IMF downgrades world economy on trade war fears as Brexit uncertainty weighs. Clouds are gathering over the world economy because of a burgeoning international trade war, while Brexit fears are taking an unexpected toll on Europe, the world’s lender of last resort has warned. The International Monetary Fund has downgraded its forecast for global growth from by 0.2% points this year and next, in its World Economic Outlook. The global economy is now set to expand by 3.7% in 2018. There were also mounting concerns of “further negative shocks” to this forecast, the IMF warned.
Stocks slide drags FTSE 100 to six-month low as Italy’s populists call EU leaders the ‘enemies of Europe’. The FTSE 100 retreated to a six-month low after racking up a third straight day of sharp decline as Italy, trade war and interest rate rise worries combined to send global stocks sliding. The stocks sell-off was given fresh impetus by Italy’s defiant populists taking aim at the EU and markets in Shanghai suffering their worst day in more than two years. Shanghai’s blue-chip index plunged 4.3% following a week-long break as growth and trade war fears plagued Chinese markets on their return. The index neared a two-year low despite the People’s Bank of China’s attempt to shore up stuttering growth by cutting the amount of cash banks have to hold in reserve for the fourth time this year. A tense exchange between the US and China’s top diplomats at the start of talks in Beijing yesterday did little to alleviate the pressure on markets.
Former Ryanair deputy embarks on £200m aircraft leasing float. An aviation veteran who spent 23 years as second in command to Ryanair’s Michael O’Leary has embarked on London float to raise a $250m (£190m) for a new aircraft leasing business. Howard Millar’s will invest the money in second-hand planes in an attempt to cash in on the growing number of airlines using leased vehicles instead of buying their own fleet outright. The fund plans to invest the cash within six months of the float, which is scheduled for early November, and is targeting annual returns of 10% and a yearly dividend yield of 8%.
Former Tesco managers on trial accused of overstating company profits. Two former senior managers at Tesco (TSCO) have gone on trial accused of an alleged fraud that resulted in the company’s profits being overstated by a quarter of a billion pounds. Chris Bush, former managing director for the UK, and John Scouler, a former UK food commercial director, were aware that income was being wrongly included in the supermarket chain’s financial records to meet targets and make Tesco look financially healthier than it was, a court heard.
The founder of French Connection Group (FCCN) has hoisted a “for sale” sign over the business, causing the fashion chain’s share price to soar. The high street retailer announced that it was weighing a potential sale and was reviewing its “strategic options”, as it moved to clarify weekend speculation. The prospect of a new owner sent shares rocketing 45% in morning trading, before paring gains to trade 25% ahead at 53.5p in the afternoon. Such a move would see founder-chief executive Stephen Marks offload his 41.6% stake, bringing to a close nearly 50 years in charge of the business. French Connection has endured mixed fortunes under Marks.
Hurricanes and typhoons cost insurer Lancashire tens of millions. Shares in specialty insurer Lancashire Holdings Limited (LRE) slipped this morning after it warned its exposure to a number of recent natural catastrophes, including Hurricane Florence in the US and some of the most powerful typhoons to hit the Pacific in decades, had left it nursing losses in the tens of millions. Lancashire has set aside funds to pay for the storms and expects losses related to these recent natural disasters to be between $25m (£19.2m) and $45m. In addition, the insurer’s marine portfolio will take a $30m hit related to “loss events” that it said it could not comment on.
WPP has lost its contract as lead advertising partner with the US-based automaker Ford, in a major setback for recently installed chief executive Mark Read. The FTSE 100 company had been Ford’s lead advertising partner for more than seven decades, but will now be replaced by Omnicom Group’s BBDO. The New York-based company is due to take over from WPP (WPP) on Nov 1. Ford’s decision to replace WPP came after a five month review by the London-based consultancy Flock Associates.
BP and Royal Dutch Shell ‘B’ (RDSB) led the index lower after oil prices were knocked by the Trump administration mulling waivers on Iranian oil sanctions. Brent crude tumbled as much as 1.7% to $82.66 per barrel, while BP (BP.) dropped 11.9p to 576.6p and Shell slipped 23.5p to £26.12.
Acacia Mining (ACA) rallied to an eight-month high after the embattled gold miner upgraded its production guidance despite its bitter dispute with the Tanzanian government dragging on. The row knocked its gold output by 29% in the third quarter of the year but it is now targeting production of more than 500,000 ounces, compared to previous guidance of up to 475,000 ounces. Acacia has been hit by a ban on exporting gold concentrate since March 2017 after Tanzania accused the company of dodging taxes. Acacia jumped 10.8p to 155p.
Takeover target RPC Group (RPC) tumbled to the bottom of the FTSE 250 in intraday trade ahead of the Takeover Panel’s deadline for bids from buyout giants Apollo and Bain. It confirmed at the end of play that the private equity firms had been given an additional four weeks to mull over an offer for the plastics and packaging company. RPC slid as much as 9.8% before closing 34p down at 779.6p.
Vodafone Group (VOD) sank to a fresh nine-year low after Jefferies warned investors that the telecoms giant could need to cut its “generous” dividend. The broker argued in a downgrade to “hold” that Vodafone’s dividend policy is a hangover from selling its Verizon Wireless stake and warned that the payout could require a 40% cut following the takeover of Liberty Global’s cable networks across Germany and central Europe. Vodafone fell 5.6p to 154.6p.
British Airways owner International Consolidated Airlines Group SA (CDI) (IAG) dipped 4p to 607.4p after Citigroup scribblers advised clients to opt for low-cost airlines. Citi warned that supply is increasing in the long-haul market and IAG will likely have to raise prices by at least 5% amid higher fuel costs.
Schroders (SDR) nudged down 23p to £29.77 despite confirming talks with Lloyds over working together in wealth management.
