Grenfell Tower: Cladding firm ends global sales for tower blocks

The US firm that supplied cladding used on London’s Grenfell Tower says it has ended global sales of the product for use in high-rise blocks. Arconic said it was discontinuing sales of Reynobond PE for tower blocks due to “issues” identified by the fire, which is feared to have killed at least 79. The government said 75 buildings in 26 council areas had now failed fire safety tests – every one tested so far. Theresa May said councils need to speed up tower block safety tests in England. Communities and Local Government Secretary Sajid Javid said all hospitals and schools had also been asked to carry out “immediate checks”.

Holland & Barrett sold for £1.8bn to Russian billionaire

Holland & Barrett, the UK’s biggest health food retailer, is being bought by a Russian billionaire for £1.8bn. L1 Retail, a fund controlled by Mikhail Fridman, is buying the 1,150-store chain from Carlyle, the US private equity firm, the Financial Times reported. Carlyle acquired Holland & Barrett as part of its $3.8bn purchase in 2010 of US firm Nature’s Bounty, now NBTY. The chain has about 600 stores in the UK as well as China, India and the UAE. The retailer, which employs more than 4,000 people, was founded in Bishop’s Stortford, Hertfordshire, in 1870. Holland & Barrett has opened more than 300 stores in the seven years since the private equity takeover, the Financial Times reported.

Brexit: May unveils ‘fair and serious’ offer on EU citizens

About three million EU citizens living in the UK would be allowed to stay after Brexit, Theresa May has proposed. A new “UK settled status” would grant EU migrants who had lived in the UK for five years rights to stay and access health, education and other benefits. Proposals were unveiled at a Brussels summit but are dependent on EU states guaranteeing Britons the same rights. German Chancellor Angela Merkel called the plan a “good start”, but Labour said it was “too little, too late”. Many EU citizens in the UK, and Britons living abroad, are worried about their status once Brexit happens. The UK’s exit deadline is 30 March 2019. Addressing other EU leaders at her first summit since the general election, the prime minister said she did not want anyone to have to leave or families to split up. “No one will face a cliff edge,” she said. “The UK’s position represents a fair and serious offer, one aimed at giving as much certainty as possible to citizens who have settled in the UK, building careers and lives and contributing so much to our society.”

Forward Diary: 26th – 30th June 2017

Company and economic announcements planned for the week commencing 26th June 2017

Fruit and veg farmers facing migrant labour shortages

UK summer fruit and salad growers are having difficulty recruiting pickers, with more than half saying they don’t know if they will have enough migrant workers to harvest their crops. Many growers blame the weak pound which has reduced their workers’ earning power, as well as uncertainty over Brexit. About 80,000 seasonal workers a year pick and process British fruit and veg. Most of them are from the European Union, mainly Romania and Bulgaria. One in five growers says they already have fewer pickers than they need. British Summer Fruits, the body which represents soft fruit growers, says labour shortages are now the worst seen since 2004. Recruitment was getting harder even before the vote to leave the EU. But the industry believes Brexit is exacerbating the problem and if access to non-UK workers dries up, it could cripple home-grown berry production.

Uber chief executive Kalanick resigns

Uber boss Travis Kalanick has resigned as chief executive after pressure from shareholders, a spokesman has said. Mr Kalanick will remain on the board of the firm, however, the New York Times reported. His resignation comes after a review of practices at the firm and scandals including complaints of sexual harassment. Last week he said he was taking an indefinite leave of absence. Five major Uber investors demanded Mr Kalanick’s immediate resignation in a letter on Tuesday, the newspaper said. Mr. Kalanick reportedly said: “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight.” Last week Mr Kalanick took an indefinite leave of absence from the firm as part of an effort to create “Uber 2.0”. His leave also comes after the sudden death of his mother in a boating accident. The ride-hailing company has had a series of recent controversies, including the departure of other high-level executives.

Brexit negotiations: Barnier rules out ‘concessions’

The EU’s chief negotiator said there would be “substantial” consequences from Brexit after the first round of talks with the UK. Michel Barnier said he was “not in the frame of mind to make concessions or ask for concessions”. UK Brexit Secretary David Davis said talks got off to a “promising start”. The UK appears to have conceded to the EU’s preferred order for the talks which will mean trade negotiations do not begin immediately. Mr Davis and Mr Barnier gave a joint press conference after day one of the talks in Brussels. The initial focus will be on expat rights, a financial settlement and “other separation issues”.

Brexit negotiations begin: David Davis targets ‘historic’ deal

Brexit Secretary David Davis will call for “a deal like no other in history” as he heads into talks with the EU. Subjects for the negotiations, which officially start in Brussels later, include the status of expats, the UK’s “divorce bill” and the Northern Ireland border. Mr Davis said there was a “long road ahead” but predicted a “deep and special partnership”. The UK is set to leave the EU by the end of March 2019.

Tesco recovery gathers pace in the UK

Tesco is cementing its recovery in the UK after its first-quarter sales growth beat expectations. Like-for-like sales – which strip out the impact of new stores – rose by 2.3% in the three months to 27 May, boosted by demand for fresh food. Analysts had expected a rise of 2.2% after Tesco reported an increase of 0.7% in the fourth quarter. Tesco will face shareholders on Friday who are expected to query a pay deal awarded to chief executive Dave Lewis. Mr Lewis was given £142,000 to help him move to a house closer to Tesco’s headquarters. This was on top of his £4.1m pay packet.

Forward Diary: 19th – 23rd June 2017

Company and economic announcements planned for the week commencing 19th June 2017

EU mobile roaming charges scrapped

A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home. The European Commission said the end of roaming charges was one of the greatest successes of the EU. But a UK consumer group warned phone users could face “unexpected charges”. Until now roaming, or connection, charges have been added to the cost of calls, texts and internet browsing when consumers from one EU country travelled to another and connected to a mobile network there.

Uber chief to take leave from company

Uber boss Travis Kalanick plans to take time away from the company, and could return in a diminished role. It comes after a review of management and practices at the firm, which is facing a number of scandals including complaints of sexual harassment. Uber’s board on Sunday voted in favour of the recommendations from the review. But two days later, board member David Bonderman made a sexist remark at a meeting about the recommendations and has now stepped down. In the email to staff, Mr Kalanick said the decision to take leave, which also comes after the sudden death of his mother in a boating accident, is part of an effort to create “Uber 2.0”. “For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team,” Mr Kalanick wrote. “But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.” Mr Kalanick’s email did not say how long he would be away from the firm.

Manufacturers call for Brexit strategy rethink

The government should rethink its Brexit strategy, following last week’s election, according to the engineering industry organisation, the EEF. It said without a more pro-business stance, the resulting political instability may force more firms to alter their plans “away from the UK”. The EEF is the latest business organisation to call for a rethink of the government’s Brexit plans. It wants access to the single market to be at the heart of Brexit negotiations. The EEF said even before the election firms were already altering or thinking about changing their business plans because of the Brexit vote. Terry Scuoler, EEF chief executive, said the government had already “wasted a year” and needed to “move away from its previous rhetoric and start repairing relations with EU partners”. For the EEF that meant putting access to the single market and staying in a customs union at the centre of the government’s negotiations and involving business groups in the talks over trade. It is also calling for a “suitable” transition period to be “firmly back on the table” as part of the Brexit talks.

Picking through the carnage

After trading almost 2.5% lower at the $1.263 level early on Thursday as the election result became clear, the pound recovered to trade the rest of the day close to $1.274 for a net 1.6% fall. From the open, the FTSE 100 Index jumped by 1.3% on the back of non-Sterling earners such as the mining, oil and pharmaceutical groups before closing the day around 0.9% higher at 7515. The more domestic plays were generally negative throughout the day.

Just when you thought it was safe to go back into the water

After most of the polls pointed to a reasonable Conservative margin of victory, the electorate has decided otherwise. In the event, the Conservatives have paid the price for running a lacklustre, unimaginative, election campaign in the face of an optimistic message from Labour. We know that ‘all that glisters’ may not be gold but the giveaways offered by Jeremy Corbyn‘s Labour Party, however funded, were attractive enough to turn many voters heads. Consequently, the country must now soldier on with a hung parliament (no party has an overall majority over 325 seats. The latest results (with 5 yet to be declared) show the Conservatives on 313 (down from 330 pre-election) and Labour on 261 (up from 229).

Forward Diary: 12th – 16th June 2017

Company and economic announcements planned for the week commencing 12th June 2017

The Sound of Silence

It’s all relative but the wall-to-wall onslaught of electioneering should have ceased by this morning to be replaced by the steady patter of feet to polling stations. There will not be much that the markets can do until indications of the shape of the election results emerges tomorrow. Typically, it will be Sterling that acts as the bellwether in this latest political storm. Any perceived weakening of the Conservatives’ position can be expected to weaken the currency and stimulate demand for non-Sterling earners. However, other blue chips are likely to decline as investors contemplate the prospect of hikes in the rates of both corporate and personal taxation not seen in decades. Of course, the situation will not be that clear-cut since some companies can expect to benefit from new Government expenditure on the promises outlined in the manifestos of Labour and the SNP.

The Final Countdown…

As we run, thankfully, into the final 24 hours of campaigning, the polls show a range of estimated leads for the Conservatives over Labour of between 4 percentage points (YouGov) and 11 points (ICM). The question remains, even if the Conservatives come out ahead, will it be by enough to represent a potent force in the Brexit negotiations or will they continue to be hobbled by challenges from other parties in the Commons. Sterling held close to the $1.29 level while the FTSE 100 Index, similarly, kept in a narrow range just below the 7525 level. The latest poll result, released overnight by Opinium, points to a 50-seat majority for the Conservatives. As we have said before, after all the hoo-ha, both the pols and the bookies’ odds could be providing a false picture.

48 hours and counting…

Inevitably, Monday’s electioneering clashes between Labour and the Conservatives pivoted around national security and the terrorist threat. A call from Mr Corbyn for Mrs May to resign on her record as Home Office Secretary in reducing police numbers needed to be countered by Mr Corbyn’s own parliamentary history of voting against anti-terrorist measures. While elections tend to generate a lot of heat, rarely is enough light emitted for voters or the markets to make a seriously-informed judgement. According to the Daily Telegraph’s ‘rolling average of eight polls’, the proportion of votes for the Tory and Labour parties have been converging since the 21st April with the gap now standing at 7 points overall – Conservatives 43.4% and Labour on 36.5%. For those inclined to ignore the polls, betting odds continue to point to the Conservatives being returned with a majority but it must be remembered that the odds are a function of betting activity which may not necessarily prove to be correct. Something that is adding piquancy to this particular election, apart from the high number of marginal constituencies being contested, is the effect of the Brexit vote where voters may decide to switch from normal allegiances to whichever party they feel will best protect their interests in dealing with the European Union. It is against this background that Sterling moved marginally higher to the $1.29 level and the FTSE 100 eased…

US interest rate prospects moderating

The big news from the US on Friday was the large drop in the May Non-farm payroll number to a gain of just 138,000 against the widely-expected 185,000. At 4.3%, the unemployment rate hit a 16-year low but the underlying message was of a slowing economy. Consequently, the outlook for the trend in future interest rates has turned softer. However, despite this dip towards a more typical jobs growth rate, it is still widely expected that at the US Federal Reserve’s next FOMC meeting on the 14th June will produce another 25-basis point rise. A question mark is raised though over the outlook for the rest of the year, particularly September, for any other rate rises. Inevitably, the US bond market yields eased in line with the implied lower rate trajectory while the Dollar also lost ground.

Now it’s for real

With just a week to go to Polling Day, another YouGov poll has indicated a further erosion of the Conservatives’ lead over Labour to just 3 points. Just for good measure, other polls are giving the Tory Party a moderately comfortable win. Where does the truth lie and can the polls, misleading in the past, be expected to be any more accurate this time ? The bookmakers’ betting odds still point to a Conservative win but the much lower odds being offered on the Conservatives compared to the Labour Party has, unsurprisingly, made a hedge bet for Labour a much more active option.

Forward Diary: 5th – 9th June 2017

Company and economic announcements planned for the week commencing 5th June 2017

Polls driving Sterling driving the FTSE-100

The revelation of a new-style YouGov poll on Wednesday shattered any complacency about the likely outcome of next week’s election. Having inherited a Conservative majority in the last General Election courtesy of David Cameron, Theresa May appears to have risked it all for nothing with the poll suggesting a possible loss of 20 seats to 310 seats (out of 650), resulting in a hung parliament.

Sterling dips on new UK election poll

The value of the pound dropped after a projection suggested the Conservatives could fail to win an outright majority in the election on 8 June. Previous opinion polls suggested Prime Minister Theresa May’s party would increase its majority, which is currently 17 seats. But the projection, published in the Times and based on YouGov research, suggests a possible hung parliament. Sterling fell by more than half of one per cent, but recovered some losses. By early Wednesday morning, it was trading 0.44% lower against the dollar at $1.28020 and 0.29% lower against the euro at 1.14600 euros.

Ryanair expects lower fares but reports record profits

Ryanair (RYA.L) expects its fares will fall further this year, although the drop will be less steep than in 2016. The airline said fares would fall by between 5% and 7% in the year to the end of March 2018, down from a fall of 13% in the past financial year. Europe’s largest carrier by passenger numbers also reported a record annual net profit of 1.316bn euros, up 6%. But the carrier warned that Brexit and the risk of terror attacks in Europe remained a threat to its business.

OPEC and Non-OPEC nations agree extension but not deeper cuts

An extension for a further nine months of the 1.8 million barrels per day reduction in output agreed last year is the result of the latest meeting. Global oil stock levels have remained high despite these efforts and on the back of sustained growth in US shale production. After a day of swings, the price of Brent crude has slipped to the $51 pb. Level. As usual, part of the challenge for the success of these arrangements is a genuine attempt by nations to exercise self-discipline. Apart from President’s pledge to reduce US inventories, OPEC is expected to reduce the total volume of oil it ships to the US.

Forward Diary: 29th May – 2nd June 2017

Company and economic announcements planned for the week commencing 29th May 2017

White House denies ‘egregious’ budget accounting error

The White House has denied the president’s budget proposal contains an “egregious” maths error. Former US Treasury Secretary Larry Summers pointed out the spending plan double-counts $2tr (£1.5tr). But White House budget director Mick Mulvaney told reporters: “We stand by the numbers.” Unveiled on Tuesday, the budget proposes deep cuts to welfare programmes. Mr Summers, also formerly chief economist of the World Bank, was one of the first to spot the apparent mistake.

Moody’s downgrades China’s credit rating

China has received a downgrade on its credit score, on worries about the future state of the economy. Moody’s Investors Services brought down China’s long-term local currency and foreign currency issuer ratings by one notch to A1 from Aa3. But China’s finance ministry said Moody’s was exaggerating the mainland’s economic difficulties and underestimating reform efforts. The downgrade could raise the cost of borrowing for the Chinese government. The ratings agency also changed its outlook for China to stable from negative. Moody’s said in a statement that the downgrade reflected expectations that China’s financial strength would “erode somewhat over the coming years, with the economy-wide debt continuing to rise as potential growth slows”. The Chinese economy expanded by 6.7% in 2016 compared with 6.9% the previous year, the slowest growth since 1990.

Manchester Arena blast: 22 dead and 59 hurt

Twenty-two people, including children, are now known to have been killed and 59 injured in a suspected terror attack at Manchester Arena. The blast happened at 22:35 BST on Monday following a pop concert by the US singer Ariana Grande. Greater Manchester Police said the lone male attacker, who died in the blast, was carrying an improvised explosive device which he detonated. Relatives are using social media to hunt for missing loved ones. Home Secretary Amber Rudd said it was “a barbaric attack, deliberately targeting some of the most vulnerable”.