(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Lloyd's of London reported a sharp growth in interim profit on a strong investment return, despite premiums slipping. Lloyd's, separately, announced the departure of Chief People Officer Annette Andrews and confirmed David Sansom as new chief risk officer. In the six months to June 30, Lloyd's reported an aggregated market pretax profit of GBP2.3 billion, significantly ahead of the GBP600 million recorded in the same period a year ago. Lloyd's attributed the sharp jump to unrealised gains from reducing US and UK bond yields. Lloyd's also noted "robust" returns from its equities unit in the first half. Lloyd's net investment return improved sharply to 3.2%, representing income of GBP2.3 billion, compared to a 0.3% return the year before, or GBP200 million in investment income.
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Kingfisher reported a decline in sales during a mixed first half for its retail units. In the six months to July 31, revenue fell by 1.4% year-on-year to GBP6.00 billion from GBP6.08 billion. Pretax profit fell by 13% to GBP245.0 million from GBP280.0 million. On a like-for-like basis, sales fell by 1.8%, with growth at UK trade tools provider Screwfix and in Kingfisher's operations in Poland and Romania offset by declines in France and at British DIY retailer B&Q. Divisionally, sales in the UK & Ireland increased by 0.8% to GBP2.66 billion in the half-year from GBP2.64 billion, but like-for-like sales in the region fell by 0.7%. Screwfix's total sales rose by 9.9% to GBP882 million, but these gains were offset by a 3.3% decline at B&Q to GBP1.77 billion, Kingfisher reported. The FTSE 100-listed firm held its interim dividend at 3.33 pence per share.
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The UK government said it is intervening in the proposed sale of Cobham on national security grounds. In July, Cobham agreed to be taken over in a GBP4 billion deal by an indirect subsidiary of funds managed by US private equity firm Advent International Corp. UK Secretary of State for Business, Energy & Industrial Strategy Andrea Leadsom has now issued a European intervention notice in relation to the deal, and has written to the UK competition regulator instructing it to investigate. The UK Competition & Markets Authority will prepare a report on the national security aspects of the proposed transaction, and has until October 29 to do so. Andrea Leadsom said the decision came following "careful consideration", adding that the government's goals are "to support private sector innovation whilst safeguarding the public interest". Cobham shareholders on Monday approved the takeover.
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Workers at Diageo distilleries have suspended strike action after a last-minute pay deal was offered. Members of Unite and GMB across Scotland's distilleries and bottling plants had been scheduled to stop working from 10pm on Tuesday. It would have seen almost two-thirds of all Diageo workers take part in a series of rolling strikes over 10 days, according to representatives of the unions. Diageo, which owns Johnnie Walker whisky, Smirnoff vodka and Tanqueray gin brands, said it had "strong contingency plans in place" to deal with the strikes but put forward a last-ditch pay deal with a two-year commitment.
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MARKETS
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London shares were higher ahead of the US Federal Reserve's interest rate decision at 1900 BST. Kingfisher was the worst blue chip performer, down 2.0%. The pound was lower against the dollar in the wake of the latest UK inflation figures. Wall Street was pointed to a lower open.
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FTSE 100: up 0.2% at 7,336.09
FTSE 250: up 0.1% at 20,065.33
AIM ALL-SHARE: flat at 884.66
GBP: down at USD1.2459 (USD1.2478)
EUR: flat at USD1.1046 (USD1.1051)
GOLD: flat at USD1,502.20 per ounce (USD1,503.58)
OIL (Brent): down at USD63.98 a barrel (USD65.36)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK inflation fell short of expectations in August, coming in at a rate well below the Bank of England's 2% target. The UK consumer price index rose 1.7% on an annual basis in August, statistics from the Office for National Statistics showed, slowing from 2.1% in July. This was the lowest rate of inflation since late 2016. August's reading also was below consensus, according to FXStreet, of 1.9%. One of the largest downwards contributions to the UK inflation rate came from recreation & culture, while slower growth in clothing & footwear prices also dragged. Meanwhile, output producer price inflation was 1.6% in the year to August, slowing from 1.9% in July. Prices for materials and fuels used in the manufacturing process fell 0.8%, versus a 0.9% rise in July. Average UK house prices increased by 0.7% in the year to July, halving from the growth rate of 1.4% seen in June. July's growth was the lowest annual rate since September 2012.
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For the first time in more than a decade, the New York Federal Reserve Bank on Tuesday pumped billions of dollars into financial markets to keep short-term US interest rates in line with the Fed's target range. The emergency interventions on money markets - one early Tuesday and another scheduled for Wednesday morning - came as a sudden cash shortage drove up interest rates. The shortage threatened the Fed's control over a crucial tool it uses to transmit monetary policy to the wider economy as the target range helps set borrowing costs across the financial system. The move came on the eve of a US Federal Open Market Committee policy decision, which economists widely expect will result in a lower target range as the central bank works to keep the economy growing.
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UK Prime Minister Boris Johnson is set to defend his controversial decision to suspend Parliament for five weeks at the UK's highest court on Wednesday. Lawyers representing Johnson will argue that his advice to the Queen to prorogue Parliament was lawful and that, in any event, the court cannot interfere in political matters. The Supreme Court in London is hearing historic appeals from two separate challenges brought in England and Scotland to the prorogation of Parliament.
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Jeremy Corbyn has said Labour would offer a "sensible" Leave deal in a new Brexit referendum as he signalled he could remain neutral in such a vote. The comments come just days before Labour's annual party conference where Corbyn is expected to come under heavy pressure to take a stronger pro-Remain stance. A number of senior shadow cabinet figures, such as Emily Thornberry and John McDonnell, have said they would back Remain in a new referendum. Labour's deputy leader Tom Watson has gone further by calling for another national poll on Brexit before any general election is held.
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