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FT Opening Quote

Hungarians have been having a say on sterling and the UK’s EU referendum, Whitbread sales have been given a Costa coffee boost. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for...

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Hungarians have been having a say on sterling and the UK’s EU referendum, Whitbread sales have been given a Costa coffee boost. 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.

How much weight should the views of Hungarians have in the Brexit debate? Quite a lot, when one of them is George Soros, the Budapest-born, US-based investor. He helped drive the pound out of the European Exchange Rate Mechanism in 1992 and believes sterling could drop 15- 20 per cent if Britons vote to leave the EU.SorosOne hesitates to contradict the famous investor, who has written a piece for The Guardian. But 15-20 per cent seems like a surprisingly large correction. Sterling floats freely and markets are making an allowance for the possibility of a pro-Brexit vote, which is reflected in opinion polls split down the middle.

Countries participating in the ERM were required to keep their currencies trading within narrow relative bands through market interventions and rate-setting. This made sterling more susceptible to a steep fall back then – 15 per cent against the Deutschmark in the weeks following Black Friday, when the Treasury gave up trying to defend it.

The other notable Hungarian is prime minister Viktor Orban, who took out a full-page advert in the Daily Mail. He urged readers to vote Remain. Purchasers of that highly insular tabloid can confidently be expected to do exactly the opposite to what any foreigner with a funny-sounding name tells them to.

There is a cluster of trading statements this morning. Whitbread, under no-nonsense boss Alison Brittain, produced sales growth of 8 per cent in the first quarter. The Premier Inn hotel subsidiary struck the same number, while café chain Costa lifted revenues 11.5 per cent. Shares have languished since Ms Brittain took over from Andy Harrison, due to doubts on growth prospects.

Oil services group Petrofac has reaffirmed profits guidance for 2016 and says net debt will rise to $1.1bn reflecting capital expenditure and dividend payments. Oldie-bothering travel and insurance group Saga also says it is on track in the current financial year.

Just Eat, the fast-growing fast food group, has appointed Paul Harrison to replace Mike Wroe as chief financial officer in September. He joins from tech group WANdisco. He may be secretly relieved to escape jargon about Hadoop programming and a weak share price.

Struggling defence group Chemring has announced a £16.8m lossbefore tax in the first half, a £1.7m increase. The company says full year underlying operating profits will now be below a consensus forecast of £48.7m.

More cheerfully, Petra Diamonds has recovered a 121-carat diamond from the famous Cullinan mine in South Africa.

FastFT reports Anglo American Platinum says its earnings for the six months ending in June will be “at least 20 per cent lower” than the same period last year. European vodka maker Stock Spirits has announced aspecial dividend of 10p a share after the group, which has been trying to overcome problems in its core Polish market at the same time as fighting a governance battle against one of its biggest shareholders, has determined that it is not likely to use its excess cash to buy any other companies this year.

In or out of the EU, you can bet the trains still won’t run on time. Readers have our sympathies if they are struggling to work this morning in the face of a strike on the execrable Southern rail service, operated by Go-Ahead subsidiary Govia.

Beyond the Square Mile

Axa’s incoming chief executive has promised a combination of growth and digital transformation for the French insurer. Laying out his plans for the next five years, Thomas Buberl said that he expected annual earnings to grow by between 3 per cent and 7 per cent. That is below the growth rate the company promised in its last plan.

Asian markets were still basking in a sharp improvement in sentimentahead of the UK’s European Union referendum on Thursday. Japan’s broad Topix was up 0.4 per cent while the Nikkei 225 gained 0.5 per cent. Australia’s S&P/ASX 200 was 0.3 per cent higher and Hong Kong’s Hang Seng was up 0.5 per cent.

In the US, the S&P 500 rose 0.58 per cent to 2,083.25, managing itsbiggest one-day advance in nearly a month. Meanwhile, Walmart sold its China business in exchange for a 5 per cent stake in, a smaller rival to Alibaba.

Brazil’s Oi files record bankruptcy protection request Brazilian telecommunications operator Oi filed the country’s biggest bankruptcy protection request on Monday, weighed down by R$65.4bn (US$19.2bn) of debt and a slumping economy. Its failure comes as corporate Brazil is struggling with what is expected to be the nation’s worst recession in more than a century, with heavily-indebted companies coming under increasing pressure.

IntradayThe latest data on UK public sector net borrowing, net debt and the cash requirement are at 9.30am, with borrowing excluding banks expected to be £9.4bn in May, compared to £7.2bn in April. At 11am, the CBI Industrial Trends survey is expected to show the total orders balance easing back to -10 per cent in June, after rising to a five-month high of -8 per cent in May. In the eurozone, ZEW economic sentiment figures are out at 1000 BST and the central bank’s president Mario Draghi addresses the European Parliament at 1400 BST. Before that, at 0900 BST, Germany’s highest court will make a landmark judgment on one of the European Central Bank’s most important — and most controversial — weapons to fight financial crises. The German Constitutional Court decision on the legality of the ECB’s Outright Monetary Transactions programme has been four years in the making.

In the US, the Fed Chair Janet Yellen delivers her semi-annual testimony on the economy and monetary policy to the Senate Banking Committee at 1500 BST. Adobe Systems and FedEx report quarterly earnings after the market close.

Markets at 0801 BST

Asian markets
Nikkei 225 up +203.81 (+1.28%) at 16,169
Topix up +14.71 (+1.15%) at 1,294
Hang Seng up +123.42 (+0.60%) at 20,634

US markets
S&P 500 up +12.03 (+0.58%) at 2,083
DJIA up +129.71 (+0.73%) at 17,805
Nasdaq unchanged 0.00 (0.00%) at 4,837

European markets
Eurofirst 300 up +46.91 (+3.66%) at 1,327
FTSE100 up +182.91 (+3.04%) at 6,204
CAC 40 unchanged 0.00 (0.00%) at 4,341
Dax unchanged 0.00 (0.00%) at 9,962

€/$ 1.13 (1.13)
$/¥ 104.37 (103.92)
£/$ 1.47 (1.47)
€/£ 0.7708 (0.7692)

Commodities ($)
Brent Crude (ICE) down -0.52 at 50.13
Light Crude (Nymex) down -0.44 at 48.93
100 Oz Gold (Comex) down -5.40 at 1,285
Copper (Comex) down -0.01 at 2.08

10-year government bond yields (%)
US 1.66%
UK 1.26%
Germany 0.06%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.79bps at 29.64bp
Markit iTraxx Europe -7.07bps at 77.93bp
Markit iTraxx Xover -29.97bps at 339.29bp
Markit CDX IG -2.57bps at 80.21bp

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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