Business News 4th October 2017

CPA’s daily bite-size summary of the business news on Wednesday 4th October 2017, filled with stories to inform and interest business people.

Market Round up

Yesterday the FTSE 100 rallied 0.4% after a choppy start to close 29.3 points up at 7468.1, the two top risers on the index were Ferguson and Ashtead, who both have significant U.S. exposure. Ferguson, the plumbing and heating products supplier, formerly Wolseley, said it delivered a “good” set of full year results, with higher profit and increased revenue driven by a “favourable” US residential and commercial market. The change in the fortunes of BHP Billiton seems to be being recognised after a 1500p target was put on the company by HSBC. U.S. data this week includes durable goods, trade and the Non Farm Payroll figures being released on Friday for September although the figures may be skewed by the Hurricanes that hit in August, so they might have less of an impact than usual. European stocks hovered around three-month highs as a sell-off in Spanish stocks eased and financials gained following another record-breaking session on Wall Street. In The US the S&P 500 climbed 0.22% to 2534.58 with tthe Nasdaq similarly rising to 6531.71. In Asia Japanese and Hong Kong share markets led Asian stocks higher, with the Chinese central bank’s weekend move to free up more liquidity boosting sentiment as the world’s second-largest economy grows at a steady pace.

Oil prices eased with WTI at $50.1 and brent at $55.6 , as speculators took profits on some large positions that have built up in the last couple of weeks as the recent rally seems to lose steam. Gold touched its lowest price level in seven weeks after strong U.S. economic data reinforced expectations of another interest rate rise in the United States this year and pushed the dollar and U.S. bond yields higher however this morning it has pulled back a bit $1276.6.

The dollar weakened after Trump aides were said to have presented a Fed chief shortlist that leans dovish. Spanish bonds will be in focus after Calalonia’s president said he intends to declare independence within days. U.S. and U.K. equity-index futures were marginally weaker. The pound has fallen to 1.127 Euros and 1.325 US Dollars.

Construction activity shrinks on uncertainty

Activity in the UK construction sector contracted for the first time in 13 months in September. The IHS Markit/CIPS PMI for the sector fell to 48.1, below the 50 mark that separates growth from contraction.

Household incomes hit

Household incomes have suffered their biggest hit for five years. ONS figures show that that for each person in a household, the money left for spending after taxes is down 1.1% on last year.

Starling announces business banking service

Digital challenger bank Starling is to launch a business banking service early next year, initially designed for entrepreneurs, sole-traders, and small business owners. Anne Boden, founder and chief executive, said the service “will be very easy to get up and running, taking five minutes or less.”

Brexit & banking

Bank of England’s Financial Policy Committee (FPC) said the risk of disruption to lending from European banks after the Brexit is likely to be slightly higher than previously estimated. “The risk of disruption to wholesale UK banking services appeared to be slightly higher than previously thought, given that a number of EEA firms branching into the UK were not sufficiently focused on addressing this issue,” the record of the FPC meeting held on September 20 showed. This disruption could affect around a tenth of lending to UK companies.

May

Prime Minister Theresa May is to take to the stage in Manchester today for the final day of the Conservative Party conference. She is expected to call on cabinet colleagues to ‘shape up’ after weeks of perceived in-fighting. This is the Prime Ministers first conference speech since the election in June and is an opportunity for her to try and reunify the party behind her vision for the country. She will plead with her Conservative Party to “shape up,” end its infighting and focus on appealing to the electorate, after an annual conference in which her domestic policies were overshadowed by Foreign Secretary Boris Johnson’s maneuverings over Brexit. May’s team had intended to use the four-day meeting in Manchester, northwest England, to focus on non-Brexit issues and explain to the country how she would improve people’s lives after a decade of stagnating wages. Instead, it was dominated by discussion of Brexit policy, with the main auditorium mostly half-full, while activists packed fringe meetings to hear those supporting a more confrontational stance with the European Union.

Yahoo

Yahoo has revealed that all 3 billion of its accounts were affected by a data breach in 2013, more than doubling the number it originally disclosed back in December. While the company stressed that no financial details or passwords had been stolen in the hack, it was sending out emails to all customers regarding the attack.

Going Postal

The Communication Workers Union, which has over 110,000 member in Royal Mail, has announced that a majority had voted for industrial action in a dispute over pensions, pay and working conditions. If a resolution to the dispute is not found this would be the first major walkout since the company was taken private four years ago and would likely have significant impact on one of the busiest times of the year for the industry, Christmas.

Uber

The chief executive of Uber has arrived in London for crunch talks with Transport for London, which refused to renew the company’s licence to operate in the capital. Dara Khosrowshahi recently took over the reins from Travis Kalanick following a messy departure which led to a lawsuit from one of Uber’s key investors against the former CEO. Khosrowshahi is due to meet with TfL commissioner Mike Brown in order to discuss the removal of Uber’s licence, which the body justified by saying it was not ‘fit and proper’ to operate in the city.

Amazon

The European Commission will today hit Amazon with a bill for back taxes worth several hundred million euros, in the latest example of the EU’s crackdown on tax avoidance. Brussels launched its investigation into Amazon – whose European operations are headquartered in Luxembourg – after allegations it benefitted from a decade-long sweetheart tax deal that amounted to illegal state support.

Ryanair

The Guardian reports that pilots are facing tax investigations relating to the way in which they are employed by Ryanair. The paper says pilots who apply to join the airline are told to set up an Irish limited company and are made directors of it, under the guidance of accountants recommended by Ryanair. However, the arrangement has seen pilots with limited experience of the tax obligations of a limited company fall foul of fraud investigators.

Macron taxes gold and racehorses

Owners of yachts, racehorses, private jets and gold ingots will have to pay new luxury taxes after President Macron’s government bowed to public anger over plans to reform France’s wealth tax. The president had previously promised to limit the levy – applicable to assets worth more than €1.3m – to property, saying it was driving wealthy people abroad.

Spain

King Felipe VI of Spain voiced harsh criticism of the “irresponsible” Catalan government for its independence campaign on Tuesday night, in a rare televised speech that stressed the crown’s commitment to the unity of the country. Catalonia’s authorities, he said, “have placed themselves outside the law and democracy, they have tried to break the unity of Spain and national sovereignty”. Offering firm backing to the Spanish government of Mariano Rajoy, Felipe said it was the “responsibility of the legitimate powers of the state to ensure the constitutional order”.