Sterling lower after polls show fall in Tory lead

26 November 2019

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Market news

European equities are treading water this morning, mostly lower amid a lack of significant news. Investors had more appetite for risk on Monday, however, pushing US equities higher after Wall Street ended a six-week winning run last week. The Federal Reserve released a confident update yesterday, saying that the current policy position is likely to remain appropriate unless there is a shock in the economic data. Fed Chair Powell said that policy is well placed to support the labour market and reach the 2% inflation target. 

The latest transmissions from US-China negotiations are relatively positive as well. China said that it will raise penalties on violations of intellectual property rights, which is a key concern of the US. Soundbites from both sides have been encouraging but reports of a phase two deal could be premature given details of phase one are still being confirmed. Meanwhile, Beijing issued a strong response after Sunday's Hong Kong election resulted in a landslide victory for pro-democracy parties, warning it would not change course or tolerate protests indefinitely. 

Sterling is a little lower today after poll data indicated that the Conservative lead over the Labour party has narrowed. The major parties released their manifestos in the past week; the Conservative party has focused on a simple message of completing Brexit, whilst spending on infrastructure and limiting taxes. Labour, meanwhile, has pledged to nationalise multiple industries and use higher tax and spending to deliver an enormous redistribution of wealth. 

Finally, some mixed news for planet earth. Carbon dioxide in the atmosphere has reached a new unwanted record, according to the World Meteorological Organisation. Despite efforts to lower emissions, the increase in concentration was above the 10-year average. More positively, global electricity production from coal is due to fall by the largest amount on record this year. Efforts of countries such as the UK, Germany and South Korea to switch to cleaner alternatives outweighed increased coal consumption elsewhere. 

Stock focus

Compass Group is among the FTSE 100's biggest fallers this morning following its results for fiscal 2019. Pre-tax profit fell by 3.3% and although its full-year organic growth was ahead of its target range, its shares are down nearly 6% at the time of writing. Compass, which provides food meals for office workers, the army and school children, warned that business was hurt by deteriorating confidence around Europe. 

TSB has revealed plans to close 86 branches over the next year, putting up to 400 jobs at risk, as new chief executive Debbie Crosbie seeks to cut costs. The bank is aiming to save £100m by 2022 and move on from a reputation-damaging software meltdown last year, which saw off TSB's previous boss. TSB has about 5m UK customers. 

Polar Capital's assets under management rose from £13.8bn to £14.3bn in the six months to the end of September, but suffered net outflows of £448m after the closure of one of its Japanese funds. Market movements and fund performance made up the deficit. First-half pre-tax profits were £24.9m, down from £27.3m last year. 

Uber will not be granted a new license by Transport for London, which has accused it of serious safety failures, claiming at least 43 drivers have operated without an appropriate license in the capital. The firm will appeal and can operate during that time, but the ruling may also have consequences for Uber's other UK locations. 
Research by Which? suggests that only one in twenty Black Friday promotions offer value for money. The consumer group studied deals offered by the likes of Amazon and found that many items are cheaper at other times in the year. Black Friday was initiated to coincide with Thanksgiving in the US, but the phenomenon has expanded overseas. 

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