The Business: Friday August 8 2014
Company news, markets and financial talking points, available from 8am Monday to Friday
Shares in Tesco have hit a ten-year low after its credit rating was downgraded by one of the world’s leading rating agencies, reports The Times. Standard & Poor’s said it had cut Tesco’s rating from BBB+ to BBB. It also warned the struggling chain that it had a “negative outlook” on its business, given the level of competition it faced in Britain from low-cost rivals such as Aldi. Tesco’s stock, which has fallen by 27 % this year, slipped by 1.5p to 244p — its lowest level since 2003.
Germany is nearing recession as the European Central Bank admits recovery is “weak, fragile and uneven”. German bonds sank to an historic low yesterday after a series of studies showed that recovery has stalled across most of the EU’s bloc. Commerzbank is warning that the German economy may have contracted by 0.2% in the second quarter and therefore cannot be relied upon to lift southern Europe out of the doldrums.
The soaring pound was wiped £1.5bn off the profits of UK plcs, reports the Daily Telegraph. With the pound rising 13% against the US dollar and 10% against the euro so far this year, companies exposed to foreign markets are being hit hard. Defence company Cobham said yesterday it has taken a £5.4m hit on first-half profits due to the strength of the pound and engineering firm Amec said the same issue slashed £16m from its income in the six months to June 30.
Malaysia Airlines, which is on the brink of collapse after two disasters in four months, is to be nationalised, reports the Financial Times. Malaysia's state investment firm Khazanah Nasional is proposing a "complete overhaul" of the troubled national carrier. Khazanah wants to buy the shares it does not already own in Malaysia Airlines and delist the carrier. The crash of flight MH17 in Ukraine and disappearance of flight MH370 have raised concerns over the airline’s future.
“The United States can play dumb, but Judge Griesa decided to seize something that isn't even ours. It belongs to the bondholders.” Axel Kicillof, Argentina's economy minister, accuses the US of disingenuous behaviour over the second default in 12 years.
A wine fraudster has been jailed for 10 years for his role in selling millions of dollars worth of fake wine. Rudy Kurniawan has also been ordered to pay £28.4m in restitution to his victims, who include the billionaire William Koch. Kurniawan mixed old wine with newer wine in his kitchen, passing the result off as expensive vintages. It is believed that many of his rich and famous clients kept quiet out of embarrassment.
FTSE-100: down -0.58 to 6597.37
Dow Jones: down -0.46 to 16368.27
Dax: down -1.00 to 9038.97
Cac-40: down -1.36 to 4149.83
Nikkei: down -2.81 to 14803.78
Hang Seng: up +0.09 to 24408.99
US dollar: buys €0.74690 and £0.59470
Sterling: buys $1.68170 and €1.25550
Oil: $105.90 up +1.3