FTSE lags as the pound rallies

The FTSE 100 is trading little changed on the day and lagging behind its European counterparts this morning, largely due to the 7% drop seen in Unilever after news broke over the weekend that a potential takeover deal has fallen through. Meanwhile the pound has begun the week on the front foot with the currency rallying across the board and recouping some of last week’s losses.

Unilever drop leaves the FTSE trying to ketchup

The biggest mover on the leading UK stock market is Unilever, with shares in the consumer goods company falling heavily after Kraft Heinz pulled out of a takeover bid. Today’s decline has seen a fair amount of last week’s advances handed back after the stock soared higher on Friday when the bid was announced in what could have been the largest ever acquisition of a UK company. The announcement that Kraft Heinz have pulled out the deal will likely come as a pleasing development for Theresa May, as the UK PM promised to take a more interventionist approach to foreign takeovers during her Tory party leadership bid last summer. With the fall in Sterling since the EU referendum, UK companies have become relatively cheaper and therefore more attractive to international suitors but there have been surprisingly few firms who have looked to use this currency devaluation to their advantage so far.  

Peers unlikely to oppose Brexit bill

After passing through the lower house of Parliament with relative ease a fortnight ago, the Brexit bill will today be debated in the House of Lords. The government does not have a majority in the Lords and there is a possibility that an alliance of Labour, Liberal Democrats and cross-benchers could throw in a spanner in the works. However the base case expectation remains that there will be no significant delays here and whilst meaningful votes aren’t expected until the 7th of next month, the government seem on track to meet its self-imposed deadline of triggering of Article 50 before the end of March.   

RBS rallies as focus turns to banks earnings

The best performing stock on the FTSE 100 this morning is the Royal Bank of Scotland (RBS) after the Treasury announced its intentions to change plans for the Bank to sell Williams & Glyn. Shares in RBS have risen by more than 5% on the news with the lender no longer required to sell Williams & Glyn by the end of the year in order to meet requirements from the EU state aid with regards to the £45bn bailout in 2008. HSBC is slightly higher this morning, with the bank set to report in the early hours of Tuesday morning to kick off a run of UK bank earnings this week. Lloyds are seen by many to be a possible star of this reporting season with Wednesday’s announcement expected to show profits to double. Thursday sees Barclays release which is also forecast to show far more profit than the prior year before RBS are expected to report a 9th successive year of losses on Friday. ​