Business News 4th August 2017
CPA hopes to inform, with its daily bite-size business news on Friday 4th August 2017, filled with stories we think will interest our members and visitors.
Markets Round up
UK equities rose following a positive trading update from Next plc which maintained its profit guidance and cited a further £50m in surplus cash which could be deployed either as a share buyback or further dividend. Shire Pharmaceuticals reported a 7% rise in sales and a $1.14bn fall in debt to $21.29bn. The shares were initially up immediately after results. The Bank of England left Base Rates at 0.25% and the MPC is now 6-2 in favour of leaving rates unchanged, shifting the consensus in the Monetary Policy Committee back to a dovish stance. Sterling responded with a sharp drop against the Euro and USD boosting UK blue chips. Right now sterling is down about 1% at $1.3144, €1.1072 and ¥144.73. European Stoxx were little changed with the Euro Stoxx 600 up 0.1% to 379. US stocks dropped on news of Russian investigation intensifying with the S&P500 falling 0.2% to 2472.16 and the Nasdaq 0.35% to 6340. In Asia no clear direction was visible with Japanese stocks down 0.4% Hong Kong up 0.1%, Chinese stocks down 0.5% and Korea up 0.4%. Gold is up to $1268 while oil continued its decline with Brent at $51.75 and WTI at $48.78. Global equities were stuck in neutral before the U.S. jobs data overall. The MSCI world stock index is down marginally to 1969 (1970 yesterday). All eyes to todays US jobs data.
Bank Of England
The Bank of England retained its interest rate at a record low in a split vote and trimmed the growth outlook, as it expects the Brexit uncertainty to hurt economic activity in coming months. The bank also hinted that the key rate could be raised next year. The Monetary Policy Committee, headed by Governor Mark Carney, voted 6-2 to hold the interest rate at a historic low of 0.25%. The Bank of England has lowered its growth forecast for the UK economy in 2017, and now expects GDP to expand by 1.7%, down from a May estimate of 1.9%. Inflation is expected to be up by 2.7% this year, before falling back to 2.6% in 2018 and 2.2% in 2019. The MPC minutes note that, should the economy evolve as the Bank is expecting, interest rates could be lifted by more than financial markets are currently pricing in. Those market expectations are for two rises to 0.5% and then to 0.75% over the next three years.
Services sector picks up
UK services activity continued to gently improve last month amid the fastest increase in average prices for three months, according to a widely followed survey released. The Markit/CIPS services purchasing managers’ index for July rose to 53.8 from 53.4 the prior month, slightly above the consensus forecast of 53.6. It remained above 50, indicating expansion, for the 12th month in a row.
Carney rules out low-tax future for UK
Mark Carney has dismissed suggestions that London could become a low-tax financial centre to attract business after the UK leaves the EU. The Bank of England governor said central banks and financial regulators had to keep up their guard because the passing of time meant people started to forget why rules had been put in place to begin with. He also said the UK’s financial sector could double in size but still requires tough regulation. He told the Guardian that the financial sector could be worth 20 times the UK’s economic output in 25 years.
BBC News
support for Brexit amongst SMEs
Small UK businesses are bullish about international trade, and have been taking advantage of the weak pound to increase overseas sales since the EU referendum, a survey by OFX has revealed. Of the 500 owners and senior managers surveyed, 67% said they feel confident about doing business overseas. Since the EU referendum, almost half (48%) have increased international sales, while 36% expect to start or increase exports in the next twelve months. Since the EU referendum, 28% of the SMEs surveyed have seen sales decrease to UK customers, while 44% say rising inflation is the biggest current concern for their business.
Insider Small Business
SMEs take profit hit to pay living wage
Nearly two-thirds (64%) of small firms impacted by the National Living Wage have met the latest rise to £7.50 per hour by taking lower profits, according to the FSB. Some 39% have put up prices, while 24% have cancelled or scaled down investment plans. A fifth have reduced staff hours (22%) or hired fewer workers (19%).
Overseas landlords exit Britain
The proportion of overseas landlords with properties in Britain has dropped over the past 12 months following the introduction of tougher tax measures. Research from Countrywide found that overseas landlords owned just 5% of all homes let in the UK in 2017, down from 12% in 2010.
Daily Mail
Fashion retailers feeling the heat
High-street fashion retailers have suffered their worst July since 2009, according to the BDO High Street Sales Tracker. Takings in fashion stores fell by 3.5% year-on-year last month, despite the onset of the traditional summer sales season for retailers.
Independent, Page: 8
Julius Baer looks to court UK’s super-rich
Swiss private bank Julius Baer is opening hubs in Manchester, Leeds, Glasgow and Belfast as it steps up efforts to court some of the UK’s wealthiest individuals living outside London. The bank said two thirds of the UK’s wealth is held by individuals outside of London and the south east.
The Daily Telegraph, Business, Page: 27 The Guardian, Page: 25
US tax reform hopes become mired in foreign cash piles
Republicans are said to be struggling to make progress on tax reform because of a lack of consensus on handling US companies’ offshore earnings.
Financial Times, Page: 4
HMRC under fire for childcare website bugs
Treasury committee chair Nicky Morgan has written to HMRC requesting an explanation for failings in its Childcare service website. Hundreds of parents have struggled to apply for childcare funding due to technical issues.
The Independent, Page: 7
US Earnings
The best earnings season in seven years for positive surprises is nearing an end. As of yesterday, 77% of reporting S&P 500 firms had beaten estimates, Bloomberg data show. If that’s sustained to the end of the season, it’ll be the highest percentage since the first quarter of 2010. Aggregate earnings growth for the quarter is 10.4%, while revenue is up 5.4%, the data show.
Bad News for Russian Ambassador to the US, Mr Trump
Some news from across the Atlantic – the investigation in potential Russian meddling in the US election, led by ex-FBI director Robert Mueller, has taken the first steps towards possible criminal charges with setting of a grand jury to look into the June 2016 meeting between Donald Trump Jr and Russian nationals. In the US, a grand jury is set up to consider whether evidence in any case is strong enough to issue indictments for a criminal trial – they do not decide whether the potential defendant is guilty or innocent. Nevertheless, it is a serious step forward in the investigation and will put further pressure on President Donald Trump.. “You don’t open a grand jury just to open a grand jury,” said Barak Cohen, a former federal prosecutor. “You need a certain amount of evidence that a crime has occurred.” Trump refuted the comments at a rally in West Virginia as he told the crowd the Russia story is a “complete fabrication”. Might be worth following his Twitter account today.
Gamekeeper turned poacher?
The computer-security researcher credited with stopping a cyberattack that crippled British hospitals in May was arrested in Las Vegas on charges that he created malware used to hack banking systems in Canada and Europe, the U.S. said. Marcus Hutchins was hailed as a hero for neutralizing the WannaCry ransomware by finding its “kill switch.” Legal advocacy group EFF said it’s trying to reach out to Hutchins.
Previous News pages
Business News 3rd August 2017
Business News 2nd August 2017
Business News 1st August 2017
Business News 31st July 2017
Business News 28th July 2017
Business News 27th July 2017
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
follow us on social media