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What to Watch: May clings on, trade wars hit markets, and profits jump at B&M and Young's

·Senior City Correspondent, Yahoo Finance UK
LONDON, ENGLAND - MAY 22: Former Leader of the House of Commons, Andrea Leadsom, arrives at her home after announcing her resignation from government on May 22, 2019 in London, England. Leadsom announced her resignation to the Prime Minister stating that she would find it difficult to present the Withdrawal Agreement Bill put forward by Theresa May to the House of Commons. (Photo by Peter Summers/Getty Images)
Ex-Leader of the House of Commons, Andrea Leadsom, arrives at her home after announcing her resignation from government on 22 May 2019. Photo: Peter Summers/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

May clings on

Prime Minister Theresa May has survived pressure from her own cabinet on Wednesday to resign although commentators say she could still resign within days.

May faced a rebellion within her own government after offering MPs a vote on whether to hold a second referendum on Brexit if they backed her withdrawal deal. Many Brexit supporting Conservative MPs thought this was unacceptable and Andrea Leadsom, the leader of the House of Commons, last night resigned from government in protest.

“The pound has continued to slide, not surprising given what’s going in at Westminster right now, with Prime Minister Theresa May rocked by the resignation of Andrea Leadsom,” Michael Hewson, chief market analyst at CMC Markets, said.

The pound was down 0.3% against the dollar to $1.26 (GBPUSD=X) and down by 0.2% against the euro to €1.13 (GBPEUR=X).

“The sands of time appear to be running out for the Prime Minister as European elections start today,” Hewson said.

“While it is unlikely that the Prime Minister will go today, she could well be gone by Monday when it becomes apparent how badly the Conservative party has done in today’s European poll.”

Trade war fears hit markets

Global stock markets are also under pressure amid revived fears over the trade war between the US and China.

Overnight Panasonic (6752.T) joined Google (GOOGL), EE, Vodafone (VOD.L), Qualcomm (QCOM), and ARM in suspending business with Huawei to comply with US sanctions.

“Whatever relief was generated by the announcement a 90-day grace period earlier in the week has completely dissipated, as investors fret over the damage this nascent tech Cold War is doing to the chance of a positive outcome to the US-China trade battle,” Connor Campbell, a financial analyst with SpreadEx, said.

Britain's FTSE 100 (^FTSE) was down by 0.6%, Germany's DAX (^GDAXI) was down by 1.3%, France's CAC 40 (^FCHI) was down by 1.1%, and the Euronext 100 (^N100) was down by 1%.

Asian markets were lower overnight. Japan's Nikkei 225 (^N225) was down by 0.6%, Hong Kong's Hang Seng index (^HSI) was down by 1.7%, but China's benchmark Shanghai Composite (000001.SS) was down by 1.3%.

B&M profits jump

Retailer B&M (BME.L) has reported an 8.7% increase in annual pre-tax profits to £249.4m.

Revenue was up 17.1% at £3.49bn in the 52 weeks to March 30.

Chief executive Simon Arora said: “B&M has again delivered strong results against the challenging backdrop of continued structural change in our industry, rising costs and uncertain times for consumers, demonstrating that its value credentials remain as resonant as ever with customers, whether they need a bargain or just enjoy one.”

... and good cheer for pubs too

Pub group Young’s (YNGA.L) has also reported a rise in profits, while rival Mitchell’s & Butlers (MAB.L) has returned to operating profit growth.

Profit before tax was up 5.1% at £39.5m and revenue rose by 8.7% to £303.7m for the year to April 1.

The group spent £67.1m on acquisitions, including the 15-strong portfolio of Redcomb pubs.

Chief executive Patrick Dardis said: “The addition of the 15 Redcomb pubs complements the existing Young’s managed house estate and presents tremendous opportunities for future growth.

“We have continued to invest in our existing estate as well as upgrading our technology and are excited to realise this potential.”

Separately, All Bar One and Harvester owner Mitchells & Butlers has returned to operating profit growth, posting £140m of operating profit in the first half of the year

Revenue was higher at £1.19bn, while like-for-like sales climbed 4.1%.

Green set to close TopShop stores

Sir Philip Green’s Arcadia Group has announced plans to shut 23 stores in the UK and Ireland, putting 520 jobs at risk, as part of a rescue plan.

Dorothy Perkins, Burton, Topshop, and Topman stores have been earmarked for closure as part of a company voluntary arrangement (CVA).

The retail group’s proposals will also see rent cut at another 194 outlets. All of the retailer’s 11 Topman and Topshop stores in the US are also set to close.

As part of the plan, Lady Green, wife of Sir Philip and ultimate owner of Arcadia, has offered landlords a 20% stake of any proceeds if the group is eventually sold.

Lady Green will also inject £50 million of equity into the business, on top of £50 million she had already loaned the company.

New $125m European tech fund launches

Cloud software company Salesforce (CRM) on Thursday announced the launch of a new $125m (£99m) investment fund for European tech startups.

The fund will focus on enterprise cloud startups in the region, which provide online services and software to businesses, and will give the global giant a stake in companies which could end up becoming leaders in its own industry.

Salesforce said the new fund will create the “world’s largest ecosystem of enterprise cloud companies.”

Government scheme ‘at risk of failure’

The CEO of online lending company Iwoca has written to the UK Chancellor warning that a government scheme to help small businesses access funding is “at risk of failure.”

Christoph Rieche wrote to Chancellor Philip Hammond on Thursday calling for a new task force to help repair the flagging Bank Referral Scheme.

The Bank Referral Scheme (BRS) was set up in November 2016 to help small and medium sized businesses (SMEs) access to loans and other financing. It came in response to a decline in lending to smaller businesses after the 2008 financial crisis.

“I am writing to you today because one of the cornerstone initiatives designed to help make finance more available to small businesses is at risk of failure,” Rieche wrote in his letter to the Chancellor, which was seen by Yahoo Finance UK. “Launched in 2016, the Bank Referral Scheme (BRS) has failed to deliver any meaningful impact.”

What to expect in the US

US stock futures were pointing to a lower open amid revived trade war fears.

S&P 500 futures (ES=F) were down by 0.6%, Dow Jones Industrial Average futures (YM=F) was down by 0.5%, and Nasdaq futures (NQ=F) were down by 0.8%.

Companies reporting later in the US today include:

  • Best Buy (BBY)

  • Hewlett Packard (HPE)

  • Weibo (WB)