Carney: EU referendum is driving demand for protection against weaker pound - business live

Discussion in 'Market News' started by Lily, Feb 23, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    All the latest economic and financial news, as Bank of England governor Mark Carney appears at parliament

    10.51am GMT

    The committee is keen to find out whether the Bank of England will make a profit or a loss on its bond-buying quantitative easing programme.

    After all, the richest households have certainly benefitted, because QE drives up asset prices. And we know who holds them.....

    10.47am GMT

    Tyrie then turns to Britain’s banks - is Carney confident that they are robust enough to rise out another crisis?

    He points out that Sir John Vickers, who conducted a major inquiry into the UK financial sector after the 2008 crisis, has warned that the banks haven’t gone far enough. What’s your view, governor?

    Since the start of the year bank stocks have been under pressure. There are a variety of causes of that but what is not a cause, what it does not indicate in my view is concerns about the resilience of the institutions.

    “The fundamental concerns are about the returns of the institutions.”

    10.38am GMT

    10.37am GMT

    Andrew Tyrie does have one question on the EU referendum:

    Q: Has the Bank modelled the impact on sterling if the Out campaign win, given what’s been going on in the markets in recent days?

    Carney in brick wall approach to #Brexit treating it as any other political event

    Particularly, there has been a sharp increase in risk reversals - buying more downside protection against future falls in sterling around the referendum date as opposed to upside protection.

    They have spiked to levels consistent with around the height of the Scottish referendum. And they’ve been particularly concentrated against cable...the sterling/dollar options market.

    10.31am GMT

    10.23am GMT

    Andrew Tyrie, committee chairman, says he doesn’t want to linger on the Brexit issue for long - as Carney is going to testify about it on 8 March.

    10.22am GMT

    10.21am GMT

    Panic averted - the session is starting now...

    10.13am GMT

    The FT’s Emily Cadman reports that Mark Carney is behind schedule....

    Carney et al are running late at the TSC for anyone on the edge of their seats

    10.11am GMT

    Looks like there’s a small delay with the web feed of Mark Carney’s session at parliament (hurry up chaps!).

    Come on Carney, there's only so many times you can hear "Treasury Committee, Thatcher Room, Tuesday 23rd February 2016. BEEEEEEEEEP"

    10.01am GMT

    The governor of the Bank of England, Mark Carney, is about to take his seat in the Thatcher Room at the Houses of Parliament.

    He’ll be quizzed by the Treasury committee about the Bank’s latest inflation report, in which it slashed its UK growth forecasts and suggested interest rates may not rise this year.

    9.46am GMT

    Bloomberg economist Maxime Sbaihi is alarmed by the fall in German business confidence this month:

    CHART: Ifo expectations dooown. Another worrying soft data in euro area. Red flag for recovery momentum. And #ECB.

    9.37am GMT

    The euro just hit a three-week low, losing 0.3% to $1.0993 against the US dollar.

    The single currency is being dragged down by this morning’s weak German business confidence report and the knock-on effect of Britain’s EU referendum (as discussed earlier)

    EURO FALLS TO 3-WEEK LOW VS DOLLAR, JUST BELOW $1.10 ... Brexit risk

    9.22am GMT

    Morale among Germany’s business leaders has hit a one-year low, after falling at its fastest rate in over four years this month.

    IFO, the Munich-based think tank, has reported that German corporate chiefs are much gloomier about future prospects, due to the slowdown in China and recent stock market volatility.

    Usually boring Ifo is interesting for once. In February German business sentiment saw its sharpest drop since 2011

    Global events have finally reached German companies’ boardrooms.....

    Expectations have taken another sharp hit from recent market turmoil, the adverse impact of low oil prices and renewed concerns about a slowing of the Chinese economy, dropping to 98.8 in February, from 102.3 in January.

    #Germany's Ifo dive in Feb to 105.7, lowest since end-2014 as expectations fall off a cliff.

    9.08am GMT

    There’s a lot of chatter that the Britain’s EU referendum could spark a sterling crisis.

    And that’s because the pound (like the English cricket team) has a worrying history of occasionally collapsing under pressure.

    The growing speculation that a Brexit may spillover to the Eurozone and threaten the future of the European Union has already encouraged bearish investors to attack the Euro across the global currency markets.

    8.40am GMT

    Shares in Standard Chartered are sliding sharply after it posted its first annual loss since 1989.

    The bank has lost $1.5bn, and warned that it faces a “broad range of challenges and uncertainties....notably China and commodities”.

    Standard Chartered falls as much as 12% in London after unexpected loss

    8.32am GMT

    Over in Frankfurt, the German DAX has slid by 103 points, or over 1%.

    Investors aren’t impressed by the first fall in German exports since 2012.

    8.23am GMT

    European stock markets are sliding in early trading.

    In London, the FTSE 100 has shed 48 points, or 0.8%. The blue-chip index is being dragged down by mining shares, after BHP Billiton reported that £4bn loss and warned that commodity prices will remain weak.

    It doesn’t help that the mining sector got its own unwelcome surprise; whilst it was expected that BHP Billiton would post its first half year loss in 16 years (coming in £4 billion in the red) analysts were still looking for a 31p dividend.

    Instead BHP slashed its interim payout by 75% to 16p, whilst also sacrificing its progressive dividend policy in order to protect its credit rating. The company’s subsequent 3.5% slide helped ensure its mining peers started the day at a loss, dragging the FTSE down by nearly 50 points after the bell.

    8.13am GMT

    Ralph Solveen, an economist at Commerzbank AG in Frankfurt, is concerned that German exports fell by 0.6% in the last quarter of 2015.

    He told Bloomberg that:

    “Investment was rather solid.

    On the other hand, given the rather weak development of exports, you can see that there’s a problem for the German economy.”

    8.04am GMT

    Germany has suffered a fall in exports as the powerhouse European economy is hit by the global downturn.

    Ouch! #Germany's exports drop in Q4 for first time since 2012.

    GDP details show German Q4 15 growth was mainly driven by (public and private) consumption and construction. Good but is it sustainable?

    7.56am GMT

    7.48am GMT

    Asian stock markets have fallen today, as the recent rally in shares subsided. And it could be a downbeat day in Europe too, with the main indices expected to fall.

    Shares are being pulled down by the oil price, which has dipped by almost 2% this morning - erasing its own recent gains.

    Related: BHP Billiton reports half-year loss of £4bn

    MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, after earlier rising 0.4% to its highest level since January 8. Japan’s Nikkei erased morning gains to close down 0.4%.

    Korea’s Kospi, which started the day higher, and Australia’s ASX 200, which opened little changed from Monday’s three-week high close, both ended the day with losses.

    Global rally struggled to extend into Asian hours, although gains in energy and material stocks capped the extent of losses. #DJ

    Our European opening calls:$FTSE 5998 down 40
    $DAX 9510 down 64
    $CAC 4271 down 28$IBEX 8339 down 48$MIB 17407 down 97

    7.33am GMT

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    Related: Why is the pound falling and what are the implications for Britain?

    Related: EU referendum: Top firms back pro-EU letter, but supermarkets refuse to sign

    Continue reading...

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