Rolling coverage of the pound, FTSE 100 and gilts, along with all the economic data, breaking news and analysis that move UK markets.
(Bloomberg) — 4 p.m. We’ll wrap up for the day, thanks for tuning in. Come back tomorrow as we bring you more news and analysis vital to UK markets and beyond.
3:37 p.m. Spotlight on Ocado’s 80% Drop From Its Pandemic Peak
We’re getting close to the end of the day now, but the pound is still on a tear, set for a second day of strong gains. Gilts and the FTSE 100 are heading in the other direction though, with yields pushing higher and stocks tumbling amid renewed bets on a longer central bank hiking cycle.
But today’s Spotlight Chart focuses on Ocado, and shows today’s drop in the stock is just the latest in a long-term down trend for the under-pressure firm. Indeed, its down about 80% from that 2020 peak.
3:10 p.m. Budget Day Strikes Grow Even More
Investors will have their eye on budget day on March 15 for several reasons. Apart from getting Chancellor Jeremy Hunt’s fiscal statement, the day will also bring about more than 130,000 government workers taking to the streets to protest over pay.
Employees from the HM Revenue and Customs, Companies House and the Care Quality Commission voted to strike, the Public and Commercial Services Union said on Tuesday in a statement.
Hunt will be under pressure to address unions’ demands for pay increases following economist estimates for an extra £10 billion of headroom at next month’s budget. And while the government has claimed that public-sector pay increases would further fuel inflation, the Institute for Fiscal Studies pushed back against that notion in an article published today.
2:12 p.m. Time for a quick check in with markets now, and the pound is having really rather a good day against the dollar now, trading well above $1.21. Not such luck for the FTSE 100 though, which is stuck in the red.
Ocado is still leading the drop, although it has pared its decline a touch through the day.
1:19 p.m. Market impact aside, will the new EU-UK deal on trading rules for Northern Ireland be enough for the DUP to rejoin power-sharing in Stormont? Lizzy Burden has the latest from Westminster in today’s politics podcast.
12:53 p.m. It’ll be a long road ahead for the UK to repair its reputation among investors following Brexit.
BlackRock and Abrdn are among asset managers overseeing more than $9 trillion combined that expect the deal to remove only some of the uncertainty that has dogged Britain since it voted to leave the EU in 2016, Bloomberg’s Loukia Gyftopoulou and Sagarika Jaisinghani report. Others, including Invesco Asset Management’s Paul Jackson, said the agreement won’t meaningfully help the economy and that he remains underweight on UK equities. The damage to markets since the Brexit vote is clear: the FTSE 100 and FTSE 250 indexes have significantly lagged all major equity benchmarks, and the pound trades below its average since the referendum.
One way the agreement could make the UK appealing to investors is growth driven by business investment. That’s been on the backfoot since the Brexit vote, according to Nicole Kornitzer, portfolio manager at Kornitzer Capital Management Inc., which oversees about $6 billion. Kornitzer added:
“A return to healthier investment levels would boost GDP and improve confidence in the overall business environment, attracting more investors.”
12:19 p.m. What the Latest Brexit Deal Means for Investors
Sunak’s post-Brexit agreement itself is better than anyone had expected, but it’s the tone — rather than the substance — that matters most. The fact that the UK and the EU are now negotiating in good faith might be enough to lift some of the “Brexit discount” that has weighed down the UK stock market since 2016. I take a look at this in today’s Money Distilled newsletter. — John Stepek
11:50 a.m. Looking ahead to the rest of the day, there’s a slew of confidence and manufacturing surveys due in the US, while Chicago Fed President Austan Goolsbee is the lone central bank speaker before the pace picks up towards the end of the week.
For more on this, and the other biggest stories that matter for markets, check out today’s Five Things newsletter.
11:29 a.m. Still, that’s not to say the deal solves all the UK’s problems. Indeed, as Loukia Gyftopoulou and Sagarika Jaisinghani write today, it is only one step for UK assets on their long road to recovery after the disruption of the past seven years.
BlackRock and Abrdn are among those that expect the deal to remove only some of the uncertainty that has dogged the UK since Britain voted to leave the bloc in 2016. Others, including Invesco Asset Management, said the agreement won’t meaningfully help the economy.
According to Invesco’s global head of asset allocation Paul Jackson:
“Investors may consider the UK to be a less important part of their core portfolio as a result of Brexit but I suspect there are also some cyclical aspects to this as well. Some of those flows will come back but some of them will be lost forever.”
10:56 a.m. One main upside for investors from Sunak’s Brexit deal is that is might mean the UK can stop talking about Brexit for a while. Here’s Man Group CEO Luke Ellis explaining why on Bloomberg TV.
10:14 a.m. Gilts Swept Up in Global Bond Losses
Gilts are feeling major pressure today for reasons not entirely confined to the UK. They’re following the lead of their euro-area counterparts, which have been battered by markets ramping up their bets for rate hikes from the European Central Bank. Traders now see the benchmark rate hitting a historic high of 4% in about a year, up from wagers for 3.5% just a few weeks ago, Bloomberg’s James Hirai and Libby Cherry report.
Those bets have been turbocharged by data that showed hotter-than-expected inflation in France and Spain, which will likely embolden ECB officials to deliver the 50-basis-point rate increase in March — a move that President Christine Lagarde touted as recently as this week.
9:14 a.m. Pound Turns it Around
The pound has turned it around in the past few minutes, shooting higher against the dollar at nearing the $1.21 level. The FTSE 100 is still lower though, with Ocado now down almost 10%.
8:52 a.m. Sunak Begins Hard Sell of Post-Brexit Deal
After securing what has been dubbed the “Windsor Framework,” Sunak embarks on the difficult task of getting key lawmakers on side. One sticking point may be the European Court of Justice’s role as ultimate arbiter of the application of EU laws in Northern Ireland, Bloomberg’s Lizzy Burden notes.
8:17 a.m. Ocado Loses to Aldi, Lidl in Cost-of-Living Crisis Part of Ocado’s problem is that its grocery arm is feeling the impact of the cost of living crisis, sending shoppers away from the more premium offerings of M&S and to discount supermarkets like Aldi and Lidl.
Data today from Kantar confirmed that trend, showing Aldi’s market share rose to a record 9.4%, with sales growing 26.7% in the period. Lidl sales rose 25.4%, bringing its market share to 7.1%. Combined, Aldi and Lidl now have 16.5% of the market, up from 14.1% a year earlier before the cost-of-living crisis deepened.
8:10: a.m. FTSE 100 Dragged Lower by Ocado, Gilt Yields Rise Ocado is having a rough morning after those numbers, falling about 8% and the worst performer in the FTSE 100. The index as a whole has opened lower on Tuesday, after a strong rise yesterday, while gilt yields are pushing higher.
8:03 a.m. Ocado reported earnings this morning, and it wasn’t good news for the online retailer.
The firm booked a £74.1 million loss before interest, taxes, depreciation and amortization — bigger than analysts expected. It reflects falling sales at its grocery venture with Marks & Spencer and increased investment in Ocado’s solutions business, where the company builds automated warehouses for retailers using its robotic technology.
The stock has fallen 54% over the past year, and was the worst performer in the FTSE 100 Index in 2022.
7:54 a.m. Good morning and welcome to Markets Today.
UK assets are shedding some of the euphoria following Prime Minister Rishi Sunak’s post-Brexit deal. The pound is on the back foot to start the day, and futures point to a quiet open for the FTSE 100.
After finding common ground with the European Union, Sunak’s government will now have to get politicians from Northern Ireland’s Democratic Unionist Party and an influential group of pro-Brexit lawmakers from his own party on board, Bloomberg’s Ellen Milligan and Alex Wickham report.
The European Research Group of Brexiteer MPs is awaiting advice from its lawyers and will meet Tuesday evening. While some ERG MPs are prepared to back the deal, others will take their lead from the DUP. That means a sizeable parliamentary rebellion is still possible if unionists come out against the agreement, three ERG MPs said.
(Updates to add posts.)
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