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European Commission President Jean-Claude Juncker said a no-deal Brexit would have “catastrophic consequences” and is doing “everything to get a deal”.
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FTSE 100 flat
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Thomas Cook slumps as it faces collapse
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Juncker says Brexit deal possible
Optimism about a Brexit deal has given FTSE 100 housebuilders a much-needed boost this morning following declines earlier this week.
PLC (), PLC () and PLC ( shares are all trading higher.
A government report criticising the Help to Buy programme and weak house price data from the ONS hit the shares earlier this week.
But news that European Commission president Jean-Claude Juncker has said he thinks a Brexit deal is possible has seen housebuilders’ shares stage a recovery today.
Juncker said on Thursday that he was ready to scrap the controversial Irish backstop if Boris Johnson came up with a viable alternative to avert a hard border between Northern Ireland and Ireland.
The pound has strengthened on the back of the remarks, putting a strain on dollar earners including (), () and Holdings PLC ().
10.00am: Pound rises on Brexit deal hopes
The pound has strengthened after European Commission President Jean-Claude Juncker told Sky News he thinks the EU and the UK could reach Brexit deal.
He said a no-deal Brexit would have “catastrophic consequences” and is doing “everything to get a deal”.
Sterling is trading against the dollar at US$1.2575 — its highest level since mid-July. Against the euro, the pound is sitting at €1.1345.
9.00am: Thomas Cook facing collapse
Thomas Cook’s shares have taken another hit this morning after saying it needs to find an extra £200mln to secure a rescue deal.
The company confirmed press speculation that it is seeking the extra funds, on top of an already agreed £900mln injection of fresh capital, and that it would provide updates “in due course”.
In reaction, its shares dropped 17% to 3.7p each.
The extra £200mln is being pushed by a consortium of banks, including Group PLC () and PLC (), to ensure Thomas Cook can keep itself afloat over the winter season when holiday bookings are usually lower.
Thomas Cook could fall into administration this weekend if it fails to find the funds, leaving customers who have booked holidays with the company stranded abroad. Worried customers have been contacting the company to make sure their packaged holidays and flights will still go ahead.
The group has been reassuring these customers over social media.
Hi Sarah, the proposals have no impact on customers who have booked a flight with Thomas Cook or who are planning to book with us in the future. ^Alex
— Thomas Cook Cares (@ThomasCookCares) September 20, 2019
8.40am: FTSE 100 starts on the back foot
The week looks set to end on a bum note after the FTSE 100 opened 21 points lower at 7,335.28.
Economic worries, following the OECD’s downgraded forecasts, appears to have unsettled the markets.
The America-China trade war and Brexit were cited as the inter-governmental group cut its 2019 growth projection to 2.9% from 3.2% – the slowest pace of expansion in a decade.
“These challenges were no better illustrated yesterday when the European Central Bank launched its first tranche of three-year loans at zero rates and below, and which fell well short of expectations. Instead of the €20bn to €100bn of loans that was expected the princely sum of €3.4bn found its way out of the door,” said Michael Hewson, analyst at CMC Markets.
“There may have been any number of reasons for the lack of demand, but if no-one wants to invest or borrow money, no amount of cheap cash will compel them to do so. This is the problem Europe faces at the moment.
“Quite simply firms will not commit to large scale investment decisions when there is no certainty about business conditions at a time when the US may want to turn its attention to Europe where tariffs are concerned, China is slowing down, and Brexit is unresolved.”
On the market, Next () rebounded 2.7% after Thursday’s bout of profit-taking.
Rolls-Royce (), down 3%, led the fallers after it admitted to more setbacks with its problematic Trent 1000 jet engine.
Proactive news headlines
() is to go private after accepting a takeover bid from US-based software firm Confluence Technologies valuing the firm at £161.1mln.
Hurricane Energy Plc’s () half yearly results on Friday were the company’s first set of financials to include revenue. The May start-up of the Lancaster field’s early production system (EPS) was a landmark moment for the company, which has since seen output ramp-up with rates at the end of the period running ahead of guidance.
(LON: MTPH; NASDAQ:MTP) said it has received the regulatory green light for a trial that may eventually pave the way for its long-acting drug to be administered by patients at home.
() has experienced improved mined ore grades at its Barruecopardo tungsten mine in Spain.
() remains on track to have a permit in place its CS perlite and pozzolan mine in Nevada by the end of the year. There is a growing market for perlite in the US, driven in part by increased use by cannabis growers.
Holdings PLC () has secured an €8.5mln credit facility that will allow it “drive commercial adoption” of its lung cancer diagnostic, of which it will be able to immediately draw down €5mln.
PLC () has appointed non-executive director Gati Al-Jebouri as its new chief executive and chairman as it grows from a special-purpose vehicle into an operating company. He replaces David Linsley and Francis McAllister, who have stepped down as chief executive and chairman respectively.
6.45am: FTSE 100 set to start in reverse gear
London’s leading shares look set to give back all of yesterday’s gains after the OECD issued a warning on global economic growth.
Spread betting quotes suggest the FTSE 100, which yesterday rose 42 points to close at 7,356, will open at around 7,317, down 39 points.
The OECD cut its projections of economic growth to 2.9% in 2019 and 3% in 2020; if the forecasts prove accurate, those growth rates would be the weakest since 2009 and the days of the credit crunch.
In May, when it issued its previous forecasts, the OECD had been expecting growth to top 3%.
US markets were mixed yesterday with the S&P 500 barely changed and the Dow Jones down 52 points at 27,095.
This morning in Asia, Japan’s Nikkei 225 was trading 58 points higher at 22,102 but in Hong Kong, further civil unrest hit sentiment and the Hang Seng index was down 25 points at 26,444.
“Anti-China protests in Hong Kong took a toll on the city’s businesses, and the HK case was brought to the attention of the US lawmakers, which now discuss a yearly review of the situation in Hong Kong when it comes to the ‘special status’ of the city. Meanwhile, geopolitical tensions between the US and Iran escalate, as Iran threatens of an ‘all-out war’ if Saudi or the US strike on the country as a response to the Aramco drone attacks,” commented Ipek Ozkardeskaya at London Capital Group.
On the corporate news scene, it is looking as if it will be a quiet day for trading updates, with a report from banking and wealth management business () likely to be the highlight.
Investors will be keen to see how the company’s simplification programme is proceeding.
Significant announcements expected today
Interims: ()
AGMs: Solgold PLC (), Sysgroup PLC (LON:SYS), (), PLC ()
Trading statement: ()
Business headlines
The Times
and its other banks are demanding an extra £200 million of funding from Thomas Cook, increasing the risk of the travel company going bust.
Large investment banks have so far relocated out of Britain fewer than 1,000 jobs despite Brexit exodus fears.
A no-deal Brexit would push the UK into recession next year and drag down the rest of the European Union, the Organisation for Economic Co-operation and Development has warned.
Diageo said it expected organic net sales growth for the year “toward the mid-point” of the target range of 4% to 6%, with operating profit growing by about 6%.
reported revenue of £129.1 million in the three months to the end of August, recovering from a clampdown on betting on financial markets, as volatile stock markets boosted trading.
Microsoft has nominated Emma Walmsley, the chief executive of Glaxosmithkline, to its board of directors.
Royal Mail has been found guilty of price-fixing in the parcels market.
The Daily Telegraph
The European Commission President Jean-Claude Juncker has said the EU can agree a new Brexit deal by 31 October as it emerged Boris Johnson wants a “take it or leave it” offer from Brussels.
Eurozone banks have shunned the cheap new loans offered by the European Central Bank to boost growth.
Rising pay packets failed to spur shopping last month as online retail sales suffered a hangover from a bumper July in their biggest drop of the year.
Saga said it had held “constructive” conversations with activist investor Elliott as it battles a tough travel market.
The Guardian
Next registered disappointing sales of its new autumn clothing ranges due to the recent warm weather.
Debenhams is to press ahead with a rescue plan involving the closure of more than 20 stores after fighting off a Sports Direct-backed legal challenge.
Airbus has forecast that the number of commercial aircraft in operation will more than double in the next 20 years.
