Markets: The Nikkei closed flat this morning at 16,254.45. IG is calling the FTSE 100, which closed at 6,740.16, to open 32 points higher. At 6.44am Brent crude was trading at $43.84 a barrel and against the dollar the pound was trading at $1.312. For more markets coverage see the snap below. Good morning: Embattled shareholders in Royal Bank of Scotland, which have seen shares slide 36 per cent since the start of the year, will find little comfort in this morning’s interim results. The bank has posted a larger-than-expected £2 billion loss as it puts aside another £1.3 billion to cover restructuring costs, PPI payouts and other fines and compensation. “We’re at the mid-way point in our five year plan and we’re making good progress. We are clearly in phase two of our strategy where our focus is on drawing a line under many of the legacy issues that have plagued this bank, and transforming the core business so we can deliver consistent, sustainable profits and results for our shareholders and do great things for our customers,” says Ross McEwan, chief executive of RBS. We’ll have a story on our website shortly - www.thetimes.co.uk/business. It may be Poet’s Day - push off early tomorrow’s Saturday - in the City, but there is little chance that City economists will be able to slip off after lunch as the attention switches from the Bank of England to the US Labor Department. Yes, you have guessed it. It is jobs day in the US with the release of July’s non-farm payroll data at 1.30pm (UK time). The closely watched jobs numbers - as they are better known - give a snapshot of the strength of the world’s largest economy. According to a Reuters survey Wall Street is betting on a 180,000 increase in non-farm payrolls, which should be enough to bring the unemployment rate down to 4.8 per cent. A better-than-expected jobs number could send the dollar even higher against the pound, as traders bet on US rates rising sooner than expected. We’ll have a full report on the data - and what it means on our website later. Closer to home we get the Halifax House Price Index for July at 8.30am. Following yesterday’s upbeat results from Ladbrokes, William Hill has posted a 28 per cent rise in first half pre-tax profits to £100.7 million. Last month William Hill rejected a takeover approach from rivals 888 Holdings and Rank just days after ousting its then chief executive James Henderson. We have also got interim results from insurer esure and brickmaker Ibstock and a trading update from housebuilder Bellway. 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 weekend. I’ll be back in your inbox on Monday morning.
Richard Fletcher
Business Editor
The Times |
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1 Savers and pensioners will bear the brunt of the Bank of England’s attempts to shore up the economy after interest rates were cut to an historic low. The Bank’s decision to reduce rates to 0.25 per cent, the lowest in its 322-year history, was described as “another nail in the coffin” for the £1.2 trillion held in current and savings accounts. 2 The Post Office has defended its chief executive’s £600,000 salary after the Unite union accused it of being over-generous to bosses and “sneaking out” its annual accounts. 3 The Bank of England has slashed growth forecasts by the largest amount on record as the UK counts the cost of leaving the European Union. The economy will narrowly avoid recession but only because the Bank took unprecedented measures by cutting interest rates to a new historic low of 0.25 per cent and launching a further £170 billion of money printing. 4 There was a silver lining in the cloud hanging over Roy Hodgson and the England football team after the early exit from Euro 2016:Ladbrokes enjoyed a good tournament as punters continued to stake their money on the winners and losers. 5 Philip Hammond has promised to do what it takes to support the Bank of England’s stimulus package and shore up growth. Economists have raised concerns that the Bank is running out of tools and that the government may have to step in with fiscal measures. 6 Inmarsat returned to growth in the second quarter, compensating for a first three months so bad that £1 billion was wiped from the London-based satellite communications provider’s valuation and resulted in its expulsion from the FTSE 100. 7 Government support for peer-to-peer lenders could encourage retail investors to take undue risks, Andrew Tyrie, chairman of the Treasury select committee, has warned. 8 Randgold Resources missed City expectations after one of its “toughest quarters in years”, but raised the prospect of a big increase in investor payouts. The FTSE 100 goldminer was beset by technical issues at two of its five big operations in Africa. 9 Cobham, the struggling aerospace and defence group, swung to a first-half loss but insisted that it was on track to meet expectations for the full year. 10 One of Britain’s biggest insurers has said it is ready to invest billions in the country’s infrastructure and has called on the government to “step up” to assume more of the risk in big projects. Mark Wilson, chief executive of Aviva, said Brexit had not changed his view on the attractiveness of the company’s home market.
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“Philip Hammond must now use his autumn statement to demonstrate that he knows how to capitalise on Britain’s historically low borrowing costs. There are heaps of job-creating infrastructure projects waiting to get off the ground. And not the vanity ones of his predecessor either, such as Hinkley, Heathrow and HS2.” You can only expect so much from an unreliable boyfriend like Mark Carney, argues Alistair Osborne. “The bazooka is firing blanks; the sledgehammer is made of marshmallow ... But Mark Carney is right to act, they reason, because no one else is: the Treasury is waiting until the autumn statement; No 10 has done little more than convene toothless committees and issue flimsy platitudes about productivity.” The governor’s sledgehammer won’t crack a thing says Ed Conway. “Like 1990s companies, today’s professionals are realising that they really can outsource all their domestic chores. I may have a 1970s-style Good Life streak in me but I know I’m swimming against the tide. More typical are my friends who call an electrician because the fuse in a lamp needs changing.” The Do It For Me sector is booming, says Rhymer Rigby. |
In London the FTSE 100 rallied after the Bank of England cut its base rate bouncing back from a new three-week low early in the session to finish up 105.76 points, or 1.6 per cent, at 6,740.16. The broader FTSE 250 also put its best foot forward with a jump of 247.19 points, or 1.45 per cent, to 17,244.32. More on yesterday’s market action here. On Wall Street, shares ended little changed yesterday as traders were cautious ahead of the non-farm payroll, or jobs, numbers later today. The Dow Jones Industrial Average finished flat in percentage terms and just 2.95 points lower at 18,352.05. The S&P 500, on the other hand, although also flat in percentage terms, closed half of one point higher at 2,164.25. Around 6.4 billion shares changed hands compared with the recent daily average of 6.6 billion. Sterling hit an eight-day low against the US dollar yesterday - down 1.6 per cent to $1.312 - after the Bank of England’s decision to cut interest rates to record lows and announce a £60 billion bond buying scheme. Against the euro, the pound slipped 1.4 per cent to €1.178.
Oil prices rose strongly for a second day, moving further off the April lows below $40 a barrel after new figures showed a small fall in US stockpiles last week. In New York, Brent crude for October settlement was 2.6 per cent higher at $44.20 a barrel. Rupert Soames may not have quite the rhetorical flourishes of his grandfather Sir Winston Churchill but at least he has had a calming influence on Serco. The troubles that shook the FTSE-250 services group seem to be dying out since he took over as chief executive. Tempus takes a look at how he is turning the business around. Stephen Hester has laboured hard since he took the helm at RSA but has not always enjoyed success - although the latest half-year results look more promising. Brammer is one of those investment disasters that sooner or later must provide a buying opportunity. Is now the right time though? Read on for more about the Tempus share tips of the day. |
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| The Times |
The Bank of England has cut Britain's growth forecasts by the largest amount on record as the UK counts the cost of leaving the European Union. The economy will narrowly avoid recession but only because the Bank took unprecedented measures by cutting interest rates to an historic low of 0.25 per cent and launching another £170 billion of money printing. Britain's economy will be 2.5 per cent smaller in 2018 than the Bank had predicted in its pre-referendum outlook in May, as productivity falters and more than a quarter of a million people lose their jobs, the governor said. In a desperate attempt to shore up the post-Brexit economy, the Bank signalled that rates were likely to fall as low as 0.1 per cent by the end of the year. It also unveiled a three-pronged money printing programme and said further measures could be taken if the slowdown deepened. |
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| The Wall Street Journal |
The Bank of England cut its benchmark interest rate to the lowest in its 322-year history and revived a financial crisis-era bond-buying program to cushion the U.K. economy from the aftershocks of the vote to leave the European Union. Thursday’s unexpectedly large and diverse stimulus package—which included a torrent of cheap cash for banks—underscores the concern at the central bank following the June 23 referendum. The BOE sharply cut its growth forecast for 2017, marking the biggest downgrade since it began publishing such forecasts in 1993, saying the outlook had “weakened materially.” Central banks, including the Federal Reserve and the European Central Bank, say they are watching closely in case the move toward Brexit sparks another damaging bout of financial-market contagion and economic instability. However, the fallout so far appears confined to the U.K., with early signs that the U.S. and eurozone economies have shrugged off the surprise result. |
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| The Daily Telegraph |
THE Bank of England has unveiled a four-pronged stimulus package designed to boost the economy and prevent a recession following the vote to leave the European Union. The pound tumbled and gilt yields dropped to fresh lows after the Bank surprised markets by boosting its money printing programme with government and corporate debt alongside the first interest rate cut in seven years. In what economists described as a "forceful response" to an expected UK slowdown, policymakers voted unanimously to cut rates to 0.25pc, from a previous record low of 0.5pc. Policymakers signalled that they were likely to vote for further cuts towards zero within months. Interest rates had previously been held at 0.5pc since March 2009. Mark Carney, the Governor of the Bank of England, said the "markedly" weaker growth outlook warranted "stimulus now". |
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| Financial Times |
The Bank of England launched its biggest stimulus package since the financial crisis yesterday and said it stood ready to make further interest rate cuts this year in an attempt to cushion a looming Brexit-induced downturn. Mark Carney, BoE governor, said there was a "clear case for stimulus, and stimulus now" after a string of business surveys suggested the UK was heading for recession because of the uncertainty following Britain's vote to leave the EU. Mr Carney warned that despite the central bank's "exceptional package of measures" — which included its first rate cut in more than seven years and a new £70bn bond-buying programme — 250,000 people were set to lose their jobs because of the economic shock. Although the cut in interest rates to a record low of 0.25 per cent from 0.5 had been widely predicted, the restarting of bond purchases and a new £100bn funding scheme for banks was more than many in the market expected. |
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