Heavily indebted Carillion’s desperate scramble for life ended this morning when a deal between creditors, the government and the company itself collapsed (more below).
A surge in Asian stock market values remained unbroken on Monday: the Hang Seng, up +0.59%, hit an all-time daily high while the Asia Dow surged more than +0.50%. In India, the Sensex was up almost +1%. Despite a stronger yen the Nikkei put on a +0.26% gain.
Some of the Asian lift took its cue from yet higher US stock valuations at the end of Friday. Commodity-based stocks also held – and consolidated – gains from an on-going weaker US dollar with gains from Rio Tinto and rivals.
That frailer dollar was at a three-year low against several Asian currencies with the yen up +0.3% against the greenback; the Australian dollar also strengthened. Earlier today the spot dollar value slipped to 90.82, down -0.14%. At close to 7am sterling was trading +0.02% higher at 1.3733 while the euro was up +0.16% higher against the dollar at 1.2207 buoyed by more Social Democrat German coalition hope.
- UK FTSE 100 7,778.64 +0.20%
- DAX 13,245.03 +0.32%
- CAC 40 5,517.06 +0.52%
- Euro Stoxx 600 398.49 +0.31%
- Dow 25,803.19 +0.89%
- S&P 500 2,786.24 +0.67%
- Nasdaq 7,261.06 +0.68%
- Nikkei 225 23,714.88 +0.26%
- Gold 1,343.10 +0.61%
- Oil WTI 64.47 +0.26%
Carillion's demise threatens 43,000 – plus many suppliers
Carillion’s plunge into liquidation this morning was blamed on massive debt levels, too-thin margins and a pension deficit of around £600m. The construction giant – its share price plunged -29% on Friday to 14.20p – is deeply embedded across UK public services, from prisons to hospitals to transport as well as the MoD.
“We understand,” said a stricken Carillion this morning, “that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”
The acknowledgement that the government will keep major contracts alive is crucial. The medium and long-term impact will not just hit 20,000 UK workers – Carillion employes 43,000 in total – but Carillion’s many suppliers.
Substantial and highly awkward questions arise for the government: Carillon has issued three profit warnings in the last year while the Government awarded the struggling company three contracts worth £2bn in total during this period.
Premier Foods cools Batchelors brand sale rumours
Yesterday the Sunday Times claimed Premier Foods could be preparing its Batchelors brand for sale to Japanese noodle player Nissin Foods. However in a statement this morning Premier said, the FT reported, “Such reviews do periodically involve discussions with third parties, including Nissin”.
Elsewhere a new paper commissioned by the Scottish government claims a ‘hard’ Brexit could hit the Scottish economy by £12.7bn, or an individual loss of £2,300 a year. Scotland's Place in Europe: People, Jobs and Investment, evaluated three scenarios for Scotland's economy.