The Market Close – IAG say Brexit will not affect business

Today’s Closing Update

U.S.Stocks were lower, despite the move seen over the course of the previous session. The major averages have all moved to the upside, although US trading activity is somewhat subdued.

European shares bounced off six-months lows as the focus shifted from politics to dealmaking and earnings.

France stuck to its tough stance in the Brexit negotiations, warning there was little chance of securing a free trade deal for financial services that would provide the degree of access sought by Britain’s biggest taxpaying industry. The French economy minister Bruno le Maire instead said finance companies may have to rely on what it known as equivalence. The legal mechanism allows countries from outside the EU to access the single market in limited circumstances but access is patchy and can be revoked at short notice.

The chief executive of British Airways parent International Airlines Group has denied the company will face any ownership issues as a result of Brexit, while dismissing as “nonsense” the spectre of a disruption to transatlantic flights. Willie Walsh said there would be no impact on the airline from Brexit since the UK government would manage to agree an open skies deal with the EU and renegotiate a bilateral aviation pact with the US.

Sainsbury’s, Britain’s second largest supermarket group, plans to increase the base rate of pay for staff working in stores but stop paid breaks and an annual bonus, in a move it said would leave most staff better off. Sainsbury’s employs 195,000 in Britain and Ireland and is the UK’s second biggest private sector employer after rival Tesco. It said it would spend an extra £100m on a plan that would also simplify the number of in-store roles from 22 to five.

Melrose Industries, which is pursuing a hostile £7.4bn takeover of GKN, has told a committee of MPs that the engineer is a “great British business” that has “lost its way” due to bad management. The buyout specialist said it would take power away from GKN’s head office and put it back in the hands of operational managers in order to drive improvements, if its bid is successful.

Aggreko reported post-exceptional pretax profit fell by 11% to £154m, down from £172m a year ago. Operating profit before exceptional items fell 10% to £229m excluding the impact of currency and pass-through fuel. The group’s pre-tax profits before exceptional items fell to £195m, down 12% from £221m in 2016 and in line with expectations. Revenues rose by 4% to £1.73bn from £1.52bn.

Oil Prices rose, paring earlier losses after South Korea said it would hold a summit with North Korea for the first time in more than a decade, which investors took as a cue to sell the U.S. dollar and buy risk-sensitive assets such as commodities.

Gold Prices increased against a weakening Dollar, regaining last week’s 0.5% loss but slipping in Euro and Sterling terms as talk of a “trade war” between the US and Europe grew.