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September 26, 2017

Pegler’s market report – 26.09.17: May’s speech in Florence sets out vision for Brexit break-up


in Insights Press Releases

As published in the Brighton Argus (26.09.17) Business section under the title Pegler’s Market Report:

May’s speech in Florence sets out vision for Brexit break-up

Currency dealers were hanging on to Theresa May’s every word last Friday during her Brexit speech in Florence. Earlier in the month the pound had soared on the back of renewed hopes of an interest rate hike at the Bank of England before the end of the year, taking sterling to its highest post-EU referendum level. Initially the pound fell as Mrs May reiterated the Government’s stance that the UK will be leaving the single market and customs union. The UK will honour its financial commitment to the EU and is seeking a two-year transition period.

The markets seemed fairly undeterred by Donald Trump announcing that the US will step-up sanctions against North Korea but the rogue state threatening to test a hydrogen bomb in the Pacific may continue to spook some investors over the coming days.

UK public sector borrowing is at its lowest level since the financial crisis giving chancellor Philip Hammond some wiggle room to ease austerity measures in his November budget. Public sector net borrowing in August was £5.7bn, far better than economists’ more gloomy forecast of £7.1bn. Many will like to channel any extra monies towards priorities such as the NHS, social care, housing and infrastructure investment as well as some further relaxation of the public sector pay cap.

Transport for London has stunned US ride-hailing service Uber after it announced that it will not be renewing its private hire operator licence when it expires on September 30, citing its approach to reporting serious criminal offences and obtaining medical certificates – generally, ‘not fit and proper’ to hold a licence. The company said it intended to immediately challenge the decision. It has 21 days to appeal the move, and if it does so can continue to operate as normal until the challenge is finished.

Johnson Matthey has revealed plans for a £200m investment in battery technology as it aims to become a key player in the coming electric car revolution – news that sent the shares surging. The company generates 60pc of its £12bn in annual sales from making exhaust catalysts for vehicles, and industry observers have warned it could be particularly hurt by the rise of electric vehicles, which do not need catalytic converters. The company’s investment spree – designed to “future-proof” the business – will begin in 2018 and last two to three years. Money will be ploughed into enhancing the technology behind the cathodes it makes for batteries as well as into increasing production capacity.

Finally, Ryanair has failed to rule out more flight cancellations, as the Irish airline struggles to grapple with the fallout from a major mistake with the way pilots’ rotas were compiled that has so far disrupted journeys for more than 315,000 people.

By David Pegler, Brighton Capital Management

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