Boris plans suspension
Sterling fell against the US dollar after Boris Johnson asked the Queen to suspend parliament for at least a month in a bid to prevent MPs blocking a no-deal Brexit on 31 October. MPs are due to return on 3 September but parliament is expected to be prorogued until a Queen’s speech on 14 September. The move was criticised by many MPs, including Commons speaker John Bercow, who said the plans were a “constitutional outrage”. Sterling had declined 0.6 per cent against the US dollar, at the time of writing.
BP exits Alaska
Shale push
BP (BP.) agreed to sell its Alaskan assets for $5.6bn (£4.6bn), taking it much closer to the 2019-20 sell-off target of $10bn. The oil and gas super-major has said it would shed assets to make up the $10.5bn spent on the BHP (BHP) onshore assets, with $1.5bn announced as of June. The 60-year-old Alaskan business includes a 26 per cent share in the massive Prudhoe Bay oilfield and 49 per cent of the Trans Alaska Pipeline. In 2017, BP upstream boss Bernard Looney said at the 40th anniversary of production at the field the “story of Prudhoe Bay is far from over”. The buyer was the private Houston-based Hilcorp Energy.
Sport's drama
PIRC V Ashley
Shareholder advisory group Pirc recommended investors oppose the re-election of Mike Ashley as chief executive of Sports Direct International (SPD), along with its chairman and several other directors. Pirc said “shareholders of the company are faced with [declining] profitability, loss of value for their shares, no dividend [distribution] and a further potential loss when the tax evasion case conclude[s]”. The sports retailer has suffered a tumultuous year so far, after it revealed in August that auditor Grant Thornton had quit and the release of its 2019 numbers was delayed by almost two weeks due to a surprise tax bill from the Belgian authorities.
Tobacco mega-merger
Investors unimpressed
Philip Morris International (US:PMI) revealed it was in talks for an all-share merger with Altria (US:ALTR) – which produces Marlboro cigarettes in the US – in a deal that would create the world’s largest tobacco group, worth nearly $200bn. The two groups were separated in 2008 in an attempt to protect Philip Morris from slowing US cigarette sales and the threats of litigation and increasing regulation. However, shareholders in both gave news of the potential tie-up a frosty reception, sending shares in Philip Morris and Altria down 8 per cent and 4 per cent, respectively, on the day the deal was announced.
Opioid action
J&J disputes
Johnson & Johnson (US:JNJ) was ordered to pay $572m after an Oklahoma judge found it had created a “public nuisance” in the state and was responsible for some of the costs relating to tackling the opioid addiction crisis. The drugmaker said it would appeal the verdict and said “neither the facts nor the law support this outcome”. The settlement is less than the estimated $17bn that the state’s attorney general argued was the total cost of the crisis, causing the shares to rally in after-hours trading. However, the ruling could encourage other US states to pursue Johnson & Johnson.
Risers and fallers (%)
| ENTERTAINMENT ONE (DI) | +41.68 |
| NMC HEALTH | +23.55 |
| JUST GROUP | +14.85 |
| RANK GROUP | +14.25 |
| SIRIUS MINERALS | +13.12 |
| NOSTRUM OIL & GAS | -30.57 |
| THOMAS COOK GROUP | -17.85 |
| HOSTELWORLD GROUP | -14.46 |
| FERREXPO | -11.86 |
| ALFA FINANCIAL SOFTWARE HOLDINGS(WI) | -10.48 |
Week to 27 August 2019
Deflation accelerates
Discounting pervades
Shop prices fell 0.4 per cent in August, according to the British Retail Consortium-Nielsen Shop Price Index, the highest rate of deflation since June 2018. That was an acceleration on the 0.1 per cent decline in the previous month and was below the 12-month and six-month price rises of 0.6 per cent. Non-food prices fell at a faster rate than food items, which Shore Capital analysts said could be due to a higher level of discounts for end-of-season sales, given weaker summer trading data this year.
Mortgages rebound
Pre-Brexit rush?
UK high-street banks approved their highest rate of mortgages in more than two years in July, driven by the prospect of continued low interest rates and strong employment levels. New mortgage approvals rose 11 per cent on the same time last year to 43,300, according to trade body UK Finance, while remortgages were up 15 per cent annually. There was also some sign of an uptick in house prices that month, with the Halifax House Price Index recording a 3.3 per cent rise on the prior year.
