Economics
The pound hit a five-year low against the dollar before closing at
$1.6334 amid expecations of significant interest rate cuts. Sterling also
fell against the euro, which climbed by 2 cents against the pound to close
at 79 cents.
Interest rates The Bank of England’s nine-member Monetary Policy
Committee had voted unanimously to cut interest rates by half a point at
their emergency meeting earlier this month.
The FTSE 100 fell by nearly 4.5 per cent to close at 4,040.89 points.
This pattern was reflected in Europe where the German Dax closed down 4.46
per cent at 4,571 points and the CAC-40 index in Paris ended trading down by
5.1 per cent at 3,298. US shares also fell during early afternoon trading.
Hungarian interest rates Hungary’s central bank has raised interest
rates by 3 percentage points to 11.5 per cent in an emergency move after the
forint fell to a record low against the euro.
International Monetary Fund Pakistan, Ukraine and Belarus have sought
help from the International Monetary Fund. Talks on a loan programme for
Pakistan will begin in the next few days, the IMF said.
G20 The White House has called a summit in Washington of the heads of
the G20 nations to discuss the financial crisis. The leaders of the world’s
20 biggest economies will meet on November 15.
Oil prices fell by nearly 7 per cent to a new 16-month low. US crude
for December delivery fell $5 to $67.18, its lowest since June 2007, while
London Brent crude traded down $4.52 at $65.20.
Banking
& finance
Barnsley Building Society has been forced to seek a rescue merger with
the Yorkshire Building Society, based in Bradford, after facing the loss of
up to £10 million of its savings which were held in two Icelandic banks.
Provident Financial, the doorstep lender, said that “increased
selectivity” in accepting new customers had kept levels of arrears and
impairment charges in line with expectations over the third quarter and
added that it was “strongly funded” with £70 million of surplus capital.
LCH.Clearnet, which includes what was the London Clearing House, is to
merge with its Wall Street equivalent in a deal that should eventually
reduce the cost of clearing on the London equities market. Euroclear, the
Brussels-based settlement service which is LCH’s biggest shareholder with
almost 16 per cent, has approved the merger.
Short-selling The Financial Services Authority, the City regulator, has
extended its crackdown on short-selling after a 30-day review of the new
measures.
Arbuthnot Banking, the boutique bank and broker, said its two banking
businesses, Secure Trust Bank and Arbuthnot Latham, were profitable in the
third quarter but its securities business would make a loss because of a
“sharp decline in corporate transactions”.
Abbey Protection, the legal and professional fees insurer, has bought
Accountax Consulting for up to £6.25 million. Accountax, based in Milton
Keynes, will receive an initial £4.4 million, plus a further £1.85 million
if it hits preset operating criteria.
Wachovia, the US banking group that is being rescued by Wells Fargo,
reported a quarterly loss of $23.9 billion (£14.8 billion), one of the
largest deficits recorded by a financial services group.
Federation of Small Businesses As small business closures hit 280 a
week, up from only 40 before the credit crunch hit, the Federation of Small
Businesses called for a £1 billion small business survival fund that would
be partly financed from Europe.
AIG, the US insurer that was recently bailed out by the Government, has
agreed to freeze any payments that had been due to Martin Sullivan, its
former British-born chief executive, whose contract calls for $19 million
plus other benefits.
HBOS Attempts to block the proposed takeover of HBOS by Lloyds TSB were
foiled when MPs voted by 424 to 64 in favour of setting aside competition
rules to allow the deal to go through.
Construction
& property
Carpathian, the property company focused on Central and Eastern Europe,
said it will consider putting itself up for sale as part of a strategic
review to maximise value for shareholders.
Landlords, understood to include Land Securities and Hammerson, are to
allow retailers with less than four stores the option to pay rents monthly,
with no financial penalty. The concession follows intense lobbying from
retailers led by Sir Philip Green and Lord Harris.
Bison Laing O’Rourke, the construction group, said it is part of a
consortium of investors which has acquired the majority operations of Bison,
the precast concrete manufacturer, after Bison’s entry into administrative
receivership. The deal means that factories in Swadlincote, Derbyshire, and
Uddingston, near Glasgow, will now be managed by Laing O’Rourke.
Consumer
goods
Wynnstay, the AIM-listed agricultural and retail group, said that its
second-half trading had continued strongly after a buoyant first half, and
it expects full-year pretax profits and earnings per share to be
substantially ahead of consensus market forecasts.
Philip Morris International, the US cigarette maker, reported higher
than expected quarterly net profits of $2.1 billion (£1.3 billion), driven
by price increases and a weak US dollar. It also maintained its full-year
earnings forecast.
Cadbury Baroness Hogg, the chairman of 3i, the private equity group,
has been named a nonexecutive director of Cadbury, the confectionery group.
Danone, the French dairy group, reported an 8.3 per cent rise in
like-for-like third-quarter sales and reconfirmed its full-year targets with
expectations for sales growth of between 8 per cent and 10 per cent.
Engineering
Manganese Bronze, the manufacturer of London black cabs, said vehicle
sales were down by more than a third because of the economic uncertainty.
Boeing, the US aerospace group, reported that its third-quarter profits
had dropped by 38 per cent to $695 million (£426 million), from $1.11
billion last time, because of a strike and supplier production problems. Its
shares fell more than 7.3 per cent in New York.
Health
GlaxoSmithKline, Britain’s biggest drugs maker, reported a 14 per cent
slide in third-quarter underlying pretax profits to £1.88 billion and said
that it was losing close to £3 billion in full-year sales because of
competition from cheaper generic rivals. However, the results were better
than markets had been expecting.
Vernalis, the neruology biopharmaceuticals specialist based in
Berkshire, said it has regained all the rights to a portfolio of compounds
targeting the treatment of inflammatory disease. The compounds had been part
of a development agreement between Vernalis and Serono, the Swiss drugs
maker.
Industrials
Rohm and Haas, the American chemicals group, reported higher than
expected third-quarter earnings as price cuts and cost reductions helped to
offset the rising prices of raw materials. Net income was unchanged at $129
million (£79 million).
Leisure
The Tote The Government has been forced to break a manifesto pledge to
sell the Tote after admitting that market conditions made it impossible to
secure a high enough price for the bookmaker. potential merger of TUIfly,
its low-cost airline, and Lufthansa’s Germanwings.
Globe Pub Company Fitch, the debt ratings agency, has downgraded Robert
Tchenguiz’s Globe Pub Company securitised bonds after deteriorating trading
conditions. It said it did not expect Globe, which recently reported a 9 per
cent decline in underlying earnings, to see any improvement in the short to
medium term.
PartyGaming, the online gaming company, said it has entered a five-year
agreement to license a number of branded slot games from WagerWorks, a unit
of International Game Technology.
TUI Travel, the tour operator, said it was no longer in talks over a
potential merger of TUIfly, its low-cost airline, and Lufthansa’s
Germanwings.
The All-Party Parliamentary Beer Group has recommended an end to the
alcohol duty escalator, minimum pricing and a reduction in the amount of red
tape faced by pubs. It also called for an urgent review of price
differentials between pubs and supermarkets.
Media
The BBC As much as £1 billion has been wiped off the value of the BBC’s
pension scheme in less than four months.
Magazine distribution to shops must be opened up to competition,
according to the Office of Fair Trading, which said the system of regional
distribution monopolies was incompatible with competition law. Newspaper
wholesaling remains unaffected because the OFT held that the need to deliver
papers quickly meant the monopoly distribution was justified.
Natural
resources
Mwana Africa, the pan-African resources group, plans to scale back its
exploration activities to conserve its cash balance because of the fall in
commodity prices.
Hochschild Mining, the Latin American silver and gold producer,
reported a 2 per cent rise in attributable third-quarter output and said
that it was on track to meet its full-year target.
Retailing
Pre-Christmas sales British consumers will spend £82.3 billion in the
run-up to Christmas, 2 per cent up on last year, according to Verdict, the
retail analyst.
Woolworths the high street retailer, named Robert McDonald as group
chief financial officer, replacing Stephen East. Mr McDonald had been group
finance director of Punch Taverns, the pub company.
Vertu Motors, the London-listed car retailer based in Newcastle, said
first-half profits had topped last year’s level on a pro forma basis, helped
by strong like-for-like volume growth in new and used-car markets. But it
added that it expects market weakness in the future.
Home Retail Group, the owner of Homebase, has cut £542 million from the
value of the struggling DIY chain and warned of the impact on profits of the
recent financial turmoil. The group, which also owns Argos, said that
like-for-like sales had fallen by “high single-digits” at both chains since
the end of August.
Arcadia The Times would like to clarify that Lord Grabiner is the
current chairman of Sir Philip Green’s Arcadia Group and not the former
chairman as stated in yesterday’s Big Shot.
Amazon, the US online retailer, reported a 48 per cent increase in
third-quarter profits as sales rose by 31 per cent to $4.26 billion (£2.63
billion). It forecast that overall sales would rise between 6 per cent and
23 per cent over the Christmas period — weaker than analysts had expected.
Support
services
Temporary workers Britain’s 1.3 million temporary workers will enjoy
the same pay and conditions as full-time staff after being employed for 12
weeks under Europe-wide legislation approved by the European Parliament. The
new rights will apply in Britain only after 12 weeks of temporary
employment. Other European Union countries, such as France and Spain, will
grant the rights from the first day of employment.
Davis Service, the laundry and workwear company, said that its business
from Britain’s hotels had continued to soften in the third quarter, but it
was on track to meet market expectations.
Technology
Alphameric, the London-listed gaming technology company based in
Surrey, said it had won a contract to help Mark Jarvis Racing, the
bookmaking group, to expand its business by using its SPOS systems (standard
point of sale), for an undisclosed sum.
Yahoo!, the US online search engine, is to cut 10 per cent of its
workforce to reduce costs amid a plunge in advertising revenues.
Third-quarter net income fell by 64 per cent to $54.3 million (£33.3
million), from $151 million last time.
Telecoms
Tele2, the Swedish telecoms operator, reported a 28 per cent increase
in third-quarter core earnings to SKr2.25 billion (£177 million) and said it
planned to focus on its core businesses as it concluded a realignment.
Transport
Northwest Airlines, the US carrier, reported a third-quarter net loss
because of the writedown of the value of its fuel hedges as the price of oil
fell from a record high. Excluding the charge, it reported a profit that
beat Wall Street expectations. Northwest, which is merging with Delta Air
Lines, linked the profit to gains in revenue on each seat flown.
Utilities
Electricity 4 Business, the electricity supplier for small businesses
that is based in Milton Keynes, has gone into administration, affecting
about 40,000 customers. Ofgem, the energy regulator, said that E4B’s
customers would be transferred to another supplier.
