Markets: The Nikkei closed up 0.21 per cent this morning at 19,998.91. The spread-betting group IG expects the FTSE 100, which closed at 7,000 yesterday, to open 12 points higher when trading begins shortly. At 6.55am Brent crude was trading at $52.14 a barrel and the pound was trading at $1.22 against the dollar and at €1.11 against the euro. For more markets coverage see the snap below. Good morning: The labour market has held up well since June’s referendum vote, with the headline unemployment rate falling to an 11-year low of 4.9 per cent last month.
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But can the labour market maintain that momentum despite increasing business uncertainty? Builders merchant Travis Perkins has announced this morning that it is to close 30 branches and ten distribution centres — with the loss of 600 jobs — as it warns of “uncertainty” surrounding customer demand in 2017. A Reuters poll of City economists forecasts no change in the headline unemployment rate when the Office for National Statistics publishes its latest labour data at 9.30am, although the claimant count is forecast to rise by 3,000. With inflation set to rise sharply economists will also focus on the average earnings data: how long before we see a fall in real wages?
We’ll have a full analysis on the employment data on www.thetimes.co.uk/business later.
Given the ferocity of the briefings against him at the weekend it is hard not to conclude that a number of Philip Hammond’s cabinet colleagues would be quite happy if the chancellor became one of those unemployment statistics. Mr Hammond appears in front of MPs on the the Treasury select committee (2.15pm), when he is expected to warn of the potential risks of Brexit.
For the latest Westminster coming and goings sign up for Red Box, the daily political briefing from The Times. A barrage of data released overnight appears to show that the Chinese economy has stabilised. Chinese gross domestic product expanded 6.7 per cent in the year to September, in line with forecasts. Other data showed retail sales rising by a solid 10.7 per cent although industrial output disappointed by growing only 6.1 per cent.
On the corporate front we have a trading update from Rentokil Initial, which declares that it is on track to meet City expectations. Laird, which was once the Laird in the old shipbuilder Cammell Laird but is now a technology company that supplies Apple, has warned that full-year profits will be lower than last year after unprecedented margin pressures.
Finally, winner of this morning’s award for corporate guff goes to a breathless Reckitt Benckiser which declares that it has made “good strategic progress in all of our Powermarkets” as it reports a 2 per cent rise in like-for-like sales in the third quarter.
Please do keep sending me any thoughts or observations about The Times business coverage to richard.fletcher@thetimes.co.uk. And don’t forget to follow me on Twitter @fletcherr for regular updates. Have a great day.
Richard Fletcher
Business Editor
The Times
richard.fletcher@thetimes.co.uk |
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1 Theresa May cleared the path for a third runway at Heathrowyesterday but was accused of delaying the move until 2018. MPs will not get a final vote on airport expansion for more than a year, the prime minister announced, to allow time for further debate. She gave ministers the freedom to speak out against expansion in a concession to Boris Johnson, the foreign secretary, who pledged to lie down “in front of bulldozers” to stop a third runway. 2 Britain is on course for a fresh pay squeeze next year after inflation jumped to a two-year high, economists have warned. Consumer prices rose 1 per cent in September, up from 0.6 per cent a month earlier, reaching their highest level since November 2014, even before any impact from the collapse in the pound. Page 2 3 Millions of older people will be denied new financial freedoms after the Treasury admitted that plans to allow pensioners to swap their retirement income for a cash lump sum were unworkable. 4 Tesco’s fightback has gained further ground, with industry figures showing that Britain’s biggest grocer has won market share for the first time in five years. Only days after winning its pricing battle with Unilever, figures from Kantar Worldpanel have revealed that Tesco’s sales grew by 1.3 per cent in the 12 weeks to October 9. 5 The pound is “not yet cheap”, despite falling almost 15 per cent against the currency basket since Britain’s vote to leave the European Union, Goldman Sachs has claimed. Sterling was still “around 10 per cent overvalued”, the investment bank said yesterday. 6 Politicians should keep their noses out of the Bank of England’s affairs unless they want to add to the nation’s problems, economists warned after Lord Hague of Richmond, the former foreign secretary, claimed that central bankers had “lost the plot”. 7 Andrew Tyrie, chairman of the Treasury select committee, has demanded that the Financial Conduct Authority says when it will publish its delayed report into the abuse of distressed companies by the Royal Bank of Scotland. 8 William Hill’s proposed £6 billion merger with Amaya, of Canada, was scrapped yesterday after shareholders in Britain’s biggest bookmaker vetoed further talks. 9 GB Energy has lifted its prices by up to 30 per cent. The independent supplier confirmed that it was raising its standard dual fuel variable tariff prices from £820 to £1,060 a year. 10 Flights from Manchester and Edinburgh to the United States will be available for as little as £200 return next year when Norwegianbecomes the European launch carrier of the Boeing 737 Max.
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“Sir Philip Green has already had one report written about him this summer, a 67-page number lovingly put together by MPs on the pensions and business committees. But he also commissioned an even longer one from two of the priciest ghostwriters in town: Lord Pannick, QC, and Michael Todd, QC. They argue that the MPs' inquiry was so “unfair” that it would not stand up in a court of law. The retail tycoon complains that Frank Field, chairman of the pensions committee, tried to “destroy his reputation”. He’s been doing a brilliant job of that all by himself,” argues Alistair Osborne. “When I was last a regular on these pages, many years ago, two things dominated economic policy. One was inflation that could never be quite beaten. The other was the pound, which was always skittish and often very weak. It’s good to be back. The markets will want reassurance that the Bank of England is not indifferent to the weak pound and the coming rise in inflation. In time that will inevitably mean higher interest rates,” predicts David Smith. “In its recent research paper entitled The Silent Road to Serfdom: Why Passive Investing is Worse than Marxism, Alliance Bernstein argued that the increased popularity of passive investment strategies impeded the efficient allocation of capital. Investors added nearly $1.3 trillion to passive funds and withdrew about $250 billion from active funds in the three years to the end of August. But it’s too soon to conclude that the rise of passive investing spells an end to active investing,” insists Alexandra Frean. |
The FTSE 100 rallied back to the 7,000 level, up 52.51 points, or 0.76 per cent as UK-exposed stocks were boosted by a stronger pound. The broader FTSE 250 rose 201.91 points, or 1.13 per cent, to 17,994.41. More on yesterday’s market action here. On Wall Street, a series of solid company earnings reports gave US markets a positive session with the hope of more to come. The Dow Jones Industrial Average rose 75.54 points, or 0.4 per cent, to close at 18,161.94 while the S&P 500 finished its best day so far this month with a gain of 0.6 per cent, or 13.10 points, to 2,129.60. About 5.6 billion shares changed hands, compared with the recent daily average of 6.5 billion.
Sterling enjoyed a modest bounce in London. It climbed to $1.230 — up 1 per cent — after Downing Street indicated that it was “very likely” that MPs would be able to vote on the final Brexit agreement between Britain and the European Union. Against the euro the pound also gained 1 per cent to €1.118. Oil prices dipped early on in London yesterday but clawed back losses later in the day, mainly on hopes that US stockpiles did not rise by as much last week as in the first week of October, when they increased by 4.9 million barrels. In New York, Brent crude for December settlement was 1.2 per cent higher at $52.15 a barrel.
The recruitment specialists, such as Hays, the largest on the London market, are a good economic indicator and the latest figures paint a disappointing picture for the UK, concludes Tempus. Asos seems able to achieve growth rates well ahead of any other fashion retailer, given its young customers’ loyalty to the brand. Connect Group is gradually lessening its dependence on newspapers and magazines, though the market is taking its time to appreciate this. Read on here for the Tempus share tips in full. |
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| The Times |
Theresa May cleared the path for a third runway at Heathrow yesterday but was accused of delaying the move until 2018. MPs will not get a final vote on airport expansion for more than a year, the prime minister said, to allow time for further debate. Tesco's fightback has gained further ground, with industry figures showing that it has won market share for the first time in five years. Only days after winning its pricing battle with Unilever, figures from Kantar Worldpanel have revealed that Tesco's sales grew by 1.3 per cent in the 12 weeks to October 9.
The pound is "not yet cheap", despite falling almost 15 per cent against the currency basket since Britain's vote to leave the European Union, Goldman Sachs has claimed. Sterling was still "around 10 per cent overvalued", the investment bank said yesterday. |
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| The Wall Street Journal |
An American judge indicated that he was likely to approve Volkswagen's $14.7 billion diesel emissions settlement deal within the next week. The European Central Bank is expected to leave its policy mix unchanged Thursday, continuing its bond-buying program until at least March. Goldman’s profit climbed 47 per cent, beating forecasts, and revenue rose 19% as trading bounced back.
Vodafone plans to work with an Iranian internet firm to help improve its network as sanctions ease. |
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| Financial Times |
The pound had its best day since fears of a “hard Brexit” gripped the currency market two weeks ago, after a government lawyer said that parliament would have the final say on whether to accept Britain’s exit deal with the European Union. James Eadie, a lawyer for the government, told the High Court that the final deal with Brussels — which would be negotiated over two years after Brexit is triggered — would “very likely” be subject to parliamentary approval. Harry Shearer, who played the bass guitarist Derek Smalls in the 1984 “rockumentary” This is Spinal Tap, has gone “to 11” with a $125m lawsuit against Vivendi, the French media group that holds the rights to the movie. Mr Shearer, who co-wrote the cult film and has supplied 23 voices in The Simpsons cartoon series, said that the four creators of the movie had been paid a meagre sum of royalties for the music and merchandising since Vivendi acquired the rights in 1989. Larry Sanders, elder brother of the failed US presidential hopeful Bernie, faces his own electoral test as he stands for the Greens in Witney, the Oxfordshire seat vacated by David Cameron. |
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| The Daily Telegraph |
Sir Philip Green launched an audacious defence of his reputation. The former BHS owner broke months of silence to say that he was "sad and very, very, very sorry" for the collapse of the 88-year-old retail chain earlier this year. He insisted that his family had injected millions into BHS. The Commons will vote tomorrow on whether to strip Sir Philip of his knighthood. The cost of living is rising at its fastest rate in two years as everyday goods and activities, from fuel to eating out, become more expensive. Higher prices for clothing, particularly womenswear, hotel stays, restaurants, petrol and gas pushed the UK consumer price index up to 1 per cent in the year to September. Tesco appears to have cemented its turnaround under Dave Lewis after growing its market share for the first time since 2011. The retail giant grew sales by 1.3 per cent in the 12 weeks to October 9, according to Kantar Worldpanel. Tesco was the only one of the "big four" — which also include Sainsbury's, Asda and Morrisons — to grow sales during the period, helping it seize a 28.2 per cent slice of the UK grocery market, against 28.1 per cent a year ago. William Hill, the bookmaker, scrapped plans for a multibillion-pound merger with Canadian online poker giant Amaya after its top shareholders all but unanimously opposed the deal. |
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| The Sun |
Ryanair has cut its profits forecast by 5 per cent because of the weak pound and is braced for an even bigger hit if the currency slumps further. The budget airline, based in Dublin, said that fares in the six months to late September were down 10 per cent and could drop by 15 per cent in the second half of the financial year. Burberry, the luxury fashion brand, will get a £125million annual profit boost from the weak pound as rich tourists hunt for a bargain.
A German rail freight firm is to cut nearly 900 jobs in the UK after a "dramatic decline" in markets such as coal. DB Cargo plans to axe about 30 per cent of its British workforce as it faces "unprecedented challenges". |
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