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Market buzz: Barnier slaps down City's Brexit hopes, Draghi downs the euro
1830:Close A stinging rebuke for the City of London from the EU's chief negotiator Michel Barnier, trashing Mark Carney's claim that bloc needs the square mile's financial services industry and tells Brits to stop "pleading" for mutual recognition and make do with 'equivalence' like Wall Street instead.
"Brexit will come at a cost - and this cost will be substantially higher for the UK than the EU," Barnier said.
"Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered - and economic growth undermined - without giving UK operators the same market access as today," Barnier said at a meeting of finance ministers in Bulgaria earlier.
"This is not what we hear from market participants, and it is not the analysis that we have made ourselves."
He rejected Theresa May's request for mechanisms that effectively preserved the status quo based on Britain and the EU reaching the same outcomes through different regulatory methods.
"Everything must change so that everything can stay the same", to paraphrase Lampedusa. But this will not work," he said.
"The equivalence system will operate in a more effective manner if the UK decides not to diverge from our financial regulation," he said before pointing out that the costs of the financial crisis were borne by taxpayers across the EU and not just in the EU.
1705: The FTSE 100 closed higher after a sluggish start on Thursday. The UK benchmark finished up 42.11 or 0.57% by the close at 7,421.43, while the pound was up 0.4% the euro at 1.1496 and fell, then rose, then fall to end flat against the greenback at 1.3927. Oil prices recovered the previous day's dip, with Brent crude up 0.5% at $74.41.
The euro fell against the pound, dollar and others as European Central Bank made no changes to policy and bank president Mario Draghi said policymakers "did not discuss monetary policy per se" and insisted the bank could remain accommodative well past September.
Several market analysts put the easing of bond yields as a key factor supporting equities on the day, including Joshua Mahony at IG, with the US 10-year treasury yield "a driving force behind the choppy price action this week, with the rise through 3% raising fears there would be an exodus from the equity space, shrinking business investment, and rising costs for leveraged firms".
"Today's drop in the 10Y yield has helped banish some of the market fears over the negative economic impact of increasing rates, with the fall towards 2.9% raising hopes we will break the recent trend after almost two weeks of daily gains," he said.
1516: Following the latest readings on advanced international trade, durable goods orders and inventories, Barclays says its tracking estimate for first quarter US gross domestic product has risen from 1.5% to 1.8%. Capital Economics on the other hand has raised its own from 2.5% to 2.8%.
1415: On the subject of the recent increase in US Treasury note yields, Draghi explains it is a natural development of the situation in the US.
1353: Draghi: Speaking on the recent softness in some euro area surveys, he says extent of decline was "unexpected" but attributes mostly to temporary factors which may lie at their heart, including weather, Easter and strikes. Other "phenomena", like drop in backlogs, could suggest a softening in demand, he says. He recommends caution tempered by unchanged confidence in ECB's ability to meet inflation targets. Risks broadly balanced, he adds, but with a prominence towards those from overseas - explicitly mentions protectionism.
Some encouraging signs on wage pressures.
1337: ECB's Draghi is speaking, says "underlying measures of inflation remain subdued overall."
1330: Orders for durable goods in the US jumped by 2.6% month-on-month (consensus: 1.1%).
Initial weekly jobless claims fall by 24,000 to hit 209,000 (consensus: 224,000).
US international trade deficit on goods shrank by 10.3% month-on-month in March to reach $68.0bn (consensus: -$74.8bn).
Yield on benchmark 10-year US Treasury note down by three basis points at 3.0% after hitting an intra-day low of 2.99%.
1245: The European Central Bank kept all its main policy rates unchanged on Thursday, reiterating its intention to continue its asset purchases until the end of September 2018, or beyond if necessary.
As of 1251 BST, the euro/dollar was trading 0.13% higher at 1.21800.
1220: Strategists at Credit Suisse have upgraded their recommendation on UK shares to 'overweight', telling clients it was the second cheapest major region after Japan, with its valuation having dropped to the bottom decile of its historic range. Yet its dividend yield, relative to the market, was at 15-year highs.
The discount rate factored into UK equities versus Continental Europe was also near all-time highs, they said, with nearly all the major industrial sectors - aside from industrials - looking unusually cheap both in terms of the price-to-earnings ratios and price-to-book multiples.
Strength in Sterling on the other hand was a risk, with the strategists conceding that the house view on the pound was in fact positive.
Nonetheless, they believed the currency's strength would be capped, pointing out three factors: the UK's current account deficit was at 3.6% of GDP, speculators were 'long' cable and Sterling was only "modestly" cheap in their opinion.
0947: The FTSE 100 has almost closed the gap, climbing up to 7379.
Fresh figures on gross mortgage lending show an 8.3% month-on-month increase to £20.5bn in March, of which £11.83bn was by high street banks. Lending was 2.3% lower than the same period last year.
Mortgage expert Henry Woodcock at IRESS noted that total mortgage approvals have dropped by 15% compared to last year, with house purchase approvals falling by almost 21%.
"There has been some positive movement in the market however, with first time buyer and home mover activity increasing and borrowers looking to re-mortgage to fix their costs before an expected May interest rate rise."
After this month's RICS housing survey indicated the slowdown in the housing market is continuing, with March the twelfth consecutive month showing a drop in buyer demand, with house price increases also slowing as consumers show more caution and stamp duty and tax relief changes impact the buy to let market, Woodcock says the outlook for the months ahead will depend on whether there is an interest rate rise. "And if there is, will it stimulate the remortgage market, or reduce affordability for first time buyers?"
0925: Drax is a big riser on the 250 as BoA Merrill Lynch upgrades the Yorkshire power plant.
Centrica is top of the FTSE 100 as rivals SSE and Npower's merger could be up for further scrutiny after the Competition and Markets Authority's initial Phase 1 investigation finds that the rivalry between the large energy companies was an "important factor" in how they set tariffs.
Shell is a faller even though earnings are in line with forecasts. Oil prices have bounced back too, with Brent crude back up to $74.26 a barrel.
Motor insurer Hastings Group is under the cosh as it said the Beast from the East pushed up claims costs in the first quarter and reported a slowdown in gross written premium growth.
Domino's Pizza shares are warm but not quite piping hot, as the company reports an 18.3% jump in first-quarter sales thanks in part to a strong New Year performance.
Elementis is up more than 4%, having fallen more than 5% since last Thursday, as the chemicals group reports a good start to the year and remained confident of making further financial and strategic progress this year.
0900: New York activist investor Elliott Advisors has bought a majority stake in Waterstones, the Bookseller reports. Exact terms of the deal, which is expected to complete in May, not disclosed apart from the fact that Russian oligarch Alexander Mamut, who bought the chain from HMV, will retain a minority stake.
Following the deal, James Daunt will remain CEO, with Elliott is providing all the financing for the transaction, including the consideration and ongoing operational finance.
0846: The FTSE 100 is slightly in the red early doors at 7367.
In focus today will be the ECB monetary policy update at 12.45pm. "As per usual, with no change to rates expected, it'll all be about what President Draghi has to say in the press conference," says Mike Van Dulken, head of research at Accendo Markets. "Note potential for recent weak macro data to have dampened the Governing Council's outlook. This could result in further QE tapering being delayed and the programme lasting into 2019, in turn delaying further policy normalisation and thus rate hikes."
The FTSE is being weighed down by a large group of stocks going ex-div today: Antofagasta, Legal & General, Fresnillo, Glencore, Relx, Rolls-Royce, William Hill, Man Group, Weir, Petrofac, IWG, National Express, Spirax-Sarco Engineering and International Public Partnerships.
0832: BP's new chairman has impressed investors, with its shares among the top risers after it appointed ex BG boss Helge Lund.
0829: Barclays and Taylor Wimpey are among the big fallers on Thursday.
Barclays despite its headline numbers beating estimates as it set out its case against activist investor Edward Bramson by promising to return more cash to shareholders and highlighting the virtues of its diverse business.
TW says demand for new housing has continued to be good through early 2018 and that it remains on track to meet its expectations for the year, although it sales rate and order book declined.
0754: Lots of interesting newspaper stories on Brexit and trade this morning.
David Davis has been accused by Brussels of engaging in "fantasy" politics with his claim that an EU trade deal could be ready for ratification by March next year, reports the Guardian, coming after the Lords blocked the Henry VIII powers post-Brexit. A series of leaked letters and briefing papers from the Northern Ireland executive have also laid bare the huge difficulties created by Brexit.
The DUP has warned it will bring down May's Government if Northern Ireland is forced to stay in the Single Market or Customs Union after Brexit, says the Telegraph.
The Sun's political editor has the big scoop, saying May in her meeting with her top Cabinet ministers last night "agreed a high-risk plan to publish a long Brexit trade deal wish list in a bid to outmanoeuvre Brussels", with the Brexit sub-cabinet-committee giving the green light to issue 50-page dossier of Brexit trade demands "to outmanoeuvre Brussels".