Article 34T9C FTSE 100 hits record closing high as Brexit rattles the pound - as it happened

FTSE 100 hits record closing high as Brexit rattles the pound - as it happened

by
Graeme Wearden
from Economics | The Guardian on (#34T9C)

Britain's stock market has closed at a new high tonight, as fears over a hard Brexit weigh on sterling

Earlier:

6.41pm BST

That's all for tonight, as City traders catch a breather after another busy day.

Here's a brief recap of the main events.

KLAXON: Michel Barnier: "There's no questions on making 'concessions" on citizens rights, peace process in Ireland, & financial commitments.

It [the draft] suggests EU leaders will "reassess the state of progress" at a summit in December, and if sufficient progress is made, adopt additional guidelines for EU negotiators on a transition and future trade relations with the UK.

In a recognition of the progress made so far, the EU will attempt to be "fully ready for this scenario" by inviting Michel Barnier, its chief negotiator, to "start internal preparatory discussions" on a transition and the future relationship.

Draft conclusions for next week's EU Council allow Barnier "to start internal preparatory discussions" re transition + future relationship

#GBPUSD : EU's #Barnier could offer UK 2-year transition stay in EU market. Pound jumps. #Brexit pic.twitter.com/LTdHcRkrUj

6.17pm BST

The US stock market is continuing to rally tonight too; the S&P 500 just hit a new alltime high.

6.07pm BST

Bitcoin is also surging in value tonight.

The digital currency just hit $5,388, which means it has gained more than 10% in just one day.

Confounding many financial experts, including Jamie Dimon, CEO of JPMorgan Chase, Bitcoin has reached a new all-time high of $5,233, with robust speculative demand seen on the move through $5,000. The cryptocurrency success story continues, albeit for now, but just as an idea for basis, the asset is up 425% since the start of the year.

"The returns are truly remarkable, especially given the recent ban on Bitcoin trading in China, where demand had previously accounted for at least 10% of all global volumes."

5.24pm BST

Mystery solved....

Handelsblatt Reporting That EU's Barnier Could Offer UK 2-Year Transition Stay In EU Market

5.23pm BST

Hello..... the pound has suddenly reversed today's losses, and is now slightly HIGHER against the US dollar for the day.

I can't immediately see why.....

STERLING RISES VS DOLLAR; LAST UP 0.08 PCT TO $1.3231 pic.twitter.com/mjasKM5gEH

Thank you for playing the forex today, it's been a blast pic.twitter.com/lbZ8ZRdbUn

5.17pm BST

Readers may be looking at the FTSE 100 and wondering if they should be buying shares, or selling up.

I"m certainly not giving any investment advice.

Factoring in earnings, from where we're sitting valuations in the UK stock market look reasonable, neither particularly cheap, nor particularly expensive. That means in the short term the stock market can turn in either direction without defying the laws of statistics.

However there are some reasons to be positive. The global economy, driven by its largest contributor the US, is picking up, with even Europe seeing a renaissance. Interest rates remain low and the UK consumer remains resilient. Meanwhile in an environment where doom and gloom pervades market sentiment, any positive surprises could go a long way to boosting stock prices.

For long term investors the immediate direction of the stock market is of limited importance in any case, as what ultimately determines your wealth are the scores on the doors when you come to draw on your investment. History tells us that over a long time period, the stock market really comes into its own.'

U.K. FTSE 100 closes at record high 7,556.24 pic.twitter.com/Zyw5vokvx1

5.06pm BST

Not just a record for the benchmark FTSE 100; the broader, more domestically-oriented UK firms listed in the FTSE 250 also hit a record high https://t.co/QlldTuZAAL

4.59pm BST

Britain's FTSE 250 index has also hit a record closing high.

The FTSE 250 contains medium-sized companies that aren't big enough to make it into the FTSE 100, so is seen as a better gauge of the UK economy.

#FTSE 250 celebrates its 25th anniversary, closes at a record high - 20,251.24, up 0.41%

4.57pm BST

#Breaking FTSE 100 closes at record high of 7,556.24 points due in part to a drop in sterling sparked by concerns about Brexit negotiations

4.55pm BST

Energy companies also helped to push the FTSE 100 to tonight's record peak.

Centrica and SSE, two of Britain's biggest energy providers, both gained 2%, after it emerged that the government's new price cap probably won't come into effect until 2019.

Related: Theresa May's energy price cap could last until 2023

4.45pm BST

Boom! Britain's blue-chip stock market has hit a new all-time closing high.

The FTSE 100 has closed at 7556.24 points, up 22 points or 0.3%.

#FTSE 100 closes at a record high 7556.24, up 0.3%

#Brexit talks hit cash impasse, Barnier eyes move by December https://t.co/Jh6jZNMyBl https://t.co/AA1B5QBDN7

The continued ascent of the FTSE has had much to do with the negative effect of the disjointed Brexit negotiations, with daily updates seemingly highlighting just how unsuccessful the initial rounds of talks have been.

The current 'deadlock' shows little signs of being broken, with both sides unwilling to budge in their stance and combative positions. As time ticks on, the chance of a hard Brexit are heightened.

The [FTSE 100's] bullish move was achieved for the wrong reasons, as the dip in the pound on the back of the stalled Brexit talks helped the British index.

3.46pm BST

Brexit uncertainty isn't hurting Germany's stock market. The DAX index, which contains the country's largest companies, has just hit its highest-ever level.

He just did it! German #DAX breaks 13000 for the first time in history. Hoch die Gliser! pic.twitter.com/12SNcmYTAB

3.30pm BST

Q: What would be the economic impact on Europe if Britain left the European Union without a deal?

Christine Lagarde says she "just cannot imagine" that the UK would simply default to WTO rules after leaving the EU, because it would create so much disruption.

Lagarde can't imagine 'no deal' Brexit. "What does it mean for the ppl (EU citizens in UK & vice versa). WTO does not (resolve) such things'

There is so much that has been brought together between the continent and the United Kingdom that it requires a very specific approach to reduce the uncertainty that is damaging [economic] potential.

IMFs Christine Lagarde thinks a hard Brexit is simply not imaginable. pic.twitter.com/x5oTrvKH3S

3.22pm BST

Lagarde is asked about yesterday's Fiscal Monitor, which argued that countries could raise taxes on the rich without hurting growth.

Q: Is this the best way to reduce inequality?

.@Lagarde was clear: you can tax the rich more to reduce inequality without hurting growth #imfmeetings #fightinequality

3.20pm BST

Lagarde has also dropped a heavy hint against trade protectionism.

Lagarde: "We are seeing a pickup of trade, and that is fueling growth. To try to rein trade ... would not be helpful."

3.19pm BST

Asked about Europe, Lagarde says it will be a "growth leader".

Earlier this week the Fund raised its growth forecasts for the eurozone (but not for the UK)

3.14pm BST

On Brexit, Christine Lagarde says Britain and Brussels need to provide more clarity and certainty.

She tells the IMF press conference in Washington that she hopes the negotiations can be concluded promptly. It is important to reduce the uncertainty that is worrying people, and put "people first and business second".

Lagarde on Brexit: "our hope is that it is conducted promptly to reduce the level of uncertainty and put people first and business second."

Lagarde says she hopes Brexit "will be concluded promptly" and calls for transition period to be agreed to remove uncertainty

3.06pm BST

Q: Are you concerned that United States might withdraw from the NAFTA agreement? Would it be a Brexit-style event?

Lagarde says the Nafta talks are underway, so she doesn't want to comment directly on it. She also doesn't put it in the same category as Brexit.

@Lagarde: I would not like to put the debate on Brexit and NAFTA in the same category #IMFmeetings pic.twitter.com/IWMCWs6Mnm

3.03pm BST

On China, Lagarde welcomes recent moves by the Chinese central bank to reduce credit, to avoid an explosion of bad debt.

The continued reining in of credit in China, to control financial risks, would be 'most welcome' she adds.

3.02pm BST

Christine Lagarde points to Fintech as an opportunity. There are "all sorts of financial innovation and disruptions" she says (but she's not specifically talking about Bitcoin).

She also warns that a 'tightening of the financial markets' could hurt emerging markets, if it sparks a capital outflow.

2.59pm BST

Christine Lagarde begins by quoting Percy Bysshe Shelley, who once declared "There is a harmony in autumn".

There is also a harmony in the global economy today. Our goal is to turn that harmony into a season of action, Lagarde declares.

Press conference of IMF Managing Director Lagarde is just starting pic.twitter.com/iWDlOquPST

Christine Lagarde says global growth is stronger - still need for focus on reducing debt and improving international trading system #IMF2017 pic.twitter.com/tA7yIo6zeF

2.50pm BST

IMF chief Christine Lagarde is giving her press conference in Washington now, at the Fund's Annual Meeting. It's being streamed live here.

2.35pm BST

My colleague Adam Vaughan has been looking into the government's pledge to cap fuel bills, and reports:

The energy bills of 11m households will be capped for as long as five years under legislation put forward by government, which the Conservatives have said could save people up to 100 a year.

The draft energy bill compels regulator Ofgem to change the licence conditions for energy suppliers so that they are forced to cap electricity and gas prices.

Related: May's energy price cap will cover about two-thirds of households

2.10pm BST

Over in Greece officials are anxiously awaiting this afternoon's press conference by IMF chief Christine Lagarde after the Washington-based organisation predicted that the country's primary surplus in 2018 will be much lower than that forecast by the EU.

1.38pm BST

The news that the Brexit talks have hit a 'very disturbing' deadlock over Britain's exit bill will not pleased the City, or the country's bosses.

The lack of progress is not a great surprise, though, which explains why the pound didn't fall more sharply (a one-month low against the euro is bad enough, though).

"As expected, the EU's chief Brexit negotiator has confirmed that the EU and UK have not progressed far enough to move on to the next stage of discussions. Along with uncertainty on the future Northern Ireland/Republic of Ireland border, both sides seem to have not found an agreement on the UK's final bill.

"Following Barnier's comments Sterling has weakened, with the risk that the deadlock could become permanent. Markets are however also likely to focus on his comments that "decisive progress" could be made by Christmas - limiting any sell-off in UK-related assets."

"The UK and EU negotiators all seem to agree that we need to move to some form of transition discussion. However, they've yet to fully grasp the need to do this quickly if they want to avoid damaging investment and industry's prospects on both sides of the channel.

"Business is looking for clarity and a clear sign of goodwill on transitional arrangements, as it is in all our interests to ensure these are comprehensive and agreed, at least in principle, before the end of the year. The EU Council must show leadership next week and build on the Prime Minister's constructive approach set out in her speech in Florence and move quickly to protect our collective economic interests."

1.05pm BST

The drop in the pound is having its usual invigorating effect on the London stock market.

The FTSE 100 has gained 28 points, or 0.3%, to 7562. That means it's less than 40 points off a new record high.

Meaning I can upgrade #FTSE100 from Brexit deadlock inspired creep north to breakout. Highest since early Jun, 35pts from record highs pic.twitter.com/tUdSdHXCCF

#FTSE100 lunch time risers: Burberry Group (+2.76%), St James's Place (+2.74%), easyJet (+2.64%), Sky (+1.92%) and Centrica (+1.65%)

#FTSE100 lunch time fallers: Standard Chartered (-0.84%), Merlin Entertainments (-0.37%) and Lloyds Banking Group (-0.30%)

12.19pm BST

The pound has just dropped by half a cent against the US dollar, back below $1.32, as the Brexit negotiations continue to struggle.

Over in Brussels, EU negotiator Michel Barnier told reporters that talks over Britain's divorce bill have reached deadlock, something he called 'very disturbing'.

Related: Brexit talks still deadlocked, says Barnier, but 'decisive' progress possible before Christmas - Politics live

11.15am BST

Britain's banks have pulled a 'spectacular' u-turn by clamping down on credit, says Mark Dyason of the specialist lending broker, Thistle Finance.

Not so long ago they were lending left, right and centre at tantalising rates, and now they are turning the taps off with similar enthusiasm.

Some might accuse them of a mind-blowing myopia.

10.45am BST

UK lenders have also seen a rise in customers defaulting on their debts.

That's a sign that households are struggling as inflation outpaces wage growth.

Default rates on credit card lending were reported to have increased slightly in Q3, while those on other unsecured lending increased significantly. A further slight increase was expected for credit card lending only in Q4.

Losses given default were reported to have increased slightly on credit card lending while remaining unchanged on other unsecured lending. Both were expected to be unchanged in Q4.

Perhaps worryingly, lenders have reported increases in default rates on unsecured loans in both Q2 & Q3, with more to come in Q4 pic.twitter.com/ytBl1XLNrj

10.25am BST

Any tightening of consumer credit is likely to hit spending, and thus economic growth, warns Sam Tombs of Pantheon Economics:

The largest % of lenders since 08 plan to reduce unsecured credit supply. Consumption will remain weak even as the real wage squeeze eases pic.twitter.com/vM9oTZnFW2

10.17am BST

Today's figures show that lenders are heeding the Bank of England's warnings not to be too reckless, says Capital Economics:

Credit Conditions Survey suggests lenders have taken heed of FPC's warnings. Relationship with official figs far from perfect though. pic.twitter.com/X0oKCIB17e

10.13am BST

Economist Rupert Seggins tweets:

Amid signs of slowing consumer credit growth, UK banks & building societies say the expect they will tighten availability in next 3 months. pic.twitter.com/LsAtJa7TSg

10.02am BST

This chart confirms that UK lenders are putting a squeeze on consumer credit:

9.50am BST

The Bank of England has also found that banks are being more rigorous about approving applications for credit cards and other unsecured loans.

It says:

Lenders reported that the availability of unsecured credit to households decreased in Q3 and expected a significant decrease in Q4.

Credit scoring criteria for granting both credit card and other unsecured loans were reported to have tightened again in Q3, while the proportion of unsecured credit applications being approved fell significantly.

9.44am BST

Newsflash: British banks are planning to rein in consumer lending by the most since the financial crisis nearly a decade ago.

Lenders surveyed by the Bank of England say they expect to tighten loan availability over the next three months. That follows warnings that Britain's debt mountain has risen to dangerous levels.

Related: The UK's debt crisis - in figures

9.30am BST

Guardian Business has launched a daily email.

Besides the key news headlines that you'd expect, there's an at-a-glance agenda of the day's main events, insightful opinion pieces and a quality feature to sink your teeth into each day.

Related: Business Today: sign up for a morning shot of financial news

9.28am BST

Newsflash: Bitcoin has buffeted its way though the $5,000 mark for the first time ever.

It's surged by 7% this morning, hitting $5,180 as traders send the cryptocurrency skyward.

Bitcoin $5,000 pic.twitter.com/RqAV4l15JG

9.14am BST

Several London-based surveyors have warned that the capital's housing market is weakening.

Allan Fuller, a Putney-based estate agent, says Britain's exit from the EU is one factor.

Buyers are cautious, Brexit and a government with little apparent direction are major factors that especially affect London sales, media predictions of values dropping erodes confidence in buyers.

The market remained soft throughout the summer period and buyers are concerned that prices are now in decline.

Prices across prime London continue to soften, perhaps down 1 to 2 % over the last 3 months. Price falls have been greatest in central London at the top end of the market, probably back close to 2012 levels.

9.04am BST

RICS also predicts that UK rents will rise by around 2% over the next year, but they'll probably fall in London:

8.51am BST

Simon Rubinsohn, RICS Chief Economist, says there are two reasons why the UK housing market is cooling.

1) Affordability constraints are hitting the higher priced segments of the market. That is why prices dropped in London (where the average house costs around 470,000, more than double the national average), and in the South East.

8.00am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain's housing market is stalling as worries that interest rates could rise soon spook buyers.

The UK housing market continues to lack momentum in September, as demand from new buyers and sales fall again and the shift in interest rate expectations contributes to buyer caution in a slowing market,

The headline indicators on demand and sales both slipped deeper into negative territory, with this subdued picture anticipated to persist over the coming months.

Feedback from contributors suggests the recent shift in interest rate expectations may be contributing to the more cautious tone in market sentiment.

At the twelve month horizon, respondents do expect prices to increase in all areas, with London the sole exception. In the capital, twelve month expectations are now more downbeat than at any other point since this series was introduced in 2010.

European opening call @LCGTrading $FTSE -3 points at 7530$DAX +8 points at 12978$CAC +3 points at 5365$IBEX +8 points at 10286

Global markets in risk-on mode after the Fed showed a more guarded view on #inflation. Nikkei hits 21y peak. Dollar lower on dovish Fed. pic.twitter.com/yBPiS1mDj1

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