FTSE heads south as Italian political crisis mounts: as it happened
FTSE gains reverse as fears of further political turmoil in Italy rise
Ocado shares jump as it retains title as UK's fastest growing grocer
Greene King sold for £4.6bn to Hong Kong owner of Superdrug and Three
BHP boss warns that nationalism is a threat to the world economy
FTSE 100 and 250 lifted as German government hints at stimulus
Markets rally after White House plays down signs of impending recession
Paddy Dear: The magic money does exist - but can we trust politicians to use it?
Markets wrap
It was a day of two halves for both currency and equity traders in the UK after the FTSE 100 reversed early gains to end 0.9pc lower at 7,125 points. The mid-cap FTSE 250 also slipped, ending 0.5pc lower at 19,008 points.
Sainsbury’s was the biggest winner of the FTSE 100 after outperforming its "big four" supermarket rivals, albeit by suffering a smaller decline of sales than the others. Its shares added 5.5p, or 3pc, to 193.9p. Screwfix and B&Q owner Kingfisher was the biggest loser, shedding 6.2p, or 3.2pc, to 188p.
Equities across Europe were lower amid political uncertainty, not least in Italy where prime minister Giuseppe Conte said he would resign. The main indices in the US are also trading lower.
The pound went in the opposite direction after comments from Angela Merkel that Europe would think about practical solutions to the current Brexit impasse were interpreted as a chink of light in the stand-off between Downing Street and Brussels. Market reaction to the comments erased sterling’s early losses against the dollar and the euro. The pound rose as high as $1.218 and €1.098 before surrendering some of its gains.
That's all for today. I'll be back again tomorrow to take you through the day's biggest business and markets stories. Have a great evening. MO'D.
IMF to send a delegation to Argentina
Argentina has promised to use “all available tools” to stabilize its currency after last week’s rout. Meanwhile, the International Monetary Fund (IMF) said it would send a delegation to visit the country “soon”.
An IMF spokesman said it was continuing discussions with Argentina as authorities work on their policy plans “to address the difficult situation that the country is facing”.
The peso plunged last week after polls suggested former president Cristina Fernandez de Kirchner may return to power.
Mike Ashley sacks boss of Jack Wills
Tracksuit tycoon Mike Ashley has dismissed the boss of Jack Wills in one of his first acts since buying the struggling fashion brand out of administration for £12.7m earlier this month. Laura Onita has more on the Sports Direct owner's latest move:
Suzanne Harlow, the former trading boss at Debenhams, was appointed chief executive at Jack Wills in September to help turn it around. She was ousted on Monday after a meeting with Mr Ashley, Retail Week reported.
A source close to Ms Harlow said: “She cares so much for the people at Jack Wills and would be horrified if they thought she had walked away during difficult times.”
Ms Harlow’s exit mirrors the departure of Alex Williamson from House of Fraser, who was also swiftly sacked after Mr Ashley bought the department store chain from administration last year.
Sports Direct also closed eight Jack Wills stores this month and warned he could shut more if landlords did not agree to cut rents. The company previously used the same tactics with some House of Fraser stores.
Read the full report here.
Stocks tumble amid rising political uncertainty in Europe
All the major share indices in Europe and the US are currently flashing red for the day as this data from Bloomberg shows.
The pound's recovery from early losses won't help FTSE shares, which are cheaper for international investors when sterling is weak.
The blue-chip FTSE 100 is down 0.7pc today while the CAC 40 in Paris and Germany's DAX 30 are both 0.5pc lower.
In the US, the Dow Jones Industrial Average has slipped 0.2pc and the S&P 500 has shed 0.3pc.
Merkel comments trigger a rally in the pound
Neil Wilson at markets.com has been trying to make sense of the pound's sudden rebound after Merkel's comments:
"In reality this is just more noise than anything else. Warm words, but the EU’s response has been clear enough. At the very most it opens just a chink of light amid all the doom and gloom for the pound. Expect more of this kind of noisy price action over the coming days and weeks."
While Merkel's tone was not aggressive, her comments did not signal a radical departure from the EU's stance that the backstop will not be removed from the withdrawal agreement.
The German chancellor said that the EU will remain united in its approach and that the backstop is a question for the political agreement regarding the future relationship between the UK and the EU, not the withdrawal agreement. The UK will need to decide which way it goes, she said.
Brexit and Italian turmoil spark market movements
Giuseppe Conte's resignation plunges Italy, the eurozone's third-largest economy, into political turmoil. All of Europe's major stock indices are now in the red today.
Meanwhile, the pound has jumped suddenly after seemingly conciliatory comments from German chancellor Angela Merkel on Brexit. Merkel said the EU would think about practical solutions to the current impasse.
woeeee GERMANY'S MERKEL SAYS EU WILL REMAIN UNITED IN APPROACH TO BREXIT || SAYS ON BACKSTOP, WE WILL THINK ABOUT PRACTICAL SOLUTIONS
Cable gone nuts pic.twitter.com/y0Wm9njCSh— Neil Wilson (@marketsneil) August 20, 2019
The pound rose 0.4pc against the both the dollar and the euro after Merkel's comments. It s now trading at to $1.214 and €1.096.
Conte to resign as Italian prime minister
Italy's prime minister Giuseppe Conte said he would resign later today after Mateo Salvini's ruling League party decided to present a no-confidence motion in the coalition government.
Italian prime minister hits out at deputy
Giuseppe Conte, prime minister of Italy, has accused his right-wing deputy Matteo Salvini of trying to drag down the ruling coalition for personal and political gain, heightening political instability in the country.
Conte told parliament that Salvini, who was sitting next to him during the speech, "has shown that he is following his own interests and those of his party".
Conte is not a member of either of the two ruling coalition parties. He is expected to resign later today, which is likely to trigger talks regarding the formation of a new coalition. If a new alliance cannot be formed, the country's president Sergio Mattarella would dissolve parliament and call early elections.
Reputation rebuild costs Persimmon
Some more details on housebuilder Persimmon's first half results. As a reminder, pre-tax profit slipped to £509m from £516m a year earlier after a tumultuous year that saw its chief executive exit and the threat of expulsion from the lucrative Help to Buy scheme.
Harriet Russell writes:
Sales of new homes declined almost 6pc in the first half, which boss Dave Jenkinson said was due to a "conscious change at the company to put customer service before volumes”.
Earlier this year, shares in Persimmon fell after housing minister James Brokenshire claimed he was "increasingly concerned" by the company's use of leasehold contracts, building quality and leadership, prompting fears that the housebuilder could be excluded from the next round of Help to Buy.
You can read Harriet's full report here: Persimmon's customer service drive hits profits
The shares have bounced around quite a bit today as investors try to make sense of what the results mean for the builder's future. Currently they are trading 0.1pc lower at £18.60
FTSE reverses early gains
The FTSE 100's early gains have been eroded with the blue chip index down 0.5pc to 7,157 points. It peaked at 7,231 earlier in the day. The mid-cap FTSE 250 is also down 0.3pc.
Italian political crisis weighs on bonds
Italian government bonds are lagging their peers today ahead of a speech by the country's prime minister Giuseppe Conte that could trigger a confidence vote and a collapse in the fragile coalition government.
Investors in Italian bonds have been on tenterhooks since the leader of the far right League party, deputy prime minister Matteo Salvini, called for an end to his party's coalition government with the 5-Star Movement earlier this month.
Outgoing Centrica boss snaps up shares
The outgoing boss of Centrica, the owner of British Gas, has snapped up some shares in the ailing company, which recently joined the ranks of FTSE companies to cut their dividends.
Iain Conn's impending departure was revealed last month alongside a further £1bn in cost-cutting, which will put more jobs at risk. Shares have fallen by roughly three quarters during Conn's tenure.
Centrica CEO Iain Conn just bought £65,000 worth of shares in the company, as its price languishes at a multi-decade low.
The parent of British Gas is at risk of a humiliating exit from the FTSE 100, alongside Marks & Spencer. pic.twitter.com/bj6e3YtpiI— David Sheppard (@OilSheppard) August 20, 2019
Corporate round up
A quick recap of two of today's main corporate stories:
Sainsbury's beats rivals in weak grocery market: Sainsbury’s suffered a decline in sales over the summer but still managed to outperform the other major supermarket chains. The news has lifted its shares and could help boss Mike Coupe buy some time in the role. Ocado was the fastest growing grocer in a flat market.
BHP sounds warning bell on global economy after paying record $17bn to investors: Shareholders in mining giant BHP will enjoy a record $17bn (£14bn) payout following the sale of its US shale assets to BP. But boss Andrew Mackenzie admitted the Anglo-Australian company is “anxious” about the world economy.
Chinese government turns to Facebook
China is using Facebook as part of an online campaign to hit out at protesters in Hong Kong and to defend its repression of ethnic minorities in Xinjiang.
Laurence Dodds writes:
State media outlets including the Global Times and China Central Television (CCTV) have paid for numerous sponsored posts and videos over the last week, smearing Hong Kong's democracy movement as violent thugs and tools of the United States.
Others sought to whitewash China's concentration camps in the western region of Xinjiang, which critics have referred to as a campaign of "cultural genocide" but which China insists is an innocent training programme designed to stop terrorism.
Read the full report: China mounts social media blitz with Facebook adverts smearing Hong Kong protesters
Salvini calls for stimulus to 'shock' Italian economy back to life
Italy's deputy prime minister Matteo Salvini has called for a €50bn (£45bn) spending splurge to “shock” Italy's ailing economy into life. The country is facing into the possibility of early elections. Tom Rees has the details:
Italy's deputy prime minister said a new government led by the Lega would use tax cuts and higher investment to revive Italian growth, putting Rome on another collision course with the European Commission.
"We need a government able to do things, not a government that simply gets by,” he told Radio 24. “It is not enough for me that we do not hike sales taxes. We must start to cut taxes,” Mr Salvini said.
Prime minister Giuseppe Conte could resign in an address to Italian parliament on Tuesday afternoon, leading to the break-up of the populist coalition formed last year by the Lega and the anti-establishment Five Star Movement.
Read the full report: Salvini calls for €50bn boost to shock Italian economy back into life as political crisis deepens
Pound takes a tumble
The pound has taken a tumble today, falling 0.5pc against both the dollar and the euro to trade. It has dropped through the $1.21 and €1.09 barriers.
Boris Johnson's letter to European Council President Donald Tusk yesterday appears to have hit investor confidence. Mr Johnson proposed removing the Irish backstop - the insurance policy to prevent a hard border in Ireland if an alternative solution is not found during the negotiation of a new trade relationship - and replacing it with a commitment to implement alternative arrangements by the end of any post-Brexit transition period.
Mr Johnson is scheduled to meet French President Emmanuel Macron and German Chancellor Angela Merkel later this week.
IT troubles at RBS prevent customers paying bills
RBS has suffered an IT problem that is preventing customers from accessing their accounts and paying bills, the Financial Timeshas reported (paywall).
The outage has affected both the bank's app and its online banking service. Customer of NatWest, which is part of the RBS group, have also experienced problems.
The problem also seems to be affecting IT at the bank's call centres, which are reported to be struggling to assist customers as a result.
The bank has issued a statement:
“We are aware that some of our customers are experiencing intermittent problems viewing their credit cards online and on the mobile app.
This is a result of system issues being experienced by a third party service provider.
We apologise to any customers impacted and are working with the third party provider to resolve these issues as quickly as possible. Customers can continue to use their credit cards as usual and no customer will be left out of pocket.”
Greene King deal: 'If the market refuses to put the right value on a stock, someone else will'
Richard Evans, Questor editor, has been reflecting on the £4.6bn takeover bid for beer business Greene King, which Questor tipped as a 'buy':
"Questor is of course delighted to see Greene King taken over at 850p a share after we tipped it a year ago at 482p: we have made a capital gain of 75pc.
If we had to express in one word why we thought the shares were too cheap last year, that word would be "dividend". The full-year divi of 33.2p admittedly didn't look likely to rise - it has now been static for three years - but neither did a cut seem likely. At the share price at the time of our tip, that 33.2p dividend equated to a yield of 6.9pc; even at the share price of 563p just before the bid was announced, the yield was 5.9pc.
These yield figures, if based on a dividend that is reliable, are simply too high at a time when the official rate of interest is 0.75pc. If the yield is too high, the share price is too low. And, as fund managers keep telling me at the moment, if the market refuses to put the right value on a stock, someone else will.
Several Questor stocks have been taken over recently - they include Manx Telecom, Safecharge and Premier Technical Services Group. I wouldn't be surprised to see more, especially while investors' pessimism about British stocks leaves many share prices in the doldrums."
Sun fails to shine on supermarket sales
While today's grocery market share figures have revealed some big winners, sales for the sector as a whole were flat compared to the same period last year as supermarket's struggled to match last year's bumper summer.
Fraser McKevitt at Kantar, which compiled the data said:
“The memory of last year still looms large for retailers and this summer’s comparatively poor weather, combined with low levels of like-for-like price rises, have made growth hard to find for retailers."
Ocado races towards top of the FTSE
Ocado is the second biggest riser on the FTSE 100 so far today after it retained its place as the UK’s fastest growing grocer.
The online business grew its sales by 12.6pc in the 12 weeks to August 12 compared to the same period last year, according to closely watched industry data from Kantar.
The 'big four' - Tesco, Sainsbury's, Asda and Morrisons - all continued to suffer from declining sales in the face of competition from discounters such as Aldi and Lidl. The German discounters grew their sales by 6.2pc and 7.7pc respectively and now have a market share of more than 13pc.
Shares in Sainsbury's are also up 2.6pc to 193.3p despite a 0.6pc fall in sales. The supermarket is the biggest FTSE 100 riser of the day so far.
Aramco appoints advisers for monster flotation
Saudi Aramco has appointed advisers for its planned share listing, Bloomberg has reported. Lazard and Moelis have won the mandate, according to the report.
The plan to float part of the company was shelved last year but the appointments could signal that the oil giant is serious about exploring the idea once again. The float is expected to raise in the region of $100bn (£83bn) and could be on the cards for as early as next year.
Greene King shareholders nursing a hangover?
Greene King shareholders may well be nursing a hangover this morning after celebrating the news that Hong Kong's richest man is offering them a premium of more than 50pc as part of a £4.6bn takeover deal.
Dedicated readers might also recall that Questor rated it as a 'buy' last year.
In case you missed the news, here's Oliver Gill's report: Greene King sold for £4.6bn to Hong Kong owner of Superdrug and Three
Wood Group to offload £250m nuclear unit
Wood Group has agreed to sell its nuclear business for £250m in a bid to cut debts racked up from its acquisition of Amec Foster Wheeler in 2017.
The Scottish engineering business announced it will sell the nuclear business to Jacobs Engineering Group in a deal that is expected to close in the first quarter of next year
The money raised should help Wood to focus on other areas of its business such as petrochemical plants, low-carbon energy and oil and gas exploration and production.
FTSE gains in early trading
Apologies for the brief interlude. We had a fire alarm at Telegraph HQ. All's well though and journalists are trudging/enthusiastically bounding back to their desks.
Now, the FTSE has inched higher this morning, helped by a new AstraZeneca diabetes drug meeting the main goal of a heart failure study. Its rise has offset a drop in BHP shares
The FTSE 100 has added 0.4pc, tracking gains in other major stock markets overnight as hopes grew of fresh stimulus from central banks and governments to beat back the risk of recession. The mid-cap FTSE 250 also gained 0.1pc.
Persimmon making the 'right trade off'
Profits may be down at Persimmon but Brewin Dolphin investment manager Arlene Ewing says the housebuilder is making the right choices:
“Persimmon continues to tackle some of its major challenges. The business came under fire for the quality of its homes and customer care, and has since invested on both fronts.
While that has taken a small bite out of profits, it appears to be the right trade off over the long term. The operating margin remains high, the underlying business looks strong, and there is good visibility of future revenues.”
Persimmon bids to rebuild its reputation
Persimmon has revealed a marginal decrease in profit for the first half of the year. Pre-tax profits were £509m, down from £516 in the same period last year.
It's been a tumultuous few months for the housebuilder. Former boss Jeff Fairburn walked the plank after a memorable interview with the BBC where he refused to discuss his gargantuan pay package. The government also threatened to bar the company from the lucrative Help to Buy market.
Ofgem launches investigation into power cuts
The energy watchdog has launched an investigation into the power cuts that struck the UK 11 days ago. The unprecedented Friday afternoon power outage left hospitals, airports, rail and road networks without powers, leaving commuters stranded and plunging towns and cities across England and Wales into darkness.
Our reporter Gareth Davies has the details:
"The probe will attempt to establish whether the parties involved - National Grid ESO, National Grid Electricity Transmission, 12* distribution network operators in England and Wales, as well as generators RWE Generation (Little Barford Power station) and Orsted (Hornsea) - breached their licence conditions."
Read the full story here: Lightning 'partly blamed' for National Grid power cut as Ofgem launch investigation
BHP warns of nationalist threat
After boosting its profits (but missing analyst forecasts), BHP is rewarding shareholders with a record dividend.
The miner warned that the rise of nationalism and the escalation of the US-China trade war threaten the global economy and returns for mining companies.
“There is no doubt that while this continues, it is actually putting a bit of a dampener on world economic growth, and certainly the prospects for world economic growth, that ultimately if not yet will impact the demand for our products,” said BHP's boss Andrew Mackenzie.
BHP boosts profits
BHP more than doubled its annual net profit as higher iron ore prices and a rebound from significant setbacks last year buoyed the world's biggest miner.
The company posted a $8.3bn (£6.9bn) profit for the year to June 30, up from $3.7bn in the previous year when heavy impairment charges related to the sale of its US shale assets and costs associated with the Samarco dam disaster in Brazil dented its results.
Too early to raise a glass?
Good morning. FTSE 250 pub group Greene King managed to almost single-handedly lift the travel & leisure subgroup yesterday to become the best-performing sector across Europe. Weary markets managed to seize some ground so we'll be looking to see if the positivity can continue.
5 things to start your day
1) Families are increasingly worried about keeping their jobs and beginning to cut back on big spending decisions as a result. Confidence in major purchases slid rapidly this month, according to IHS Markit’s household finance index, raising fears over the stability of consumer spending.
2) Germany is on the brink of a recession after the country’s central bank warned that Europe’s largest economy is at risk of shrinking further in the third quarter of the year. German output will remain lacklustre and “could continue to fall slightly” in the three months to the end of September, the Bundesbank said, heightening fears of a global economic slowdown.
3) British Airways and Royal Dutch Shell have submitted plans to build Europe’s first plant that converts household waste into jet fuel. The duo will work with Velocys, a sustainable fuel specialist, on the site near to the Humber estuary in North Lincolnshire. It is hoped that around half a million tonnes of rubbish destined for landfill will be converted into cleaner burning aviation fuel.
4) The world's biggest cargo ship - longer than 36 buses - arrives in Europe: The latest giant of the seas, the MSC Gülsün, has docked in Europe after its first voyage from northern China set a record for container ships. The 400 metre (1,312ft) vessel can transport 23,576 standard 20ft long shipping containers - known as “TEUs” (Twenty Foot Equivalent units).
5) The rebirth of Detroit: Self-driving cars are transforming Motor City. Once synonymous with decline, poverty and crime, it is now home to hipster hotels, a buzzy restaurant scene and a slew of startups working on self-driving cars, air taxis and the tech that powers them. Electric scooters dot the pavements and it has a shared bicycle scheme, shiny new buses and a freshly-launched transit mobile app.
What happened overnight
Most Asian markets rose on Tuesday on the back of hopes for central bank and government stimulus measures around the world, while investors were also cheered by further signs of easing tensions in the China-US trade war.
By lunch Tokyo was up 0.4 percent, while Shanghai was slightly higher and Hong Kong was flat, weighed by profit-taking after four days of gains.
Sydney gained 0.6 percent, Singapore, Seoul and Taipei each put on 0.3 percent and Wellington rose 0.6 percent. Manila and Jakarta were both down.
BHP, the world's biggest miner, more than doubled its annual net profit on Tuesday on the back of higher iron ore prices and a rebound from significant setbacks the previous year.
The resources giant posted a US$8.3 billion profit for the year to June 30, up from US$3.7 billion in the previous year when heavy impairment charges related to the sale of its US shale assets and costs associated with the Samarco disaster in Brazil dented its results.
Underlying profit - its preferred measure, which strips out one-off costs and is more closely watched by the market - rose just 2 percent to US$9.4 billion, due to strong commodity prices and increased production.
The company declared a final dividend of 78 US cents, which it said was a record return of US$3.9 billion to investors and came on top of US$17 billion already paid out this financial year.
Coming up today
Full-year results: BHP, which is trying to see off US activist Elliott Investments, has already released its results in Australia today.
Interim results: Empiric Student Property, Global Ports, John Wood Group, Persimmon, Tribal Group, SeaDrill
Economics: CBI manufacturing (UK), construction (eurozone)
