US plans $11bn tariffs on European aircraft, wine and cheese. The United States is planning $11 billion of tariffs on goods from the European Union — including aircraft, aircraft parts, motorcycles, cheese and wine — to counter the harm that it claims has been caused to Boeing by its subsidies for Airbus. The US trade representative, Robert Lighthizer, said that the case had been in litigation at the World Trade Organisation for 14 years and that “the time has come for action”. The WTO has found that the EU provided Airbus with subsidies for nearly 40 years. These subsidies included aid for the launch of all Airbus models, causing Boeing to lose sales and market share throughout the world. In 2016 the WTO said that the EU had failed to comply with a ruling to stop the subsidies.
Debenhams goes into administration. Debenhams (DEB) has become the latest high street retailer to go into administration after its lenders took control of the business. The chain’s stores will continue to trade as the lenders seek to refinance and restructure the business by closing unprofitable stores. The move comes after the retailer failed to reach a deal with , the department store chain’s largest shareholder. The lenders refused two recent offers from Sports Direct to underwrite an equity fundraising, including one made in the early hours of this morning, in order to secure an additional £99 million of necessary short-term funding. As a result, the board said that it would have to cede control.
Fears that a Labour government led by Jeremy Corbyn could renationalise the water industry sent shares in Britain’s listed utilities sinking this morning. Risks for the sector are rising, analysts at JP Morgan said, as the bank now believed that “a general election looks the most likely route out of the Brexit impasse, bringing to the fore the threat of nationalisation under a future Labour government”. In a research note, the analysts downgraded Severn Trent (SVT) and Pennon Group (PNN) to “neutral” from “overweight”. They remained “overweight” on United Utilities Group (UU.) but cut their target price on all three companies to reflect the inclusion of a “nationalisation scenario” in their valuations. Severn Trent was the bigger faller on the FTSE 100 in morning trading, down 41p at £19.19, while United Utilities was trading 10.8p lower at 808.2p. In the mid-cap index Pennon fell 15.4p to 710.4p.
The biggest mover in the FTSE 250 was Sirius Minerals (SXX), the company that is trying to secure funding for a giant fertiliser mine under the North Yorkshire Moors. Shares in the company rose as much as 20% in morning trading, before paring some of their gains to trade up around 8% or 1.8p at 23.9p as markets headed for midday. Sirius, which has a strong retail investor base, made no comment on the share price movement and its only disclosure to the market this morning was a notification that the Capital Group of Companies had sold around a 2 per cent interest in the company’s shares last week.
Rolls-Royce Holdings (RR.) was in focus following news that the United States plans to impose tariffs on European Union goods, including commercial aircraft, in retaliation for EU subsidies for Airbus.
Daily Mail and General Trust A (Non.V) (DMGT) was downgraded to “sell” by analysts at Liberum on concerns that Brexit-related uncertainty would hit print advertising revenues at the group, while a slowdown in the housing market could also affect its revenues from its property information business.
Debenhams on the brink as rescue fails. Sports Direct’s last-ditch £150m offer is rejected. Debenhams (DEB) is expected to fall into administration today after a last-ditch rescue offer by was rejected by the department stores group and its lenders. Delivering bad news to the 25,000 employees who work at the 165-shop chain, it said that it could not accept an offer from Sports Direct to underwrite a £150 million emergency rights issue, which would involve existing shareholders buying newly issued shares. This means that barring any deadline extensions for talks or an eleventh-hour takeover offer, Debenhams, a retailer that traces its history to 1778, will fall into a pre-pack administration and hand control to its lenders today. That will wipe out Debenhams’ shareholders, including Mike Ashley’s Sports Direct, which owns nearly 30% of the group.
Standard Chartered in $1bn settlement. Standard Chartered (STAN) is set to pay about $1 billion to settle long-running regulatory investigations into alleged breaches of sanctions against Iran and financial crime controls. The London-listed emerging markets-focused bank could announce settlements with prosecutors and financial watchdogs in the United States and Britain as early as today, according to Reuters.
Streaming ‘will take games industry to new level’. The launch of video games platforms by Google and Apple will boost an industry that has been shaken by the “phenomenally successful” Fortnite franchise, one of London’s largest listed gaming firms has claimed. Keywords Studios (KWS) said that the battle between the Silicon Valley titans would lift revenues across the sector. Andrew Day, 55, its chief executive, predicted that an increase in streaming platforms would create more demand. Google has said that its Stadia streaming service will allow users to play games on their television, computer or smartphone without using a console. Apple will launch a $10-a-month service within months. Amazon, too, is looking to strengthen its position in the industry, which is highly fragmented, growing at more than 10% a year and generates more than $100 billion of annual revenues. It is significantly larger than the movie and television businesses, another key battleground for the big technology platforms.
Jury discharged in Barclays (BARC) executives’ Qatar fraud trial. The jury hearing a case against four former Barclays bankers over the bank’s Middle Eastern fundraising during the financial crisis has been discharged. It was informed of the decision yesterday by Mr Justice Jay at Southwark crown court. A criminal case brought by the Serious Fraud Office against John Varley, Barclays’ former chief executive, and three other bankers began in January in the first jury trial anywhere in the world against such senior financiers over the events of a decade ago.
Edward Bramson steps up battle for seat on Barclays (BARC) board. The fight between Barclays and the activist investor seeking a seat on its board has intensified after Edward Bramson claimed that the lender would have to raise more capital if it did not overhaul its investment bank. Sherborne Investors, Mr Bramson’s fund, issued the warning in an open letter to other shareholders yesterday in an attempt to drum up support for his campaign to be elected as a non-executive director of the bank at its annual meeting on May 2.
Creditors block administration of Patisserie Valerie. The administration of Patisserie Holdings (CAKE) has been obstructed after creditors to the collapsed café chain rejected plans by KPMG to wind down the business. In a rare move, creditors voted against the professional services firm’s proposals on how to handle the administration, as it warned it was “uncertain” whether there would be enough money to repay them. KPMG must now negotiate a deal with the creditors to proceed. If the two sides cannot agree, the administrator will have to apply to the court for directions, which could result in the company being liquidated.
Job-cutting Centrica boss gets a 44% pay rise. The boss of Centrica (CNA) received a 44% pay rise last year to £2.4 million after he was awarded a bonus for a cost-cutting drive that resulted in the loss of 2,200 jobs. Unions attacked the increase for Iain Conn, 56, as “obscene”. It was disclosed when Centrica, the owner of British Gas, published its annual report yesterday, only a week after the group had told staff that a further 400 jobs were at risk from the proposed closure of an office in Glasgow.
Shell branches out into tree-planting campaign. Europe’s biggest oil company will plant millions of trees as part of a $300 million plan to reduce its carbon footprint. Royal Dutch Shell ‘B’ (RDSB) said that it also would give motorists the option of paying more for fuel to fund projects offsetting the emissions that they would generate by driving. The one cent per litre voluntary levy is being launched in the Netherlands this month and will be rolled out at Shell’s petrol stations in Britain this year.
Funeral firms face price cap, says watchdog. The competition regulator has raised the prospect of intervening on the price of funerals. The Competition and Markets Authority said that if its 18-month investigation into the sector found evidence of problems, it could “seek to limit the ability of funeral directors and/or crematoria to set prices significantly above the costs of providing their services”. Officials are concerned about a lack of transparency in the £2 billion funeral industry, the vulnerability of customers and inflation-busting price rises, particularly among larger operators. The market, which is unregulated, is fragmented, although Dignity (DTY) and Co-op Funeralcare are dominant, with a combined market share of about 27%.
Retail landlord counts cost of devaluations. A property investor has breached the terms of a £145 million loan because its lender found that its four British shopping centres were worth less than had been thought. RDI Reit (RDI), which owns offices and hotels as well as retail parks, said yesterday that it had breached a covenant of a debt facility covering the shopping centres that it has with Aviva, the insurer and asset manager. Aviva carried out a valuation of the sites and found that they were worth £152.5 million, giving it a loan-to-value of 89.4% that exceeded the 85% ratio stipulated in the covenant.
Analysts sounded the alarm yesterday over sales at Aston Martin Holdings (AML), putting the luxury carmaker into reverse. Deutsche Bank downgraded the stock from “buy” to “hold” and halved its target price to £10. Its analysts acknowledged that the Warwickshire-based business had strong sales last year, with wholesale volume up by a quarter at 6,400 units, but added that they expected global volatility in the market and the uncertainty caused by Brexit to depress demand from customers. Deutsche Bank sees the forthcoming launch of the DBX, Aston Martin’s sports utility vehicle, as the “key trigger” for its opinion on the shares, “but with deliveries of that model several months out, we see limited share price potential in the meantime”.
Saga (SAGA) shares sank 6½p to 60p after analysts again raised concerns about its strategy in the wake of a profit warning. Issuing a downgrade, UBS noted that Saga had warned about its profits twice. Analysts at the Swiss bank said that the company had concluded that its recent strategy of extracting growth from the price comparison corner of the insurance market was “unsustainable” and that it would refocus on its direct-to-consumer products. Plans to invest in new products and normalise margins are likely to hit earnings, UBS added.
Suppliers hit by Boeing storm. More than £600 million was knocked off the value of two British suppliers to Boeing yesterday after the American aerospace group said that it would cut production of its 737 Max passenger jet. Shares in Rolls-Royce Holdings (RR.) and Melrose Industries (MRO) fell by 1.7% and 2%, respectively. After markets closed on Friday, Boeing said that it would cut production on its 737 line by nearly 20%. Analysts said that the company would take a significant hit this year as a result. Shares in Rolls-Royce, which makes engines for some Boeing aircraft, closed down 16p at 910¾p, a fall of about £440 million in market value. Shares in Melrose, which makes aerospace parts, fell by 3¾p to 189p, a loss of about £180 million.
Tempus – AstraZeneca (AZN): Hold. Shares close to record highs but potential of pipeline and prospects in China still emerging
Tempus – Genel Energy (GENL): Buy. Strong cash generation should fund growth
