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Pound falls after IDS quits; Chinese market hits two-month high - business live

Discussion in 'Market News' started by Lily, Mar 21, 2016.

  1. Lily

    Lily Forum Member

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    Brexit fears are swirling again as Britain’s government suffers a shock resignation


    12.56pm GMT

    There’s a nifty GIF, showing how the UK government could raise £4.4bn to replace the abandoned cuts to disability benefits:

    PM 'has full confidence' in Osborne amid disability benefit cuts U-turn row https://t.co/zvBQIiDf7q pic.twitter.com/fQrbqgxIqm

    12.31pm GMT

    With the pound still down, analyst are wondering if Iain Duncan Smith’s shock resignation could seriously dent confidence in the government.

    Robin Bew of the Economist Intelligence Unit says the crisis could highlight David Cameron’s weaknesses:

    #UK Gov resignation doesn’t just underscore #Brexit woes. Also highlights increased inability of Gov to get policy through unimpeded

    No10 confirms MPs will be asked to vote on a Budget tomorrow with £4bn missing from it after PIP U-turn. Irregular, to put it mildly.

    #Breaking George Osborne still has full confidence of Prime Minister, David Cameron's official spokeswoman says pic.twitter.com/wlAsZymqpg

    12.14pm GMT

    French business chief Henri de Castries has moved a step closer to becoming the next chairman of banking giant HSBC.

    De Castries resigned as chief executive of insurance group AXA this morning, where he’s worked for the last 27 years. And that has heightened speculation that he could replace Douglas Flint at HSBC.

    The 61-year old was appointed to the board of HSBC last year as a non-executive director and is now cited a candidate to replace Douglas Flint who revealed on Friday that a search was underway for his successor.

    Britain’s bank has already promised that its next chairman will not be selected from its top management team - breaking with tradition - and appoint an outsider to the role.

    Related: Axa's Henri de Castries resigns, fuelling HSBC speculation

    11.08am GMT

    Britain’s factory sector suffered another drop in March, according to the latest CBI Industrial Trends Survey.

    The survey found that output volumes over the three months to March fell at the fastest pace since September 2009, with 8 of the 18 manufacturing sub-sectors posted a decline in output.

    “March has been a mixed month for the UK’s manufacturers. Whilst total order and export books remained steady, a drop in output reflected some volatility in the food and drink sector. Reassuringly, manufacturers expect a swift turnaround in activity.

    11.05am GMT

    European stock markets have shaken off their early losses, sending Germany’s DAX up by 0.7%.

    The British pound was an underperformer in currency markets after the resignation of MP and former Tory leader Iain Duncan-Smith. A bit of internal party bickering doesn’t normally impact Sterling but this time it has because of the possible implications for Brexit.

    10.45am GMT

    Two data companies that we quote a lot in this liveblog are merging.

    IHS Global Insight, home of Jane’s Defence Weekly and the ever-quotable analyst Howard Archer, is buying UK rival Markit in an all-share deal.

    10.13am GMT

    The CBI, which represents Britain’s businesses, has also waded into the EU referendum debate.

    In a new report, it warns that Brexit could cost....£100 billion pounds (a figure which is crying out for a Dr Evil impression)

    Related: Brexit could cost £100bn and nearly 1m jobs, CBI warns

    "Leaving the EU would mean a smaller economy in 2030." CBI. Possible? sure. But a heroic level of guesswork/assumption in 15 yr forecasts!

    9.30am GMT

    Alastair Winter, chief economist at investment bank Daniel Stewart, is hopeful that Britain will avoid a sterling crisis.

    Despite today’s losses, he predicts the pound will hover at current levels until June’s referendum is much closer.

    I would expect sterling to loiter around $1.40 unless and until Brexit really looked like winning.

    IDS was a disaster as Tory leader and is no firebrand. Many people believe he was out of his depth in implementing Universal Credits. I also doubt he is a market-mover.

    George & Dave are undoubtedly wounded, but this profits Boris* more than Labour (except Sadiq Khan who was set to win the London mayoralty race anyway).

    9.15am GMT

    Richard Benson, head of portfolio investment at currency managers Millennium Global in London, also believes the pound is suffering from the aftermath of Iain Duncan Smith’s resignation.

    He told Reuters:

    “Sterling does not normally react strongly to UK politics so this is probably due to Brexit.

    “The referendum is just making people focus on issues like this a lot more. It is down in response this morning.”

    9.03am GMT

    Sterling has been falling this morning, after work and pensions secretary Iain Duncan Smith sensationally resigned late on Friday.

    The pound fell by almost one cent against the US dollar, hitting a low of $1.4377. It is also down 0.4% against the euro, at €1.2803.

    The resignation of Iain Duncan Smith, the work and pensions secretary, will simply add another layer of political risk to sterling’s prospects. ‘Brexit’ continues to dominate conversations, and the most alarming comment I’ve heard so far was from a business student at a talk I gave last week: “I’d quite like the Uk to leave the EU, just to see what happened’.

    Young educated Londoners are natural in favour of Europe and if they’re torn between rebelling and not bothering to vote at all (older voters are much more likely to turn up at the ballot box, but also more likely to vote to leave the EU), that doesn’t bode well.

    The political turmoil in the Conservatve party has ended last week's UK Pound £ rally and pushed it back to US $1.44 #GBP #BoE

    Corbyn on @skynews Chancellor should consider his position, warns of a "lurking wolf" at DWP targeting needy people pic.twitter.com/SWNEvHzUfx

    Related: Tory turmoil: Corbyn calls on Osborne to follow IDS and resign - Politics live

    8.32am GMT

    European Central Bank policymaker Benoît Cœuré is urging eurozone politicians to create closer economic and monetary union, or risk seeing the European project unravel.

    The progress of European integration has increased interdependence between Member States. But we still haven’t drawn all the necessary conclusions and European politicians still don’t have the tools that would allow them to respond to the expectations placed on them.

    This shortcoming feeds popular frustration with European policies, sometimes to the point that they question European integration itself. There is nothing inevitable about the status quo, but, to move forward, we need to redefine a common project. It will take many years to implement this project. It is all the more urgent to start defining it.

    Cœuré: A stronger euro area would benefit political stability https://t.co/bozeRS6UZR

    8.23am GMT

    The rally in Chinese shares has not fed through to Europe.

    London’s FTSE 100 dropped by 30 points, or 0.3%, at the start of trading.

    Miners, oil #stocks get hit as $ rallies & US rig count increase puts supply imbalance back in spotlight pic.twitter.com/EeKtCBejJf

    Commodities rolling returns for the past 10 years are at -6.1%, which is the lowest since the Great Depression. pic.twitter.com/MlmqUPvJJS

    8.16am GMT

    IMF chief Christine Lagarde has offered Beijing some support over the weekend.

    8.01am GMT

    China’s new encouragement for speculative stock market borrowing is part of a broader stimulus push, argues Chris Weston of IG.

    He writes:

    The Chinese government is clearly pining for the days of yore when domestic stocks and property investment both moved up in tandem. The China Securities Finance Corporation loosened controls on margin lending on Friday and Chinese markets have responded in kind, rallying aggressively as soon as they reopened.

    Heavy fiscal spending on the government’s part has helped restart property construction in 2016, while monetary easing and weakening home purchase downpayment requirements have helped spur property sales.

    One wonders whether part of the reason behind this stimulatory push is due to the fact that top members of the Chinese leadership are positioning themselves for the five out of seven Politburo Standing Committee seats that will become available at 2017’s 19th Party Congress.

    7.54am GMT

    A flurry of buying activity has ripped through China’s stock market today, after Beijing relaxed rules designed to prevent a bubble.

    The Shanghai composite index has spiked by over 2% to close at 3,020 points, a gain of 64 points, despite concerns over the Chinese economy.

    China Securities Finance Corp., the state-backed agency that provides funding to brokerages for margin trading, will restart offering loans to securities firms for periods ranging from 7 days to 182 days, according to a statement posted on its website Friday.

    The agency will cut interest rates on the debt to as low as 3 percent, it said.

    7.41am GMT

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

    After the recent drama from central bankers, there’s a calmer feeling in the markets this morning. And with not much data in the calendar, it could be a bit of a drag.

    Related: Iain Duncan Smith broadside leaves David Cameron facing test of unity

    History repeats itself, first as tragedy, then as farce, then as Greek bailout negotiations. pic.twitter.com/atFonyDaip

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