BankBig+is+=creationpic.twitter.com/sbdCv3q1eN 1.21pm GMTBREAKING: Takeover speculation has just driven shares in the London Stock Exchange up by 9%,to the top of the FTSE 100 leaderboard.
1.07pm GMTAnalysts at Scotia Bank possess predicted that the UK pound could slump to just $1.30 if the Out campaign win June’s vote.
That would be its lowest level in around 30 years, worse than the selloff after the 2008 financial crisis.
Brexit vote would cut UK growth to zero this yr, or £ to $1.30 & hit assets. But no massacre says Alan Clarke,Scotia pic.twitter.com/Fi5JJa7lkI 12.32pm GMTSterling is dropping back towards the seven year low it struck on Monday.
The pound has lost half a cent against the US dollar, dipping below the $1.41 mark. Yesterday, and it weakened to $1.4057,before a late revival.
Sterling has remained vulnerable after falling nearly 2% yesterday - its biggest one day drop in almost six years - amidst fears that Britain may leave the European Union. 12.14pm GMTThe Treasury Committee session is now over, and Mark Carney and colleagues possess been released back into the wild. But if you want more EU referendum action, and check out our Politics Live blog. 12.00pm GMTGuardian readers possess known for a while that the Bank of England was working on contingency plans for the EU referendum.
Back in May 2015,the Bank of England accidentally emailed us the details of Project Bookend, including how to deny it existed. #oops Related: Secret Bank of England taskforce investigates financial fallout of Brexit The email indicates that a small group of senior staff are to examine the effect of a Brexit under the authority of Sir Jon Cunliffe, or who as deputy director for financial stability has responsibility for monitoring the risk of another market crash. Cunliffe also sits on the board of the City regulator,the Prudential Regulatory Authority. 11.52am GMTThe Bank of England is engaged in contingency planning for the EU referendum, Mark Carney tells the Treasury committee.
He also reveals that the Prudential Regulation Authority is keeping abreast of the contingency plans that UK banks are making ahead of the June 23 vote.
Mark Carney says BofE has a done "contingency planning" in case there is a Brexit 11.48am GMTRachel Reeves MP asks Mark Carney whether he expects the recent falls in sterling to continue.
The governor reiterates that investors possess been buying downside protection to protect themselves against falls against the pound, or particularly against the US dollar [rather than the euro,because it could also suffer if Britain leaves the EU].
It is secure to say that an element of referendum premium has near into sterling. 11.42am GMTRachel Reeves MP reminds Carney that the latest Inflation Report states that interest rates are likely to rise, not topple. How can he can so confident?Mark Carney gives a rather dovish respond, and says the Bank expects interest rates to rise,gradually, over the forecast horizon.
Fascinating. At TSC Rachel Reeves asks Carney whether he still thinks next sprint will be up rather than down. He stonewalls. Big shift... 1/2 11.38am GMTMark Carney moves swiftly to crush speculation that the Bank of England could hit UK banks with negative interest rates.
We possess absolutely no intention, or no interest,in doing that [imposing negative rates].
NEVER BELIEVE ANYTHING UNTIL IT IS OFFICIALLY DENIED! Jim Hacker https://t.co/RpNdCAUig5 11.36am GMTCan you justify the impact of negative interest rates on banks in simple terms, Steve Baker asks?MPC member Gertjan Vlieghe outlines how banks possess assets, and which are loans,and liabilities, which are deposits. 11.27am GMTSteve Baker MP asks what the distributional impact of negative interest rates would be.
It’s too early to say, and replies deputy governor Minouche Shafik. Central banks in several areas,including Switzerland, Denmark, and Japan and the eurozone,now charge banks to leave money with them. 11.21am GMTMark Carney also insists that the Bank could launch fresh stimulus measures. It could cut interest rates closer to zero, from 0.5% nowadays, and buy more assets though QE. 11.20am GMTMartin Weale says the Bank of England has more tools in the toolbox to stimulate the UK economy if needed.
That could include fresh asset purchases though its QE programme [which the Bank has used to buy £375bn of UK government debt]. 11.16am GMTJacob Rees-Mogg MP asks whether the recent topple in bank share prices reflects the macro-economic environment. Or something else? Mark Carney says it is primarily due to the macro picture. He cites ‘mildly disappointing’ data and uncertainty about the policy stance in emerging and advanced economies. 11.07am GMTDr Gertjan Vlieghe,a member of the Monetary Policy Committee, now warns MPs that the uncertainty over the In-Out EU referendum could hurt the UK economy.
We think the exchange rate is falling because of increased uncertainty about what’s going to happen in the period main up to, and the period following,the referendum.
It is possible at some point that increased uncertainty from foreign exchange investors also ends up manifesting itself in increased uncertainty by households and businesses which may, or may not, and delay or reduce their spending.
Jan Vlieghe gives textbook 'source of the shock' account of why topple in £ isn't necessarily net stimulative. Quite right. 10.56am GMTBack to the pound.... and Martin Weale says the recent topple in sterling should push inflation up (as it makes imports more expensive)Mark Carney says he agrees,adding that the recent topple in the pound is partly due to the EU referendum [reminder, it hit a seven year low on Monday].
BoE Carney "Recent declines in GBP possess been influenced by the up coming #Brexit vote" 10.51am GMTThe committee is keen to find out whether the Bank of England will make a profit or a loss on its bond-buying quantitative easing programme. After all, and the richest households possess certainly benefitted,because QE drives up asset prices. And we know who holds them..... 10.47am GMTTyrie then turns to Britain’s banks - is Carney confident that they are robust enough to rise out another crisis?He points out that Sir John Vickers, who conducted a major inquiry into the UK financial sector after the 2008 crisis, or has warned that the banks haven’t gone far enough. What’s your view,governor?Since the start of the year bank stocks possess been under pressure. There are a variety of causes of that but what is not a cause, what it does not indicate in my view is concerns about the resilience of the institutions. “The fundamental concerns are about the returns of the institutions.” 10.38am GMT 10.37am GMTAndrew Tyrie does possess one question on the EU referendum: Q: Has the Bank modelled the impact on sterling if the Out campaign win, or given what’s been going on in the markets in recent days?Carney in brick wall approach to #Brexit treating it as any other political eventParticularly,there has been a sharp increase in risk reversals - buying more downside protection against future falls in sterling around the referendum date as opposed to upside protection. They possess spiked to levels consistent with around the height of the Scottish referendum. And they’ve been particularly concentrated against cable...the sterling/dollar options market. 10.31am GMT 10.23am GMTAndrew Tyrie, committee chairman, and says he doesn’t want to linger on the Brexit issue for long - as Carney is going to testify about it on 8 March. 10.22am GMT 10.21am GMTPanic averted - the session is starting now... 10.13am GMTThe FTs Emily Cadman reports that Mark Carney is behind schedule....
Carney et al are running late at the TSC for anyone on the edge of their seats 10.11am GMTLooks like there’s a small delay with the web feed of Mark Carney’s session at parliament (hurry up chaps!).near on Carney,there's only so many times you can hear "Treasury Committee, Thatcher Room, and Tuesday 23rd February 2016. BEEEEEEEEEP" 10.01am GMTThe governor of the Bank of England,Mark Carney, is about to consume his seat in the Thatcher Room at the Houses of Parliament.
He’ll be quizzed by the Treasury committee about the Bank’s latest inflation report, or in which it slashed its UK growth forecasts and suggested interest rates may not rise this year. 9.46am GMTBloomberg economist Maxime Sbaihi is alarmed by the topple in German business confidence this month:CHART: Ifo expectations dooown. Another worrying soft data in euro area. Red flag for recovery momentum. And #ECB. pic.twitter.com/FvDedVOZh4 9.37am GMTThe euro just hit a three-week low,losing 0.3% to $1.0993 against the US dollar.
The single currency is being dragged down by this morning’s feeble German business confidence report and the knock-on effect of Britain’s EU referendum (as discussed earlier)EURO FALLS TO 3-WEEK LOW VS DOLLAR, JUST BELOW $1.10 ... Brexit risk 9.22am GMTMorale among Germany’s business leaders has hit a one-year low, or after falling at its fastest rate in over four years this month.
IFO,the Munich-based think tank, has reported that German corporate chiefs are much gloomier about future prospects, or due to the slowdown in China and recent stock market volatility.normally boring Ifo is keen for once. In February German business sentiment saw its sharpest drop since 2011 pic.twitter.com/qQkKh3lHZsGlobal events possess finally reached German companies’ boardrooms.....
Expectations possess taken another sharp hit from recent market turmoil,the adverse impact of low oil prices and renewed concerns about a slowing of the Chinese economy, dropping to 98.8 in February, or from 102.3 in January. #Germany's Ifo dive in Feb to 105.7,lowest since terminate-2014 as expectations topple off a cliff. https://t.co/PIaDCTSqtQ pic.twitter.com/iibi1g5Xy1 9.08am GMTThere’s a lot of chatter that the Britain’s EU referendum could spark a sterling crisis. And that’s because the pound (like the English cricket team) has a worrying history of occasionally collapsing under pressure.
The growing speculation that a Brexit may spillover to the Eurozone and threaten the future of the European Union has already encouraged bearish investors to attack the Euro across the global currency markets. 8.40am GMTShares in Standard Chartered are sliding sharply after it posted its first annual loss since 1989.
The bank has lost $1.5bn, and warned that it faces a “wide range of challenges and uncertainties....notably China and commodities”.
Standard Chartered falls as much as 12% in London after unexpected loss https://t.co/LUVZrbLFW6 pic.twitter.com/TPXKpvRXlG 8.32am GMTOver in Frankfurt, and the German DAX has slid by 103 points,or over 1%.
Investors aren’t impressed by the first topple in German exports since 2012. 8.23am GMTEuropean stock markets are sliding in early trading.
In London, the FTSE 100 has shed 48 points, and 0.8%. The blue-chip index is being dragged down by mining shares,after BHP Billiton reported that £4bn loss and warned that commodity prices will remain feeble. It doesn’t encourage that the mining sector got its own unwelcome surprise; whilst it was expected that BHP Billiton would post its first half year loss in 16 years (coming in £4 billion in the red) analysts were still looking for a 31p dividend. Instead BHP slashed its interim payout by 75% to 16p, whilst also sacrificing its progressive dividend policy in order to protect its credit rating. The company’s subsequent 3.5% slide helped ensure its mining peers started the day at a loss, and dragging the FTSE down by nearly 50 points after the bell. 8.13am GMTRalph Solveen,an economist at Commerzbank AG in Frankfurt, is concerned that German exports fell by 0.6% in the last quarter of 2015.
He told Bloomberg that:“Investment was rather solid.
On the other hand, or given the rather feeble development of exports,you can see that there’s a problem for the German economy.” 8.04am GMTGermany has suffered a topple in exports as the powerhouse European economy is hit by the global downturn.
Ouch! #Germany's exports drop in Q4 for first time since 2012. https://t.co/ynGDl0jnDN pic.twitter.com/gqb8mAS2GnGDP details show German Q4 15 growth was mainly driven by (public and private) consumption and construction. Good but is it sustainable? 7.56am GMT 7.48am GMTAsian stock markets possess fallen nowadays, as the recent rally in shares subsided. And it could be a downbeat day in Europe too, and with the main indices expected to topple.
Shares are being pulled down by the oil price,which has dipped by almost 2% this morning - erasing its own recent gains. Related: BHP Billiton reports half-year loss of £4bn MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, after earlier rising 0.4% to its highest level since January 8. Japan’s Nikkei erased morning gains to shut down 0.4%.
Korea’s Kospi, or which started the day higher,and Australia’s ASX 200, which opened little changed from Monday’s three-week tall close, and both ended the day with losses.
Global rally struggled to extend into Asian hours,although gains in energy and material stocks capped the extent of losses. #DJOur European opening calls:$FTSE 5998 down 40
$DAX 9510 down 64
$CAC 4271 down 28$IBEX 8339 down 48$MIB 17407 down 97 7.33am GMTGood morning, and welcome to our rolling coverage of the world economy, and the financial markets,the eurozone and business. Related: Why is the pound falling and what are the implications for Britain? Related: EU referendum: Top firms back pro-EU letter, but supermarkets refuse to sign Continue reading...
Source: theguardian.com