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Business - Need to Know

Morning Edition

Good morning. Jan du Plessis, SABMiller’s combative chairman, knows a thing or two about bids: last year he saw off an unsolicited approach from Glencore for Rio Tinto, where the South African-born grandee is also chairman.

Two weeks after rival brewer AB InBev made a preliminary takeover approach for SABMiller, the Peroni owner has updated investors on current trading. “Growth accelerated in the second quarter of the year, underpinned by our unmatched footprint in the growing beer markets of the world,” says SABMiller this morning.

No doubt AB InBev’s advisers will pick over the trading statement - and in particular the hit from currency movements. But arbitrage traders betting on what would be Britain's biggest-ever takeover of a UK company - with a price tag of at least £70 billion - will be unnerved by the decision to bring forward the trading update. What does it tell us about the prospects of a deal getting done?

For the latest on the market reaction log on to our Business Now live blog.

Elsewhere, John Wood Group has appointed a new chief executive. Robin Watson, currently chief operating officer at the the Scottish oil industry services company, will take the helm on January 1, replacing Bob Keiller who has “decided to retire”.

Despite a slight slowdown in like-for-like sales at Greggs in the third quarter, the 4.9 per cent growth was “slightly ahead of expectations”, the UK bakery chain said. As the cold weather sets in, the retailer says it has benefitted from relaunching its hot food menu.

There are also updates from UK Mail, which says its first half performance is in line with its revised expectations in August when it issued a profit warning. Ted Baker has reported a 25 per cent jump in sales, boosted by strong sales growth in the US.

The great and the good will gather today at the Royal Albert Hall for the Institute of Directors annual convention. The speakers include Lord Mandelson, Lord Lawson, Lloyds chief executive Antonio Horta-Osorio, BAE Systems’ Sir Roger Carr and Sir Charlie Mayfield, chairman of John Lewis.

But the most timely (and closely) watched session comes at midday: What can Rugby and Business learn from each other? No doubt when Ian Ritchie, chief executive of the Rugby Football Union accepted the invitation he hadn’t even considered that England might already have crashed out of its World Cup.

Harry Wilson, our city editor (and England rugby fan) will be there. He’ll be filing regular updates to our Business Now live blog and Twitter @harrynwilson.

On the economics front we get the latest global economic forecasts from the International Monetary Fund this afternoon - brace yourselves for downgrades. Ahead of that the Halifax House Price Index for September 2015 will be released shortly. We get monthly car registration data from the Society of Motor Manufacturers and Traders Society for September at 9.00am. The new car market recorded its 42nd consecutive month of growth in August. Can the industry deliver a 43rd? Or is this extraordinary run about to come to an end?

Please do keep sending me any thoughts or observations about The Times business coverage - richard.fletcher@thetimes.co.uk and don't forget you can also follow me on Twitter for updates throughout the day - @fletcherr.

Have a great day.

Richard Fletcher
Business editor
The Times
richard.fletcher@thetimes.co.uk

Troubled German carmaker Volkswagen saw its sales in South Korea slide 7.8 per cent month-on-month in September, according to industry data released overnight. Volkswagen sold 2,901 cars in South Korea in September, the lowest number since May, data from the Korea Automobile Importers & Distributors Association showed. That still represented an increase of 26.7 per cent from the same month a year earlier.

Britain’s biggest banks have lent more than $5 billion to the world’s most active commodities traders, sparking fears they could suffer big losses if the falling price of natural resources sparks a crisis at one of the companies. More than half of the top banks’ exposure to commodities is through loans to Glencore, the debt-laden mining group and commodities trader whose shares have suffered sharp swings since a leading analyst said they could be worthless.

“More than 160,000 diehard comic book and pop culture fans, some dressed in superhero and alien costumes, will descend on Manhattan this week for New York Comic Con - an exuberant celebration of geekdom. Between them and the show’s sponsors, they will bring in tens of millions of dollars for the organisers over a mere four days.” When it comes to big business, comic con is no laughing matter, says Alexandra Frean.

“Beneath what used to be a turquoise outcrop in the heart of the Gobi desert lies enough ore to keep one of the world’s largest copper and gold mines busy until the next century, but nevertheless Rio Tinto wants to get a move on. Its haste is understandable. The mining group has sunk about $6 billion into Oyu Tolgoi, yet the proposed mine was left in limbo during a three-year impasse with the Mongolian government over the share of profits.” Marcus Leroux reports from the Gobi Desert.

The Nikkei has closed up 1 per cent this morning at 18,18610. IG expects the FTSE 100 to open up 25 points when trading begins shortly.

The FTSE 100 bounced 168.94 points, or 2.76 per cent, higher to 6,298.92 in broad-based gains, with not one blue-chip stock underwater. The index joined a global rally in which Paris and Frankfurt rose by 3.5 per cent and 2.7 per cent, respectively. Investors were in bullish mood, shrugging off weak services sector figures for the eurozone and Britain and taking renewed comfort from lacklustre American jobs figures on Friday, which reduced the likelihood of a US interest rate rise. The broader FTSE 250 rose 314.20 points, or 1.87 per cent, to 17,110.28. Read here for Alex Ralph’s full market report.

Wall Street played its part too with strong gains in a heavily traded session. Rising oil prices boosted energy stocks and investors placed bets that the Federal Reserve would not raise interest rates this year. The Dow Jones Industrial Average jumped 304.1 points or 1.9 per cent to 16,776.4 while the hi-tech Nasdaq climbed by 1.6 per cent or 73.5 points to 4781.3. The S&P 500, which rose by 1.8 per cent or 35.7 points to 1987.1, has enjoyed a five-day rise of 5.6 per cent - its best five-days since late 2011. Around 7.9 billion shares changed hands compared with the recent daily average of 7.3 billion.

Sterling dipped against the US dollar - down 0.2 per cent to $1.514 - after the latest PMI survey showed that output from the UK’s hitherto dominant services sector was the lowest since May 2013. Against the euro, the pound inched up 0.1 per cent to €1.354.

Oil prices started the week in bullish style on a view that the global supply glut was diminishing with the number of rigs at work in America dropping for a fifth week. In New York, Brent crude for November settlement, which at one point yesterday was trading 3.4 per cent higher, its biggest intraday gain in more than two weeks, rose by 2.3 per cent to $49.22 a barrel.

In a special report Tempus takes an in-depth look at the prospects for the £2 billion-plus retail offer for shares in Lloyds Banking Group. To read more about the Tempus tip of the day click here.

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1 George Osborne promised to breathe life into Britain’s high streets in what he said was the biggest giveaway of power from Whitehall in living memory. Handing total control over business rates to local councils would make them regenerate town centres, the chancellor said.

2 The government is to sell £2 billion of shares in Lloyds Banking Group to the public, as it moves closer to selling off the last of its stake in the bailed-out bank. The sale will begin next spring, eight years after the lender was rescued with a £20.5 billion bailout, which left the state with a 43 per cent stake.

3 Supermarkets in England are bracing themselves for a surge in the theft of shopping baskets after the introduction of the 5p plastic bag charge. One leading chain has ordered an extra 60,000 wire baskets in anticipation of thefts from shoppers either unwilling or unable to pay the charge.

4 Trinity Mirror, Britain’s biggest regional and local newspaper group, is exploring a plan to stop readers using ad-blocking software on their iPhones or iPads from accessing its websites. The move is a sign of the threat the apps represent to publishing groups that rely on advertising because they give away their content free.

5 Britain’s biggest banks have lent more than $5 billion to the world’s most active commodities traders, sparking fears that they could suffer big losses if the falling price of natural resources sparks a crisis at one of the companies.

6 BP is set to pay out $20.8 billion in fines to settle claims linked to the Deepwater Horizon oil disaster five years ago in the biggest settlement in American legal history.

7 The start of a bidding war for Xchanging, the insurance outsourcing company, has sent its shares surging, with Capita and Apollo Global Management mulling a takeover.

8 Britain will shut down all its coal-fired power stations by 2023, under new plans being drawn up by ministers ahead of a United Nations climate change conference in Paris next month. The proposals to set a firm date for the UK’s last coal-fired power station to cease generating electricity are being discussed by officials at the Department of Energy and Climate Change.

9 Nestlé is in advanced talks to take a bigger scoop of the global ice cream market by forming a €3 billion joint venture with R&R Ice Cream, the UK-based maker of Fab lollies and Oreo cones.

10 The Happiest Place on Earth may soon imitate the surge-pricing model adopted by Uber, the ride-hailing app, as Disney considers introducing demand-based ticketing into its American theme parks to cut congestion.

The Times
Britain’s biggest banks have lent more than $5 billion to the world’s most active commodity traders, raising fears that they could suffer big losses if the falling price of natural resources sparks a crisis at one of the companies. More than half of the leading banks’ exposure to commodities is through loans to Glencore.
read full update
Daily Telegraph
Ordinary investors will be offered a 5pc discount on shares and bonus shares in a £2bn sale that will mark the final stage of Lloyds Banking Group’s return to the private sector, the Treasury has announced. But the sale risks making a loss unless Lloyds' share price improves rapidly over the coming months.
read full update
Financial Times
The US, Japan and 10 other Pacific Rim nations have struck the largest trade pact in two decades, in a huge strategic and political victory for US President Barack Obama and Japanese Prime Minister Shinzo Abe. The Trans-Pacific Partnership covers 40 per cent of the global economy and will create a Pacific economic bloc with reduced trade barriers to the flow of everything from beef and dairy products to textiles and data.
read full update
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