Brexit worries have forced HSBC analysts to cut their rating on three low-cost airlines this morning.
HSBC downgraded easyJet, Ryanair and Wizz Air to “hold”, from “buy”.
It warned that demand for budget flights is “weakening across Europe” in the face of Brexit worries, and slowing global growth.
EasyJet yesterday surprised the City by warning the Brexit angst was pushing ticket price down, as passengers were reluctant to book flights in the current confusion.
Jim Reid of Deutsche Bank (DB) has flagged up the general election risk to clients today:
Attention will shift to today’s marathon cabinet meeting, scheduled for 9am to 12pm and then again from 1pm to 3pm. The morning session will be political officials only, no civil servants, meaning that PM May and her team are likely to consider the options including calling for a general election. That’s the base case from DB’s Oliver Harvey, though there is space in the parliamentary timetable for May to bring her WA for a fourth vote tomorrow if she wanted to.
Sterling had traded firmer through much of yesterday and was up around +0.52% when New York went home. After the votes, the currency dropped over half a percent and is trading slightly above those levels this morning.
UK business groups are extremely exasperated with parliament too.
Helen Dickinson OBE, chief executive of the British Retail Consortium, has warned that shoppers will pay the price if Britain crashed out of the EU in mid-April.
“Parliamentarians are playing a reckless game of chicken which will end in disaster unless enough MPs can be persuaded to back a clear outcome which avoids a chaotic no deal Brexit.
Unless the majority of MPs rally behind a plan of action that avoids no deal, it will be ordinary families who suffer higher prices and less choice on the shelves.”
Introduction: Pound weaker after latest Brexit deadlock
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Anxiety over Brexit is mounting in the City today, and across UK businesses, after parliament again failed to find a way out of the morass.
The pound took a dive last night, when investors heard that MPs had rejected several softer Brexit options, including a customs union and a confirmatory second referendum.
Sterling swiftly shed almost a cent, on fears that Britain could yet crash out of the EU without a deal in 10 days’ time.
It’s currently bobbing around the $1.304 mark, still above last Friday’s two-week low, but likely to remain volatile today.
With Theresa May’s deal still struggling for support, and the threat of an election looming, investors are understandably wary of sterling.
The City will be watching Westminster closely again today, as ministers gather for a bumper-size cabinet meeting to plot the way ahead.
Adam Cole of Royal Bank of Canada says investors should prepare for a fourth vote on May’s withdrawal agreement (although there’s little sign that many MPs have changed their minds).
In last night’s second round of indicative votes, the Commons again rejected the four proposals that were put to it, though generally by smaller margins (customs union by three votes compared to eight and second referendum by 12 votes compared to 27, but with only 15 Tory supporters).
Tory Boles (sponsor of the CM2.0 proposal) resigned from the party after the vote. Where now? Reports suggest May has scheduled five to six hours of cabinet meetings for today to discuss all options, including ending the deadlock with a general election. There is a still a widespread expectation she will make a final attempt to get her deal through with small amendments and we may get some clarification of the timing of that today. Parliament is scheduled to devote time to discussing the alternatives again tomorrow.
Also coming up today
Data firm Markit will release its latest survey of UK construction today. It’s expected to show that building activity shrank a little in March.
Davi Madden of CMC Markets says the construction PMI will probably fall below the 50-point mark showing stagnation.
The UK construction PMI report will be announced at 9.30am (UK time) and dealers are anticipating a reading of 49.8, and that would be a slight improvement on the 49.5 reading in February.
Yesterday we learned that factories were busy stockpiling for Brexit (so surely they’ll need some new warehouses to put the stuff?).
Christine Lagarde, the head of the International Monetary Fund, is giving a speech on the global economy. It’s titled “Three Priority Areas for Action”.
- 9.30am BST: UK construction PMI report for March
- 1.30pm BST: US durable goods orders for February
- 2.30pm BST: IMF chief Christine Lagarde speaks in Washington