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Markets: The Nikkei closed up 0.9 per cent this morning at 16,745.64. IG is calling the FTSE 100, which closed at 6,893.92, to open 2.5 points higher. At 6.57am Brent crude was trading at $48.86 a barrel and against the dollar the pound was trading at $1.302 and against the euro at €1.157. For more markets coverage see the snap below. Good morning: This morning’s papers will make uncomfortable reading for the “big four” accountants with the government proposing tough new penalties for advisers who help clients avoid tax. Under the plans, which will be set out in a HMRC consultation document today, enablers of tax avoidance could have to pay a fine of up to 100 per cent of the tax the scheme’s user underpaid. “People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay,” said Jane Ellison, financial secretary to the Treasury. Sam Coates, our Deputy Political Editor, has the full story here. Following yesterday’s inflation data we get the latest employment numbers at 9.30 this morning. The headline unemployment rate is forecast to remain at 4.9 per cent and average earnings growth to rise to 2.4 per cent year-on-year in the three months to June. Ignore the headline figures, advises Samuel Tombs, economist at Pantheon Macro. “The claimant count and vacancy figures for July will be key,” he wrote in a note to clients yesterday. Tom Knowles, our Economics Correspondent, will be ploughing through all the data. He’ll have a full story later on our new website - www.thetimes.co.uk/business. Attention will switch to the US later with the publication of the minutes of July’s Federal Reserve meeting. The Fed is expected to outline its current view on the strength of the US economy, which will no doubt spark speculation on whether the next rate increase could come in September or December. Cobham, the ailing aerospace company, has announced this morning that it has poached David Lockwood from Laird to replace its current chief executive. The Sunday Times reported in July that John Devaney, Cobham’s chairman, has asked headhunters at Korn Ferry to find a replacement for Bob Murphy following a disastrous year that saw shares slump following a profit warning in April and an emergency £500 million cash call. We'll have a story up shortly. Balfour Beatty has posted an £11 million first half pre-tax loss - but that’s not bad given that at this point last year the troubled construction group was £150 million in the red. “We are now starting to see tangible benefits from the transformation of Balfour Beatty. By concentrating on our selected markets, we are growing our order book within a control environment which ensures that our business decisions lead to sustainable profit and cash growth,” claims Leo Quinn, chief executive, who is confident enough to reinstate the interim dividend - albeit at a substantially lower level. Meanwhile, FTSE 100 insurer Admiral has reported another set of record results. First-half profits rose 4 per cent to £193 million. David Stevens, who took over earlier this year when long-standing chief executive Henry Engelhardt retired, said the insurer was benefiting from a rise in the cost of car insurance. We also have upbeat half-year results from car dealer Lookers.
Please do keep sending me any thoughts or observations about The Times business coverage - richard.fletcher@thetimes.co.uk. Finally, don't forget to follow me on Twitter for regular updates throughout the day - @fletcherr. Have a great day.
Richard Fletcher
Business Editor
The Times |
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1 Banks and accountancy firms that help businesses avoid tax will be hit by massive fines for the first time under proposals set out by the Treasury. Any firm involved in designing, selling or marketing a tax avoidance scheme which is deemed unlawful could face fines worth up to 100 per cent of the underpaid tax. 2 A huge offshore wind farm of 300 turbines. to be built by Dong Energy of Denmark, has been given the go-ahead. Greg Clark, the business secretary, gave planning permission to the Hornsea wind project which will sit 55 miles off the Yorkshire coast and become the world’s biggest marine-based wind farm. 3 The Campaign to Protect Rural England is calling for subsidies to be diverted from the richest landowners to small farmers who are struggling to survive because of the low prices they are paid for milk, lamb and other produce. 4 More than half of European fund managers plan to sell UK stocks amid renewed fears about the impact of Britain leaving the EU, saying they are more negative on the outlook for Britain than on Italy, says a Merrill Lynch survey. 5 BHP Billiton, the world’s largest mining company posted a $7.2 billion (£5.5 billion) loss after a $4.9 billion writedown on its onshoreUS oil and gas business and a $2.2 billion provision to cover some of the costs of the fatal Samarco dam disaster in Brazil. 6 Karen Millen has lost a High Court battle to regain the rights to use her name in business. The fashion designer sold the retail chain she founded with ex-husband Kevin Stanford to Baugur, the Icelandic investor, for £95 million in 2004. 7 A £3.4 billion bid for William Hill hung by a thread last night amid indications that Rank Group and 888 Holdings may be ready to throw in their cards. The bidding partners have had two offers rejected over the past ten days and are under pressure to up the ante again. 8 William Dudley, president of the New York Fed, said that a September rate rise was possible. Fed futures contracts suggest that investors are expecting one further interest rise before the end of next year, but Mr Dudley said they were underestimating the chances of rate rises in coming months. 9 Rising prices at the petrol pump helped to push up inflation to its highest level in nearly two years, according to the first set of official figures after Britain’s vote to leave the European Union. 10 First-half profits at John Wood Group fell by more than 60 per cent despite the oil services group cutting costs, including laying off 3,600 staff. Revenues fell by 17 per cent to £2.56 billion during the six months to the end of June as a result of the difficult conditions in the oil and gas market.
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“British shoppers must brace for a burst of price rises over the next 12 months as the 17 per cent post-referendum slide in sterling feeds through into the real economy.” If anything, yesterday’s official inflation numbers suggest that the spike could arrive a little sooner than expected, warns Patrick Hosking. “To press ahead with Hinkley would be by far the most reckless course of action. The reason for this has little to do with geopolitics, national security or fears of Chinese espionage and a lot to do with common sense. At more than £30 billion, the estimated cost of the subsidies that David Cameron’s government agreed in order to construct two reactors at Hinkley, looks increasingly ludicrous.” If cool-headed realism prevails, Theresa May will kill off Hinkley and opt for a simpler, cheaper plan B that is less fraught with geopolitics and easier to execute, says Robin Pagnamenta. “With clarity over the terms of the UK’s exit from the European Union set to be in short supply until well into 2017 ... expect the UK’s exchange rate to be a headline act for some time to come.” For the first time in a quarter of a century the value of the pound has become the most watched indicator of the UK’s economic health, argues Simon French, chief economist at Panmure Gordon. |
In London, the FTSE 100 slipped back from its 14-month high - down 0.7 per cent, or 47.27 points, to close at 6,893.92 - as higher-than-expected inflation data weighed on market sentiment. The broader FTSE 250 shed 120.77 points, or 0.7 per cent, to 17,808.50 as a number of companies reported disappointing results. Read here for more on yesterday’s market action. On Wall Street, US markets retreated from Monday’s record highs as William Dudley, president of the New York Federal Reserve, hinted that there could be an interest rate rise as soon as next month. The Dow Jones Industrial Average fell by 84.03 points, or 0.5 per cent, to close at 18,552.02 while the S&P 500 dropped 0.6 per cent, or 12 points, to 2,178.15. Around 5.9 billion shares changed hands compared with the recent daily average of 6.4 billion. Sterling enjoyed some respite in London yesterday as it rose from three-year lows against the single currency and moved further away from a five-week trough against the greenback thanks to slightly higher-than-expected UK inflation. Against the euro, the pound was 0.3 per cent higher at €1.154 and against the US dollar it gained 1.1 per cent to $1.301. Oil prices sharply pared early gains yesterday after traders cautioned that new data from the American Petroleum Institute could show a surprise rise in US stockpiles last week. In New York, Brent crude for October settlement was 1 per cent higher at $48.90 a barrel. Antofagasta, the Chilean copper miner, was one of three in the sector to see their share prices rise sharply after reporting halfway figures. Its assumptions seem based on a recovery in the copper price some time in 2018 that may or may not arrive, though, warns Tempus. John Menzies is still thought of as a newspapers and magazines distributor, but after pressure from an activist shareholder it is looking at splitting off the aviation side. Mears Group has been trying to expand its care side for several years, but with the odd hitch on the way. Read here for the Tempus share tips in full. |
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| The Times |
More than half of Europe's largest fund managers plan to cut their holdings in UK companies amid fears about the impact of Britain leaving the EU. Fifty three per cent of the 34 major asset managers surveyed by Bank of America Merrill Lynch said they would reduce their exposure to London-listed shares, the lowest level ever recorded. The turn in investor sentiment comes after blue-chip share indices rallied following the Brexit vote to higher than they stood before the referendum as fresh rounds of central bank stimulus buoyed the markets. The BAML survey suggests that the rises could prove short lived if asset managers follow through with their intentions to pare back their positions.The survey found that funds were even more negative on the outlook for Britain than Italy, which is in the midst of a banking crisis. |
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| The Wall Street Journal |
BHP Billiton Ltd., the world’s No. 1 miner by market value, recorded its worst-ever annual loss as US$7.7 billion in charges exacerbated a deep slump in commodity prices. Melbourne, Australia-based BHP reported a net loss of $6.39 billion for the 12 months through June, compared with a year-earlier net profit of $1.91 billion. Underlying profit, stripping out one-time charges, slumped 81% to $1.22 billion. As recently as 2011, annual profits topped $20 billion. The loss deepens the gloom in the global mining sector, which has responded to global economic uncertainty and low prices for commodities from copper to iron ore by closing mines, laying off workers and slashing returns for investors. |
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| The Daily Telegraph |
Inflation picked up in July in the first sign that the fall in the pound following the Brexit vote is pushing up prices. The first official data for the month following the referendum shows consumer prices increased by 0.6pc over the last 12 months, up from 0.5pc in June and hitting the highest level since November 2014 - and economists believe this is just the start. A sustained boost in import costs could leave inflation at above 3pc by the end of next year, denting Britons' spending power and preventing the Bank of England from taking any further action to boost the economy. Rising fuel prices were a key factor behind the increase, as oil is traded in dollars on global markets. When the pound slumped, petrol prices rose by 0.8p per litre to an average forecourt level of 111.8p in the month and the price of diesel climbed 0.9p to 113p per litre, according to the Office for National Statistics. |
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| Financial Times |
The Bank of England's second effort to buy long-term gilts proved successful yesterday as investors took advantage of the sharply higher prices that followed the central bank's botched attempt last week. Bondholders offered to sell the BoE more than £3bn, enabling it to comfortably purchase the £1.17bn of government bonds targeted as part of a stimulus programme designed to cushion a forecast slowdown in the UK economy after the June vote to exit the EU. The BoE announced a £70bn bondbuying plan this month alongside its first rate cut in seven years as part of an effort to drive down borrowing costs and encourage holders of government debt to cash out and put their money into the real economy. International markets are keeping a close eye on the BoE's buying after the sizeable shortfall in last week's purchase of longer-dated gilts triggered a global rally that sent bond yields in the UK and Europe spiralling to record lows. |
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