Charm offensive
Following Theresa May’s cabinet reshuffle, it’s back to Brexit negotiations for two members that retained their positions. Chancellor Philip Hammond and Brexit minister David Davis headed to Germany to woo European business leaders to retain a close relationship with UK industry – including financial services – following the country’s departure from the EU. Mr Hammond addressed industry leaders at the Die Welt Economic Summit, while Mr Davis met industry bosses to urge them to lobby for a deal that maintains strong economic ties. Last year the chancellor told the Die Welt conference that while the UK wanted to closely co-operate with the EU, it may be forced down the route of low taxes and light regulation if it was refused.
CFDs under spotlight
FCA concerns
Management at the UK’s spread-betting specialists may be sweating a lot more over the Financial Conduct Authority’s (FCA) review into the marketing and sale of contracts for difference (CFDs) to retail investors. The regulator issued a letter to providers warning that it had uncovered areas of serious concern. Some companies marketing to retail investors were unable to properly define their target market, had flawed due diligence processes and had not highlighted conflicts of interest, the FCA said. Shares in UK-listed providers IG Group (IGG), Plus500 (PLUS) and CMC Markets (CMCX) dipped slightly on the day of the announcement.
UK motor slides
Diesel takes brunt
There’s been a dark cloud hanging over the UK motor market for a while now, and the latest data from the Society of Motor Manufacturers and Traders (SMMT) offers little succour to the industry. New vehicle registrations fell almost 6 per cent in 2017 – the first annual decline since 2011. Registrations were down 14 per cent in December, the ninth consecutive month of contraction. Diesel motors suffered the largest fall in demand. Electric vehicle registrations, by contrast, rose more than a third, but still make up just 6 per cent of the overall market.
Retail's revolving door
Dixons Carphone departure
It’s change at the top for Dixons Carphone (DC.). The electricals retailer has announced that its chief financial officer Humphrey Singer is leaving to take up the same position at beleaguered high-street chain Marks and Spencer (MKS). Mr Singer will step down from Dixons in July this year, although the board has already commenced its search for his replacement. Mr Singer has worked for Dixons since 2007, and in the role of CFO since 2014.
Supermarkets clean up
Buoyant Christmas
On the whole, the trading backdrop for UK retailers has been pretty dire since sterling’s crash compounded stagnant wage growth 18 months ago. However, there was some good news out of the major supermarket chains this week. J Sainsbury’s (SBRY) boss Mike Coupe hailed record sales over the festive period, with grocery sales alone rising 2.3 per cent and online food purchases up 8.2 per cent. That followed reports from Morrisons (MRW) that premium and ‘food to order’ ranges had proved particularly popular over the 10 weeks to January, along with its online service, where sales rose more than 10 per cent.
Risers and fallers (%)
| EnQuest | +23.65 |
| Premier Oil | +19.11 |
| AO World | +17.1 |
| Countrywide | +16.32 |
| Carillion | +16.06 |
| Mothercare | -30.09 |
| McBride | -17.61 |
| Debenhams | -16.1 |
| Micro Focus Int’l | -11.5 |
| Ultra Electronics | -10.44 |
| Week to 9 January 2018 | |
Worm turning?
Housebuilders disappoint
Investor jitters that housebuilders’ bull run may be about to reverse mounted, despite some solid trading updates out of the sector. Shares in Taylor Wimpey (TW.) dropped almost 5 per cent, although management reported an increase in operating margins and a 5 per cent rise in completions in 2017. That followed a buoyant update from Persimmon (PSN) – including a rise in sales prices and completions – which was greeted negatively by shareholders. Are shareholders expecting too much, or could the cycle be about to turn? Our property specialist says it's more the former and that government support and a supply shortage should continue to underpin growth.
Bond sell-off intensifies
Inflation ahead
Could US 10-year treasuries soon be heading into bear territory? Yields on the government bonds had hit 2.59 per cent at the time of writing, a hair’s breadth away from last year’s high in March. The sell-off was stoked by reports that China could reduce its US bond-buying and rising global inflation as governments dial down their fiscal stimulus. The European Central Bank plans to halve its bond-buying to €30bn (£26.6bn) of assets a month for at least the first three quarters of this year.
