Speaker blocks 3rd vote on current Brexit deal; Sterling strengthens after no-deal Brexit rejected; UK unemployment falls below 4%.

19 March 2019

Speaker blocks 3rd vote on current Brexit deal; Sterling strengthens after no-deal Brexit rejected; UK unemployment falls below 4%.

The Weekly Note is brought to you by the ALPHA: r² discretionary service team.

Market news

Theresa May’s Brexit deal has been dealt a potentially fatal blow by the Speaker of the House of Commons, who yesterday scuppered the anticipated third parliamentary vote. John Bercow instructed that the unpopular deal could not be revisited in parliament without “substantial changes”. With the official Brexit deadline looming and whilst threatening a long Article 50 extension, the Prime Minister was attempting to coerce MPs into supporting the deal.

Bercow’s use of a convention dating back to 1604, with 11 days to go until the UK is due to leave the EU, has caused some ministers to express fears of a constitutional crisis. The road to Brexit is as unclear as ever; Tory Eurosceptics have welcomed the move to block another identical vote, but the government has said it will still try to get May’s deal through the Commons.

The expectation of a lengthy Brexit delay leaves Sterling near its 2019 highs, while the FTSE 100 has rallied over 3% since the beginning of last week. The pound had already strengthened 2.07% against the dollar last week after Parliament voted against a no-deal Brexit.

Global equities have enjoyed a positive week, with confidence returning after the preceding sell-off. Strong earnings and positive economic data in the US led the S&P 500 to its best week since November, rising 2.95%. The US Consumer Price Index rose for the first time in four months, registering 1.5% year-on-year. The Federal Reserve begins its meeting today.

A jump in industrial production in the eurozone, up 1.4% in January compared to December, encouraged the Stoxx 600 to rise 2.86% last week. Calm sentiment was also supported by developments between the US and China, which kept global yields steady.

Employment figures from the Office for National Statistics have brought some good news for Britain this morning. Unemployment has fallen below 4% for the first time since 1975, whereas surveys had pointed towards stagnation. Weekly earnings growth fell marginally but remains above inflation at 3.4%.

Oil prices have shot up in the past week, despite a rebound in Libyan supplies. Brent crude oil, at around $68.10 a barrel, is at its highest price since November amid continuing sanctions on Iran and Venezuela.


Economic data*

Share Closing Values at 18/2/19 Year high Year low
FTSE 100 7,229 7,904 6,537
Euro Stoxx 50 3,388 3,596 2,90
DAX 11,657 13,204 10,279
DJ Industrial Average 25,914 26,952 21,713
S&P 500 2,833 2,931 2,351
NASDAQ 7,714 8,133 6,190
Nikkei 225 21,585 24,448 18,949


FOREX versus US Dollar Last % Change**
British Pound 1.33 0.13
Euro 1.13 0.11

** From previous day close* Source: Thomson Reuters


Stock focus

Asos revealed its interim results this morning and stated that it is confident it will meet its full-year guidance. December’s profit warning saw shares plunge over 40% and the price remains well short of half the highest level reached a year ago. The fashion retailer reported an 11% rise in sales overall but a disappointing fall in the US due to the struggles of a new warehouse.

Ocado also updated shareholders this morning, reporting a rise in revenue of 11.2% in the three months to the beginning of March. A four-day fire in its Andover warehouse in February accounted for a 1.2% drag on sales, but the online grocer dismissed it as a temporary setback. It reported more orders per week, but of smaller average sizes.

Shares of Standard Life Aberdeen are higher today after it emerged it has claimed victory in a dispute with Lloyds Banking Group. Lloyds gave notice to withdraw a £100bn investment mandate from Aberdeen after it merged with Standard Life, claiming the newly formed company had become a competitor.

The potential merger between Deutsche Bank and Commerzbank has been recently talked up by both companies, but there is some fear that the prospect of heavy job losses, and union intervention, could obstruct the talks. The proposed deal has long been seen as a good idea for the banks, but has lacked political support.

JD Sports has agreed to buy its rival Footasylum in a deal worth £90m. Last year Footasylum issued two profit warnings in quick succession in the face of competition and consumers spending less freely. The offer equates to a 77% premium over the current share price, but is about half of 2017’s floatation price.

Worldpay, the leading UK payments group, is to be acquired by US rival Fidelity National Information Services (FIS) in a $43bn takeover deal. The rapid growth of online and card payments has led to consolidation within the industry and the purchase will improve FIS’s physical payment capabilities.

Important information

This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a
transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.

Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117.

Speaker blocks 3rd vote on current Brexit deal; Sterling strengthens after no-deal Brexit rejected; UK unemployment falls below 4%.

Important note

No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.

Walker Crips Investment Management Limited (WCIM) is a member of the London Stock Exchange and is Authorised and Regulated by the Financial Conduct Authority (FCA).

This website is solely for information and private circulation and does not constitute an offer to buy or sell shares in any company mentioned herein. References to Walker Crips refer to Walker Crips Investment Management Limited and/or other companies within Walker Crips Group plc. It is important to remember that the value of investments and the income from them can go down as well as up and investors may not realise the value of the initial investment. Recommendations may or may not be suitable for all recipients of this publication and if you have any doubts you should seek advice from your investment advisor. WCIM cannot accept responsibility for any losses which may be incurred by anyone acting on such recommendations. The value in sterling terms of foreign investments may rise or fall in response to currency fluctuations.

It must be noted that information concerning past performance is not a guide to future performance. In line with the FCA rules on conflicts of interest, investors should be aware that Walker Crips may have actual or potential conflicts of interest that could affect the objectivity and independence of their research. Where such conflicts exist it is Walker Crips’ policy to disclose them publicly. Principals and Associates of WCIM may have held a long term position in some of the stocks or shares mentioned herein. Consequently, in line with FCA Rules on conflicts of interest, WCIM research in these areas cannot be classified as impartial within the FCA’s definition and should not be relied upon as independent or objective. Prices and factual details are deemed to be correct at the time of publication but may change subsequently. The publication has been prepared with all reasonable care and is not knowingly misleading in whole or in part. Expressions of opinion are subject to change without notice.

Investors are strongly advised to consult with their own Broker / Account Executive to discuss risk levels and whether a particular investment is suitable for their financial circumstances.

Opinions expressed by individuals within this website does not necessarily represent the views of the Company.

Please indicate that you agree with the statement below to continue

If you do not agree with the above statement and have questions about our service and products please contact us on 020 3100 8000.

Display disclaimer

Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, may fall as well as rise and the amount realised may be less than the original sum invested.

Walker Crips Group plc (Old Change House, 128 Queen Victoria Street, London EC4V 4BJ), registered in England, registered number 1432059, incorporates the following companies which are authorised and regulated by the Financial Conduct Authority: Walker Crips Investment Management Limited registered in England number 4774117 member of the London Stock Exchange, Walker Crips Wealth Management Limited registered in England number 3790291, Ebor Trustees Limited registered in England number 3514268, Barker Poland Asset Management LLP registered in England and Wales number OC341149.