• FTSE 100 down 19 points

  • Pound slips as hopes fade for Brexit deal

  • UK inflation steady at 1.7% in September

10.50am: Sterling drops half a per cent as Brexit deal hits the skids

The pound has fallen over half a per cent against the dollar to US$1.271 amid reports that the chances of a last-minute Brexit deal could be dying as talks stalled between the UK and the EU.

A report from Bloomberg said that negotiators saw a deal as impossible unless the UK moved its position, sending the pound lower less than a day after reports that a deal could be made in time for a crunch summit on Thursday sent sterling up to US$1.28.

David Madden at CMC Markets said the comments had “dashed hopes for the possibility of an agreement being reached soon” and that several currency dealers are now reversing their previous positive positions.

“The mood in relation to Brexit is less optimistic as the [Northern Irish Democratic Unionist Party] appear to be putting up resistance to any sort of arrangement that would treat Northern Ireland differently from Great Britain post Brexit. In addition, the EU want the UK to make further concessions”, he added.

Sterlings struggles did little to help the FTSE 100, which in mid-morning was 19 points lower at 7,193.

9.50am: UK inflation stands pat at 1.7% in September

Inflation in the UK remained unmoved in September at 1.7%, the same level as August and below expectations of 1.8%.

The inflation rate is the lowest since December 2016 and was driven down by falling motor fuel costs as well as a decline in the prices of second-hand cars. It is also below the Bank of England's target of 2%, although Brexit is widely expected to be a more crucial factor in whether the central bank will decide to cut interest rates.

The weaker-than-expected figure, coupled with a small rise in unemployment shown yesterday, will raise fears that the UK economy is headed for a slowdown despite GDP figures last week having allayed fears of an imminent recession.

Good news for consumers – UK CPI Inflation unchanged at 1.7% in September, still the lowest rate since December 2016. The largest downward pressure came from falling Motor fuel and second-hand car prices.

— Suren Thiru (@Suren_Thiru) October 16, 2019

“A number of factors are keeping a lid on inflation: global growth appears to be slowing, and trade tensions have impacted demand globally. In addition, energy and commodity prices remain fairly benign for the most part. In spite of full employment in the UK, and real wage growth, inflation remains fairly steady and manageable”, said Andrew Evans, UK equity fund manager at Sanlam Investments.

However, traders are likely to shrug off the data as Brexit headlines continue to dominate sterlings movements, with ThinkMarkets Naeem Aslam saying that fears of a deal “slipping away” were piling pressure on the pound, which in early trading was down 0.36% at US$1.274 against the dollar.

Meanwhile, in the equity markets, the FTSE 100 continued its downward trend and was 22 points lower at 7,189 shortly before 10am.

8.30am: Muted start for the FTSE 100

The FTSE 100 made a muted start to proceedings after Sino-American relations deteriorated (see our opener) and with a Brexit deal hanging precariously in the balance.

The continued economic deterioration in China made for a tough start for the miners with Rio Tinto (LON:RIO), off 1.7%, leading the Footsie fallers.

Topping the AIM 100 with an 8% rise was ASOS (LON:ASC), which dispensed with its traditional profit warning to produce results in line with (heavily downgraded) expectations.

“The online fashion retailer has been caught in the vice of competitive price cuts and rising costs. Add in the traditional challenges of a small company trying to make it on the global stage and this years profits air-pocket was inevitable,” said Tom Stevenson of investment powerhouse Fidelity.

“Chief executive Nick Beighton candidly admits that ASOS underestimated the cost and complexity of becoming an international player.”

Proactive news headlines

Instem PLC (LON:INS) said it is seeing strong demand for its informatics services with the value of new orders growing by 58% to £840,000.

Intellectual property investment group Tekcapital PLC (LON:TEK) shares jumped after it announced its portfolio company Salarius brought in a new customer.

Sativa Group PLC (LON:SATI) has received a controlled drug licence from the UK Home Office, allowing it to produce and supply cannabis at its headquarters in Somerset.

Eden Research plc (LON:EDEN) said its partner had received full authorisation in Belgium for its crop protection product, Cedroz.

Applied Graphene Materials PLC (LON:AGM) has hailed “positive traction” among its customers as the firm said it was encouraged by ongoing momentum in its commercial pipeline.

Futura Medical PLC (LON:FUM) will give two presentations on its DermaSys drug delivery technology and lead product MED2005, a fast-acting topical gel for the treatment of erectile dysfunction, at the Scientific Meeting of Sexual Medicine Society of North America next week in Nashville, Tennessee. The company will also host its third Scientific Advisory Meeting with high profile US key opinion leaders in the field of erectile dysfunction.

Arkle Resources PLCs (LON:ARK) Stonepark zinc project, near Limerick, has been boosted by an injection of funds from global mining major Glencore. The big-cap miner has invested just over C$1mln into Group Eleven, Arkles partner in Stonepark, with a share subscription giving it around 11.58% of the company.

Sales have rebounded at Strategic Minerals PLCs (LON:SML) Cobre magnetite operation as the metal miner proceeded with arbitration claim against its main customer.

Ariana Resources PLC (LON:AAU) has tidied up the structure of its Kizilcukur project in Turkey by buying the holder of a net smelter royalty over the project.

Caledonia Mining Corporation PLC (LON:CMCL) says electricity supplies have improved in Zimbabwe in the past two months though it is installing additional diesel capacity to insulate the Blanket mine fully from any further grid outages.

TLOU Energy Limiteds (LON:TLOU) quarterly update highlighted “an excellent start” to flow testing at its Botswana CBM wells. The company, in a statement, told investors it is very encouraged by production data to date.

Diversified Gas & Oil PLC (LON:DGOC) has extended its definitive asset retirement agreement with the Commonwealth of Kentucky, adding a further five years to the term. The arrangement was first agreed in February with an initial five-year term and it will now run until 31 December 2028.

Angling Direct PLC (LON:ANG) has acquired fishing tackle retailer Erics Angling Centre for £1.1mln as it continues to consolidate the UK fishing market.

6.45am: FTSE 100 called lower

The FTSE 100 is expected to head south on Wednesday morning as hopes of a trade deal between the US and China began to fade amid rising tensions over Hong Kong, which has been rocked by protests over the last four months.

Spread-better IG expects the FTSE 100 to open around 30 points lower having ended Tuesdays session effectively flat at 7,211.

Relations between the worlds two largest economies began to deteriorate in the aftermath of the latest round of trade negotiations after the US House of Representatives passed a bill yesterday requiring the American government to review the civil rights situation in Hong Kong annually for the city to maintain its special trading status.

China responded angrily, as it sees the bill as an intrusion in its internal affairs, and threatened to take “strong measures” to counter the US efforts.

“The optimism regarding a possible trade deal between the US andRead More – Source