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Markets: The Nikkei closed down 1.6 per cent this morning at 16,596.51. IG is calling the FTSE 100, which closed at 6,941.19 yesterday, to open 26 points lower. At 6.45am Brent crude was trading at $48.06 a barrel and the pound was trading at $1.29 against the dollar and at €1.15 against the euro. For more markets coverage see the snap below and follow me on Twitter for regular updates throughout the day - @fletcherr. Good morning: Anglo-Australian miner BHP Billiton has announced the largest loss in its history this morning as it writes down the value of its US shale business and makes provision for compensation and fines linked to the Samarco disaster. In total, the world’s largest mining group has reported a $6.3 billion (£4.9 billion) full year loss and warned of “modest” growth this year. “While commodity prices are expected to remain low and volatile in the short to medium term, we are confident in the long-term outlook for our commodities, particularly oil and copper,” said Andrew Mackenzie, BHP Billiton’s chief executive. It is a similar picture at John Wood Group, the oil services group, which has posted a 63 per cent fall in pre-tax profits (the oil price rally of recent days that has pushed Brent crude up 13.8 per cent since the start of August coming too late to boost results). We also have results from copper producer Antofagasta, where profits have fallen 8 per cent. Elsewhere John Menzies and Polypipe have announced half-year results and Unilever has said it is buying air purification specialist Blueair. How is the UK economy faring following June’s vote to leave the European Union? After weeks of confidence surveys we finally get some hard evidence. We kick off today with July’s inflation report at 9.30am, with retail sales and employment data due later in the week. Markets are understandably jumpy. As we report in this morning’s paper, sterling slipped to $1.28 yesterday, although on the flipside the FTSE 100 hit a fresh year-high amid mounting expectation of further stimulus from the Bank of England. Inflation is expected to rise this year, as sterling’s post-Brexit slide pushes import prices up, but not just yet. According to a poll by Reuters economists expect the headline CPI rate of inflation to remain steady in July at 0.5 per cent, flat on June. Tom Knowles, our Economics Correspondent, will be poring through the inflation data. He’ll have a full report on www.thetimes.co.uk/business later or for instant reaction follow him on twitter - @tkbeynon. The market will also have a raft of US economics data to digest with housing starts, inflation and industrial production figures later today, as well as quarterly earnings from Home Depot and TJ Maxx owner TJX Cos. Please do keep sending me any thoughts or observations about The Times business coverage - richard.fletcher@thetimes.co.uk. Have a great day. Richard Fletcher
Business Editor
The Times |
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1 NHS officials waved through medicine price rises of up to 600 per cent with no questions asked after demands from a monopoly supplier, according to emails seen by The Times. Health staff queried the “large difference” in new prices set for a host of drugs by the British company AMCo but merely asked for confirmation that the changes were correct. 2 Investigators at the US Justice Department have found evidence of criminal wrongdoing in Volkswagen’s diesel emissions cheating scandal and are negotiating a settlement with the German carmaker that is expected to result in charges and financial penalties. 3 More than 6,000 families may have been paying three times too much for their gas after some of the country’s top energy suppliers made basic errors calculating how much fuel households have used.
4 Rail fares have risen by almost a quarter since 2010, compared with a 12 per cent increase in average pay, according to the TUC. The disclosure comes as the government prepares to announce next year’s fare rises, with about 1.5 per cent expected to be added to the cost of regulated tickets, which include season tickets and day returns. 5 The pound dropped to near its lowest levels since the Brexit vote as markets prepared for evidence this week that the UK economy has been knocked off course by the decision to leave the European Union. Sterling dropped half a per cent to $1.2874. 6 Britain’s blue-chip companies handed their shareholders five times more cash than they paid into their own pension schemes last year despite the fund deficits ballooning on the back of falling interest rates. FTSE 100 businesses paid dividends worth £71.8 billion. 7 William Hill, the bookmaker, has shown no signs of lowering its defences after it rejected a sweetened takeover offer from 888 Holdings and Rank Group that it claimed was “based on risk, debt and hope”. 8 Thousands of workers at Sports Direct are to receive pay totalling £1 million after the retailer failed to pay them the national minimum wage. The payments, to workers at its Shirebrook warehouse complex in Derbyshire, involve agency workers as well as Sports Direct staff. 9 The growth rate of Japan was flat in the second quarter as weaker exports and business investment put the brakes on efforts to revive the economy. Stagnant GDP during the three months to June and annualised growth of 0.2 per cent were below expectations. 10 Genus, the bull semen producer, must pay $2 million in damages to an American rival for breaching its patents and breaking a confidentiality clause, although the payout means the company has a free hand to develop its own technology for ensuring that bulls sire only female calves.
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“Inheriting other’s people’s pets can be a mixed blessing. Philip Hammond, the new chancellor, is no doubt wondering what to do with the rabbit George Osborne pulled out of the hat on Budget Day in March. The Lifetime Isa (or Lisa) was promised for April 2017, and has been hopping about the Treasury ever since.” Will Lisa be shooed into the long grass, asks Patrick Hosking? “Venture-backed tech start-ups with big ambitions and small or non-existent profits have long sought to boost recruitment, retention and morale by offering staff share options and the promise of a massive payday someday down the road. But with many companies delaying public offerings and staying private for longer, the road to riches is becoming increasingly long” Technology start-ups are having to rethink their approach to compensation, says Alexandra Frean. “Amid Labour’s ructions over the leadership, it’s easy to lose sight of the dismal state of its economic thinking. There is much that a left-wing party could constructively contribute to debate.” A left-wing government needs credibility in monetary policy, says Oliver Kamm. Jeremy Corbyn appears to have given no thought to this. |
In London, the FTSE 100 touched a fresh 14-month high - up 0.4 per cent, or 25.17 points, to 6,941.19 - after energy shares rallied and Sage Group recovered from an early fall following a data breach. The broader FTSE 250 was flat in percentage terms after rising 7.89 points to 17,929.27 with Peppa Pig owner Entertainment One leading the way with a gain of 6.8 per cent on talk of a bid from KKR, the private equity firm. More on yesterday’s market action here. On Wall Street, the three main US stock markets each hit all-time highs again, extending their record breaking run from last week. The Dow Jones Industrial Average was up 59.58 points, or 0.3 per cent, to close at 18,636.05 while the S&P 500 rose by 0.3 per cent, or 6 points, to 2,190.15 and the tech-heavy Nasdaq climbed 0.6 per cent, or 29.12 points, to 5,262. Around 5.5 billion shares changed hands compared with the recent daily average of 6.4 billion. Sterling started off the week in reasonable shape. However, by late-afternoon nervousness ahead of official inflation data today saw it fall against the US dollar - down 0.4 per cent to $1.286 - within a whisker of the lows hit in the two weeks after the shock Brexit vote. Against the euro, the pound was €1.149.
Oil prices continued their upward march in the belief that Opec will take action to support prices and help to reduce the global supply glut - early indications are that US stockpiles did fall slightly last week. In New York, Brent crude for October settlement rose by 2.4 per cent to $48.48 a barrel - still well below the $52.50 seen in June. Housebuilders may have recovered much of the losses seen in the wake of the referendum vote, but many in the market are still mistrustful of the sector, Tempus notes. Shares in Bovis Homes fell despite some half-year figures that showed further progress although with a note of caution. The car dealership market is consolidating as smaller firms sell out, and Lookers is gaining from the process. Foresight Solar Fund is one of those vehicles that offer investors a high and reliable income. Read on here for more about the Tempus share tips of the day. |
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| The Times |
The pound dropped close to its lowest levels since the Brexit vote as markets braced themselves for hard evidence this week that the UK economy has been knocked off course by the decision to leave the European Union. Sterling dropped half a per cent to $1.2874 against the dollar, dipping to its July 11 low and close to the $1.2798 it reached on July 6, which was the lowest since 1985. The pound was also down by half a per cent against the euro at 87p for the first time in three years as currency speculators turned the most negative on sterling since records began. Bearish sentiment intensified as markets prepared for a blizzard of official UK economic news on inflation, employment, retail sales and the health of the public finances, offering the first indication of the state of the economy since the referendum vote. Another sign of concern is that yields on tenyear gilts or government bonds are trading at record lows. |
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| The Wall Street Journal |
US Justice Department investigators found what they believe to be criminal wrongdoing in Volkswagen AG’s diesel-emissions cheating, and are negotiating a settlement with the German auto maker expected to result in charges and significant financial penalties, said people familiar with the matter. Federal prosecutors and Volkswagen lawyers have held preliminary discussions and are working to settle an anticipated criminal case before the end of the year, though the timing may slip, the people said. Prosecutors haven’t yet decided on specific charges they might bring against Volkswagen, the people said. Volkswagen last year admitted to misleading environmental regulators and consumers. Prosecutors have previously charged other car makers with wire fraud and concealing information from government officials for safety transgressions. |
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| The Daily Telegraph |
The gulf between William Hill and its suitors Rank Group and 888 has widened even further after a row erupted over how the mooted takeover should be valued, following the rejection by Britain's biggest bookmaker of a sweetened £3bn-plus bid. The bookie yesterday revealed that it had received a sweetened cash-andstock approach from Rank, the owner of Grosvenor casinos and Mecca bingo halls, and online gambling company 888 on Sunday evening that it had once again spurned on the grounds that it was too low and "highly opportunistic". Under the terms of the revised proposal, the joint bidders had offered William Hill investors a greater share of the gambling giant that would be created from a deal but had kept the cash portion of the bid unchanged. In a further twist, however, a disagreement also broke out between William Hill and its suitors over the value of the offer, pushing the two sides further apart than ever before. In a move that took Rank and 888 by surprise, the bookie said the improved bid had been worth 352p a share - or about £3.1bn - and that it now considered that the pair's first proposal, which was rejected last week, to have been valued at 339p. |
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| Financial Times |
Santander UK is to halve the interest rate on one of its most popular accounts in a move other banks are expected to follow as they adjust to ultra-low rates and economic uncertainty triggered by the Brexit vote. The bank has signed up more than 3m customers to its 123 current account, luring them with a comparatively high rate of 3 per cent. It blamed its decision to slash the maximum payout on the account to 1.5 per cent on "interest rates staying lower for longer". Lloyds Banking Group followed with a statement saying it would "review" its current accounts, which include its "Club" product that offers up to 4 per cent interest. Santander UK, which considers itself a "challenger" to the largest high street lenders, has been one of the most aggressive banks in pursuing current accounts in a bid to attract customers. It has attracted £1bn a month this year to its current accounts, which have an overall balance of £61bn. The creation of the 123 account in 2012 was a pivotal moment for Santander UK, which arrived on the high street two years earlier after buying Abbey National, Alliance &Leicester and part of Bradford &Bingley. |
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