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FT Opening Quote

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Legal & General has brushed off the effect of the Brexit vote, Tory leadership nominations close at noon, Mark Carney speaks at 4pm. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign u...

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Legal & General has brushed off the effect of the Brexit vote, Tory leadership nominations close at noon, Mark Carney speaks at 4pm. 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.

Consumer confidence has slumped since the Brexit vote, according to a YouGov/CEBR poll. This suggests optimism has dropped to its lowest level since May 2013. Retail spending is likely to ebb, hurting shopkeepers.

Mark Carney is giving a speech later today. It will be interesting to see whether he puts a brave face on the referendum result, having previously suggested a Brexit vote could trigger a recession. Bosses of quoted business who backed Remain may also have to reverse away from the alarmism that was the worst feature of that campaign.

Legal & General kept its nose out of the debate and says disruption to its retirement division was “minimal”. Bulk annuity sales by the business were £3.6bn in the first half, compared with £2.4bn in the whole of 2015. Lifetime mortgage sales exceeded individual annuity sales

3i has received a series of approaches for its stake in Benelux-based discount retailer Action. The quoted private equity group says it has no plans to sell its investment or float the business. However, the bid interest has emboldened it to increase the book value of the shareholding from £902m to £1.4bn.

Roadside assistance group AA, emblematic to critics of aggressive noughties private equity, is selling its Irish businesses to Carlyle for €156m. Profits before tax last year were €12m. Management is backing the deal.

Rio Tinto is closing the book on a cautionary tale for all miners. It is transferring a 54 per cent stake in Bougainville Copper, a red metal mine in Australasia, to an independent trustee, for distribution to rival local governments. Bougainville was a hugely valuable mine, but its development was hampered by arguments over ownership and eventually civil war.

FastFT reports John Wood Group, Britain’s biggest oil services company, expects a double digit increase in its dividend as it affirmed its outlook and earnings expectations for the upcoming year. The company, which provides equipment and services to oil production companies, said it expected its earnings before interest, tax and amortisation to be 20 per cent lower than reported in 2015 as it navigates a “challenging” global environment.

Debate is raging among City bosses of our acquaintance over whether to start transferring staff to continental branches and subsidiaries in small groups right away, to ensure continued pan-European passporting. Those that have tried to maintain dual sites in activities such as euro securities trading in the past say it doesn’t work.

The alternative is an all-or-nothing switch, which requires greater determination and heavier investment

The newspapers are stuffed with commentary on leadership contests in both main parties. Theresa May is the favourite to head the Conservative Party while Angela Eagle is challenging Jeremy Corbyn over at Labour HQ, perhaps as a stalking horse.

Remainers are keeping alive the hope of a second referendum via a general election. However, a former senior civil servant tells OQ that is unlikely. A hefty no-confidence vote against the government is required from the House of Commons to override the 5-year fixed parliamentary term now written into law.

Labour MPs would have little incentive to back the no-confidence motion, our ex-mandarin says, because their tally of seats would collapse even further in an election.

How do you make a Maltese cross? Tell him his country is peddling EU citizenship at €650,000 a pop.

However, the investment-based programme is singled out in an FT articleas one of the easiest ways to plant a foot in the single market if you aren’t fortunate enough to have an Irish granny.

Beyond the Square Mile

Sterling has fallen one-third of one per cent to $1.3385, despite being up as much as 0.3 per cent at the start of the Asian session. The yen is 0.2 per cent firmer against the dollar at ¥‎102.66, which comes despite the dollar index (the US currency against a basket of global peers) rising 0.1 per cent to 95.819.

Brexit and the EU. Europe’s leaders have dug in their heels over uncontrolled migration in the single market, in a blow to UK hopes to curb freedom of movement.

Stress test failure Deutsche Bank and Santander have again failed the Federal Reserve’s stress tests, as regulators rejected their proposed payouts to shareholders, even as US banks were given the go-ahead for dividends and share buybacks.

Oil prices slipped on Thursday after strong gains of more than 3 per cent after data from the US Energy Information Administration showed an unexpectedly large decline in US crude inventories last week. Brent crude, the international benchmark, was 1.2 per cent lower today at $50.02 a barrel, while West Texas Intermediate was 0.8 per cent weaker at $49.48.

US equities roared higher on Wednesday, marking the biggest two-day rally since mid-February, as concerns over the Brexit vote eased. Investors have embraced risk assets over the past two days, with the S&P 500 index soaring by 3.6 per cent over the period.

Intraday

At 9.30am, a final estimate of UK first-quarter GDP is expected to confirm growth at 0.4 per cent quarter-on-quarter, while the current account deficit is expected to narrow to £28bn from £32.7bn. Nominations for the Tory leadership contest close at noon, while Governor Mark Carney will be giving a speech, followed by a short question-and-answer session, from the Bank of England at 4pm. In the eurozone, at 0855 BST, German unemployment figures will be released, while eurozone June inflation figures will be announced at 1000.

In the US, at 1445 BST, the June Chicago PMI is expected to rise to 51.0 from a previous 49.3. Constellation Brands, ConAgra Foods and chipmaker Micron are due to report quarterly earnings.

Markets at 0801 BST

Asian markets
Nikkei 225 up +9.09 (+0.06%) at 15,576
Topix down -1.87 (-0.15%) at 1,246
Hang Seng up +317.71 (+1.55%) at 20,754

US markets
S&P 500 up +34.68 (+1.70%) at 2,071
DJIA up +284.96 (+1.64%) at 17,695
Nasdaq up +87.38 (+1.86%) at 4,779

European markets
Eurofirst 300 up +38.37 (+3.06%) at 1,291
FTSE100 up +219.67 (+3.58%) at 6,360
CAC 40 unchanged 0.00 (0.00%) at 4,195
Dax unchanged 0.00 (0.00%) at 9,612

Currencies
€/$ 1.11 (1.11)
$/¥ 102.52 (102.81)
£/$ 1.34 (1.34)
€/£ 0.8281 (0.8283)

Commodities ($)
Brent Crude (ICE) down -0.43 at 50.18
Light Crude (Nymex) down -0.39 at 49.49
100 Oz Gold (Comex) down -8.00 at 1,316
Copper (Comex) up +0.01 at 2.20

10-year government bond yields (%)
US 1.51%
UK 0.95%
Germany -0.11%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.25bps at 27.53bp
Markit iTraxx Europe -7.88bps at 85.75bp
Markit iTraxx Xover -18.22bps at 374.13bp
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.