Markets: The Nikkei closed up 0.38 per cent this morning at 16,963.61. The spread-betting firm IG is calling the FTSE 100, which closed at 6,947.55 yesterday, to open 39.5 points higher when trading begins shortly. At 6.59am Brent crude was trading at $51.77 a barrel. For more markets coverage see the snap below. Good morning: Ryanair has warned shareholders this morning that the fall in the value of sterling has forced the budget airline to cut this year’s profit forecasts by 5 per cent. We’ll have a full story shortly on www.thetimes.co.uk/business.
How long will it take for the fall in the value of the pound and rising oil prices to feed through into higher prices for UK consumers? We will get the first clue at 9.30am when the Office for National Statistics publishes inflation data for September. According to a poll by Reuters, economists expect the headline CPI rate of inflation to rise to 0.9 per cent year on year. But higher-than-expected inflation could send the pound, which has fallen 18 per cent since the referendum, even lower. |
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The pound has bounced in overnight trading in Asia. At 6.59am the pound, was trading at $1.22 against the dollar and at €1.11 against the euro. The fashion retailer Burberry certainly won’t be complaining about the weak pound — with the vast majority of its sales overseas City analysts have pencilled in a £140 million boost this year from positive foreign exchange movements. Burberry has updated investors on current trading this morning, reporting a 2 per cent rise in like-for-like sales in the second quarter, moving back into positive sales territory after four negative quarters. We also have an update this morning from ASOS, the online fashion retailer which has reported a 37 per cent rise in pre-tax profits — excluding a £20.9 million charge to settle a trademark dispute — and said that it was confident about the year ahead. It is a busy day for the City’s retail watchers: with the latest supermarket market share data from both Kantar Worldpanel and Nielsen due at 8am. Will we see further evidence of the “big four” fighting back against the discounters?
Elsewhere this morning bookmaker William Hill has terminated £6 billion takeover talks with Amaya. Last week William Hill’s biggest shareholder Parvus Asset Management Europe, which has a 14.3 per cent stake, said that it opposed the deal, arguing that it had “limited strategic logic and would destroy shareholder value”.
Bellway, the housebuilder, has reported another record year with profits jumping 42 per cent and says that “the long term outlook remains positive”.
In the US the earnings season continues with Goldman Sachs, Johnson & Johnson and Intel due to update Wall Street before the bell. Finally, Sir Philip Green has published an independent review of the select committee report into the collapse of BHS this morning by Lord Pannick QC and Michael Todd QC, who conclude that the report were “bizarre” and “unsupportable” and contained very serious factual and legal errors.
Please do keep sending me any thoughts or observations about The Times business coverage - richard.fletcher@thetimes.co.uk and follow me on Twitter @fletcherr for regular updates.
Have a great day.
Richard Fletcher
Business Editor
The Times
richard.fletcher@thetimes.co.uk |
“Biffa can’t help being a rubbish business. It’s been that for a century with 7,500 staff and 2,500 trucks to show for it. But does it have to behave like one? Biffa’s three private equity owners have gone to extraordinary lengths to get the issue away, not least lopping £200 million off the asking price. They blame Brexit Britain. But there’s another possibility: fund managers are fed up with being done over by rubbish floats,” fumes Alistair Osborne. “Given that we spend more on the state pension than anything other than the NHS, the choice of pension age matters. Life expectancy has been increasing and it is likely to continue rising. But if we are going to talk about fairness, we can’t consider the pension age in isolation. We might want the tax and welfare system to be even more redistributive than it is at present,” argues Paul Johnson. “Interest rates will not rise until 2020. That, at least is what the market predicts. Markets are peculiar beasts, though. You might think of them as a sophisticated ants’ nest of overpaid individuals all taking directions from the queen, or in this case the Bank of England governor Mark Carney. Except that communication is deliberately vague, so Mr Carney can change his mind without rebellion,” suggests Philip Aldrick. |
The FTSE 100 began the week in lacklustre fashion, easing back from last week’s record highs, amid a weaker oil price and subdued trading across the pond. It closed down 66 points, or 0.94 per cent, to 6,947.55. The broader FTSE 250 fell 187.68 points, or 1.04 per cent, to 17,792.50. More on yesterday’s market action here. On Wall Street, shares finished modestly lower as energy stocks retreated with crude oil prices and Stanley Fischer, vice chairman of the US Federal Reserve, warned that economic stability could be threatened by low interest rates. The Dow Jones Industrial Average closed down 51.98 points, or 0.3 per cent, at 18,086.40 while the S&P 500 also fell 0.3 per cent, or 6.48 points, to 2,126.50. In late trading in New York, however, Netflix shares jumped 20 per cent after the streaming services added 3.6 million customers in the third quarter against its forecast of 2.3 million. About 5.2 billion shares changed hands compared with the recent daily average of 6.5 billion.
Sterling endured a choppy start to the week in London with reports of a rift between Philip Hammond, the chancellor, and some of his cabinet colleagues who are regarded as more hardline on the terms of Britain’s exit from the European Union. Against the dollar the pound was flat at $1.218 and against the euro it fell 0.2 per cent to €1.108 — having at one stage dipped below €1.10 for the first time since March 2010 — as traders remain cautious ahead of this week’s meeting of the European Central Bank. Oil prices began the week in negative fashion as concerns about the global supply glut dominated sentiment, although the losses were limited by forecasts of a drop in American shale output. In New York, Brent crude for December settlement was 0.5 per cent lower at $51.68 a barrel. .
In the first of a series on the world of investment trusts and other funds, Tempus considers Perpetual Income and Growth, a trust where the discount to net assets seems excessive. Pearson’s latest trading update is not yet another profit warning but the market has taken it badly anyway. Robert Walters made the wise decision several years ago to get into the area of outsourcing human resources. Read on here for more about the Tempus share tips of the day. |
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1 Volkswagen could face a huge bill to compensate 1.2 million British owners of cars embroiled in the diesel emissions scandal after ministers warned that the company’s actions were “completely unacceptable”. The transport department insisted that drivers should be given payouts for the “inconvenience” caused by VW’s decision to cheat pollution tests. 2 Investors dumped UK government bonds yesterday in one of the heaviest sell-offs since the Brexit vote as international demand for sterling assets declined rapidly. Overseas investors are becoming increasingly worried that inflation and a move by the Conservative government towards a “hard” Brexit will lead to a downgrade in the UK’s creditworthiness. 3 Biffa’s hopes of joining the FTSE 250 have been consigned to the rubbish heap after it emerged that its core shareholders had to buy additional shares merely to get its shaky flotation away today. The three private equity owners of the garbage collection business ended up buying an additional £50 million of shares. 4 The popularity and cost to taxpayers of the new Lifetime Isa could be far higher than the Treasury is expecting, ministers were warned yesterday, after they estimated that only 200,000 people would apply in the first year. 5 The government is set to take another multibillion-pound hit on the value of its stake in Royal Bank of Scotland after the slump in the bank’s share price since the European Union referendum. 6 Bookmakers look set to be hit by an extra £30 million bill after the government decided to impose a levy of 10 per cent of their gross profits from horse racing from both betting shops and online betting. 7 Leaving the European Union will save Britons from paying the price of the European Union’s costly agricultural policy, according to a paper for the Institute of Economic Affairs that flies in the face of multiple warnings that Brexit will push up food prices. 8 Bank of America has defied expectations and published improved quarterly results, continuing a positive trend among the four big lenders in the United States. Third-quarter profits rose by 7 per cent compared with last year. 9 Pearson was struggling yesterday to convince investors that its turnaround plan was on track after sales figures at its key universities courseware division were worse than expected. 10 Shares in Luceco, a maker of LED lights, switches and sockets, jumped almost 19 per cent on their debut on the London Stock Exchange in an initial public offering that valued the company at £209 million.
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| The Times |
Investors dumped UK government bonds yesterday in one of the heaviest sell-offs since the Brexit vote as international demand for sterling assets declined rapidly. Overseas investors are becoming increasingly worried that inflation and a move by the Conservative government towards a "hard" Brexit will lead to a downgrade in the UK's creditworthiness. Biffa's hopes of joining the FTSE 250 have been consigned to the rubbish heap after it emerged that its core shareholders had to buy additional shares merely to get its shaky flotation away today. |
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| The Wall Street Journal |
A sharp selloff in global government bonds revealed investors’ concerns over rising inflation and the willingness of central banks to tolerate it, even as the market later mainly recovered. UK government bonds led the selloff. Yields on 10-year U.S. and German debt hit their highest levels since June. Bank of America reported higher third-quarter profit and revenue, driven by fixed-income, currency and commodities trading. |
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| Financial Times |
The government’s stake in Royal Bank of Scotland is about to be sharply written down in the public accounts, leaving a £6bn to £7bn hole in plans to reduce the burden of debt in next month’s Autumn Statement. The flow of French bankers moving into South Kensington in London — home to the French Lycée and sometimes known as Paris’s 21st arrondissement — has largely stopped after Britain’s vote to leave the EU. |
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| The Daily Telegraph |
British government bond prices have fallen back to their pre-referendum level, as worries over inflation and the post-Brexit economy mean investors are demanding a higher rate of interest in exchange for lending to the UK. The future of more than 100 UK stores belonging to American office stationery giant Staples have been thrown into doubt despite talks to offload its European operations to Cerberus, one of Wall Street's most powerful hedge funds. |
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| The Sun |
Britain's jobs market was "thriving" in the first three months after Brexit despite warnings of a looming rise in unemployment. Agencies were busy and vacancies rose in the July to September period. Robert Walters, the recruiter which takes on marketing, banking, and IT staff, said that its UK profit was up 9 per cent year on year at £23.4 million. Its European business grew 27 per cent to £14.5million. |
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