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The Times
Thursday September 7 2017
Business – Need to know – Afternoon Edition
Martin Waller
By Martin Waller
 
The price of houses has recovered, apparently putting paid to fears that the long housebuilding boom was at last coming to an end, taking some of the pressure off first-time buyers. House prices in the three months from June to August were 0.1 per cent higher than in the previous few months, according to the Halifax House Price Index. Prices in that quarter were therefore 2.6 per cent higher than in the same period a year before. This means that the rise in August against the previous month accelerated, up 1.1 per cent as against a 0.7 per cent rise in July.

The Halifax figures, of course, include the secondary market, which some had thought was bearing the brunt of the slowdown as those who already had a home became more cautious about moving. Comments from the four quoted housebuilders that have reported this week suggest that the first-time market is still going strong too.

The cigarette maker Imperial Brands has confirmed the sale of a 10 per cent stake in the Spanish-quoted logistics company Logista for £230.8 million. The business is not seen as a core one at Imperial, which has said that up to £160 million of the proceeds from the sale would be handed back to investors by means of a share buyback. Imperial will still hold 60 per cent of Logista and is entering into a lock-up agreement not to sell any more for about three months.

Jaguar Land Rover, the UK’s biggest car maker, may be committed to introducing an electric or hybrid option for all its models by 2020, as reported in this paper this morning, but Ralf Speth, the chief executive, is worried that the UK may not be ready for the mass arrival of electric cars. He questioned on the BBC Radio 4 Today programme whether there would be a network of charging points to support the new cars, or even if there would be enough power on the grid. Dr Speth did make some encouraging noises about Brexit, however, saying that he was hopeful we would get “free and fair trade” as politicians on either side of the negotiations would want to do their best for society.

ZPG, which owns the Zoopla online estate agent, has moved further into the field of financial services, announcing the agreed purchase of money.co.uk to add to its uSwitch offering. The sellers will get £80 million up front and another £60 million dependent on profits over the next year.

In March last year the Financial Conduct Authority said it was investigating six life insurance companies over their treatment of longstanding customers after identifying some risks that could lead to them being treated unfairly, such as insurers relying on “customer inertia”. The regulator appears today to have cleared one of the six, Police Mutual, which provides services to police officers, saying that the investigation has been closed with no further action. It has to be said that this is the most obscure of the six: still under investigation are Scottish Widows, Prudential, Countrywide Assured, Old Mutual and Abbey Life.

Finally, the government has backtracked on the reforms to the so-called Ogden formula that rocked the insurance industry when they were announced early in the year. This governs compensation for accident claimants and the earlier, more generous formula took hundreds of millions off industry profits. The revision today is more benign to the industry or, if you like, less generous to claimants. Analysts have welcomed the change and share prices are up. It remains to be seen what consumer groups make of the decision.

Martin Waller
Tempus editor
Martin Waller
 
Market Snap
Insurers were on the rise earlier after the government announced a shake-up that will cut insurance premiums and reduce personal injury payments. Direct Line climbed more than 3 per cent to 383p on the FTSE 100. Ministers acted after the profits of motor insurers took a hit in February when the Ogden discount rate was unexpectedly cut from 2.5 per cent to -0.75 per cent, raising premiums. Hastings also gained 7p to 309p following the news.
The FTSE 100 brought an end to its recent losing streak, picking up 16.44 points, or 0.22 per cent, to 7,370.57 during late morning trading. Defensive stocks were popular, with Imperial Brands advancing 93p to £33.03 and British American Tobacco rising 65½p to £48.77½.

Stocks trading without entitlement to their latest dividend payout trimmed almost 7 points off the index. BHP Billiton fell 35½p to £14.49 and Antofagasta slipped 3p to £10.39.

Many investors were awaiting for news from the European Central Bank and any signals provided by Mario Draghi, its president. “The big question is whether he will be able to talk down the euro for anything more than a few hours, or whether markets will simply look past his words with an expectation that a renewed tapering of QE is on its way, and that it is now merely a question of time,” Chris Beauchamp, chief market analyst at IG, said. “We know that the euro’s strength is beginning to irk the ECB, but will irritation be enough to prompt them into a policy change? And given the widespread rush to buy eurozone stocks, and hence the euro, is there really much that the ECB can do anyway?”

The FTSE 250 gave up 50.90 points, or 0.26 per cent, to 19,601.41. Go-Ahead Group, the transport operator behind Southern Railways, dropped 150p to £16.03 after releasing its full-year results.

ZPG, the owner of Uswitch and the online estate agent Zoopla, picked up 12p to 366½p after buying the price-comparison website Money.co.uk for £140 million. Credit Suisse responded by lifting its target price from 440p to 460p and Jefferies raised from 483p to 542p.

Callum Jones
Markets Reporter
 
FTSE risers and fallers*
Up
GKN +3.39%
Imperial Brnads +2.96%
Micro Focus International +2.90%
Direct Line Insurance +2.29%
Barratt Developments +2.02%
 
Down
BHP Billiton -2.19%
Babcock International -1.29%
Paddy Power Betfair -1.18%
Land Securities -0.99%
Centrica -0.86%
 
 
Markets
FTSE100 7393.18 +0.53%
FTSE250 19607.92 -0.23%
Cac 5144.730 +0.849%
Dax 12342.05 +1.04%
BrentCrude 54.46 +0.48%
Gold 1338.0500 +0.32%
GBP/$ 1.3096 +0.42%
GBP/€ 1.0929 -0.16%
10Y Gilt 131.269 -0.2%
*As at noon
 
US day ahead
The weekly report from the US Labor Department is expected to show the number of Americans filing for unemployment benefits to have increased by 5,000 to a seasonally adjusted 236,000 for the week ended September 2. Separately, the data on non-farm productivity for the second quarter is expected to be revised to an increase of 1.3 per cent from 0.9 per cent. Also the Senate Banking Committee will vote on two nominees to fill top financial regulatory posts. If confirmed Randal Quarles would become vice-chairman for supervision at the Fed and Joseph Otting would take over as comptroller of the currency.
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