RBS shares plunge on ‘legacy issues’ Shares in the Royal Bank of Scotland (LON:RBS) have fallen 5 percent this morning, after the banking giant reported a £2 billion loss for the first six months of the year. Although the bank has not made a profit since 2007, the steep loss reported today is far larger than the £179 million loss for the six months previously. CEO Ross McEwan blamed the sharp fall on ‘legacy issues’, including PPI problems dating back to 1993 and ongoing restructuring. At the same time, the bank announced that is would be splitting from its Williams & Glyn business, with Santander UK being the rumoured buyer for the 300-branch high street banking chain. RBS is currently trading down 4.43 percent at 183.55 (1004GMT). E-Sure shares down as claims rise It has also been a bad morning for British insurer E-Sure, whose shares have fallen 4 percent after reporting a drop in first-half underlying profit. Underlying pretax profit fell to £45.6 million for the six months to June, down 1.9 percent, with gross written premiums rising 16.3 percent. The company blamed adverse weather conditions leading to a rise in claims, along with lower oil prices putting more cars on the road. E-Sure is currently trading down 4.18 percent at 268.40 (1014GMT). House prices fall in July, but effect of Brexit unknown House prices in the UK are so far largely unaffected by Brexit, falling by 1 percent in July but still up 8.4 percent on one year ago according to mortgage lender Halifax. However, the lender warned that there was evidence that the housing market may be slowing, but it was still too early to determine the long-term effects of Brexit.

05/08/2016

The Bank of England Monetary Policy Committee today announced interest rates will be lowered for the first time since 2009, in a move designed to support the economy amidst a flurry of data suggesting that the UK is heading for an economic downturn.

The BoE Monetary Policy Committee unanimously decided to cut interests rate from 0.5% to 0.25%, as had been predicted by many analysts since the vote to leave the European Union.

Although analysts did not expect a further expansion of the BoE’s quantitative easing (QE) program at this time, the committee also decided to expand its’ asset purchase facility from £375 billion to £435 billion.

A further expansion of the QE program signals that the committee is more worried about the possibility of prolonged recession in the UK than was widely expected.

The new policy package also included the purchase of up to £10 billion in UK corporate bonds and a new Term Funding Scheme.

The Term Funding Scheme will provide funding for banks at rates close to the newly established bank rate to ensure that new interest rate cuts can be translated from the BoE to the commercial banking level. The decision to add this complementary policy feature was made in the eye of already very low interest rates, which may make it impossible for some banks and building societies to lower their deposit rates further and therefore make the lower bank rates a less powerful tool to achieve lower commercial interest rates.

The BoE hopes that its new stimulus package will combat recessionary pressures in the economy which could drive down employment and consumer spending following economic uncertainty due to the UK’s decision to leave the European Union. The decision will, however, come at a price; lower interest rates and further QE are likely to deny the possibility of achieving the 2% inflation target set by theinstitution itself.

In its monetary policy summary published Thursday at 12pm the Committee voiced its opinion: “Given the extent of the likely weakness in demand relative to supply, the MPC judges it appropriate to provide additional stimulus to the economy, thereby reducing the amount of spare capacity at the cost of a temporary period of above-target inflation.”

In its August Inflation Report, which was published beside the monetary policy decision, the MPC stated its expectation of future developments: “…By the three-year forecast horizon unemployment will have begun to fall back and that much of the economy’s spare capacity will have been re-absorbed, while inflation will be a little above the 2% target.”

The growth forecast for 2017 has been slashed from 2.3% published in May, to only 0.8% and BoE signalled there may be a possibility for further rate cuts in upcoming policy meetings.

The Pound fell sharply against other major currencies in the aftermath of the decision. The GBP/USD rate fell from 1.33265 ten minutes before the publication of the decision at 12pm to 1.31300 at 12.30pm. At 2.22 the rate stood at 1.31434 USD per British Pound.

More than a hundred design industry professionals have come out in favour of Apple, as Samsung appeals to the US Supreme Court over the $548 million it had to pay for copying Apple’s iPhone design. The original payment was made in 2012, after a court case found Samsung had copied the rounded-corner front face, bezel and grid of icons iPhone design. Samsung are currently in the process of appealing this “excessive” cost, prompting a large group of design professionals, including those from Calvin Klein, the Parsons School of Design and Bentley, to sign a court brief supporting Apple. In the note, they argued that the product’s distinctive look is what drives people to purchase the iPhone, with the “look of the product comes to represent the underlying features, functions, and total user experience.” This is the latest in a long-standing rivalry between the two electronics companies, with Samsung bosses making a dig at the design of Apple’s new iPhone at the unveiling of the Samsung Note 7 launch this week in New York. Samsung’s SVP of product strategy, Justin Denison, made a reference to Apple’s rumoured lack of headphone jack, saying: “Do you know what else it comes with? An audio jack, just saying.”

04/08/2016

The Bank of England has cut rates for the first time since 2009, in a move designed to negate the economic effects of the Brexit vote. The Monetary Policy Committee voted unanimously in favour of reducing interest rates from 0.5 percent to 0.25 percent. The central bank also announced further measures to provide additional support to the economy in the wake of the referendum. These include a new Team Funding Scheme to reinforce the pass-through of the cut in Bank Rate; the purchase of up to £10 billion of UK corporate bonds; and an expansion of the asset purchase scheme for UK government bonds. The decision to leave the European Union at the end of June has led to increasing economic uncertainty, with warnings over the future stability of the British economy coming thick and fast. On Wednesday, Markit lowered the British PMI figure to 47.3, the lowest figure since April 2009. UK Investor will be live-tweeting the press conference taking place at 12.30PM. Please tune in to @ukinvestormag on Twitter.

04/08/2016

The global economic outlook remains uncertain in the wake of the Brexit vote but European financial markets look set to weather the storm, according to the European Central Bank’s latest economic bulletin. The ECB confirmed that markets had steadied since the vote, but warned that “incoming data for the second quarter point to subdued global activity and trade.” According to the bulletin, the ECB expects recovery in the Euro area to continue at a”moderate pace”, despite inflation remaining at zero with no sign of an upward trend. President of the ECB Mario Draghi stated in July that the ECB would wait for further information before making more policy decisions, taking into account new staff projections released in September as well as rate decisions by other central banks.

04/08/2016

Bank of England expected to cut rates post-Brexit The Bank of England is expected to cut interest rates for the first time since 2009, in a decision to be announced at 12pm today. In the wake of the European referendum economic activity has slowed, with the service sector and construction industry both seeing a sharp fall. Rates have remained at a record low of 0.5 percent since 2009, but Bank of England governor Mark Carney widely expected to lower rates further today to 0.25 percent. Pound falls, Asian shares up The pound has fallen this morning ahead of the rate decision by the Bank of England, falling 0.1 percent but remaining well clear of the three decade low hit after the Brexit vote. Shares in Asia fared better on Thursday, with the MSCI Asian-Pacific index rising 0.5 percent after a hard week last week. Toyota profits drop as strong yen weighs

Japanese carmaker Toyota has seen a 15 percent drop in its first quarter net profit, with the strong yen weighing down the company’s exports.

Toyota posted a net profit of 552.5 billion yen in the months between April and June, down from 646.4 billion yen previously. The company also lowered their forecast for full year operating profit, predicting their lowest results in four years. The last three have been heavily boosted by Prime Minister Shinzo Abe’s stimulus measures designed to prop up the weak Japanese currency.

04/08/2016

The proposed tie-up between Liberty Global and Vodafone has been approved by the European Commission, subject to the completion of concessions by Vodafone. The joint company will operate in the Netherlands and is conditional on Vodafone divesting its consumer fixed line business in order to retain sufficient competition in the market. The divestment will entirely remove the overlap between the activities of Vodafone and Liberty Global in the markets, allowing the deal to go ahead. Competition commissioner Margrethe Vestager commented: “The telecoms market is of strategic importance for our digital society. The commitments offered by Vodafone ensure that Dutch consumers will continue to enjoy competitive prices and good choice.” Brussels also rejected a request to refer the merger to the Dutch competition authority for assessment.

03/08/2016