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Pound enjoys biggest two-day gain in 10 months: as it happened

Sterling surgesto five-week highagainstdollar and euroafter MPs defeat Government over no-deal
China and US agree to continue negotiations next month, sending stock markets up
Germanfactory data shows continued slowdown
Chancellor declares the end of austerity with ?13.8bn cash bonanza
Double shock of global recession and no-deal Brexit may be more than Europe can withstand

5:08PM
Markets wrap: Pound bursts above $1.23 in biggest two-day surge in 10 months
The series of stinging defeats for Boris Johnson in Parliament sparked the strongest surge in the pound in 10 months as speculators dumped their huge bets against the battered currency.
Sterling jumped to a five-week high versus the dollar and euro after MPs moved to block a no-deal Brexit and rejected the prime ministers initial call for a snap election.
The currency has now enjoyed its biggest two-day gain versus the dollar since last November, bursting back above $1.23 todayin a 1.3pc rally. Partof the currencys sudden surge was pinned on hedge funds pulling out of short positions betting on another tumble.
However, foreign exchange analysts warned the rally will run out of steam. Chris Turner, head of foreign exchange strategy at ING, argued that sterlings strength would be short-lived given the uncertainty posed by a snap election and the risk Boris Johnson would win a majority in the House of Commons.
The ultimate outcome is still very uncertain and the risk of a no-deal Brexit later this year is still very much on the table, said Lee Hardman at MUFG.
We're wrapping up the live blog for today. Join us tomorrow morning for more live coverage from the world ofbusiness and markets. Thanks for joining us, have a good evening.
4:36PM
German recession fears stoked by another tumble in new orders
While fears of sudden downturn in the US may be easing this afternoon, Germany is on full recession alert after more woeful industrial figures.
New orders in factories slumped 2.7pc in July compared to the previous month as its manufacturing recession drags on.
Here's a snippet from Tim Wallace's report on thelatest setback in Europe's "engine room":

Germanys industrial powerhouse is braced for the manufacturing recession to deepen further as new orders slumped again over the summer, denying the embattled sector any relief from its year-long struggle.
The heartlands of the eurozones industry were initially hit hard by a crash in exports to China. The Asian giant has been affected by a protracted trade war with the US. While a global slowdown is sapping order books, German domestic demand is also falling, indicating the malaise has spread.
3:46PM
US stocks surge on strong jobs data and cooling trade tensions
Just to divertyour eye briefly away from the Brexit saga, let's have a quick look at the moves on stock markets this afternoon.
US stocks are surging after themood on markets was boostedby surprisingly strong economics data and an easing in trade tensions.
Strong US jobs data havemade a mockery of mounting recession fears this afternoon while the White House and Beijing have pencilled in a date in the diary for trade talks.
The S&P 500, New York's benchmark index, is up 1.5pc to afive-month high.
China and the US announced new round of trade talks and will work to make substantial progress. Personally I think the US, worn out by the trade war, may no longer hope for crushing China's will. There's more possibility of a breakthrough between the two sides. Hu Xijin ??? (@HuXijin_GT) September 5, 2019
3:01PM
Handover
Once again, were doing a handover today, as markets (and journalists) wait to see what Boris Johnson and his Government have in store. Im off slightly early, so mycolleague Tom Reeswill be taking over. Have a good afternoon! Louis
2:52PM
SEB: Sterling would likely weaken during a General Election
Plenty of currency strategists and analysts are cracking out their crystal balls today.
Anyone speculating on a long-term view of the pounds fortunes needs to be thinking several steps ahead. Right nowthat means, if a General Election is called, predicting how sterling will move in the months during andafter the ballot.
Richard Falkenhall, senior currency strategist atSEB, the Nordic corporate bank, says:

If we are correct in our view that an extension will be followed by a snap election sometime in November or December 2019, the relief rally in the GBP could probably continue for a more few weeks, taking the EUR/GBP down to 0.88-0.89. However, we expect renewed weakness in the GBP once the election is under way as the outcome will be impossible to predict, and could be anything from a leave Parliament accepting a no-deal departure to a Labour majority with a completely different and left-oriented economic policy. This will probably push the EUR/GBP back towards 0.93 again.
2:41PM
Business leaders to push Leadsom on Brexit preparation
Pound enjoys biggest two-day gain in 10 months: as it happened

Business secretary Andrea Leadsom

Credit:
Alberto Pezzali/AP
Though focus remains locked on the Commons chamber, Brexit remains at the forefront of other parts of government proceedings. My colleague Harriet Russell reports:

Britains business secretary is meeting with company executives at the Cabinet Office to address complaints that the government has failed to help them prepare for Brexit.
A number of senior managers from both mainstream and smaller banks, including Barclays and Lloyds, are expected to discuss setting up a new finance council to support small and medium-sized businesses (SMEs) as Britain prepares to leave the EU, possibly without a deal.
Its understood that the council will be chaired by business secretary Andrea Leadsom and economic secretary to the Treasury John Glen, along with a range of representatives from several lending businesses.
However, it remains unclear exactly what the powers of the new council will be or how regularly it will meet. Sources said any announcement regarding the council is unlikely to include further details until its remit is determined further down the line.
2:20PM
Round-up: Tesla Model 3 takes Ford Focuss spot, Germany industry drops deeper into recession
Two interesting stories from today, via my colleagues Alan Tovey and Tim Wallacerespectively:
Tesla Model 3 overtakes Ford Focus to be UKs third best-selling car:Teslas Model 3 the car Elon Musk hopes will makeelectric motoring affordable for the mass marketwas Britains third-biggest selling vehicle last month.
German industry plunges deeper into recession as export slump infects domestic economy:Germanys industrial powerhouse isbraced for the manufacturing recession to deepen further as new orders slumped again over the summer, denying the embattled sector any relief from itsyear-long struggle.
2:15PM
Sterling steady
The pound has looked pretty steady for nearly three hours now, holding gains around the $1.2325 mark (a very precise mark, I know). It looks like theres a limit to how far positivity can run for now, and traders will likely be watching to see what emerges from Number 10 to decide where to go next.
1:56PM
Boden boss steps down as company sounds warning over profits
Pound enjoys biggest two-day gain in 10 months: as it happened

Boden claims the first six months of the year were challenging, particularly in the US
Jill Easterbrook, boss of fashion brand Boden, is to step down after just under three years at the company. Laura Onita reports:

Ms Easterbrook, who previously spent a decade climbing the ranks at grocer Tesco, said she wanted to bag more non-executive roles in addition to her existing one at Auto Trader, the car marketplace.
We have achieved a huge amount over the last three years taking a great brand and laying the foundations for future long-term success, she said.
Her departure comes as the London-based business said that investment [will] likely hurt profits in 2019.
You can read her full report here: Boden boss exits as fashion brand warns on profits
1:47PM
US added 195,000 jobs in August
Pound enjoys biggest two-day gain in 10 months: as it happened

The jobs figure beat expectations

Credit:
Daniel Acker/Bloomberg
The United States added 195,000 jobs in August smashing expectations and climbing significantly on a downward-revised July figure of 156,000.
Thats quite a climb, especially as economists surveyed by Bloomberg had anticipated a fall.
Pantheon Macroeconomics Ian Shepherdson said the result likely will be the best ADP number for some time. He added:

As always, remember that payroll forecasts are subject to big errors, because the error in the payroll number itself is about +/-100K, but for now a decent August report is more likely than not. By the same token, significantly weaker numbers over the next few months also are more likely than not.

Jobless claims rose slightly, from 215,000 to 217,000, though I dont think that will be enough to cause any upset.
US jobless claims: 217,000 vs 215,000 expected David Madden (@dmadden_CMC) September 5, 2019
1:07PM
Melrose leads FTSE 100 risers after narrowing losses
Pound enjoys biggest two-day gain in 10 months: as it happened

UK manufacturers are facing trade war pressures and Brexit uncertainty

Credit:
Ben Birchall/PA
Restructuring firm Melrose, which specialises in taking over and improving struggling manufacturing businesses, is the biggest riser on the FTSE 100 today, up 6pc.
The company reported its pre-tax losses were narrowing, and said it expected to hit targets despite a slowdown in the global manufacturing sector.
Its latest results are the first to reflect its controversial takeover of industrial giant GKN.
Justin Dowley, its chairman, said:

These results show the initial fruits of the improvestage of Melrosesownership of GKN and, with the overall GKN margin increasing positively, we are excited about what is possible. The performance is in line with expectations and leverage is better than expected.

RBC gave Melroses shares a top pick rating, which they said: reflects our view on the significant improvement potential at the acquired GKN business and the market being tooconcerned about automotive risk in the current valuation.

12:50PM
Tweet: Government will make second bid for election on Monday
BBC political editor Laura Kuenssberg tweets:
Mogg confirms vote on early election on Monday evening - if govt doesnt get it passed before Parliament closes next week, there cant be an election before Oct 31st Laura Kuenssberg (@bbclaurak) September 5, 2019
12:37PM
Full report: Go-Ahead boss defend Southern services
Pound enjoys biggest two-day gain in 10 months: as it happened

Southern Railhas been plagued by strikes in recent years

Credit:
DANIEL LEAL-OLIVAS/AFP
My colleague Oliver Gill has a full report on Go-Aheads full-year results, released this morning. He writes:

Chief executive David Brown defended the recent performance of the network, which has beenblighted in recent years by poor punctualityand a bitter industrial dispute with staff.
Southerns metro performance was exceptionally good, Mr Brown said.
It stands up to any railway in the world,he added.
The comments came as Go-Ahead, the majority owner of Southern, Govia Thameslink and Great Northern, posted a 10pc rise in revenue to ?3.8bn in the year to June 29. Pre-tax profit fell by a third to ?97m. This included a ?17m pension charge to equalise retirement benefits for men and women.
His full report is here:Southern Rail among the best in the world, says train chief
Business Briefing Newsletter REFERRAL (Article)
12:26PM
Pound could climb back to $1.35
Pound enjoys biggest two-day gain in 10 months: as it happened

The pound is up today, but is still on a long-term decline

Credit:
DANIEL SORABJI/AFP
UBS economist Dean Turner has offered some predictions on what might happen to the pound in different Brexit scenarios going forward. He says (and I quote):
Sterling has been buffeted by the frenetic pace of events in Parliament over the last couple of days. Removing the immediate threat of a no-deal Brexit has helped the pound recover some of its recent weakness.
If, as we expect, Brexit is delayed until January 2020 and an election is held after October, we would expect this recovery to continue.
GBP/USD could rally above 1.30. A deal could even bring it to 1.35. For EUR/GBP, the respective levels would be 0.87 or even the lower 0.80s.
The key risk to this view is an early general election (in October) and a victory for Johnson's Conservative party.
A no-deal Brexit could send GBP/USD toward 1.15, or even lower, given the dollar's recent strength. EUR/GBP would likely rise toward 0.97.
12:11PM
Futures bright as magazine company raises earnings forecast
The brightest spot on the FTSE 250 today is magazine publisher Future, which is up just under 10pc after upgrading its outlook for the coming year.
In a full-year pre-close trading update this morning, the company said:

Trading for the final quarter of the current year in the groups core operations is stronger than the boards previous expectations. We have seen a positive performance from Amazon Prime Day related activity and strong ongoing trading in the US, as well as some additional benefits from foreign currency translations. Full year EBITDA is now expected to be materially ahead of current board expectations.

Chief executiveZillah Byng-Thorne said:

Integration of our acquisitions is on track and we now have a substantial presence in the US. We are successfully leveraging our brands on our technology platform, driving strong growth across the business.

The company has had a frankly breathtaking year, with shares up around 170pc so far in 2019, reaching their highest levels since 2001 this morning.
11:48AM
The FTSE is now seriously lagging peers
Londons blue-chip index is now around 0.7pc off, with the pound up over 1pc currently. On the continent, Spains IBEX is putting in a particularly good innings, up 1.1pc currently. The CAC and DAX are both up about 0.9pc.
11:42AM
To put the pounds movement in context...
...it is now up around over threeand a half cents from its 34-year low on Tuesday. putting it just over one cent beneath the level it stood before Boris Johnson became Prime Minister.
11:35AM
PMs brother quits politics
In other big political moves, the PMs brother, Jo Johnson, has announced plans to quit as an MP and minister. Johnson, who has campaigned for a second referendum, wasminister of state for universities.
Its been an honour to represent Orpington for 9 years & to serve as a minister under three PMs. In recent weeks Ive been torn between family loyalty and the national interest - its an unresolvable tension & time for others to take on my roles as MP & Minister. #overandout Jo Johnson (@JoJohnsonUK) September 5, 2019
You can follow the latest updates here:Brexit latest news: Boris Johnsons brother Jo resigns as MP as he says he is tornbetween family and national interest
11:32AM
Heres how the pound has moved since Boris Johnson became Prime Minister
Pound enjoys biggest two-day gain in 10 months: as it happened

Credit:
Bloomberg
The pound is now at its highest level since July. To recap some of the main moments that moved the currency:
Mr Johnsons no-deal statements and Donald Trumps trade war salvo sent the pound dipping at the start of the month
After successive lows in the middle of the month, the pound bounced back during the PMs handshake tour of Europe
The currency dipped sharply after plans to prorogue Parliament were revealed
Sterling has bounced back in recent days as rebels and opposition parties took back control of Parliament
Commenting after its fall on Monday, OFX analystSebastien Clements said the pound is closely resembling the behaviour of anemergingmarketcurrency, where high volatility and extreme political uncertainty leave its movements near-impossible to predict.
ING analysts James Smith and Petr Krpata say:

We dont expect the current GBP rebound to have legs. So far, sterling has benefited from the mix ofthe success MPs have hadinlegislating against no-dealBrexit and the stretched short GBP positioning. But with early elections looming, we expect the pound to soon re-start itsweakening trend, given election uncertainty and the non-negligible risk of a no-deal Brexit if the Conservative party win a parliamentary majority under Prime Minister Boris Johnson.
11:15AM
Sterling holds just short of 1pc gain...
...while over in Westminster, former Labour MP Luciana Berger, who had been an independent since earlier this year, has joined the Liberal Democrats:
I am very pleased to announce that I have joined @joswinson and the @LibDems, the strongest party to stop brexit, fight for equality and a fairer country. Luciana Berger (@lucianaberger) September 5, 2019
Thats unlikely to have any impact on votes, but does strengthen Lib Dem leader Jo Swinsons hand.
11:12AM
Round-up: William Hill boss ducks out, Ofgem fines Engie over price manipulation
Pound enjoys biggest two-day gain in 10 months: as it happened

William Hill boss Philip Bowcock will make an exit from the company with effect from 30 Sept 2019

Credit:
Sarah Ebbett/Racing Photos
As business ramps back to normal service, two corporate stories from this morning:
William Hill boss Philip Bowcock exits as digital chief takes the reins:William Hill chief executive Philip Bowcock is to exit after a little over two years to make way for the bookmakers chief digital officer.Ulrik Bengtsson will take charge with immediate effect and Mr Bowcock will leave the FTSE 250 company by the end of the month.
Ofgem fines Engie ?2m after trader manipulates wholesale gas prices: The energy watchdog has finedFrench energy company Engie?2.1m for manipulating wholesale gas prices.Ofgem found that a trader working for Engie Global Markets engaged inspoofinga technique to increase or decrease asset prices by placing bids or offers on the market and then cancelling them before the trade is executed to artificially boost trading profits.
11:04AM
Climb could be catalyst for further jumps
With sterling having apparently reached another rung of the ladder at nearly 0.9pc up on the close yesterday. Thats just clear of $1.23. If optimism holds, yesterdays 0.96pc gain is the number to beat (with that being a six-month high).
If there's buyers at 1.23 we can look to a drive to 1.2380 - sentiment has turned around pretty sharply here and shorts are being squeezed. Liquidation of stretched short positions could exacerbate this rally pic.twitter.com/LbmZT1XYgq Neil Wilson (@marketsneil) September 5, 2019
10:53AM
Sterling soars
After a pause for breath, sterling has found its second wind and is now soaring up against the dollar once again, with traders taking heart at Boris Johnsons series of defeats.
It is up 0.8pc against the dollar, and 0.6pc against the euro.
The currency posted its biggest gains in six months yesterday we might well see it push higher today, depending on what happens in Westminster.
It lost a lot of ground last week after Mr Johnsons plans to prorogue parliament were revealed, and hit a 34-year low earlier this week. After it became clear the Government would be unable to see off efforts to prevent a no-deal Brexit, however, the pound has climbed markedly.
CMC Markets Michael Hewson said:

While a lot of the narrative appears to be on how damaged the Prime Minister is after recent events, it surely cant be that unexpected the way events have panned out, which suggests that this may be part of a wider plan to portray parliament and opposition MPs as obstructionists and wreckers, something that he may well allude to when he speaks later today. As such any further sterling upside could well be limited with respect to whether or not we get an election before or afterOctober 31.
10:46AM
Hong Kong-exposed shares dip as doubts return
Pound enjoys biggest two-day gain in 10 months: as it happened

Hong Kong chief executive Carrie Lam
Yesterday, relief at the withdrawal by Hong Kong chief executive Carrie Lam of an extradition bill that sparked months of protests in the Asian financial hub spilled on to Londons markets, lifting stocks with exposure to the disruption, such as HSBC, Prudential, Standard Chartered and Burberry.
Those gains have been shaken off slightly today, with all four slightly in the red as investors thoughts turn to the road ahead for the troubled city.
The bills demise may not end protests as demonstrators have several more demands, including that an independent investigation is held into police use of force against protesters, something Ms Lam has refused.
10:32AM
Ex-dividend shares add to weight on blue-chip index
The FTSE 100 is off about 0.3pc currently, with a commensurate weakening in the pound against the dollar reducing pressure on the blue-chip index.
Its well worth noting a few decently heavy shares are also ex-dividend today, adding to pressure on the index. When shares go ex-dividend, they trade without a right to the next payout, meaning a proportional discount occurs.
The biggest ex-dividend dragsare pharma giants AstraZeneca, which is off 2.19pc, and GlaxoSmithKlein, off 1.3pc. Together, they arecontributingtwelve points of the downwards tug on the FTSE, which is about 20 points in the red overall. Miner BHP is also off 3pc after going ex-dividend.
10:16AM
Nothing to sob about for Boohoo as online fashion firm raises outlook
Pound enjoys biggest two-day gain in 10 months: as it happened

Boohoo owns a slew of fashion brands

Credit:
Charlotte Rutherford
Online fashion company Boohoo which also owns brands including PrettyLittleThing, Nasty Gal, MissPaper and, as of last month, Karen Millen and Coast is seeing its share price surge today, after an unscheduled trading announcement.
In an update to the City this morning, the AIM-listed companys board says it:

[N]ow anticipates that results for the current financial year will be ahead of previous guidance, with Group sales growth now expected to be between 33pc and 38pc (against previous guidance of 25pc to 30%)
Jefferies analysts labelled it another stellar performance over a warm summer, saying the company was benefiting from successful price and promotion investments and highly effective marketing.
Liberum analysts added:

We had previously flagged strong traffic data for Nasty Gal, but interestingly all brands are delivering strong momentum, with the UK in particular generating that outperformance against the backdrop of a weak high street.

Heres the endorsement the Telegraphs Questor column gave the brand last year:
Questor: Buy Boohoo after a shaky few months the fast fashion group is back on trend
9:56AM
European stocks at one-month high, FTSE sinks further as sterling finds new gains
The pound has mounted a pretty strong climb since the start of London trading this morning, and its now steady at about 0.5pc up against the dollar.
Traders (like the rest of us) are holding their breath for new political updates, but with a clear majority against no-deal in the Commons, sentiment is high that the UK can now avoid crashing out from Europe.
Those gains are hurting the FTSE, which is now off nearly 0.5pc on the day, increasingly an inverse mirror of the currencys performance.
Other European bourses are finding solid gains around the 0.8pc mark, putting several at one-month highs, though Italy is lagging slightly as traders take stock following the formation of a new coalition of the leftist Five-Star movement and the Democratic Party, led by Prime Minister Giuseppe Conte.
9:50AM
Reaction: Car market will have to continue to contend with the ongoing Brexit negotiations
Responding to those car registration figures, Auto Traders Ian Plummer says:

Unsurprisingly the market is down, despite retailers and manufacturers best efforts as they sought to beat the new Real-world Driving Emissions (RDE) test deadline by registering large volumes of cars before the end of the month. This has effectively inflated sales.
Although we shouldnt be focused on August, more importantly it is about how the market fairs in September, a key plate change month. The market will have to continue to contend with the ongoing Brexit negotiations and as things heat up politically, uncertainty remains which is not helping business or consumer confidence - especially not helping to sway manufacturers to send more cars into the UK.
9:42AM
New car registration decline slows
Pound enjoys biggest two-day gain in 10 months: as it happened

92,573 registrations were made in August

Credit:
Phil Noble/REUTERS
Registrations of new cars fell 1.6pc overall in August, with private registrations dropping 1.7pc.
Thats substantially better than the 5.6pc average drop across recent months, and is likely to be in part due to August being a comparatively quiet month for sales.
The Society for Motor Manufacturers and Traders, which compiles the figure, picked out the following highlights from its report:
UK new car market falls -1.6% in August, to 92,573 registrations.
Good news for zero emission vehicle uptake, with registrations up nearly fivefold to take record 3.4% market share as hybrids also register growth.
Industry calls for policies and measures to boost uptake of latest, lowest emission vehicles, a vital step on the road to zero.
UK car registrations down -3.4% in the year to August, driven primarily by a -19.3% fall in Diesel sales, as the switch towards alternatives continues. Interesting also to note that not all the alternatives are created equal. Sales of plug-in hybrids down a whopping -37%. pic.twitter.com/T53hw1YcBB Rupert Seggins (@Rupert_Seggins) September 5, 2019
Good news - car registrations were strong in August. The 1.7% y/y drop is consistent with a big seasonally-adjusted m/m% rise, as sales in Aug 2018 jumped ahead of new emissions testing rules. This points to car sales boosting q/q% GDP growth by a non-trivial 0.05pp in Q3. pic.twitter.com/JNtvyvRZqn Samuel Tombs (@samueltombs) September 5, 2019
#SMMT report new #UK #car registrations fell 1.6% year-on-year in typically quiet month of August (ahead of September number plate change). 6th successive decline with registrations down 3.4% y/y over first 8 months of 2019. Private sales down 1.7 y/y in August; fleet down 3.5% Howard Archer (@HowardArcherUK) September 5, 2019
Mike Hawes, SMMT chief executive, said:

August is typically the new car markets quietest month so the huge increase in EV registrations is very visible but especially welcome. Its great to see consumers respond to the massive industry investment made over many years.
While this is encouraging, these figures also show the scale of the challenge ahead. Its a long road to zero and while manufacturers can deliver the technology, they cant dictate the pace of uptake.
9:35AM
German factory orders sink at alarming rate
Pound enjoys biggest two-day gain in 10 months: as it happened

The Thyssenkrupp factory in Duisburg, Germany

Credit:
INA FASSBENDER/AFP
In case anyone was feeling a littletooupbeat about the global economy following this mornings trade war news, heres a reason to be less cheerful: German factory order slumped 2.7pc month-on-month during July, a sharper fall than expected, while its construction industry slowed down even more than expected during August.
For factories in Europes biggest economy, that means a year-on-year drop of 5.6pc, as trade war fears weigh on the countrys export-heavy economy.
#Manufacturing in July 2019: New orders -2.7% seasonally adjusted on the previous month. https://t.co/4qPfcOH2cA pic.twitter.com/Z2UUPpxBXE Destatis news (@destatis_news) September 5, 2019
Ouch! German factory orders sink, raising risk of recession. Demand fell 5.6% in Jul (YoY), 2.7% (MoM) exceeding the estimate for 1.4% decline. Manufacturing slump drags on as global trade tensions rise. https://t.co/hmxX8qsgVS pic.twitter.com/U4d9yeemYy Holger Zschaepitz (@Schuldensuehner) September 5, 2019
Claus Vistesen, from Pantheon Macroeconomics, said:

A disappointingly weak headline, though it is not a huge surprise given the still-grim survey data. In short, the jump at the end of Q2 was always going to be reversed at some point in Q3...the underlying trend is still weak, consistent with the surveys, indicating thatGermanmanufacturing will remain in recession through Q3.

Germanys economy is already in contraction, so poor figures like these make it appears ever-more certain that the country is on course to enter a technical recession.
In a sign of the times, German steel giant Thyssenkrupp is set to exit to Germanys 30-member DAXindex of blue chips, becoming the second founder member to lose its spot in a year. It chief executive Guido Kerkhoff said yesterday:

We have to be honest: our performance was too weak and thats why our relegation to the MDAX is the logical consequence.
German GDP
9:23AM
Yorkshire Bank-owner CYBGs shares crash after PPI cost warning
Pound enjoys biggest two-day gain in 10 months: as it happened

CYBG operates Clydedale Bank, Yorkshire Bank and Virgin Money

Credit:
Handout
A burning red spot on the FTSE 250 today: shares in CYBG which operatesClydesdale Bank, Yorkshire Bank and Virgin Money are off more than 19pc, after the company raised its provision for PPI payments.
The falls were as large as 23pc at the start of trading, knocking the company to a record low. Its Australian shares also shed 20pc overnight.
PPI payout deadline: court ruling opens door to claims after 29 August
The company reported yesterday that itsaw a significant spike in the final days prior to the complaint deadline. That was followed by a later notice released after markets closed in which it said:

Further to the statement made earlier today, the Board of CYBGis announcing that it expects to increase its provisions for legacy PPI costs by between ?300m and ?450m. This is primarily due to an unprecedented volume of PPI Information Requests received during August in advance of the PPI complaint deadline of 29 August 2019 and in line with the rest of the industry.

Investec analysts branded the announcement a catastrophe, adding:

Although CYBG was known to be, proportionately, the most exposed to any late spike in PPI claims, last nights announcement is still really quite shocking in terms of the scale of the (anticipated) damage. It now (provisionally) guides to a further PPI charge of ?300m-?450m; for illustration, ?400m would represent 20% of its current market capitalisation.

It looks like todays wipeout is roughly in line with that level of expected damage.
9:10AM
Johnson prepares for public address
Boris Johnson, coming off the back of a series of brutal Parliamentary defeats, plans to address the public at some point this afternoon (the timing as-yet unconfirmed by Downing Street), in which the PMs office says he will speak directly to the public, setting out the vital choice that faces our country.
Opposition parties refused to accede to the PMs demands for a General Election yesterday, instead taking the position that Britains exit from the European Union should be delayed. Mr Johnson had called for a ballot day of October 15, but members of the so-called Rebel Alliance has feared he would reneged, and delay until after Britains Brexit date potentially setting the country up for a de facto no-deal exit.
The current state of the House of Commons
Elsewhere in market-relevant politics today, at 10am the legal challenge against Mr Johnsons efforts to shut down Parliament will be heard at the High Court, andat 12pm Michael Gove will discuss no-deal planning with the Commons Brexit Select Committee.
You can follow our politics live blog here: Brexit latest news: Labour plots to delay election until November as PM accuses Corbyn of cowardly running away
9:01AM
Fixed income standards body chief quits
An interesting story in the Financial Times this morning, which reports that Gerry Harvey, head of the FICC Markets Standards Board set up to raise standards in fixed-income trading quit in January without fanfare after an internal probe recommended disciplinary proceedings against him.
Bank of England Governor Mark Carney has said the body should reverse the tide of ethical drift, so having its chief quit over his conduct is not a great look.
FT: Chief of fixed income standards body quit after investigation (?)
8:43AM
Southeastern operator sees profits dented by loss of London Midland franchise
Pound enjoys biggest two-day gain in 10 months: as it happened

A Southeastern train in Ashford, Kent

Credit:
Andrew Errington/Moment Mobile ED
Go-Ahead Group, the company behind Southeastern rail, beats estimates for full-year revenuein its report this morning, but said the loss of its London Midland franchise had hurt its profits overall.
Revenue rose 10pc to ?3.81bn
Pretax profit fell 33.4pc to ?97m
David Brown, its chief executive, said:

Im pleased to report full year results slightly ahead of our expectations in both bus and rail divisions. Strong performance in our London & International bus division more than offset a lower result in our regional bus business. Rail operating profit was slightly ahead of expectations, driven by strong performance at Southeastern, but was lower than the prior year which included a part year of operating the London Midland franchise.

RBC analysts gave the results a mixed review, maintaining a neutral rating on Go-Ahead shares. Liberum analystGerald Khoosaid:

While less strategically challenged than much of the peer group, further progress in delivering international contract profits is needed to sustain the current rating.

Both gave it a target price of ?20.00, a cut to its close at ?21.48 yesterday. Shares are currently down 0.4pc.

8:29AM
FTSE stays flat as Europe advances
Heres how European blue-chips look currently. The FTSE is dragging its feet slightly, weighed down by moderate gains for the pound:
Pound enjoys biggest two-day gain in 10 months: as it happened

Credit:
Bloomberg TV
Oandas Craig Erlam says:

As ever, the announcement is not without confusion, with the Chinese Commerce Ministry claiming that both sides had agreed to meet in Washington in early October while the US side only confirmed that the phone call had taken place. Investors are nevertheless buoyed by the comments as it at least opens the door to talks to end the trade war that has already plagued the global economy.

Markets.coms Neil Wilson adds:

The news of face-to-face high-level talks between the US and China next month hasbeenseen asa positive but needs to be taken with a good dose of salt.It wasnt that long ago the market was rallying as we thought a deal imminent, now its moving onnothing more thanconfirmation of talks.It highlights the headline risk that traders must contend with and suggests there is very little by way of a strong trend in the markets right now, just a lot of short-termism and uncertainty. A trade deal is a long way away.
8:13AM
Trade war: Whats happening now?
Pound enjoys biggest two-day gain in 10 months: as it happened

President Donald Trump (left) and China's President Xi Jinping

Credit:
NICOLAS ASFOURI/AFP
The US and China have agreed to proceed with trade talks in October, ending doubt over whether talks would proceed.
The announcement, which means the two sides will speak face-to-face for the first time since a series of escalations during August, has prompted relief across stock markets so far today, with Japanese shares in particular surging.
The FTSE is dragging its feet slightly, with the pounds continued climb against the dollar unlikely to be helping the exporter-heavy index.
A specific date for the talks has not yet been announced, but Chinas commerce ministry says early October, while the US Office of the Trade Representative (Robert Lighthizer) says they will be in the coming weeks. The in-person meeting is set to take place in Washington.
On Sunday (which feels a whole Brexit lifetime ago), both countries ramped up tariffs against one another, following a tit-for-tat clash during the last month.
Heres everything you need to know about the US-China trade war
This is how tariffs currently stand:
US China trade war
7:20AM
Agenda: Pound rebounds after double defeat for Johnson, trade war relief rally expected
Pound enjoys biggest two-day gain in 10 months: as it happened

Boris Johnson has quickly suffered a series of humiliating defeats in the Commons

Credit:
UK Parliament/Jessica Taylor
Good morning, the pound extended its strong rebound last night after MPs backed the Brexit delay bill and rejected a general election, surging above $1.22 against the dollar.
It is something of a reversal in fortune for the battered currency after it sank to a 34-year low on Tuesday (excluding the 2016 flash crash). Since that plunge, the mood has changed dramatically in Westminster and on currency markets. Can sterlingbuild some momentum today?
Meanwhile, markets are expected to see gains today after a breakthrough in the US-China trade tensions.

5 things to start your day


1)Sajid Javid has found the magic money tree as he declared an end to austerity. In the deluge of big numbers, theres another little one that stands out:0.34pc the record-low yield at which the UKs 10-year government bonds traded earlier this week, as investors showed their fear of a possible no-deal exit.
2) TheRetail Price Index will be ditched but rail commuters could be waiting years.The flawed inflation measure will be scrapped but not until 2025 at the earliest much to the chagrin of long-suffering rail travellers.
3)Fragile Europe is facing twin threats of a global recession and no-deal Brexit.While Britain would suffer the bigger economic shock from a no-deal Brexit, the eurozone would also be transformed, Ambrose Evans-Pritchard argues.
4) TheBillionaire Uniqlo founder is seeking a female successor. Aesthetic senseis one of the qualities that Tadashi Yanai believes makes a woman an apposite successor to his Japanese clothing empire.
5)An agile ECB cant fight eurozone fires on its own, Christine Lagarde is warning.The incoming president of the ECB urged governments to play a more active role in aiding the region's economy.

What happened overnight


Asian shares extended gains on Thursday and USstock futures jumped after China said it will hold trade talks with the United States in early October, raising hopes they can de-escalate their trade war before it inflicts further damage on the global economy.
MSCIs broadest index of Asia-Pacific shares outside Japan was up 0.8pc, while the Shanghai composite index surged 1.8pc. Japan's Nikkei added 2.4pc.
But Hong Kong's Hang Seng has shed 0.9pc after strong gains yesterday when its Chief Executive Carrie Lam announced the withdrawal of the controversialextradition bill.
USstock futures reversed early losses and rose 1pc.
The Chinese yuan jumped versus the dollar in offshore trade, while safe-haven assets such as gold and the yen fell.
The US-China talks announcement followed a call earlier in the day between Chinas Vice Premier Liu He and USTrade Representative Robert Lighthizer and USTreasury Secretary Steven Mnuchin, the Chinese Ministry of Commerce said in a statement on its website.
Trade teams from the two countries will hold talks in mid-September before the high-level talks next month, the ministry said. Both sides agreed to take actions to create favourable conditions, it said.
A spokesman for the USTrade Representative's office confirmed that Mr Lighthizer and Mr Mnuchin spoke with Liu and said they agreed to hold ministerial-level trade talks in Washington in the coming weeks.

Coming up today


Full-year results:Alumasc, Genus, Go-Ahead Group, McBride, Redrow, Mid Wynd Investment Trust, HSS, SIG
Interims:Melrose, Mpac
Trading statement:Dixons Carphone
Economics:New car registrations (UK)
See also:
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