People shopping on Oxford Street in central London, Britain, December 20, 2018. REUTERS/Henry Nicholls
March 21, 2019
LONDON, (Reuters) – British retail sales unexpectedly kept up a robust pace of expansion last month, after unusually warm weather boosted sales, reinforcing the sector’s role as a bright spot for the economy ahead of Brexit.
Annual retail sales growth slowed only a fraction to 4.0 percent in February after sales volumes grew at their fastest in more than two years in January, the Office for National Statistics said on Thursday.
Economists polled by Reuters had forecast a slowdown in sales growth to 3.3 percent.
Consumer spending has been a source of strength for the British economy at a time when businesses say that Brexit uncertainty is forcing them to postpone investment and a slower global economy is hurting export demand.
On Wednesday Prime Minister Theresa May asked for a three-month delay to Brexit on Wednesday to buy time to get her twice-rejected departure deal though parliament, but the request faced immediate resistance from the European Commission.
Sales volumes in February alone rose by 0.4 percent versus a poll forecast of a decline, after jumping by 0.9 percent in January, while annual sales growth for the three months to February was its strongest in over two years at 3.7 percent.
Falling inflation, a steady rise in wages and the lowest unemployment since 1975 have all boosted household incomes over the past year, though after inflation wages are still below their peak before the financial crisis.
Last year overall British economic growth slowed to its weakest since 2012 and the Bank of England – which is predicted to keep rates on hold later on Thursday – forecasts the weakest growth for a decade this year.
The ONS said that unusually warm weather in February had boosted spending at garden centres and on sporting equipment, sales fell at supermarkets and in clothing stores due to an end of January’s seasonal promotions.
Earlier on Thursday, major British clothing chain Next reported a small fall in annual profit on Thursday, hurt by lower store sales, and forecast another decline for 2019-2020.
Figures from the British Retail Consortium at the start of the month had suggested that annual sales growth at bigger high-street stores slowed in February, with the trade association blaming Brexit.
Separate figures from the ONS on Thursday showed the government broadly on track to meet updated borrowing goals for the 2018/19 financial year, as the strong labor market boosted income tax revenue.
Public borrowing for February, the eleventh month of the tax year, fell to 0.2 billion pounds from 1.2 billion pounds a year earlier, below economists’ average forecast of 0.6 billion pounds in a Reuters poll.
With just one month remaining of the current financial year, government borrowing totals 23.1 billion pounds, down 44 percent from the same point in the 2017/18 tax year, though these figures are likely to be revised further.
Last week Britain’s official budget forecasters cut their 2018/19 borrowing forecast to 22.8 billion pounds or 1.1 percent of GDP from 25.5 billion pounds.
Finance minister Philip Hammond said at the time that if Brexit went smoothly there would be more money for public services in a major multi-year spending review due late this year.
(Reporting by David Milliken and Andy Bruce)
FILE PHOTO: Catherine McGuinness, Chairman of the Policy and Resources Committee of the City of London Corporation, poses for a photograph in London, Britain, January 17, 2018. Picture taken January 17, 2018. REUTERS/Hannah McKay
March 21, 2019
LONDON (Reuters) – Extending Britain’s departure date from the European Union would only be a “sticking plaster” if deep-seated issues are left unresolved, City of London financial district chief Catherine McGuinness said on Thursday.
It appeared that financial services have been “thrown under a bus” in terms of Britain’s efforts to secure a divorce settlement with the bloc, she told a City & Financial conference.
UK financial services minister John Glen told the conference that the sector had every right to feel frustrated with Britain’s failure so far to secure a divorce settlement with just a week to go before Brexit Day.
(Reporting by Huw Jones; Editing by Toby Chopra)
Logos of Tencent are displayed at a news conference in Hong Kong, China March 22, 2017. REUTERS/Tyrone Siu
March 21, 2019
HONG KONG (Reuters) – Tencent Holdings said on Thursday net profit for the quarter ended December fell a sharper-than-expected 32 percent, the most on record for a quarter, as a regulatory review weighed on its gaming business.
Net profit at Asia’s second-most valuable listed company for the September-December quarter was 14.2 billion yuan ($2.12 billion), against the 18.3 billion yuan average estimate of 16 analysts, according to Refinitiv data.
Revenue in the quarter rose 28 percent to 84.9 billion yuan, slightly ahead of an average estimate of 83 billion yuan from 19 analysts. Tencent attributed that in part to strong growth in sponsorship advertising revenue.
Tencent declared a final dividend of HK$1.00 per share versus HK$0.88 in 2017.
(Reporting by Sijia Jiang; Editing by Muralikumar Anantharaman)
German Chancellor Angela Merkel checks her phone at the lower house of parliament (Bundestag), ahead of a Brussels summit for Brexit delay discussions, in Berlin, Germany March 21, 2019. REUTERS/Hannibal Hanschke
March 21, 2019
BERLIN (Reuters) – Germany will meet the obligation it has made to NATO allies to spend 1.5 percent of economic output on defense by 2024, German Chancellor Angela Merkel said on Thursday.
“The 1.5 percent target by 2024 is an obligation to NATO … I guarantee and the German government guarantees that we will meet that obligation. And that will require effort,” Merkel told the lower house of parliament.
(Reporting by Joseph Nasr; Writing by Thomas Escritt; Editing by Michelle Martin)
Britain’s Foreign Secretary Jeremy Hunt is seen outside Downing Street in London, Britain March 20, 2019. REUTERS/Hannah McKay
March 21, 2019
LONDON (Reuters) – The European Union could next week hold an emergency summit to offer a Brexit extension with potentially onerous conditions such as holding another referendum, British Foreign Secretary Jeremy Hunt said on Thursday.
“There could be and we don’t know there will be an EU emergency summit to offer us an extension,” Hunt told BBC radio.
“We don’t know what the length would be and it could have some very onerous conditions,” such as holding another referendum. He said such an option would be unlikely to be supported by the British parliament.
Hunt said the government did not yet know whether Prime Minister Theresa May’s twice-defeated Brexit deal would be brought back to parliament next week.
“Do we resolve this or have Brexit paralysis?” Hunt said. He said a no-deal exit on March 29 remained the legal default.
Hunt said if the deadlock remained next week – parliament still had the option to vote to revoke Article 50 and cancel the entire Brexit process, though it was “highly unlikely”
(Reporting by Andrew MacAskill. Editing by Guy Faulconbridge)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 12, 2019. REUTERS/Staff
March 21, 2019
(Reuters) – European stock markets opened lower on Thursday, as the impact on banks of an accommodative policy message from the U.S. Federal Reserve outweighed any broader lift to sentiment from its abandoning of further interest rate hikes this year.
The pan-European STOXX 600 index dipped 0.3 percent, driven by falls in Paris, Madrid and Frankfurt that contrasted with a strong reaction on Asian markets to the Fed’s statement and news conference.
Germany’s DAX led with a 0.5 percent fall, weakened by a 1 percent loss for bank stocks, which tend to suffer when expectations for future interest rates fall.
Banking shares across Europe had also risen earlier this week on signs of a merger between Deutsche Bank and Commerzbank.
A bright spot were semiconductor makers, boosted by Micron Technology’s upbeat outlook for the sector, which soothed worries about falling demand for smartphones. Infineon and STMicro were both up 2 percent.
EssilorLuxottica’s shares slumped to the bottom of the CAC 40 and the STOXX 600 on new tensions in its boardroom as the top shareholder and executive chairman accused the Franco-Italian group’s executive vice chairman of a power grab.
Investors punished HeidelbergCement, the world’s second-largest cement maker, after its results and Swedish construction group Skanska fell 3.2 percent after it said it would not reach a target for operating margins.
London’s FTSE 100 index was the only index to buck the trend, gaining 0.3 percent as miners benefited from higher copper prices on the back of a weaker dollar.
The market’s internationally-focussed blue chip stocks also tend to gain on falls for sterling, which was suffering again from Britain’s failure to find a clear route out of the European Union before a March 29 deadline.
Among its midcaps, a profit warning from British precision engineering group Renishaw Plc due to a slowdown in Asia drove its shares 14 percent lower.
(Reporting by Agamoni Ghosh and Patrick Graham; editing by Josephine Mason)
FILE PHOTO: Christian Sewing, CEO of Deutsche Bank AG, addresses the media during the bank’s annual news conference in Frankfurt, Germany, February 1, 2019. REUTERS/Kai Pfaffenbach/File Photo
March 21, 2019
FRANKFURT (Reuters) – Christian Sewing, the chief executive of Deutsche Bank, believes there is a strong case for a merger with rival Commerzbank, according to a person with direct knowledge of his thinking ahead of Thursday’s meeting of the supervisory board, setting the stage for a showdown with unions fearing massive job cuts.
Sewing sees multiple benefits of a merger, including “clear” dominance in its home market, scale, and shared technology costs, the person said.
Deutsche’s CEO also believes that a combined entity would improve the cost of funding, with “the best funding ever”, the person said. Jobs would be cut with or without a merger, the person said.
A spokesman for Deutsche Bank declined to comment.
(Reporting by Tom Sims and Andreas Framke; Editing by Riham Alkousaa)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 11, 2019. REUTERS/Staff
March 21, 2019
By Huw Jones
LONDON (Reuters) – Stock exchanges in Europe are not harming markets or gouging customers with the fees they charge for data, an industry-commissioned report said on Thursday.
The report from consultants Oxera for the Federation of European Securities Exchanges (FESE) wants to counter accusations from investment funds that “monopoly” bourses were continually hiking fees for market data to lift profits.
Investment firms have called on the EU’s markets watchdog ESMA to review market data fees charged by exchanges, saying they keep on rising despite falling costs of computing and data storage.
Oxera’s report concludes that “economic analysis suggest that the current charging structures for market data are unlikely to have detrimental effects on market outcomes for investors.”
FESE said that while fees have been “challenged by some”, the report showed that aggregate market data revenues have risen by only 1 percent a year, from 230 million euros ($261.2 million) in 2012 to 245 million euros in 2018.
“Costs have remained stable over the last five years,” said Rainer Riess, FESE director general.
Policymakers should be very mindful that any changes do not harm how prices of shares are formed, Riess added.
Investment funds face scrutiny over their own fees charged customers and want to cut costs.
They have to buy data to help show regulators that they are obtaining the best share prices on behalf of investors in a region where many platforms trade the same stocks.
The Alternative Investment Management Association, Managed Funds Association, Britain’s Investment Association and two German funds bodies BVI and BAI, asked ESMA in December to enforce an EU securities law that requires market data to be sold on a “reasonable commercial basis”.
The bloc’s competition officials are also facing pressure to intervene.
In the United States the Securities and Exchange Commission repealed two data price changes last May for public feeds for Nasdaq and New York Stock Exchange listed securities for the first time after complaints from asset managers.
The battle across the Atlantic has led to market participants like Fidelity Investments and hedge fund Citadel to back a new, low cost Members Exchange bourse to compete with NYSE.
FESE said the real issue was not prices but the “often very low quality” of data from off-exchange or “dark” trading platforms.
There has been talk for many years of a “consolidated tape” or a single pipe for gathering share prices from different platforms, like in the United States.
FESE said data intermediaries or vendors were already offering a de facto tape for prices on the bulk of so-called “lit” exchanges, where prices and trades are instantly visible.
(Reporting by Huw Jones, Editing by William Maclean)
FILE PHOTO: The logo of Indonesia’s central bank, Bank Indonesia, is seen on a window in the bank’s lobby in Jakarta, Indonesia, September 22, 2016. REUTERS/Iqro Rinaldi
March 21, 2019
By Gayatri Suroyo and Maikel Jefriando
JAKARTA (Reuters) – Indonesia’s central bank, welcoming the Federal Reserve’s forecast of no U.S. rate hikes this year, on Thursday kept its benchmark on hold to maintain financial stability while tweaking some rules to try to encourage more lending.
Bank Indonesia (BI) held its 7-day reverse repurchase rate steady at 6.00 percent, where it has been since November, as expected by all 20 analysts in a Reuters poll.
The decision came hours after the Fed abandoned projections for any rate hikes this year, sending the rupiah up 0.4 percent on Thursday.
Governor Perry Warjiyo told reporters after the meeting that global developments, including the Fed’s latest statement, “will be more positive for capital inflows to emerging markets, including Indonesia.”
BI was one of Asia’s most aggressive central banks last year, raising the benchmark rate six times by 175 basis points to respond to the Fed’s four rate hikes and to counter outflows that kept the rupiah under pressure for most of 2018.
This year, the rupiah has been generally appreciating due to inflows to Indonesia’s equity and bond markets as major central banks around the world turned dovish.
BI still expected one more rate hike by the Fed through 2020, but sees the rupiah being stable this year, Warjiyo said.
“This is a ‘dovish hold’, said Satria Sambijantoro, an economist at Bahana Sekuritas in Jakarta. “BI signaled its readiness to support credit expansion, with tweaks on some macroprudential policy measures to support liquidity in the banking system.”
BI will raise the guidance for where it wants banks to maintain its financing-to-funding ratio to a 84-94 percent range, from 80-92 percent range, effective July 1.
Warjiyo said the measure, which allows banks to manage a slightly higher liquidity ratio without being penalized, was aimed at getting banks to lend more.
Meanwhile, he said BI had also been adding liquidity to the financial system since December through open market operations, estimating the cash injected so far at 459 trillion rupiah ($32.51 billion).
While banks on aggregate had “more than enough” liquidity, he said smaller banks were facing difficulties to expand lending due to funding constraints.
Warjiyo said the new moves would help accelerate lending growth to the upper end of the 10-12 percent outlook in 2019, without hurting stability.
Even so, BI still sees economic growth this year remaining in a range of 5.0-5.4 percent.
The latest measures announced by BI indicated it “was in little hurry to change interest rates,” Capital Economics said, predicting no change in the benchmark rate this year.
In February, the annual inflation rate cooled to 2.57 percent, the slowest in nearly a decade and just above the lower end of BI’s 2.5-4.5 target range for 2019. Warjiyo said inflation will remain within target until the end of the year.
The Philippine central bank, the second Southeast Asian one holding a policy meeting right after the Fed’s, also kept its benchmark rate on hold, as expected.
(Additional reporting by Fransiska Nangoy, Nilufar Rizki and Tabita Diela; Editing by Richard Borsuk and Ed Davies)