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What to Watch: Mark Carney warning, pound rises, Woodford is out

Edmund Heaphy
Finance and news reporter
Mark Carney, Bank of England governor. Photo: Chris J Ratcliffe/AFP/Getty

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

Mark Carney warns of market swings as Brexit nears

Bank of England governor Mark Carney on Tuesday warned that there could be large swings in financial markets as the UK gets closer to leaving the European Union.

Speaking to a House of Commons committee, Carney said that markets could move “in either direction.”

“Developments over the course of the next several days, the next several weeks, will have a material impact on the value of the pound, the value of shares, the cost of debt for UK banks and companies, in either direction depending on how those developments transpire,” Carney told the treasury committee.

Carney, who steps down at the end of January, also said that he believed that there would be “an orderly transition” to the next governor of the bank.

“At the moment the commitment is to have an orderly transition from myself to the next governor. There is ample time in order to accomplish that. There's a wide range of qualified candidates,” said.

Pound gains as EU says Brexit deal 'still possible this week'

The pound gained on Tuesday after EU chief Brexit negotiator Michel Barnier said that, even if it would be “difficult”, it was still possible that a Brexit deal could be agreed this week.

Speaking in Luxembourg, Barnier said that the EU’s negotiating team was “working hard” and that negotiations had been “intense.”

"Because, even if an agreement will be difficult — more and more difficult, to be frank — it is still possible this week,” he said.

The pound, which had a steady day on Monday overall, was up around 0.1% against the dollar to around $1.265 (GBPUSD=X).

But the currency’s momentum has slowed from last week, when it made some of its biggest gains in recent months. On Friday, it jumped the most in one day since January 2017.

Neil Woodford's stricken £3.1bn fund to be shut

Money manager Neil Woodford’s stricken flagship £3.1bn fund is to be shut, with all money returned to investors and Woodford himself sacked from the fund bearing his own name.

Withdrawals from the Woodford Equity Income fund have been frozen since June in one of the biggest scandals in the City. Money manager Neil Woodford has been racing to sell investments and reposition the fund in a bid to save it.

But Link Fund Solutions, which administers the fund, said on Tuesday: “The decision has now been taken not to re-open the Fund and instead to wind it up as soon as practicable.”

Link said in a letter to investors that not enough progress has been made to stabilise the fund ahead of the planned reopening in December. The fund will be wound up in January, as investors must be given three months notice, and all money will be returned as soon as possible.

“We recognise that the winding up will come as a disappointment to some investors, but we believe that this course of action is now in the best interests of all investors,” Link director Karl Midl said in the letter to investors.

European stocks mixed

European stocks were mixed on Tuesday, with the FTSE 100 (^FTSE) falling by around 0.2%. Germany’s DAX (^GDAXI) was up 0.5%, while France’s CAC 40 (^FCHI) was up by 0.53%.

What to expect in the US

Futures are pointing to higher open for US stocks.

S&P 500 futures (ES=F) are up 0.44% and Dow Jones Industrial Average futures (YM=F) are up by around 0.45%. Nasdaq futures (NQ=F) are up, by 0.47%.

Companies reporting later on Tuesday in the US include:

  • United Airlines (UAL)

  • Citi (C)

  • JP Morgan Chase (JPM)

  • Goldman Sachs (GS)

  • Wells Fargo (WFC)