WSJ City: Brexit Boosts Innovation Spending, Hedge Funds’ Ill-Timed Bets, Political Risk Moves to Italy

Good morning from London. Here’s essential reading today from WSJ City. For updates throughout the day, you can download WSJ City for iPhone here or Android here. You’ll need to open this email on your mobile device to do this.  You can sign up to receive this briefing direct to your inbox here.   

More than seven in 10 businesses plan to boost spending on innovation in light of the Brexit vote.

Hedge funds made an ill-timed bet against the healthcare sector, just before the shares took off.

Political risk and capital raising mean a crucial two weeks for Italy and its banks.

The Trump win and hawkish Fed have reversed the search-for-yield trade. Here how fortunes could change.

City Talk: Apple offers to replace some batteries, Chemring gets pound boost, yuan’s bad month.

Nicolas Sarkozy is no longer in the race for the French presidency after an upset in a key primary.

The sharp drop in the euro since the US election is fuelling debate about whether it may reach dollar parity.

Banks have been encouraged to introduce a new level of transparency into bond sales.

Mitt Romney is under “active consideration” to be secretary of state, Mike Pence said.

IN THE PAPERS

Facebook plans to add 500 jobs to its UK workforce, the latest sign that the technology industry has confidence in London. FT (£)

Theresa May will promises to match Donald Trump’s plans to cut corporation tax in an attempt to help her relationship with business leaders. The Times (£)

Lloyds Banking Group leads the race to buy Bank of America’s £7 billion credit card business in Britain. FT (£)

The Treasury has dismissed claims it used its access to the Financial Conduct Authority to obtain price-sensitive information before selling Royal Bank of Scotland shares. The Telegraph

Insurers want the government to help them open up foreign markets, with China and India top priorities, as part of efforts to foster global trade following the Brexit vote. The Telegraph

A survey carried out by a German think-tank, has found that support for the EU has grown in Europe following the Brexit vote—including in Britain. FT (£) 

MARKETS TODAY

European markets are set for cautious gains at the open on Monday, helped by rising commodity prices as the rally in the US dollar loses some steam.

Oil and metal prices are rising, with Brent up 1% to $47.31 a barrel. Iraq’s oil minister said the country plans to offer three new proposals this week aimed at bolstering the unity of OPEC ahead of a meeting of the group at the end of the month.

The dollar was lower against the pound and euro. “With a December hike now 95% priced in, according to CME group, it seems the dollar trade may be experiencing a temporary cooling, although with markets still only pricing in one hike next year, I think there could be more to come down the road,” said Craig Erlam, senior market analyst at OANDA.

In Asia on Monday, Japanese stocks were a bright spot in a generally strong regional performance, as a weak yen and decent economic data boosted Tokyo-traded shares.

The swift rise in government bond yields also steadied slightly, even after the rout in US Treasurys deepened on Friday, with the yield on the benchmark 10-year note closing at a 12-month high.

COMING UP

The CBI Annual Conference in London.