Brexit negotiations formally kicked off at the start of this week, exactly one year on from the UK’s decision to leave the European Union. On Monday lead negotiators David Davis and Michel Barnier began the divorce process with a sequence of talks in Brussels. Chancellor Phillip Hammond declared in his Mansion House speech that jobs and living standards must come first and that when the British people voted for Brexit last June, they did not vote to become poorer, or less secure.
Brexit uncertainty caused sterling to plummet 0.4% against the dollar on Tuesday, following Bank of England governor Mark Carney’s statement that now is not the time to raise interest rates. Carney explained that it was important to see how the economy would react to the reality of Brexit negotiations and that wage growth would need to strengthen before rates are hiked. However, the dip was short lived, and sterling rose again on Wednesday after Bank of England chief economist Andy Haldane said that he planned to vote for an interest rate rise “relatively soon”.
London’s FTSE 100 index fell 33.39 points to 7,405.90 at the end of the week. In other market news, the price of Brent crude collapsed to a seven-month low of below $45 a barrel due to increasing fears that Middle Eastern members of OPEC (Organisation of Petroleum Exporting Countries) will not be able to cooperate and deliver on production cuts agreed in May.
Amazon and Whole Foods say ‘I do’
Amazon has announced a $13.7 billion takeover of Whole Foods. The online retail giant is to pay $42 a share for the upmarket supermarket chain. The news drove Whole Foods’ share price 29% higher; Amazon shares were also ahead. The takeover deal – the biggest in Amazon’s history – is expected to be completed in the second half of the year. Whole Foods chief executive, John Mackey described the partnership as “like an old traditional marriage” which was “truly love at first sight”.
In other company news it was a case of “taxi for Travis” on Wednesday when Uber chief executive Travis Kalanick resigned after eight years at the top. The maverick entrepreneur was facing mounting pressure to step down after a series of scandals at the fast-growing taxi firm. Despite his unseating as CEO, Kalanick will remain a member of the board.
MSCI opens the door to China
Chinese stocks have gained direct entry into the MSCI indices for the first time. This means some of China’s mainland stocks, known as A-shares, will be included in the most influential indexer of emerging market equities, initially making up 0.7% of the index’s value. This move – one that has been rejected for the past three years due to regulatory and accessibility issues – will favour Beijing’s attempts to open up its financial markets and attract foreign capital. Chinese stocks hit an18-month high following news of the decision.
And finally….
Management at a Canadian hotel was left hopping mad this week, after it was robbed of the key element in its signature cocktail, the ‘Sourtoe’. Consuming this digit-ally enhanced tipple apparently involves downing a shot of whisky until the main ingredient, a preserved human toe, touches your lips. Terry Lee, “Toe Captain” at the Downtown Hotel in Dawson City, went out on a limb to call the suspected thief a “low life”. Word on the street is that the toe had been cured in salt for six months prior to playing its part in the quirky cocktail…..how toe-tally toe-rific!
Editorial image credit: Allstar Picture Library / Alamy Stock Photo
