10 things you need to know in markets today

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The government has appointed the former UK ambassador to Russia, Sir Tim Barrow, to replace Sir Ivan Rogers as the country’s EU ambassador who resigned unexpectedly on January 3.
The BBC and other news outlets confirmed with the Foreign Office that Barrow, a senior diplomat, will play a key role in the UK’s Brexit negotiations.

The FTSE 100 closed at a record high for the fifth session in a row on Wednesday, closing marginally higher despite a dreadful day for the retail sector. The FTSE 100 closed up 0.14%, or 10.21 points higher, at 7.188.10. It is the second record close this week and extends a winning run that began in the period between Christmas and New Year.

Theresa May will probably fail to keep Britain in the EU Single Market and lose the UK’s financial passport after Article 50 talks conclude in March 2019, according to Goldman Sachs analyst Andrew Benito. That is the bad news, the kind that might impose a “permanent cost” on the UK of 1.2% of GDP. The good news is that once Britain gets past what Benito calls its “phoney war” with the EU, Prime Minister May will probably be able to get a transitional agreement which will last until a new free trade agreement is made.

From commodities to Bitcoin, Chinese speculators are looking to escape the weakening yuan. Following an enormous rout in stocks in 2015, skyrocketing house prices in the nation’s largest cities and a lack of investment options elsewhere, Chinese speculators flocked to commodity futures markets in 2016, trading record volumes during the year. Mirroring the frenzy seen in commodity futures, there’s now evidence that Chinese speculators have now moved into the Bitcoin market, once again fuelled by concern over the potential for further yuan weakness.

Bitcoin is still going wild. Bitcoin is up 95% since the beginning of September, and it gained 123% in 2016, making it the top performing currency for the second year in a row. So far in 2017, the cryptocurrency has added a further 19% to its value, and is currently trading at $1,150 per bitcoin. Speculation from China — mentioned above — has been one of the big drivers of bitcoin’s surge.

Deutsche Bank has agreed to pay $95 million to resolve a U.S. government lawsuit. The suit accused the German bank of using shell companies to evade significant tax liabilities in 2000, according to court papers filed on Wednesday.

HSBC believes that the ‘euphoria’ surrounding the dollar will end once reality sets in during 2017. “We believe too much will be priced in to the currency market in terms of a successful reflation trade,” an HSBC team led by David Bloom wrote. “The USD rally will reverse as belief in Trump-flation turns to realisation that the scale of policy overhaul is relatively modest (‘Trump-lite’), and that the results are underwhelming as a consequence (‘Trump-failure’). We expect a retracement from mid-year to the end of the year.”

Credit Suisse said it has blocked an attempt by Jefferies Group LLC to lure a number of its senior bankers. Of the eight bankers that had agreed to take on new roles at Jefferies, five are remaining at the Swiss bank, according to Credit Suisse spokeswoman Nicole Sharp. This includes Jonathan Moneypenny, who had agreed to join Jefferies to co-head its global leveraged finance capital markets business, Reuters reported on Tuesday. Moneypenny has reversed his decision and will remain at the Swiss bank, Sharp said.

Venezuelan President Nicolas Maduro shuffled his cabinet on Wednesday. Maduro named a new economy czar to oversee the OPEC country’s decaying socialist system and a new oil minister to confront the economic difficulties caused by low oil prices. Economist Ramon Lobo, who has been serving as a legislator for the ruling Socialist Party, will assume the dual roles of finance minister and economy vice president – making him the country’s top economic authority.

Former Republican Senator Dan Coats of Indiana is the leading candidate to serve as U.S. President-elect Donald Trump’s director of national intelligence. NBC reported the news on Wednesday, citing sources familiar with the discussions. Coats met with Trump on Nov. 30 at Trump Tower in New York City.

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