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FT Opening Quote

Michael Sherwood of Goldman Sachs faces a grilling from MPs on BHS, house prices are up 5.1 per cent in June, says Nationwide, Dixons Carphone profits are up 17 per cent. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your earl...

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Michael Sherwood of Goldman Sachs faces a grilling from MPs on BHS, house prices are up 5.1 per cent in June, says Nationwide, Dixons Carphone profits are up 17 per cent. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here.

Most investment bankers would no more discuss their client relationships on camera than their love lives. Michael Sherwood, co-head of Goldman Sachs in Europe, is preparing to do so this morning, as MPs scrutinise Sir Philip Green’s sale of BHS for £1.

The retailer collapsed earlier this year with a £571m pension deficit. So Goldman’s unpaid advice on the credibility of buyer Dominic Chappell is under the spotlight.

Mr Sherwood’s task is to avoid the appearance of evasiveness or bad temper, without giving so much away that clients feel exposed speaking to him in future. The committee may investigate his habit of taking on larger-than-life customers who are not always popular in the City or Westminster. These include Sports Direct’s Mike Ashley, another actor in the BHS drama.

Dixons Carphone has raised full year “headline” profits before tax (which exclude merger amortisation) 17 per cent to £447m and is increasing its dividends 15 per cent to 9.75p. The merger of Dixons and Carphone Warehouse, dismissed by critics as defensive, has gone well. The white goods and electronics retailer has been assisted by the collapse of Comet. But execution under suave chief executive Seb James has also been strong.

Greene King, a doughty survivor in the bombed-out pubs industry, haslifted full year profits before tax around £70m to £190m. Revenues topped £2bn for the first time, thanks to the acquisition of the Spirit Pub Company. But Rooney Anand, the usually irrepressible CEO, warns that consumer confidence is likely to be dented by the Brexit vote.

Struggling defence business Cobham has appointed David Mellors as its new chief financial officer. He currently holds the same role at defence contractor Qinetiq, where he is described as playing a “pivotal role” in its turnaround. FastFT reports Chemring’s financial director is leaving the UK defence group, which is fighting to stem heavy losses. Steve Bowers will take up a CFO role at legal group Herbert Smith Freehills, remaining at Chemring while a successor is sought.

Distribution group Bunzl has bought the splendidly-named Classic Printed Bag Company as part of its bolt-on M&A strategy. There is a lot to be said for being dull and reliable like Bunzl at times such as these.


French president François Hollande says the City of London should no longer be able to clear euro-denominated trades. That right was one of the few positive concessions wrung by the UK from the EU in recent years. “Flanby”, as the scooter-propelled love machine is known to French critics, sees pulling euro securities trading back to the eurozone as a punishment for the Brexit vote.

Banks in the City hope for a regime of equivalence with the EU that would allow them to keep pan-European passports. They are likely to be disappointed.

Never mind Brexit. We are facing a “Burgundy Apocalypse”, according to Bloomberg. Terrible weather means the supply of grapes is collapsing, particularly in the Côte de Beaune. Cash-strapped bankers will have to buy beers to weep into instead.

Finally, we bid a fond adieu to Chris Nuttall, the top-hatted engine driver who has kept OQ on the rails since its inception. He’s off to help manage the FT’s coverage of the humdrum, low-ticket industry that is Silicon Valley. We hope he will not miss his glamorous old life too much as he rises at a normal hour without needing to worry whether Lamprell has issued a profits warning.

Beyond the Square Mile

UK house price growth picked up slightly in June. Nationwide’s monthly house price index showed year-on-year growth picked up to 5.1 per cent, having slowed in the previous two months after the market was distorted by changes in stamp duty for buy-to-let and second home buyers in April. June’s growth compares to 4.7 per cent in May.

Asian markets continued a tentative global rally as an overnight bounce in the British pound offered investors some reprieve from the Brexit-driven turbulence of recent days. Uncertainty in the wake of the UK’s decision to leave the EU spurred the yields of numerous government bonds to hit record lows and gold to reach a two-year high as investors searched for safer assets. Some of those moves reversed as the mood in markets improved.

Sterling, which has borne the brunt of investors’ concern about Brexit, was down 0.2 per cent on Wednesday in Asia at $1.3318. It had jumped 0.9 per cent on Tuesday, having fallen by a combined 11.1 per cent over the previous two sessions.

Istanbul bomb attack A trio of suicide bombers struck Istanbul’s biggest airport, killing at least 36 people and injuring nearly 150.

In the US, the cloud of fear that engulfed Wall Street over the past two trading sessions lifted on Tuesday, as the S&P 500 posted its best rally in more than three months amid easing worries about Brexit. Overall, the S&P 500 rose 1.78 per cent to 2,036.09.

Nike shares fell 6 per cent late on Tuesday after the apparel maker said a key indicator of future sales missed Wall Street estimates in its last quarter.


At 9.30am, the Bank of England reports on May mortgage approvals for house purchases, with IHS analysts expecting them to slow further to a 14-month low of 65,000. There are also data on consumer credit and M4 money supply. Prime Minister’s Questions are at noon, with David Cameron expected back from the still ongoing EU summit. At 10am BST, June eurozone consumer confidence and business climate readings are due, with German inflation figures following at 1300 BST.

In the US, May personal income, personal consumption and the PCE price index are due at 1330 BST, followed at 1500 BST by the May pending existing home sales index, with a 1 per cent month-on-month decline expected. Monsanto and General Mills report pre-market.

Markets at 0801 BST

Asian markets
Nikkei 225 up +243.69 (+1.59%) at 15,567
Topix up +23.07 (+1.88%) at 1,248
Hang Seng up +179.04 (+0.89%) at 20,352

US markets
S&P 500 up +35.55 (+1.78%) at 2,036
DJIA up +269.48 (+1.57%) at 17,410
Nasdaq up +97.42 (+2.12%) at 4,692

European markets
Eurofirst 300 up +29.34 (+2.40%) at 1,252
FTSE100 up +158.19 (+2.64%) at 6,140
CAC 40 unchanged 0.00 (0.00%) at 4,089
Dax unchanged 0.00 (0.00%) at 9,447

€/$ 1.11 (1.11)
$/¥ 102.26 (102.74)
£/$ 1.34 (1.33)
€/£ 0.8285 (0.8292)

Commodities ($)
Brent Crude (ICE) up +0.30 at 48.88
Light Crude (Nymex) up +0.36 at 48.21
100 Oz Gold (Comex) up +6.30 at 1,321
Copper (Comex) down 0.00 at 2.17

10-year government bond yields (%)
US 1.47%
UK 0.95%
Germany -0.11%

CDS (closing levels)
Markit iTraxx Europe -5.18bps at 93.63bp
Markit iTraxx Xover -26.53bps at 392.35bp
Markit CDX IG -6.28bps at 84.77bp

Sources: FT, Bloomberg, Markit

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Chris Nuttall
Award-winning journalist with more than 35 years' experience in newspapers, magazines, radio, TV and the internet at local, national and international levels. At the BBC for 17 years and has spent the past 15 with the Financial Times. Served as a foreign correspondent in Sri Lanka, Washington and Turkey as well as in a roving role for the BBC. Turned a late 1980s geeky interest into a professional focus on the internet and technology and was founding World Editor of the BBC News website and the BBC 's first Internet Correspondent.

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