UK stocks cool on Brexit trade fear and China tensions
Both major UK stock indices fell on Wednesday on the back of rising China tensions and Brexit trade gloom, with the FTSE 100 down 1%. Both indices dipped on the news that the UK Government was close to ‘giving up hope’ of a Brexit trade deal as World Trade Organisation arrangements loomed. Similarly, fears of mounting tensions with China continue to weigh on the minds of investors. The best performer on the day for the FTSE 100 was Kingfisher plc, owner of the B&Q retail chain, which gained 14.6% on the back of better-than-expected outlook for profits. It was followed by mining firm Fresnillo, up 9.6% and packaging firm Smurfit Kappa, up 2.8%. Leading the FTSE 100 down, however, was turnaround specialist Melrose Industries, down 14.2%, as it announced job cuts and a halting of the dividend. It was followed by hotel and restaurant firm Whitbread and high-end fashion house Burberry Group, both down 4.1%. In the FTSE 250, which lost just 0.2%, the biggest rise was Mediclinic International, rising 15.6%, followed by Computacenter at 12.3% and Petropavlovsk up 8.7%.
- FTSE 100: -1% Tuesday, -17.6% YTD
- FTSE 250: -0.2% Tuesday, -20.1% YTD
What to watch
RBS: The Royal Bank of Scotland, or RBS, is no more and is now known as NatWest. It reports interim results amid a flurry of announcements to promote the name change. The bank’s bosses admitted the RBS brand had become ‘toxic’ and so settling on the familiar NatWest is an attempt to move away from the post-crisis image of a failed, nationalised bank. The lender reports interim results on Friday, with a tough outlook predicted as it weathers the storm of coronavirus, with withheld credit payments from borrowers affecting profits. The bank is well-capitalised, however, thanks to stringent stress-test measures in place. Investors don’t seem enamoured by this, as the share price has mostly flatlined in 2020.
Crypto corner: regulator clears the way for US banks to hold cryptocurrency
The Office of the Comptroller of the Currency (OCC) has announced, in a letter seen by Coindesk, it is now permitting US Banks to hold cryptoassets for their customers.
The announcement clears the way for mainstream regulated banks to hold unique cryptographic keys for cryptoasset wallets, essential for such providers to store digital wealth assets for clients. The measure paves the way not only for private clients to hold digital assets at banking providers, but also for cryptoasset firms to deal more easily in digital assets instead of relying on fiat currency.
The letter, addressed to an unidentified bank, stated:
The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers.
The current head of the OCC, Brian Brooks, is a former Coinbase executive who has begun introducing various technological reforms to help financial institutions better utilise modern financial technologies such as cryptoassets.
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