House prices rebound
Reversing earlier losses
UK house prices edged up by 2 per cent in August, after a 1.8 per cent increase in July – signifying the highest monthly rise since February 2004. In turn, house prices climbed by 3.7 per cent on an annual basis, up from 1.5 per cent in July, according to the latest Nationwide House Price Index. Robert Gardner, Nationwide’s chief economist, said that “house prices have now reversed the losses recorded in May and June and are at a new all-time high”, noting that the recovery in activity had been “unexpectedly rapid”. See p50 for Emma Powell’s take.
Strong summer for Dunelm
Pent-up demand
Dunelm’s (DNLM) shares bounced after the homewares retailer announced that sales in July and August were up 59 per cent and 24 per cent, respectively, year on year. Dunelm attributed the boom to pent-up demand, the timing of a summer sale and the reopening of stores. Spending on home improvements has been strong during lockdown – something visible in updates from other home-focused businesses too, such as Topps Tiles (TPT). Dunelm also pointed to the proportion of its stores that are outside towns and the growth of its home delivery service. Full-year results are due on 10 September.
Zoom-ing profits
Surging demand
Video conferencing platform Zoom (US:ZM) enjoyed a 355 per cent increase in second-quarter revenues to $664m. Amid widespread lockdowns and surging demand for remote working tools, the group saw a 458 per cent rise in the number of customers with more than 10 employees, reaching roughly 370,200. Operating profits for the three months to July landed at $188m – a far cry from the $2.3m figure posted a year earlier. In turn, Zoom raised its outlook for FY2021, expecting revenues of $2.37bn-$2.39bn, up from earlier guidance of $1.78bn-$1.8bn.
Wirecard inquiry
Collapsed company
The German parliament is opening an inquiry into Wirecard, the payments group that collapsed after revealing that €1.9bn in cash was missing amid allegations of fraud. The investigation comes as questions mount about how the Wirecard accounting scandal was able to happen, despite the company’s status as a publicly listed entity subject to regulatory oversight. The group filed for insolvency on 25 June. The Wirecard fiasco has come to a head not long before Germany’s next federal election, which is due to take place towards the end of next year.
Facebook clashes in Australia
News block
Facebook (US:FB) said that it will block both users and publishers in Australia from sharing news on its social media platforms, if the government implements a proposal that would force it to pay traditional media companies for publishing their content. Facebook complained in a blog post that the laws misunderstand “the dynamics of the internet” and will “do damage to the very news organisations the government is trying to protect”. The draft laws would also apply to Alphabet’s (US:GOOGL) Google, if passed.
Risers and fallers (%)
| Saga | 34.8 |
| SDL | 30 |
| Alfa Financial Software | 22 |
| Provident Financial | 17 |
| OneSavings Bank | 16.6 |
Rolls-Royce | -19.6 |
| Bakkavor | -14.5 |
| Topps Tiles | -11.6 |
| AA | -11.3 |
| Card Factory | -10.2 |
Week to 1 September 2020
Astra in US vaccine trials
Phase three study
AstraZeneca (AZN) has revealed that the potential Covid-19 vaccine created by scientists at Oxford University has entered late-stage trials in the US. The phase three study, entailing up to 30,000 adults, will assess the safety and efficacy of the vaccine candidate – as well as its ability to trigger an immune response. In July, earlier results from the ongoing phase one/two trial were published in medical journal The Lancet, showing that the vaccine candidate was “tolerated” and generated “robust immune responses”.
Buffett looks to Japan
Trading companies
Warren Buffett’s Berkshire Hathaway (US:BRK.A) investment company has bought a stake of “slightly more than” 5 per cent in five of Japan’s top trading companies. These – listed alphabetically – are Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. The positions were acquired over approximately 12 months, via regular purchases on the Tokyo Stock Exchange. Berkshire Hathaway said that it planned to hold its Japanese investments for the long term. Depending on price, it may lift its stake to a maximum of 9.9 per cent in any of the five businesses.
