20/04/2016
Morning Round-Up: Mitsubishi hit by emissions scandal, FTSE hits heights, UK unemployment up
Mitsubishi front new emissions scandal
Mitsubishi have become the latest car maker to be hit by an emissions scandal, after the company admitted to falsifying fuel economy test data for 600,000 cars.
Mitsubishi Motors president Tetsuro Aikawa said the misconduct had been reported to Japan’s transportation ministry, and involved 157,000 own brand cards and 468,000 made for Nissan.
Shares in the company closed down over 15 percent last night, their biggest drop in 12 years.
FTSE falls from heights of Tuesday
The FTSE fell this morning, dropping down from its highest close of the year on Tuesday evening.
The index, which got off to a rocky start in January, is now up almost 16 percent from three and a half year lows reached earlier this year.
Energy shares pushed the market down, after a renewed drop in the price of oil and weakening of investor sentiment.
UK unemployment rises by 21,000
UK unemployment rose by 21,000 in the three months to February, its first increase in nearly a year, according to the Office for National Statistics.
Earnings, rose by 1.8 percent in the three months to February, down from the 2.1 percent rate seen in the last quarter.
“It’s too soon to be certain, but with unemployment up for the first time since mid-2015 – and employment seeing its slowest rise since that period – it’s possible that recent improvements in the labour market may be easing off,” ONS statistician Nick Palmer said.
The surprise rise in unemployment can be largely put down to employers caution ahead fo the European referendum, as well as this month’s introduction of a higher minimum wage.
Brussels steel meeting unproductive, leads to US-China rift
Ministers from 34 of the largest steel-producing countries have failed to agree measures to tackle the industry’s oversupply problem, leading to a dispute between the US and China.
The meeting took place in Brussels yesterday involving countries representing 93 percent of global steel production, but had little productive outcome. Furthermore, the US blamed Bejing for their handling of the situation, with the US Secretary of Commerce Penny Pritzker saying a statement:
“Unless China starts to take timely and concrete actions to reduce its excess production and capacity in industries including steel … the fundamental structural problems in the industry will remain and affected governments – including the United States – will have no alternatives other than trade action to avoid harm to their domestic industries and workers.”
China’s assistant trade minister, Zhang Ji, responded that the excess capacity was the result of the 2008 economic downturn, with falling demand being “the fundamental reason” for the problem. China’s official state news agency Xinhua called Washington’s comments a “a lame and lazy excuse for protectionism”.
The UK business secretary Sajid Javid also attended the meeting, which took place just days after Tata Steel announced plans to sell its UK plants, risking 15,000 jobs. The lack of outcome in countering the problem of excess supply in the steel industry is likely to hinder the UK’s attempts to find a buyer for the plants, which were reported to have been losing over £1 million per day.
19/04/2016
Morning Round-Up: AB InBev to sell Peroni, Netflix shares down, AB Foods sees growth
AB InBev to sell Peroni brand to Asahi upon takeover
Anheuser-Busch InBev has accepted an offer from Japanese brewing group Asahi for the Peroni brand, should its takeover of SABMiller go through.
AB InBev have been clear about their desire to sell a couple of SABMiller’s brands from the outset, and the sale to Asahi is part of their plan to acquire antitrust approval for its ¢100 billion takeover of SAB.
Asahi Group have confirmed that they are in talks to buy SABMiller’s Peroni, Grolsch and Meantime beer brands for 2.55 billion euros.
Netflix fall on slower growth
Online streaming service Netflix announced a surprising drop in subscriber growth, causing shares to fall nearly 10 percent in after-hours trading on Wall Street.
The company said it expected to add about 500,000 customers in the US and two million internationally during the current trading quarter ending in June. These figures are significantly lower than those forecast by analysts, which were 586,000 users in the US and 3.5 million globally. However, the company posted a profit rise of $4 million on the year before, at $28 million. The share price has now eased, standing down 2.79 percent at 108.40 (0813GMT). Primark owner Associated British Foods saw shares rise this morning after a 3 percent rise in first-half profit. The company, which also owns a slew of major sugar, grocery and agriculture businesses, surprised analysts with an underlying profit of £486 million in the six months to February, above the £480 million forecast. AB Foods confirmed that their underlying trading outlook for the group for the full 2015-16 year was unchanged. The group (LON:ABF) are trading up 1.82 percent at 3,406 (0818GMT).19/04/2016
Qantas shares drop over ten percent on weak demand
Shares in Australian airline Qantas have dropped over 10 percent this morning after announcing that it had been hit by “softness in demand”.
The group cited the “upcoming federal election and recent drop in consumer confidence in Australia” as reasons for the fall in passengers, and have axed plans to increase flight routes and capacity.
Domestic capacity growth in the fourth quarter will now be negative compared to the same period a year earlier, and the airline has cut its domestic capacity increase from 2 percent to between 0.5 percent and 1 percent.
Shares in Qantas (ASX:QAN) are currently down 10.84 percent at 3.62 (1007GMT).
18/04/2016
Morning Round-Up: Treasury report on Brexit, Asian shares slip, Business secretary at world steel summit
Brexit will “leave UK poorer”, says Treasury
The Treasury is due to release a 200-page report today with the conclusion that a Brexit would be dismal for Britain’s future.
It warn that Britain’s national income could be 6 percent smaller by 2030 if the UK leaves the European Union, with the size of the cut in GDP being the equivalent of about £4,300 a year for every household.
In an article for the Times on Monday the chancellor wrote: “The conclusion is clear for Britain’s economy and for families – leaving the EU would be the most extraordinary self-inflicted wound.” Asian shares slip on OPEC deal failure Asian shares were down across the board on Monday, with Tokyo’s Nikkei leading the way down 3.40 percent. All Asian markets closed in the red, with Shanghai Composite down 1.44 percent and 0.73 percent. The poor sentiment spread to European markets upon open this morning, with the FTSE currently down 0.54 percent, the CAC40 down 0.49 percent and the DAX down 0.27 percent (0921GMT). Business secretary attends world steel summit in Brussels In the wake of the sale of Tata Steel’s UK plants, business secretary Sajid Javid will hold talks in Brussels with 27 nations to “seek solutions to the overcapacity crisis”. The sale of Tata Steel’s plants, which were reportedly losing over £1 million per day, may result in the loss of thousands of jobs and has led to the government being urged to partly privatise Britain’s waning steel industry. The talks will seek to work out how governments can “facilitate market-driven industry restructuring” and aims to “agree on steps to reduce competition-distorting policies”.18/04/2016
Oil prices sink after OPEC talks collapse under Saudi-Iran tensions
Oil prices sunk on Monday after a major meeting in Qatar designed to freeze output failed.
After months of hope for the outcome of the meeting, the disappointing failure will call OPEC’s credibility into question, as well as further flooding the market with unwanted oil. The meeting, which included most OPEC countries – with the exception of Iran – as well as some non-OPEC countries, fell to pieces after Saudi Arabia refused to sign a price freeze without the participation of rival Iran.
According to reports, Saudi Arabia said an oil freeze agreement must be signed by all 13 OPEC members – including Iran, who was never signed up to attend the meeting. The turnaround move by Saudi suggests that rivalry between the two countries in the Middle East appears to be more important to Riyadh than the freezing of oil output.
Iran have said that they will continue to increase output, following the lifting of sanctions against it:
“As we’re not going to sign anything, and as we’re not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative,” the Iranian government said.
Qatari Energy Minister Mohammed Saleh al-Sada stated that consultation will continue between the countries until the June OPEC meeting:
“All participating countries will consult among themselves and with others,” he said.
Oil prices tanked on the news of the failure, with Brent Crude falling around 7 percent, before recovering to $41.23 a barrel. US Crude also saw a similar fall and recovery, now standing at $38.46 (0851GMT).
Could Haughton Honey be a sweet deal for investors?
For investors looking for a sweet deal, Haughton Honey might be the place to start; the premium honey brand has launched an £80,000 crowdfunding campaign to attract investment, boost growth and take the business to the next level.
Since launching in 2014, Cheshire-based Haughton Honey has steadily expanded and has been snapped up and stocked by the likes of Booths and The Protein Works. With the UK honey market worth £119.5 million per year, this fast-paced business is clearly expanding into a receptive market.
Since starting the business two years ago the company now has more than 70 regional sales outlets in the UK, and sales of jams, spreads and honey grew 5.9 percent in the year up to October 2015. As Haughton Honey’s founder Crispin Reeves says, “forget spreading the love – loving the spread is more accurate at the moment.”
Speaking about his decision to attract investment through crowdfunding platform Crowdcube, Reeves said:
“During 2015 we packed and sold over 8,000kg of English honey and anticipate requiring more than double that amount during 2016. Now is the time to seek additional investment to support the growth of Haughton Honey so that we can take on more bee farmers, increase our honey production to satisfy our growing month-on-month demand, and hopefully achieve a listing with a second premium multiple retailer.”
Haughton Honey bottles raw honey straight from the hive, which is cold extracted and never pasteurised – so it retains all of the natural enzymes and proteins that make English honey so special. The product is 100% natural and pure, and features traces of dandelion, chestnut, blackberry, clover and other wildflowers.
A series of rewards are on offer for those who invest in Haughton Honey, including discounts, honey, bee farming experiences, and hotel, restaurant and cookery school vouchers. For more information, visit their crowdfunding page here.
Miranda Wadham on 15/04/2016
Morning Round-Up: Chinese economy slows, VW lose market share, IKEA sees operational change
Chinese economy slows, but future looks brighter
Growth in the Chinese economy slowed to 6.7 percent over the first quarter of the year, its slowest rate since 2009.
However, other figures from the Chinese government suggest stimulating measures may be beginning to have an effect. New debt seems to be prompting a recovery in factory activity, investment and household spending after Chinese banks extended 1.37 trillion yuan in net new yuan loans in March, nearly double the previous month’s lending.
Investment in industrial assets and infrastructure jumped 10.7 percent on the same period last year, with household spending also increasing.
Volkswagen sales hit by scandal
It seems that Volkswagen have failed to counter the negative image produced by its emissions scandal, seeing demand for its branded motors fall by 1.6 percent in March.
Despite European car sales rising by 5.7% over the last month, Volkswagen’s brands, including mass-market Skoda and up-market Audi, accounted for 23.4 percent of new registrations in the three months ended March versus 24.4 percent.
However, the German company did see some growth, with European sales for the entire group rising by 2.3 percent.
Volkswagen (ETR:VOW) shares have fallen a further 1.75 percent on the news, to 126.05 (1001GMT).
Major changes set to split up IKEA
Major changes are due to be made to the structure of Swedish furniture company IKEA, splitting up the company in order to manage its increasing growth.
IKEA are set to transfer ownership of some operating parts of the company to the smaller firm who owns the IKEA brand. Inter IKEA will now take control of design, manufacturing and logistics, massively increasing its role and fundamentally changing the way IKEA is organised.
Some critics say this will hinder the traditionally smooth operation of the furniture company, who have been running in this way for the past 30 years and become a household name in the process.
15/04/2016
BP’s annual meeting hit by shareholder revolt
BP’s annual general meeting is taking place in London today, with the main topic of conversation being the proposed 20 percent pay rise for chief executive Bob Dudley.
Shareholders are concerned over the decision to give its CEO such a big rise during a difficult time for the company, which has been plagued by job cuts and falling profits.
Aberdeen Asset Management and Royal London Asset Management are amongst shareholders considering voting against the move, which will take Mr Dudley’s salary package to £14 million. Carl-Henric Svanberg, BP’s chairman, spoke at the AGM today to reassure shareholders that their voices were being heard: “They are seeking change in the way we should approach this in the future… But let me be clear. We hear you. We will sit down with our largest shareholders to make sure we understand their concerns and return to seek your support for a renewed policy.” 14/04/2016BREAKING: MPC hold rates at 0.5% for another month
The Bank of England voted unanimously to maintain rates at their record low of 0.5 percent at their monthly meeting on Wednesday.
The EU referendum weighed heavily on the minds of Monetary Policy Committee members, with the minutes saying:
“EU referendum may cause softening in first half UK growth, MPC will react more cautiously to data before EU vote”.
The minutes also mentioned the implication of Brexit on longer-term monetary policy, saying that it “may prompt an extended period of uncertainty and may have a significant impact on pound and asset prices, pushing down demand in the short term”.
It is clear from today’s minutes that a rate rise is extremely unlikely before the EU referendum on the 23rd June.
In terms of inflation, twelve-month CPI increased to 0.5 percent in March but remains well below the 2 percent inflation target, largely due to flagging energy and food prices.
Globally, the MPC acknowledged that the risks from China have lessened somewhat, but that GDP figures from the US remain disappointing. The UK economy has picked up a little, helped by a moderate rise in oil prices and strengthening of the pound.