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| Pound hits 31-month high as Conservatives hold election lead - business live | Pound hits 31-month high as Conservatives hold election lead - business live |
| (32 minutes later) | |
| Rolling coverage of the latest economic and financial news, as the Conservative party extends its lead over Labour | Rolling coverage of the latest economic and financial news, as the Conservative party extends its lead over Labour |
| Back to the pound.... and Adam Cole of Royal Bank of Canada points out that sterling has already largely priced in a Tory victory. | |
| That means there might not be much of a rally if Johnson wins a majority....and quite a tumble if he doesn’t. | |
| Cole writes: | |
| If the UK bookies’ prices are a reasonable guide to market expectations for Thursday’s election, it is hard to see much more upside for GBP on the outcome. Betfair’s prices now imply almost an 80% probability of a Conservative majority government and that rises to 85% including a Conservative minority. At 15%, the probability of a Labour-led government is its lowest since the campaign began | |
| Taken together, the weekend’s polls suggest voting intentions have stabilised, with the Conservatives 10% points ahead on the raw data. As the second chart shows, the steady rise in Labour’s share appears to have stalled and their performance is now lagging, relative to the run up to the 2017 election. There is no “blackout” period in the UK, aside from polling day itself, and polls will continue to be published up to Wednesday night. YouGov will update their MRP model at 10:00 GMT tomorrow. | |
| Despite the confidence with which markets predict a Conservative victory, there are still several major uncertainties – turnout (particularly amongst younger voters), potential tactical voting and the large proportion of undecided voters that the polls still show. | |
| In another fillip for the eurozone economy, Germany has managed to grow its exports. | |
| German exports rose by 1.2% in October, beating gloomy forecasts of a 0.7% decline. | |
| Sales to non-EU countries jumped by 4.5%, suggesting a pick-up in the global economy may be helping the euro area. | |
| Economists are encouraged by the pick-up in eurozone confidence this month: | Economists are encouraged by the pick-up in eurozone confidence this month: |
| Just in: Eurozone economic confidence has jumped unexpectedly, in an encouraging signal for the European economy. | Just in: Eurozone economic confidence has jumped unexpectedly, in an encouraging signal for the European economy. |
| The monthly gauge of investor morale, from the Sentix research group, rallied to +0.7 from -4.5% last month. | The monthly gauge of investor morale, from the Sentix research group, rallied to +0.7 from -4.5% last month. |
| That shows that fears of a euro-recession are easing; investors’ expectations have hit their highest level since March 2018. | That shows that fears of a euro-recession are easing; investors’ expectations have hit their highest level since March 2018. |
| The receding danger of a disorderly hard Brexit may be cheering Europe, along with hopes of a breakthrough in the US-China trade wars. | The receding danger of a disorderly hard Brexit may be cheering Europe, along with hopes of a breakthrough in the US-China trade wars. |
| Some stocks could rally if the Conservatives win Thursday’s election, given Labour’s commitment to nationalise parts of the utilities sector. | Some stocks could rally if the Conservatives win Thursday’s election, given Labour’s commitment to nationalise parts of the utilities sector. |
| But Russ Mould, investment director at AJ Bell, says Brexit uncertainty could still hold the market back: | But Russ Mould, investment director at AJ Bell, says Brexit uncertainty could still hold the market back: |
| Elsewhere in the City, shares in oil producer Tullow are in freefall after announcing its CEO and exploration director had both resigned. | Elsewhere in the City, shares in oil producer Tullow are in freefall after announcing its CEO and exploration director had both resigned. |
| The firm also suspended its dividend, and admitted that oil production from two fields in Ghana will be rather lower than expected. | The firm also suspended its dividend, and admitted that oil production from two fields in Ghana will be rather lower than expected. |
| Shares have slumped 60% this morning, a quite staggering slump, to 57p - their lowest since 2001. Back in 2012 they were worth £13, when the firm was reporting solid activity in Ghana, Uganda and Kenya. | Shares have slumped 60% this morning, a quite staggering slump, to 57p - their lowest since 2001. Back in 2012 they were worth £13, when the firm was reporting solid activity in Ghana, Uganda and Kenya. |
| Shares in UK focused companies are strengthening this morning too. | Shares in UK focused companies are strengthening this morning too. |
| Retailers Marks & Spencer (+3%), Next (1%) and Kingfisher (+1.1%) are all among the risers, along with banks such as Lloyds (+0.8%) and RBS (+0.7%). | Retailers Marks & Spencer (+3%), Next (1%) and Kingfisher (+1.1%) are all among the risers, along with banks such as Lloyds (+0.8%) and RBS (+0.7%). |
| Supermarket chain Tesco is the top riser, up 5%, after announcing it could sell its Thai and Malaysian stores. | Supermarket chain Tesco is the top riser, up 5%, after announcing it could sell its Thai and Malaysian stores. |
| But the pound’s strength is pulling down some big overseas earners, including drinks firm Diageo (-1%). | But the pound’s strength is pulling down some big overseas earners, including drinks firm Diageo (-1%). |
| This means the FTSE 100 has dipped by 10 points in early trading, to 7228. | This means the FTSE 100 has dipped by 10 points in early trading, to 7228. |
| For all the talk of ‘getting Brexit done’, it’s inevitable that the issue would dominate UK politics in 2020 and beyond. | For all the talk of ‘getting Brexit done’, it’s inevitable that the issue would dominate UK politics in 2020 and beyond. |
| If the UK does leave the EU by the end of January, a new battle to define the future trading relationship between the two sides will break out. | If the UK does leave the EU by the end of January, a new battle to define the future trading relationship between the two sides will break out. |
| Mujtaba Rahman, managing director at Eurasia Group, says Johnson will have some “very big decisions to make”, about how close to stick to European rules and regulations in return for less friction at the border. | Mujtaba Rahman, managing director at Eurasia Group, says Johnson will have some “very big decisions to make”, about how close to stick to European rules and regulations in return for less friction at the border. |
| The size of any Conservative win would be a crucial factor here. A big majority would free Johnson from having to placate the hard-line Brexiteers on the back benches (and now in his cabinet too). | The size of any Conservative win would be a crucial factor here. A big majority would free Johnson from having to placate the hard-line Brexiteers on the back benches (and now in his cabinet too). |
| Rahman says there’s little clarity about which way Johnson will pivot (if he remains as PM): | Rahman says there’s little clarity about which way Johnson will pivot (if he remains as PM): |
| Our morning briefing explains what the parties will be up to today: | Our morning briefing explains what the parties will be up to today: |
| Jim Reid of Deutsche Bank has warned clients that the Conservative lead has been slightly whittled away in recent days: | Jim Reid of Deutsche Bank has warned clients that the Conservative lead has been slightly whittled away in recent days: |
| The closely-watched MRP opinion poll, released on Sunday, also gives the Conservatives a solid lead of Labour -- with a majority of 38. | The closely-watched MRP opinion poll, released on Sunday, also gives the Conservatives a solid lead of Labour -- with a majority of 38. |
| But... it comes with a warning that many voters are undecided, so that majority could yet evaporate. | But... it comes with a warning that many voters are undecided, so that majority could yet evaporate. |
| This chart shows how the pound has rallied against the euro in recent weeks, to this morning’s 31-month high. | This chart shows how the pound has rallied against the euro in recent weeks, to this morning’s 31-month high. |
| However, it’s still around 8% weaker than before the EU referendum in 2016. | However, it’s still around 8% weaker than before the EU referendum in 2016. |
| 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. |
| With three days until polling day, the City is growing increasingly confident that Boris Johnson is heading back to Downing Street with a healthy working majority. | With three days until polling day, the City is growing increasingly confident that Boris Johnson is heading back to Downing Street with a healthy working majority. |
| Fears of a hung parliament are receding, as the Conservative Party extends its sizeable lead in the opinion polls. This has lifted the pound to a new 31-month high against the euro this morning, touching €1.19 for the first time since May 2017 (just before the Tory’s lost their majority in a snap election). | Fears of a hung parliament are receding, as the Conservative Party extends its sizeable lead in the opinion polls. This has lifted the pound to a new 31-month high against the euro this morning, touching €1.19 for the first time since May 2017 (just before the Tory’s lost their majority in a snap election). |
| Sterling is also rallying against the US dollar too, up 0.25% to $1.318 - a seven-month high. | Sterling is also rallying against the US dollar too, up 0.25% to $1.318 - a seven-month high. |
| The rally comes as pollsters Survation give the Conservatives a 14-point lead over Labour, at 45% of the vote vs 31%. | The rally comes as pollsters Survation give the Conservatives a 14-point lead over Labour, at 45% of the vote vs 31%. |
| That would surely be enough to guarantee a Conservative majority, who could drive Boris Johnson’s Brexit bill through the Commons by January 31st. | That would surely be enough to guarantee a Conservative majority, who could drive Boris Johnson’s Brexit bill through the Commons by January 31st. |
| But elections are unpredictable beasts -- so traders could yet get a nasty shock after the polls close on Thursday night. | But elections are unpredictable beasts -- so traders could yet get a nasty shock after the polls close on Thursday night. |
| Elsa Lignos of Royal Bank of Canada points out that undecided voters could still swing plenty of seats: | Elsa Lignos of Royal Bank of Canada points out that undecided voters could still swing plenty of seats: |
| The election campaign will continue today across the country, with Labour outlining its plans if it defies the polls and forms the next government.... | The election campaign will continue today across the country, with Labour outlining its plans if it defies the polls and forms the next government.... |
| Also coming up today | Also coming up today |
| Asian stock markets have rallied overnight, after last Friday’s US jobs report came in much stronger than expected. Europe is likely to be subdued, though, having ended last week strongly. | Asian stock markets have rallied overnight, after last Friday’s US jobs report came in much stronger than expected. Europe is likely to be subdued, though, having ended last week strongly. |
| On the data front, research group Sentix publishes its latest survey of eurozone investor morale. | On the data front, research group Sentix publishes its latest survey of eurozone investor morale. |
| The agenda | The agenda |
| 9.30am GMT: Eurozone Sentix Investor Confidence survey; expected to fall to -5.3 from -4.5 | 9.30am GMT: Eurozone Sentix Investor Confidence survey; expected to fall to -5.3 from -4.5 |