Yahoo Finance What to watch: Battle for Asda, UK PMI and retail sales, public debt hits £2tn
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Two retail titans in clashing bids to buy Asda
Two titans from the UK’s retail sector are vying to buy Asda, one of the country’s largest supermarket chains.
According to a report in the Times, former Asda chief executive Paul Mason is leading a bid with US private equity giant Lone Star, which is known for its real estate investments. Mason led the company two decades ago.
Former Debenhams chief executive Rob Templeman, meanwhile, is advising rival firm Apollo Global Management on a potential bid for the supermarket, which has about 300 stores in the UK.
In February, current Asda owner Walmart (WMT) confirmed that it was in talks to sell a controlling stake in the supermarket chain.
The world’s largest retailer said it had received “inbound interest” from several parties about acquiring a stake in the UK supermarket chain, but said no decisions had been made on any third-party investment.
The discussions come after the UK’s competition regulator last year blocked a proposed £12bn ($15.8bn) merger between Asda and rival supermarket chain Sainsbury’s (SBRY.L). The deal valued Asda at £7.3bn.
UK private sector sees sharpest growth in seven years
Activity in the UK’s private sector grew at its sharpest pace since 2013 in August, with new data indicating a faster-than expected recovery from the coronavirus pandemic in both the manufacturing and services sectors.
The composite purchasing managers’ index (PMI) reading from IHS Markit’s closely watched survey came in at 60.3, well ahead of analyst forecasts and above July’s figure of 57.
PMIs are an indicator of private sector activity and are given on a scale of 1 to 100. Anything above 50 signals growth, while anything below means contraction.
“August's data illustrates that the recovery has gained speed across both the manufacturing and service sectors since July,” said Tim Moore, economics director at IHS Markit.
“The combined expansion of UK private sector output was the fastest for almost seven years, following sharp improvements in business and consumer spending from the lows seen in April.”
UK public debt breaks through £2tn for the first time
Britain’s public debt has burst through the £2tn mark for the first time, according to official figures.
New data from the Office for National Statistics (ONS) on Friday shows public debt at the end of July was bigger than the size of the entire UK economy for the first time in more than half a century.
Analysts said UK government borrowing this year was on track to hit its highest share of GDP since the Second World War, despite coming in lower than expected in recent months.
The government has ramped up spending on support for firms, workers, and public services to alleviate the devastating economic damage of the coronavirus and lockdown measures this year.
Several business loan programmes, the furlough scheme, grants for the self-employed, a temporary stamp duty holiday, and emergency cash for public transport operators are among the crisis measures to have pushed up spending.
UK retail rebound stronger than expected in July
Total UK retail sales continued to rebound more strongly than expected in July, the first full month where the whole sector was allowed to re-open nationwide.
Retail leaders warned the data “masks a crisis” in parts of the industry, with town and city centre firms’ survival at stake as they struggle with lower footfall and rent bills.
The latest figures from the Office for National Statistics (ONS) showed the volume of retail sales rose 2% between June and July, when analysts had expected a 0.2% boost. Some analysts had expected sales to go into reverse.
The quantity and value of total sales also smashed through levels seen before lockdown, with both up 4.4% on February. They were also higher than levels seen a year earlier, and up by a quarter on levels seen at the height of lockdown,
European stocks mixed as investors weigh economic data
European stocks were mixed on Friday morning as investors assessed the new economic data from the UK and the results of several closely watched indicators from across the continent.
The pan-European STOXX 600 index (^STOXX) rose by around 0.4%, while London’s FTSE 100 (^FTSE) was around 0.1% in the red despite the better-than-expected UK retail sales data.
Germany’s DAX (^GDAXI) rose by 0.4%, while France’s CAC 40 (^FCHI) was up by around 0.3%.
The mixed session in Europe followed a strong trading session in Asia.
Shanghai’s SSE Composite Index (^SSEC) rose by 0.5% on Friday, while the Hang Seng (^HSI) closed more than 1.3% in the green in Hong Kong.
Japan’s Nikkei (^N225) rose by almost 0.2%, while the KOSPI Composite Index (^KOSPI) in South Korea climbed by more than 1.3%.
What to expect in the US
Futures were pointing to a flat open for stocks in the US.
The broader US market has drifted sideways this week after the S&P 500 hit a record high on Tuesday. Investors have piled back into technology and “stay at home” stocks, amid signs that the US economic recovery may drag on.
Futures on the S&P 500 (ES=F) fell by less than 0.1%, while Dow Jones Industrial Average futures (YM=F) rose slightly. Nasdaq futures (NQ=F) were also only marginally in the green.
