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| Oil rallies and bitcoin smashes through $12,000 in nervous markets – business live | |
| (32 minutes later) | |
| In the City, clothing retailer Bonmarché has been forced into a screeching u-turn over a takeover offer. | |
| Bonmarché had previously rejected a bid from retail billionaire Philip Day, claiming that it undervalued the company. | |
| But this morning, it admitted to shareholders that recent trading had been “poor”, meaning it now recommends accepting Day’s offer! | |
| Bonmarché blamed “continued weakness in the underlying clothing market, and a lack of seasonal weather” to counteract this trend. So, given the danger that trading doesn’t improve, Day (who owns the Edinburgh Woollen Mill Group) suddenly looks less of a threat and more of a savour. | |
| Or as Bonmarché’s board put it: | |
| Whilst the Board’s view remains that the Offer does not adequately reflect the potential longer term value of the business, the increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the Offer potentially more attractive in the short term. | |
| Shares in Bonmarché have promptly slumped by 20% to 11.5p, the level of Day’s offer, as hopes of a rip-roaring takeover battle fade. | |
| European stock markets are subdued this morning, after America’s top central banker dampened hopes of hefty interest rate cuts. | |
| Yesterday, Fed chief Jerome Powell gave a speech in New York in which he appeared to push back against Donald Trump’s demands for lower borrowing costs. | |
| Powell declared: | |
| The Fed is insulated from short-term political pressures — what is often referred to as our ‘independence. | |
| Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests. Central banks in major democracies around the world have similar independence. | |
| Powell also reiterated that the Fed will act “as appropriate” to sustain America’s economic expansion. But this still left traders disappointed - and worried they’ve been too confident in expecting a Fed rate cut in July. | |
| Stephen Innes of Vanguard Markets says Powell: | |
| ... walked back some of the market overly zealous dovish inference. | |
| This has pushed the main European indices down a little: | |
| FTSE 100: Down 8 points of 0.1% at 7,413 | |
| German DAX: Down 35 points or 0.3% at 12,192 | |
| French CAC: Down 9 points or 0.2% at 5,504 | |
| Neil Wilson of Markets.com also reckons Facebook’s move into digital currencies is helping push bitcoin up (as it gives the whole sector more legitimacy). | Neil Wilson of Markets.com also reckons Facebook’s move into digital currencies is helping push bitcoin up (as it gives the whole sector more legitimacy). |
| He also believes nervous investors are trying to spread their risk, in case other asset prices tumble. | He also believes nervous investors are trying to spread their risk, in case other asset prices tumble. |
| The biggest players are looking at cryptocurrencies afresh and don’t want to miss out. There’s a ‘haven’ play too as nominal and real yields have retreated sharply, reducing the opportunity cost of holding (or HODLing) bitcoin. | The biggest players are looking at cryptocurrencies afresh and don’t want to miss out. There’s a ‘haven’ play too as nominal and real yields have retreated sharply, reducing the opportunity cost of holding (or HODLing) bitcoin. |
| And the liquidity injection from central banks has forced a range of assets like gold, bonds, the yen etc, so bitcoin is just being swept along by those macro currents. Whatever the cause, the momentum is powerful right now. | And the liquidity injection from central banks has forced a range of assets like gold, bonds, the yen etc, so bitcoin is just being swept along by those macro currents. Whatever the cause, the momentum is powerful right now. |
| Bitcoin has now surged by around 150% in the last two months, from around $5,100 in late April to over $12,700 this morning | Bitcoin has now surged by around 150% in the last two months, from around $5,100 in late April to over $12,700 this morning |
| Marcus Swanepoel, CEO at cryptocurrency exchange Luno, says bitcoin’s in a bull run, for several reasons: | Marcus Swanepoel, CEO at cryptocurrency exchange Luno, says bitcoin’s in a bull run, for several reasons: |
| The bullish signals for bitcoin have been present for some time, with greater buying and interest from major banks, institutions and groups of specialist buyers adding liquidity to the market. This led to increased speculation and the price rise from April. Then the Facebook announcement of Libra showed to many financial services sectors that altcoins are going mainstream. | The bullish signals for bitcoin have been present for some time, with greater buying and interest from major banks, institutions and groups of specialist buyers adding liquidity to the market. This led to increased speculation and the price rise from April. Then the Facebook announcement of Libra showed to many financial services sectors that altcoins are going mainstream. |
| Finally, as the geopolitical situation remains so uncertain, strategic investors are still looking at Bitcoin and Ethereum as uncorrelated with centralised assets, so provide a quasi safe-haven option. | Finally, as the geopolitical situation remains so uncertain, strategic investors are still looking at Bitcoin and Ethereum as uncorrelated with centralised assets, so provide a quasi safe-haven option. |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| It’s another jittery day in the markets, as geopolitical tensions and trade war anxiety give investors plenty to think about. | It’s another jittery day in the markets, as geopolitical tensions and trade war anxiety give investors plenty to think about. |
| Oil is the big mover this morning - Brent crude has romped to $66.25 per barrel for the first time in almost a month. | Oil is the big mover this morning - Brent crude has romped to $66.25 per barrel for the first time in almost a month. |
| This follows a report from the American Petroleum Institute showing that US crude stockpiles fell by 7.55 million barrels last week. That bigger-than-expected decline may indicate higher demand than expected. | This follows a report from the American Petroleum Institute showing that US crude stockpiles fell by 7.55 million barrels last week. That bigger-than-expected decline may indicate higher demand than expected. |
| But tensions in the Middle East are also driving oil up. Relations between Washington and Tehran deteriorated further yesterday as Donald Trump threatened to obliterate parts of Iran, after president Rouhani suggested the US leader was “afflicted by a mental disorder”. | But tensions in the Middle East are also driving oil up. Relations between Washington and Tehran deteriorated further yesterday as Donald Trump threatened to obliterate parts of Iran, after president Rouhani suggested the US leader was “afflicted by a mental disorder”. |
| This sort of “jaw-jaw” antics only increase worries of military action, disrupting supplies. No wonder oil is up 10% since two tankers were attacked in the Gulf of Oman two weeks ago. | This sort of “jaw-jaw” antics only increase worries of military action, disrupting supplies. No wonder oil is up 10% since two tankers were attacked in the Gulf of Oman two weeks ago. |
| Trump threatens ‘obliteration’ after Iran suggests he has a ‘mental disorder’ | Trump threatens ‘obliteration’ after Iran suggests he has a ‘mental disorder’ |
| Investors are also getting nervous about this week’s G20 meeting of world leaders, which kicks off on Friday. Trump is due to meet China’s Xi Jinping on Saturday, for a crucial meeting on trade. | Investors are also getting nervous about this week’s G20 meeting of world leaders, which kicks off on Friday. Trump is due to meet China’s Xi Jinping on Saturday, for a crucial meeting on trade. |
| American officials say their aim is to restart negotiations, suggesting the two sides could agree not to impose more tariffs while talks are underway. Bloomberg is reporting that the U.S. could suspend the next round of tariffs on an additional $300bn of Chinese imports. | American officials say their aim is to restart negotiations, suggesting the two sides could agree not to impose more tariffs while talks are underway. Bloomberg is reporting that the U.S. could suspend the next round of tariffs on an additional $300bn of Chinese imports. |
| But nothing’s guaranteed. | But nothing’s guaranteed. |
| And in such turbulent times, some traders are turning to cryptocurrencies for protection. | And in such turbulent times, some traders are turning to cryptocurrencies for protection. |
| Bitcoin has continued its recent strong rally, hurtling through the $12,000 mark for the first time in 15 months today. It’s currently up 8.4%, or $986, at $12,737. And with Facebook’s new Libra currency getting plenty of attention, some analysts are predicting that digital coins will keep climbing. | Bitcoin has continued its recent strong rally, hurtling through the $12,000 mark for the first time in 15 months today. It’s currently up 8.4%, or $986, at $12,737. And with Facebook’s new Libra currency getting plenty of attention, some analysts are predicting that digital coins will keep climbing. |
| Also coming up today | Also coming up today |
| Mark Carney, governor of the Bank of England, is being quizzed by MPs on the Treasury committee. Officially it’s about the Bank’s last quarterly inflation report, but Brexit and trade rules may also come up too (especially as Carney shot down Boris Johnson’s Brexit idea last week). | Mark Carney, governor of the Bank of England, is being quizzed by MPs on the Treasury committee. Officially it’s about the Bank’s last quarterly inflation report, but Brexit and trade rules may also come up too (especially as Carney shot down Boris Johnson’s Brexit idea last week). |
| Plus, new US durable goods and trade data will show if America’s economy is suffering from the trade dispute with China. | Plus, new US durable goods and trade data will show if America’s economy is suffering from the trade dispute with China. |
| The agenda | The agenda |
| 10.15am BST: Treasury committee hearing with the Bank of England | 10.15am BST: Treasury committee hearing with the Bank of England |
| 1.30pm BST: US durable goods orders for May | 1.30pm BST: US durable goods orders for May |
| 1.30pm BST: US trade goods for May | 1.30pm BST: US trade goods for May |