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What to watch: Boohoo slumps on factory exposé, Cinema chains sue each other, and Sunak boosts stocks

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·4-min read
LOS ANGELES, CALIFORNIA - NOVEMBER 07: Signage is seen at boohoo x All That Glitters Launch Party on November 07, 2019 in Los Angeles, California. (Photo by Dana Pleasant/Getty Images for boohoo.com)
Two reports over the weekend highlighted alleged poor conditions at factories used by Boohoo as suppliers. Photo: Dana Pleasant/Getty Images for boohoo.com

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

Boohoo slumps on factory exposé

Shares in fast fashion retailer Boohoo (BOO.L) slumped as much as 12% in early trade after two reports over the weekend highlighted alleged poor conditions at factories it uses as suppliers.

On Saturday, the Guardian ran a report suggesting Boohoo may have relied on factories in Leicester that did not close during lockdown, which could have contributed to the current COVID-19 outbreak in the city.

The Sunday Times followed with an undercover exposé alleging workers were paid as little as £3.50 ($4.37) an hour in factories supplying Boohoo, far below the minimum wage of £8.72 an hour.

Boohoo said in a statement on Monday it was “grateful” to the Sunday Times for exposing factory conditions, which it said were “totally unacceptable and fall woefully short of any standards acceptable in any workplace.” The company said it was reviewing its exposure to the manufacturer in question and would take action.

“Where help and support for improvement is required, we have and will continue to provide it, to ensure that everyone working to produce clothing in our supply chain is properly remunerated, fairly treated and safe at work,” the company said.

Cinema chains sue each other

Canada’s biggest cinema chain Cineplex is to sue rival Cineworld (CINE.L) for up to CA$ 2.2bn (£1.3 bn), sparking a counter-claim from the British chain.

Cineplex alleges that Cineworld breached its obligations when it pulled out of a CA$2.8bn (£1.6bn) takeover deal last month.

Cineworld denied the breaches and said it plans to make a counter-claim against Cineplex.

Sunak boosts house builders, retailers

Speculation about what chancellor Rishi Sunak could announce in his stimulus statement on Wednesday has boosted British stocks.

Housebuilders topped the FTSE 100 after a report in the Sunday Times that the chancellor is considering raising the threshold for stamp duty — a tax on property transactions — in a bid to kickstart growth.

Barratt Developments also put out a positive trading update that boosted sentiment in the sector. Barratt said it had seen “high customer interest levels” since reopening its sales centres, with forward orders now ahead of where they were this time last year. Chief executive David Thomas said the company was proceeding with “cautious optimism”.

Housebuilders Persimmon (PSN.L) rose 6.3%, Taylor Wimpey (TW.L) climbed 4.9% and Barratt Developments (BDEV.L) gained 6.1%.

Next (NXT.L) rose 3.9% and JD Sports (JD.L) added 3.4%. The Guardian reported over the weekend that Sunak is also considering giving Brits a one-off £500 voucher to spend in parts of the economy hardest hit by the COVID-19 shutdown, including physical retail.

Global stocks rise

European stock markets opened higher on Monday, taking a cue from Asian markets which rallied overnight.

The FTSE 100 (^FTSE) rose 1.8% at the open, while the DAX (^GDAXI) and the CAC 40 (^FCHI) both gained 1.9%.

It came after a strong session in Asia overnight. Japan’s Nikkei (^N255) rose 1.8%, Hong Kong’s Hang Seng index gained 3.7% (^HSI), the Shanghai Composite rose 5.8% (000001.SS), and the Shenzen Component (399001.SZ) climbed 4.1%.

“Those moves are being attributed to positive commentary on the stock market from Chinese state media, namely a front-page editorial in the Securities Times which suggested that a “healthy” bull market after the pandemic is now more important to the economy than ever,” Jim Reid, a senior strategist at Deutsche Bank, wrote in a morning note to clients.

US futures were also rallying strongly after the long Independence Day weekend. S&P 500 futures (ES=F) were up 1%, Dow Jones futures (YM=F) were up 1.3%, and Nasdaq futures (NQ=F) climbed 1.2%.

Lloyds CEO to step down

Lloyds Banking Group (LLOY.L) has announced that chief executive António Horta-Osório will step down from his role in 2021 after a decade in charge of the lender.

Horta-Osório has informed the board he plans to retire from Lloyds by June next year, kicking off the race to find a successor for one of the most high-profile banking roles in the UK.

Portuguese Horta-Osório took over running Lloyds in 2011 in the wake of the financial crisis. The bank was months away from running out of cash when he took the helm.

His tenure has seen Lloyds slim down to focus on domestic banking and turn around its performance. Horta-Osório has also overseen the transition back to full private ownership following a state bailout during the 2008 financial crisis.

However, while Lloyds has returned to profitability, the slimming down of operations has left the group’s share price 45% below where it was when Horta-Osório took over.