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Business - Need to Know

Morning Edition

Good morning. Another bank. Another set of provisions. Alongside full year results this morning Barclays has put aside £750 million for “ongoing investigations and litigation relating to foreign exchange” manipulation, taking the total to £1.25 billion. Wow.

The bank is touting a 12 per cent rise in profits to £5.5 billion. But that is “adjusted profit” - ie before all the bits Antony Jenkins, the chief executive, would rather forget about. Katherine Griffiths, our banking editor, will have more on the Barclays results shortly on www.thetimes.co.uk/business.

We have also got results this morning from Taylor Wimpey, Glencore, an upbeat Travis Perkins and Paddy Power, the bookmaker, which says it has looked at possible acquisitions, but concluded that none are “compelling” so has decided to return €392 million to shareholders. Punch Taverns has announced the appointment of Duncan Garrood as chief executive.

Mark Carney will appear in front of the Treasury select committee alongside Anthony Habgood, chairman of the Bank of England court. MPs want to question the pair about the Bank’s investigation into whether its officials condoned manipulation of foreign exchange trading. The investigation criticised the Bank’s chief forex dealer for failing to raise suspicions about questionable behaviour among traders - but cleared executives of wrongdoing.

It could be a difficult session for the Bank governor. Philip Aldrick, our economics editor, will be at the hearing. For the latest from Westminster log on to our Business Now live blog.

It is a more sober day at the Mobile World Congress in Barcelona with delegates focusing on the nuts and bolts of the future of mobile: “5G and the Internet of Things”. Nic Fildes, our technology and communications editor, is there. For the latest follow him on Twitter - @NicFildes.

Following the better-than-expected manufacturing PMI yesterday, we get the construction PMI data for February this morning (9.30). Economists expect a reading of 59, down a fraction from 59.1 last month.

In the US, the major automobile manufacturers report monthly car and truck sales data for February today and Best Buy, the electronic retailer, is due to report fourth quarter results.

Finally, don't forget to follow me on Twitter -@fletcherr - for updates throughout the day.

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

Australia's central bank announced overnight that it was holding its benchmark interest rate, confounding calls for a cut and sending the Australian dollar sharply higher. The Reserve Bank of Australia (RBA) said it was too early to follow February's quarter point cut to a record low of 2.25 per cent - though it did leave the door wide open for an easing at future policy meetings.

“The Nasdaq Composite has broken through the psychologically important level of 5,000 points for the first time since the dotcom bubble. The technology-heavy index, home to the likes of Apple, Microsoft, Netflix and Amazon, closed 44.57 points higher, almost 1 per cent, at 5,008.1 last night.”

“The eurozone economy is in a bad state. Thank goodness. After all, for most of the past six years it’s been in a terrible state. Now things are slowly, slightly improving.” Love it or hate it, the euro is part of the solution for Europe’s ills, argues Oliver Kamm.

Vauxhall has unveiled the latest weapon in its decades-long battle with Ford to be Britain’s biggest-selling car brand - the launch of the new Viva, the smallest and cheapest model in its range, reports Robert Lea at the Geneva Motor Show. The same. But completely different. That could be the advertising strap line aimed at urging the over-45s not to be confused with the Vauxhall Viva of yesteryear.

In Tokyo, the Nikkei 225 closed down 0.06 per cent this morning at 18,815.16. The FTSE 100 is forecast to open 6 points higher when trading begins shortly.

The FTSE 100 briefly touched a new record high of 6,974.26 yesterday before commodity shares led the blue chip index lower to close 6 points or 0.1 per cent down on the day at 6,940.6. It was also a negative day for the broader FTSE 250, which fell by 23.9 points, or 0.1 per cent, to 17,249.9. More from Gary Parkinson on yesterday’s market action.

It was a different story on Wall Street. The Nasdaq finished above 5,000 for the first time since the 2000 dotcom bubble. The high-tech index closed up 0.9 per cent, or 44.6 points, at 5,008. That achievement almost overshadowed another pair of record closes: the Dow Jones Industrial Average rose 156 points, or 0.9 per cent, to 18,288.6, and the S&P 500 was 0.6 per cent, or 12.9 points, higher at 2,117.4. All told, 6.4 billion shares changed hands, slightly higher than the daily average for the past five days.

Sterling retreated 0.5 per cent from an eight-week peak against the US dollar to $1.536 yesterday over uncertainty about the outcome of the UK’s general election in May and a fall in house prices for the first time in five months. Against the single currency, the pound was up 0.5 per cent to 0.728p per euro.

Brent crude was on the slide again yesterday - down 4.9 per cent to $59.54 a barrel - as traders factored in rising output from Libya where a recent fire caused a production pipeline shutdown.

Intertek was once a byword for consistency and reliability, but a fall-off in work from mining and oil and gas clients meant 2014 was a disappointing year. The provider of testing services says there are signs of growth returning, but, asks Tempus, has its disappointing run really come to an end? Amlin, together with the other Lloyd's insurers, has had a couple of good years, but caution prevails for 2015. Alent was demerged from Cookson Group a little more than a year ago, but the shares have struggled to make headway. Read on for more on the Tempus tips.

The Times
The Nasdaq Composite has broken through the psychologically important level of 5,000 points for the first time since the dotcom bubble 15 years ago. The technology-heavy index, home to the likes of Apple, Microsoft, Netflix and Amazon, closed 44.57 points higher, almost 1 per cent, at 5,008.1 last night amid a broader Wall Street rally that also pushed the Dow Jones industrial average 155.93 points up to 18,288.63 and the S&P 500 12.89 points ahead at 2,117.39 — both closing records.
read full update
Financial Times
Workers who live in London have suffered a bigger wage squeeze than those in any other UK region since the crash. The crunch came even though the capital’s economy seems to have rebounded more strongly than the rest of the country. While Londoners still enjoy much higher salaries than the UK average, official data analysed by the Financial Times suggest that the pay gap has narrowed since the financial crisis, soothing concerns that the capital is running away from the rest of the UK.
read full update
Daily Telegraph
A Russian billionaire’s company has accused the British government of acting “irrationally” by seeking to block the acquisition of North Sea assets because of concerns over energy security. A bitter legal row now threatens to erupt between the Department of Energy and Climate Change and Mikhail Fridman. The tycoon and his associates acquired the gas fields yesterday after the completion of a €5bn (£3.6bn) deal to buy the oil and gas assets of RWE, the German utility company.
read full update
CITY AM
Insurers such as Just Retirement have escaped a potentially devastating blow to their earning power thanks to a regulatory re-think over new capital requirements. The Bank of England’s prudential regulation authority had been considering rules that may have forced them to abandon the highly lucrative equity release mortgage market.
read full update
ECONOMICS

UK: The country’s manufacturing output has reached a seven-month high in the latest sign that the economy is gathering pace after a slowdown towards the end of last year. The Markit/Cips purchasing managers’ index hit 54.1 in February, up from January’s 53.1, well above the 50 mark that separates growth from contraction. The survey indicated manufacturing output is growing at a quarterly rate of 0.5 per cent, compared with 0.2 per cent in the final three months of 2014.

Eurozone: Deflation in the 19-country region eased while unemployment fell in a double helping of good news for the European Central Bank, which meets this week to decide the fine detail of its €1.1 trillion stimulus package. Prices in the eurozone were 0.3 per cent lower last month than a year ago, but the scale of deflation was lower than in January when the consumer prices index was down 0.5 per cent compared with a year earlier.

US markets: The technology-heavy Nasdaq composite index broke through the 5,000 level for the first time since the dotcom bubble 15 years ago. The index closed up 44.57, or 0.9 per cent, at 5,008.10, amid a broader rally that also led to gains for the Dow Jones industrial average, which closed up 155.93 at a record of 18,288.63. Stocks were lifted after the publication of government data showing a 0.9 per cent rise in US disposable incomes, and an interest rate cut in China.

Banking & Finance

Amlin: The Lloyd’s of London insurer paid out its first special dividend in eight years, despite reporting that annual pre-tax profits had dropped by 20.5 per cent to £258.7 million and highlighting a “challenging” market. Shareholders will receive the payout, of 15p a share, on top of the annual dividend of 27p a share. Shares closed more than 6 per cent lower, down 33p at 496½p.

City Link: More than 200 former staff at the collapsed parcel delivery business who claim they should have been consulted before losing their jobs have hired lawyers at JMW Solicitors to help them pursue a collective action for compensation at an employment tribunal. More than 2,500 workers lost their jobs after City Link filed for administration on Christmas Eve, and, if successful, the government will almost certainly have to foot the compensation bill, as City Link has insufficient assets.

Equity crowdfunding: Gonçalo de Vasconcelos, a co-founder of the Cambridge-based Syndicate Room, a fledgeling crowdfunding business, says that equity crowdfunding “is beginning to get some bad press”. Problems he points to include “outrageous” valuations, small investors unwittingly getting a different class of share to professional backers and investors being “misled” when online platforms delete negative user comments about companies’ investment pitches. “The sector needs to be a lot more transparent,” says Mr Vasconcelos, who expects Syndicate Room to facilitate £50 million worth of investment this year.

Construction & Property

House prices: Figures from Nationwide showed that house prices fell for the first time in five months in February as the property market slowed more sharply than expected. The rise in home-loan approvals in December had left some economists expecting a pick-up, but house prices came in below the 0.3 per cent rise expected to fall by 0.1 per cent compared with January. On an annual basis, house-price growth slowed for the sixth consecutive month to 5.7 per cent — the slowest growth rate since September 2013.

Engineering

Vauxhall: The carmaker has unveiled the latest weapon in its decades-long battle with Ford to be Britain’s biggest-selling car brand — the Viva, the smallest and cheapest model in its range. Where the Vauxhall Viva of yesteryear was a British-built family car, the new Viva — launched at the Geneva Motor Show — will be a £7,995 runaround aimed at first-time buyers or downsizing older couples who have been lured by the likes of the Hyundai i10.

Industrials

Alent: The provider of specialist chemicals to the electronics and motor industries, which was demerged from the old Cookson Group late in 2013, said that disregarding the effect of the high pound operating profits were ahead by 7.6 per cent to £95.1 million in 2014.

Leisure

Chinese tourists: Rising household incomes in China are set to transform the global tourism industry over the next decade as tens of millions of families take their first trips abroad and spend an estimated $50 billion on only 25 cities. The forecasts are being published in a report commissioned by InterContinental Hotels Group, which estimates that last year China overtook the United States as the largest source of international travel spending.

Tragus Group: The restaurant group behind the Café Rouge and Bella Italia chains will announce a change of name today and a return to the expansion trail after a painful financial restructuring last year. Tragus will open 70 restaurants over the next three years and will rebadge itself as Casual Dining Group, with an eye to a possible stock market listing after the programme.

Media

Trinity Mirror: The publisher of the Daily Mirror and People newspapers will pay its first dividend since 2008 after offsetting falling revenues with higher cost-cutting than expected and reporting a sharp reduction in debt. Trinity Mirror also revealed that Simon Fox, its chief executive, was paid £1.79 million last year, up from £710,000 in 2013, after the vesting of long-term incentive plans worth £1 million. Mr Fox was not the best-paid director, however.

Natural Resources

Oil prices: The price of oil fell below $60 a barrel yesterday, stirring hopes that consumers will reap the benefit. The benchmark Brent rallied 18 per cent last month, but a recognition of the scale of stockpiles sent the price of crude down 5 per cent to below $60 in its sharpest reverse in a month.

L1 Energy: A Russian-owned company led by Lord Browne of Madingley is on a collision course with the government over a deal to take control of a dozen North Sea oil and gasfields. The former BP boss is executive chairman of L1 Energy, a division of LetterOne Group, which was set up by the former oligarchs behind TNK, BP’s joint-venture partner in Russia. L1 completed a €5.1 billion (£3.7 billion) deal to buy RWE Dea’s upstream oil and gas business in defiance of Ed Davey, the energy secretary, who signalled he would insist L1 sold the assets to a third party if the deal went ahead.

Professional & Support Services

Intertek Group: The product testing specialist said that demand from other areas should this year serve to balance a reported fall in business from the oil and gas sector, because of the low oil price, and from minerals from the start of 2014. These negatives, however, and exchange-rate movements left reported pre-tax profits 4.7 per cent lower at £300.2 million in 2014.

Retailing

Marks & Spencer: The head of the high street retailer’s Asia business is to step down less than two years into the job as it announced a shake-up of its China business. Bruce Findlay, a former executive of Calvin Klein, is leaving to take up a role at Diesel, the Italian fashion brand. M&S announced plans to close five of its stores in secondary Chinese cities by August, cutting its number of stores in mainland China to 10. It said it would enter major cities such as Beijing and Guangzhou in the 2015-16 financial year, eventually bringing the number of stores back to 15.

Game Digital: The video games retailer has made a big play in the world of live video game events by taking over the company that hosts Britain’s biggest gaming festivals. Multiplay, which arranges the popular Insomnia festival and international gatherings for fans of Minecraft, the block-building game, was bought for £20 million.

Technology

Google: The search giant is to launch a branded mobile phone network. Sundar Pichai, the head of Google’s products, told delegates at the Mobile World Congress in Barcelona that it would outline its mobile launch plans in a couple of months. It is thought it will launch first in the US and go into other markets if successful. Google mobile will automatically reconnect dropped calls, using a combination of wi-fi and cellular networks, but Mr Pichai said the group did not “intend to be a network operator of scale”.

Telecoms

Inmarsat: The London-listed satellite communications provider is to link up with Airservices Australia, Qantas and Virgin Atlantic in a trial to improve flight tracking services on commercial airline flights to and from Australia. About 11,000 commercial passenger aircraft are already equipped with an Inmarsat satellite connection, representing more than 90 per cent of the world’s long-haul commercial fleet.

Mobile World Congress: Mark Zuckerberg has made a bold pitch to the telecoms industry, saying Facebook could help to develop their businesses, despite being the recipient of criticism from Vodafone and Telefónica at the world’s largest mobile phone trade show. Facebook, Google and Amazon were at the centre of complaints at the congress, which accused the US technology companies of enjoying a free ride on the networks that the telecoms companies have spent billions building.

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