Welcome to today's round-up of business news from The Times: what we're
saying, what they're saying]
Top stories
The Times: Tesco bought the Royal Bank of Scotland out
of their joint venture Tesco Personal Finance for £950 million ($1.9
billion) as the supermarket giant moves to take on the banks.
New York Times: Merrill Lynch will write
down $5.7 billion (£2.9 billion) in the third quarter and will raise
$8.5 billion (£4.2 billion) by selling new shares.
Reuters: The US’s four biggest banks will begin issuing
covered bonds backed by pools of home loans under the latest plan with
the Treasury to support home financing.
Comment
Martin Waller in The Times: For a country so steeped in the free
market, the US can show some strikingly
socialistic tendencies .
Stephen King in The Independent: It is time for some Reaganomics
- tight monetary policy and loose fiscal policy – to fight inflation.
Damian Reece in the Telegraph: Tesco’s plan to offer simple financial
services at the same time as bank brands are tarnished will
go down a treat with the public.
Upside
The Times: BP is expected to announce record
quarterly profits of more than £3.5 billion, but the battle to control
TNK-BP, its Russian joint venture, will dominate the announcement.
Reuters: Kraft, North America’s largest food maker, reported second-quarter
profit rose 3.5 per cent to $732 million (£367 million) and its shares
lifted 4.6 per cent.
Telegraph: Informa, publisher of Lloyd's List and academic imprint
Routledge, grew revenue 18 per
cent but profit fell by a third because of debt from its Datamonitor
acquisition.
Downside
The Times: Ryanair announced it would cut
fares 5 per cent to start a price war that it expects will drive it
into the red; its shares plunged 23 per cent.
The Times: Land Registry figures confirmed house prices in England and
Wales fell by 1 per cent last
month.
Bloomberg: Profit at Amgen, the world's largest biotechnology company, fell
7.7 per cent to $941 million (£472 million); it beat expectations and
its shares rose 3 per cent.
Mergers and shakers
The Times: Detica, the data security group, agreed
to sell itself to BAE Systems, Europe's biggest defence contractor, in
a cash deal worth £531 million ($1.1 billion).
Telegraph: Shell and ExxonMobil have aborted
plans to sell Infineum, the lubricant additive company, after bidders
failed to match the $3 billion (£1.5 billion) asking price.
Reuters: Former Barclays finance director Naguib Kheraj will
take over as chief executive of JPMorgan Cazenove in October.
Around Asia
New York Times: As most airlines around the globe are shedding jobs and
routes, Middle Eastern carriers are expanding
as fast as they can .
Financial Times: China Telecom, the country’s largest fixed-line
operator, will spend Rmb80 billion (£5.9 billion, $11.7 billion) to upgrade
a wireless network it just bought.
South China Morning Post: Sohu.com, China’s second-largest online
portal, will list its games business in the US after reporting a sevenfold
increase in second-quarter profit.
Look ahead
Bloomberg: Lloyds TSB is expected to report that income
fell 43 per cent to £881.1 million ($1.75 billion) when the bank
reports results on Wednesday.
Bloomberg: Aviva and Prudential, Britain's biggest insurers, are on
Wednesday expected to post losses
of £1.1 billion ($2.2 billion) and £604 million respectively.
Nikkei: Japan’s Matsushita plans to start selling organic
electroluminescent television sets with a screen size of 40 inches or so as
early as 2011.
MARKETS
FTSE 100 5,312.60 down 0.8% (Monday close)
Dow 11,131.08 down 2.1% (close)
S&P 500 1,234.37 down 1.9% (close)
Nasdaq 2,264.22 down 2% (close)
Nikkei 13,057.27 down 2.2% (latest)
Hang Seng 22,156.33 down 2.3%(latest)
Currencies
Sterling $1.994/1.2666 euros (latest)
Euro $1.5742 (latest)
Commodities
West Texas crude $124.98 up 25 cents (latest)
Gold $942.20 up $4.40 (latest)
New York
Reuters: US stocks tumbled on
Monday on credit and housing fears and a mixed bag of quarterly results.
Financial stocks suffered. Merrill Lynch was down 11.6 per cent, Citigroup
fell 7.5 per cent, Lehman Brothers fell 10.4 per cent, Bank of
America fell 5.1 per cent, Fannie Mae fell 10.7 per cent and Freddie
Mac fell 6.7 per cent. Insurer American International Group fell
12 per cent. On the Nasdaq, Apple shares were the biggest drag,
falling 4.8 per cent. Kraft Foods reported stronger-than-expected
results and its shares rose 4.9 per cent.
Asia
Bloomberg: Asian stocks fell
in morning trade after the International Monetary Fund said there was no end
in sight to the US housing recession. Toyota fell 3.9 per cent after
lowering its sales forecast. Commonwealth Bank of Australia led
financial companies lower, falling 4 per cent. The MSCI Asia Pacific Index
fell 1.2 per cent in morning trade. Financial stocks accounted for 32 per
cent of the decline.
Michael Beh
michaelwbeh@gmail.com
London
At the start of a busy week of earnings announcements, many investors
yesterday took their chance to sell before potential bad news.
HBOS was the worst-hit blue chip in anticipation of what are widely
expected to be grim first-half results on Thursday. The bank – likely to
lose its status as the UK’s largest mortgage lender when Santander, the
Spanish owner of Abbey, reports results today – is expected to announce
pretax profits down by as much as 60 per cent to about £1.2 billion.
HBOS fell as much as 10 per cent in early trading, before recovering slightly
to close down 7.3 per cent.
Rexam, the maker of drinks cans, was hit hard before interim results,
due tomorrow after Merrill Lynch cut its target price. Although the broker
kept a “buy” rating and expects Rexam to meet first-half targets, it said
that all eyes would be on its outlook as costs rise. Two of Rexam’s main
peers, Ball and Crown, the American companies, have recently reported
second-quarter earnings, with Ball warning on rising fuel and freight costs.
Barclays was off after Cassa di Risparmio, of San Marino, an
independent savings bank, took legal action against the British bank,
seeking €170 million (£134 million) to compensate for losses linked to
derivatives products.
Overall, the FTSE 100 closed down 40 points at 5,312.6, with losses offset to
some extent by gains for miners. Anglo American, Xstrata, and BHP
Billiton, rose after Chevreux upgraded them all to “out-perform”, noting
that a recent sell-off had left miners looking cheap.
Antofagasta was the FTSE 100’s biggest riser thanks to higher metal
prices.
Peter Stiff
peter.stiff@thetimes.co.uk
AGENDA
AECI
BP (Q2)
Bodycote
Bradford & Bingley
Croda International
Dialight
Dignity
Elementis
Inchcape
Provident Financial
St James’s Place Capital
United Business Media
Wolfson Microelectronics
FINALS
PZ Cussons
DQ Entertainment
Games Workshop
ITM Power
AGMs
Amiad Filtration Systems
Caledonia Investments
Dawson International
RDF Media
Regal Petroleum
Rensburg Sheppards
Vodafone
Workspace Group
EGMs
Cashbox
Smiths Group
NEW BUSINESS FIGURES
St James’s Place Capital (Q2)
ECONOMICS
BoE June household lending, final M4 (0930 BST)
UK BSA mortgage lending survey (0930 BST)
CBI distributive trades survey (1100 BST)
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