Stocks slide amid global uncertainty. Oil falls as US signals it may lift Iran sanctions. Stock markets in Europe and Asia dropped along with the pound and the euro. Britain’s blue-chip index fell to its lowest level in six months, while Chinese stocks suffered their biggest one-day loss since February. The FTSE 100 fell by 1.2% to 7,233.33, its lowest close since April. It has fallen by 3.7 per cent in the last three trading days. Italy’s worsening dispute with the EU over its budget deficit rattled European stock markets, with the benchmark pan-European Stoxx 600 down 1.1% to its lowest close in six months. Italy’s FTSE MIB was the worst performer, falling 2.4% to its lowest in more than 17 months as banks with large government bond holdings came under pressure. Chinese stocks were hit as markets reopened after the Golden Week holiday, amid renewed concerns over the potential impact on growth from China’s trade dispute with the US. The CSI 300 index fell more than 4%, despite Beijing’s central bank moving to offset the risk of the trade dispute by cutting banks’ reserve requirement ratios to free up capital.
Tesco bosses ‘knew of profit errors’. False accounting at Tesco (TSCO) took place on an industrial scale, leading to a £250 million overstatement of the company’s profits, a court was told. Two former directors at the supermarket chain went on trial yesterday accused of fraud. About £2 billion was wiped off the value of Tesco in September 2014 when it announced that a statement the previous month had overstated its profits.
Timing a float can be tricky. But what better moment than now? Just look at Aston Martin — hits the road at £19 per share, in a ditch four days later at £16, already having done £680 million damage. Or Funding Circle, the lender proving just how easy it is to “help your business fly” — as long as it’s backwards. Listed at 440p, it’s down to 342p in only seven trading days. So you can see why is gagging to get its London IPO airborne. Assisted by the crew from Liberum and J&E Davy, it’s targeting a $250 million cash-raise to invest in second-hand, single-aisle aircraft — Boeing 737s, Airbus 320s, that sort of thing. And before you try those “you cannot be Sirius” jokes, look at the pilot. The “investment adviser” to the fund — Sirius Aviation Capital Holdings — is led by a certain Howard Millar.
Every little helps as Marks & Spencer poaches rival. Marks & Spencer Group (MKS) has poached Tesco’s commercial director in the latest shake-up of its food business. It said yesterday that it had hired George Wright from Britain’s biggest grocer as part of an attempt to “modernise” its food division. The move was orchestrated by Stuart Machin, the new boss of M&S Food, who also has re-hired April Preston, a former M&S employee who most recently worked for Harrods’ food halls.
Carpet war is leaving burns on both sides. Carpetright (CPR) may have blamed Tapi Carpets for its recent struggles, but the bitter competition between the two is also taking a toll on its upstart rival and — increasingly — next-door-neighbour. Tapi, the flooring company set up by the son of the founder of Carpetright, said yesterday that it had plunged to another loss. In accounts filed at Companies House, Tapi Carpets & Floors said that it had made a pre-tax loss of just under £11 million in the year to December 30. This was slightly deeper than the £10.1 million loss it made the year before and meant that again it missed its target of turning a profit by now.
Sale could end connection with founder Marks. Investors yesterday did what high street shoppers have increasingly failed to do in recent years and beat a path to the door of French Connection Group (FCCN), lured by news of a potential sale of the fashion chain. Shares in the company leapt by more than 30% at one point after it confirmed that it was assessing options for the business, including a sale. The move could signal the end of any involvement with French Connection by Stephen Marks, its founder. Numis, the corporate broker, has been approaching prospective bidders who might want to take on Mr Marks’ 42 per cent stake. Given the size of his holding, any deal would be likely to trigger a takeover offer for the whole company.
Lancashire rains on insurers’ parade with warning of catastrophe losses. Recent hurricanes and typhoons are set to blow a multibillion-dollar hole in the bottom line at Lancashire Holdings Limited (LRE). Shares in the specialist insurer fell by 34½p, or 5.9%, to 552½p after it forecast catastrophe losses of between $25 million and $45 million from recent storms in the Atlantic and the Pacific, resulting in a negative return on equity in its third quarter. It also estimated further net losses of about $30 million in its marine portfolio.
Compass deal reveals way ahead at Mitie. Mitie Group (MTO) has served notice that it aims to be the country’s top security company with the takeover of Compass’s guarding and surveillance business. Mitie’s security operations already employ 13,000 people and generate £430 million of annual revenues, accounting for about a fifth of a business that spans buildings maintenance, cleaning and catering. It guards premises ranging from the Port of Southampton to Durham University. It has agreed to pay Compass Group (CPG), a group best known for its catering services, £14 million for its Vision Security Group subsidiary. Mitie’s 12% share of a British security market dominated by G4S (GFS) is set to get nearly 50% bigger after the deal for VSG, which employs 6,000 people guarding 1,400 locations. VSG turned over £192 million last year, although its latest accounts revealed a £2.7 million loss.
Stock market punters who were betting on a takeover of Fevertree Drinks (FEVR) may have been reaching for something stronger last night. The rumour mill had it that Pepsico might be running a slide rule over the posh tonic maker, but the fizz went out of the stock yesterday as the share price slumped by 332p, or 10.3%, to £28.90. While the fall should be viewed in the context of the wider market sell-off, some of the damage appeared to have been inflicted by a research note from Jefferies in turn citing industry data pointing to a slowdown in Fevertree’s British growth. Ironically, the note suggested that the recent weakness in the share price was a “rare buying opportunity . . . concerns look overdone”, yet then went on to heighten those concerns.
Traders said that hedge funds and skittish investors were driving price moves across the markets. TI Fluid Systems (TIFS) was among the victims, as investors in a recent placing at 262p per share decided that it was time to head for the exit before Bain Capital, the majority shareholder, reaches the end of a lock-up period during which it has been unable to sell any more shares. The FTSE 250 developer, manufacturer and supplier of automotive fluid, which floated at 255p last October, fell 25p to 214¾p. Fund managers were said to be easing the pain by taking profits from short positions, helping to boost some stocks. Marks & Spencer Group (MKS) rose 2¼p to 286p after GLG Partners reduced its short position by 0.04%.
Vodafone was among the biggest fallers on the premier index after Jefferies downgraded the stock to “hold”, from “buy”, saying that its dividend was “too generous for operating prospects”. Analysts reduced their price target from 240p to 165p. Vodafone Group (VOD) closed down 5½p at 154½p.
Halma (HLMA) fell 68p to £13.68 after Shore Capital downgraded the stock to “hold”, from “buy”, citing valuation grounds.
Amino Technologies (AMO) plunged by 33.5% after the Aim-listed maker of set-top boxes for pay-TV operators warned of lower orders than expected and higher component prices in the second half owing to “external macroeconomic headwinds”.
Libya is back in play for BP (BP.). The search for oil and gas in Libya is back on for BP, which is selling half of its exploration rights to Eni and handing operational control to the Italian company. The London-based oil major acquired rights to explore 54,000 sq km on land and off the coast of Libya in 2007 in a deal unveiled during one of Tony Blair’s desert meetings with Colonel Gaddafi.
Tempus – Lloyds Banking Group (LLOY): Avoid. The bank’s growth ambitions look interesting, but Brexit uncertainties make it too much of a risk
Tempus – Acacia Mining (ACA): Avoid. Too much of a question mark until its Tanzania dispute is resolved
