US stocks tank as probe into Russian meddling in US election intensifies; manufacturing sector shifts up a gear

President Donald Trump's ex-national security adviser, Michael Flynn
President Donald Trump's ex-national security advisor, Michael Flynn
  • Stocks tank in the US as former Trump advisor pleads guilty in Russia probe; S&P 500 sheds as much as  1.6pc of its value while the dollar dives 0.5pc against a basket of the leading global currencies.
  • UK manufacturing growth soared in November to a four-year high, a closely-watched survey has indicated
  • IHS Markit's PMI survey jumped to 58.2 (any reading over 50 indicates growth), smashing economists' expectations, as new orders and production jump
  • Sterling's Brexit breakthrough boost fades on currency markets; stuck in flat at $1.3510 against the dollar
  • Brent crude rebounds following yesterday's Opec meeting; the oil cartel and Russia agreed cuts extension but left the door open to an early exit

                                                                                                    

Markets wrap: Investor sentiment flips as US election probe intensifies

US president Donald Trump and ex-advisor Michael Flynn

The net tightening around president Donald Trump in the probe into Russian interference in the US election has flipped sentiment on the markets this afternoon with the S&P 500 and Dow Jones sinking as much as 1.6pc and 1.4pc, respectively.

The news came late in the European session and stocks followed their counterparts across the pond into the red with the FTSE 100 reversing its small move higher to retreat 26.18 points to 7300.49.

US-exposed stocks continued to benefit from progress in Donald Trump’s plan to slash corporate tax but started to sink as the probe in Washington intensified while on currency markets, the escalating investigation helped the pound pare its early losses against the dollar to hold above $1.35.

Elsewhere, Britain's factories are at their busiest since 2013 with new orders piling up and production being boosted by a competitive pound and robust global demand, IHS Markit's closely-watched PMI survey indicated this morning.

IHS Markit director Rob Dobson commented that manufacturers had "shifted up a gear in November" and were on course for quarterly growth of 2pc.

US stocks plunge eases

The Dow Jones has pared some of its losses

The net tightening around the president in the probe into Russian election meddling has flipped sentiment on the markets in the US this afternoon but the losses are easing.

The S&P 500 and Dow Jones dived as much as 1.6pc and 1.4pc, respectively, but have since pared some of their losses. The latter is currently sitting on a 0.6pc loss but the dollar is having less luck, having erased all of its gains against the pound.

CMC Markets analyst David Madden gave his review of the action on the markets in the US this afternoon:

"US markets sold off sharply after the news broke that Michael Flynn, the former national security adviser (NSA) chief is expected to plead guilty in relation to the Russia investigation. Mr Flynn is will cooperate with the government agencies and could implicate President Trump.  

"Republicans in the Senate delayed voting on the tax reform so they could patch up the tax bill before pressing ahead with the vote. The GOP want to ensure to all the loose ends are tied up and that sceptical Senators are brought on side. Dealers are sensing that progress is being made, but seeing as that a lot of the bill is already priced, they are now in wait and see mode."   

How Britain's high street banks became an endangered species

Royal Bank of Scotland has announced that it is closing 259 branches – around a quarter of its network.

There has been a flurry of bank closures this year, as more customers move to online and telephone banking. Lloyds, HSBC and Barclays have all closed branch networks across Britain in 2017.

Telegraph analysis puts the number of branch closures in 2017 – including the Big Four, Clydesdale and Yorkshire banks, and TSB – at 661.

According to Government figures, there were 20,583 bank branches in 1988, while today the figure is around the 10,000 mark. With many of the remaining branches unevenly spread around the UK, scores of towns and villages have no local branch and must rely on internet banking or a local Post Office.

Read Sophie Christie's full report here

Stocks tank in the US as former Trump advisor pleads guilty in Russia probe

Stocks over in New York have tanked in the last few moments after president Donald Trump's ex-national security advisor, Michael Flynn, pleaded guilty to misleading the FBI in its probe into Russian interference in the US election with one report indicating that he is willing to testify against the president in the trial.

ABC News is reporting that he is prepared to testify that Mr Trump asked him to make contact with Russia. Wow, that would be quite something.

A quite routine session across the pond has flipped in a couple of minutes. The S&P 500  has shed 1.3pc of its value while the dollar has dived 0.5pc against a basket of the leading global currencies.

RBS trying to emulate Lloyds to reduce costs

RBS said that 259 branches will be closed

One would imagine that today will not be the last time we hear about bricks-and-mortar bank closures and job losses given the recent pivot towards digital transactions.

The move online has only been accelerated by the rapid rise of the smart phone and RBS is trying to emulate Britain's biggest digital bank, Lloyds, which has the lowest cost base relative to its income, according to Hargreaves Lansdown analyst Laith Khalaf.

He added:

"There is of course a significant cost to this transition in terms of the jobs of front line branch staff, and also potential detriment for those customers who still rely on their bank branch and may now face long journeys to conduct their normal banking business.

"While better technology is making things easier for banks and lots of their customers, the risk is that those who aren’t part of the digital revolution get left behind by it."

Factories ramp up hiring to cope with surging demand

British factories face surging demand from customers at home and abroad

Britain’s factories increased their output at the fastest pace in more than four years as surging orders gave manufacturers a boost and pushed them to ramp up hiring again.

Export demand is particularly strong as the weak pound makes British goods competitive abroad, and order books have reached such a scale that backlogs grew in November for the first time in six months.

The purchasing managers’ index (PMI), compiled by IHS Markit, rose to 58.2 last month, the highest level since August 2013.

Any score of above 50 indicates growth, so this move up from 56.6 in October shows an acceleration in the manufacturing sector.

Read Tim Wallace's full report here

Factories across the globe enjoy robust growth

As Samuel Tombs alluded to before, it's not just the UK's manufacturing sector enjoying robust growth at present. Eurozone manufacturing growth hit a 17-year high this morning and US figures just released showed activity across the pond also picking up a touch.

IHS Markit said that the robust growth in the US sector was supported by "solid, albeit slightly weaker, increases in output and new orders".

That leaves the US on course for its best quarter since the start of 2015 with IHS Markit economist Christ Williamson adding that cost pressures should begin to ease as the disruption from hurricane season fades.

A second reading for the US manufacturing sector from ISM this morning indicated, however, that the sector continued to cool from September's 13-year high.

Thomas Cook plans 50 store closures

Thomas Cook plans to close stores by March 2018

Thomas Cook plans to close 50 stores in the UK as part of an ongoing review of its retail network. 

The travel operator said that if the plans went ahead, it would close the Thomas Cook and Co-operative Travel branded stores by March 2018. The shops affected are either near other Thomas Cook locations or are experiencing a hit to profits due to declining footfall, the company said in a statement today. 

The planned closures will affect up to 400 staff members, but the company planned to redeploy many of them, a spokesman said.

Read Ayesha Javed's full report here

Games Workshop 2017's star stock

Games Workshop has battled through a difficult period to improve results

It's probably about time we had a quick run-through of what stocks are moving in London today.

Countryside Properties has plunged 6pc after its private equity backer Oaktree Capital dumped two-thirds of its stake, just under two years after it floated the housing developer.

Fantasy figurine retailer Games Workshop's break-out year has been given another another boost after its revenue was lifted by its shift towards digital gaming. The Nottingham-based firm is now 2017's best performer on the FTSE all-share, having seen its share price soar over 190pc this year. 

On the FTSE 100, defence outsourcer Babcock International has slumped to the bottom of the index after Morgan Stanley downgraded it to "equal-weight" while the banking sector is driving the wider index lower.

Invidior shares hit a high as US regulator gives green light to heroin treatment

Addiction to opioids such as heroin has been declared a national emergency in the US

Investors jumped on pharma group Invidior after the US drug regulator approved the company’s treatment for opioid addiction - an issue described by Donald Trump as a “national emergency”.

Shares in the mid-cap firm surged almost 13pc after the Food and Drug Administration (FDA) gave the green light for the addiction treatment through a once-a-month injection of a drug called Sublocade.

Invidior says that 12m Americans abuse opoids - such as heroin - and the drug results in four fatal overdoses every hour of the day. It expects Sublocade to be available to patients in the first quarter of 2018.

Shaun Thaxter, Invidior chief executive, called Sublocade “a scientific innovation” that delivered a “complete blockade of drug-liking effects for a full month in most patients”.

Read Alan Tovey's full report here

Corbyn tells banks: You're right, we are a threat

Mr Corbyn said banks such as Morgan Stanley were speculators

Labour leader Jeremy Corbyn told Morgan Stanley that bankers are right to regard him as a threat because he wants to transform what he cast as a rigged economy that profited speculators at the expense of ordinary people.

Morgan Stanley last month warned that political uncertainty in Britain was a bigger threat than Brexit for some domestic investors given the risk of Mr Corbyn winning power and radically changing Britain's free-market economy.

"Bankers like Morgan Stanley should not run our country but they think they do," Mr Corbyn said in a video posted on Twitter.

Read the full report here

Lunchtime update: British factories at busiest in four years

Britain's factories are at their busiest in four years as new orders pile up and production climbs, IHS Markit's closely-watched PMI survey indicated this morning.

Boosted by a competitive pound and robust global demand, the manufacturing sector confounded expectations in the survey, rising sharply to 58.2. IHS Markit director Rob Dobson commented that manufacturers had "shifted up a gear in November" and were on course for quarterly growth of 2pc.

Meanwhile on currency markets, the pound's Brexit breakthrough bounce is fading with sterling nudging down 0.1pc against the dollar to just under $1.35. Bitcoin has climbed back over the $10,000 mark after rallying 5pc but its wild swings in volatility are easing.

Brent crude has jumped 1pc to $64.36 per barrel, its sharpest rise in two weeks, after initial sinking yesterday in reaction to Opec leaving the door open to an early exit to production cuts.

Interserve's support services head steps down amid wider cost cutting

Bruce Melizan stepped down from the board yesterday

The head of Interserve’s support services division has stepped down as new chief executive Debbie White begins streamlining management in a bid to stabilise the troubled company.

Bruce Melizan, who has worked for Interserve since 2003, stepped down from the board yesterday but will remain will the company until the end of January.

After that, the support services arm, which has a 50,000-strong workforce, will report directly to Ms White, who became chief executive in September.

Read Rhiannon Bury's full report here

Manufacturing PMI reaction: Highly encouraging but outlook appears mixed

Could today's expectations-smashing rise in manufacturing activity indicate that the UK economy is beginning to accelerate? 

As Rupert Seggins' very handy tweet above shows, manufacturing accounts for a fraction of the UK economy and Tuesday's PMI survey for services, the UK's biggest sector, should give us a better indication. Economists are expecting growth in the sector to ease a touch but still remain at a robust level at 55 (any reading over 50 indicates growth) in November.

EY Item Club's chief economic adviser Howard Archer described this morning's survey as "highly encouraging" but added that the outlook is a little less so.

He explained:

"The outlook for manufacturing appears somewhat mixed. The export environment looks pretty bright but domestic conditions could well prove challenging over the coming months despite November’s healthy orders."

Bitcoin touches back over $10,000 

The market's hot topic of the moment, Bitcoin, is back on the rise this morning and briefly touched back over the $10,000 mark but Goldman Sachs boss Lloyd Blankfein doesn't appear to have been swept up in the hysteria.

He said in an interview with Bloomberg that the digital currency is a "vehicle to perpetrate fraud", adding that the wild swings in price have knocked its status as a currency.

It hasn't just got financial wonks talking either and that is just the next step in Jean-Paul Rodrigue's asset bubble theory, according to our report Patrick Scott. He had a look at what whether Bitcoin fits the bubble trend here.

Also worth a mention is our Tech editor James Titcomb's piece this morning. He noted that in Bitcoin's first mention in the media in the International Herald Tribune six years ago, the author said that its rise to $8.74 was looking a little on the frothy side.

Oil prices move higher following production cuts extension

Opec will meet in June and could end production cuts early if the market rebalances sooner than expected

Oil prices are ticking up this morning after oil cartel Opec and other major producers agreed yesterday to extend production cuts to the end of 2018 to shift the glut of oil stocks.

Brent crude prices wobbled a little on news that the 14-nation-strong organisation has left the door open to an early exit next June but have rallied 1pc this morning to $62.20 per barrel.

The muted reaction on the markets yesterday shows how much the move was already priced in, FXTM analyst Lukman Otunuga said.

He added that Nigeria and Libya agreeing to cuts is also helping keep prices steady.

Order books are full but cost pressures pose a threat

While growth in the manufacturing sector might be picking up the pace, so are cost pressures.

IHS Markit said that higher oil and steel prices and climbing vendor prices due to supply constraints pushed up purchasing costs at a pace close to October's seven-month high.

Order books may be full but cost challenges still pose a threat, Barclays head of manufacturing Mike Rigby said.

He added:

"What the sector needs now is manufacturers following through, more and quicker, on investment intentions, particularly in areas such as smart tech, which is vital if the sector is to boost productivity and remain competitive at an international level."

Manufacturing PMI snap reaction: UK manufacturers riding on the coattails of the eurozone

While other sectors flounder amid political and economic uncertainty, manufacturing has been buoyant since the EU referendum and today's PMI survey showed that over 50pc of the UK's manufacturers expect production to be even higher in one year's time.

UK factories are "riding on the coattails of their eurozone counterparts", according to Pantheon Macro economist Samuel Tombs.

He added:

"The future output balance remained below its 5-year average of 72.9, despite rising to 72.3 in November from 71.2 in October. We fear, therefore, as the CBI’s Industrial Trends Survey has indicated, that manufacturers might soon run in to capacity constraints."

Manufacturing sector climbs to four-year high

Britain manufacturing sector put its foot on the gas in November to rise to its highest level in over four years, IHS Markit's closely-watched PMI survey indicated this morning.

A sharp pick-up in new orders boosted the index to 58.2, smashing economists' expectations.

IHS Markit director Rob Dobson said that the sector "shifted up a gear in November" and that quarterly growth is on course to hit a rate of 2pc.

He added:

"The breadth of the rebound is also positive, with growth strengthening across the consumer, intermediate and investment goods industries. 

"Of real note was a surge in demand for UK investment goods, such as plant and machinery, with new orders for these products rising to the greatest extent in over two decades. This suggests that capital spending, especially in the domestic market, is showing signs of renewed vigour"

RBS axes a quarter of its bank branches with loss of 680 jobs

RBS is axing 259 branches around the UK

State-owned Royal Bank of Scotland said on Friday it would close 259 branches - around a quarter of its network - and cut 680 jobs as it reduces costs and encourages customers to use online and mobile services.

The latest round of closures at the Edinburgh-based bank follow 180 announced in March, putting 1,000 jobs at risk, and a similar move by Lloyds Banking Group, which said on Wednesday it would close 49 branches.

British banks are set to close a record 762 branches this year, Reuters reported in August, drawing criticism for depriving customers of access to in-person services, particularly in poorer parts of the country.

Jane Howard, RBS's managing director of branch banking, told Reuters that customers were increasingly using mobile and online channels rather than bricks-and-mortar branches, and RBS had to react to that.

Read the full report here

Agenda: Competitive pound and strong global demand set to boost manufacturing sector

Britain's manufacturing sector is expected to accelerate in this morning's PMI survey

A competitive pound and strong global demand is expected to lift Britain's buoyant manufacturing sector in a closely-watched survey this morning. 

October's manufacturing PMI survey is set to rise to 56.5, the sector's 16th consecutive month of growth, as Britain's exporters continue to feel the benefit from weaker sterling.

Elsewhere, RBS has axed 680 jobs and closed 259 branches as part of its pivot towards digital banking. The bank has retreated 1pc on the blue-chip index early on while recently relegated defence struggler Babcock International has shed another 3pc on a ratings downgrade.

The pound's Brexit breakthrough boost is easing on currency markets this morning while the banking sector has driven the FTSE 100 lower.

Crude prices are back on the rise again after pulling back yesterday as Opec and Russia left the door open to an early exit on its production cuts extension. The oil cartel bowed to pressure from Russia to signal an exit strategy from the cuts but the dip in sentiment on the oil market has proved short-lived with Brent crude rallying 0.7pc to just over $63 per barrel.

Economics: Manufacturing PMI (UK), Manufacturing PMI (US), Construction spending (US),  Manufacturing PMI (EU)

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