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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London open: Stocks fall as China cuts renminbi UK shares dropped as China's central bank slashed the renminbi to try to boost the slowing economy.
The People's Bank of China cut the daily fixed rate to the dollar by 1.9% to 6,228, the most on record.
Oanda analyst Craig Erlam added: "Devaluing the yen should support exporters at the expense of other exporting nations in the region so we can probably expect similar easing measures in the coming days."
He said the move will now raise further questions about whether the US Federal Reserve can still seriously consider raising rates this year. "The process of competitive devaluation among numerous countries that are easing monetary policy is effectively exporting deflation to those that aren't, particularly those contemplating rate hikes. Any move by the Fed to now raise rates could strengthen the currency by more than previously expected. Whether that will be enough to encourage the Fed to delay such a hike isn't clear but if they were not sure before, this certainly won't help matters."
Federal Reserve vice chairman Stanley Fisher on Monday told Bloomberg he doesn't expect the first interest rate hike in nine years to occur until inflation returns to the central bank's 2% target. His remarks placed doubt on a September rate increase.
Closer to home, Bank of England policymaker David Miles said on Monday he was close to voting for higher interest rates at the policy meeting last week as he saw a reasonable case. However, he did not find the arguments conclusive.
"Sterling had gone up a bit, oil prices had fallen a bit, there were somewhat ambiguous signals from the labour market, but on balance it was a set of economic news that probably reduced at least the near-term inflation profile by a non-trivial amount," he told Bloomberg.
However, he warned that the longer the Bank leaves rates at 0.5%, the faster they may need to rise in the future.
In other UK news, British retail spending increased at a slower annual rate in July as wet weather hurt spending on food for barbecues. Retail spending climbed 2.2%year-on-year last month after rising 2.9% in June.
Meanwhile, Greece and its creditors have reached an agreement on a third bailout for the country on Tuesday morning after a marathon session of talks. The Hellenic nation reached an outline agreement on a €86bn deal, after agreeing a budget with a primary deficit of 0.25% of gross domestic product (GDP) in 2015, improving to a 0.5% surplus in 2016, a 1.75% in 2017 and a 3.15% surplus in 2018.
In company news, Ladbrokes edged up slightly despite posting a 44% drop in adjusted first-half profit to £24.7m, reflecting lower betting on football.
Serco advanced after maintaining its full-year profit guidance and reporting a better-than-expected fall in revenue in its first half.
Standard Chartered slumped on news it was the second biggest bank to walk away from the Carmichael coal mine in Australia in a week.
Rio Tinto was on the back foot after the chief financial officer told analysts that costs could be further reduced amid a challenging market.
Just Retirement Group rallied after saying it plans to merge with Partnership Assurance in an all-share deal worth £669m. |
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| Market Movers
techMARK 3,219.69 -0.24%
FTSE 100 6,715.02 -0.31%
FTSE 250 17,754.38 -0.04%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 4,062.00p +3.33%
Fresnillo (FRES) 668.50p +2.93%
Weir Group (WEIR) 1,553.00p +1.37%
ARM Holdings (ARM) 964.00p +1.26%
Coca-Cola HBC AG (CDI) (CCH) 1,339.00p +1.13%
Anglo American (AAL) 817.20p +1.09%
BP (BP.) 389.55p +1.05%
Royal Dutch Shell 'B' (RDSB) 1,906.00p +0.69%
Royal Dutch Shell 'A' (RDSA) 1,892.00p +0.67%
BG Group (BG.) 1,113.00p +0.63%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,573.00p -2.12%
GKN (GKN) 315.90p -1.68%
Mondi (MNDI) 1,590.00p -1.30%
Carnival (CCL) 3,482.00p -1.19%
Associated British Foods (ABF) 3,194.00p -1.02%
SABMiller (SAB) 3,358.50p -1.02%
Diageo (DGE) 1,811.50p -0.98%
Merlin Entertainments (MERL) 400.30p -0.92%
National Grid (NG.) 852.40p -0.91%
ITV (ITV) 260.90p -0.91%
FTSE 250 - Risers
Premier Oil (PMO) 128.20p +4.06%
Allied Minds (ALM) 460.20p +3.35%
Ophir Energy (OPHR) 116.60p +3.19%
Tullow Oil (TLW) 234.30p +2.76%
Serco Group (SRP) 128.70p +2.55%
Acacia Mining (ACA) 242.40p +2.49%
Wood Group (John) (WG.) 627.50p +2.45%
Centamin (DI) (CEY) 55.00p +2.33%
Hunting (HTG) 505.00p +2.19%
Cineworld Group (CINE) 543.00p +2.07%
FTSE 250 - Fallers
Woodford Patient Capital Trust (WPCT) 115.50p -3.19%
Brewin Dolphin Holdings (BRW) 301.80p -2.14%
SIG (SHI) 197.00p -2.14%
Fidessa Group (FDSA) 1,952.00p -1.91%
Shawbrook Group (SHAW) 334.10p -1.56%
Jimmy Choo (CHOO) 178.60p -1.54%
Scottish Inv Trust (SCIN) 627.00p -1.42%
Kaz Minerals (KAZ) 160.70p -1.35%
esure Group (ESUR) 236.90p -1.29%
Worldwide Healthcare Trust (WWH) 2,040.00p -1.16%
FTSE TechMARK - Risers
Oxford Biomedica (OXB) 9.14p +2.12%
NCC Group (NCC) 239.75p +1.80%
Consort Medical (CSRT) 932.00p +0.43%
KCOM Group (KCOM) 97.50p +0.26%
IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 201.32 +0.21%
E2V Technologies (E2V) 226.44p +0.19%
FTSE TechMARK - Fallers
Dialight (DIA) 555.00p -0.72% |
| | UK Event Calendar | | Tuesday 11 August
INTERIMS
Card Factory, Johnston Press, Ladbrokes, Partnership Assurance Group, Prudential, Serco Group, SIG, Synthomer
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Productivity (US) (13:30)
Wholesales Inventories (US) (15:00)
ZEW Survey (EU) (10:00)
ZEW Survey (GER) (10:00)
UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:01)
FINALS
Hargreaves Services
EGMS
PME African Infrastructure Opportunities, Telecom Egypt SAE GDS (Regs)
AGMS
OptiBiotix Health, Real Estate Credit Investments PCC Ltd, Telecom Plus, Triad Group
|
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Shares fall on China devaluation, with autos and resources under pressure European stocks fell into the red as investors reacted to a surprise move by the Chinese central bank to devalue the yuan, which lifted the dollar and hit basic resources, while weakness in the auto sector also weighed.
At 0855 BST, the benchmark Stoxx Europe 600 index was down 0.5%, Germany's DAX was 0.9% lower and France's CAC was down 0.7%.
Greece bucked the trend, however, with the Athex Composite up 1.6% as it emerged the debt-ridden nation has finally reached an agreement with its creditors on a third bailout.
"Investors hoping a Greek deal would usher some confidence back in to the market have been caught off guard by the Chinese central bank," said Mike McCudden, head of derivatives at Interactive Investor.
"The consequential dollar spike is hitting commodities and investors are running for cover. However, as it appears the world's second largest economy is serious about getting its house in order, the short - term sell off may well throw up some opportunities for the seasoned investor."
In an attempt to boost its slowing economy, the People's Bank of China devalued the renminbi by the largest amount on record, slashing its 'daily fix' to the dollar by 1.9%.
The PBOC said in a statement that it would aim to keep the exchange rate at 6.2298 yuan per US dollar, down from 6.1162, and would try to allow the currency to depreciate by 2%.
As a result, basic resources in Europe took a hit, with the Stoxx 600 index for the sector down 1%. When the greenback appreciates, it makes dollar-denominated commodities more expensive for holders of other currencies.
Autos were the standout losers, however, with the index for that sector down 2.1% as data showed car sales in China fell in July for a second month in a row, as car makers continue to struggle with high inventories. Daimler and BMW were both firmly lower.
Meanwhile, shares in other companies with significant exposure to China also took a hit, with luxury brands Burberry and LVMH both under pressure.
Elsewhere, staffing company Adecco fell sharply after its second-quarter results missed expectations.
Shares in Delta Lloyd NV tumbled after the Dutch Insurer said it swung to a loss in the first half. |
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| | US Market Report | | US close: Stocks higher as Fed official suggest later rate hike US stocks closed higher on Monday, boosted by deal news and comments from Federal Reserve member Stanley Fischer.
The Dow Jones Industrial Average and the Nasdaq were up 1.39% and 1.16% respectively, while the S&P 500 gained 1.27%.
Speaking on Bloomberg TV, Federal Reserve Vice Chairman Stanley Fischer appeared to signal that the central bank may not lift interest rates until inflation returns to normal levels. Fischer said that while full employment is nearly within reach, low inflation means it's not quite time for the Fed to hike rates.
"The concern about this situation is not to move before we see inflation as well as employment returning to more normal levels," said Fischer.
Craig Erlam, market analyst at Oanda, said: "If the Fed is not convinced by the inflation figures, I still think we could still see a rate hike this year but maybe a smaller one than expected, say 10 basis points. This would send the message that the path of rates is higher and the return to normalisation has begun, while not threatening the recovery or putting too much of a burden on US companies from the impact it would have on the dollar."
Meanwhile, deal news also helped to underpin the tone on Monday, with shares in Precision Castparts, which makes industrial components, up a whopping 20% after Warren Buffett's Berkshire Hathaway said it would buy the company in a deal worth $37.2bn.
Alibaba was on the front foot after the e-commerce company announced that it would invest more than 28 billion yuan in a near-20% stake in Suning Commerce Group.
On the downside, shares in milk producer Dean Foods slumped. Its second-quarter profit beat expectations, but revenue fell more than anticipated.
Results from Kraft Heinz, Shake Shack and Take-Two Interactive Software are expected to be released after market close. Shares in Kraft Heinz were higher ahead of the publishing of the results.
The dollar was 0.24% higher against the yen, 0.5% lower against the euro and 0.65% down against the pound, while gold futures were up 0.85% at $1,103.
Oil prices rose, with West Texas Intermediate up 2.17% at $44.82 a barrel and Brent crude up 3.35% at $50.24.
Also on Monday, investors were digesting a series of Chinese data.
Figures released over the weekend showed Chinese exports dropped 8.3% from a year ago, while imports fell 8.1%. Meanwhile, inflation rose 1.6% in July, which is well below the government's annual target of 3% and producer prices hit their lowest level since 2009. |
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| | Newspaper Round Up | | Tuesday newspaper round-up: China devaluation, Google becomes Alphabet, Buffett deal China caught investors off guard by weakening its currency the most on record, sending ripples through the foreign exchange market. The People's Bank of China lowered the renminbi's daily fix to the US dollar by 1.9 per cent to 6.228, the most on record. Each morning the central bank fixes the currency at a certain point and allows the renminbi to trade as much as 2 percentage points in either direction from the mid-point. Typically the PBoC's adjustments are incremental. - The Financial Times
Google has announced a massive corporate overhaul that will see the internet giant separate its core business from its ambitious research divisions and owned by a new company, Alphabet. Chief executive Larry Page, who co-founded Google as a university research project two decades ago, announced the creation of Alphabet, a holding company of which Google would be one subsidiary, on Monday night. - The Telegraph
Warren Buffett gave Wall Street a summer boost after the world's third richest man announced the biggest takeover deal of his long investment career with the $37 billion purchase of Precision Castparts Corp. American shares jumped after news broke of Mr Buffett's all-cash acquisition of the Oregon-based aircraft components maker. Markets were cheered both by the investor's bet on a continued economic recovery and by the suggestion that the mergers and acquisitions boom is going strong. - The Times
Russia's economic woes deepened on Monday as a collapse in oil prices and western sanctions sent the economy spiralling into a 4.6% contraction in the second quarter of the year. The pace of the decline, which doubled from the 2.2% in the first part of the year, is the sharpest fall in economic output since the height of the global financial crisis in 2009. The dire figures also exceeded Moscow's expectations of a 4.4% fall, and were dubbed as the "lowest point" for the country by the Ministry of Economics. - The Telegraph
The music has stopped at nearly half of Britain's nightclubs over the past decade amid a storm of problems such as the smoking ban and the proliferation of dating websites. According to the Association of Licensed Multiple Retailers, the number of nightclubs in the UK has fallen from 3,144 in 2005 to 1,733 this year. It said that tough planning laws and crime policies were to blame, while the smoking ban, licensing laws and a rise in competition from music festivals were also cited. - The Times
Esure has signalled further price rises for motorists, as a surge in personal injury claims pushes up the cost of car insurance, hitting the company's profits. The firm sold 5.8% more premiums in the first half of the year, totalling £275.5m, and now has 1.995 million policies in force. - The Telegraph
A company that offered its customers protection against the deluge of nuisance calls has itself been fined £50,000 for making unsolicited, and in some cases threatening, calls to consumers. The Bournemouth-based company behind Stop the Calls offered people a call-blocking device to stop unwanted sales and marketing calls and also offered to remove people from a cold-calling database for £45 a year. However, Point One Marketing, previously known as Conservo Digital, was one of the most aggressive instigators of unsolicited marketing calls to promote its services. - The Times
The Co-op Bank is set to dodge financial penalties over the failings that led to its near-collapse and a £1.5 billion bondholder-funded bailout after regulators concluded that fines would threaten the lender's turnaround. The Financial Conduct Authority and the Prudential Regulation Authority are expected today to announce the closure of their joint investigation into the bank and the black hole that was discovered at the heart of its finances. Despite finding evidence of weak oversight of the business, they will not impose large fines. - The Times |
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