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24 September 2019
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The Supreme Court has ruled this morning that Boris Johnson's proroguing of Parliament was unlawful, sending MPs back to work imminently. It said that the Prime Minister was wrong to prevent Parliament from doing its job. The decision is historically significant and could have a huge impact on Brexit; sterling surged initially following the news, as it lessens the chance that Johnson can force through a no-deal Brexit.
European markets are lacking direction today following mixed trade headlines overnight. US Treasury Secretary Steven Mnuchin indicated that talks with China are on track, but there were fresh doubts on the prospects of a deal between America and Japan following a threat from President Trump.
Last week saw an increase in volatility in global markets. Wall Street neared record highs midweek before confidence was shaken by trade tensions. The Federal Reserve lowered interest rates for the second time this year, but its commentary was more hawkish than expected. European equities were affected by the global oil supply disruption that occurred earlier in the week, but later stabilised. Oil prices rose as much as 19% after half of Saudi Arabia's oil production was wiped out in an attack, but optimism over the facility's recovery time grew throughout the week.
The Bank of England kept interest rates unchanged and it is largely expected to do so until there is more clarity over Brexit. In August, the UK's Consumer Price Index (CPI) fell from 2.06% to 1.72%, which was actually above the central bank's forecast.
In Japan, inflation also fell in August. Core CPI, which excludes fresh food, sank to a two-year low of 0.5%, in line with market expectations.
Finally, fears that Germany is heading into a recession sharpened last week following the latest composite purchasing managers' index reading. The manufacturing component for September revealed the biggest slowdown in factory activity since the financial crisis.
Thomas Cook collapsed in the early hours of yesterday morning after the company was unable to secure the extra £200m funding it required to stay afloat. The UK Civil Aviation Authority has launched “Operation Matterhorn” to repatriate some 150,000 British tourists - the largest such exercise since the Second World War.
Thomas Cook's Anglo-German rival Tui has reassured the market this morning that it expects full-year results to be “in line with expectations”, forecasting earnings before interest, tax and amortization to be €803m for the year to the end of September. Tui said it was “currently assessing the short-term impact of Thomas Cook's insolvency”.
Marks & Spencer has reduced the price of various staples by up to 40% in anticipation of its new delivery service that will rival Waitrose. When Ocado's contract with Waitrose ends next September, it begins a joint venture with M&S, which recently fell out of the FTSE 100.
Shares in Metro Bank tumbled this morning after a £200m bond sale was pulled on Monday night due to lack of demand. The bank's borrowing costs have risen since a misreporting scandal came to light in January. It needs to raise new debt before the end of the year to meet new EU regulations.
Close Brothers announced that its CEO will leave the company alongside its annual results this morning. Full-year profit fell by nearly 30%, which it partly attributed to “low levels of investor risk appetite”. Preben Prebensen will remain at the company for at least 12 months, after leading the merchant bank since 2009.
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