14.11 Draghi is asked about the possibility of releasing meeting minutes, as he suggested last month.
If I’m correct, i didnt use the word minutes i used the word an account of our discussions and work is going on. If it’s well done it could give more light and transparency on the nature of our discussions but our institutional setup is not the same as the US or UK or Japan we are a 17 country monetary union. Nothing should threaten the independence [of the governors]. A proposal will be presented in autumn.
14.08 Draghi asked about the possibility of a debt haircut for Greece (the ECB is a big owner of Greek bonds)
The answer is no. We’ve gone through this when we had discussions with Greece a year ago. We cannot do monetary financing.
14.05 Draghi is asked about the likelihood of a third package of aid for Greece. He doesn’t say much though:
On Greece. I can say that the current adjustment programme expires at the end of 2014 and this leaves some time for the eurogroup to decide on extension and the prospects for Greece to retain access to capital markets. If an extension is needed, it will require further conditionality.
13.55 Draghi is talking the euro down:
13.52 Draghi is asked about reducing interest rates further. He says that it was discussed and that if growth continues to be weak and inflationary pressures remain subdued, “such an instrument should be considered”.
13.48 The floor opens for questions. Draghi is asked about Syria and the potential of an oil price spike, if that affects his view of inflation.
We have to see really, we have to see whether this would alter medium term forecasts. Risks to inflation are broadly balanced and that includes risk to commodity prices.
13.45 2013 inflation expectations have been revised upwards from 1.4pc to 1.5pc.
13.40 Draghi has raised 2013 eurozone growth expectations from -0.6pc to -0.4pc but lowered 2014 forecasts from 1.1pc to 1pc.
Looking ahead to the remainder of the year and 2014, output is expected to receover at a slow pace, gradual improvement in domestic demand. The overall improvements in financial markets seen since last summer seem to be gradually working their way through the real economy. Real incomes have benefited from lower inflation, however unemployment in the euro area remains high.
13.35 Mario Draghi is speaking following the ECB decision. He says:
Our monetary policy stance geared towards maintaining growth while maintaining price stability. Looking ahead, our monetary policy stance will remain accomodative for as long as necessary, at current or lower levels for an extended period of time, based on a subdued outlook for inflation, given the broad based weakness in the economy.
13.20 US jobs data from ADP, the outsourcing company, have disappointed somewhat. Private jobs growth was 176,000 in August, against expectations of 184,000. We’ll have a better view of the jobs market tomorrow, when non-farm payroll figures are released.
13.00 More on Dixons getting rid of its PIXmania business (see 08.00) from Denise Roland:
The electricals retailer, which operates Currys and PC World, is set to hand PIXmania to German holding group mutares AG in a deal which involves Dixons providing an additional €69m (£58m) of cash.
In August last year, Dixons ramped up its stake in PIXmania from 77pc to 99pc in a bid to take “full day to day control of the business”. At the time, Sebastian James, chief executive, described PIXmania as “the heart of our very successful UK multi-channel business”, but acknowledged that the loss-making firm faced “significant market headwinds”.
Mr James said Dixons had offloaded the firm because PIXmania “needs a different kind of entrepreneurial vigour”.
“I am a passionate believer that Dixons succeeds where we offer our customers an integrated multi-channel proposition, where we are the market leader and that we do best when we stick to our knitting,” he added.
PIXmania is a European internet retailer specialising in digital photography and electronic goods. It trades in 26 countries through bespoke transactional websites. While primarily focused on the internet, PIXmania still maintains 17 showrooms in France, Italy, Spain and Portugal.
12.45 Everything is on hold at the European Central Bank as well. Benchmark interest rates are left at 0.5pc, with the marginal lending facility at 1pc and the deposit facility at 0pc. Mario Draghi will be speaking at 1.30pm.
12.30 And some interesting trivia on Twitter
12.15 So everything as expected from the Bank, although there was some suggestion that the MPC would release a statement in order to convince the markets that it is committed to maintaining low interest rates. Some reaction:
David Kern, chief economist at the British Chambers of Commerce
The MPC was right to keep interest rates and QE on hold. Recent strong data has increased the likelihood that GDP will continue growing at a relatively fast pace in the third quarter. This will also strengthen expectations that interest rates will start to increase before Q3 2016, the earliest date forecast by the MPC.
While Governor Carney is keen to reinforce the Bank’s forward guidance, increasing interest rates earlier than the MPC expected shouldn’t be a concern if the recovery continues to gather pace. Although the forward guidance boosts business confidence, it is only effective if the MPC remains committed to the inflation target, and does not increase QE. Any increase in QE at a time when the US considers withdrawing its stimulus could lead to a sharp fall in sterling and higher inflation, providing little benefit to exporters. Instead, we urge the MPC to consider policy measures aimed at boosting business lending. This means purchasing more private sector assets including securitized SME loans rather than just gilts.
Howard Archer, chief European and UK economist at IHS Global Insight
With the Bank of England only adopting forward guidance last month, there was little likelihood that the MPC would take any significant policy action at their September meeting. Its action was limited to reinvesting £1.9 billion of cash flows associated with the redemption of the September 2013 gilt held in the Asset Purchase Facility.
Interestingly, there was no statement from the MPC, despite its highly probable disquiet over a further rise in market interest rates. On the interest rate front at least, there remains little likelihood of any Bank of England action for some considerable time to come. However, the Bank of England could undertake yet more Quantitative Easing if market interest rates move higher, although we suspect that the bar for such action is now pretty high given the current marked revival in UK economic activity.
Our current belief is that the Bank of England will end up raising interest rates before mid-2016 despite their current forward guidance, but they will hold off from acting until late-2015. This reflects our expectation that UK growth will moderate following the current surge in activity although we now believe the economy should be able to grow by close to 2.5pc in 2014 following likely expansion around 1.5pc in 2013.
Glenn Uniacke, senior dealer at Moneycorp
The MPC’s decision to hold interest rates is at odds with the stellar UK economic data of the past few weeks. Should the economy continue to perform so well, Carney will find it difficult to continue to talk down the expectations of UK growth, and along with it the Pound. The Bank of England’s aim to keep long-term borrowing rates as low as possible may have to be tempered by the realities of a strong UK recovery evidenced by August’s PMI figures.
12.00 Interest rates have been set at 0.5pc for the 54th consecutive month, the Bank of England has announced.
It has also kept its quantitative easing programme steady at £375bn. Unlike the last two months, it has not released an additional statement.
The pound is up from $ 1.561 to $ 1.564 in the wake of the announcement.
11.45 All eyes on the Bank of England in 15 minutes when the Monetary Policy Committee releases the results of yesterday’s meeting. Interest rates are bound to stay at 0.5pc, but markets will still be watching carefully to see if the MPC releases an accompanying statement.
Here’s some commentary from Kathleen brooks of Forex.com:
The main thing to look out for at this meeting is whether or not the BOE will release a statement alongside its policy decision. The Bank has released statements at its last two meetings chaired by new BOE Governor Mark Carney. Although the August statement was only one line long this was mostly due to the upcoming August Inflation report. Thus, there is a chance that the BOE will make a statement a permanent feature. Since we don’t expect any change in policy, whether or not the BOE releases a statement will determine the extent of [pound] volatility on Thursday.
11.25 The Treasury is putting the brakes on its sale of Lloyds due to the Syrian crisis and the impending tapering of the Federal Reserve’s stimulus programmes, Bloomberg is reporting, referencing “three people with knowledge of the situation”.
The story claims that no decision on the sale’s timing has been made. Lloyds is 39pc owned by the taxpayer, and the Government planned to kick off a sale by disposing of around £5bn as early as this month, but this appears to have been held back.
11.15 Samsung caused a lot of excitement yesterday as it unveiled its Galaxy Gear smartwatch. It is expected to be the first big candidate for domination of the nascent smartwatch market, and already has a new competitor. US chipmaker Qualcomm has just announced its own “Toq” model, as technology correspondent Sophie Curtis reports:
Like the Galaxy Gear, Qualcomm’s smartwatch is designed to serve as a second display to your Android smartphone. However, it offers “days of battery life” before the device needs to be recharged, unlike the Gear which has to be charged every day.
This is because it features Qualcomm’s Mirasol display technology – a reflective, low-power display that enables an always-on viewing experience without draining the battery. Qualcomm claims that Toq is so power-efficient it does not even require an on/off button.
Toq can be charged wirelessly using Qualcomm’s “drop and go” charging technology, which requires users to simply place the smartwatch on its case. Optional wireless Bluetooth headsets are also included, featuring high quality stereo sound with a dedicated tweeter and woofer for superior wide band audio.
Full story here
11.11 A push from HSBC has lifted Marks & Spencer, up 2.9pc, to the top of the FTSE 100. Analysts at the broker lifted their recommendation on the high-street stalwart to “overweight” from “neutral” and said:
Womenswear represents c.45pc of UK General Merchandise (GM) revenues. The newly designed ranges under John Dixon (Executive Dir. of GM) and Belinda Earl (Style Director), whose Autumn / Winter preview enthusiastically received by the fashion press, will hit the stores from Q2. While it will take more than a single season to fully overhaul this offer, should this, aided by an improving UK macro-economic outlook, drive an increase in real demand at high street level, M&S could enter a cycle of rising margins and improving return on capital via a return to positive GM like-for-like sales growth.
11.00 David Lloyd Leisure, the gym chain, has been bought by private equity group TDR Capital, whose investments include Center Parcs, Pizza Express and restaurant group Ask.
A price has not been disclosed for David Lloyd, which has 81 clubs in Britain and 10 in Europe. The chain’s chief executive Scott Lloyd says:
I am delighted to be partnering with TDR for the next phase in DLL’s development. The team at TDR have an enviable track record of investing in highly-successful businesses, particularly in the leisure sector and DLL and its members will see immense benefit from their experience and expertise.
10.27 In the FTSE 100, GlaxoSmithKline, down 1.8pc, is the single biggest faller in the index after group’s experimental treatment for melanoma – MAGE A3 – disappointed in a late-stage clinical trial. Analysts at Shore Capital said:
We have previously taken the view that MAGE-A3 is a high risk / high reward endeavour and as such have not included any revenue forecast in our GSK model, although are aware of risk adjusted consensus forecast of £154m and £233m for 2016E and 2017E respectively.
In the FTSE 250, Dixons has surged 8.1pc after pleasing with both its first-quarter results and news it has sold its troubled PIXmania business to a German company.
10.25 Back to St Petersburg for the G20 summit.
China has backed Russia over its opposition to intervention in Syria. Chinese finance minister Zhu Guangyao told reporters:
Military action would have a negative impact on the global economy, especially on the oil price – it will cause a hike in the oil price
In other developments:
• China and Russia have warned America that slowing down its quantitative easing programme would have a profound effect on the global economy.
• However, the Chinese have played down the prospect of emerging economies hit by tapering expectations needing a bailout.
• Leaders are set to agree measures on sharing corporate information, in a clampdown on tax evasion.
• Barack Obama will not have a formal meeting with David Cameron, in a move seen as a snub over the Prime Minister’s Commons defeat last week.
10.10 Two different stories of borrowing costs in Europe: French bond yields have risen to the highest level since Francois Hollande came into power last May. Meanwhile, Spanish borrowing costs are at a three-year low.
French 10-year bond yields since last September – yields at 2.58pc.
09.40 The Royal Mint has unveiled its first ever £20 coin, which commemorates the birth of Prince George.
The silver coin, which features St George and the Dragon, is available to pre-order from the Royal Mint’s website. It will set you back…£20. The Mint is anticipating a sell-out, with only 250,000 being struck.
09.25 Car sales rose for the 18th consecutive month in August – with 65,937 new registrations – a 10.9pc rise on last year. Sales in the year to dte a 1.39m, up 10.4pc.
Image: Society of Motor Manufacturers and Traders
Top 10 cars in August:
1. Ford Fiesta – 3,289
2. Vauxhall Astra – 2,428
3. Volkswagen Golf – 2,223
4. Ford Focus – 2,225
5. Vauxhall Corsa – 2,151
6. BMW 1 Series – 1,927
7. Nissan Qashqai – 1,875
8. BMW 3 Series – 1,517
9. Volkswagen Polo – 1,442
10. Vauxhall Insignia – 1,147
09.05 More from Mr Djisselbloem on the possibility of a third Greek bailout:
I haven’t spoken about a new loan…..further assistance might be necessary. We as a eurozone must be ready. It is not new news. It is non-news we have always said we will stand ready.
It is much too early to talk about the character of a new programme, the size of a new programme or the conditions… Full access to financial markets [for Greece] by the end of 2014 will not have been achieved and the eurozone stands ready to give support
09.00 Back in the stock market, the FTSE 100, which spent most of Wednesday in negative territory before rallying late in the day to close slightly higher, has continued that upward momentum. The benchmark index is now up 1pc, or 62 points, at 6,537.
08.50 Eurogroup president and Dutch finance minister Jeroen Djisselbloem has been fielding questions from MEPs about Greece. He has said that “it is realistic” that Greece will need a third bailout but that no further steps will be taken until April Our man in Brussels Bruno Waterfield is at the hearing.
08.40 What could be behind Supergroup’s rise in sales? ITV’s Tim Gatt thinks he has the answer
Picture in question (note SuperDry logo):
08.25 In other corporate news, Betfair has reported a 13pc fall in three-month sales – which it blames on pulling out of markets including Germany and Greece, as well as the lack of a major football tournament this summer. On a more positive note, underlying earnings before interest, tax, depreciation and amortisation was up 16pc.
Fashion retailer Supergroup has posted a 27.5pc jump in first quarter sales to £75m, transport group Go-Ahead has improved full-year revenues from £2.4bn to £2.6bn and Phones4u Finance – the group that owns the mobile retailer – has sold LSG, the insurance group, to America’s Assurant for £107m.
08.15 The FTSE 100 has moved higher in early trade in London and added 24 points, or 0.4pc, to 6,498. Boosted by an upgrade to “buy” from “neutral” at UBS, InterContinental Hotels is leading the risers with a gain of 3.4pc.
08.00 Louise Armitstead reports on Dixons Retail receiving an offer for its European business in her City Briefing:
Dixons Retail has reported a 4pc jump in like-for-like sales over the first quarter, showing again that Currys and PC World are now better placed to shrug off pressure from the likes of Amazon.
The electricals company, which has benefited from the demise of Comet and popularity of the iPad, has also announced two disposals today. An irrevocable offer has been received for PIXmania, Dixon’s loss-making European business, from Germany’s mutares AG.
And Dixon’s ElectroWorld Turkey is being sold to Bimeks. Sebastian James, chief executive, said he was “excited” about the future of a more “simplified group.” There will be more explanation at the company’s annual meeting today – but with shares already up 50pc this year, investors are unlikely to have many complaints.
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07.45 Yahoo! introduced a new logo overnight. Here’s what it looks like:
If you’ve forgotten already, here’s the old one:
07.35 The Indian rupee has also jumped this morning after the country’s new central bank chief, Raghuram Rajan, unveiled measures to prop up the currency. He has pledged to open up the country’s banking sector, raise short-term interest rates and introduce capital controls, warning that these policies “will not be popular”.
However, it seems to be working for the rupee: It is now worth $ 0.0151, against a low of $ 0.0146 yesterday.
07.30 In Asia, the Bank of Japan has upped its view of Japan’s economic growth, saying the country is “recovering moderately” as exports pick up and inflation improves.
This represents an upgrade from tha bank – which kept interest rates on hold this morning. Last month it said the economy is “starting to recover moderately”.
07.25 At 12.00 we’ll have the latest interest rate decision from the Bank of England’s Monetary Policy Committee. The actual decision is more predictable than ever after after Governor Mark Carney introduced his forward guidance policy last month, promising not to raise rates until unemployment falls below 7pc. Interest rates will stay at record lows of 0.5pc, the same since March 2009.
Any extension of the £375bn Quantitative Easing programme is also unlikely. However, what may be worth looking out for is any statement from the Bank, as Mr Carney continues to attempt to assure markets that interest rates will not rise before 2016.
07.20 Today marks the first day of the G20 summit in St Petersburg. A few months ago, tax avoidance was at the top of the agenda, but there is only one thing on everyone’s mind this time: Syria.
Barack Obama will not hold a formal meeting with David Cameron, in what is seen as a snub for the Prime Minister’s handling of the crisis. He will, however, meet Francois Hollande, the French President.
07.15 A look at the other papers this morning:
The Financial Times (£) reports that the International Monetary Fund has been forced to drop its view that emerging economies are the driver of economic growth, instead noting that “momentum is projected to come mainly from advanced economies”.
The Times (£) writes that Britain has fallen in the global competitive rankings from eighth to tenth, according to the World Economic Forum.
The Guardian reveals that universities are twice as likely to use zero-hours contracts as other employers.
07.10 Our lead story this morning reports on an extraordinary attack from the Bank of England on Neville Richardson, the former chief executive of Co-op Bank. The Bank hit out at Mr Richardson’s claims to MPs yesterday that the lenders problems had little to do with its takeover of the Britannia Building Society. Harry Wilson reports.
Elsewhere, Alistair Osborne speaks to Sir James Dyson, who bemoans a lack of quality engineers in Britain.
Ambrose Evans-Pritchard argues that different problems of inflation in the north and a lack of growth in the south have created an impasse that is choking the eurozone.
And Emily Gosden reports that ministers have rejected calls to subsidise new gas storage facilities, insisting Brtain has plentiful gas supplies.
Here’s the front page of today’s Business section:
07.00 Good morning and welcome to our daily business and markets live blog, your one stop shop for all the breaking business stories of the day.