Falling fuel prices keep inflation rate lowest since August 2016
The inflation rate in Britain did not rise from last month as petrol prices fell at the quickest rate in three years, giving a renewed boost to consumers before Brexit.
Consumer Prices, as per the CPI (Consumer Price Index) rose at rate of 1.7% annually, matching the rate in August. This was the lowest recorded since August 2016.
Prior to this, the Bank of England had forecasted a inflation would average 1.6% in the final quarter, and this looks to be accurate.
ONS Statistician Mike Hardie said “Motor fuel and second-hand car prices fell, but were offset by price increases for furniture, household appliances and hotel rooms,”
Hardie added “Inflation remained unchanged into September at its lowest rate since late 2016”
Fuel prices fell significantly by 2.1% compared to a year earlier, the biggest drop since August 2016.
Adding to this, the price of motor fuel saw a slight decrease with a 0.7% drop, putting heavy downward pressure on inflation.
The Bank of England have stated that inflation pressures may mean rises to interest rates in the medium/long term, as Brexit still looms.
This monthly figure will decide the annual increase in rates for businesses.
Pensioners will also see an increase by 4% in state pension, more than double the current rate of inflation. The triple lock rule means the payout figure is the highest figure in the CPI index.
Dominic Curran, a property policy advisor at the British Retail Consortium said “the CPI figure means that “retailers will have to cough up an extra £137 million from April. Already, while retail accounts for 5% of the economy, it pays a massive 25% of all business rates.The chancellor must take action on rates in the forthcoming Budget and scrap ‘downwards transition’, which takes £1.3 billion from retailers and uses most of it to subsidise rates in other industries”
The fact that the inflation rate is lower than expected is not of surprise, there is still uncertainty in the British economy as consumers look to hold off purchases still a concrete Brexit plan is formulated.
In other current affairs, new stories have been about the London Stock Exchange (LON:LSE), Thomas Cook (LON:TCP), Facebook (NASDAQ: FB), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).
ASOS profits crash 68%
ASOS saw its profits crash following warehouse issues, the online fashion retailer revealed on Wednesday.
Shares in the company (LON:ASC) were up during trading on Wednesday morning.
In its final year results to 31 August, the online fashion retailer announced a 68% crash in profit before tax, amounting to £33.1 million in comparison to the £102 million figure recorded the year prior.
However, retail sales were up 13% on the previous year.
The online fashion retailer said that performance in dresses was strong, particularly with animal print, broderie and satin styles “really resonating”.
As for menswear, trends such as neon and utility were successful, as well as the return of the casual trouser through cargo pants.
ASOS posted yet another profit warning in July, as well as a shock profit warning last December in the run-up to Christmas.
“This financial year was a pivotal period for ASOS, where we have invested significantly and enhanced our global platform capability to drive our future growth,” Nick Beighton, CEO of ASOS, commented on the results.
“Regrettably this was more disruptive than we originally anticipated. However, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them,” the CEO continued.
“Whilst there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year,” Nick Beighton said.
“Our focus now shifts to ensuring that we enhance our capability to drive an improved customer experience and leverage the benefits from the investments we have made. With over 60% of our revenue coming from international customers and a strong global logistics platform with capacity to grow, we are well positioned to take advantage of the global growth opportunity ahead of us.”
ASOS added that its recent collaboration with Ovie from Love Island was particularly successful. The Love Island star provided both an ASOS Design style edit of his favourite pieces and also a design collaboration on an exclusive range, ASOS said.
https://platform.twitter.com/widgets.js Shares in ASOS plc (LON:ASC) were trading at +18.44% as of 10:25 BST Wednesday.❗️Message: it’s National Ovie Day❗️ We’ve enlisted @OvieSoko to put together an edit full of his fave ASOS AW19 pieces, from utility gilets to smart tailoring. Check out his picks and keep an eye out for more news – it’s not Ovie yet… pic.twitter.com/TULp9YvYtP
— ASOS (@ASOS) September 16, 2019
dotDigital omnichannel AI and customer data offerings lead profit surge
Software and cross-channel automated marketing services provider dotDigital Group plc (LON: DOTD) boasted strong progress across its fundamentals during the full-year ended June 2019.
The Group’s revenues rose 19% to £51.3 million, alongside 15% organic revenue growth to £42.5 million, and average revenue per user up 14%, to £966 per month.
This sales progress led adjusted EBITDA growth of 24% and a 25% hike in adjusted operating profits, to £14.7 million and £11.8 million respectively.
Further, dotDigital saw its cash balance widen from £15.0 million to £19.3 million year-on-year, while adjusted EPS jumped 33% to 3.88p, which it said was ahead of market expectations.
The Company also noted strong progress across its core offerings; 19% of of customers using more than one channel demonstrated the ‘value’ of its Comapi technology, while its Magneto partnership recorded 27% revenue growth.
Going forwards, the Company remains confident in its performance in 2020, with contracted recurring revenues already factored into its core business. However, it is worth noting that AI and data-led offerings are currently in their ascendancy. As such, expansion in the short-term are inevitable.
As time goes on, public and academic pressure to more closely manage – or at the very least provide direction – for data technology and AI offerings, will likely push regulatory bodies towards the direction of more stringent legislation.dotDigital Group comments
Milan Patel, CEO, stated,
“The Group is very excited about its financial performance and our growth opportunities, driven by investment in technology innovation, geographic expansion and strategic partnerships. With the additional investments in people across all regions it sets the foundations for scalable growth in AI infused marketing and data driven cross channel Marketing Automation. The Group is especially pleased with our international performance.”
“Although relatively early on, Q1 of the 2019/20 financial year has started well with trading in line with expectations. With 89% of our revenues recurring, a high proportion under contract and strong client relationships we continue to have good visibility into our earnings. We are confident in delivering continued organic growth across our core organic growth pillars.”
“We remain focussed on delivering against our strategy and are confident for the year ahead.”
Investor notes
After a slight dip, the Company’s shares are currently up 7.69% or 7.00p, to 98.00p per share 15/10/19 14:41 BST. Analysts from Peel Hunt reiterated their ‘Buy’ stance on dotDigital Group stock. The Group’s p/e ratio is 28.80, their dividend yield is modest at 0.65%. Elsewhere in the tech sector, there were updates from; ProPhotonix Ltd (LON: PPIX), Universe Group plc (LON: UNG), Microsaic Systems PLC (LON: MSYS), Petards Group plc (LON: PEG), SCISYS Group PLC (LON: SSY), Pebble Beach Systems Group PLC (LON: PEB) and ULS Technology PLC (LON: ULS).Capital Drilling taps quarter-on-quarter growth and busy end to 2019
Mining company Capital Mining Ltd (LON: CAPD) recorded progress during the third quarter and gears itself up for a busy end to FY 2019, with revenues currently lagging behind on a year-on-year comparison.
Company revenues grew 6.1% compared to the previous quarter, up to US $29.4 million. However, on-year revenues contracted 5.2% from $31.0 million for Q3 2018. This trajectory was cemented by its average monthly revenues per operational rig, which dipped 4.4% during the quarter to $174,000, and 12.1% year-on-year for Q3, down from $198,000.
While these results aren’t too encouraging, the Group made significant operational progress during the period, including being awarded its first comprehensive mining services contract with Allied Gold Corp at its Bonikro Gold Mine in Côte d’Ivoire.
The Company added that its, “Extension of services to incorporate load and haul enables Capital Drilling to offer clients a fully integrated mining service, providing the ability for Capital Drilling to pursue transformational growth opportunities with a broader base of long-term mine site based clients.”
It finished by boasting continued operational profitability and development driven by ten new exploration contract awards in 2019, alongside a 17% in its interim dividend paid at the end of the first half, up to 0.7 cents per share.
Capital Mining comments
Responding to teh update, Executive Chairman Jamie Boyton said, “In the first nine months of 2019 Capital Drilling has positioned itself for further growth, which is now bearing fruit with strong exploration contracting and mobilisation activity and, as recently announced, broadening our service offering with the award of our first comprehensive mining services contract with Allied Gold Corp at their Bonikro gold project. Our West African growth strategy continues to pay dividends, with a record number of contracts commencing in Q4. During the quarter, we have invested to support the new contracts, and we are confident that Capital Drilling is building a stronger, broader revenue base as a result. With increasing activity levels already seen in Q4, underpinned by high quality long term contracts, we are optimistic of a solid performance for the remainder of the year as well as into 2020.”Investor notes
The Company’s shares rallied modestly by 0.39% or 0.24p following the update, up to 63.74p per share 15/10/19 08:54 BST. Analysts from Peel Hunt reiterated their ‘Buy’ stance on Capital Drilling stock. The Group’s p/e ratio is 14.05, their dividend yield stands at 2.56%. Elsewhere in the mining and minerals sector, recent updates have come from; Griffin Mining Ltd (LON: GFM), Alien Metals Ltd (LON: UFO), Highland Gold Mining Ltd (LON: HGM), Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU), Resolute Mining Limited (LON: RSG), Bisichi Mining PLC (LON: BISI).FCA to put the brakes on interest-based car retail commissions
UK regulatory body The Financial Conduct Authority (FCA) announced on Tuesday that it is planning to ban the awarding of commission on the basis of interest rates paid by customers, in the motor finance sector.
Currently, car retailers and other motor finance brokers earn commission which corresponds to the interest rates they can get their customers to agree to paying. As part of this practice, brokers are able to set the interest rate on motor-related transactions. The FCA have found that this practice,
‘creates an incentive for brokers to act against customers’ interests.’
Making this change will not only remove this incentive for motor brokers, it will give lenders more control over the prices customers pay for their motor finance, and will save customers an estimated £165 million per year.
FCA Comments
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said,
“We have seen evidence that customers are losing out due to the way in which some lenders are rewarding those who sell motor finance. By banning this type of commission, we believe we will see increased competition in the market which will ultimately save customers money.”
The regulator’s statement concluded by saying,“The FCA is also proposing to make changes to the way in which customers are told about the commission they are paying to ensure that they receive more relevant information. These changes would apply to many types of credit brokers and not just those selling motor finance.”
“The FCA is consulting on the new rules until 15 January 2020 and plans to publish final rules later in 2020.”
Other news has come from; Elsewhere in political and macro economic news, there have been updates from; Michel Barnier saying a deal is still possible, UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).Student start-ups and social enterprises on the rise
New data revealed on Tuesday that almost 14,000 student start-ups and social enterprises generated £821 million in turnover in 2018.
Pareto Law’s report shows that the estimated total turnover of the graduate start-ups was more that HelloFresh and Boohoo (LON:BOO), which totalled £802 million and £603 million respectively.
The estimated total turnover of graduate founded businesses and social enterprises, which currently employ more than 25,000 people, has surged 26% over the course of four academic years.
The report, which is an analysis of data provided by the Higher Education Statistics Agency, shows that the Royal College of Art is the university to have created the largest amount of start-ups and social enterprises in 2017 to 2018 with 251 new businesses started.
“In uncertain economic times it is great to see that student-founded businesses have found a way to grow and thrive,” Jonathan Fitchew, CEO of Pareto Law, commented on the research.
“The challenges faced by any graduate who has started a business over the past few years are significant and those who manage to make the grade should be proud of everything they’ve achieved,” the CEO of Pareto Law continued.
“It just goes to show that stereotypes that are often associated with graduates and students are tired and outdated. They’re hardworking and ambitious creators of wealth and jobs, and a vibrant part of the wider UK economy that we’re proud to serve.”
Jake Butler, Operation Director at Save the Student, added that “the idea of students starting their own ventures, big or small, is not only excellent for the students themselves but also the wider economy. You don’t need £1000s to start and there’s not even a need to set the world alight and going it alone can be a great experience.”
Elsewhere on Tuesday, news emerged from the Office for National Statistics that the UK unemployment rate increased to 3.9% from June to August, an unexpected rise given that the market was expecting the rate to remain at 3.8%.
Michel Barnier says Brexit deal is still possible, Sterling happy to chase the story
Chief EU negotiator Michel Barnier has said that a Brexit deal could still be reached between the EU and the UK. He said that the proposals currently on offer were not good enough, but that he was ready for Boris Johnson’s good intentions to turn into a legal document before the EU summit, which begins on Thursday.
Speaking to Bloomberg, Barnier said, “Not all that U.K. has been saying in the last days is totally unacceptable.”
“They have moved in our direction on key points and that’s why I think we still can make significant progress today.”
Speaking on the prospect of a deal, he said, “Because even if an agreement will be difficult, more and more difficult to be frank, it is still possible this week.”
He continued, “Reaching an agreement is still possible. Obviously any agreement must work for everyone, the whole of the United Kingdom and the whole of the European Union.
“Let me add also that it is high time to turn good intentions into a legal text.”
Brexit Secretary Stephen Barclay echoed the optimistic sentiment, stating a deal was still,I have just debriefed EU27 Ministers in Luxembourg. 🇪🇺 unity remains strong. We want an agreement that works for everybody: the whole #UK & whole #EU. On route back to Brussels to take stock w/ my colleagues. Talks are difficult but I believe an agreement is still possible. pic.twitter.com/FxQHCajg5b
— Michel Barnier (@MichelBarnier) October 15, 2019
“very possible”.
He said, “The talks are ongoing. We need to give them space to proceed. But detailed conversations are under way and a deal is still very possible.”
Meanwhile, Secretary of State for Scotland, Alistair Jack, foresees Boris Johnson pushing for a No-Deal scenario at the end of the month, which he believes will be supported by some sympathetic EU27 leaders,
“He can make it very clear that he doesn’t want to ask for that extension, that he’s being forced to ask for that extension and some European leaders may sympathise with him on that and feel that it’s unfair that he should have to do something he doesn’t want to do.”
Speaking on market movements after the bell this morning, Spreadex Financial Analyst Connor Campbell commented on developments towards a deal,
“Sterling very much chose to focus on the positives. While Michel Barnier was keen to stress it has become ‘more difficult’ to reach an agreement this week, stating that it is ‘time to turn good intentions into legal texts’, his claim that it is ‘still possible’ for the UK and EU to come together on a deal was enough to restore the pound’s faith in proceedings, even if other members of the bloc were less convinced.”
“Cable climbed 0.6%, returning to the $1.265-levels struck last Friday, while a 0.7% increase against the euro actually sent sterling to a fresh 5-month high of around €1.1487.”
“Of course, this had the side effect of inhibiting the FTSE while its peers were charging forth. Though the European markets weren’t particularly receptive to the ‘partial trade deal’ reports from over the weekend on Monday, a strong Asian session greenlit some substantial growth this Tuesday.”
“Looking forward to the rest of the day, and the market’s resolve may be tested by a few key bits of data. For the UK, the latest jobs report is expected to see wage growth (including bonuses) and the unemployment rate hold at 4.0% and 3.8%. For the Eurozone things could be trickier: the region-wide and German ZEW economic sentiment readings are set to worsen month-on-month, sinking to -26.7 and -27.0 respectively.”
It will be difficult to reconcile the appetite for a deal and Boris Johnson’s personal vision for the UK, which it is plausible to believe differs from any kind of view the EU has for the UK going forwards. For me, the UK has struggled with the realisation that its government has been asked to make a change in national direction, and to-date it has found that job too difficult. Some have said its inability to execute this task had been based on a lack of willpower, and while this may be true to an extent, King’s College Professor David Edgerton also highlighted a problem recent Conservative governments have faced: that they no longer have a strong stake in UK business. Whereas once, Conservative top guns would have strong ties – or ownership – of industry in fields such as UK manufacturing (and could thus adjust national direction with greater ease), the saturation of overseas ownership of key UK businesses and assets since the 1970s and 1980s means that in the present day, Boris Johnson is trying to rekindle some kind of British business boom from a bygone era, and some of the UK’s largest employers (many not British companies) are shaking their heads. Maybe Boris’s vision will come to life; only time shall tell. For now, Barnier has told the prime minister he has until midnight tonight to table new proposals. Elsewhere in political and macro economic news, there have been updates from; UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), ECB stimulus, the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).UK unemployment at 3.9%
The UK unemployment rate increased to 3.9% from June to August, new data from the Office for National Statistics revealed on Tuesday.
This was an unexpected rise as the market was expecting the rate to remain at 3.8%.
The Office for National Statistics said that in the three months to August 2019, the level of employment fell by 56,000 to 32.69 million, the first quarterly decline since the three months to October 2017.
“The fall in employment was caused by changes in the numbers of men and women,” the Office for National Statistics said.
“The number of women entering employment has been a strong contributing factor to the current high employment levels, so a fall in their number in employment has had a larger impact on the current level of employment,” the report continued.
The data also showed that average weekly earnings continued to increase. Total average weekly pay (including bonuses) grew by 3.8% in the year to August to £542.
“There’s been a little bit of softness in the most recent job data with the unemployment rate ticking higher,” David Cheetham, Market Analyst at XTB UK, commented on the figures.
“Overall there is a hint of weakness here but it should be remembered that the labour market remains strong by historical standards. In terms of market reaction there was a small dip lower in the pound but it has since shrugged of the release with the markets far more concerned with the latest Brexit developments,” David Cheetham added.
Indeed, as the Brexit deadline approaches, uncertainty over the nation’s future prevails. Elsewhere on Tuesday, news emerged from Kantar that consumers are preparing more so for Halloween than they are the Brexit deadline day, with new grocery market figures revealing a year-on-year increase in supermarket sales of 1.3%
More preparations for Halloween than Brexit, Kantar
Consumers are preparing more so for Halloween than they are the Brexit deadline day, new grocery market figures from Kantar revealed on Tuesday.
Kantar said on Tuesday that year-on-year supermarket sales increased by 1.3% over the past 12 weeks.
Halloween and the Brexit deadline will occur on the same date – 31 October.
Kantar said that consumers are already planning for Halloween, spending a total of £1.5 million on pumpkins over the past 12 weeks.
Brexit uncertainty may prevail, but the data shows that while a quarter of British consumers say they are considering stockpiling, they are waiting to see how the next few weeks pan out.
“If they take any action it will be closer to the deadline, if a chaotic trading situation looks increasingly likely,” Kantar added.
“But well-documented concerns about the availability of popular products in the event of a no-deal Brexit have not yet translated into a consistent increase in purchasing,” Kantar continued in its report.
“Sales of dry pasta and healthcare products over the past four weeks were 9% and 7% higher than the same time last year, but those of canned products fell by 2% and frozen food by 1%.”
Sainsbury’s (LON:SBRY) increased its sales at the fastest rate since last October, making it the only big four retailer to achieve growth. At the end of September the supermarket chain announced that it will be closing many stores and opening new ones.
Sales at Asda (NYSE:WMT) dropped by 0.9% over the period, Morrisons (LON:MRW) saw a decline of 1.8% and Tesco (LON:TSCO) fell 0.2%.
Shares in J Sainsbury plc (LON:SBRY) were trading at +0.28% as of 10:32 BST Tuesday. Meanwhile, shares in WM Morrison Supermarkets plc (LON:MRW) were down trading at -0.54% as of 10:34 BST and shares in Tesco plc (LON:TSCO) were up trading at +1.34%.
