Japanese household spending rose 2.3% in June – the biggest monthly gain since midsummer 2015, a welcome upturn for PM Shinzo Abe – but domestic inflation at 0.4% remains frustratingly low, according to new overnight data. Despite the Japanese spending uptick stagnant wages remain a drag-anchor on the economy.
Overnight the Swiss franc saw some more heavy selling amid more optimism on the euro. At 7am the euro was trading close to $1.17 at $1.695 while the pound was at $1.3086, daily rises of close to 0.20% for each. The euro was at 1.1312 against the Swiss franc, up more than 2.5% in the last week.
Plenty of market news this morning including Virgin, Rightmove, IAG and BT. EU business climate indicators and economic sentiment emerge at 10am while University of Michigan confidence numbers arrive at 3pm.
- UK FTSE 100 7,443.01 -0.12%
- Dow 21,796.55 +0.39%
- S&P 500 2,475.42 -0.10%
- Nasdaq 6,382.19 -0.63%
- Nikkei 225 19,930.04 -0.74%
- DAX 12,212.04 -0.76%
- CAC 40 5,186.95 -0.06%
- Gold 1,265.00 -0.12%
- Oil WTI 48.91 -0.24%
Branson gives up control of Virgin Atlantic
We start with news that Richard Branson has agreed to sell Air France-KLM a 31% stake in Virgin Atlantic meaning Virgin’s own stake dips from 51% to 20%. The deal is part of an existing four-part arrangement with Delta which has been in operation for nearly five years.
“Delta has helped us considerably with feed from America,” Branson wrote in a letter to shareholders and staff, “but because we don’t have more slots at Heathrow or Gatwick we’re unable to enjoy feed from Europe or provide extra onward journeys for those customers we are now carrying to London.”
The airline industry has consolidated over Virgin Atlantic’s lifetime he wrote “and it’s now our turn to put ourselves at the heart of an important alliance".
Meanwhile profits climb for BA owner IAG
Staying in the air Virgin rival IAG, owner of British Airways, says second quarter operating profit surged to €805m compared to €555m a year ago.
"The underlying trend in unit revenue improved, benefitting partially from Easter and a weak base last year,” said IAG. "Non-fuel unit costs before exceptional items are up, at constant currency. These costs include the financial impact of the power failure which affected British Airways' customers.”
IAG’s share price is up 34% year-to-date and 46% up in the last 12 months.
Moving onto BT there’s a 42% slip in pre-tax profits of £418m for the first quarter. Much of that is down the Italian accounting scandal and a settlement with Orange and Deutsche Telekom. However BT maintains its outlook with share buybacks of £200m in the quarter.
"Our new Consumer business,” says chief exec Gavin Patterson, “will operate our three distinct brands; BT, EE and Plusnet; to leverage our position as the largest and only fully converged player in the market.”
Rightmove revenues rise 11%
Lastly, a quick squint at Rightmove’s six-month numbers. Revenues are up 11% to almost £120m with underlying operating profit up 11% to £91m. Underlying basic earnings per share rose 14% to 80.3p (2016: 70.3p), with basic earnings per share increasing 12% to 76.6p.
Rightmove claims continued traffic growth with visits up 3% to 131.8 million per month compared to the same period a year ago “and time on site averaging over one billion minutes per month”.
Breaking news: Barclays is putting aside an extra £700m for PPI compensation payments. Half-year profits for Barclays rise 13% to £2.34bn.