Twitter shares fall on hacking concerns
Twitter shares (NASDAQ:TWTR) fell more than 6% on Tuesday on concerns of hacking activity.
The social media platform warned of “unusual activity” from China and Saudi Arabia relating to a help form bug in a statement published on Monday.
Twitter said it had identified suspicious traffic to a support forum, which left users’ phone country codes and details vulnerable.
The company said the issue was discovered on November 15th and resolved the follow day.
The company statement said:
“Importantly, this issue did not expose full phone numbers or any other personal data. We have directly informed the people we identified as being affected. We are providing this broader notice as it is possible that other account holders we cannot identify were potentially impacted.
Since we became aware of the issue, we have been investigating the origins and background in order to provide you with as much information as possible. During our investigation, we noticed some unusual activity involving the affected customer support form API. Specifically, we observed a large number of inquiries coming from individual IP addresses located in China and Saudi Arabia. While we cannot confirm intent or attribution for certain, it is possible that some of these IP addresses may have ties to state-sponsored actors.”
Back in October the social network posted a profit for q3, sending Twitter shares upwards.
Twitter’s earnings beat market expectations for the quarter, increasing by 29% to $758 million during the period.
Shares in the social media platform are currently -6.80% as of 11:49AM (GMT).
Big four UK accountancy firms facing shake-up
The UK’s top accountancy firms are set to face a major shake-up amid a series of proposals put forward by the competition watchdog.
The Competitions and Markets Authority (CMA) introduced a series of radical reforms to tackle various issues it had flagged in the accountancy industry.
The proposals are set to challenge the dominance of the ‘big four’ accountancy firms within the UK industry, namely, KPMG, PwC, EY and Deloitte.
Specifically, the CMA recommended dividing audit and advisory businesses to ensure separate management and accounts.
In addition, the proposals recommended oversight for those who appoint auditors in a bid to maintain independence.
Lastly, the watchdog proposed the introduction of a “joint audit” system, with both a ‘big four’ auditors and a ‘non-Big Four’ company working in collaboration on an audit.
Andrew Tyrie, CMA chair, commented: “Addressing the deep-seated problems in the audit market is now long overdue. Most people will never read an auditor’s opinion on a company’s accounts. But tens of millions of people depend on robust and high-quality audits. If a company’s books aren’t properly examined, people’s jobs, pensions or savings can be at risk.
“The CMA will now consult on a number of proposals for robust reform. These intractable problems may take some years to sort out. If it turns out that the proposals are not far-reaching enough, the CMA will persist until the problems are addressed.”
House prices: What to expect for 2019
A new report from the Royal Institution of Chartered Surveyors (RICS) has revealed that house prices will continue to stagnate in 2019.
The surveyors and valuers have warned that the market will enter the third year of decline as sales volumes are expected to fall around 5% and the house price growth will reach a standstill.
RICS economist, Tarrant Parsons, said that the uncertainty surrounding Brexit has caused “greater hesitancy” in the property market.
“That said, the current political environment is far from the only obstacle hindering activity with a shortage of stock continuing to present buyers with limited choice, while stretched affordability is pricing many people out.”
“For the year ahead, this mixture of headwinds is unlikely to dissipate, meaning sales volumes may edge a little lower.”
“On the back of this, house price growth at a UK level seems set to lose further momentum, although the lack of supply and a still solid labour market backdrop will likely prevent negative trends,” he said.
Following the Bank of England’s suggestion that a disorderly Brexit could lead to house prices plummeting 30%, Rics has said this forecast is unrealistic.
“Some of the assumptions behind the disorderly Brexit scenario seem implausible to us. Mainly, we would expect the Bank to cut interest rates and potentially restart quantitative easing in the wake of no-deal,” said the group.
JLL is more optimistic than Rics amid the Brexit uncertainty, saying that they expect an initial slump at the start of the new year will lead to a 1% growth in the first six months, followed by a 1.5% growth in the second half of the year. This growth will soar to 11% over the next five years.
“With UK earnings growth set to return to a more normal rate of 4% per annum by 2021, real wage growth and more modest property price increases will unlock transactions that have been hampered by a lack of affordability,” said Adam Challis, who is the head of UK Residential Research.
SSE & Npower merger falls through, shares fall
SSE has abandoned plans to merge with Npower.
The potential merger between two of the UK’s biggest energy firms has been cancelled amid “very challenging market conditions”.
The new government price cap and increasing competition mean that new considerations for the retail arm are to demerge and list its retail arm or sell it.
The cap will keep energy bills below £1,137 a year for “typical usage” and will start in January 2019.
Alistair Phillips-Davies, the SSE chief executive, said: “This was a complex transaction with many moving parts. We closely monitored the impact of all developments and continually reviewed whether this remained the right deal to do for our customers, our employees and our shareholders.”
“Ultimately, we have now concluded that it is not. This was not an easy decision to make, but we believe it is the right one.”
In a statement, SSE said it had decided the tie-up was no longer “in the best interests of customers, employees or shareholders”.
“While the Board believed strongly in the new company’s potential to deliver benefits for customers and the wider market, it does not now believe the new company would be in a position to meet trading collateral requirements in a sustainable way; and does not now believe the new company would be capable of listing on the premium segment of Official List and Main Market of the London Stock Exchange,” the group added.
Martin Herrmann, chief operating officer of Innogy SE, said: “Adverse developments in the UK retail market and regulatory interventions such as the price cap have had a significant impact on the outlook for the planned retail company. “We are now assessing the different options for our British retail business.” SSE and Npower said back in November that they would have to reconsider their terms, indicating that the deal may fall through. Russ Mould, investment director at AJ Bell, said “SSE’s retail merger plan with Npower looked complicated from the start and it’s perhaps no surprise that the deal is off.” “The big utility companies are under pressure from an incoming price cap on standard variable tariffs, as well as rising competition from independent operators who are gobbling up market share.” Shares in SSE (LON: SSE) are trading down 2.62% (1527GMT).Laura Ashley announces 40 UK store closures
Laura Ashley has announced plans to close 40 stores in the UK, focusing instead on growth in Asia.
The home furnishings company is the latest group to struggle amid the difficult trading environments, with plans to shut around a quarter of UK outlets.
The group is owned by Malaysian United Industries (MUI), who’s new chairman Andrew Khoo said the “challenging environment” in the UK was hitting Laura Ashley.
“The direction I want to go is to have not so many stores, but maybe the ones we have could be larger. It’s more about showcasing the brand. It doesn’t really matter if they buy online or offline, we just want them to get inspired,” he said.
“We’re moving to Asia in a much bigger way. We have a regional office in Singapore, it’s a dedicated office of about 10 people and it’s focused purely on e-commerce into China.”
“Once we get a significant foothold in digital retail in China we can look at the physical stores roll out,” he added.
“It’s a challenging environment and it could become more challenging.”
“My long-term view of the UK is I have confidence in the UK and we will continue to invest in the UK. As long as Laura Ashley stays relevant there’s no reason we can’t get over this little speed bump.”
The retailer has struggled alongside groups New Look, Marks & Spencer (LON: MKS), House of Fraser and Carpetright (LON: CPR) who are also all closing stores with CVAs. Laura Ashley issued its third profit warning in 12 months in February.
In other market news, Monday has seen Asos (LON: ASC) shares fall after a profit warning and shares in H&M (STO: HM-B) fall by almost 10% despite a rise in sales.
When markets opened on Monday, shares in Laura Ashley (LON: ALY) tumbled by 7% but have since recovered and are now trading +15.74% (1455GMT).
H&M shares down 10% despite rise in sales
Shares in H&M fell almost 10% on Monday following the retailer’s trading update.
Despite a 12% rise in sales for the three months to the end of September to 56.4 billion kronor ($6.2 billion), shares tumbled as investors remained unconvinced of the group’s recovery.
H&M’s full-year report will be released at the end of January and has not given further details of its progress amid the difficult trading environment.
Harris Associates, H&M’s second-largest shareholder, has trimmed down its stake in the company over this year.
Monday also saw Asos (LON: ASC) issue a profit warning due to poor trading in the run-up to Christmas. Last week, Sport’s Direct (LON: SPD) boss Mike Ashley said trading in November was “the worst on record, unbelievably bad”.
“The last thing the sector needs right now is a profit warning from one of it’s few star performers a week before Christmas. E-commerce is often positioned as the death knell of the high street, so you know things are bad when even the online giants are struggling,” said Natalie Berg, who is a retail analyst at NBK Retail.
The Asos profit warning saw shares in the group tumble, as well as affecting shares in rival Boohoo (LON: BOO).
Shares in H&M (STO: HM-B) are currently trading -9.31% (1430GMT).
Asos issues unexpected profit warning, shares tumble
Asos issued a profit warning in the run-up to Christmas, sending shares down over 40%.
The online retailer said that sales had faced a “significant deterioration” and would continue to remain challenging.
The group’s sales growth forecast has been downgraded from 20 to 25% to 15%.
“Whilst trading in September and October was broadly in line with our expectations, November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations,” said Asos in an unscheduled announcement.
“The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years. We have recalibrated our expectations for the current year accordingly.”
Chief executive Nick Beighton said: “We achieved 14% sales growth in a difficult market, but in the light of a significant downturn in November, we think it’s prudent to recalibrate our expectations for the full year.”
“We are taking all appropriate actions and our ambitions for Asos have not changed,” he added.
The online clothing retailer blamed the fall in sales on economic uncertainty and weaker consumer confidence.
The news comes amid difficult trading environments that have hit many high street stores. Last week, Sport’s Direct (LON: SPD) boss Mike Ashley said trading in November was “the worst on record, unbelievably bad”.
Whilst many brick-and-mortar stores have faced challenging retail environments, online retailers were considered to safe from the weaker consumer confidence and economic uncertainty.
The profit warning from Asos has sent shockwaves through the online retail industry, with shares in Boohoo (LON: BOO) falling over 10% and shares in Next falling 8% in morning trading.
Natalie Berg, who is a retail analyst at NBK Retail, said: “The last thing the sector needs right now is a profit warning from one of it’s few star performers a week before Christmas. E-commerce is often positioned as the death knell of the high street, so you know things are bad when even the online giants are struggling.”
Shares in Asos (LON: ASC) are currently trading down 40.43% at 2,498.36 (1019GMT).
Pound falls amid continuing Brexit uncertainty
The pound fell lower on Friday after Theresa May’s trip to Brussels to discuss the backstop issue with EU leaders.
This morning, the pound was half a percent down against the dollar and 0.3% against the euro. The pound fell to $1.2616 and €1.1114 respectively.
Ian Strafford-Taylor, the chief executive of currency traders FairFx, said: “Over the last couple of months… we’ve seen several developments in Brexit negotiations, MP resignations and more recently a leadership challenge which have all sparked significant turbulence for the pound.”
The fall in the sterling has seen passengers at Heathrow being offered one US dollar for each pound.
“Now that Theresa May has vanquished a vote of no confidence the currency can get back to focusing on the depressing state of her attempts at Brexit. Falling half a percent against the dollar – cable ducked back under $1.26 in the process – and 0.3% against the euro, sterling slumped in the face of the latest round of rejections from the EU, May’s desperate attempts to save her deal so far proving pretty useless,” said Connor Campbell from Spreadex.
The Euro has also fallen on Friday amid Brexit uncertainty and protests taking place in France.
Chris Williamson, who is the chief business economist at IHS Markit, said: “The eurozone economy saw a disappointing end to 2018, with growth slowing to the weakest for four years.”
“While some of the slowdown reflected disruptions to business and travel arising from the ‘yellow vest’ protests in France, the weaker picture also reflects growing evidence that the underlying rate of economic growth has slowed across the euro area as a whole.”
“Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area. The surveys also point to further signs that the struggling autos sector continued to act as a drag on the region’s economy.”
“Forward-looking indicators such as new orders and future expectations remaining subdued suggest that demand growth is stalling, adding to downside risks to the immediate outlook.”
Capita shares down on NAO’s British Army report
Shares in Capita fell over 6% on Friday after a new government report revealed that it has failed to meet targets recruitment contract for the British Army every year.
The outsourcing firm has a £495 million contract with the British Army since 2012, where Capita has been responsible for recruitment.
According to the report from the National Audit Office (NAO), Capita has failed to meet targets every year since the deal was awarded and recruitment has been as low as 21% of the British Army’s requirements.
The NAO has said that the Army Recruiting Partnering Project has “underestimated the complexity of what it was trying to achieve” and there are “significant problems”.
A spokesperson from Capita said: “As the NAO report states, both Capita and the Army underestimated the complexity of this project. Our focus is now on working with the Army to deliver a recruitment process fit for the 21st century.”
“We have overhauled governance on the contract and are already seeing improvements, with applications at a five-year high and a reduction in the amount of time it takes candidates to join the Army. We are absolutely committed to getting this partnership right.”
The Army and Capita believe the changes to the recruitment approach and the new online system will lead to an increased number of recruits. Recruits have already increased over the past two years.
A spokesman from the British Army said: “We are fully committed to improving our recruiting process. Working with Capita we have put in place a plan to address the challenges. The army has developed a range of measures to speed up the recruitment process.”
“This includes new measures to reduce the time between applying and starting training, greater access to military role models for recruits and a new IT system.”
“The army meets all of its operational commitments to keep Britain safe,” he added.
Shares in Capita (LON: CPI) are currently trading down 4.24% at 109,65 (1119GMT).
Richard Branson: Hard-Brexit would be a “disaster”
Richard Branson has warned that a hard Brexit would be “an absolute disaster”.
Speaking to the BBC, the Virgin Group founder said that the British people and businesses will suffer in the event of a hard Brexit.
“I think Theresa May needs to be 100% honest with the public. She’s admitted that a hard Brexit would be an absolute disaster for the British people,” he said.
“From our Virgin companies’ point of view, a hard Brexit would torpedo some of our companies. If British business suffers, British people will suffer, and it’s really really important that people realise that.”
Branson went on to say the fall in the pound would particularly affect Virgin holidays, where fewer people would be able to afford to go on holiday due to the poor exchange rates.
The Virgin Group boss was speaking from the Virgin Galactic event, where one of his spaceships is set to reach space for the first time.
Branson’s space startup hopes that the SpaceShipTwo passenger rocket ship will reach further than 80km, which space is said to start.
“Overall the goal of this flight is to fly higher and faster than previous flights. We plan to burn the rocket motor for longer than we ever have in flight before, but not to its full duration. At the end stages of the rocket burn in the thin air of the mesosphere and with the speeds that we expect to achieve, additional altitude is added rapidly,” said the company in a blog post.
His comments come during a tough time for the prime minister, who has delayed the Parliamentary vote on the Brexit withdrawal agreement. The new vote will take place in January.
Theresa May is currently in Brussels where she is working on the backstop issue with the Irish border with EU leaders.