Business News 18th August 2017
CPA hopes to inform, with its daily bite-size business news on Friday 18th August 2017, filled with stories we think will interest our members and visitors.
Markets Round up
The FTSE 100 fell 45 points (0.6%) yesterday to reverse most of Wednesday’s gains. UK Markets started the day on the back foot with Ex dividends taking 10 points off the leading index from the off. UK retail sales then came in at a gain of 1.4% missing estimates and significantly lower than the 2.8% gain from June leading analysts to predict that the BOE would most likely hold off on any rate rises in the short term. Bank stocks were weaker after the Fed minutes also pointed to a more dovish stance of interest rates. US initial jobless claims fall by more than expected Jobless claims fell to a near six-month low according to data from the Labor Department, however, this failed to impact UK stocks which slowly drifted lower in the afternoon session to close at 7387. The FTSE 250 likewise fell 0.4% to 19,773.0 The Eurostoxx 50 & 600 were down 0.6% too, closing at 3462 and 377 respectively as doubts over US interest rates hit financials across Europe.
US markets – stocks moved sharply lower over the course of the trading day on Thursday. With the sell-off on the day, the S&P 500 dropped to its lowest closing level in over a month. The major averages ended the session at their worst levels of the day. The Dow tumbled 274.14 points or 1.2% to 21,750.73, the Nasdaq plummeted 123.19 points or 1.9% to 6,211.91 and the S&P 500 slumped 38.10 points 1.5% to 2,430.01. The broad based weakness on Wall Street reflected concerns about ongoing political turmoil in Washington, D.C.5.
Asian stocks also sank as global investor sentiment was battered by big losses on Wall Street amid U.S. political turmoil and a deadly van attack in Spain. Oil prices dipped as part of a broad-based selloff across markets and despite signs that crude markets are gradually tightening. Gold prices were mostly steady early amid weaker Asian stocks, with some investors gravitating towards safe-haven assets.
Terrorists strike again
Spanish police said they had killed five “terrorists” who reportedly tried to mow down pedestrians in the resort town of Cambrils, hours after a similar attack in Barcelona. “We are working on the hypothesis that events in Cambrils were a terrorist attack. We have killed its alleged perpetrators,” Catalan police wrote on Twitter. The news came hours after police launched a manhunt for the driver of a van who ploughed into crowds of people on one of Barcelona’s busiest thoroughfares, killing 13 people and injuring 100. Seven people were injured in the attack in Cambrils, 120 kilometres south of Barcelona, including one police officer.
UK Retail Sales
UK retail sales increased in July as stronger spending on food offset a fall in the purchase of other goods, according to official figures. The volume of sales grew by 0.3% compared with June, the Office for National Statistics (ONS) said. However, the figure for June’s retail sales growth was revised down from 0.6% to 0.3%. The latest data shows that the volume of food sales rose by 1.5% in July, having fallen by 1.1% in June. The ONS said all other sectors saw a fall in volume sales apart from household goods. Ole Black, ONS senior statistician, said that overall it was a “relatively subdued picture” in retail sales”.
UK Exports
One positive effect of the fall in Sterling after last summer’s referendum has been the boost to UK exports, which – relatively speaking – now look a great deal cheaper to international buyers. A particular success story has been salmon, sales of which have leaped up by 53% over the first half of the year according to the Food and Drink Federation (FDF).
Sales of the fish rose over the period to 408 million, making it the second most exported product behind whisky and ahead of beer (chocolate rounded in at a healthy 4th place). Meanwhile, the EU remains the top market for UK food and drinks exports, although the US is the second largest export destination, with Americans buying £92m worth of British products – up £4m on last year.
U.K. Is Said to Set Out More Detailed Brexit Vision Next Week
The U.K. is preparing to give further details of its approach to Brexit next week when it lays out positions in at least three different areas that it wants to negotiate with the European Union. Prime Minister Theresa May’s government will publish two papers on Monday with more expected in the following days, as Britain and the EU gear up for a fresh round of divorce talks at the end of the month, according to three people familiar with the plans. Publication of the positions follows accusations by the EU and critics in the U.K. that the government hadn’t presented a clear idea of what it wants from the Brexit talks. Five months since the two-year process of Britain’s withdrawal was formally triggered, the U.K. is trying to inject fresh impetus in order to be able to convince European leaders in October that they should start talks on a future trading relationship.
Trump
As the fallout between corporate leaders and President Donald Trump over his handling of white supremacist violence in Charlottesville worsened, Trump said he is scrapping two business advisory councils that were running out of strength. Eight members of the President’s American Manufacturing Council resigned since Sunday over the issue, while all members of the Strategic and Policy Forum agreed to quit the group Wednesday in condemnation of Trump’s defiant remarks about violence at the Charlottesville white nationalist rally. And within hours, Trump tweeted: “Rather than putting pressure on the business people of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all.” Two more top Republican leaders rebuked Donald Trump over his reaction to the deadly weekend violence that erupted between white supremacist groups and counter-demonstrators. Senator Lindsey Graham called on Trump to “fix” his remarks, while Senator Bob Corker said he feared the nation would be imperilled unless Trump changed. Corker’s criticism of Trump was among the harshest yet. He said Trump had “not yet been able to demonstrate the stability, nor some of the competence, that he needs to demonstrate in order for him to be successful.”
US jobs
One of the most widely-followed signals for the US jobs market revealed it continued to be in robust health. Initial jobless claims plummeted by 12,000 over the week ending 12 August to reach 232,000, according to the Department of Labor. Economists had forecast a reading of 240,000. Meanwhile, the four-week moving average, which aims to smoothe out the volatility in the figures from one week to the next, dipped by 500 to 240,500. Secondary unemployment claims, those which are not filed for the first time and referencing the week ended on 5 August fell by 3,000 to 1.953m.
ECB
European Central Bank policymakers raised concern over the appreciation of the euro in July, pointing out the risk of the exchange rate overshooting in the future, and stressed that the favorable financing conditions are still supported by the massive stimulus. “Concerns were expressed about a possible overshooting in the repricing by financial markets, notably the foreign exchange markets, in the future,” the bank said in the minutes, which it calls “the account”, of the July 20 rate-setting session released today.
Hammond and Carney trusted by finance chiefs on Brexit
A survey of 200 CFOs in Britain by Thomson Reuters has found that Mark Carney and Philip Hammond are trusted most to deliver a good Brexit deal. They gave the Chancellor and Bank of England governor eight and 8.6 out of 10 respectively to ensure there is a positive outcome for business as the UK splits from the EU. Theresa May was awarded 3.5 out of 10, while Liam Fox ranked even lower on 3.2. The survey also showed that 69% of firms are yet to change their strategic planning after the UK’s decision to leave the EU despite fears it could hit investment and the labour market.
Corporation tax race unwinnable
Toby Ryland of HW Fisher argues that cutting corporation tax may have headline attractions, but other countries such as Ireland and Singapore will always go further. He says the UK should not become embroiled in a race to the bottom and risk ending up as an offshore tax haven. “The effective rate is the tax burden that British businesses face on a daily basis – attempts to disguise the real effective rate by promoting reductions in the headline corporation tax rate isn’t just doomed to fail, it risks taking our economy into a downward spiral from which it will be extremely difficult to escape,” comments Mr Ryland.
Real Business
Tax and Red Bull, please
The complex tax structures used by the Thai Yoovidhya family, which owns the Red Bull drinks brand, is being untangled following a family member being involved in a hit and run car incident where a police officer died. The family’s financial affairs have been managed by Mossack Fonseca, the law firm connected to the notorious Panama Papers leaked last year. A legal expert at the Thai Finance Ministry is quoted: “Thailand doesn’t meet basic international frameworks to combat money-laundering and terrorist financing and tax avoidance — that is, keeping money anonymously in offshore accounts — is legal and common. Here we call it tax planning.”
The Independent
Amazon’s tax turnaround
Linda Qiu in the Independent says President Trump is wrong to accuse Amazon of failing to pay its taxes. She says that as of this April, Amazon has collected sales taxes in all states that have one. Joseph Henchman of the Tax Foundation says “other large e-retailers, most notably eBay, generally do not collect sales tax still,” whereas Amazon “ultimately changed their position.”
The Independent, Page: 65
Nasdaq Nordic market raises challenge to London’s Aim
Nasdaq’s junior stock exchange has stepped up its challenge to London after securing legal approval to offer UK investors tax breaks for investing in its Nordic markets.
Funding Circle and Aegon to funnel £160m to SMEs
Insurance giant Aegon has joined forces with peer-to-peer lending platform Funding Circle to fund £160m of loans to UK small businesses. The two firms plan to support around 2,600 SMEs in the first 12 months, with the intention of extending this into a four year funding programme. Stephen Barclay, economic secretary to the Treasury, said the partnership shows “that there is significant appetite for inward investment into the UK and we hope to see more deals of this scale in the future”.
Stamp duty surcharge fails to deter buyers
Figures from Hamptons International suggest the 3% stamp duty surcharge has not dampened Britons’ hopes of owning a second home. During the past 12 months, about 2.1% of properties (25,213 homes) sold went to buyers who already owned a home, up from 2% (17,591 homes) in 2011.
Reform need for property taxation
Writing in the Standard, Russell Lynch finds himself agreeing with Jacob Rees-Mogg MP who recently called for a cut to stamp duty. Lynch argues that stamp duty is burdening London buyers who contributed £4.8bn last year of the Treasury’s total £10.5bn revenue, set to increase to £17bn by 2021.
Evening Standard, Page: 40
Exports surge on weaker pound
Britain’s factories enjoyed a surge in sales to the EU in the first half of 2017, as export growth outstripped import growth. The UK’s goods deficit narrowed to €53bn (£48bn) for the six months to June in its trade with the EU, down from €57.8bn in the same period of 2016. The UK’s total trade deficit has shrunk from €102.2bn in the first half of 2016 to €83.7bn this year.
Retail sales beat expectations
UK retail sales increased in July as stronger spending on food offset a fall in the purchase of other goods, according to official figures. The volume of sales grew by 0.3% compared with June, the ONS said.
Financial Times The Times The Daily Telegraph, Business, Page: 27 The Guardian, Page: 23 Independent I, Page: 48
Heritage campaigners oppose HMRC’s Liverpool move
Heritage campaigners have formally objected to HMRC’s plan to move thousands of workers into a Liverpool “landmark”. HMRC wants to make India Buildings on Water Street one of its “modern, cost-effective regional centres” in 2019. But the Twentieth Century Society opposes HMRC’s “harmful alterations” to the building and the removal of public access to a ground floor retail arcade.
BBC News
Sky’s the limit for multi-millionaires
The boss of aviation charter company Air Partner has predicted that a new generation of ultra-high net worth individuals will drive growth in private jet travel. Mark Briffa said “cash-rich, time-poor” people are looking to swap asset purchases such as “flash watches and fast cars” for “experiential” spending on luxury travel.
The Daily Telegraph
Previous News pages
Business News 17th August 2017
Business News 16th August 2017
Business News 15th August 2017
Business News 14th August 2017
Business News 11th August 2017
Business News 10th August 2017
Business News 9th August 2017
Business News 7th August 2017
Business News 3rd August 2017
Business News 2nd August 2017
Business News 1st August 2017
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