Week 36

05 September – 09 September

 

05 September

 

Leaders of the world’s 20 largest economies have been warned that they must “civilise capitalism” as they seek to revive economic growth and address growing public scepticism about the benefits of free trade and globalisation.

 

Samsung investors have swiped away concerns about its unprecedented recall of 2.5m Note 7 phones — despite a forecast loss of more than 4m unit sales, worth $5bn in revenues or 5 per cent of annual net profit.

 

Another shot of better than expected data from the UK economy put the wind in sterling’s sails on Monday after the services sector recorded its biggest monthly jump in 20 years, defying expectations of a further leg lower for a currency now trading at a seven-week high.

 

The accounting deficit of defined benefit pension schemes for the UK’s 350 largest listed companies stood at £189bn on August 31, compared to £139bn at the end of July, according to consultancy Mercer.

 

06 September

 

Business conditions for eurozone retailers improved at the fastest pace in 10 months in August, driven in part by a surge in France, where activity hit a five-year high, according to a survey from Markit tracking sales, margins and hiring plans.

 

Demand for research on start-ups has grown as more investment flows into big late-stage fundraising rounds, which have come to be known as “mini-IPOs”. Investment in venture-backed start-ups reached $60bn last year, double the level of 2013, as new investors such as mutual funds and asset managers have entered the scene.

 

Switzerland has emerged from deflation for the first time in 20 months.

 

Glencore is selling its first euro bond today since a dramatic fall in the price of its shares and bonds in September last year, which was fuelled by a rout in commodity prices and investor fears over its debt load.

 

07 September

 

Today, policymakers are rethinking their strategy. At the latest ECB press conference, President Draghi and Vice-President Constâncio said they would have to address future bank profitability. This week Governor Kuroda of the Bank of Japan stated that central bankers should weigh the benefits of QE and negative interest rates with its negative impact on financial intermediation.

 

Starved of returns in their home markets, institutional investors across the developed world have been pouring money into emerging market assets at a rate of more than $20bn a month since the middle of this year — quite a turnround after the outflows that dominated much of the previous 12 months.

 

Financial markets began the year beset by concerns over the health of the world economy, a tumbling oil price, the effectiveness of central banks’ unconventional policies and the valuation of both bonds and equities.

 

The US dollar dropped, Treasury bonds rallied and dividend-paying stocks jumped after a weak reading on the American services sector detracted from speculation that the Federal Reserve will raise interest rates this month.

 

08 September

 

China’s dollar-denominated export contraction softened further in August as imports returned to growth for the first time since 2014.

 

Apple raised prices on some of its products in the UK on the same day as it unveiled the latest iPhone in a move blamed by analysts on the sharp drop in sterling following Britain’s vote to leave the EU.

 

The UK’s vote to leave the EU has exacerbated existing problems for financial firms, from the low interest rate environment to the stagnant profitability of banks, the European Supervisory Authorities said on Wednesday as part of their twice-yearly risk outlook, writes Caroline Binham, Financial Regulation Correspondent.

 

European banks should not blame their problems on low interest rates, European Central Bank president, Mario Draghi has said, insisting that measures taken by the central bank will ultimately have a “positive effect” on banks’ balance sheets.

 

09 September

 

An umbrella group of super-regulators this week flagged Brexit as a fresh challenge to a sector already suffering from sluggish growth as it battles against historically low interest rates and swingeing fines for misconduct.

 

On Thursday, the ECB kept interest rates unchanged and also dashed hopes it would push out the end date of its €80bn-a-month asset purchase programme from March 2017 by an extra six months.

 

UniCredit is considering a full sale of its Pioneer asset management arm as it looks to raise capital and shore up its balance sheet after ranking sixth from the bottom in European bank stress tests, according to four sources with knowledge of the matter.

 

The Bank of Korea kept rates steady at 1.25 per cent, a move predicted by all but one of the 32 economists surveyed by Bloomberg.