Brexit buffer
Amid the confusion surrounding the date MPs will vote on the prime minister’s Brexit deal at the time of writing, there looked to be some certainty for the City of London’s derivatives clearing houses. A draft agreement from Brussels will grant European derivatives traders temporary access to London’s clearing houses for 12 months in the event of a no-deal Brexit. A no-deal exit would put around £45 trillion of swap positions at risk, according to the Bank of England. Without equivalence rights, EU banks and brokers would not be able to use UK venues to trade derivatives.
Regulator challenged
Timetable disputed
Sainsbury’s (SBRY) and Asda announced plans to challenge the Competition and Markets Authority (CMA) over its probe into the two companies’ proposed merger. Both are seeking a judicial review, because they believe they haven’t been given sufficient time to present their case for the tie-up to regulators. The CMA wants the current in-depth stage of the investigation to complete by the beginning of March, but neither company sees this as an adequate timetable. Shares in Sainsbury’s dipped 5 per cent on the day it announced the challenge.
Opec cuts
Rising US shale
The Organization of the Petroleum Exporting Countries (Opec) forecast a reduction in demand for its crude oil in 2019 at 31.4m barrels a day (bpd), 100,000 bpd less than predicted last month and 2.1m bpd lower than 2017. The cartel and its allies agreed earlier this month to return to supply cuts next year amid concerns over a reduction in oil prices and rising supplies, notably in US shale. That was against the wishes of President Trump, who had called on Opec to maintain supply levels to compensate for losses from Iran after the reimposition of sanctions.
Truce off
Huawei arrest
Any improvement in China-US relations suffered a further setback after Huawei chief financial officer Meng Wanzhou was charged in New York with misleading banks about the Chinese telecoms giant’s connections with a company suspected of breaching sanctions over exports to Iran. Ms Wanzhou was arrested – and later bailed – while switching planes in Canada, less than two weeks after the Chinese and US leaders had raised hopes of an end to the trade dispute. Unsurprisingly, news of the arrest pushed global stock markets downwards.
Rolls confident
Defying engine problems
Rolls-Royce (RR.) issued a bullish outlook for the full year, with profits and cash flow expected to sit towards the upper end of the engine manufacturer’s target range. The group’s restructuring programme remains on track, with plans to cut headcount by 4,600 during the next two years, while management continues to tackle performance issues with some of its Trent 1000 engines, which power Boeing’s 787. The FTSE said remedial work – expected to cost around £1bn – was progressing well, but admitted that the number of aircraft on the ground remained at a high level.
Risers and fallers (%)
| THOMAS COOK GROUP | +11.36 |
| JUST GROUP | +11.2 |
| STOCK SPIRITS GROUP | +9.38 |
| CIRCASSIA PHARMS. | +7.14 |
| RANDGOLD RESOURCES | +7.04 |
| INTERSERVE | -43.07 |
| MCCOLL'S RETAIL GP. | -20.52 |
| SUPERDRY | -20.4 |
| CLIPPER LOGISTICS | -20.13 |
| PHOTO-ME INTL. | -19.79 |
Week to 11 December 2018
Hooked on litigation
Injunction success
Indivior’s (INDV) patent saga continued after the opioid addiction specialist revealed it would petition for a re-hearing of its litigation battle against a generic launch of its main product, Suboxone. A ruling by a US appeals court last month allowed Indian firm Dr Reddy’s Laboratories to sell its copy of the drug, and sent Indivior shares crashing. Indivior has won an injunction on the launch until its petition for a potential re-hearing is admitted. The petition is expected to be filed on 20 December 2018.
Weak appetite
Food sales dip
If weak high-street sales were a result of low consumer confidence, it appears this concern has trickled over into the grocery sector too. According to industry tracker Kantar Worldpanel, the UK grocery market grew by 2 per cent over the 12 weeks ended 2 December – the slowest rate since March 2017 – suggesting that the recent Black Friday promotional event had little effect on food retailers. Aldi maintained its position as the fastest-growing supermarket and saw its market share rise by 0.7 percentage points, while Lidl’s market share also jumped 0.5 percentage points to 5.6 per cent. Sales at both Tesco and Sainsbury’s fell, down 0.1 per cent and 0.2 per cent respectively.
