Scottish National Party (SNP) leader Nicola Sturgeon will look to take advantage of Theresa May beginning the formal process of Brexit next month by demanding another referendum on Scottish independence.

"Whilst polls suggest that the majority of Scots would vote in favour of staying in the UK the UK government may consider this too big a risk to take and do maintain the right to refuse another referendum. If Scotland were to choose to leave the UK then the prospect of a devolutionary crisis could rise, which in turn may significantly weaken the UK’s bargaining power when negotiating Brexit terms with the EU.

"Whilst the pound is lower on this story, the size of the selling remains fairly small and this seems more a case of a story that could grow into something bigger in the coming weeks rather than a major market mover at present." 

11:23AM

Former B&Q boss Sir Ian Cheshire to chair Barclays' ring-fenced UK bank

Barclays has announced Debenhams chairman Sir Ian Cheshire will become the head of its new ring-fenced bank. Alan Tovey reports: 

The appointment could prove controversial as Sir Ian was a former director of Bradford & Bingley, the lender that collapsed during the financial crisis.

The bank announced that as well as being made chairman-designate of Barclays UK, the ring-fenced bank that comprises its UK retail banking, business banking, consumer credit card and wealth management businesses, Sir Ian will become a non-executive of parent Barclays Plc from April 3.

Sir Ian is an experienced business leader who was previously the executive chairman of B&Q owner Kingfisher. He is currently the senior independent director of Whitbread and chairman of the advisory board of the Cambridge Institute for Sustainability Leadership.

Read the full story here

11:04AM

Pound spluttering on Scottish specs 

The pound spluttered this morning, hitting a 12-day low of $1.2384 against the US dollar in morning trade, on the back of a report in The Times purporting Scotland could ask for a second Scottish independence referendum. 

However, Ipek Ozkardeskaya, of London Capital Group, said: "The Scottish concerns are, in fact, nothing new."

She says the UK’s decision to quit the European Union had immediately triggered questions regarding Scotland’s future in the United Kingdom.

"However, the eventuality hasn’t been largely factored in the pound’s value so far. If Scotland decides to proceed with the second referendum to quit the UK, there would certainly be another fundamental downshift in the pound’s value, both against the US dollar and the euro."

10:45AM

Insurers tumble as Britain cuts discount rate for personal injury

Insurers slumped towards the bottom of the blue chip index this morning after Britain changed the rate at which compensation payments are calculated in personal injury claims.

The Ministry of Justice cut the discount rate used to calculate lump sum payouts to minus 0.75pc from 2.5pc, it said in a statement, a rate that had been in place since 2001.

The move to lower the rate will likely increase the size of lump sum pay outs and potentially hit UK motor insurers' profits.

Direct Line shares

The Ministry of Justice said: "The current legal framework makes clear that claimants must be treated as risk-averse investors, reflecting the fact that they may be financially dependent on this lump sum, often for long periods or the duration of their life." 

Shares in Admiral fell 2.9pc and Direct Line dropped 7.5pc, and is now poised for its worst day since June. 

10:29AM

Eurozone economic confidence rises in February 

The headline economic confidence index rose marginally this month.

It hit 108.0 in February, up from 107.9 in January but it was marginally below the consensus, 108.1 

Claus Vistesen, of Pantheon Macroeconomics, said consumer sentiment slipped marginally in line with the advance reading, but an increase in services and manufacturing confidence rose, as did the business climate indicator, providing offsetting support to the headline.

"Across countries, economic confidence dipped in Germany, but rose in the other major economies. Sentiment fell sharply in Greece, though, indicating that the likelihood of another round of brinkmanship is perhaps denting private sector confidence. " 

10:22AM

MUFG: Pound will continue to strengthen despite Scottish referendum reports

Although the pound has weakened this morning amid sharp selling as fears grow about a second Scottish independence referendum, Lee Hardman, currency analyst at MUFG, thinks the local currency will continue to strengthen despite referendum reports.

Here are MUFG's reasons for its positive outlook on the pound: 

  1. The report is highly speculative at the current juncture, and we doubt that it will have a lasting negative impact on the pound;

  2. Also, opinion polls have shown a modest increase in support for Scottish independence since the Brexit vote, but it remains far from clear that holding another referendum would have a different result;

  3. We still continue to expect the pound to strengthen in the coming months benefitting from rising political risk in Europe.

10:14AM

 FTSE gains amid weakening pound

Joshua Mahony, of IG, notes that the FTSE is benefitting from a weaker pound this morning, with fears over a potential breakup of the UK pushing GBPUSD to the lowest level in 12-days.

UKX

The blue chip index is currently trading up 0.24pc at 7,261.56.

Mr Mahony highlights that the pound has seen "substantial selling" at the open today, following reports that Theresa May will push for the almost certain Scottish referendum to take place post-Brexit.

He adds: "This is all about leverage, with a united Britain representing a stronger hand when it comes to Brexit negotiations. At a time when businesses and individuals alike are struggling to prepare for the UK’s exit of the EU, there is a good chance they will also have to deal with the breakup of the UK, should the Scottish choose to leave."

10:01AM

Persimmon profits jump 25pc as it builds more than 15,000 new homes

Shares in house builder Persimmon have slipped 0.5pc this morning despite reporting full-year pre-tax profit growth of 23pc to £782.8m. Sam Dean reportS: 

Profits surged by nearly 25pc at Persimmon in 2016 as the UK’s second-largest house builder put up almost 600 more homes than in 2015.

Persimmon’s profit before tax climbed 23pc to £774.8m last year, up from £629.5m in 2015, while full-year revenues were up 8pc to £3.14bn.

The FTSE 100 company built 15,171 new homes in 2016, an increase of 599 from 2015, with the average selling price rising 3.8pc to £206,765. It also acquired more than 18,700 plots of land in 2016.

Persimmon

Persimmon, which builds homes largely for first-time buyers, said last month that “it feels like a confident market for house buying” in the wake of the vote to leave the European Union.

Its shares rose more than 2pc earlier this year after the Government published its long-awaited white paper that outlined plans to build 200,000 “decent, well-built homes with gardens” by 2020, sold at a 20pc discount to first-time buyers under 40.

Read the full story here

9:46AM

Suggestions of a second Scottish independence referendum are 'creating market nervousness'

Cable has broken its overnight lows, Anthony Cheung, of Amplify Trading, flags this morning, amid a raft weekend news weighing on the pound. 

According to reports, Theresa May's government is ready to rewrite the Brexit bill, he said. It has been suggested that the Prime Minister is setting aside time for overturning changes to the Brexit bill, when it is debated in the House of Lords this week. 

There's also some reports about the times of triggering Article 50, which is weighing on the currency. It is purported that the government will be ready to vote the week of March 13. 

Mr Cheung also said there are a lot of indications that it could take place on March 15, which is also the day of the Dutch election. 

He adds: "Tactically, from Theresa May's point of view, this would be a strong play", adding that she would be triggering Article 50 when "Europe is on the back foot". 

"It is probably an opportune time to strike" in terms of kick off Brexit negotiations. 

Suggestions of a second Scottish independence referendum is also "creating market nervousness", Mr Cheung said. He thinks the pound is susceptible to further downward moves should sentiment continue to build this morning. 

Listen to Mr Cheung's full morning briefing here: 

9:26AM

Is global financial giant PwC to blame for the Oscars mix-up?

Turns outs the Oscar mix-up is a business story. Sam Dean has the details: 

It has already been labelled the most dramatic moment in the history of the Academy Awards, but who was behind the chaotic mix-up that saw the cast and crew of La La Land stripped of its Best Picture award halfway through their acceptance speech?

The company in charge of the balloting process is PricewaterhouseCoopers, one of the largest professional services firms in the world, and a leading auditor.

PwC is charged with guarding the envelopes that reveal the winners, and handing them to the presenters just before they go on stage.

Within hours of the mix-up, the company released a statement saying it "deeply regretted" the mistake, saying "the presenters had mistakenly been given the wrong category envelope".

As it proudly boasts on its website, PwC was this year celebrating its 83rd year leading the Oscars balloting process, but the colossal mistake has already lead to calls for it be to removed from the ceremony.

PwC veterans Martha L Ruiz and Brian Cullinan are the only two people who know the results ahead of the ceremony.

Ms Ruiz, who has worked for PwC for nearly two decades, is just the second woman to serve as a “PwC Oscars tabulator”, while Cullinan is a PwC partner and serves as the company’s US board chairman.

“The reason we were even first asked to take on this role was because of the reputation PwC has in the marketplace for being a firm of integrity, of accuracy and confidentiality and all of those things that are really key to the role we have with the Academy and counting these ballots,” said Mr Cullinan in a promotional video highlighting the company’s role in the ceremony.

“It’s really symbolic of how we are thought of beyond this role and how our clients think of us, and I think it is something we take very seriously and take a lot of pride in.

Read the full story here

9:18AM

Scotland back on the risk radar

Brexit is back on the agenda this morning, here's what the experts had to say: 

Rebecca O'Keeffe, of Interactive Investor: "European equities are higher, with politics being the key driver of market sentiment. UK equities are being given a helping hand as sterling has dropped further on the back of reports that there will be a new Scottish Independence vote. Sterling was already faltering on expectations that the House of Lords is going to force changes to the draft Brexit bill and the combination of these two events has put the pound under increased pressure, boosting the global FTSE100 index. In France, increased support for Emmanuel Macron has slightly eased fears of another political revolution and helped market sentiment."

Michael Hewson, of CMC Markets, noted the pound was under pressure in early Asia trading on reports suggesting that the Scottish government could look to call another independence referendum sometime next year.

However, he highlighted: "The weakness may well have also been prompted by other reports that UK Prime Minister Theresa May could well introduce curbs on freedom of movement at the same time as she comes to trigger Article 50 at the end of March."

"It is reported that any EU national who arrives here after that date would not automatically have the right to stay in the UK permanently. This may set the stage for early disagreements with EU leaders before talks even get under way."

 Jeremy Cook, o f World First, said: "While the weekend’s political risk has been insubstantial sterling has been taken lower on two political stories released in this morning’s papers. The most likely and the one that is set to cause the lesser damage to sterling assets is the Telegraph report that Theresa May will announce on March 9th that, as well as triggering Article 50, the free movement of EU citizens into the UK will end on that day as well. This will be mirrored in the opening tone of the negotiations as and when they start; the EU will want their quid pro quo for such a measure.

"The Times article that has caused more concerns however tells us that Theresa May is preparing for the Scottish government to call a second independence referendum to coincide with the triggering of Article 50. The expectation is that should Nicola Sturgeon request a referendum that the PM would only agree to it should it take place following the 2 year negotiation period."

Mr Cook said although the pound is lower this morning it has recovered the majority of the losses as traders realise that we are not likely to get an answer on either of these stories anytime soon and that there is UK data throughout the week that could easily provide for sterling strength.

"It is not too early to start shorting the pound i.e. betting that it is going to get weaker but better entry points may present themselves in the near future."

8:58AM

LSE merger with Deutsche Börse in doubt after 'disproportionate' demands from Brussels 

Shares in London Stock Exchange dropped 1.7pc and Deutsche Börse was set for its worst day in eight months, tumbling 4.5pc, after LSE said it believes the EU Commission is "unlikely to provide clearance for the merger" with the German exchange. Szu Ping Chan reports: 

The London Stock Exchange’s merger with Deutsche Börse was thrown into doubt last night after the LSE’s board said addressing EU competition concerns would be “detrimental” to the business.

The LSE said the European Commission was unlikely to approve the €24bn (£21bn) deal to create Europe’s largest exchange operator following eleventh hour demands by Brussels to sell MTS, a key electronic bond trading platform.

LSE

In a statement last night, the LSE described the terms outlined by Brussels to clear the deal as “disproportionate” and impractical.

“Based on the Commission’s current position, LSE Group believes that the Commission is unlikely to provide clearance for the merger,” it said.

The LSE said the MTS platform played a “systemically important” role in the trading of Italian government bonds and other securities, and that divesting the business would “jeopardise” its relationship with regulators.

It claimed that selling MTS would also trigger a fresh wave of regulatory concerns on both sides of the Atlantic and be “detrimental to [the LSE’s] ongoing businesses in Italy and the combined group, were the merger to complete”.

Read the full story here

8:53AM

European shares rise in early trading but LSE and Deutsche Boerse weigh

European bourses started the week with their best foot forward buoyed by upbeat corporate earnings. However, gains were limited by a drop in LSE and Deutsche Boerse shares after LSE said its proposed merger with the German exchange was unlikely to be approved by the European Commission. 

Here's a snapshot of the current state of play in Europe: 

Mike van Dulken, of Accendo Markets,said: "Calls for a positive open come after another record close on Wall St and despite a poor start for the week in Asia. Fears of a fresh Scottish referendum (the Times) on independence have served to send the Pound lower against the Dollar (and Euro), providing an early translational boost to the UK’s blue-chip index, helping offset more M&A disappointment as LSE suggests it merger with Deutsche Böerse in jeopardy with competition concerns unlikely to be remedied."

UKX 8:43AM

Theresa May poised to announce end of free movement for new EU migrants next month 

Reports that Theresa May is poised to announce end of free movement for new EU migrants next month is also weighing on the local currency. Our deputy political editor Steven Swinford has the details: 

Theresa May is next month poised to announce the end of free movement for new EU migrants on the same day that she formally triggers Brexit negotiations.

The Prime Minister is expected to say that EU citizens who travel to Britain after she triggers Article 50 will no longer have the automatic right to stay in the UK permanently.

They will instead be subject to migration curbs after Britain leaves the European Union, which could include a new visa regime and restricted access to benefits.

Migration rates and percentage of English speaking migrants

 Mrs May is expected to say that EU migrants who arrived in the UK before the "cut-off date" will have their rights protected as long British citizens living elsewhere in Europe are granted the same assurance.

Iain Duncan Smith, a leading Eurosceptic conservative MP, said that that announcement will show that Mrs May is taking control of Britain's borders while giving clarity to the 3.6million EU migrants already living in the UK.

He said: "Theresa understands that if you want to take control you have to command the high ground. She will be giving clarity by setting a clear deadline while the European Union looks increasingly muddled and mean-spirited".

Read the full story here

8:41AM

Pound slumps to 12-day low on reports of second Scottish referendum

The pound slumped to a 12-day low against the US dollar  after The Times reported that Prime Minister Theresa May's team is readying for Scotland to call a second referendum on independence in March. 

The local currency fell by as much as 0.7pc to $1.2384, its lowest level since February 15 when it touched $1.2384. Against the eruo, it fell to a one-week low of 85.38p per euro. 

The newspaper cited unidentified government sources as saying May could agree to another referendum on independence in Scotland but on the condition it's held after Brexit. 

 Connor Campbell, of SpreadExsaid: "Brexit fears are back on the agenda this Monday morning, with the pound bearing the brunt of investors’ fretful trading.

"The reason behind the pound’s morning wobbles seems to be speculation surrounding a second Scottish independence referendum, alongside Amber Rudd’s comments on Sunday that Brexit will ‘end freedom of movement as we know it’."

8:33AM

Agenda: Brexit fears back on the agenda

Good morning and welcome to our live markets coverage. 

Brexit took a back seat in recent weeks as investors turned their attention to political instability in Europe. However, this morning Brexit is back on the agenda after The Times reported thatPrime Minister Theresa May’s team is preparing for Scotland to potentially call for an independence referendum in March.

The local currency was also hurt by  reports that Theresa May is next month poised to announce the end of free movement for new EU migrants on the same day that she formally triggers Brexit negotiations.

Also on the agenda: 

Full-year results: Dialight, Senior, Persimmon, Rotork, FBD Holdings, Keller Group, Ascential, Hiscox, Bunzl, Trinity Mirror

Interim results: Dechra Pharmaceuticals, MJ Gleeson

Trading update: Associated British Foods

AGM: Mysquar Limited

Economics: Durable goods orders m/m (US), pending home sales m/m (US), private loans y/y (EU), M3 money supply y/y (EU)