Dollar rises as markets turn eyes to Opec

European bourses are mirroring a tentative Asia session as the dollar continues to be supported by better US economic data and investors turn their attention to a meeting between Opec members. Sentiment is underpinned by US index futures suggesting the S&P 500 will gain 3 points to 2,207.3 when trading gets under way later in […]

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Basel Committe fail to sign off on latest bank reform measures

Banking regulators have failed to sign off the latest package of global industry reforms, leaving a question mark hanging over bankers who complain they have faced endlessly evolving regulation since the financial crisis. Policymakers had hoped to agree the contentious new measures at a crunch meeting held in Chile this week, but a senior official […]

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Banks, Financial

Banking app targets millennials who want help budgeting

Graduate debt, rent and high living costs have made it hard for millennials to save for a house, a pension or even a holiday. For Ollie Purdue, a 23-year-old law graduate, this was reason enough to launch Loot, a banking app targeted at tech-dependent 20-somethings who want help to manage their money and avoid falling […]

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Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

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Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

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Categorized | Equities

Week in Review, November 12

Posted on November 11, 2016

A round up of some of the week’s most significant corporate events and news stories.

Yahoo admits staff knowledge of hacking in 2014


Whether the timing was by accident or design, Silicon Valley technology companies released bad news this week that was easy to miss in the hullabaloo around the US election, writes Hannah Kuchler.

In a filing with the US Securities and Exchange Commission, Yahoo said some of its staff had known about a massive hack close to when it happened in late 2014.

It had previously maintained that no one internally knew of the state-sponsored attack until this August.

The timing is important because Verizon signed a deal to buy the internet company for $4.8bn in July.

Since the announcement of the attack, as a result of which the information of at least 500m Yahoo users was stolen, Verizon has said it might like a discount if there is a material impact on the business.

In the same filing Yahoo said forensic experts were investigating evidence that an intruder had created a way to access account information without passwords, using cookies.

It added that law-enforcement agencies were sharing data provided by a hacker, though it was unclear whether this information derived from the same attack or a different one.

At almost the same time on the day after the election, Adam Bain, the chief operating officer of Twitter, announced that he was stepping down after six years at the company. He did not say where he was going.

He will be replaced in the role, which oversees advertising revenue, by Anthony Noto, Twitter’s chief financial officer.

Mr Bain is the most senior Twitter executive to leave since Jack Dorsey, co-founder, returned to take charge of the faltering messaging platform last year.

As the first election results were rolling in, GoPro said it was recalling its Karma drone after some units had lost power mid-air.

The news came less than a week after the maker of action cameras had warned investors about production problems.

Karma had been considered a flagship product launch for the holidays.

French authorities examine Renault emissions file

A car’s emissions are tested © PA

Renault’s diesel emissions scandal deepened this week as French state prosecutors were called in, raising the prospect of a conviction for the company, writes Peter Campbell.

A government investigation has been assessing the legality of Renault’s engine management system, which switches off emissions controls when the temperature is below 17C.

This system meant Renault cars passed official laboratory emissions tests, but gave off far higher levels of poisonous nitrogen oxide gases when driving in real world conditions that were colder than 17C.

Questions have been raised over similar systems used by Fiat and General Motors’ Opel unit, but Renault is the first company to face the prospect of prosecution over it.

Its system is different to that used by Volkswagen, which specifically detected lab conditions and then turned off an emissions control function.

On Wednesday, the carmaker said France’s independent technical commission and fraud agency had passed the case on to public prosecutors.

Renault shares fell from €75.43 to €72.41 on Thursday morning, but recovered to €74.04 yesterday.

Earlier in the year, Renault set aside €50m to cover the cost of a software fix for 900,000 affected vehicles. But Stuart Pearson, an analyst at Exane BNP Paribas, said the 4 per cent share price fall on Thursday morning indicated investors were expecting costs of up to €900m, or the equivalent of €1,000 per vehicle.

Disney takes a hit on falling ad revenues

© Bloomberg

Walt Disney reported a sixth consecutive year of record results this week, but earnings per share slipped 10 cents to $1.10 and below analyst estimates of $1.15 in the final quarter to October 1, writes Matthew Garrahan.

The media company took a hit on lower advertising revenues and affiliate fees from its ESPN sports cable network, related to a “decline in subscribers”, a theme that continues to spook investors, given that the network generates about half of Disney’s profits.

But Bob Iger, the chairman and chief executive, was bullish about its prospects, with new channel bundles being launched by digital providers such as YouTube and Hulu.

“ESPN has the richest collection of sports rights in the business,” he said, pointing to a new NBA contract, which will run to the end of the 2024-2025 season. “I feel really good about the programming [and] I feel really good about [ESPN’s] ability to drive solid advertising.”

Operating income in the quarter fell at each of Disney’s main divisions. Movie studio profits slid 28 per cent on a weaker slate of films, particularly the summer releases of Pete’s Dragon and Queen of Katwe. Disney did release two hits, with Finding Dory and Captain America: Civil War generating big box office returns.

For the full year, Disney broke box office records across the board with four movies crossing $1bn in global box office and a fifth, Jungle Book, making more than $900m. “Disney [Animation], Pixar, Marvel and Lucasfilm all contributed to this remarkable achievement,” Mr Iger said.

Rio board to meet over consultancy payments

The Simandou iron ore project in Guinea

The board of Rio Tinto will convene on Monday to discuss company payments made to a consultant for work on a controversial iron ore project in Guinea, writes Neil Hume.

At the meeting, directors are expected to consider the future of Alan Davies, the head of its energy and minerals business, according to people with knowledge of the matter.

Mr Davis was suspended following an internal inquiry into Rio’s payments to François Polge de Combret, who served as a consultant to the company on its Simandou iron ore project in Guinea. Mr de Combret is a former classmate of Alpha Condé, Guinea’s president.

Rio said on Tuesday it had become aware of company emails from 2011 “relating to contractual payments totalling $10.5m made to a consultant providing advisory services” on Simandou, regarded as one of the best undeveloped deposits of iron ore. It subsequently notified regulators in Australia, the UK and US about the payments to Mr de Combret.

Emails from May 2011 seen by the Financial Times show former Rio executives and Mr Davies debating the payments to Mr de Combret. A month earlier, Rio paid $700m to the then new Condé government to secure its claims over half of Simandou.

Last month Rio said it had agreed to sell its 46.6 per cent stake in Simandou to China’s Chinalco for up to $1.3bn. Analysts say Chinalco could now seek to renegotiate the price.

Rio declined to comment. Mr Davies could not be immediately reached for comment.

M&S in broad retreat from foreign markets


Marks and Spencer announced a far-reaching store closure programme affecting one in 10 of its clothing stores in the UK and many more overseas, as the company battles to turn itself round after years of market share losses, writes Mark Vandevelde.

The chain will stop selling clothes at a further 45 UK outlets, replacing existing full-line outlets with smaller Simply Food stores, refocusing the 132-year-old retailer on its successful upmarket grocery business. The overhaul to the company’s retail estate will take five years and cost £350m.

M&S will maintain its brand presence in locations including India and the Middle East via a profitable franchise business. But UK retailer will pull back from all but three of the overseas markets in which it runs its own stores. Only stores in Ireland, the Czech Republic and Hong Kong will be spared.

Among the store locations due to close is the chain’s flagship store on the Champs Elysées in Paris. The outlet opened in 2011 to loud fanfare, a decade after the British chain first retreated from western Europe.

Also due to close is a prominent branch in Shanghai, which M&S opened in a building that many local people believed to be cursed.

Steve Rowe, who started as chief executive in April, announced the changes as he unveiled half-year results that showed flat revenues and shrinking profits.

The store closures are “a step in the right direction”, said Jamie Merriman, an analyst at Bernstein. “But we won’t know for four years whether it’s worked.”