Business news and markets: live

Business news and markets: live

08.00 Louise Armitstead has digested this morning’s corporate announcements in the City Briefing email.

Just in time for its 200th anniversary, Debenhams has reported a 2.5pc rise in annual revenues to £2.8bn and 2pc growth in like-for-like sales too. The high street stalwart says pre-tax profits are down 2.7pc to £154m but this has beaten analysts expectations. Online sales are up 46.2pc and now represent 13.2pc of group sales. Michael Sharp, chief executive, will hope Debenhams has done enough to put the profits warning earlier this year behind it, but he has warned that he remains “cautious about the strength and pace of any consumer recovery in 2014.”

Sir Martin Sorrell’s WPP has beaten analysts expectations for the sixth time in eight quarters with a 5pc jump in 3Q like-for-like revenues – the market was expecting 4pc. Revenues at the world’s biggest advertising company, which is seen as a litmus test for the health of the UK and global economy, rose 7.4pc to £2.7bn. WPP has appointed Charlene Begley, former head of home and business solutions at General Electric, to its board as non-executive director.

Unilever has reported underlying sales growth of just 3.2pc for the third quarter. The numbers are at the lower end of the 3pc-3.5pc guidance given three weeks ago when the Anglo Dutch owner of Persil, PG Tips and Dove issued its shock profits warning, blaming a slow down in emerging markets.

Unilever profits have taken a hit from slower sales in emerging markets. Photo: Alamy

Stobart Group has reported a jump in half year revenues to £330.2m from £247.4m last year, boosted by £54.5m new automotive revenues. Pre-tax profits are down marginally from £10.5m to £10.4m. Stobart’s new chairman, Iain Ferguson, is strengthening the board already with the appointment of Andrew Wood, the former finance director of BBA Aviation, as senior non-executive director. Bloomsbury, the publisher of Harry Potter books, has reported a 13pc jump in half year revenues to £49.2m and a 33pc jump in pre-tax profits to £1.1m. The publisher has said the successes included MasterChef: the Finalists and The Signature of All Things by Elizabeth Gilbert.

Rolls Royce has won a £22m contract to supply machinery for Samsung Heavy Industry drilling rigs in Korea.

China cash squeeze could hit the SMEs hardest

07.55 Michael van Dulken of Accendo Markets notes that encouraging manufacturing growth figures from China could be short-lived as the central bank’s cash crunch bears down on their ability to borrow:

Quote The money markets situation continues to deteriorate in China with a net PBOC drain of cash from the system in an effort to tighten margins and calm inflation. It has a way to go to get as bad as the squeeze of this summer, but pressure is likely to be felt by the SME businesses that appear so optimistic within the PMI data.

Walmart to open another 110 facilites in China

07.42 Sticking with the far eastern theme, US supermarket giant has announced it will further expand its China operation by opening 110 new stores and distribution centres in the next two years. Walmart already operates more than 400 hypermarkets, Sam’s Club stores and distribution centres across China. The chain also said it had closed 11 stores and will shut as many as 30 others to restructure the business.

Chinese manufacturing rises to seven month high

07.20 China’s manufacturing activity expanded at its strongest pace in seven months in October, adding to evidence the world’s second-largest economy is recovering.

HSBC’s preliminary purchasing managers’ index (PMI) hit 50.9 last month, a significant improvement from September’s 50.2 and the highest since 51.6 in March.

The index tracks manufacturing activity in China’s factories and workshops and is a closely watched gauge of the health of the economy. Any reading above 50 indicates growth.

Fresh fears of China cash crunch as central bank drains liquidity

07.05 China’s money rates spiked overnight as the People’s Bank of China (PBoC) declined to inject cash into the economy for a third day. The Chinese central bank is draining liquidity in an effort to curb the risky credit growth that has seen property prices across the country’s cities overheat. It has withdrawn nearly Rmb100bn (£10bn) in the last two weeks.

The liquidity shortage has seen China’s benchmark seven-day repo rate (the cost of borrowing cash from the central bank) spike further and hit 5pc, its highest in four months.

Back in June, lending between banks in China ground to a near-halt as the PBoC refused to pump more cash into the economy, causing interbank borrowing rates to spike as high as 25pc.

Wei Yao, economist at Societe Generale in Hong Kong, says that the trend is set to continue:

Quote Seeing growth stabilising, policymakers seem to be shifting their focus back to risk management.

Beijing’s municipal government issued a seven-point property tightening policy on Wednesday. Aside from a reiteration of existing policy, the city plans to offer 70 thousand units of below-market-price apartments in the next two years, which is equivalent to nearly 30pc of the housing sales in 2012. Other big cities are likely to follow Beijing’s lead to announce property tightening measures in the coming months.

At the macro level, the People’s Bank of China withdrew nearly 100bn yuan from the interbank market in the past two weeks and as a result, the overnight repo rate is back above 4pc and the 7-day rate close to 5pc. The leadership still intends to develer the economy, which is the main reason behind our call that the secular deceleration trend is far from over.

People’s Bank of China in Beijing. Photo: EPA

Best of the rest

06.55 ScottishPower’s chief corporate officer Keith Anderson has challenged Sir John Major’s call to levy a windfall tax on energy companies, by asking “How do you put a windfall tax on a business which is losing money?” writes The Times.

A growing list of investors in Royal Bank of Scotland are urging George Osborne not to press ahead with mooted plans to split the lender into a good bank and fully separate bad bank, reports the Financial Times.

The Guardian reports analysis that shows London’s economy is doing even better after the banking crash than during the bubble and is racing ahaead of the rest of the UK.

The Independent reports that City watchdog the Financial Conduct Authority will today announce a new crackdown on the crowdfundnig and pper-to-peer lending industry, which is expected to top £1bn by 2016.

Top stories in the Telegraph

06.50 News of the last-ditch efforts by union Unite to save the doomed Grangemouth petrochemicals plant following yesterday’s decision by owner Ineos to close the operation leads our finance page this morning.

Last night, Microsoft brushed off Apple’s move to give away its software, claiming the iWork productivity suite from its rival was “lightweight” and “has never gotten much traction”.

Major energy suppliers have welcomed the Prime Minister’s pledge of an annual review of competition in the market, claiming it would help to restore trust, writes Emily Gosden.

And Ambrose Evans-Pritchard writes that Europe is sliding into a deflationary trap, already causing debt ratios in half a dozen countries to ratchet upwards to the point of no return.

Good morning

06.45 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.

Finance News – Business news from the UK and world


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