BoE’s Carney Warns Of Brexit-Induced Financial Crisis

BoE’s Carney Warns Of Brexit-Induced Financial Crisis

City Index  | Sep 14, 2018 09:59

FTSE opens higher

The FTSE stared the day strongly, up over 0.50%, pulled higher by a stronger close in the US market and positive company news including Investec’s spin off plans.

Investec on the rise on spinoff plans

Investec PLC (LON:INVP) shares powered 10% higher after the banking group announced it would spin off and separately list its asset management business in the next 12 months. The move is part of the restructuring process triggered by the departure of current chief executive Stephen Koseff.

The new company will be listed in both London and Johannesburg and will keep at its helm the current chief executive of the asset management business Hendrik du Toit. Du Toit will also briefly become the joint chief executive of the whole group in October when Koseff steps down. Investec’s asset management unit has 109 billion pounds in clients’ assets under management.

BoE’s Carney warns of Brexit-induced financial crisis

Sterling is holding steady against the dollar this morning, trading up 0.16%, but is nudging down against the euro 0.05% following a stark warning from the Bank of England’s Mark Carney.

In a special meeting with the cabinet Carney said that a chaotic no-deal Brexit could create a financial crisis on the scale of 2008, trigger a decline in house prices of between 25% and 35% and see the pound weaken further. It remains to be seen if the warning provokes any reactions within the top echelons of UK politics who seem to be more embroiled in a political power struggle than finding ways of leaving the EU in an orderly fashion.

JD Wetherspoon (LON:JDW)

The hot British summer helped pub owner JD Wetherspoon grow its pre-tax profit year on year by 4.3%. The group had a reasonable revenue increase in September but expects that higher wages, taxes and interest costs will make a dent in its profits. To maintain its current profit levels the group will have to grow sales in the coming financial year by 4% and in September those sales grew by 5.5%. Like other UK retailers, pub owners and restaurants Weatherspoon will have to face the fallout from Brexit and potentially higher interest rates later this year.

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions."

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