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| Sterling slumps to new two-year low below $1.23 amid no-deal Brexit fears – business live | Sterling slumps to new two-year low below $1.23 amid no-deal Brexit fears – business live |
| (32 minutes later) | |
| Some extracts from the letter sent by the Woodford Equity Income Fund’s authorised corporate director, Link Fund Solutions: | |
| We anticipate that the suspension of dealing is likely to last until early December while we implement the strategy to re-position the portfolio in order for the Fund to be re-opened at that time, and which is conditional upon achieving the target fund profile. In our view, this is a realistic amount of time for Woodford to complete a measured and orderly re-positioning of the Fund’s portfolio of assets ensuring that there is adequate liquidity whilst preserving or realising the value of the assets. | |
| We have concluded that this approach would represent the best outcome in terms of value, time and equal treatment for all investors. Importantly, it would allow all investors to choose, whether they wish to remain invested in or to withdraw their investments from the Fund. The work that is underway to re-position the portfolio is designed to ensure that there are liquid assets available for these purposes, while continuing with the objectives and investment strategy of the Fund. [...] | |
| Progress has been made with Woodford continuing to assess the portfolio and make sales where reasonable prices can be achieved. | |
| Investors in Neil Woodford’s flagship fund will be unable to get their money back until early December, administrator Link Fund Solutions has said. | |
| The Woodford Equity Income Fund suspended withdrawals from the fund on 3 June, and extended that suspension on 1 July. | |
| Link said the suspension will give a “realistic” amount of time to reposition the fund’s portfolio, according to Reuters. That will likely involve selling many of its more illiquid stakes in companies to free up cash to pay back to investor clients. | |
| Where does this all leave the Bank of England, due to publish its latest inflation report and monetary policy on Thursday? | Where does this all leave the Bank of England, due to publish its latest inflation report and monetary policy on Thursday? |
| With the European Central Bank and the Federal Reserve planning interest rate cuts to stimulate their slowing economies, the Bank is expected to hold its policy steady. Yet its assumption of a smooth Brexit outcome will sound increasingly untenable if the government insists it will leave the EU without a deal. | With the European Central Bank and the Federal Reserve planning interest rate cuts to stimulate their slowing economies, the Bank is expected to hold its policy steady. Yet its assumption of a smooth Brexit outcome will sound increasingly untenable if the government insists it will leave the EU without a deal. |
| The BoE’s rate-setting monetary policy committee (MPC) is “stuck between a rock and a hard place”, says Paul Hollingsworth, chief UK economist at investment bank BNP Paribas. | The BoE’s rate-setting monetary policy committee (MPC) is “stuck between a rock and a hard place”, says Paul Hollingsworth, chief UK economist at investment bank BNP Paribas. |
| Given the risks from Brexit and global trade tensions, we do envisage the MPC striking a cautious tone. But with inflationary pressures rising, rates already well below neutral, the pound still weak and fiscal stimulus looming, easing does not look justified. In any case, it would do little to offset the heightened uncertainty. | Given the risks from Brexit and global trade tensions, we do envisage the MPC striking a cautious tone. But with inflationary pressures rising, rates already well below neutral, the pound still weak and fiscal stimulus looming, easing does not look justified. In any case, it would do little to offset the heightened uncertainty. |
| Hitting holidaymakers in the pocket as they head abroad during the school holidays, the pound has sunk by more than 10 cents against the dollar from a peak in excess of $1.33 in March. | Hitting holidaymakers in the pocket as they head abroad during the school holidays, the pound has sunk by more than 10 cents against the dollar from a peak in excess of $1.33 in March. |
| Against the euro it has fallen by more than 7 cents from a high of €1.17 recorded in May. | Against the euro it has fallen by more than 7 cents from a high of €1.17 recorded in May. |
| You can read the full story by the Guardian’s Richard Partington here: | You can read the full story by the Guardian’s Richard Partington here: |
| Pound drops to lowest level in two years amid no-deal Brexit rhetoric | Pound drops to lowest level in two years amid no-deal Brexit rhetoric |
| Don’t forget that the pound’s weakness comes with the US Federal Reserve set to cut interest rates on Wednesday – usually a spur for the dollar to weaken. | Don’t forget that the pound’s weakness comes with the US Federal Reserve set to cut interest rates on Wednesday – usually a spur for the dollar to weaken. |
| The market-implied probability of a rate cut is 100%, with the consensus pointing to a 0.25 percentage point cut in the Fed’s target range for the federal funds rate – the first in the decade since the financial crisis. | The market-implied probability of a rate cut is 100%, with the consensus pointing to a 0.25 percentage point cut in the Fed’s target range for the federal funds rate – the first in the decade since the financial crisis. |
| That would certainly please US President Donald Trump, who has been pushing for an interest rate cut to boost the economy even as the central bank has raised rates. | That would certainly please US President Donald Trump, who has been pushing for an interest rate cut to boost the economy even as the central bank has raised rates. |
| Under any previous president in recent years an overt intervention criticising the Fed would have been astonishing: now it is a commonplace Twitter outburst. Here are two more salvos from this morning: | Under any previous president in recent years an overt intervention criticising the Fed would have been astonishing: now it is a commonplace Twitter outburst. Here are two more salvos from this morning: |
| The E.U. and China will further lower interest rates and pump money into their systems, making it much easier for their manufacturers to sell product. In the meantime, and with very low inflation, our Fed does nothing - and probably will do very little by comparison. Too bad! | The E.U. and China will further lower interest rates and pump money into their systems, making it much easier for their manufacturers to sell product. In the meantime, and with very low inflation, our Fed does nothing - and probably will do very little by comparison. Too bad! |
| The Fed “raised” way too early and way too much. Their quantitative tightening was another big mistake. While our Country is doing very well, the potential wealth creation that was missed, especially when measured against our debt, is staggering. We are competing with other..... | The Fed “raised” way too early and way too much. Their quantitative tightening was another big mistake. While our Country is doing very well, the potential wealth creation that was missed, especially when measured against our debt, is staggering. We are competing with other..... |
| ....countries that know how to play the game against the U.S. That’s actually why the E.U. was formed....and for China, until now, the U.S. has been “easy pickens.” The Fed has made all of the wrong moves. A small rate cut is not enough, but we will win anyway! | ....countries that know how to play the game against the U.S. That’s actually why the E.U. was formed....and for China, until now, the U.S. has been “easy pickens.” The Fed has made all of the wrong moves. A small rate cut is not enough, but we will win anyway! |
| Wall Street has weakened slightly as markets open in New York. | Wall Street has weakened slightly as markets open in New York. |
| The S&P 500 has lost less than 0.1% in early trades, the Nasdaq has lost 0.1% and the Dow Jones industrial average is basically flat. | The S&P 500 has lost less than 0.1% in early trades, the Nasdaq has lost 0.1% and the Dow Jones industrial average is basically flat. |
| The demand for British government debt has risen as no-deal Brexit fears have taken centre stage. | The demand for British government debt has risen as no-deal Brexit fears have taken centre stage. |
| The yield on the UK 10-year gilt, the benchmark rate for government borrowing, hit 0.628% on Monday afternoon, the lowest since September 2016. | The yield on the UK 10-year gilt, the benchmark rate for government borrowing, hit 0.628% on Monday afternoon, the lowest since September 2016. |
| Yields move inversely to prices, implying that investors are buying more of the government bonds – likely in anticipation of a round of economic stimulus from the Bank of England in the event of no-deal Brexit. When interest rates rise the demand for debt tends to fall. | Yields move inversely to prices, implying that investors are buying more of the government bonds – likely in anticipation of a round of economic stimulus from the Bank of England in the event of no-deal Brexit. When interest rates rise the demand for debt tends to fall. |
| Some investors may (bravely) also see British government debt as a relative safe haven. | Some investors may (bravely) also see British government debt as a relative safe haven. |
| Boris Johnson is speaking (on a trip to Scotland), and his words appear to be putting even more pressure on the pound: it has taken another leg lower. | Boris Johnson is speaking (on a trip to Scotland), and his words appear to be putting even more pressure on the pound: it has taken another leg lower. |
| The new low point against the US dollar is $1.2239, a 1.1% drop. That is equal to the nadir reached on 16 March 2017. | The new low point against the US dollar is $1.2239, a 1.1% drop. That is equal to the nadir reached on 16 March 2017. |
| Johnson’s ascent to prime minister has already prompted a severe weakening in sterling, as he has set course for a no-deal Brexit. | Johnson’s ascent to prime minister has already prompted a severe weakening in sterling, as he has set course for a no-deal Brexit. |
| Today he repeated that the UK will leave the EU with or without a deal on 31 October, and said that the EU would have to compromise on the backstop, an insurance policy designed to prevent a hard border between Northern Ireland and the Republic of Ireland. | Today he repeated that the UK will leave the EU with or without a deal on 31 October, and said that the EU would have to compromise on the backstop, an insurance policy designed to prevent a hard border between Northern Ireland and the Republic of Ireland. |
| Today’s losses for the pound would represent the biggest one-day loss since March this year. | Today’s losses for the pound would represent the biggest one-day loss since March this year. |
| The field of European candidates to lead the International Monetary Fund (IMF) has narrowed to three, the Financial Times (£) reports. | The field of European candidates to lead the International Monetary Fund (IMF) has narrowed to three, the Financial Times (£) reports. |
| Traditionally (and for no obvious reason, given the “I” in IMF) the top job at the IMF has gone to a European. The process is set to run until October. | Traditionally (and for no obvious reason, given the “I” in IMF) the top job at the IMF has gone to a European. The process is set to run until October. |
| Reportedly in the running are former Dutch finance minister Jeroen Dijsselbloem, World Bank boss Kristalina Georgieva and Finnish central bank boss Olli Rehn. | Reportedly in the running are former Dutch finance minister Jeroen Dijsselbloem, World Bank boss Kristalina Georgieva and Finnish central bank boss Olli Rehn. |
| New: there are now three Europeans in consideration to lead the IMF. The field has been narrowed to Jeroen Dijsselbloem, Olli Rehn and Kristalina Georgieva. Calvino and Centeno both knocked out which suggests softening in southern European objections to "northern" MD at the fund | New: there are now three Europeans in consideration to lead the IMF. The field has been narrowed to Jeroen Dijsselbloem, Olli Rehn and Kristalina Georgieva. Calvino and Centeno both knocked out which suggests softening in southern European objections to "northern" MD at the fund |
| Picking Georgieva would require a change to the bylaws of the IMF which prevent an incoming managing director being 65 years old or above. There was no consensus to change the law at an IMF meeting last Friday but officials involved say it can be done at any time in the process | Picking Georgieva would require a change to the bylaws of the IMF which prevent an incoming managing director being 65 years old or above. There was no consensus to change the law at an IMF meeting last Friday but officials involved say it can be done at any time in the process |
| Another big deal on a day of mega-mergers: US drug company Pfizer is buying Mylan in an all-stock deal and combining the $10bn generic pharmaceutical company with its own off-patent branded and generic business. | Another big deal on a day of mega-mergers: US drug company Pfizer is buying Mylan in an all-stock deal and combining the $10bn generic pharmaceutical company with its own off-patent branded and generic business. |
| The Pfizer business, called Upjohn, makes well known drugs such as Lipitor, Celebrex and Viagra, whose patents recently expired. Mylan, based just outside of Pittsburgh, is best known for its EpiPen, an injector used to halt life-threatening allergic reactions. | The Pfizer business, called Upjohn, makes well known drugs such as Lipitor, Celebrex and Viagra, whose patents recently expired. Mylan, based just outside of Pittsburgh, is best known for its EpiPen, an injector used to halt life-threatening allergic reactions. |
| Pfizer shareholders will own 57% of the combined new company and Mylan shareholders will own 43% after the all-share merger. | Pfizer shareholders will own 57% of the combined new company and Mylan shareholders will own 43% after the all-share merger. |
| The new company is expected to have revenues of $19-$20bn in 2020. | The new company is expected to have revenues of $19-$20bn in 2020. |
| The pound has fallen further as American traders get to their desks: it has now hit a low of $1.2282 against the US dollar, a decline of 0.8% over the course of the day. | The pound has fallen further as American traders get to their desks: it has now hit a low of $1.2282 against the US dollar, a decline of 0.8% over the course of the day. |
| That is the first time that the pound has fallen below $1.23 since mid-March 2017. | That is the first time that the pound has fallen below $1.23 since mid-March 2017. |
| The mid-cap FTSE 250 has followed the lead set by its weightier counterpart in rising by 0.4% – despite two big dents. | The mid-cap FTSE 250 has followed the lead set by its weightier counterpart in rising by 0.4% – despite two big dents. |
| The pain for Sports Direct has lessened somewhat, with shares now down by 9% following its announcement late on Friday evening. | The pain for Sports Direct has lessened somewhat, with shares now down by 9% following its announcement late on Friday evening. |
| However, corporate services company Sanne Group is the biggest faller, with shares down by an eye-watering 33%. Sanne cut its profit forecasts and analysts at RBC cut their target price for the stock. | However, corporate services company Sanne Group is the biggest faller, with shares down by an eye-watering 33%. Sanne cut its profit forecasts and analysts at RBC cut their target price for the stock. |
| Here’s Sanne’s share price performance over the past year: | Here’s Sanne’s share price performance over the past year: |
| The pound just came within a whisker of that $1.23 mark – it traded at $1.2301 against the US dollar, a loss of about 0.6% over the day. Sterling is down by 0.5% against the euro. | The pound just came within a whisker of that $1.23 mark – it traded at $1.2301 against the US dollar, a loss of about 0.6% over the day. Sterling is down by 0.5% against the euro. |
| The FTSE 100 is now up by 1.5% for the day. | The FTSE 100 is now up by 1.5% for the day. |
| It’s a somewhat more mixed picture across the rest of Europe. Germany’s Dax is flat, while France’s Cac 40 has lost 0.1%. | It’s a somewhat more mixed picture across the rest of Europe. Germany’s Dax is flat, while France’s Cac 40 has lost 0.1%. |
| Digital bank Revolut has poached the finance director of Metro Bank, it announced on Monday. | Digital bank Revolut has poached the finance director of Metro Bank, it announced on Monday. |
| David MacLean stepped down from the high street lender to join the London-based fintech firm. | David MacLean stepped down from the high street lender to join the London-based fintech firm. |
| Metro and Revolut both sell themselves as upending the traditional banking model, but the latter is among the new crop of app-based banks who eschew branch banking. Metro has followed a “bricks and clicks” model that uses prominent branches. | Metro and Revolut both sell themselves as upending the traditional banking model, but the latter is among the new crop of app-based banks who eschew branch banking. Metro has followed a “bricks and clicks” model that uses prominent branches. |
| Both banks have suffered blows to their reputations in recent months. While MacLean was at Metro it mischaracterised loans, a major accounting error which was only noticed by the Bank of England. Revolut, meanwhile, has faced serious questions over its compliance processes and work culture. | Both banks have suffered blows to their reputations in recent months. While MacLean was at Metro it mischaracterised loans, a major accounting error which was only noticed by the Bank of England. Revolut, meanwhile, has faced serious questions over its compliance processes and work culture. |