Yahoo Finance What to Watch: Sainsbury's slips, Lagarde at the ECB, and Telford takeover
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Sainsbury’s slips
Sainsbury’s (SBRY.L) missed analysts’ forecasts with first quarter results on Wednesday but pointed to market share gains “in a tough trading environment.”
The retailer saw like-for-like sales slide by 1.6% in the 16 weeks to 29 June, as its decline accelerated from 0.9% in the previous quarter. The slide was worse than the 1.5% dip in sales City analysts expected.
Bruno Monteyne, an analyst at Bernstein, said Sainsbury’s quarterly fall “compares unfavourably against the Q1 like-for-like performance of its big-4 peers (Tesco UK +0.4% ex. Booker, Asda +0.5% ex. cal, Morrisons +0.2%).”
Grocery sales fell by 0.5%, which beat forecasts, but general merchandise sales dropped by 3.1% and clothing sales fell by 4.5%.
“We continue to adapt our business to changing shopping habits and made good progress in a challenging market,” Sainsbury’s CEO Mike Coupe said.
Coupe is expected to face criticism from some investors at the supermarket’s annual general meeting on Thursday, following the collapse of its planned mega-merger with Asda earlier this year.
Sainsbury’s shares fell by as much as 1.5% at the open but have recovered and are trading down 0.3% at 8.45am.
Lagarde at the ECB
International Monetary Fund head Christine Lagarde has been picked to take over as head of the European Central Bank.
Lagarde will replace Mario Draghi, who has run the ECB since 2011 and will leave the central bank in October.
Lagarde has been director of the IMF since 2011 and is set to be the first woman to lead the ECB, as well as the first non-economist. Her background is in law and politics.
European leaders agreed on new appointees for all of the top jobs at a summit in Brussels on Tuesday evening.
German defence minister Ursula von der Leyen will become European Commission president, and the first woman to hold the job. Belgian prime minister Charles Michel is poised to become Council president and Spanish foreign minister Josep Borrell will be the new high representative for foreign affairs.
Serco fine
Outsourcing giant Serco (SRP.L) has been fined £19.2m, plus £3.7m in costs, as part of a settlement with the Serious Fraud Office (SFO) over fraud and false accounting relating to electronic tagging contracts with the Ministry of Justice.
Serco said its UK subsidiary, Serco Geografix, has taken responsibility for the three offences of fraud and two of false accounting committed between 2010 and 2013.
The issue was reported by Serco to the SFO in 2013. The settlement sees the lengthy investigations brought to an end without any criminal charges.
Serco previously paid a £70m settlement to the Ministry of Justice in December 2013.
Telford takeover
US real estate services firm CBRE has agreed to buy London-focused house builder Telford Homes (TEF.L) in a deal worth £267.4m.
The property group — which is listed in New York — said it offered to pay 350p-a-share for Telford, which represents an 11% premium to its closing price on Tuesday.
“The board believes that the offer from CBRE represents fair value for shareholders in light of Telford Homes’ market positioning, the current operating environment, and the underlying value of Telford Homes’ site portfolio and pipeline,” Andrew Wiseman, chairman of Telford Homes, said.
Telford shares jumped by 11% to 352p at the open.
Purplebricks losses jump
Online real estate agency Purple Bricks (PURP.L) will pull out of the United States, the company announced Wednesday. Operating losses at the firm jumped by 88% to £52.3m in its most recent financial year.
The company had already said it would scale back its ambitions in the US in May, when it ousted its CEO and withdrew from the Australian market.
The announcement came as part of the company’s latest full-year results. While losses at the firm almost doubled, group revenue was up 55% to £136.5m.
Facebook warned on Libra
One of Britain’s top regulators has warned Facebook (FB) against adopting “a move fast and break things” approach to its new cryptocurrency project Libra.
“Historically, this may have been a sector that has lived by the mantra of ‘move fast and break things,’ but the issues raised here require deep thought and detail,” Chris Woolard, the Financial Conduct Authority (FCA)’s executive director of strategy and competition, said in a speech on Tuesday.
Separately, members of US Congress wrote to Facebook late on Tuesday calling for Facebook to immediately halt development of Libra “until regulators and Congress have an opportunity to examine these issues and take action.”
European stocks solid
European stocks were enjoying modest gains on Wednesday morning. The FTSE was helped by a sliding pound, which was weighed down by a gloomy speech from Bank of England governor Mark Carney on Tuesday afternoon. (Many of the Footsie constituents report earnings in dollars, so a weak pound makes share prices look attractive.)
Britain's FTSE 100 (^FTSE) was up by 0.5%, Germany's DAX (^GDAXI) was up by 0.5%, France’s CAC 40 (^FCHI) was up by 0.4%, and the Euronext 100 was up by 0.5%.
The pound was down by 0.1% against the dollar to $1.257 (GBPUSD=X) and flat against the euro at €1.114 (GBPEUR=X). The euro was flat against the dollar at $1.128 (EURUSD=X).
Asian markets dipped overnight. Japan's Nikkei 225 (^N225) ended down by 0.5%, China's benchmark Shanghai Composite (000001.SS) was down by 0.9%, and the Hong Kong's Hang Seng index (^HSI) was down by 0.2%.
What to expect in the US
US stock futures were pointing to a higher open later today.
S&P 500 futures (ES=F) were up by 0.1%, Dow Jones Industrial Average futures (YM=F) were up by 0.1%, and Nasdaq futures (NQ=F) were up by 0.2%.
