Good morning! Here’s what you need to know in markets on Wednesday.
Britain’s exit from the European Union could stoke a £40 billion ($51 billion) loss in revenue for financial firms in the UK, Bloomberg News reported, citing an industry report to be released Wednesday. Oliver Wyman, which prepared the report on behalf of TheCityUK lobby group, said almost 70,000 jobs and £10 billion of tax revenue are on the line from Brexit, according to Bloomberg’s Gavin Finch and Richard Partington.
The pound hit a new 31-year low against the dollar overnight. Sterling fell as low as $1.2721 against the dollar, but is up 0.09% to $1.2736 at the time of writing (6.30 a.m. BST/1.30 a.m. ET). The pound is down 0.04% against the euro to €1.1355, its lowest level in 5 years.
Google’s biggest product launch wrapped up Tuesday and a slew of new gadgets are coming soon from the search giant. The company announced its first ever smartphone, a voice-controlled home speaker system, a virtual reality headset, and a new Chromecast.
It’s PMI day in Europe. September figures for growth of the service sectors and overall economy of Spain, Italy, France, Germany, Britain, and the European Union as a whole will be released from 8.15 a.m. BST (3.15 a.m. ET) onwards. Economists expect the IHS Markit figures to show a sharp slowdown in growth for Britain’s service sector.
Gold tumbled below $1,300 (£1,020.97) overnight on Tuesday on signs the ECB could be about to taper.The shiny metal fell by 3.1% after Bloomberg reported that the European Central Bank will “probably gradually wind down bond purchases before the conclusion of quantitative easing, and may do so in steps of €10 billion (£8.8 billion, $11.2 billion) a month, according to euro-zone central-bank officials.”
Michael Saunders, the most recent appointee to the Bank of England’s interest rate setting committee, is to warn that the Bank’s forecasts of weak growth next year are likely to be wrong and the economy could recover strongly from the dip after the Brexit vote. The Guardian reports that Saunders will tell business leaders in Manchester on Wednesday that the economy was more resilient than many economists believed, including officials at the bank, and may grow at an accelerated pace in 2017.
Asian stock markets are up despite a weak finish for the US. Japan’s Nikkei is up 0.49% and the Hong Kong Hang Seng is up 0.41% at the time of writing (6.25 a.m. BST/1.25 a.m. ET). China’s benchmark Shanghai Composite is closed. Markets in the US dipped overnight. CMC Market’s chief market analyst Michael Hewson is calling the FTSE 100 to open 12 points lower at 7,062.
Here’s JPMorgan’s comprehensive guide to markets heading into the final quarter of the year. Third-quarter earnings season will unofficially start next week, and it is expected to mark the sixth straight quarter that the largest public companies report a decline in profits, according to FactSet.
Salesforce CEO Marc Benioff sees Twitter, which is said to be up for grabs as an acquisition target, as an “unpolished jewel,” reports the Wall Street Journal, citing anonymous sources. Since reports first emerged that Twitter might be looking for a buyer, Salesforce’s name has kept coming up as a potential acquirer.
Tokyo-based brewer Asahi plans to offer more than 500 billion yen (£3.82 billion, $4.87 billion) for SABMiller beer business in five Eastern European countries, the Nikkei business daily said. Reuters reports that SABMiller’s business in the Czech Republic, Poland, Hungary, Slovakia, and Romania will be opened up to bidding after Anheuser-Busch InBev acquires the company next week, the Nikkei said.
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