Business News 27th July 2017

CPA hopes to inform, with its daily bite-size business news on Thursday 26th July 2017, filled with stories we think will interest our members and visitors.

Markets Round up

The FTSE 100 got off to a good early start yesterday as it looked to build on the momentum started on Tuesday. Shortly after the opening bell rang the blue chip index headed to day highs of 7487.05. The index closed slightly off the highs at 7452, up 17.5 points on the day (0.25%). The FTSE 250 climbed 0.6% to 19,763.  ITV was one of the best performers closing up 2.4% to 180p after its dividend rise more than made up for a drop in profits in and revenues, both of which were in line with expectations. GSK posted its first half results at 11am with shares closing down 2.9% at 1540. The drugmaker revised EPS guidance to growth of 3%-5%, targeting another £1bn cost savings by 2020. The Euro stoxx 50 meanwhile climbed 0.5% to 3491 as earnings continued to drive stock prices higher. Overnight the US was flat, albeit at all times highs as the Nasdaq climbed 0.16% to 6423 and the s&P stayed at 2478 supported by the FED and corporate results. Nasdaq futures jumped after facebook announced faster than expected sales growth with revenue up 45% year on year. Facebook shares have climbed over 3% in post market prices.  In Asia stocks climbed with the Chinese Hang Seng up 0.8%, The Japanese Topix up 0.4%, Australian shares up 0.15% and Korean shares up 0.4%. In currencies the dollar continued to get beaten up after the FED signaled it sees US inflation pressures have reduced and therefore interest rates are not being pressured upwards. The FED also signaled it expected to start to reduce its balance sheet of treasuries soon if the US economy continues to grow. The pound strengthened against the dollar almost 1% to $1.3129 but remained level against the Euro at 1.1205. It’s going to be a big day for the stock markets as a large number of companies report today. Consumer goods dominate a huge day for European earnings. AB InBev, Nestle, Danone and Diageo report in the space of an hour in their morning, with L’Oreal and Kering bringing the curtain down post-market. Big Pharma joins in, with Roche, Bayer and AstraZeneca. Also posting: auto giants VW and Fiat Chrysler, oil majors Shell and Total. Oil continued to climb with WTI at 48.68 and Brent at $50.87 stoked by hopes that a steeper-than-expected decline in U.S. crude oil inventories will reduce global oversupply. Gold too continued to rise, up to £1262 on the FED’s guidance on interest rates.

FCA to regulate firms offering credit

The regulatory regime overseeing financial services firms that was intended to regulate the behaviour of bank bosses is to be extended to almost all sectors of the financial services sector, covering 47,000 firms including dentists, gyms and tool hire companies that offer credit to customers. The Financial Conduct Authority estimated that the new regime would cost firms £550m, with up to £190m of ongoing costs for the firms involved. It been expected that the additional firms would be covered by the senior managers and certification regime (SMCR) from 2018. The sceme will replace the Approved Persons Regime.

UK Growth

The UK economy grew by 0.3% in the three months to June, driven in part by a booming film industry, said the Office for National Statistics (ONS). The initial estimate showed growth picking up from the first quarter of the year, when it was 0.2%. The ONS said the growth was driven by services, particularly retail, which more than offset falls in output in the manufacturing and construction sectors. It added there had been a “notable slowdown” in growth from last year. “While services such as retail, and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth,” said Darren Morgan, ONS head of national accounts. The t=year on Year rise was 1.7% as anticipated.

Sports Direct

Sports Direct boss Mike Ashley won a High Court battle with an investment banker over a £15m deal allegedly made in a pub. Jeffrey Blue told the court Newcastle United’s owner reneged on a promise to pay him a multimillion-pound sum if he increased the firm’s share price. The court heard about “drink-fuelled” meetings in pubs, including one where Mr Ashley “vomited into a fireplace”. Mr Ashley’s lawyers said he had won a “comprehensive” victory. The hearing was told that four years ago Mr Ashley met Mr Blue and three other finance specialists at the Horse and Groom in London and “consumed a lot of alcohol”. Mr Ashley said: “I can’t remember the details of the conversations that we had in the pub as it was a heavy night of drinking. “If I did say to Mr Blue that I would pay him £15m if he could increase [Sports Direct’s] share price to £8, it would be obvious to everyone, including Mr Blue, that I wasn’t being serious.” So being drunk can save you money!

German Autos

Supervisory boards at two big German carmakers are to hold emergency meetings later after they were accused of breaching EU cartel rules. Volkswagen and Daimler have declined to comment on the allegations that they and other German car giants colluded to fix the price of diesel emissions treatment systems. The claims first surfaced on Friday in a report by Der Spiegel magazine. The issue is under investigation by EU and German anti-trust regulators. Companies found to have infringed EU cartel rules are liable to pay fines of up to 10% of their global revenue. Other firms under investigation are BMW, Porsche and Audi.

UK Autos

UK car production fell by 13.7% in June compared to a year earlier – the third month in a row that output has fallen.  The Society of Motor Manufacturers and Traders (SMMT) said the UK market was cooling in line with forecasts, following a long period of record growth. The industry is likely to fall short of its ambition to produce more than two million cars a year by 2020, it said. The SMMT said uncertainty over Brexit was an added cause for concern.

Libor to end by 2021

Libor, the benchmark underpinning more than £250 trillion of financial products, will be phased out by the end of 2021, as the FCA  look to replace the scandal-tarred indicator with a more reliable system. Andrew Bailey, the head of the Financial Conduct Authority, said Thursday that the rate isn’t sustainable because of a lack of transactions providing data. Libor became a byword for corruption after traders were caught manipulating the benchmark, leading to about $9 billion in fines and the conviction of several bankers. “We do not think we will complete the journey to transaction-based benchmarks if markets continue to rely on Libor in its current form,” Bailey said in a speech at Bloomberg’s London headquarters. “Panel bank support for current Libor until end-2021 will enable a transition that can be planned and can be executed smoothly.” The London interbank offered rate, or Libor, is behind securities including student loans and mortgages. The benchmark is the average rate a group of 20 banks estimate they’d be able to borrow funds from each other in five different currencies across seven time periods, submitted by a panel of lenders every morning.  The FCA only started regulating Libor in 2013, the same year new legislation was passed making it a criminal offense to take any misleading action in relation to financial benchmarks.  Bank of England Governor Mark Carney said earlier this month that Libor is no longer suitable. It has been suggested it be replaced by actual overnight funding rates in the sterling unsecured market.


A US judge has ordered Apple to pay more than half a billion dollars to a university after the tech firm failed to abide by an earlier court ruling. Apple was sueovernight funding rates in the sterling unsecured market.d in 2014 for allegedly using a technology developed by a professor and his students in its iPhone chips without the University of Wisconsin-Madison’s permission. Apple was ordered to pay about $234m (£179m) when it lost the patent case. That sum has now been more than doubled because it continued to use the tech. The judge said that additional damages and interest brought the sum owed to $506m. However, Apple still hopes to overthrow the fine by appealing against the original jury verdict. The penalty is still less than the $862m the university had originally sought in damages.


Lloyds Banking Group has reported a strong first half performance with improvements in underlying and statutory profit. Underlying profit rose by 8% to £4.5 billion with underlying return on tangible equity of 16.6 . Total income was 4% higher at £9.3 billion and net interest income of £5.9 billion was up 2% with improved margin of 2.82%. Other income was 8% higher at £3.3 billion. The board has declared an interim ordinary dividend of 1.0 pence per share, up 18%, which, it said, was in line with the group’s progressive and sustainable approach to ordinary dividends

Tribunal fees axed

The Government will stop charging employment tribunal fees and refund those who have already paid them, after the Supreme Court ruled they were unlawful.  In a statement Justice Minister Dominic Raab said the Government will “take immediate steps” to stop charging for employment tribunals, as well as putting in place arrangements to refund those who have paid. The move follows the judgement yesterday, in which Lord Rees said fees on employment tribunals restricted access to justice. The move will be of serious concern to business owners as it will open the door to spurious or malicious claims brought without merit but on the assumption that firms would rather settle than face the monetary and time cost of fighting them.


Theresa May suffered another blow as Director of Strategy Chris Wilkins resigned, leaving the U.K. without a key author of her Brexit vision. The exit comes as Home Secretary Amber Rudd broke her silence on migration, saying the U.K. will keep its doors open to EU workers after Brexit. Rudd wrote in the FT that there’d also be up to a three-year transition for firms to adjust. She has announced a consultation into the costs and benefits of EU migration, ahead of the UK’s eventual departure from current arrangements. You could be forgiven for wondering why this wasn’t done before the Brexit vote?  The independent Migration Advisory Committee has been set the task by the Home Secretary of carrying out an analysis into the social and economic benefits EU migration brings to the UK. As part of this they will examine the regional and sector distribution of EU migrants as well as seasonal trends

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Previous News pages

Business News 26th July 2017

Business News 25th July 2017

Business News 24th July 2017

Business News 21st July 2017

Business News 20th July 2017

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