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Business - Need to Know

Morning Edition

Good morning. Mario Draghi, president of the European Central Bank, steps back into the spotlight today. Few are betting on any change following the meeting of the central bank’s governing council: with the ECB expected to maintain its monthly €60 billion quantitative easing program and its key refinancing rate at 0.05 per cent.

But with Europe being battered by the turmoil in China (and wider commodities markets) the central bank is expected to downgrade its inflation forecasts for the eurozone - to zero per cent this year - and could shave a fraction off expectations for GDP growth.

No doubt traders and economists will pore over Mr Draghi’s comments at his press conference (1.30 UK time) amid mounting speculation that the ECB could eventually be forced to extend its QE programme beyond September 2016.

We’ll have the latest from the press conference (and the market reaction) on our Business Now live blog. Don’t forget you can also follow me on Twitter for the latest updates throughout the day - @fletcherr.

Ahead of the ECB meeting we get the latest services PMI data for the UK and Europe. According to a poll by Reuters economists expect to see a reading of 57.6 in the UK, up from 57.4. We get the data at 9.30am.

With Chinese markets closed for a national holiday it has been a less volatile overnight session - with Asia taking its lead from the US and equity markets closing a fraction higher (see markets below).

On the corporate front this morning we have got the latest salvo in the battle for Aga Rangemaster, middle-England’s favourite oven maker. Original suitor Middleby has urged AGA shareholders to be “wary” of a rival approach by Whirlpool.

There is an upbeat trading update from easyJet this morning, which has upgraded full-year profit forecasts on the back of record August traffic numbers. We have also got full-year results from travel group Go-Ahead. With profits up 11 per cent David Brown, chief executive, seems very pleased. Customers on the group’s Southeastern franchise - the most dissatisfied passengers of any train operator - may not share his joy. As one of his embattled customers I certainly don’t.

Please do send me any thoughts or comments about The Times business coverage - richard.fletcher@thetimes.co.uk.

Have a great day.

Richard Fletcher
Business Editor
The Times

Japan is unlikely to see inflation hit the central bank’s two percent target over the next two-and-a-half-years as consumer spending remains weak and China's slowdown hurts exports. Takahide Kiuchi, Bank of Japan board member, said overnight that Asian economies may see growth slow significantly as China suffers from huge slack and US consumer spending remains soft, keeping any rebound in Japan's economy modest.

National Savings & Investments has been accused of unfairly creaming off customers from the private savings industry after it revealed that it had sucked in a mammoth £5.4 billion from savers in the three months to June, sending its total balances to an all-time high. Depositors rushed to buy NS&I ­pensioner bonds, while wealthy savers took advantage of the lifting of the ceiling on individual holdings of premium bonds from £40,000 to £50,000.

“Usually Prime Ministers only call snap elections when they have a great story to tell. But Alexis Tsipras has never been afraid to challenge conventional political wisdom. He is seeking a renewed mandate after just eight months in office despite what must rank as one of the worst economic records of any leader of a modern industrialised country outside of wartime,” Tsipras has broken all the rules of politics, but could still end up on top says Simon Nixon.

“There are many thrilling ways to become an ex-billionaire, some of them even legal. But who would choose the Glencore way: going to work all day to watch the share price vanish? The Swiss commodities colossus had five billionaires when, in 2011, it pulled off London’s biggest float at 530p a share. Today, with the shares down another 8 per cent to a fresh low? Just the boss, Ivan Glasenberg, who’s seen a stake once worth £6 billion shrink to less than £1.5 billion.” Alistair Osborne on the fallout from Glencore’s sliding share price.

The Nikkei 225 has closed up 0.48 per cent this morning at 18,182.39. The FTSE 100 is expected to open 53 points higher when trading begins shortly.

The FTSE 100 struggled to rally after a sharp slide in the previous session, but closed higher supported by a rebound on Wall Street, up 24.77 points, or 0.41 per cent, to 6,083.31. The broader FTSE 250 gained 45.37 points, or 0.27 per cent, to 16,885.73. Alex Ralph has more on yesterday’s market action here.

Wall Street collectively jumped almost 2 per cent in a volatile and relatively lightly traded mid-week session even though investors remain concerned about the stumbling Chinese economy. The hi-tech Nasdaq led the way, surging 2.5 per cent or 113.9 points to close at 4,749.9. The Dow Jones Industrial Average jumped by 293 points or 1.8 per cent to 16,351.4 while the S&P 500 also rose by 1.8 per cent or 35 points to 1,948.9. Around 6.7 billion shares changed hands compared to the recent daily average of 9.1 billion.

Sterling hit its lowest level against the US dollar in nearly three months yesterday - down slightly on the day in London to $1.527 - as investors continued to bet that the Bank of England will not raise interest rates until well into next year. Against the euro, however, the pound rose by almost 0.5 per cent to €1.361.

Oil prices endured another see-saw day, swinging between gains and losses but ended higher even though inventory reports showed unexpectedly large stockpiles. In New York, Brent crude for October settlement finished 1.8 per cent ahead at $50.47 a barrel.

How can the market have got Ashtead quite so badly wrong, asks Tempus? The shares have been undermined by worries over its (negligible) exposure to US oil and gas. Diploma has warned of the effects of the weakening of the Australian and Canadian dollars against the US currency, which is making its products less competitive in those markets. Halfords’ warning over the sales of bicycles has come as a surprise, given that the products were moving quickly enough out of its shops in the spring. Read on for more about the Tempus tips of the day.

Longstanding claims that alcohol abuse costs Britain more than £20 billion a year are challenged today by new figures from a free market think tank suggesting that the costs are more than offset by taxes. According to the Institute of Economic Affairs, the direct costs of alcohol in England, including NHS, police, criminal justice and welfare, amount to nearly £4 billion a year, whereas revenues from alcohol taxes are more than £10 billion.

1 The state-owned National Savings & Investments has been accused of unfairly poaching customers from the private sector after it revealed that it had sucked in a mammoth £5.4 billion in the three months to June, sending total balances to an all-time high.

2 Low oil prices have made the hazardous trip from Asia to Europe via the Cape of Good Hope look more attractive. Research showed that tankers have been making longer voyages to take advantage of market conditions. At least five have avoided the short-cut to Europe via Egypt, a diversion that adds 4,000 miles to the journey.

3 Reduced second-quarter bicycle sales hit Halfords three months after the company said it was “not a one-trick cycling pony”. Cycle revenues fell 11 per cent in the eight weeks to August 28 — a steep reversal of the 2 per cent rise in sales of bikes and kit recorded in the group’s first-quarter trading covering the three months to July 3.

4 Glencore shares hit a new low amid concern that the mining and commodities trader will have to issue shares to cut its $30 billion debt. The company has lost 16 per cent of its market value in the past two days, finishing as the worst performer in the FTSE 100 on both.

5 Positive American employment figures bolstered hopes of continued recovery as private companies hired more staff and productivity grew faster than expected. Solid non-farm payroll data coincided with statistics from the US Labor Department showing that productivity had grown at its fastest pace since the fourth quarter of 2013.

6 The planned closure of Eggborough, a coal-fired plant in North Yorkshire that produces 4 per cent of Britain’s electricity, was announced as the owner of the nearby Drax plant said it was suing the government over George Osborne’s removal of a green tax break.

7 Shares in Asos slumped by 5 per cent after the online retailer confirmed that the chief executive would be replaced by Nick Beighton, the chief operating officer and former finance director. The shock was shortlived, however, as Mr Beighton had been regarded as Nick Robertson’s successor since he joined from Luminar, the nightclub group, six years ago.

9 MBK, an Asian private equity group, has beaten Kohlberg Kravis Roberts and the Carlyle Group to buy Tesco’s South Korean retail business Homeplus in a deal worth $6 billion.

10 Of all the creative industries, music is one in which Britain can claim global dominance, accounting for six of the top ten recording artists worldwide last year, according to IFPI, which represents the recording industry.

The Times
National Savings & Investments has been accused of unfairly creaming off customers from the private savings industry after it revealed that it had sucked in a mammoth £5.4 billion from savers in the three months to June, sending its total balances to an all-time high. Depositors rushed to buy NS&I pensioner bonds, while wealthy savers took advantage of the lifting of the ceiling on individual holdings of premium bonds from £40,000 to £50,000.
read full update
Daily Telegraph
The South African billionaire who has recently snapped up Virgin Active, the gym chain, and New Look, the high street retailer, is now training his sights on Britain's struggling supermarket industry, it can be revealed. Christo Wiese, who has an estimated £4.2bn fortune, said there were parallels between the grocery sector in his home country, where he has built up the ShopRite empire into the continent's largest food retailer, and the highly competitive UK market.
read full update
Financial Times
China's efforts to apportion blame for its stock market rout have unnerved many of the foreign investors Beijing has spent years trying to court and left analysts and investors increasingly wary of provoking Beijing's anger. "I can feel the government supervision is strengthening. We are required to use more gentle wording in reports and our opinion should not be too strong," said an analyst at a Chinese brokerage.
read full update
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