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FTSE 100 opens slightly higher, ahead of Westminster votes

European markets have got off to a modestly positive start this morning with most investors attention on Westminster and an alphabet soup of parliamentary motions that could shape the future direction of the Brexit gridlock.

Voting is set to start at 7pm, however even if MPs manage to agree on a popular option, something that is by no means guaranteed, that doesn’t mean that the EU will endorse it.

MPs will start debating up to 16 different flavours of Brexit options, ranging from an outright revoke, to the prime minister’s deal to a no-deal scenario. While none of the votes will be binding, any option that MPs can coalesce around could shift the debate to a possible solution, with variations around a Norway type of option set to be the most likely to gain some significant support.

Imperial Brands attempts to embrace e-cigarettes appears to be paying off after the company reported that net revenue growth at the upper end of its 1-4% growth range. On tobacco sales the company said it expected volumes to be slightly below the levels seen in the second half of last year.

The new myBlu e-cigarette has seen increased brand awareness in Europe and Japan, with good revenue growth in the US. First half earnings will also be impacted by reductions in the company’s stake in Logista, as well as £50-100m worth of other divestments on H2.

The tug of war for control of Debenhams took another twist this morning after Sports Direct tabled a 5p a share offer for the remainder of the shares it doesn’t already own. The offer is conditional on Mike Ashley becoming CEO, and the company not filing for a CVA and not seeking new alternative funding arrangements. The new bid would cost Sports Direct at £60m and would be a 127% premium on the most recent closing price.

The slow housing market doesn’t appear to be holding back housebuilder Bellway which has reported first half revenues of £1.49bn, and profits of £313.9m, with 5,007 new homes completed in the last six months. Forward orders have remained strong with the capacity to deliver up to 13,000 homes per year.

In M&A news, reports suggest Renault wants to accelerate merger talks with Nissan, with a view to make a bid for Fiat Chrysler, which has been in the cross hairs of reported interest from Peugeot.

The New Zealand dollar has taken a battering overnight after the Reserve Bank of New Zealand kept rates on hold but like a lot of its peers, decided to take a dovish tilt on next possible policy moves by saying that the next move on rates could well be lower. While this was unexpected, maybe it shouldn’t have been given that the kiwi dollar has been rising steadily this year, up over 5% from its October lows against the US dollar, and also just above two-year highs against the Australian dollar. All central banks have inflation targets and with the Kiwi looking strong the RBNZ probably felt a weaker Kiwi was needed in light of recent gains.

US markets look set to open modestly higher this morning, after a positive session yesterday, the first in three days but with investors cautious as bond yields in the US continue to play havoc with the long term time horizons of market asset allocation decisions. In the space of a month the centre of the US yield curve has collapsed below the front end in a manner resembling a U shape, raising concerns that a sharp global recession could be in the offing.


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