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FT Opening Quote

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They think it’s all over, but maybe not yet. Despite Brexit and England’s exit from the Euros, Redrow and Rolls-Royce are upbeat this morning and the pound has steadied. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early...

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They think it’s all over, but maybe not yet. Despite Brexit and England’s exit from the Euros, Redrow and Rolls-Royce are upbeat this morning and the pound has steadied. 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.

Hodgson

England is out of Europe thanks to a flaxen-haired force of nature. Well, that was the football, with Icelandic goal-scorer Kolbeinn Sigthorssonsealing the fate of Roy Hodgson’s side in Nice last night.

As for Brexit, a couple of big listed companies are this morning telling investors to calm down, dear.

Redrow, whose shares have been battered alongside those of other housebuilders, says the “chronic shortage of housing leaves market fundamentals unchanged”. The company reports there were long queues at sites launched last weekend. Full year pre-tax profits are now expected to beat analysts’ estimates of £240m. Rolls-Royce says the Brexit vote will have no immediate impact on its day-to-day business, with the longer-term picture taking years to emerge.

Perhaps the banks should make statements of their own? Barclays fell 17.3 per cent and RBS dropped 15 per cent on Monday. The sell-off looks overdone, given the hefty capital buffers banks are now required to maintain.

The pound stabilised in early trading at $1.3291, 1.3 per cent higher than its low on Monday. Japanese stocks made a modest recovery, while Hong Kong shares eased further.

David Cameron is on his way to an EU summit and dinner. Lame duck will be on the menu.

The UK may have no effective leadership, but at least Legal & General has a new chairman in the form of John Kingman. The smart and occasionally acerbic civil servant was second permanent secretary of the Treasury and also did a stint at NM Rothschild.

A few years ago he worked on the FT’s Lex column. Mr Kingman never had a chance to write for OQ, which is surely one of his lasting regrets.

Online grocer Ocado has announced a 15 per cent increase in half-year revenue to £584m and a £1.3m increase in profits before tax to £8.5m. Boss Tim Steiner says talks on selling grocering systems to potential international partners are continuing. That has been a persistent refrain. Ocado needs to ink a deal soon.

FastFT reports challenger bank Shawbrook has reported a £9m “impairment charge” in the second quarter after it reported “irregularities” in a part of its asset finance business, which will hit its pre-tax profits. Old Mutual, the South Africa-focused but London-listed financial services group, said it will consider a new remuneration policy for directors and adopt a new long-term incentive plan. Car auction site BCA Marketplace,which calls itself the Amazon of used cars, has announced revenues of £1.2bn in its maiden results since floating on the stock exchange last year. Carpetright has experienced a challenging start to its new financial year and has raised concerns about a possible knock to consumer confidence from the uncertainty that has resulted following last week’s Brexit referendum.

Eurosceptics are banging the drum for a second referendum this morning, to the fury, doubtless, of Leave voters. A re-run of the poll would look anti-democratic. More likely, a general election next year could become a proxy for it, through a re-casting of the parties.

That would suit a lot of City businesses, which are currently struggling to work out how best to ensure they can provide a pan-European service. The surest way is to start moving capacity to the continent straight away.

The parallels between the Brexit vote and England’s ejection from Euro 2016 have not been lost on sports writers. The similarities are more limited than they imagine. But that hasn’t stopped Remain fans feeling sick as a parrot at blonde bombshell Boris putting one in the back of the net for Team Brexit. Sorry. Couldn’t resist.

Beyond the Square Mile

Here’s a Brexit update from fastFT in Hong Kong on the markets’ state of play:

Sterling – At $1.3305, the pound has gained 0.6 per cent from its levels in late US trade, and sits comfortably off Monday’s $1.3121 31-year low. Most analysts are however predicting more weakness in the coming months with forecasts of $1.25 and even $1.10 common.

Gold – down 0.8 per cent from the New York close, at $1,316.25 an ounce and moving further away from Friday’s two-year high at $1,337.8.

Oil – Brent crude is up 2.2 per cent at $47.74. That leaves it still far short of the eight-month high at $52.51 reached early in June, but off its $46.72 low during Monday’s selling.

Asian stocks – started lower, but tried to make a comeback – unless there were strong UK links. The likes of CK Hutchison and CYBG continued their slide, but by early afternoon, Tokyo’s Topix was up 0.3 per cent. Hong Kong’s Hang Seng, replete with UK-linked names, was 0.9 per cent lower.

Yen - Has been all over the place today. Stronger in the early morning, then weaker. Now it’s flat at ¥‎102 per dollar. Hit a high of ¥‎99.02 on Friday.

In the US, Volkswagen has agreed to a $14.7bn US package affecting nearly half a million rigged cars and to help fund zero-emissions technology in the country, according to two people familiar with the matter. The agreement is to be officially announced on Tuesday morning in California

Wall Street logged its biggest 2-day loss since last August as the fallout from Brexit continued to send investors scurrying for haven assets. The S&P 500 closed 1.5 per cent lower, putting it at its weakest level since March.

Intraday

Prime Minister David Cameron today heads to Brussels to attend a meeting of EU leaders perplexed at the Brexit vote, while, at home, Labour leader Jeremy Corbyn is facing a no-confidence vote in his leadership, with a secret ballot of Labour’s 232 MPs. ECB President Mario Draghi is expected to address Brexit when he speaks in Sintra, Portugal at 0900 BST.

At 11am, the CBI’s Distributive Trades Survey is expected to show reasonable but unspectacular retail sales growth in June, according to IHS analysts. Specifically, they expect the CBI to report that the balance of retailers reporting a year-on-year increase in sales to have edged back to +5 in June after recovering to +7 per cent in May from -13 per cent in April.

In the US, at 1330 BST, the third report on Q1 real GDP is expected to show a small upward revision to a 1.0 per cent quarter-on-quarter annualised growth rate from a previous report of +0.8 per cent. At 1400 BST, the April S&P/Case-Shiller home price indices are expected to show 5.5 per cent growth year-on-year, while at 1500 BST, the June Conference Board consumer confidence index is predicted to rise 1 point from a previous reading of 99.6. Athletic wear maker Nike and cruise company Carnival report quarterly results.

Markets at 0751 BST

Asian markets
Nikkei 225 up +13.93 (+0.09%) at 15,323
Topix down -1.14 (-0.09%) at 1,225
Hang Seng down -126.61 (-0.63%) at 20,101

US markets
S&P 500 down -36.87 (-1.81%) at 2,001
DJIA down -260.51 (-1.50%) at 17,140
Nasdaq down -113.54 (-2.41%) at 4,594

European markets
Eurofirst 300 down -46.35 (-3.65%) at 1,223
FTSE100 down -156.49 (-2.55%) at 5,982
CAC 40 unchanged 0.00 (0.00%) at 3,985
Dax unchanged 0.00 (0.00%) at 9,269

Currencies
€/$ 1.11 (1.10)
$/¥ 101.87 (101.99)
£/$ 1.33 (1.32)
€/£ 0.8314 (0.833)

Commodities ($)
Brent Crude (ICE) up +0.59 at 47.75
Light Crude (Nymex) up +0.78 at 47.11
100 Oz Gold (Comex) unchanged 0.00 at 1,323
Copper (Comex) unchanged 0.00 at 2.13

10-year government bond yields (%)
US 1.46%
UK 0.93%
Germany -0.10%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.49bps at 27.78bp
Markit iTraxx Europe +3.99bps at 98.81bp
Markit iTraxx Xover +19.78bps at 418.88bp
Markit CDX IG +4.12bps at 91.05bp

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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