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Wall Street at record high after strong company results
Wall Street has got off to flying start: US stocks have risen to fresh record highs boosted by a flurry of strong company results.
The Dow Jones industrial average rose nearly 70 points, or 0.4%, to 21778.96 while the S&P 500 advanced nearly 4 points, or 0.15%, to 2481.73. and the Nasdaq climbed 33 points, or 0.5%, to 6455.67.
Here in London, the FTSE 100 index is still in negative territory, down nearly 13 points at 7439.65, a 0.2% drop.
Investors are breathing a sigh of relief after US durable goods data showed a better than expected 6.5% gain in orders in June, says Dennis de Jong, managing director at online broker UFX.com.
A downbeat assessment on current inflation levels at yesterday’s Fed Reserve meeting had cast further uncertainty over the next interest rate, although today’s numbers suggest the US economy remains in good health.”
The greenback could claw back some of yesterday’s losses against major European counterparts.
Attention now turns to tomorrow’s all-important GDP data. The US economy must continue to meet expectations if Janet Yellen is to confirm an interest rate hike in September.
Chancellor appoints new Bank of England deputy governor
Phillip Hammond has found a new Bank of England deputy governor to replace the disgraced Charlotte Hogg from within his own Treasury ranks.
The chancellor has appointed the Treasury’s chief economic adviser, Sir David Ramsden to replace Hogg, who resigned earlier this year after failing to disclose that her brother was a senior executive at Barclays – a bank she would have regulated.
Ramsden’s full title will be deputy governor of markets and banking.
Hogg was also chief operating officer, but that post is going to someone else. The Bank of England will make a separate announcement about that post later today.
Ramsden has a long list of responsibilities in his new role, the Treasury said, including : specific responsibility for managing the balance sheet, the government’s foreign exchange reserves, and the gathering of market intelligence relevant to policy decisions.
Sir Dave, as he is known, will also be a member of the monetary policy committee, the financial policy committee, the prudential regulation committee and the court of the Bank of England.
The world’s oil consumption could peak as early as the late 2020s as electric cars become more popular, says Royal Dutch Shell boss Ben van Beurden.
But he added that oil would still be needed for several more decades, arguing that it will remain the main fuel used in planes, ships and heavy trucks.
He told reporters after Shell, Europe’s biggest oil company reported a sharp rise in quarterly profits:
Even if the UK, France and the western world in general will all go to 100% electric vehicles, that would be great, but that wouldn’t be enough... We still have less advanced economies that cannot do that switch.
He even admitted that he would get an electric car the next time he buys a new vehicle, in an interview with Bloomberg.
The International Energy Agency, the energy watchdog, does not expect oil demand to peak before 2040. Shell, which has been producing oil since 1907, and its rivals are increasingly switching to less-polluting natural gas.
France to nationalise STX France shipyard - Le Monde
France has decided to nationalise the STX France shipyard, marking president Emmanuel Macron’s first major industrial policy decision, Reuters is reporting, citing Le Monde.
The French government has been in an ownership standoff with Italy over the shipyard in Saint-Nazaire, north-western France. Reuters says:
As France’s most pro-business leader in decades, few would have predicted the former investment banker’s first big move in the corporate sector to be a nationalisation.
However, his action fits with the interventionist style of other postwar French leaders. It also crosses into the strategically sensitive defence sector where many national governments prefer to wield influence over ownership.
The Economy Ministry would not comment on the report when asked by Reuters, but said it would hold a news conference on the subject at 3:00 pm (1300 GMT).
Economy Minister Bruno Le Maire had given the Italians until Thursday to accept an offer for 50/50 ownership of the shipyard, brandishing the threat of a temporary nationalisation to buy time to find another solution if the offer were rebuffed.
“The aim is not to nationalise Saint-Nazaire, but we have to temporarily.”
CBI survey: Retail sales at three-month high in Jyly
The warm summer weather added a sizzle to Britain’s high streets this month: retail sales growth hit a three-month high as shoppers updated their summer wardrobes and bought more groceries, according to a monthly survey from the CBI employers’ group.
Its retail sales balance rose to 22 in July from 12 in June, marking the highest reading since April. Expectations for next month were the strongest since last December, but the CBI warned it might not last.
Anna Leach, head of economic intelligence at the CBI, said:
While retailers expect a similar pace of growth next month, the factors underpinning their sales growth are more shaky. Although employment is strong, real incomes are falling in the wake of higher inflation, and that’s expected to feed slower consumer spending growth ahead.”
Market round-up
Time for a quick market round-up. The FTSE 100 index has slipped into negative territory, trading down some 2 points at 7450.24.
AstraZeneca’s woes are weighing on the index, as is the stronger pound, which is rising against the dollar after a more cautious statement from the US Federal Reserve last night suggested the next interest rate hike may be some way off, and sent the greenback sliding.
Sterling has risen as high as $1.3157, its highest level since mid-September – good news for holidaymakers heading to the US. It has eased back to $1.3141, but is still about 1% higher than before the Fed statement.
However, the euro has also rallied against the dollar and sterling is still close to eight-week lows on expectations that the European Central Bank will tighten policy later this year. It is trading at 89.21 pence per euro.
AstraZeneca is the biggest faller with a 16.1% loss to £42.87 after news of a key lung cancer drug trial failure, and the stock is on track for its worst day ever. Lloyds Banking Group is also among the biggest losers after reporting another £1bn charge for PPI claims. Its shares are down 2.3% at 67.49p.
Drinks giant Diageo is the biggest riser, with the shares up 6.5% at £24.20. The maker of Johnnie Walker and Smirnoff raised its profitability target and unveiled a share buyback programme.
Sky has also reported results this morning. Our media correspondent Mark Sweney reports:
Sky is to hire 300 new technology staff to keep pace with rivals such as Netflix and Amazon as the broadcaster suffered a drop in full year profits and an increase in the rate of customers defecting to rivals.
Here is our full story on Lloyds.
AstraZeneca boss Pascal Soriot is fielding numerous questions about whether he’s leaving to join Israel’s Teva. With a sigh, he said
AstraZeneca CEO: 'I will only make one comment: I'm not a quitter;" says about Mystic failure that immuno-oncology drugs take time to work
— Julia Kollewe (@JuliaKollewe) July 27, 2017
UK to scrap Libor interest rate benchmark from end 2021
The head of Britain’s financial markets watchdog just said that the UK will scrap the scandal-hit Libor interest rate benchmark from the end of 2021, when a substitute index should be in place.
Libor is based on banks’ submissions of interest rates they believe they would be charged for borrowing money.
Andrew Bailey, chief executive of the Financial Conduct Authority, said in a speech in London that work must “begin in earnest” on shifting to an alternative index, saying that aiming for the end of 2021 would ensure a smooth transition.
Updated
AstraZeneca boss Pascal Soriot is speaking on a conference call to journalists after the failure of a key lung cancer drug trial sent the company’s shares down more than 15%, to £43.24. The stock is heading for its worst day ever.
Soriot, whilst saying that the company never comments on market speculation and rumours, has tried to squash the speculation triggered by a recent media report that he could jump ship and defect to Israel’s Teva, the world’s biggest generics drugmaker.
He said:
I’m impressed with the progress we’ve made. I’m proud to be the CEO of this company and I’m looking forward to continuing on our journey ahead... I’m committed to delivering our strategy of returning to growth.
Travel company Thomas Cook as announced that it will start selling holidays in Tunisia again soon, after the UK changed its travel advice yesterday.
Chief executive Peter Fankhauser told journalists:
The foreign office came to the conclusion that it is again safe to travel. We didn’t have any programme for the winter so we are setting up a really good quality offer for Tunisia and this is going to take some time. I suppose that we are gong to start during the winter season, but more towards the spring.
Walkie Talkie sold to Hong Kong oyster sauce maker for £1.3bn
The Walkie Talkie skyscraper in the City has been sold to a Hong Kong oyster sauce maker for £1.28bn in a record-breaking deal.
Land Securities has sold the building at 20 Fenchurch Street to Hong Kong-based Lee Kum Kee, a sauces company that specialises in oyster-flavoured sauce. It is the latest trophy building in London to be acquired by Asian investors, and marks the biggest sale ever of an office building in the UK.
Photograph: Neil Hall/Reuters
Updated
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Foxtons, the London-based estate agent known for its fleet of Minis, has seen its shares tumble 7% to 89.75p, after a 64% plunge in first-half profits, as the London market cooled. Pretax profits dropped to £3.8m in the six months to June, from £10.5m a year earlier.
Chief executive Nic Budden said:
Our performance has been resilient in the context of a London property market that has been further impacted by unprecedented economic and political uncertainty. Whilst sales commissions in the second quarter as a whole were down 3% versus prior year, sales exchanges and our under offer pipeline weakened through June and the early part of July.
AstraZeneca shares crash 16% after lung cancer trial failure
Shares in AstraZeneca have crashed more than 16%, after the drugmaker suffered a major setback with the failure of an key lung cancer trial. The shares plunged as low as £42.71, wiping about £10bn off the company’s market value.
The long-awaited initial results from the Mystic study found that a combination of two injectable immunotherapy drugs, durvalumab and tremelimumab, failed to help patients.
Chief medical officer Sean Bohen described the results as “disappointing” but said the trial would continue to assess overall survival.
The news came as Britain’s second-biggest pharmaceuticals firm reported an 8% fall in revenues in the second quarter to $5.05bn at constant currencies, while core earnings per share rose 6% to 87 cents.
Lloyds takes £1bn PPI charge; reports biggest profit in 8 years
Let’s have a look at the company results.
Lloyds Banking Group Lloyds has set aside another £700m to meet PPI claims, taking the PPI charge in its first half to £1bn. However it has also reported its biggest first-half profit in eight years – a statutory pretax profit of £2.5bn, 4% higher than last year – and lifted the interim dividend.
Lloyds is reporting its first results since the government sold the last chunk of its shareholding in the lender in May, after rescuing during the financial crisis with a £20.3bn bailout.
Its chief executive António Horta Osório has just told journalists on a call: “I have no intention of going anywhere,” trying to squash speculation that he could be on the way out.
Updated
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The pound has hit $1.3146, its highest level since last September against the dollar, after last night’s US Federal Reserve statement. The dollar is sliding after the Fed adopted a more cautious tone on the inflation outlook – boosting expectations that the next interest rate hike may be delayed until next year.
The Fed kept rates unchanged last night and said it expected to start paring back its huge bond holdings “relatively soon” – cementing expectations this will start in September. But while it expects the economy to keep strengthening, it noted that inflation had declined.
The Fed statement sent the dollar to 13-month lows against a basket of major currencies. The euro hit $1.1777, its highest level since early 2015.
There is a raft of company results today, while the economic agenda is light.
In Germany, consumer confidence reached a 16-year high, according to the GfK market research group. Its indicator rose to 10.8 going into August from 10.6 in July.
Here in the UK, the latest retail sales survey from the CBI should shed some light on what’s going on on the high street, a day after official figures showed that the British economy remains stuck in a soft patch. It grew by 0.3% in the second quarter of this year, with the film industry a rare bright spot, following 0.2% growth in the first quarter. Earlier this week, the International Monetary Fund downgraded its growth forecast for the UK to 1.7% this year, while upgrading the four biggest eurozone economies - Germany, France, Italy and Spain.
The agenda
9am BST: Andrew Bailey, CEO of the UK’s Financial Conduct Authority, gives a speech on the future of Libor
11am BST: CBI survey of UK retail sales for July
1.30pm BST: US Durable goods and trade for June
Updated
