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Business - Need to Know

Afternoon Edition

Good news for Britain’s high street. Retail sales rose more strongly than expected in February, helped by last year's recovery in the housing market which boosted furniture purchases.

Retail sales rose 0.7 per cent in February from a month earlier, and were up 5.7 per cent on the year, according to the figures from the Office for National Statistics.

There was also a drop-off in prices for the eighth consecutive month, falling by 3.6 per cent in February 2015 compared with a year earlier - the largest year-on-year fall since comparable records began in 1997.

“People are clearly not deferring their spending plans amid deflation speculation - they are spending the windfall. This is good news for growth and should probably mean that the second round effects for inflation will be positive,” said Alan Clarke, head of European fixed income strategy at Scotiabank.

A separate survey, by the Confederation of British Industry, showed that retail sales growth rebounded in March, as the balance rose to +18 in March, slightly above economists' expectations for +15, and up from +1 in February, which was the weakest reading since November 2013.

Alex Ralph has the details here.

Elsewhere, lenders face having to raise even more capital to strengthen their balance sheets as Mark Carney, the governor of the Bank of England, warned that the risks facing the British financial system “remained elevated”. Writing to George Osborne, the chancellor, alongside the Bank’s latest statement from its Financial Policy Committee, Mr Carney suggested banks could be forced to raise fresh funds as officials looked at the “calibration” of the UK’s capital rules for lenders.

Harry Wilson, our City Editor, has the full story here.

Finally, Shell has announced plans to cut 250 jobs and alter shift patterns on its North Sea operations as part of its $15 billion cost-cutting plans revealed in January. The axe is falling on both employees and contractors. The cuts are in addition to the 250 job losses announced last August. More details on our Business Now live blog.

Have a great day. Follow me on Twitter for regular updates throughout the day -@becclancy.

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

The stock market’s in retreat this morning, spooked by unconvincing US economic data yesterday, Greece’s ongoing financial problems and Saudi Arabia’s military action in Yemen. The Footsie is off a further 98 points from Monday’s record closing high of 7,037.7, at 6,893.

With tension rising in the Middle East, the price of oil is predictably on the rise, too. Dearer crude is bad news for gas-guzzlers such as airlines. IAG, the owner of British Airways, is down 28p at 579.5p. When investors take risk off the table, they head for havens, gold included. Shares in miners, bought as a proxy for bullion, are among the few in demand this morning. Randgold Resources is up 25p at £49.07.

Gary Parkinson
Market Reporter

Non-store retailing is racing ahead of other store types

The Vancouver-based maker of yoga gear Lululemon Athletica will report its fourth-quarter financial results before the markets open today. The company recently announced a sale saying that it had “made too much”, suggesting that excess inventory is putting pressure on margins. Analysts expect earnings per share of 73 cents, against 75 cents for the same period last year, on revenue of $601.86 million, compared with $520.99 million last year.

Winnebago Industries, the recreational vehicle maker, is expected to report higher second-quarter profit, helped by higher sales of its motorhomes and the fall in oil prices. Winnebago is also likely to benefit from a slightly less harsh winter compared with last year. Investors will be looking to see how the company is gearing up for the summer months, when RV sales peak. Analysts expect the company to announce earnings of 38 cents per share, against 35 cents last year, and revenue of $253.26 million for the quarter, compared with $228.8 million a year ago.

Data out today include figures for new claims for unemployment benefit for last week. Analysts expect the number, out at 12.30pm GMT, to decline 1,000 to a seasonally-adjusted 290,000 in comparison with the prior week's reading of 291,000.

Last night jurors began deliberations in a high-profile Silicon Valley sex discrimination suit against the venture capital firm of Kleiner Perkins Caufield & Byers. Deliberations will continue today. Ellen Pao, a former junior partner, is suing the firm for $16 million for sex discrimination and retaliation and as much as $144 million in punitive damages. She claims she was passed over for promotion because she was a woman. After leaving Kleiner, Ms Pao became the interim chief executive of Reddit, the news and discussion website. If she wins, the case could have major repercussions in the tech and venture capital industries. Whatever the result, the case is likely to lead to much soul searching in Silicon Valley about the treatment of women.

On the markets, investors will be watching biotech shares in particular today to see whether yesterday’s meltdown spreads to the rest of the market, or whether it was merely a bout of profit taking.

Markets: Futures suggest a negative day on Wall Street. The Dow Jones is expected to open down 104 points at 17,541, the S&P to fall 12.25 points to 2,041, and the Nasdaq to drop 42.50 points to 4,281.

Alexandra Frean
US Business Editor
@freanie

If you wanted a demonstration that low food and energy prices are good for consumer spending, then this is it
Alan Clarke, head of European fixed income strategy at Scotiabank, on the retail sales figures
Today's FTSE 100 risers and fallers
Up (%)
Weir Group 1.30
Fresnillo 1.19
Centrica 0.73
Randgold Resources 0.51
Hikma Pharmaceuticals 0.50
* As at noon
Down (%)
London Stock Exchange Group 8.74
Schroders 5.02
ARM Holdings 4.61
International Consolidated Airlines Group 4.60
Hargreaves Lansdown 4.39
* As at noon
The Markets Today
FTSE 100 6,893.11 -1.4%
FTSE 250 17,205.77 -1.69%
Cac 4,945.63 -1.5%
Dax 11,670 -1.65%
Brent Crude 59.90 4.28%
Gold 1,207.75 0.87%
GBP/US 1.4932 0.36%
GBP/euro 1.3580 0.15%
10Y Gilt 131.674 -0.58%
* As at noon
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