Friday , April 28 2017
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FT Opening Quote

Summary:
Tesco sales are gaining momentum, the pound has hit a high for the year as voting begins in the UK’s EU referendum. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full ne...

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Tesco sales are gaining momentum, the pound has hit a high for the year as voting begins in the UK’s EU referendum. 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.

The moment of truth will come on Friday morning – a verdict with big implications for business that could change the lives of millions (roll of drums). Yes, tomorrow the Competition and Markets Authority will decide whether to set up a database of “disengaged customers” who can’t be bothered to switch energy supplier.

That aside, there’s the small matter of the Brexit vote. Sterling hit a year high of $1.4844 in Asia earlier this morning in response to a couple of polls. Analysts believe risks are clustered on the downside, with sterling and stocks forecast to fall 10-20 per cent following a Leave victory.

A gloomy outlook is supported by the comments of Standard & Poor’s chief sovereign ratings officer Moritz Kraemer in the German daily Bild. He said the UK could swiftly lose its AAA credit rating if Britons decide to quit the UK.

The verdict will show whether we are a “nation of xenophobes or cowards”, according to one FT colleague. That’s a cynical view, but not a bad characterisation of the Leave and Remain campaigns.

Tonight will be a night of coffee and pizza for many Forex and rates traders. Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley are among banks that have asked some staff to pull all-nighters.

Bloomberg reports that while US banks have booked hotel rooms for employees, rather tragically, Barclays has asked traders to bring in sleeping bags.

The fate of great nations somewhat overshadows the financial performance of retailers this morning. But Tesco has nevertheless reported group like-for-like sales growth of 0.9 per cent for the first quarter. The company, which chief executive Dave “Drastic” Lewis is trying to turn round, describes this as “continued positive momentum”.

In a press call this morning, Mr Lewis said Tesco’s new Farm Brands range had sold well. The group is selling off vanity acquisitions made by Philip Clarke, such as the Harris & Hoole café chain and Giraffe, a restaurants group.

Packaging group DS Smith has announced a 3 per cent improvement in annual profits to £201m, fattened to a 15 per cent jump to £332m after exceptionals and the like stripped out. Energetic chief executive Miles Roberts says the company has been helped by demand for packets to enclose goods ordered online.

Scottish engineer Weir Group is selling two renewables groups for £34.4m as part of a debt reduction plan. Struggling defence group Cobham has won an order for aircraft communications valued at $200m or more.

We will see you again the other side of the referendum. Have a good day and pleasant evening, even if you expect to spend part of the latter in a sleeping bag on the floor at Barclays.

Beyond the Square Mile

Asian markets were treading cautiously ahead of the UK’s referendum today on whether to stay in the European Union, but opinion polls helped push the British pound to its highest level of 2016.

US stocks slipped ahead of the Brexit vote, with the S&P 500 falling 0.17 per cent to 2,085.44. Meanwhile, the US announced it would hike duties on Chinese steel to over 500 per cent and Fed chair Janet Yellen warned that America’s prospects for higher wage growth may be hampered by the country’s poor productivity.

Intraday

One event dominates the day. Polls are finally open for the referendum on whether Britain leaves the EU or remains. They close at 10pm, when a YouGov exit poll is expected. Results will come in throughout the night from the different districts, with most due in by 4am on Friday, although they could be later if there has been a big turnout. Here’s our guide to the night’s events.

Manufacturing and services purchasing managers’ indices (PMIs) for France, Germany and the eurozone are out between 8am and 9am BST.

Markets at 0755 BST

Asian markets
Nikkei 225 up +172.63 (+1.07%) at 16,238
Topix up +14.10 (+1.10%) at 1,299
Hang Seng up +68.27 (+0.33%) at 20,863

US markets
S&P 500 down -3.45 (-0.17%) at 2,085
DJIA down -48.90 (-0.27%) at 17,781
Nasdaq down -10.44 (-0.22%) at 4,833

European markets
Eurofirst 300 up +6.29 (+0.47%) at 1,342
FTSE100 up +34.64 (+0.56%) at 6,261
CAC 40 unchanged 0.00 (0.00%) at 4,380
Dax unchanged 0.00 (0.00%) at 10,071

Currencies
€/$ 1.13 (1.13)
$/¥ 104.30 (104.39)
£/$ 1.48 (1.47)
€/£ 0.7684 (0.7677)

Commodities ($)
Brent Crude (ICE) up +0.02 at 49.90
Light Crude (Nymex) unchanged 0.00 at 49.13
100 Oz Gold (Comex) down -5.30 at 1,263
Copper (Comex) down 0.00 at 2.13

10-year government bond yields (%)
US 1.70%
UK 1.32%
Germany 0.06%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.2bps at 29.04bp
Markit iTraxx Europe -1.3bps at 77.48bp
Markit iTraxx Xover -3.4bps at 337.47bp
Markit CDX IG +0.46bps at 78.94bp

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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