Good morning! Here’s what you need to know in markets on Tuesday.
1. Chancellor Angela Merkel believes firmly in strong German-US relations and is simply being honest with the United States when she flags up policy differences with Washington, her spokesman said on Monday. Merkel sent shockwaves through Washington and London by saying on Sunday that Europe must take its fate into its own hands, implying that the United States under President Donald Trump and Britain after its Brexit vote were no longer reliable partners.
2. The euro came under pressure on Tuesday after a media report that Greece may forego its next bailout payment if creditors cannot strike a debt relief deal. The euro is down 0.33% against the dollar to $US1.1129 at the time of writing (6.35 a.m. BST/1.35 a.m. ET) and down 0.14% against the pound to £0.8684.
3. Ryanair reported record annual profit on Tuesday despite sharp falls in average fares due to overcapacity and Britain’s vote to leave the European Union. Europe’s largest carrier by passenger numbers, Ryanair said it earned a net profit of €1.316 billion (£1.14 billion), Reuters reports.
4. British Airways expects to run a full flight schedule at London’s Heathrow on Tuesday, the airport said on Monday, after a worldwide computer system failure at the airline stranded 75,000 passengers over a holiday weekend. Shares in BA’s parent group International Consolidated Airline Group closed down 2.7% in Madrid on Monday and its London-listed shares may well see a similar fall when markets open after the long weekend today. The Guardian reports that the airline’s compensation bill for passengers may be as much as £100 million.
5. Royal Bank of Scotland looks set to avoid an embarrassing 14-week High Court trial over the lender’s crisis-era £12 billion cash call after the bulk of the investors behind the lawsuit indicated they will accept a £200 million settlement. The Telegraph reports that the action group that has been marshalling 9,000 retail shareholders and about 20 institutional investors through the legal challenge has told its members that it has decided it “is in the best interests of all claimants” to agree to an 82p per share deal made by the lender.
6. Asian markets are quiet on Tuesday, following holidays in the US and UK. Japan’s Nikkei is up 0.03% at the time of writing (6.25 a.m. BST/1.25 a.m. ET), after falling in earlier trade due to a strong yen, which hurts exporters. Both the Hong Kong Hang Seng and China’s Shanghai Composite are closed for a holiday.
7. Dulux paint owner Akzo Nobel has scored a court victory in its battle to fight off an unwanted takeover offer from US rival PPG Industries. The BBC reports that a Dutch court rejected attempts by a group of shareholders to force a special shareholder meeting aimed at ousting the company’s chairman.
8. The supercharged London housing market is slowing down. According to data from Hometrack UK, the annual rate of house price growth in London declined from 13% a year ago to just 3.5% last month, the lowest growth rate since 2012.
9. Brad McMillan, chief investment officer of Commonwealth Financial Network, which oversees $US114 billion (£88.9 billion), is positive about stocks in the short-term but sees a reckoning on the horizon that will strike within the next two years. In an interview with Business Insider, McMillan spoke about his bear market call, valuations, investor complacency and President Donald Trump’s lessening impact.
10. One of the eurozone’s top central bankers has stepped up the campaign to claim the City’s lucrative euro-clearing business by declaring that it is impossible for it to remain in London. The Times reports that François Villeroy de Galhau, a member of the European Central Bank’s governing board and head of France’s financial regulator, made the statement as the European Commission worked on proposals intended to force euro-denominated derivatives to be cleared in the eurozone.
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