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Seven Days: 3 February 2017

A round-up of some of the biggest business stories of the week
February 2, 2017

Bouncing bricks

Estate agent's tweet

It might only be 140 characters long, but a tweet by online estate agent Purplebricks could have been behind a major spike in its shares. The tweet noted that January had been a record-breaking month for valuations and instructions, so "if there's a right time to start your property search, it's now". The stock spiked as much as 12 per cent on the day of the tweet - 26 January - but a statement from the company the following day suggested it wasn't aware of the specific reason for the increase and so the shares dipped 7 per cent. By 30 January, it acknowledged the potential that the tweet had affected the shares, but noted that the level of activity was in line with expectations.

 

Racing cars

VW versus Toyota

In spite of the major emissions scandal that dogged German carmaker Volkswagen last year, the company has managed to overtake Toyota Motor as the world's largest automaker. The Japanese business produced full-year sales figures that showed it made slightly fewer vehicles in 2016 than VW - 10.2m versus 10.3m. Toyota had been the largest car manufacturer since 2012, according to industry body OICA. Sales in Japan rose 2.8 per cent to 2.23m during 2016 for Toyota, but sales in the rest of the world slipped 0.5 per cent to 7.94m.

 

 

Greece-y pole

Bonds tank

The yields on Greece's benchmark government bond yields hit their highest level in two months this week on concerns that the International Monetary Fund (IMF) is considering withdrawing support for the country after six years. Yields, which move inversely to prices, hit 8 per cent after two consecutive days of near-40 basis point rises. There seems to be a rift between the IMF and the EU over Greece's prognosis post 2018 - the fund believes debt could rocket to 275 per cent of GDP after 2022 from its 180 per cent level now, but Brussels thinks steady economic growth and stimulus measures can tackle the debt pile.

 

Irish charm

Diageo's launch

The world's largest distiller, Diageo, is braced to re-enter the Irish whiskey market after a two-year absence by investing €25m (£18.6m) in its own start-up premium blend. The producer of Johnnie Walker, Smirnoff vodka and Guinness said its Roe & Co brand would begin trading in March by using ingredients from existing Irish distilleries, but an old Guinness power station in Dublin would be converted into a distillery to start its own production in 2019. The premium segment is being targeted - while it only accounts for 6 per cent of the Irish whiskey market, it's growing four times faster than its mainstream cousin.

 

Belt tightening

Credit peaking

Lower-than-expected borrowing and gilt sales by overseas investors combined to further weaken the pound this week. Unsecured lending grew by £1bn in December, according to Bank of England data, but this was almost half November's level and less than the forecast £1.7bn. A smaller-than-forecast rise in mortgage approvals was partly to blame. And net overseas holdings of UK gilts dropped by £2.9bn at the end of the year, the first net sales since July - the month after the EU referendum. The sales compare to £15.5bn of net purchases in November.

 

 

Aiming high

Woodford launch

High-profile fund manager Neil Woodford is set to more closely mimic the product range he ran at his former firm Invesco Perpetual with the launch of a higher income fund. Mr Woodford ran Income and High Income at the Henley-based group and will now run similar mandates at his own business once the Income Focus fund launches. The new fund will have the ability, like all UK Equity Income funds, to invest 20 per cent of assets in overseas stocks. Mr Woodford is aiming for a 5 per cent income in 2018 based on the 100p launch price.

 

Sweet pill

Trump's medicine

The UK's pharmaceutical stocks were given an injection of energy this week after US President Donald Trump pledged to reduce barriers to selling new medicines. The suggestion sits slightly awkwardly with his protectionist tone, but could help him achieve one of his aims of lower drug prices. Generic drugs specialist Hikma was nearly atop the FTSE 100 on 1 February, while AstraZeneca and Shire also booked initial gains of more than 2 per cent.