Good morning! Here’s what you need to know in markets on Thursday.
1. The value of the pound jumped on Wednesday afternoon after Bank of England Governor Mark Carney hinted that he could be close to voting for a hike in interest rates during a panel appearance. A week ago he said “now is not yet the time” for an increase.
2. Investors in the Co-op Bank’s bonds are facing the second big reduction in the value of their holdings within four years after the struggling lender revealed the terms of a £700 million bailout, the Times reports. Retail bondholders will take at least a 55 per cent cut in their investments under the terms of a third recapitalisation of Co-op Bank since the discovery in 2013 of a £1.5 billion black hole in its finances.
3. Tesco is planning to axe 1,200 jobs at its head office. The news comes after the company announced it was cutting night shifts in some of its largest stores as part of cost-cutting measures
4. The EU may have to cut farm subsidies after Brexit to fill the budgetary black hole caused by Britain’s withdrawal, the Times reports. Günther Oettinger, the European budget commissioner, said in a blog yesterday: “The departure of the United Kingdom alone leaves us with a revenue shortfall of minimum €10 billion a year.”
5. A trip to Poland by U.S. President Donald Trump next week may feel like a diplomatic coup for the right-wing government, but western European nations are uneasy it will encourage Warsaw’s defiance towards Brussels, Reuters reports. Trump visits Poland for one day – en route to a G20 summit in Hamburg, Germany – to take part in a gathering of leaders from central Europe, Baltic states and the Balkans, an event convened by Poland to bolster regional trade and infrastructure.
6. Japan’s Nikkei share average rose on Thursday morning to hover near two-year highs after Wall Street rebounded, with tech share outperforming the overall market, Reuters reports. It gained 0.5% to 20,238.75 in midmorning trade, moving closer to 20,318.11 hit last week, the highest level since August 2015. Meanwhile, the broader Topix gained 0.8% to its near two-year high of 1,627.54.
7. The number of cars rolling off UK production lines in May plunged, as demand among British motorists for new vehicles fell, according to Official data from industry trade body the Society of Motor Manufacturers and Traders, the Telegraph reports. May saw 136,119 new cars built in Britain, down 9.7% on the same month last year.
8. The Investment Association has issued a so-called “amber alert” to its members ahead of Burberry’s shareholder meeting next week while Institutional Shareholder Services (ISS) has also urged investors to vote against Burberry’s remuneration report, the Telegraph reports. The fashion house is under pressure over the financial renumeration paid to two of its most senior staff.
9. Fintech app Revolut is finalising a new round of funding that will value it at £300m. Sky News reports that Revolut, a payments app which undercuts traditional rivals, is in the final stages of talks about a deal that will see it raising more than £50m, Sky News reports.
10. Annual house price growth in the capital has slowed to 1.2%, according to Nationwide’s June house – the weakest pace of growth in the capital since 2012. London prices have been affected by a number of factors including stagnant wage growth, mortgage affordability, Brexit-related uncertainty, volatile sterling, and stretched valuations.