- Markets spent mocu hof the day listless as investors play wait-and-see with European Central Bank decision on Thursday
- Unemployment falls to lowest since 1974 and wages grow against expectations
- Europe opens downbeat, Asian markets mixed with falls in China
- China’s producer price index fell at sharpest rate since August 2016
- Matthew Lynn: Who is to blame for the grounded flights — BA or the pilots’ union?
Wrap-up: Stocks find some energy after a slow day, bankers outperform, JD stays on its feet
Time for me to wrap up here: the FTSE 100 found a little life at the end of the day, closing fairly solidly up.
Though JD Sports was the day’s stand-out performer, the heavy lifting came from Lloyds and Barclays, who have burst into (possibly) post-PPI life with a bang.
Tomorrow is likely to see stimulus fever crank up as investors look ahead to the European Central Bank’s meeting on Thursday. It’s a quieter day on the corporate and economic fronts for the UK, though the sword of Damocles (i.e., an actual Brexit development), hangs over us as ever.
Thank you to everyone who has followed along or commented today. Jon me again tomorrow for the latest news on business, markets and economics. Oh, and remember: we’re still live-blogging the iPhone launch here (less than an hour left until announcement time).
Round-up: IP pins portfolio drop on Woodford, mega mortgages make a comeback, modular smartwatch startup collapses
Here are some of the top stories from this afternoon as we head towards the close of London markets.
- IP Group blames portfolio squeeze on Woodford woes: IP Group blamed the crisis engulfing veteran fund manager Neil Woodford for a sluggish first half of the year.
- Bumper mortgages are back as low deposit loans hit highest level since the credit crunch: Homebuyers are stepping onto the housing ladder with ever-smaller deposits as the bumper mortgages popular in the years before the credit crunch regain a bigger foothold in the market.
- London start-up behind world’s first modular smartwatch collapses: A London start-up developing the world’s first modular smartwatch has collapsed into liquidation owing creditors nearly £3m.
Markets shift into more positive territory
The overall state of European equity indices has shifted positive, though the it is barely a climb overall as Italy weighs.
US markets are pretty solidly in the red overall, with the tech-heavy Nasdaq falling the furthest at 0.7pc down.
Spreadex’s Connor Campbell said:
It wasn’t the most inspiring session, caught between the UK’s political drama of the last few days, last night’s disappointing Chinese data and Thursday’s potentially rate cutting ECB meeting.
Overcoming a downbeat start, the European indices managed to eke out some growth on Tuesday afternoon...
...They managed to do this despite the losses incurred by the Dow Jones after the bell rang on Wall Street. Presumably digesting the same worrying Chinese factory readings that impacted the European open, the Dow shed around 100 points, forcing it away from the month and a half highs struck at the end of last week.
Germany resists calls for spending spree
Germany’s DAX index is up around 0.4pc currently, improving on a flat picture earlier in the day. Investors holding their breath for a major stimulus into the country’s shaky economy may be shifting positions following comment by finance minister Olaf Scholz earlier today. Economics correspondent Tom Rees writes:
Olaf Scholz insisted he would present an “expansionary” budget to address the “great challenges” facing the ailing industrial powerhouse.
However, he refused to increase debt and ditch the government’s so-called “black zero” policy despite pledging a “great deal of investment”.
Angela Merkel’s administration has been urged by German industry and economists to scrap the pledge to balance the books and pump much-needed investment into its economy.
Lenders underpin off-colour FTSE 100
Investor hopes that the pain of PPI has passed lit a fire under major lenders’ stocks today, with Barclays and Lloyds adding the biggest boost to the FTSE 100.
Both banks announced their final repayments provisions for mis-selling PPI on Monday, with Lloyds setting side up to £1.8bn, and Barclays up to £1.6bn.
The figures — based on a rush of complaints in the days leading up to the deadline at the end of last month — tipped the grand total of PPI payments over £50bn.
The scandal has been a weight on the backs of UK banks for decades, with a legal ruling in 2011 opening the floodgates for customers who were sold the service incorrectly to directly demand compensation.
Lloyds has been the worst-hit by the fallout, with its totally compensation provisions topping £20bn — equivalent to more than half its current market capitalisation.
Barclays is up around 5.6pc currently, putting it on track for its biggest one-day gain since 2012. Lloyds — frequently cited as the UK’s most-traded stock — is up just under 4pc.
Jefferies analysts said the big hit to Barclays was a moment for “cleansing the Augean stables”, adding:
On the prospectively large PPI top up, the Q3 charge should hopefully be the final charge and bring resolution to a years-long industry phenomenon that became grotesque.
They said from the next quarter, the bank would be able to focus on developing its dividend and improving its core capital ratio.
Mid-cap movers: Cairn Energy rises, IP Group slips
On the FTSE 250, Cairn Energy is the biggest riser, up nearly 11pc currently after revealing it swung back to a profit during the first half of the year.
The Scottish energy firm moved from a $603.9m loss to a $43.2m profit, as it shook off considerable impairment costs that had devastated its balance sheet.
Chief executive Simon Thomson said:
As a full-cycle E&P business Cairn has seen good progress in the first half of 2019 with the opportunity to develop and deliver multiple catalysts for future growth.
The biggest faller on the mid-cap index is tech investment company IP Group, which announced its net asset value per share — with goodwill and intangibles stripped — fell to 110.6p from 121.1p last year.
The company said it was making “good” progress in spite of the drop, saying it was nearing a point of self-sustainability.
IP Group shares are down more than 10pc currently, in yet another blow to Neil Woodford, its second-largest investor.
Round-up: China feels pig pressure, inside Jack Ma’s Alibaba ascendancy, what Corbyn means for investors, plus: iPhone launch live blog
It’s just past 2pm, the sterling is the bright side of flat, the FTSE is narrowly down and Wall Street, set to open in about half an hour, is set for a slight fall based on futures trading. Here’s what you should be reading:
- Chinese factories struggle as African swine fever sends pig prices skyrocketing: Chinese factory prices tumbled at their fastest pace in three years in August, stoking hopes of more government action as demand for goods is squeezed by the trade war with the US.
- How Jack Ma turned Alibaba into China’s online juggernaut despite knowing ‘nothing about technology’: Sophie Smith takes a deep dive into the career of the Chinese tech titan.
- What would Corbyn in power mean for savings and mortgage rates?: What would a Corbyn administration mean for the pound in your pocket? Telegraph Money looks at how savings and mortgage rates could be affected by a shift in power.
PLUS: The Telegraph’s eager tech team have launched a live blog of the latest iPhone launch, a few hours ahead of the event.
- You can following all the latest here: iPhone 11 launch — live updates and latest news as Apple reveals its new smartphone
Apple boss Tim Cook will take to the stage at 6pm.
JP Morgan: Johnson resignation most likely outcome from Brexit crisis
As analysts continue to speculate about the UK’s political path forward, JP Morgan analyst Malcolm Barr thinks Boris Johnson will resign rather than buckle over a no-deal Brexit. Reuters reports:
Of the three main options facings British Prime Minister Boris Johnson, the most likely is that he resigns to let someone else make a request to the European Union to delay Brexit, JP Morgan said on Tuesday.
“The only options we regard as ultimately viable are for the PM to present a deal to the (House of) Commons and secure approval for it, resign and let someone else make the extension request as PM, or back away from his stated position,” JP Morgan’s Malcolm Barr said in a note to clients.
“At this point, our view is that resignation is the most likely of these three,” Barr said.
NIESR: ‘Turning point’ may be approaching for UK jobs market
The National Institute of Economic and Social Research has released its full reaction to this morning’s jobs figures. It says further pick-up is “unlikely” and has warned over the potential impact of Brexit. It says:
With unemployment remaining at a multi-decade low of 3.8pc in the three months to July, the labour market continues to be tight, but more evidence is emerging to suggest it may be reaching a turning point
Looking at data gathered for August so far, the research group suggests uncertainty over the “fragile” economic outlook may push placements down slightly when new figures are released.
NIESR economist Dr Arno Hantzsche said:
Today’s labour market data were again strong but more timely signals show that a turning point may soon be reached as Brexit and global uncertainties increasingly weigh on hiring. Whole-economy earnings growth has become more reliant on services sectors whose output continues to be in strong demand and on hiring and pay decisions in the public sector.
Full report: Jobs markets finds yet more ground despite fears of a slowdown
With sterling flat and the FTSE 100 slightly down, it looks like this morning’s job report has done little to shift market sentiment. Deputy economics editor Tim Wallace has a full report on the number. He writes:
The jobs market defied fears of a recession over the summer, adding another 31,000 jobs in the three months to July to send unemployment back down to a 45-year low of 3.8pc, the Office for National Statistics said.
It means consumers have the ammunition to keep supporting the economy as real pay is rising rapidly and is almost back to pre-crisis levels after a decade-long crunch.
- You can read his full report here: Jobs market defies recession fears as pay growth hits 11-year high
What an iPhone flop would mean for Apple’s supply chains
Expectations are mixed ahead of today’s new iPhone launch. People aren’t anticipating any big surprises, with incremental changes likely to be the order of the year... again.
The company’s increasing challenge in differentiating its new handsets from their forerunners has proved to be a liability, with customers choosing to hold out longer for upgrades. My colleague Matthew Field writes:
Whether it is a hit with consumers or a flop will have wide-ranging repercussions for Apple, the world's second biggest company worth $968bn. But it is not just Apple's own success that rests on the iPhone's fortunes.
From the miners who dig rare earth metals out of underground mines to workers at hundreds of component manufacturers in 45 countries from the US to South Korea, the billions of dollars in sales and profits earned by Apple from the 200 million plus iPhones it sells each year have a far wider influence.
He’s taken a look at the complex, ultra-globalised path an iPhone takes to end up in someone’s hands. You can read Matt’s full report here: Why a flop for the new iPhone 11 would be a disaster for nearly 50 countries that depend on Apple
Speaking of Trump...
....here’s my article on the Volfefe Index, a system created by JP Morgan analysts to measure how much the US Presidents’ Tweets rattle markets:
Here’s a reminder of two of his ‘greatest hits’ from last month:
Margrethe Vestager to keep role as EU competition chief
In a move that is likely to draw the ire of Silicon Valley bosses and Donald Trump, EU competition chief Margrethe Vestager is set to keep her role as part of the new European Commission line-up.
In a surprise decision, Ms Vestager will keep her role while also becoming an executive vice-president within the new leadership team, led by Ursula von der Leyen,
The Danish politician has made a name for herself internationally by taking on tech giant, including levying record fines against Google for manipulating search results.
Here’s more on her relationship with Mr Trump:
Citigroup: Price of gold could top $2,000 an ounce next year
Gold prices have rallied strong in recent weeks, driven by market uncertainty that has pushed traders towards assets perceived as safe from an economic storm.
The price of an ounce of gold is currently just over $1,500 — having hit a six-year high last month. Citigroup analysts say an economic slowdown could push it to even-greater levels, predicting it could top $2,000 an ounce.
“We expect spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point in the next year or two,” analysts said.
That would beat the current record of $1,921.17, which was reached in 2011.
Employment minister: Jobs data shows UK in ‘great shape’ for Brexit
Responding to this morning’s jobs data, employment minister Mims Davies MP said:
Wages are consistently rising faster than inflation – now for over a year-and-a-half – meaning we’re seeing a sustained boost in pay, supporting consumer confidence and giving a vital lift to millions of households who gain from greater financial security.
This joint record employment rate and decades-low unemployment shows our labour market is booming. It’s especially pleasing to see continued record female employment at 72.1pc, signalling the great strides we’ve made in empowering women in the workplace, whatever their background.
There is still more to do. But today’s positive figures again show a thriving, diverse and resilient labour market to be proud of, and we are in great shape for Brexit on 31 October.
Here’s how UK unemployment looked compared to the rest of the continent, based on figures from May:
Sterling mixed as big picture uncertainty comes back into focus
The pound is currently slightly up against the euro, but down against the dollar, reflecting mixed feelings coming out of Britain and the eurozone.
UBS economist Dean Turner says:
In our view, the government’s failure to engineer an election prior to proroguing parliament further reduces the risk of a no-deal Brexit on October 31. Mr Johnson no doubt has a few more rabbits to pull out of the hat, though, so we can continue to expect the unexpected.
Nevertheless, we now expect the focus for the government to shift to trying to secure a deal, which now seems the most likely way for it to achieve its ambition of leaving the EU before the end of October. However, we currently think it is more likely that Brexit is delayed beyond October and a general election is held before the end of the year.
In the meantime, the fading likelihood of a no-deal Brexit at the end of October should continue to support sterling. Any progress towards securing a deal with the EU could see the pound strengthen to around 1.30 against the US dollar. If a deal is brokered and agreed by parliament, it could move even higher.
Looking at the broader picture, Thursday’s European Central Bank meeting is likely to produce the biggest shift on the markets. A slew of policymakers have attempted to pour cold water on the ECB’s planned approach.
Saxo Bank’s John Hardy says the meeting is “a likely key test for whether the market’s recent risk sentiment rebound has sufficient legs to persist or whether it has been built on misplaced confidence that central bank easing from the ECB and elsewhere can boost global asset prices.”
Round-up: JD takes shot at landlords, will the new Land Rover Defender rescue JLR, and Harry de Quetteville’s predictions for the new iPhone
Here are three things you should read this morning:
- JD Sports takes potshot at landlords by demanding ‘fairness’ for all retailers: JD Sports launched a broadside at landlords by demanding “fairness and flexibility” for leases as it posted a jump in sales.
- The new Land Rover Defender: a 4x4 to save JLR or just a marketing gimmick?: Industry editor Alan Tovey takes a deep-dive look at JLR’s big bet.
- Apple’s iPhone 11 won't knock your socks off — here’s why that doesn’t matter: If you want to get a sneak preview of tomorrow’s iPhone launch, then you don’t have to wait, agog, for CEO Tim Cook’s big reveal, writes Harry de Quetteville.
Reaction: Jobs boom is ‘running out of headroom’
Here’s some of the reaction to this morning’s employment figures.
Pawel Adrjan, economist at jobs site Indeed, said:
The labour market is finally running out of headroom. With Britain’s jobs boom slipping into the rear view mirror, the number of new jobs being created has slowed substantially; just 31,000 over the past quarter, a number so small it is within the statistical margin of error.
“But this is not yet a decline — more a pause for breath. Both the employment and the unemployment rates are holding steady, which is a significant achievement against the backdrop of a stagnant economy and risk-averse employers who are growing increasingly reluctant to hire.
Tej Parikh, chief economist at the Institute of Directors, said:
As so many people have entered work, there has been an uplift to household incomes which has helped to keep consumers ticking. For a long time, businesses have been eager to expand their workforce despite difficult economic conditions. With the supply of available workers shrinking and uncertainty lingering, firms are now beginning to dial down their recruitment ambitions.
Pantheon Macroeconomics’ Samuel Tombs said there are signs of “stagflation” in the market:
Brexit uncertainty undoubtedly has sapped firms’ enthusiasm for hiring new workers, but sharply rising unit labour costs also are playing a role. The pick-up in the headline rate of wage growth to the symbolic 4pc level—the highest rate since 2008—has not been accompanied by any improvement in productivity, which still is flatlining.
Average pay hits £470 per week, still below pre-recession peak
Earnings for UK workers are, on average, still lower than before the recession a decade ago.
The ONS said:
For July 2019, average regular pay, before tax and other deductions, for employees in Great Britain was estimated at:
£507 per week in nominal terms
£470 per week in real terms (constant 2015 prices), higher than the estimate for a year earlier (£461 per week), but £3 (0.7pc) lower than the pre-recession peak of £473 per week for April 2008
The equivalent figures for total pay in real terms are £502 per week in July 2019 and £525 in February 2008, a 4.3pc difference.
The biggest wage growth was in the construction sector, where earnings rose 6.2pc, followed by finance and business services on 5.3pc. Manufacturing had the lowest growth, at 2.4pc. The ONS said:
In terms of regular pay, the construction sector was the highest-paid sector (£621), followed by the finance and business services sector (£612) and the manufacturing sector (£588). The reversal of the highest-paying position between total and regular pay shows the effect that bonus payments have on pay in the finance and business services sector. As with total pay, the least-paid sector was the wholesaling, retailing, hotels and restaurants sector (£342).
Snap take: Unemployment hits joint record low, jobs added disappoints
Surprises across the board there. Though unemployment fell and employment has re-hit a record high, the number of jobs added was even worse than feared.
Wage growth figures are likely to be welcomed especially as the British consumer has done much to underpin recent growth. The figure of 4pc month-on-month (including bonuses) is the best in over a decade.
The Office for National Statistics says:
The estimated employment rate for everyone was estimated at 76.1%; this is the joint-highest on record since comparable records began in 1971 and 0.6 percentage points higher on the year
The unemployment rate was estimated at 3.8%; this is lower than a year earlier (4.0%) and unchanged on the quarter.
The economic inactivity rate was estimated at 20.8%; this is lower than a year earlier (21.2%) and unchanged on the quarter.
The employment rate for women hit a record high:
The estimated employment rate for men was 80.2pc; this is up 0.1 percentage points on the year but down 0.1 percentage points on the quarter
The estimated employment rate for women was 72.1pc; this is the joint-highest since comparable records began in 1971 and 1.1 percentage points higher on the year
Pound dips slightly as Commons closes down
The Commons was officially prorogued in the wee hours of this morning, after Boris Johnson’s General Election bid was quashed in his sixth defeat in six days.
Sterling is down just slightly this morning, as traders bed down for what could be a long period of waiting out the news. With MPs more or less out of action, we may not now exactly where we stand on Brexit until late October — unless there is a breakthrough before then.
Political correspondent Harry Yorke has the details on what could happens in politics over the coming weeks.
- You can follow the latest political updates with Danielle Sheridan here: Brexit latest news: Harriet Harman vows to ensure 'Parliament will have its say' on Brexit as she confirms intention to stand as Speaker
Bovis and Galliford re-fire takeover talks
Merger fever is back among the UK’s mid-cap housebuilders, as Bovis Homes re-sparks a £1bn bid for rival Galliford Try.
Talks had previously collapsed in May. My colleague Laura Onita reports:
In May, Galliford rejected a bid from Bovis saying it was not in the interest of all shareholders.
Although most of the terms have been agreed, Graham Prothero, the boss of Galliford, said: “Much remains to be done before we can present the detailed proposal to our shareholders and wider stakeholders.”
The companies are confident a tie-up would create “significant” cost and savings benefits and “substantial” value for shareholders. They insisted, however, the move was not a merger.
- You can read her full report here: Bovis and Galliford Try restart £1bn housing merger
Galliford shares are up around 14.5pc, while Bovis is down just under 5pc.
Markets.com’s Neil Wilson says:
So what’s changed? £300m in cash has sweetened the deal for Galliford it appears, with the previous offer having made up entirely of new Bovis shares.
It marks a big shift from when the embattled Bovis (contractor problems and build quality issues) faced down a takeover bid from Galliford. Shares in Bovis have risen over 20% since those opportunistic offers from Galliford and Redrow were rebuffed. And for Bovis CEO Greg Fitzgerald, it marks something of a coming home after 30-odd years at Galliford.
The big question for us now is whether this marks the start of a deal frenzy for housebuilders. On that front I would not be too quick to assume others will follow. Whilst there may be singular reasons to combine businesses, generally speaking there are limited synergies from combining operations. Economies of scale don’t really exist in the same way as they do for many other businesses.
888 Holdings leads All-Share fallers as profits fold
Across the whole FTSE All-Share, today’s current biggest faller is 888 Holdings, which operates a slew of online gambling and casino sites.
The company’s profit before tax dropped dramatically in the first half of the year, at $22.2m compared to $60.1m in the same period last year. Average daily revenue rose 6pc compared to the year before.
Boss Itai Pazner said the company’s board “continues to believe that 888 is very well positioned for the future as a result of the group’s diversification”.
Peel Hunt said the company was responding well to regulatory pressure, writing:
The highlight of today’s interims statement is the 23pc LFL growth in UK revenue. In the face of regulatory pressure, 888 has changed the product and marketing focus of its UK business, restored it to healthy growth and demonstrated the strength of its platform. Overall numbers were in line and we are not changing forecasts today but there is plenty about which to be optimistic.
Goodbody analysts maintained a buy rating on a belief that the company may soon see merger activity, but noted weakness in parts of its operations.
Shares stumble at equipment lender Ashtead despite growth
Also reporting on the FTSE 100 today is Ashtead, which has a tough challenge on its hands to meet last year’s strong results.
The equipment rental firm reported first quarter revenue growth of 17pc, and increased its operating profit for the three months to the end of JUly to £358, from £305m the year before.
The company, which makes 90pc of its sales in the US, was being watched for signs that it may be feeling the impact of a global economic slowdown.
Brendan Horgan, its chief executive, said:
Our North American end markets remain strong and we continue to execute well on our strategy of organic growth supplemented by targeted bolt-on acquisitions...
...We remain focused on responsible growth. Our increasing scale and strong margins are delivering good earnings growth and significant free cash flow generation.
The results received a mixed review from RBC analysts, who wrote the company’s current valualtion suggests “the market is continuing to discount an impending downturn”. They added:
However (and in line with management commentary), we maintain our stance that the business is in a much better place than in 2006 and that the market is underestimating the benefits of its diversification and the degree of structural change (which will continue through the cycle).
The company is one of the biggest fallers on the blue-chip index this morning, currently off 2.3pc.
Economic spotlight: Jobs data
In just under an hour, we’ll get the latest figures on UK unemployment and wage growth, which is likely to show both remaining flat, at 3.9pc and 3.7pc respectively.
Economics correspondent Tom Rees says:
While growth has stuttered, the labour market remains buoyant. Unemployment is expected to hold at a 44-year low, but wage growth could cool.
The actual number of jobs added might been more of a dark spot, with analysts polled by Bloomberg expecting a figure of 55,000 in July, down from June’s number of 115,000.
Yesterday, GDP figures surprised to the upside, with the UK posting growth of 0.3pc during July.
JD half-year performance ‘nothing short of stellar’
JD Sports reported a 47pc rise in revenue and 6.6pc increase in profit for the first half of the year, continuing a strong run of growth for the sportswear retailer.
The FTSE 100 company, which has outperformed many of its retail rivals despite gloom on the high street, said it had experienced growth of more than 10pcd in its core UK and Irish operations.
The company said it had opened 36 stores across Europe, Asia Pacific and the US during the period, lifting it to new record earnings.
The company said it expected to land in the middle of its predictions for the full year.
Peter Cowgill, its executive chairman, said:
Notwithstanding the ongoing uncertainty with regards to Brexit, the Board is confident that, without the impact from the transition to IFRS 16, the Group would have been on track to deliver headline profit before tax for the full year at the top end of market expectations which currently range from £402 million to £424 million. However, after adjusting for the impact of the transition to IFRS 16, we would expect to deliver results at the mid-point of expectations. We remain encouraged by our prospects for further growth."
Peel Hunt analysts said:
JD’s performance in H1 is nothing short of stellar, especially in the core UK market, and the (underlying) upgrade is material today (4%). JD’s attractiveness to shoppers and suppliers (and investors) is at an all-time high and we see little chance of this changing, as its obsession with customer data and marketing wavelengths is keener than ever, regardless of territory.
China's producer price index (PPI) — an important barometer of the industrial sector that measures the cost of goods at the factory gate — dropped 0.8pc on-year in August, following a 0.3pc drop in July, reports AFP.
A slowdown in factory gate inflation reflects sluggish demand, while a turn to deflation could dent corporate profits and drag on the world's number two economy, which in turn could lead to a drop in prices globally.
Last month was the first time the PPI had fallen into negative territory since August 2016.
Petroleum and natural gas mining, and coal and other fuel-processing sectors led the drop, National Bureau of Statistics official Shen Yun said in a statement, indicating weakness in manufacturing.
However, consumer price index (CPI) - a gauge of retail inflation — rose 2.8pc last month, stabilising from July and beating forecasts.
Chinese factory prices fall
Most Asian stocks swung lower on Tuesday, weighed by Chinese markets after data showed mainland factory prices shrinking at their fastest pace in three years while reports of German stimulus plans pushed global bond prices down.
China's producer price index fell 0.8pc in August year-on-year, official data showed on Tuesday, its sharpest decline since August 2016 as flagging demand at home and abroad forced some businesses to slash prices.
The data pushed blue chip shares in China down 0.76pc, which in turn drove an index of Asian stocks outside of Japan 0.3pc lower, having traded flat earlier in the session.
US stock futures were down 0.08pc in Asia after the S&P 500 ended flat in New York on Monday. Australian shares were down 0.49pc. Bucking the trend, Japan's Nikkei stock index rose 0.35pc.
Hong Kong shares were slightly higher after Tuesday's morning session. The Hang Seng Index added 0.08pc, or 22.18 points, to 26,703.58 going into the break.
Agenda: Busy day for British corporates
Welcome to our live markets blog. Markets across Europe ended pretty mixed yesterday with the biggest pressure on the FTSE 100 index coming from sterling, which made solid gains through the session after GDP figures for July beat analysts’ expectations, dampening fears that the UK is sliding towards a recession.
5 things to start your day
1) The UK’s chances of sliding into recession for the first time in a decade have dramatically receded after official figures revealed surprisingly strong growth in July. Despite ongoing turmoil at Westminster over Brexit and a likely general election, forecasters at the National Institute for Economic and Social Research now put the chances of recession at just 10pc after a much better than expected 0.3pc expansion for the UK economy during the month.
2) Can corner shops survive? When larger supermarkets made their move into the convenience store sector, Britain’s humble corner shops were forced to find new ways to survive. Over the last seven years, the sector has diversified the range of products and services they offer to consumers by offering parcel collection or Post Office counters.
3) Elliott Management, the $38bn New York hedge fund that bears Paul Singer’s middle name, jolted Wall Street by revealing a $3.2bn stake in America’s biggest operator. AT&T shares climbed as much as 8pc as traders placed their bets for the battle to come.
4) Sage Group, Britain’s biggest listed technology company, confirmed that it is putting its payment processing unit Sage Pay up for sale. The FTSE 100 software company, which disposed of its payroll division earlier this year and its US payments software business in 2017, said it was “evaluating potential strategic options” for the business, including a sale.
5) Will the UK run out of insulin and other vital medicines in a no-deal Brexit? Even if the worst disruption can be avoided, the nature of the sector means that small-scale shortages can have a major detrimental impact on customers who are affected.
Coming up today
Today is a busy one on the corporate calendar.
Construction equipment rental company Ashtead had a booming 2018/19, but the latest trends in the US construction sector — where it makes 90pc of its sales — suggest storm clouds may be on the horizon, while Brexit is piling pressure on to its smaller UK wing.
JD Sports will also report interim results. Its strong relationships with suppliers have played well with analysts in recent reports, leading it to outperform much of the tepid retail market. The trainer specialist only entered the blue-chip index in June, so investors will be watching closely to see if it is likely to keep a foothold.
Finally, Bovis Homes will also report results, which will be scrutinised for signs that it is managing to improve its margins. “A half-year trading statement revealed completions and sales rates are moving in the right direction at Bovis – and a trend towards more lucrative locations is helping underpin selling price,” said Hargreaves Lansdown’s Sophie Lund-Yates. “That’s ticked some important boxes, but more progress is required,” she added.
Interim results: 888 Holdings, Ashtead, Bakkavor, Bovis, IP Group, JD Sports
Economics: Jobless claims and unemployment, trade balance, construction output (UK)