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Business - Need to Know

Afternoon Edition

Good afternoon. Some of the world's biggest technology companies were dealt a blow by the European Court of Justice this morning after it ruled that a crucial data sharing deal was invalid.

Companies such as Facebook had relied on the "Safe Harbour" agreement which allowed them to send private data about users back to the United States without breaching European data protection laws.

But the ECJ said the deal struck in 2000 between the United States and the EU was “invalid” and did not sufficiently guarantee the protection of Europeans' personal data and must be struck out.

The case stemmed from a complaint by an Austrian law student and privacy campaigner, Max Schrems, who sued the Irish data protection commissioner, arguing that it had failed to protect him from the prying of US intelligence agencies and urging the suspension of data transfers.

Facebook responded to the ruling by urging the EU and US to find a quick solution. "It is imperative that EU and US governments ensure that they continue to provide reliable methods for lawful data transfers and resolve any issues relating to national security," a Facebook spokeswoman said in an emailed statement to AFP.

So what next and what’s at stake? There’s plenty more on the ECJ ruling on the Business Now live blog.

Meanwhile, the Volkswagen emissions scandal continues to grow. The carmaker admitted this morning that 8 million diesel vehicles in the European Union had been fitted with software capable of cheating vehicle emissions tests, according to a copy of the letter sent to German MPs and seen by Reuters.

The letter, dated October 2 and co-signed by the former government spokesman and current VW chief lobbyist Thomas Steg, says that vehicles with 1.2, 1.6 and 2.0 litre variants of the diesel engine type EA 189 are affected.

But the emissions scandal has done little to halt the surging car market. Motor dealers shrugged off the Volkswagen scandal and sold more new cars last month than any September ever before.

It is traditionally a strong selling month because of the registration plate change and typically accounts for almost a fifth of annual sales. This time round, 462,517 new cars were bought in September - a rise of 8.6 per cent year on year. It is the 43rd consecutive month of sales growth.

That takes new registrations in 2015 through the 2 million mark, up 7.5 per cent at 2.09 million. Depending on the effect of the VW scandal, on-the-road numbers could pass the all-time record set in 2003 of 2.58 million.

Older diesel versions of the VW Golf have been affected by the emissions-related recall, but it remains Britain’s fourth best-selling vehicle. Overall, Volkswagen sales were slower than the general market in September. Robert Lea, our industrial editor, has the full story here.

Meanwhile, UK house prices fell by almost 1 per cent in September from a month earlier. That is the biggest drop in more than a year, according to figures from Halifax.

The latest house price index from the mortgage lender showed that the average cost of a home in the UK fell by 0.9 per cent to £202,859, a considerable dip from the 2.7 per cent rise reported in August.

From a year earlier, house prices increased by 8.6 per cent in three months to September, easing from August’s 9 per cent growth. On a quarterly basis, house prices fell from 3 per cent to 2 per cent, its lowest rate of growth since May.

However, Halifax said that the strengthening demand in housing suggests such a dip is only temporary. Tom Knowles, has the full story here.

Finally, SABMiller has reportedly rejected an informal takeover offer from Anheuser-Busch InBev that it considered too low, according to people familiar with the matter who have spoken to Bloomberg.

As we reported this morning, AB InBev may be reluctant to up its rumoured £42-a-share offer to the £45-plus that the SABMiller board appears to be demanding.

SABMiller today issued a pointed reminder to AB InBev of its growth credentials by bringing forward a trading update scheduled for the day after next week’s deadline for its rival to make a takeover bid.

Have a great afternoon.

Rebecca Clancy
Breaking News Editor, Business
The Times
rebecca.clancy@thetimes.co.uk

The FTSE 100 has struggled to hold momentum following yesterday’s global rally. In choppy trading, the blue-chip index has edged 2.86 points lower to 6,296.06.

Glencore continues to dominate events. Amid softer metal prices, the company is leading a bunch of miners lower, down 3.3 per cent to 111¼p, giving back some of yesterday’s big gains.

Investec, the investment bank that unnerved investors last week and did much to trigger the volatility in Glencore’s shares after it warned shareholders could be wiped out, has taken another swipe, saying Glencore is “blaming everybody else” for its problems.

Meanwhile, SABMiller is also among the biggest fallers, down 2.9 per cent to £36.56, following a report that the brewer had turned down an informal offer made last week from Anheuser-Busch InBev of just over £40 a share as it was too low.

Stemming London’s losses are the supermarkets ahead of Tesco’s interim results tomorrow. Wm Morrison, the biggest riser, is up 2.3 per cent to 172p.

The FTSE 250 is also lower, down 7.08 points to 17,103.20, with Betfair, down 3.2 per cent to £32.59, among the biggest fallers after top investors sold eight 8 million shares in the company at £32.50 a share, up from 7.35 million, in an accelerated bookbuild handled by Barclays.

Alex Ralph
Market Reporter
The Times
@alexralph

Judges at the European Court of Justice in Luxembourg today. Europe's highest court has ruled in favour of an Austrian law student who claims a trans-Atlantic data protection agreement doesn't adequately protect consumers

Earnings season kicks off with a trickle of results this week. In July, PepsiCo warned that that weakening foreign currencies would reduce its profit by 11 percentage points this year. Today, as it publishes third quarter earnings before the opening bell, it is expected to report that strong sales growth in its developing markets, which include China, Africa and Latin America, is making up for weak sales in the United States. The company is expected to report earnings per share of $1.26, against $1.36 a year earlier. Revenue of $16.15 billion is forecast, compared with $17.22 billion last year.

Yum! Brands, the owner of the KFC and Pizza Hut, is still rebounding from an on-going food scare in China. At the same time, activist investors have been lobbying for the company to spin off the China business, which is its biggest driver of revenue and profit, according to Reuters. When it reports after the closing bell today, analysts expect it post earnings of $1.06 a share, up sharply from 89 cents a year earlier, on revenue of $3.68 billion, compared to last year’s $3.35 billion.

Microsoft is holding a big launch event in New York at 3pm BST today at which it is expected to announce new phone hardware running Windows 10, and a new Surface device, as well as updates to its Microsoft’s wearable fitness tracker and virtual reality/augmented reality products.

The Commerce Department will release the US trade deficit data at 1.30pm BST. The trade gap is expected to have widened to $47.1 billion in August from $41.8 billion in July.

US Commerce Secretary Penny Pritzker begins her two-day visit to Cuba to explain the liberalisation of the trade embargo.

Markets: Futures suggest a negative start on Wall Street. The Dow Jones is expected to open down 43 points to 16,616, the S&P to fall 5.75 points to 1,969, and the Nasdaq to retreat 13.50 points to 4,297.75.

Alexandra Frean
US Business Editor
The Times
@freanie

"This is extremely bad news for EU-US trade. Without Safe Harbour, [businesses] will be scrambling to put replacement measures in place."
Richard Cumbley, global head of technology, media and telecommunications at law firm Linklaters on the ECJ ruling on 'Safe Harbour'.
Today's FTSE 100 risers and fallers
Up (%)
WM Morrison Supermarkets 2.26
Burberry Group 1.56
International Consolidated Airlines 1.54
Wolseley 1.47
Travis Perkins 1.46
* As at noon
Down (%)
Glencore -3.26
SABMiller -2.87
ARM Holdings -1.66
Hikma Pharmaceuticals -1.61
Antofagasta -1.58
* As at noon
The Markets Today
FTSE 100 6,296.02 -0.05
FTSE 250 17,203.20 -0.04
Cac 4,648.81 0.69
Dax 9,892.59 0.79
Brent Crude 49.44 0.39
Gold 1,138.10 0.0
GBP/US 1.52 0.16
GBP/euro 1.35 -0.07
10Y Gilts 101.78 -0.17
* As at noon
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