Markets Round-Up on 24th October 2017.

Stock Markets

U.S. stocks ended down, retreating from their recent run of record highs, with the S&P 500 down 0.4% to 2565 and the Nasdaq down 0.64% to 6586.8 as technology and industrial shares declined.

Asian markets were mixed after U.S. stocks lost steam overnight and the dollar edged down from three-month highs. Japanese stocks still enjoyed a post election glow with the Nikkei up 0.5% but the Hong Kong hang Seng fell a further 0.5%. The Chinese CSI 300 rose 0.73% but the Korean Kospi was flat despite tech shares in Korea jumping 1.7%. Australia, Taiwan and India likewise lacked direction.

The UK stock market traded in a narrow range today as markets paused ahead of significant economic and corporate results due tomorrow, namely  the 3rd Quarter UK GDP figures and results for Glaxo, Lloyds, Fresnillo and Antofagasta. The FTSE 100 closed at 3610.7 up just 2.1  points or 0.03%. The 250 closed down 0.1%. A late sell off in Sterling had little time to impact London’s equity market

Europe fared better with the Spanish IBEX climbing 0.45% and the Italian MIB up 1.12%. The French and German indexes also showed modest gains and the Euro Stoxx 50 was up marginally 0.05%.


The pound fell to €1.1164 Euros and $1.3133 US Dollars.


Oil Majors and Oil support service companies continued their recent good performance as Brent Crude approached $58 per barrel.  Both BP and Royal Dutch Shell report within the next 10 days and OPEC meets at the end of November to discuss production levels.  Oil prices are stable, supported by supply concerns in the Middle East and declining U.S. drilling activity, although analysts warned that the United States market may not be tightening by as much as expected. WTI is at $58.2 and Brent at $52.4

Gold prices dipped to $1276.3 as investors nervously awaited news on the next head of the U.S central bank, while strong share markets and a calmer geopolitical environment sapped safe-haven demand.

Other News

While Business called for clarity on Brexit, Theresa May dashed there hopes.  May said for the first time that any transition arrangement for the period immediately after Brexit day, March 29, 2019, will only be agreed to as part of a broader deal – which isn’t expected for another year. “Is it not the case that the British community will be shocked to hear the Prime Minister’s words today, which seem to suggest that there will be no clarity on transition or implementation until we get a final deal in some number of months – or possibly longer – ahead?” asked Chris Leslie, a Labour lawmaker.

Bunzl said it has performed in line with expectations in the second half of 2017 so far, with revenue up 11% in the third quarter of the year at constant exchange rates. The distributor and outsourcer said revenue growth in the quarter ended in September was helped by improved underlying growth of between 5% and 6%, bolstered by new business wins in North America towards the end of 2016, and a 6% boost from acquisitions, partly offset by fewer trading days.

Whitbread booked a 20% rise in first-half profits after its opening of new hotel rooms helped boost revenue. Pre-tax profit rose to £316m, up from £264m, after revenue jumped 7.4%. Much of the growth in revenue came from the Premier Inn hotels business, for which the company opened more than 2,000 new rooms. Like-for-like revenue growth at the Costa coffee chain, however, slowed to 0.6%. Whitbread declared an interim dividend of 31.4p, up 5% on the previous year. “Despite the well known short-term economic uncertainty, our performance in the first half was good and we expect to meet expectations for the full year,” the company said.

Carpetright’s like-for-like sales rose in the third quarter despite volatile conditions and increased competition. But it warned that it expected first half profits to be below last year’s. Total group sales were up 1.8% while in the UK the group saw like-for-like sales growth of 0.8%, with an increase of 2.1% within the flooring category, offset in part by reduced bed sales which were impacted in the period by an acceleration of re-ranging activity to improve the proposition.

Carillion has agreed new facilities and deferrals which had improved group committed headroom throughout 2018 by between approximately £170m and £190m. The group said it continued to assess a broad range of options for optimising its capital structure and to this end is fully engaged in constructive dialogue with stakeholders. An update said: ‘Carillion announced on 29 September 2017 that a term sheet for further committed credit facilities of £140m had been agreed with five of the Group’s core lenders. ‘Further to this, the Group is pleased to announce the signing of two committed facilities, totalling £140 million, as contemplated by this term sheet. ‘This additional liquidity is fully available to draw down now.’

A UK-wide study has highlighted stark differences between regional levels of productivity among SMEs, with companies in West Somerset 26 times less productive than those in London, for example. The study, a joint venture between Nesta, the innovation charity, and Sage, the cloud computing company, also found intervention by local authorities can pay off and reverse regional trends. The report also found areas with a high churn rate for companies are also some of the most productive.

A preliminary report from the Maturity Institute claims that the Big Four accounting firms are acting in a “cartel-like” fashion and that they are guilty of “poor governance, skewed value motives of partners, avarice, ineffective governmental and regulatory control, obsolete accounting and auditing practice”. The report, Auditing the “Big 4” Accounting Firms, adds that the Big Four has sought to influence global regulatory bodies such as the UK Financial reporting Council (FRC) and the wider system network has become complicit in lowering audit quality standards and placing partner interests above all other stakeholders. The Maturity Institute also questioned the ACCA code of ethics “which puts no responsibility on accountants to put society first” and said the ACCA fails to tackle the question of immorality or ethics when it comes to taxation. Both the ACCA and the FRC said the reports claims against them were unfounded and untrue.

A study by PwC has found that spending on R&D by international companies in the UK makes up 80% of all corporate R&D in the country – about £15bn a year. This “imported corporate R&D” would be put at risk by slowed immigration and a greater inward focus, the report said. PwC’s John Potter said: “Uncertainty only serves to slow innovation. Given that R&D activities ultimately help to create the jobs, growth and wealth of our communities, we need to ensure clarity over policy to keep innovation centres around the world working effectively.”

A quarterly survey by Deloitte has revealed that consumer confidence among Britons has improved for the first time in a year and is close to levels recorded during the recovery years of 2014 and 2015. Concerns remain about disposable incomes, but consumers are more confident about their job prospects and have cut back on discretionary spending.

The public supports a ban on unpaid work experience which lasts over four weeks, according to new research by the Social Mobility Commission, which itself has backed a change in the law to stop companies from exploiting unpaid interns. The commission’s chairman, the former Labour MP Alan Milburn, said the issue was a “modern scandal” that must end.

Research by Barclays reveals that the over-65s have been the fastest-growing age group of business owners in Britain over the past decade. The number of companies set up by olderpreneurs in the past 10 years increased by 140%, the study found, while the number set up by under-34s grew by just 23%.

Apple will take a much smaller than expected delivery of its new iPhone X model, it was reported. Initial shipments of the new smartphone model will reach roughly 20m units, the Nikkei reported, which is half the planned amount for the year. Last month Apple was revealed to be facing setbacks in the production of the iPhone X due to an imbalance of the key pair of components affecting the device’s new facial recognition system.


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