Yahoo Finance What to Watch: Brexit stalemate, bitcoin surges, and Northern Rock loans sold
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Brexit stalemate
The pound is slipping on Tuesday morning after MPs failed once again to back a Brexit option and a leading EU negotiator warned no deal is now more likely.
Sterling was down by 0.1% against the euro to €1.16 (GBPEUR=X) and down 0.1% against the dollar to $1.30 (GBPUSD=X).
It comes after MPs once again failed to provide a majority for any Brexit options following a series of indicative votes on Monday evening. The EU’s chief Brexit negotiator, Michel Barnier, said on Tuesday morning the result means a no deal Brexit is now “more likely.”
Bitcoin surges
Bitcoin (BTC-USD) surged overnight, briefly passing $5,000 for the first time since November.
The price surge, which was as much as 20% at its peak, didn’t appear to be driven by any news. Analysts said it was likely triggered by a price threshold that triggered algorithmic trading programmes to buy.
“This trigger was through volume led price action driving the price and triggering algos on a breakout,” Charles Hayter, CEO and founder of CryptoCompare, told Yahoo Finance UK.
“We’re seeing the period of 6am-7am GMT have 6m trades in the hour compared to average of c.1.5-2m, a 3-4x increase.”
Mati Greenspan, a senior market analyst with trading platform eToro, told Yahoo Finance UK: “Momentum has been gradualing building in the crypto market for a few months now and it seems it finally popped.
“The break above $4,200 was critical. That level had been building up for a while now so no doubt there was a group of entry orders and stops that were triggered during the Asian session.”
Northern Rock loans sold
A £4.9bn portfolio of loans bought by the taxpayer during the financial crisis has been sold in a “milestone” move, the Chancellor has announced.
The portfolio of mortgages and unsecured loans from NRAM – formerly part of failed bank Northern Rock – were sold to US investment banking giant Citi, with finance provided by bond manager Pimco.
The Treasury said the sale marks a “major milestone” in the recovery of taxpayers’ cash, with the proceeds used to fully repay the loans provided to NRAM and Bradford & Bingley (B&B) at the height of the financial crisis.
After the deal, UK Asset Resolution (UKAR) – the so-called bad bank that manages the assets of Northern Rock and B&B – owns about £8bn worth of assets, down from about £14bn in September 2018 and from £116bn in 2010.
Bonmarche bid
Edinburgh Woollen Mill owner Philip Day has made an offer for retailer Bonmarche (BON.L) which values the company at just £5.7m.
The mandatory offer follows Day’s purchase, through holding company Spectre, of more than 26m shares in Bonmarche.
This represents 52.4% of the company, putting Spectre above the 30% threshold at which it must make a takeover approach. Shares in Bonmarche dropped 25% in early trading on Tuesday.
MPs call for ‘big four’ break-up
Members of parliament (MPs) have called for a “full structural break up” of the “Big Four” accountants after a recent string of high-profile failures — such as Carillion and BHS — that raised questions over auditing quality.
The Business, Energy, and Industrial Strategy (BEIS) select committee published its final report into the UK audit market on Tuesday. Auditors check company accounts to ensure that investors are getting accurate and full pictures of a business’s financial health.
The final report proposes sweeping changes to the “big four” accountants — PwC, KPMG, EY, and Deloitte — that check the accounts of almost all of Britain’s biggest businesses. It calls for the businesses to be broken up into separate auditing and non-auditing companies to prevent conflicts of interest.
European markets
European stock markets were quiet on Tuesday, with only the FTSE making much headway thanks to the falling pound. (The majority of FTSE-listed companies report earnings in dollars, meaning a weak pound makes their share price look more attractive.)
Britain’s FTSE 100 (^FTSE) was up by 0.4%, while Germany’s DAX (^GDAXI) was flat, France’s CAC 40 (^FCHI) was up by 0.1%, and the Euronext 100 (^N100) was 0.2% higher.
Asian markets were muted overnight. Japan’s Nikkei 225 (^N225) was flat, Hong Kong’s Hang Seng index (^HSI) was up by 0.2%, and China’s benchmark Shanghai Composite (000001.SS) was up by 0.1%.
What to expect in the US
US stock futures were pointing to a slightly lower open later today. S&P 500 futures (ES=F) were down by 0.1%, Dow Jones Industrial Average futures (YM=F) were down by 0.1%, and Nasdaq futures (NQ=F) were down by 0.1%.
