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Pound recovers; more woe for Samsung


Added 12th October 2016 05:44 PM

The pound briefly bounced back above $1.22 and strengthened to around 90 pence against the euro on Wednesday.

Pound recovers; more woe for Samsung

The pound briefly bounced back above $1.22 and strengthened to around 90 pence against the euro on Wednesday.

The British pound recovered Wednesday as lawmakers debated Brexit, while Samsung faced further pressure after a major profits warning caused by its smartphone crisis.

European and Asian stock markets fell across the board, partly due to expectations of a US interest rate rise later this year, dealers said.

"The pound is higher... after a strong rally late last night and in Asia put a stop to a vertiginous drop on Tuesday," said ETX Capital analyst Neil Wilson.

"Theresa May's decision last night to allow the House of Commons a debate on the government's Brexit plans... have allayed some of the concerns about a 'hard Brexit'."

Prime Minister May signalled ahead of a House of Commons debate that she would let parliament scrutinise her plan for Brexit before she begins the formal process to exit the EU.

But she has still offered no reassurance that MPs will have a vote on her plan before she triggers Article 50 of the EU's Lisbon Treaty, which formally begins the two-year exit process.

The pound briefly bounced back above $1.22 and strengthened to around 90 pence against the euro on Wednesday.

Late last week, sterling plunged to $1.1841 -- the lowest level for 31 years. At the same time, the European single currency reached 94.15 pence, its highest against the pound in a seven and a half years.

The weak pound helped London's benchmark FTSE 100 index to reach Tuesday a record intra-day high at 7,129.83 points.

Elsewhere in foreign exchange, the South African rand struck a one-month low of 14.49 rand against the dollar. The currency tumbled around 3.5 percent Tuesday on the announcement that South African Finance Minister Pravin Gordhan would be prosecuted for fraud.

Samsung warning

Samsung Electronics on Wednesday slashed its latest quarterly profit estimate by one third in the wake of a highly damaging recall crisis that ended with the scrapping of its latest flagship smartphone.

In the first indication of just how much the Galaxy Note 7 fiasco might end up costing the world's largest smartphone maker, Samsung revised its operating forecast for the third quarter to 5.2 trillion won ($4.6 billion), compared to the 7.8 trillion won it announced just last week.

The revelation came after close of trade Wednesday which saw Samsung's share price fall 0.7 percent, following an 8.0 percent plunge the day before. Seoul's KOSPI shares index edged up 0.1 percent overall.

Wednesday's revision would reflect a 30-percent drop in Samsung's quarterly operating profit from a year ago, compared to a 5.5-percent rise according to the earlier estimate.

Wall Street shares opened lower Wednesday as investors turned sour over the rising dollar and higher US bond yields.

Markets are keenly awaiting the release of minutes from the Federal Reserve September policy meeting, hoping for a clue about the bank's plans for raising borrowing costs.

A string of recent upbeat data on the world's top economy, and increasingly positive comments from Fed boss Janet Yellen, have fuelled speculation that rates will rise by year-end.

Key figures around 1330 GMT

London - FTSE 100: DOWN 0.3 percent at 7,053.07 points

Frankfurt - DAX 30: DOWN 0.5 percent at 10,527.53

Paris - CAC 40: DOWN 0.5 percent at 4,451.42

EURO STOXX 50: DOWN 0.3 percent at 3,011.59

New York - DOW: DOWN 0.2 percent at 18,095.58.

New York - S&P 500: DOWN 0.1 percent at 2,134.32

New York - Nasdaq: DOWN 0.3 percent to 5,232.97

Tokyo - Nikkei 225: DOWN 1.1 percent at 16,840.00 (close)

Hong Kong - Hang Seng: DOWN 0.6 percent at 23,407.05 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,058.50 (close)

Pound/dollar: UP at $1.2197 from $1.2130

Euro/pound: DOWN at 90.237 pence from 91.15 pence

Euro/dollar:  DOWN at $1.1017 from $1.1056

Dollar/yen: UP at 103.88 yen from 103.48 yen

Oil - West Texas Intermediate: DOWN 54 cents at $50.25 per barrel

Oil - Brent North Sea: DOWN 53 cents at $50.25

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