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FT Opening Quote

Summary:
George Osborne has said he is staying on as chancellor and has put off plans for an emergency budget. 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.

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George Osborne has said he is staying on as chancellor and has put off plans for an emergency budget. 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.

George Osborne is clinging on as chancellor. In a speech intended to reassure the markets which ended around 7.20am, he was tucking in behind the pro-Brexit vote, saying his duty was to stick around and assist with negotiations on the UK’s departure from the EU.

The chancellor said he had spent the last 72 hours talking to the bosses of big financial institutions and figures such as the US Treasury Secretary and the governor of the Bank of England. His conclusion is that the UK can deal with any shocks. There is “a robust contingency plan”, he said, with the Bank ready to pump up to £250bn into the banking system if needed.

Ozzy stepped back from the swingeing emergency budget he promised during the referendum campaign, with the elegance of a toreador dodging a charging bull. A budget depends on the selection of a new prime minister, he implied. We do not of course know whether the politician formerly known as Gideon would deliver it.

Political journalists are talking up the possibility Mr Osborne may throw in his lot with Boris Johnson if the peroxide opportunist emerges as Tory leader, perhaps as foreign secretary. His chances of claiming the top job himself are now low.

Aviva has reacted to market volatility following the Brexit vote with astatement of its own to reassure investors. The insurer says, as of the Friday close, its Solvency II coverage ratio is close to the top of its working range of 150-180 per cent. That implied a surplus of £9.7bn as of March this year.

EasyJet has warned that economic and consumer uncertainty in the wake of the Brexit vote means revenue per seat at constant currency in the second half will be down by mid-single digits. Moves in fuel and exchange rates will add £25m in extra costs over guidance.

FastFT reports Foxtons has issued a profit warning, with the London-focused estate agent citing uncertainty caused by the EU referendum, a state it says will be prolonged given the Leave vote last Thursday.

Sir Richard Branson has called on parliament to consider calling asecond Brexit referendum. He claims the Leave camp misrepresented the consequences of a vote for the UK to quit the EU. The founder of Virgin is also urging Britons to sign a petition that has attracted 3.6m supporters.

Sir Richard is a respected entrepreneur. But his views would carry more weight if he was resident in the UK, rather than on his private island in the British Virgin Isles.

Lord Hill has told the FT that the City should brace itself for an era when Franco-German interests will determine the financial rule book for the EU. The European Commissioner for financial services, who had been working on a plan for capital markets union, resigned at the weekend.

His brief has been taken over by Valdis Dombrovskis, the Commission vice president responsible for the euro. That increases the likelihood that trading in euro-denominated securities will need to be cleared through a eurozone-based clearing house.

Finally, international gold company Nord Gold, has completed therelocation of its domicile from the Netherlands to the UK. As investment stalls, it is good to see someone has faith in the country as a business location.

Beyond the Square Mile

Sterling sank a further 2 per cent to $1.3395 in early morning European trading as investors continued to digest the fallout from the UK’s decision to leave the EU and sought haven assets such as government bonds and gold.

The Japanese yen is sitting 0.6 per cent stronger at ¥‎101.59, and despite the stronger currency, Japan’s Topix is up 1.2 per cent. Hong Kong’s Hang Seng is trading 0.7 per cent higher and Australia’s S&P/ASX 200 is up 0.6 per cent.

Oil prices are under a bit of pressure. Brent crude, the international marker, is down 0.3 per cent at $48.28 a barrel after falling 4.9 per cent on Friday.

Gold is up 0.8 per cent this morning at a two-year high of $1,326.80 an ounce.

Intraday

The House of Commons reconvenes today after its recess, with the prime minister David Cameron due to make a speech on Brexit, as Labour’s shadow cabinet is in revolt against its leader Jeremy Corbyn. The German Chancellor Angela Merkel will host Donald Tusk, European Council president, in Berlin to talk about Brexit, and will later meet France’s François Hollande and Italy’s Matteo Renzi. The German leader has already pushed back against EU pressure to rush Britain’s departure

Markets at 0802 BST

Asian markets
Nikkei 225 up +357.19 (+2.39%) at 15,309
Topix up +21.28 (+1.77%) at 1,226
Hang Seng down -63.69 (-0.31%) at 20,195

US markets
S&P 500 down -75.91 (-3.59%) at 2,037
DJIA down -610.32 (-3.39%) at 17,401
Nasdaq down -202.06 (-4.12%) at 4,708

European markets
Eurofirst 300 down -90.41 (-6.65%) at 1,270
FTSE100 down -199.41 (-3.15%) at 6,139
CAC 40 unchanged 0.00 (0.00%) at 4,107
Dax unchanged 0.00 (0.00%) at 9,557

Currencies
€/$ 1.10 (1.11)
$/¥ 101.88 (102.19)
£/$ 1.34 (1.37)
€/£ 0.8219 (0.8155)

Commodities ($)
Brent Crude (ICE) up +0.32 at 48.73
Light Crude (Nymex) up +0.24 at 47.88
100 Oz Gold (Comex) up +10.00 at 1,330
Copper (Comex) unchanged 0.00 at 2.11

10-year government bond yields (%)
US 1.50%
UK 1.09%
Germany -0.08%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.14bps at 28.27bp
Markit iTraxx Europe +19.76bps at 94.82bp
Markit iTraxx Xover +77.95bps at 399.1bp
Markit CDX IG +10.65bps at 86.93bp

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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