North Korean nuke advance undermines shares

Shares in Asia were subdued overnight by a new warning from the International Atomic Energy Agency (IAEA) on the nuclear threat of North Korea. ““(The) yield is much bigger than the previous test, and it means North Korea made very rapid progress,” IAEA director Yukiya Amano told the press; the threat is global he added.

While Amano's statement hasn’t done much for gold – yet – it did pacify shares (Asia Pacific shares still look likely to end higher by the end of this month than they were at the start). Some up-coming stock market Asian holiday closures are imminent. 

The dollar spot price at 93.25 is up +0.16% (7am) while the pound is trading at $1.3409, down -0.24%. The euro appears steadier at $1.1774, down -0.1% though watch for new CPI Eurozone data at 10am which will surely shift euro sentiment. 

Some sterling-sensitive news shortly with a UK Q2 GDP update and a speech from Bank of England Governor Mark Carney due. Consumer price inflation from Germany is expected to see a likely confirmed +0.1% rise to 1.8%. German unemployment numbers are out at 9am while a rash of personal spending data from the US lands at lunchtime – plus the University of Michigan Confidence numbers at 3pm. A lot to absorb, all in. 

• UK FTSE 100 7,322.82 +0.13%
• Dow 22,381.20 +0.18%
• S&P 500 2,510.06 +0.12%
• Nasdaq 6,453.45 +0.01
• Nikkei 225 20,350.27 -0.06%
• DAX 12,704.65 +0.37%
• CAC 40 5,293.77 +0.22
• Gold 1,287.50 -0.10%
• Oil WTI 51.49 -0.14%

Carillion makes £1.15bn loss in first half

The major news this morning is a fairly horrendous half-year update from heavily shorted building support services player Carillion. Carillion has now taken a £200m charge to bolster support service contracts plus a £134m write-down charge on its construction business in the UK and Canada. For the six months to 30 June Carillion saw a £1.15bn loss on revenues of £2.5bn – stunningly awful numbers, partly the consequence of too-low bid work. 

"This is a disappointing set of results which reflects the issues we flagged in July…We now expect results,” added interim chief exec Keith Cochrane, “for the full year to be lower than current market expectations.”

There’s estimated further restructuring costs of £75m to £100m for the second half of the year. For the full year total revenue is expected to come in at between £4.6-£4.8bn (previously up to £5bn), Carillion says. At close of business last night Carillion’s 63.75p share price was -75% down on the year.  

Repair work needed for Carillion's balance sheet too: Shutterstock

Mercantile Investment Trust out-performs All-Share

Elsewhere Mercantile Investment Trust reports a +16.2% return on assets rise for the six months to 31 July which compares against a +10.7% climb from the FTSE All-share. The return to shareholders was +14.5%, as the discount at which the shares trade widened slightly over the half year, says Mercantile. 

“The outlook is currently somewhat of a curate's egg, with strengthening economic news around the globe resulting in a positive impact on the portfolio companies' sales prospects, partly offset by a worrying geopolitical situation and continued domestic political uncertainty.”

Breaking news: Speaking to BBC Radio 4 earlier ex Labour MP and shadow chancellor Ed Balls says the Treasury has distanced itself from the responsibility of financial stability. Balls was marking 20 years of the Bank of England being granted independence. 

Nationwide claims London house prices fell by -0.6% in September. However UK prices as a whole rose +0.2% to an average £210,116. "Housing market activity, as measured by the number of housing transactions and mortgage approvals, has strengthened a little in recent months, though remains relatively subdued by historic standards."