Business News 8th September 2017
CPA hopes to inform, with its daily bite-size business news on Friday 8th September 2017, filled with stories we think will interest Business people.
Markets Round up
UK markets bounced back yesterday following another weak day as investors watched for further signs of aggression from in North Korea with the FTSE 100 climbing 0.6% to 7397 and the 250 climbing 0.2% to 19,696.7. The ECB offered no surprises keeping interest rates unchanged and no changes to the stimulus program and Euro stocks responded positively with the Euro Stoxx 50 climbing 0.4% to 3447.66 and the 600 rose 0.3% to 374.95 led by German stocks . Sterling dropped against the Euro as Draghi forecast high Eurozone growth rates however it strengthened against the dollar and “Trumponomics “ continued to weigh. U.S. Shares were flat with the S&P static at 2465.10 and the Nasdaq up 0.1% to 6397.9 despite media stocks weighing heavily after negative business updates from Walt Disney and Comcast and as another powerful storm neared the United States. Asian shares were mixed with the Japanese Nikkei down 0.6% to 19274.8, The Hang seng up 0.5% to 27668.5 the Chinese CSI300 down 0.1% to 3826, korea down 0.1% to 2343.7, Australian ASX 200 down 0.3% to 5672.6 and the Indian Nifty flat at 9935. Markets were supported by solid Chinese trade data, while the dollar skidded after European Central Bank chief Mario Draghi suggested the central bank may begin tapering its massive stimulus programme this autumn. The Pound is at 1.089 Euros and up to $1.3137 US dollars.
Oil prices rose on Friday, with WTI at $48.94 and Brent at $54.64 as U.S. crude production was hit harder by Hurricane Harvey than expected, with the even bigger storm Irma heading for Florida and threatening to cause more disruption to the petroleum industry.
Gold prices hit its highest in a year on Friday at $1352.73 as the dollar sagged after weaker-than-expected U.S. jobs data and as festering tensions over North Korea stoked safe-haven demand.
The ECB
The European Central Bank does not appear to be eyeing hikes on the interest rate paid on its deposit facility next year, but is monitoring the exchange rate, its president said. His remarks stood in stark contrast with forecasts from many economists who were expecting the ECB to further taper the pace of its bond purchases, or quantitative easing programme, in 2018, but to continue until them end of next year. Hence, it appeared to follow that any hikes in the deposit rate would have to wait until 2019, whereas some economists were projecting a roughly 20 basis point increase in 2018, alongside the tapering of QE.
Europe’s debt bias chokes small business and job creation
Xavier Rolet says in the FT that the European corporate funding system “is fundamentally ill-suited to helping” SMEs grow into the major global companies of tomorrow.
Buoyancy returning to housing market
House price growth in the UK picked up in the three months to August, rising 2.6% higher than in the same period last year, according to Halifax.
The EU
French President Emmanuel Macron called for a series of “democratic conventions” across Europe as he vowed that his generation would rebuild citizens’ trust in the European Union. “Are you afraid of a European ambition that will enable us to win back our sovereignty, our democracy, our confidence?” he asked. “Have this crazy ambition. I promise you we will succeed. “Speaking at the Pnyx, a hill that was the center of Athenian democracy almost 2,500 years ago, Macron began speaking a few words of Greek to pay tribute to the founders of the city state.
Companies warned over new tax evasion law
Simon Airey, litigation and investigations partner at Paul Hastings, writes in City AM on the UK Criminal Finances Act 2017, which comes into effect on September 30th. Among other things, the act introduces a new criminal offence if a company fails to prevent its “associated persons” from facilitating tax evasion by a third party, deeming a firm’s involvement or otherwise in the offence as irrelevant. This, he says, makes setting up a compliance programme with procedures to prevent the facilitation of tax avoidance of the utmost importance.
Tonnage tax reform would boost UK shipping
The UK shipping industry could be boosted by Brexit as the government would be free to reform its tonnage tax, which allows ship owners to pay rates based on tonnage capacity rather than operating profits. David Dingle, the chairman of Maritime UK, said. The Telegraph cites a recent study by EY showing nearly 70% of Greece’s shipping industry views its regulatory environment as a disadvantage, with firms considering whether to move their business to the UK.
The Daily Telegraph, Business, Page: 1
Financial crime crackdown curbs emerging markets
According to a report from the International Finance Corporation, cuts to so-called correspondent banking relationships are having the effect of shutting out households and small businesses from the global financial system.
Gender pay gap proves source of profit for lawyers and consultants
UK law firms, consultants and human resources companies are turning new annual reporting rules for charities with over 250 employees on the gap between female and male pay into billable work.
Audit needs to enhance investor confidence
The Audit and Assurance Faculty is calling for action to ensure audit remains relevant to stakeholders and can provide the trust in corporate reporting they demand. The Faculty outlines key points for discussion, including new technology and whether audit can be relevant when it deals with such a small part of company value. A YouGov survey published by the Financial Reporting Council in 2016 highlighted a perceived lack of auditor independence as the key reason for investors having lower confidence in audit than other parties – reflecting the need for improved ethical standards, the Faculty says.
High streets enjoy best month in two years
The UK high street has enjoyed its best month in almost two years as the weak pound led to an influx of British “staycationers” and overseas tourists. Overall like-for-like sales were up 2% last month, making it the best month since September 2015 and the best August since 2013, according to BDO’s High Street Sales Tracker.
UK fintechs hold ambitious plans for growth
A new report on the UK’s fintech industry by EY and Innovate Finance for the Treasury reveals businesses expect revenue growth to at least double in the next year. The study found fintechs have received an average of £15m each in investment to date and 50% expect future funding rounds to exceed £2m, with 35% anticipating more than £5m. A third of firms predict an IPO is likely within the next five years. Europe and North America are regarded as the key places for future expansion, but the industry sees challenges in recruiting talent and fears customer adoption rates will not be sufficient to build the size of the user base.
BCC cuts forecasts for 2018/19
The British Chamber of Comerce has marginally upgraded its growth forecast for 2017 to 1.6% from 1.5% but cut its growth forecast for 2018 from 1.3% to 1.2%, and from 1.5% to 1.4% in 2019. The BCC also said that the fall in sterling since the Brexit vote has harmed the UK’s performance. Dr Adam Marshall, the BCC’s director general, said that “the UK economy as a whole is treading water, and there is no sign on the horizon of a return to healthier levels of growth.”
The Guardian, Page: 17
Jean-Claude Juncker questions ‘stability’ of Brexit chief David Davis
Theresa May’s Brexit strategy came under heavy fire on Thursday as Jean-Claude Juncker, president of the European Commission, questioned the “stability” of her chief negotiator while right wing Conservative MPs mobilised to push for a hard exit. Mr Juncker had told his colleagues in the Commission that he was concerned about “the stability and accountability” of David Davis, Brexit secretary, escalating already frayed tensions between Brussels and London. The comments, which appeared in the minutes of a July meeting of 28 European commissioners, came as hopes that “sufficient progress” on the outlines of Britain’s exit could be achieved by the EU’s October summit were rapidly fading.
Frankfurt’s win could be Europe’s loss
Paris has already lost to Frankfurt in the battle to secure financial services businesses post-Brexit, according to senior German bankers, with the German city on course to become the dominant financial hub in the EU. The Telegraph’s Ambrose Evans-Pritchard suggests Frankfurt’s growing power could make Paris think twice about trying to further weaken London’s influence. The Franco-German axis is becoming lopsided, and this may be the reason for France’s softened tone in the Brexit negotiations. Increased German power has made Germans uncomfortable too – fearing a backlash and disruption to the EU’s internal balance of power.
The Daily Telegraph, Business, Page: 1, 3
Irma
Hurricane Irma continued past the Dominican Republic towards Haiti on Thursday after devastating a string of Caribbean islands and killing at least 10 people as one of the most powerful Atlantic storms in a century took aim at Florida. With winds still upwards of 175 mph, the storm lashed several small islands in the northeast Caribbean, including Barbuda, St. Martin and the British Virgin Islands, tearing down trees, flattening homes and causing widespread damage. The eye of the hurricane did not directly hit Puerto Rico, passing north early yesterday, battering the US territory with high winds and heavy rains. Three people were killed and around two-thirds of the population lost their electricity
Electric Cars
BMW has committed to substantially boost its electric vehicle offering. By 2025, the German luxury carmaker will have 12 electric models and 13 hybrid versions. Head of R&D Klaus Fröhlich said “the trend towards electric mobility is irreversible”. The move is evidence of a growing industry trend that sees automotive firms turn away from traditional fuel-powered vehicles. The news from BMW comes after Jaguar Land Rover, the UK’s biggest carmaker, announced similar plans. From 2020, every vehicle line launched at JLR will include an electric or hybrid version. Chief Executive Ralf Speth said “One thing is clear: the future is electric”, although he admitted the combustion engine will be around “for many years to come”. Earlier in the summer, Volvo confirmed all of its new electric models will have an electric motor from 2019.
Spain
Spanish prosecutors said on Thursday they would bring criminal charges against members of Catalonia’s parliament, as Madrid moved to crush the region’s plans for an independence referendum. Prime Minister Mariano Rajoy said he had appealed to Spain’s Constitutional Court to declare the referendum illegal. The 1978 constitution states Spain is indivisible. “This vote will never take place,” he told a news conference. “In making the appeal, we are defending the rights of all Spaniards and all Catalans.”
Or see our recent previous news pages
Business News 7th September 2017
Business News 6th September 2017
Business News 5th September 2017
Business News 4th September 2017
Business News 1st September 2017
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