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10 December 2019
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European markets are lower this morning amid mixed trade news and with some focus on the ECB's policy meeting on Thursday. The central bank's new president, Christine Lagarde, has pledged to aim for more policy consensus amongst members, which should include higher government spending and focus on climate change, but investors' inflation expectations are still below the ECB's target level.
The FTSE 100 has been down more than 1% this morning, also hindered by sterling, which is strong despite some disappointing UK macro data. Last week, sterling reached a seven-month high and the FTSE 100 fell 1.45% whilst American and European benchmarks were largely flat. The currency has taken strength from the perceived chances of a Conservative majority in this week's election, with the latest polls showing a squeeze on support for smaller parties ahead of the vote.
Sterling would perhaps be higher if it weren't for some gloomy economic data. UK GDP growth was flat in October, making it three months without growth for the first time since 2009. Businesses remain pessimistic about the UK's prospects post-election, as separate surveys exposed fears that corporate investment would shrink next year and that optimism is waning. Meanwhile, Boris Johnson has cast doubt on two big infrastructure projects, the expansion at Heathrow and the new north-south high-speed railway line, HS2.
In the US, President Trump is expected to face two articles of impeachment today, as House Democrats look to charge him with abuse of power and obstruction of Congress. Democratic members of the House Judiciary Committee have called the evidence “overwhelming” and said that the President poses “a clear and present danger to our free and fair elections and to our national security”. There could be a full vote in the House of Representatives this week.
Finally, Chinese consumer inflation in November measured above expectations. China's Consumer Price Index rose 4.5%, following a near eight-year high of 3.8% in the previous month. Pork prices, which have surged over 100% in the past year, are the main driver.
The £5bn bidding battle for Just Eat looks to be heating up before Christmas, with both of its hopeful suitors under pressure to improve their offers. An improved cash offer from Naspers worth £5.1bn was immediately rejected yesterday, while Takeaway.com is facing calls to offer as much as 58% of the enlarged share capital to existing Just Eat shareholders, who are already benefitting from the intense competition.
Ashtead is at the bottom of the FTSE 100 this morning following the disappointing performance of its UK division amid economic uncertainty. Its core American business is, by contrast, less affected by uncertainty and “continues to perform well”. Overall profits at the company in the six months to November rose by 6%. It has been one of the year's best performing stocks but is down over 7% today.
Tullow Oil's share price dropped by more than two thirds yesterday after the company suddenly fired its chief executive, cut oil production guidance and suspended its dividend. The exploration director was also sacked, a month after analysis of a South American site showed disappointing results. The FTSE 250 company's chairwoman said “decisive action” was needed following the company's disappointing performance.
Tesco is considering selling its retail operations in Thailand and Malaysia after “inbound interest” from potential buyers and a review of its business in the region, which is valued at about £6.8bn. The supermarket chain's shares rose sharply yesterday in expectation of a sizeable distribution to shareholders.
The shakeup at the top of HSBC is set to continue in January, with the departures of the chief risk officer and chief operating officer. Its chief executive was sacked in August by Mark Tucker, the chairman who has overseen significant changes to the bank's senior management in the last couple of years. The changes are part of a wider effort to improve profits at HSBC.
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