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So, Brexit is the gift that keeps on giving. After the Commons rejected a call for a December 12 election, Prime Minister Boris Johnson will try again Tuesday – this time with the backing of the Lib Dems and the Scottish National Party.
With only a simple majority required (Monday’s motion to overturn fixed-term parliament rules required two-thirds of MPs to back it), Johnson appears to have a better shot at a pre-Christmas poll. He hopes it will provide him a better mandate (backed by a fatter majority) for his EU exit deal.
Against this backdrop, the FTSE 100 opened 19 points lower at 7,312.70.
While BP’s () third-quarter results were slightly above consensus, the market remained wary following a sharp slide in earnings as it was hit by weaker global demand and contracting chemicals industry margins. The shares receded 0.6%.
“Today’s numbers weren’t expected to come in close to the levels seen in Q2 given the decline in oil prices seen since then; however they still show a company that is nimbler and more efficient than it was a decade ago,” said Michael Hewson, analyst at CMC Markets.
Stepping down a division to the FTSE 250, Royal Mail () was off 4.5% amid worries it may be hit by industrial action in the run up to its busiest period.
6.44am: FTSE 100 set for limp start
The FTSE 100 is expected to continue dragging its feet at Tuesday’s open, as markets wait and see whether Boris Johnson has any more success in his push for a December election.
London stocks were being called four points lower on the IG spread betting platform, having finished very modestly higher at 7,331.28 the day before.
On Wall Street overnight, S&P 500 recorded a new all-time high just above 3,044 in early trading, before treading water for the rest of the session to finish at 3,039.4, a gain of almost 17 points or 0.6%.
The Dow Jones added 0.5% to close at 27,090.7, while the tech-laden Nasdaq jumped 1% to 8,325.98.
Sterling regained some ground against the dollar to $1.2859 after the EU granted the UK a Brexit “flextension” until 31 January, leading to reports that the government will sadly have to melt down the commemorative 50p coins that were due to celebrate the planned 31 October exit date.
In an evening vote, Boris Johnson was again defeated in parliament as he failed to win a vote that required two-thirds support of MPs for his proposal for a 12 December general election.
Brexit will remain the main theme on Tuesday, as the PM returns to the political ring with a slightly different approach, Downing Street revealed.
This will be for a vote on a one-line bill seeking to amend the Fixed-Term Parliaments Act to hold an election on 12 December, which will only need a simple majority in order to provide a rare Commons victory for Johnson.
“Although Parliament tonight voted against holding a general election, it seems likely that MPs will soon change their minds and in the next day or two will vote for an election that will decide the fate of Brexit,” said Paul Dales of .
For the economy and the financial markets, neither election result looks particularly appealing, Dales said.
“If the Conservative Party won, business profits would be supported by the Tory’s policies. But the Conservatives would pursue a hardish Brexit in the form of Boris Johnson’s deal, there would be some chance of a no deal Brexit on 31st January and also a chance of something similar to a no deal in December 2020.”
Meanwhile, he predicted that a Labour government “would rule out a no deal on 31st January or in December 2020 and would pursue either a softer Brexit (probably involving the UK staying in the EU’s customs union) or a second referendum that could lead to a decision to remain.
“But Labour’s policies imply that its other aim would be to shrink the share of GDP that goes to businesses as profits.”
How’s BP’s cash flowing?
Investors will be eager to see how far declining oil prices have affected oil major BP () when it provides a trading update on Tuesday.
Brent crude prices have fallen by a fifth since April with trade war tensions accompanied by intrigues in the Iranian gulf, down below $60 a barrel for Brent crude at the start of October.
BP’s shares have responded in tune with a 12% drop from their year-high in March and were hovering at 512p overnight.
Earnings are likely to have been damaged by the dip in prices, as well as ongoing environmental concerns, but for most investors the cash flow will be the all-important number, since this will dictate the dividend.
Tense times for trader
Ever-volatile Ltd () is due to give a trading statement, hoping to continue the uptick in its last quarterly revenues.
Back in July, the online trading platform, which is headquartered in Israel but operates a subsidiary in London, said turnover was up to US$148mln helped by increased volatility in financial markets.
Investors will be hoping to see last quarter’s gain in customers spilling over into higher revenues in the third quarter.
Shares have more than halved since February, hovering at 788p on Friday, following a profit warning that said tighter regulations were causing a slump in CFD (contract for difference) trading, sending revenues down from a mega-year in 2018 based on surging cryptocurrencies.
Significant events on Tuesday 29 October:
Interims: ()
Trading statement: (), Hunting PLC (), Ltd ()
AGMs: PLC ()
Economic announcements: US consumer confidence, US home sales
Business headlines
Financial Times
– TikTok-owner ByteDance, the $75 billion Chinese start-up, is eyeing an initial public offering in Hong Kong.
– Vodafone’s joint venture in India is under threat after a supreme court ruling left the telecom group’s local unit facing billions of dollars in retrospective fees, interest and fines.
– AT&T has placated the activist investor Elliott Management with a “three-year action plan” to sell up to $10 billion of assets and reconfigure its board.
– Operating profit at Commerzbank jumped 29% in the third-quarter, as Germany’s second-biggest bank clamped down on costs.
The Times
– Google’s parent company Alphabet announced a profit of $7 billion for the three months to the end of September, weaker than expected, despite strong growth in its lucrative online advertising.
– Political uncertainty and a slowdown in global growth have cut the flow of new foreign direct investment to Britain by more than half.
– The group behind the Soho House private members’ clubs has raised $100 million in equity investment, giving it a $2 billion valuation and further delaying any plans to list the business.
– Spotify brought in more paying subscribers than had been predicted in the third quarter and made an unexpected profit, sending shares in the world’s most popular music streaming service up 18.6%.
– The government has shortlisted five sites for the first Virgin Galactic spaceport in Britain as the company made its stock market debut in New York.
– Beyond Meat, the plant-based burger business, recorded a maiden net profit of $4.1 million in the three months that ended on 28 September.
Guardian
– Britain’s biggest retailers have been ramping up their stockpiling efforts to record levels in the run-up to Brexit, according to the Confederation of British Industry.
– John Lewis trials sustainability schemes at Oxford store, including ban on 5p single-use plastic bags and replacement of bubble wrap with eco-wrap.
– The decision by the billionaire Barclay brothers to put the Daily and Sunday Telegraph up for sale could herald the breakup of a vast but faltering business empire.
– Labour has demanded Sajid Javid immediately publish economic forecasts prepared for the budget to ensure the government does not avoid public scrutiny before a potential election.
Telegraph
– Embattled Aston Martin suffered a fresh blow as Merrill Lynch, the lender behind the luxury car maker’s disastrous float, urged investors to dump its shares.
– ’s shares skyrocketed yesterday after Google’s parent company Alphabet reportedly made a bid for the troubled activity tracker company.
– Former Skyscanner and Just Eat backer Vitruvian Partners has won the race to buy Sykes Cottages in a deal worth £375m.
– Volkswagen is seeking to take on tech giants such as Google’s Waymo in the race to create self-driving systems for cars.
– Premiership rugby sponsor Gallagher has been told to publicly apologise for allegedly making racist remarks to an ex-employee after an explosive trial over the executive’s exit came to a close.
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