UK markets close in 3 hours 26 minutes

What to Watch: Traders bet on rate cut, economy shrinks in November, and William Hill profit boost

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
From left: William Hill global brand and marketing director Charlotte Emery, darts champion Peter Wright, and PDC chairman Barry Herne with the Sid Waddell trophy at Alexandra Palace, London. Photo: Steven Paston/PA via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Pound slides as interest rate cut looks increasingly likely

The pound fell against the euro and dollar on Monday, as expectations increased that the Bank of England could cut interest rates at the end of the month.

Sterling fell below $1.30 for the first time in over two weeks after a member of the Bank of England’s interest rate setting committee said he would favour a rate cut.

Gertjan Vlieghe, a member of the central bank’s Monetary Policy Committee, told the Financial Times over the weekend he would back a rate cut later this month if UK economic data does not improve. He described the decision as a “close call.”

The pound fell 0.4% against the dollar to $1.2995 (GBPUSD=X) in early trade and 0.4% against the euro to €1.1682 (GBPEUR=X).

Vlieghe’s comments echo the sentiments of other colleagues on the Monetary Policy Committee members over the last week.

UK economy shrank ahead of general election

The Bank of England is considering a rate cut amid signs of sustained weakness in the UK’s economy.

New data from the Office for National Statistics, published on Monday, will do nothing to quell fears that a rate cut is imminent.

The data showed GDP shrunk by 0.3% month-on-month in November. Economists had been expecting growth of 0.0%.

William Hill profit boost

William Hill (WMH.L) said profit for the year will be ahead of expectations, thanks to good trade at its retail shops and favourable sporting results at the end of last year.

The company said it expects operating profits from continuing operations of between £143m ($185m) and £148m for 2019.

“The group has delivered a strong operating performance, ahead of our expectations and against a challenging regulatory backdrop,” chief executive Ulrik Bengtsson said in a statement.

“We made good progress on a number of fronts, including our retail business, online and in the US, enabling us to deliver on our long-term strategic ambitions.”

Shares rose 1.1%.

Trade and invest with confidence on global multi-asset investment platform eToro. Join over 11 million users who invest in stocks, indices, commodities, ETFs, cryptos and currencies. Your capital is at risk.

US-China trade deal hopes lift stocks

Stocks rallied on Monday, ahead of the signing of the ‘Phase One’ trade deal between the US and China later this week.

Representatives from the US and China are set to sign an initial trade deal on Wednesday. Separately, the Wall Street Journal reported on Saturday that the two sides will also announce new semi-annual trade talks, separate from the ‘Phase Two’ trade deal negotiations. The new talks will cover mechanisms for resolving future disputes and possible reforms.

Signs of cooling tensions between the two superpowers helped spur Asian stock markets higher. Japan’s Nikkei (^N255) closed up 0.4%, the Hong Kong Hang Seng (^HSI) was up 0.9%, and the Shanghai Composite (000001.SS) in China rose 0.7%.

European markets also opened higher, although gains were less notable. The FTSE 100 (^FTSE) climbed 0.3%, the DAX (^GDAXI) gained 0.1%, and the CAC 40 (^FCHI) in France rose by 0.1%.

Fastest rise in City optimism in four-and-a-half years

The financial services sector is more optimistic about the future for the first time since 2017, according to a new survey, with optimism rising at its fastest rate since mid-2015.

The Confederation of British Industry (CBI) and PwC said on Monday a quarterly survey of 94 leading finance firms found companies expect business conditions to improve — the first time finance has been optimistic about the future in three years.

The survey was done prior to the December general election but expectations of a Tory victory and progress on Brexit may have helped.

Flybe in crisis talks to stave off collapse, risking 2,000 jobs

Regional airline Flybe is in the midst of talks to secure financing to prevent a collapse of the company that could risk more than 2,000 jobs, according to Sky News.

Exeter-based Flybe is one of the largest regional airlines in Europe, and handles around half of all UK domestic flights outside of London.

Accountancy firm EY has been put on standby to handle the potential administration of the group, Sky News said, citing unnamed aviation industry sources.

Noting that the government had been briefed on a potential crisis at Flybe, Sky News said that both the business and transport departments have been considering providing or facilitating emergency financing for Flybe.

Both Flybe and the government have thus far declined to comment.