Market buzz: Top flight index boosted by pound weakness

1700:Close Britain's top-flight index pushed higher on Friday, boosted by weakness in the pound on the back of 'dovish' remarks overnight from BoE Governor Mark Carney himself.

Stressing the need to take all the data into account, especially next Friday's first quarter GDP report, Carney appeared to leave the door open to pushing back the date of the next hike in Bank Rate past 10 May.

For the week as a whole, the top flight index was higher by 103.61 points or 1.4% to 7,368.17.

1613: It's the news that all Spurs fans wanted to hear: Brendan Rodgers is the favourite to take over at Arsenal.

The Northern Irishman, former Swansea and Liverpool boss, has shortened into being the 5/2 favourite with Betfair from 6/1 earlier, while standing equal at Ladbrokes with Italian Carlo Ancelotti at 9/2.

Patrick Vieira has moved out to 13/2 from 10/3, with Betfair, while Ancelotti and German Tuchel are 5/1 from 6/1, with Luis Enrique, who left Barcelona last season and has been on sabbatical for a year, has jumped to 5/1 from 16/1. Laddies have Tuchel and Vieira at 6s, Yogi Loew and Massimiliano Allegri at 8s and Diego Simeone looks attractive at 16/1.

Paddypower, the cheeky gets, are offering odds of 20/1 that Big Weng will "continue the great French tradition of beating a hasty retreat and find himself back in charge of the Gunners by the start of next season", or at least 6/1 that he is appointed director of football at the Emirates.

Should he actually tear himself away, the Nicklas Bendtner-underpants-sponsoring bookie offered odds of 3/1 that Arsene will replace Didier Deschamps as the next France manager, 20/1 the next England manager and 66/1 the French presidency.

1554: Sterling is down 0.5% to just over $1.4 as Mark Carney's dovishness over a potential May rate hike and disagreement about the Irish border after Brexit combined in a double whammy for the currency.

Noting that cable has seen a "classic failed breakout" at 1.435, market analyst Jasper Lawler at London Capital Group says its a return to the most hotly debated question in central banking: "How gradual is gradual?

"We tend to support the view of the BOE’s Michael Saunders who on Friday said that 'gradual need not mean glacial'. There will always be uncertainties but it’s been clear for a long time that the UK is not in need of emergency stimulus.

"We tend to think a rate hike in May is still on because UK interest rates are set by a committee. Not by the Governor who some may view as living up to his reputation as an unreliable boyfriend. If some meaning is to be taken from Carney’s comments, if a May hike does happen, it’s probably the only one this year. If only interest rate expectations could be managed as well as Arsenal under soon-to-be retired Arsene Wenger."

1540: Sporting bets are piling in for veteran Carlo Ancelotti and former Borussia Dortmund manager Thomas Tuchel to be the new Arsenal manager, while odds are coming down for supposed outsiders, with Leonardo Jardim has gone from 40/1 into 15/2 and Rafael Benitez who is now at 8/1 from 14/1.

The Evening Standard suggests the club consider Carlo Ancelotti a "serious candidate", with ex player Mikel Arteta "among frontrunners", currently learning new tricks from Pep Guardiola at Manchester City.

Katie Baylis, spokesperson for Betfair, said the online bookie has taken a "flood of bets" on Patrick Vieira to take over, slashing the odds from 14/1 to 10/3 favourite.

There is also speculation Wenger’s next move, with PSG and China 5/2 favourites, a move to the MLS in the USA at 3/1 and the French national team at 4/1.

1523: Fidessa has agreed to be bought by Dublin-based Ion for £1.5bn.

1450: Shire shares have barely reacted after the drugmaker received a slightly higher bid from Takeda Pharmaceutical.

The Japanese company upped its bid £47 per share, coming a day after the Dubline , the companies disclosed that Shire had rejected Takeda’s third indicative bid of 46.50 pounds per share.

1430: More Arsenal fans from the world of finance have paid tribute to Arsene Wenger.

Credit Suisse chief executive Tidjane Thiam told Financial News that despite having in the past criticised of the Arsenal manager that he felt the Frenchman "has done great things for Arsenal and for football".

Fellow Arsenal fan Simon Robey, founder of Mayfair investment banking firm Robey Warshaw, said: "The joyous exuberance of his greatest teams gave me some of my most cherished sporting memories."

1231: The comments from MPC member Michael Saunders are lifting the pound off its lows, though it's still down around 2% from Tuesday's highs.

Analysts at TD Securities say that Saunders' assessment, as an expert on UK data, that first-quarter weakness is likely to "carry some weight" when the MPC meets to decide on policy on 10 May.

What is clear from the last 24 hours now, says TD, is that the distribution between a May and an August hike has shifted "and we're likely to see a divided committee in May, regardless of which decision it takes".

"A week ago, our view was that a hike between the two meetings was almost a given (barring a serious deterioration in Brexit negotiations, which is still a possibility--see below). But while we think the economic arguments suggest about 80% chance of a hike in May vs 20% in August, following yesterday's comments we would flatten the distribution somewhat, closer to a 60% chance of a May hike vs 40% chance of an August hike."

1228: The London midday market report finds the FTSE 100 up 0.5% to 7,364.

Along with CRH, Hikma Pharmaceuticals is another big riser. The generic drug-maker says it has launched Dexrazoxane for injection, to reduce the incidence and severity of heart disease in women receiving a common chemotherapy treatment.

1214: Building materials group CRH is the standout gainer on the FTSE 100 after its chief executive told the Irish Times that the company was keeping the prospect of a full or partial New York listing of its key US division under review, having ruled it out in the past. Albert Manifold also said a share buyback was still being considered as the company looks to enhance shareholder returns.

1143: Michael Saunders - an external member of the Monetary Policy Committee who voted for a hike in March - has pushed back against Carney's comments. In a speech in Glasgow on Friday morning, Saunders argued that interest rate hikes should be gradual, not glacial.

"'Gradual' does not imply that the MPC can only raise rates at a very low frequency, such as once per year. Nor does 'gradual' mean that the MPC cannot tighten faster than markets price in," he said in a speech at the University of Strathcylde.

1040: The FTSE 100 is up 0.4% to 7,355.57, outperforming its European peers, which are mostly in the red thanks to the overnight slide in the pound that helps the London index's mass or internationally focused firms.

"The US led geo-political fears of recent times seem to have faded, with markets instead focusing on the slew of positive earnings figures out of the US," says analyst Joshua Mahony at IG. "However, with the US-Chinese trade stand-off likely to rear its ugly head once more, there is a real fear that this represents a lull before sentiment turns sour again."

He noted that even before Carney's interview with the Beeb, the pound had already been the worst performing major currency over the week, with falling inflation and retail sales figures reducing the case for an immediate rate rise at next month’s meeting.

"While Carney acknowledged that the BoE is likely to act in 2018, his interview with the BBC saw market confidence of a May hike shaken considerably. With market expectations for a May rate rise falling from 88% to 56% over the course of the week, there is a clear shift in market expectations which is in turn being reflected by a devaluation in the pound."

Yes, Joshua, but what about Wenger?

1017: The Wenger news is on the front page of the WSJ online edition, where they report that "rather than suffer the ignominy of being fired, Wenger agreed to announce his exit on his own terms," citing one of the usual persons familiar with the matter.

Wenger’s “longevity and consistency over such a sustained period at the highest level of the game will never be matched,” US-based majority owner Stan Kroenke said in Arsenal's statement.

Here's some tributes from some commentators of the financial persuasion, and Robert Peston.

Economist Howard Archer of the EY Item Club (and a Shrewsbury Town fan): "Deserves huge credit for an overall wonderful career at #Arsenal - doubt we will see such long-serving managers as him & Sir Alex Ferguson again."

CMC Markets' Michael Hewson (sounds like he's a Gooner): "Whatever you think or say about Arsene Wenger he transformed English football and Arsenal. Most successful Arsenal manager ever. End of an era - Thank you Arsene."

Robert Peston, former BBC economics correspondent and now ITV politics man (Arsenal season ticket holder): "Such mixed feelings about Wenger resignation. I wanted him to go, but I miss him already. He was magnificent for us over many years, but it was time."

Could Arsene Wenger now replace Mark Carney at the Bank of England? He has many of the necessary skills! #WengerIn #CarneyOut

— Shaun Richards (@notayesmansecon) April 20, 2018

1000: Moya Greene and now Arsene Wenger! The Frenchman has quit as manager of the North London football club and property developer after 22 years in charge, a statement from Arsenal Holdings confirms.

We said it was a busy day for boardroom news, but no-one expected this drama, which is the hot topic across the Square Mile. Bloomberg and the WSJ quickly onto the news too, while Finance Twitter is fully across all the memes and #WengerOut and other hashtags.

Well that's it - Arsene Wenger leaving Arsenal

Time for pub and weekend pic.twitter.com/7VHkZ2s1Ug

— Michael Hewson 🇬🇧 (@mhewson_CMC) April 20, 2018

#MerciArsene end of an era. #Wenger #Arsenal

— Joshua Raymond (@Josh_RaymondUK) April 20, 2018

0944: Analyst Robin Hardy at Shore Capital has some thoughts on the impact of interest rates on housebuilders, warning that mortgage rates are likely to rise regardless of what happens at the Bank of England's meeting next month.

Last week he had noted that it is not the BoE's base rate that impacts mortgage rates but rather swap rates and the cost of wholesale funds for lenders, but that both of these rates have increased very significantly in recent months but yet not fed through to the pricing of mortgages.

Hardy believes that these core costs are now higher than the lowest rates in the market (ie 1.49% for a 75% LTV five-year fixed rate) with swap rates alone priced at around 115bps.

"For small lenders the cost of funds had been as low as 25bps under the two government lending schemes FLS and TFS but will now have to be market-based and are likely to rise to be well above 100bps.

"This means that, in our view, mortgage rates are likely to rise regardless of what happens at the next MPC.

"The market is acting as if the house builders have dodged a bullet on interest rates – we do not believe that they have. Therefore, any substantial rise in share prices based on interest rate ‘relief’ is, we think, erroneous."

0918: Ion Investment says it has made a proposal to buy financial technology company Fidessa for £38.703 per share in cash, which includes 79.7p dividend.

On 3 April, Dublin-based Ion had approached Fidessa with a possible offer at £38.297, comprising £37.50 cash and the 79.7p dividend, representing a 5% premium to another offer from Switzerland's Temenos.

Under the Takeover Panel's PUSU rules Ion must made a firm offer by not later than 1700 BST today or announce that it does not intend to make an offer.

0901: Friday's London opening market report shows stocks higher early trade as the pound fell back following Carney's dovish comments overnight. A few moments ago, the FTSE 100 was up 0.4% to 7,356.93, while the pound was down 0.2% against the euro at 1.1386 and 0.3% lower versus the dollar at 1.4046 after Carney cast doubt on another interest rate hike in May.

0848: Lots of boardroom news today, with the main bits being that Barclays boss Jes Staley can stay in place as probes by the Financial Conduct Authority and the Prudential Regulation Authority into his conduct are likely to just result in a fine, while over at Royal Mail they have confirmed the widely known retirement of CEO Moya Greene, with parcels boss Rico Back taking the reins on 1 June.

Taylor Wimpey's longstanding FD Ryan Mangold has left the board with immediate effect, in a move that surprised analysts in the City. Shore Capital was surprised "more so that he is leaving the post today without any prior warnings" but the fact that there is a succession in place and the seemingly amicable terms "suggest very strongly that this is a walk rather pushed departure", and that his replacement looks a "robust appointment".

0748: The FTSE 100 is being called around 20 points higher, according to traders in the City. The pound is falling again this morning, a new leg lower after last night's one caused by Mark Carney comments. It's down 0.2% this morning versus the dollar to 1.4061.

0745: The pound fell yesterday evening to after comments from BoE boss Mark Carney. The Canadian central banker said an interest rate rise is "likely" in 2018 but any tightening will be gradual.

Marshall Gittler, chief strategist at ACLS Global, said the big trend overnight was a general rise in bond yields and steepening yield curves. "The origin isn’t clear, but yields started to rise from the start of the day in Europe. Gilts sold off the most (10 yields +10 bps) despite Carney’s comments and the weak economic news there, which is somewhat of a puzzle.

"Treasuries went along with the trend; the yield on 10-year Treasuries poked its nose above 2.90% again (2.91%) and seems to be headed to the 3.0% level. Furthermore, the Treasury curve steepened by 4 bps, ending nine consecutive days of flattening. The combination of bear steeping in the bond market of this magnitude and a fall in stocks is historically uncommon, as usually a steeper bond curve indicates either expectations of rising economic activity or less demand for safe investments. Rising US bond yields supported USD."

0744: Shire shares are going to have the rug pulled from under them after last night Allergan pulled back from tabling a bid for its UK-listed rival just hours after first indicating its possible interest. High farce!

0741: Overnight the main US stock indices all finished in the red, as investors sifted through more earnings and data releases for some fresh cues. The Dow Jones closed down 0.34% at 24,664.89, the S&P 500 was off 0.57% at 2,693.13, and the Nasdaq 100 fell 0.85% to 6,774.89.