13 Mar 2019
All eyes will remain trained on the UK tonight, analysts have said.
Here's how the day wrapped up:
US 10 Year 2.62%
S&P 500 0.59%
Brought to you by TreasuryONE
13 Mar 2019
Asset managers are leading Britain's Brexit exodus
The prospect of leaving the European Union has forced Britain’s financial community to make expensive preparations for life outside of the trading bloc.
Whatever happens on March 29 – a no-deal Brexit, a delay to the departure or some kind of agreement – the UK faces a slow but steady erosion to its position as the European centre of looking after other people’s money.
London-based think tank New Financial said in a report published this week that it identified 269 UK-based financial firms that have reacted to Brexit by setting up new hubs, moving staff or rebasing assets elsewhere in the EU. The moves are real, not theoretical; the firms can’t afford to wait and see whether Brexit actually happens.
"The days of contingency planning’ are long gone," as New Financial puts it. Asset managers have been the most proactive in establishing non-UK offices from which to do business, the report says. Moreover, the greatest number have chosen Dublin for their base in the bloc. Banks that have secured new EU licenses have overwhelmingly opted to locate their hubs in Frankfurt.
New Financial says that it identified £65bn of portfolio funds that have been transferred out of the UK so far. But that’s based on publicly available information, which the think tank reckons underestimates the potential flows from the asset management community, as well as from banks.
"We think the final numbers will be much larger," the study says.
The European Securities Market Association and the Financial Conduct Authority have acted sensibly in minimising the potential disturbance Brexit will cause and ensuring the continuation of so-called delegation rights that allow funds to be marketed and sold in one country and managed from another.
Last month, EU and UK regulators agreed to two cooperation agreements to coordinate oversight of investment funds, in case Britain leaves the bloc without a deal.
13 Mar 2019
It’s a tongue-twister in the making: Build-A-Bear is bearish on Brexit.
The toy company partly blamed waning consumer confidence in the UK, its largest international market, for sluggish sales in the past fiscal year as Britain approaches the deadline to leave the EU with no deal in place.
Revenue in the year that ended February 2 fell 7.5% from a year earlier to $336.6 million, the St. Louis-based company said Wednesday.
Sales in Europe sank almost 18%. Build-A-Bear Workshop said “the situation in the United Kingdom still poses a challenge.”
Even so, the company said it’s moved beyond other issues that impacted it last year, including the liquidation of Toys “R” Us and a significant drop in family-centric movie properties.
Build-A Bear expects to return to profitability this year.
Revenue growth will be in the mid- to high- single digits, as it invests more in its e-commerce operations and expands its non-retail revenue streams. The shares fell as much as 6.4% in early trading in New York. - Bloomberg
13 Mar 2019
Optimism that the UK will avoid crashing out of the European Union is propping up the pound.
Sterling strengthened the most among the Group-of-10 currencies on Wednesday ahead of a vote where analysts expect Parliament to reject leaving the EU without a deal.
UK government bonds declined as demand for safer assets waned, while stocks rose.
13 Mar 2019
OVERVIEW: US equity futures edged higher alongside European stocks and Asian shares declined on Wednesday as investors weighed the latest clues on the strength of the global economy.
The pound gained before the next major Brexit vote. Contracts on the S&P 500 fluctuated before nudging upward, while those on the Dow Jones struggled as Boeing extended losses in pre-market trading.
The Stoxx Europe 600 Index saw a modest advance as gains for oil companies and financial services offset a slide for retailers following disappointing earnings from Inditex, owner of the Zara chain, and Adidas.
Treasury yields ticked higher along with those on core European bonds. The dollar was steady after three days of declines. After a positive start to the week, investors are in a cautious mood as they digest soft data from Japan and Australia, as well as the ongoing Brexit drama and a warning from the top American trade negotiator that tariffs on Chinese goods may not be rolled back.
Reports on US wholesale prices and capital-good orders Wednesday will provide further clues to the path of monetary policy, while numbers on Chinese production and retail sales and a Bank of Japan policy decision are all coming up later in the week.
“There’s a wall of data over the next few days that will inform the pace of global growth, not least Chinese production and retail sales and the Bank of Japan’s policy decision,” Nema Ramkhelawan-Bhana, a Johannesburg-based economist at FirstRand, said in a note.
“This, paired with Brexit uncertainty, has rendered the market skittish, disallowing risk assets from consolidating recent gains.”
Sterling extended its advance for the week and gilts fell as UK lawmakers prepare to vote on whether to tear the country out of the European Union with no agreement, or give themselves the chance to delay Brexit in the hope of securing better terms. Elsewhere, Australia’s dollar slid with bond yields after weak consumer confidence data reinforced a deteriorating outlook for the economy. West Texas oil climbed above $57 a barrel after an industry report showed an unexpected drop in US fuel supplies.
Emerging-market stocks declined for the first time in three days.
These are the main moves in markets:
The Stoxx Europe 600 Index gained 0.1% as of 10:52 London time. Futures on the S&P 500 Index rose 0.1%. The MSCI All-Country World Index fell less than 0.05%. The UK’s FTSE 100 Index fell less than 0.05% to 7,148.50. The MSCI Emerging Market Index sank 0.2%.
The Bloomberg Dollar Spot Index climbed less than 0.05%. The euro increased 0.1% to $1.1294. The British pound gained 0.6% to $1.3149. The Japanese yen rose less than 0.05% to 111.35 per dollar.
The yield on 10-year Treasuries gained two basis points to 2.62%. Germany’s 10-year yield rose two basis points to 0.07%. Britain’s 10-year yield gained three basis points to 1.191%. Japan’s 10-year yield fell one basis point to -0.042%.
West Texas Intermediate crude increased 0.9% to $57.39 a barrel, the highest in more than 16 weeks. Gold climbed 0.5% to $1,308.08 an ounce, the highest in almost two weeks. The Bloomberg Commodity Index rose 0.2% to the highest in more than a week. - Bloomberg
13 Mar 2019
The rand has been trading like the proverbial yo-yo, says Andre Botha, Senior Dealer at TreasuryONE.
“What an interesting day yesterday was, with the rand trading like the proverbial yo-yo. The rand was on the front foot for most of the day after the US inflation number came in worse than expectations.
"This only solidified the Fed's position to sit on their hands and adopt a wait and see approach. The last two big data sets out of the US, the non-farm payroll number and the inflation number, came in weaker than expected.
"The rand gave up all of the gains it made in evening trade when Theresa May's second plan to exit the European Union fell on deaf ears and was overwhelmingly rejected by the British Parliament. She immediately announced another vote for today, on blocking a no-deal exit.
"A second vote will take place tomorrow to seek an extension to Article 50’s exit process. Should this vote fail, the UK might exit the EU on March 29 with no deal. This uncertainty has spread into the market, and we have seen EM currencies losing some ground and Gold picking up which suggests that the market is nervous heading into tonight's vote. "Looking at today, we could see the rand trading sideways as we await the details of tonight's vote in the UK and little in terms of data will be released.
"It looks like the markets are a little risk weary which could pin the rand on the backfoot, but should the no-deal option be voted against tonight we could see the rand grinding stronger.”
13 Mar 2019
The rand is weaker as global uncertainty pushed markets into safe haven assets, says TreasuryONE.
By 10:04, the rand was trading at R14.34 to the greenback.
"Lawmakers in the UK overwhelmingly rejected Theresa May’s latest Brexit deal last night which leaves the UK with three options going forward. There could be a no deal Brexit, a delay in Brexit or a second referendum. The first option will be voted on tonight and the second on Thursday night. The pound fell from above 1.3200 to its current 1.3090 level while the Euro is at 1.1285.
"We saw Gold bounce to $1304.67 in Asia this morning. US stocks closed mixed while Asian stocks are lower. US Treasury yields were also lower, with the 10y at 2.62% and the 30y at 3.00% on the back of softer US inflation data.
"Markets will keep a eye on the UK tonight for further direction while the lack of news from the trade negotiations is not helping in stabilising markets."
13 Mar 2019
Asian stocks drop as rally eases; pound holds loss
Adam Haigh, Bloomberg
Stocks in Asia dropped Wednesday as the positive sentiment at the start of the week faded for lack of fresh data alleviating global growth concerns.
The pound held losses as the UK’s Brexit woes deepened anew.
Shares posted losses in the region’s biggest markets, with the heaviest declines coming in Japan, while futures signaled lower starts in Europe and the US. Earlier, the S&P 500 Index closed slightly higher.
Treasuries and the dollar steadied after yields fell Tuesday in the wake of softer inflation data that bolstered bets the Federal Reserve will remain patient. Australia’s dollar slid with bond yields after weak consumer confidence data reinforced a deteriorating outlook for the economy.
“We’re pretty concerned about the direction of global growth partly because we can’t see who is going to come and save us this time,” Steve Diggle, chief executive officer and founder of Vulpes Investment Management, told Bloomberg TV in Singapore. “We are way ahead of the fundamentals after this bounce” in risk assets this year, he said.
Sterling is on the back foot again after UK lawmakers Tuesday rejected the government’s latest deal to leave the European Union, raising the prospect that the divorce will be delayed or even reversed.
Parliament will now probably vote to postpone Brexit this week, and lawmakers - including some of May’s own Cabinet - will likely try to maneuver to force the government to rip up its Brexit plans and start again.
Alongside Brexit developments, investors have a slew of economic data to digest.
The latest inflation reading came amid falling prices for autos and prescription drugs, adding to evidence the American economy is in no danger of overheating.
In the coming days the focus will turn to Chinese production and retail sales, as well as a Bank of Japan policy decision. Elsewhere, crude oil prices climbed after an industry report showed an unexpected drop in US fuel supplies.
13 Mar 2019
Brimstone CEO: We are still good at what we do
Brimstone had a tough year, but it can still deliver, CEO Mustaq Brey told Fin24 on Tuesday.The investment corporation's profit for the year ended December 31, 2018 dropped just shy of 50%, from R141m to R71.3m, according to its annual results.
13 Mar 2019
'We like competition' – FNB CEO on new entrants in banking sector
FNB CEO Jacques Celliers says competition from new banking entrants means the sector as a whole will get better.
Celliers was speaking to Fin24 on Tuesday afternoon following the release of FirstRand's unaudited interim results for the six months ended December 31, 2018.
FNB announced a pre-tax profit increase of 12% to R12.5bn for the six months ended 31 December 2018, driven mainly by a strong performance from its SA business.