Oct 1, 2013

The Telegraph City Briefing October 1, 2013.

The Telegraph

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The US Federal Government is shutting down. In the past few hours President Obama lost a high-stakes game of brinkmanship as the Republicans refused to pass the Budget unless he scrapped his signature healthcare reforms. For the first time in 17 years, more than 700,000 Federal workers will stay home and a million more  will work from home without pay as non-essential services are closed. The President said there would be "economic consequences for all." Stockmarkets on Wall Street fell and the dollar dropped before the deadlock though Treasury bills held firm. With the world's powerhouse economy in crisis, traders here are braced for falls. In two weeks time, there's the debt ceiling deadline and the prospect of a US default just got bigger. We'll have the updates on our live business blog here

In company announcements today Wolsey has said its annual pre-tax profits jumped to £473m last year to £198m. The plumbing and building suppliers, which has been boosted by a strong housing market in the US, has raised its total dividend by 10pc and announced a special dividend of £300m which chief executive Ian Meankins said "reflects the group's strong financial position." Experian has announced a $324m acquisition of 41st Parameter, a US-based provider of fraud protection services. Rangers International Football Club has announced £1.3m in annual pre-tax profits.

It's the end of an era at the Royal Bank of Scotland as Ross McEwan takes over as chief executive from Stephen Hester. For the avoidance of rows, Mr McEwan will not receive a bonus for two years but he's getting paid £1m a year. Marius Kloppers officially retires from BHP Billiton today, Andy Ransom takes over as chief executive of Rentokil Initial,  Sir Roger Carr starts as chairman designate of BAE Systems, and Stobart Group gets Iain Ferguson as chairman.

The number of advertised UK jobs rose to its highest level for four years in September, according to the Reed Job Index today. The index showed vacancies jumped to 24pc on an annual basis. The latest manufacturing PMIs will be released at 930am. The Financial Policy Committee, the Bank's risk watch-dog, is publishing the record of its latest meeting. And Paul Tucker, the deputy governor of the Bank of England, is speaking at the Oliver Wyman conference in London.

The National Minimum Wage is going up as a raft of Government measures come into force today. The adult rate is now £6.31 an hour, up 1.9pc, and £5.o3 for 18-20 year olds. The Government's radical new pay rules start so from today, shareholders will have a binding vote on public company pay policies. Newly built commercial property completed from today until September 2016 will be exempt from empty property rates for 18 months under measures announced by the Chancellor in the Autumn Statement last year. And the Competition and Markets Authority is legally established, replacing both the Competition Commission and the Office of Fair Trading.

In Europe, Italy remains in limbo with Encrico Letta's government facing a vote of confidence tomorrow. Market reaction has been muted so far as traders hoped that an internal revolt against Silvio Berlusconi could stave off another general election in Europe's third biggest economy. Meanwhile, troika officials are off to Ireland for their latest quarterly visit. 

The political drama almost makes the Chancellor's promise of bringing Britain back to budget surplus look relatively easy. Today in Manchester Boris Johnson's speech is the highlight of this morning's agenda at the Conservative Party Conference. The Mayor of London will be followed by Eric Pickles and then Iain Duncan Smith who will speak on the Government's key back-to-work scheme.  In the fringe today Patrick McLaughlin will speak on High Speed 2, Lord Kirkham, the founder of DFS is speaking on entrepreneurialism, and there's a debate on the privatisation of Royal Mail. We'll have all the updates live here.


I know the sacrifice you make - the 60-hour weeks, juggling family life and staying awake at night worrying about how you are going to pay the next wage bill.Karren Brady, vice-chairman of West Ham, is appointed the Government's Small Business Ambassador.


23.7pcThe amount average UK house prices will jump by 2018, to a record £278,000, according to the Centre for Economics and Business Research.


Jeremy Warner believes that George Osborne's rhetoric on the deficit is a million miles away from the reality.
Emily Gosden reports that small energy suppliers have warned they could be put out of business by Labour's planned price freeze.

Nathalie Thomas writes that Eurostar and a company controlled by France's national railway are planning a joint bid to run Britain's East Coast Main Line.


Financial Times (£): Hedge funds' bets on falling share prices have dropped to their lowest level in years as traders predict an extended bull run for equities over the coming months.

The Guardian: German supermarket Aldi is aiming to open 50 new stores in the UK this year after sales soared 40pc to £3.9bn in 2012.

The Mail: Directory enquiry firm 118 118 is moving into a new market - personal loans.


In London, the FTSE 100 yesterday fell 50.44 points to 6,462.22.

In the US, the Dow Jones Industrial Average closed down 128.57 points at 15,129.67. The S&P 500 fell 10.20 points to 1,681.55.

The Nikkei rose 0.2pc this morning, closing at 14,484.72.


Michael Gapen, director of US economic research at Barclays, warns of big problems if a US government shutdown dragged on:
There could be knock-on effects if confidence wanes or a prolonged shutdown signals something worse. It says something about our ability to govern.


Brent crude oil fell 0.24pc to $108.37 a barrel. Gold dropped 1.08pc to $1,327 an ounce. More here.


Sterling rose 0.58 cents against the euro to €1.1963 and climbed 0.72 cents against the dollar to $1.6194. More here.

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