Business Live Wednesday 29 May – BBC News

Oil prices fell by more than 1% on Wednesday as tensions between the US and China show no signs of abating.

Brent crude is down 1% at $69.40 while West Texas Intermediate is off 1.29% at $58.38.

James Mick, managing
director and energy portfolio manager at Tortoise, said: “Investors are concerned from a macro perspective about
worldwide demand, particularly in the face of the growing trade
dispute between the US and China.”

Meanwhile, Jasper Lawler, head of research
at LCG said: “Oil bears are digging their
heels in on concerns that the trade war could trigger an economic downturn,
hitting future demand.

“The only reason that oil hasn’t fallen further is that
supply remains relatively tight with ongoing OPEC supply cuts, tensions in the
middle east and Venezuela’s on-going political struggles.”

Firms in the services sector have reported falling profits in recent months, according to a new study from business body the CBI.

Its research suggests business conditions fell “sharply” in the quarter to May. It added that declining optimism was affecting firms in hotels, restaurants, travel, leisure as well as those in professional services.

And Anna Leach, the CBI’s deputy chief economist, said Brexit “paralysis” was continuing to take a toll on the UK’s services firms.

She warned: “Profits, optimism and investment spending are falling sharply amidst a torrid operating environment.

“Politicians have wasted six critical weeks, allowing uncertainty to tighten its stranglehold on the British economy. Business and the country need Westminster to rule out no deal, and deliver an urgent resolution to the Brexit mess.”

The FTSE 100 started Wednesday trading 0.69% lower at 7,218.86.

The FTSE 250 also dropped, down 0.61% at 19,088.17.

Getty ImagesCopyright: Getty Images

Patrick O’Brien, UK research director at GlobalData Retail, says that Boots is a “very complacent-looking retailer” which is facing issues on a number of fronts.

He says that on pricing it “can’t compete with those discounters”.

“Then in the more excitable, more fashion driven areas such as cosmetics and skincare, it is getting outflanked by much more agile and exciting brands.”

Trainline, the rail app, says it will float and plans to raise £75m to fund expansion plans.

The company is owned by US private equity firm KKR and is expected to launch its initial public offering in June.

Cult BeautyCopyright: Cult Beauty

The competition is coming from all sides for Boots, which is reportedly looking at closing 200 stores in the UK.

But the pressure has been there for some time, according to Patrick O’Brien, UK research director at GlobalData Retail.

“It is number one for health and beauty in the UK,” he says. “But its market share 10 years ago was 23% and it is down to 19% and it really has been a really gradual decline over a long period.”

He says: “The grocers have been losing market share over the last five years. The ones who are really taking it are the discounters, companies like Savers, Home Bargains, B&M, Aldi.

“But they are also losing out to upcoming online brands like Feel Unique and Cult Beauty, Look Fantastic and, of course, Amazon.”

Today Programme

BBC Radio 4

More from Matt Hancock’s interview on the Today programme, where he said the Conservative Party must be more business-friendly.

When asked whether that meant people such as fellow Tory challenger Boris Johnson should be kept away from leadership positions, he replied “no”.

Mr Johnson was reported last year to have used expletives in response to fears from businesses over the effects of a hard Brexit on the economy.

Mr Hancock added: “That attitude is wrong. We need to be much more pro-business as a party. I will be as robust as I can in making this case.”

Stobart GroupCopyright: Stobart Group

Aside from legal fees related to the dismissal of former chief executive Andrew Tinker, Stobart has also reported a £34.7m pre-tax loss for the full year compared with a £112.4m gain in the previous 12 months.

Its underlying profit, however, is ahead 60% and chief executive Warwick Brady says it has been a “transformational year” for the company.

“We have significantly strengthened the board and management team and taken the opportunity to deal with legacy issues while putting in place appropriate operational rigour within the business.”

Sales for the year to 28 February rose 39% to £146.9m.

Today Programme

BBC Radio 4

Conservative Party leadership candidate Matt Hancock tells BBC Radio 4’s Today programme he would change business rates if he wins the battle to replace Theresa May.

Companies have long called for changes to the current business rates regime, which they say is a factor in the ongoing crisis on the UK High Streets.

Health Secretary Mr Hancock said he would “absolutely” change the current system, although he did not spell out how it would be achieved. He also pointed out that the levy brings in £26m in revenues a year.

“It is something I would definitely look at,” he said, pointing out that firms based in “bricks and mortar” premises were finding it hard to compete with online rivals, who do not have to pay business rates.

Today Programme

BBC Radio 4

Boots has become the latest High Street retailer to announce it is closing shops.

Panmure Gordon’s chief economist Simon French says this is a review of Boots’ property portfolio “in terms of footfall and the costliest of the estate in terms of business rates”.

He tells the Today programme: “The owner, Walgreens Boots Alliance, its share price is down about 40% over the course of the last six months and therefore, under pressure for cost-cutting, they have already announced potentially $1bn of cost cutting – this is the programme that will contribute to the bottom line.”

It’s been a pretty bleak session across Asia markets, though shares in Shanghai edged higher.

In afternoon trading, Japan’s Nikkei 225 index and South Korea’s Kospi index each dropped 1.2%, while Hong Kong’s Hang Seng slipped 0.1%.

The Shanghai Composite bucked the trend with a 0.2% rise.

Robin Brant

Political Correspondent

Sitting up on a stage, in a large theatre-like room at its sprawling Shenzhen HQ there was much talk from the Huawei executives of America’s rural and “poorer” customers who deserve “equitable access” to good broadband provision.

Huawei’s chief legal officer went as far as saying “connectivity is a basic human right”. Three billion customers across the world are facing the threat of having their welfare “damaged” apparently.

So the firm wants to speed things up. The other reason of course is that the assault from the Trump administration is biting.

Asked if the restrictions could be devastating to the company one executive said he wouldn’t use that word. Asked if the company would still be around in a year’s time he said its business plans go well beyond next year.

This is a company that insists it is – proudly – privately owned. Its HQ is not a place dotted with political paraphernalia. Nonetheless I asked if the two senior executives present were members of China’s prevailing Communist Party. One said he wasn’t. The other wouldn’t say.

Today Programme

BBC Radio 4

Theresa May formally resigns as Prime Minister on Friday and the field of candidates to replace her is crowded to say the least.

So who is the best choice for business?

Simon French, chief economist at Panmure Gordon, tells the Today programme: “One of the challenges businesses face is that each of the candidates – and we’ve had 11 declared thus far – are each trying to speak to three constituents.”

He says these are: “Their own MPs in order to secure the nomination.That goes forward to the second set of constituents which is the Conservative Party membership and then of course there is the wider constituency, the people who will vote in and when the next general election takes place.

“Therefore the challenge for business is to decipher which of the slightly different messaging that each of the candidate will use is actually applicable for how business will have to face up to a new regulatory regime and a new tax regime going forward under a new Conservative leader.”

Today Programme

BBC Radio 4

More on that Huawei story.

Emily Taylor, editor of the Journal of Cyber Policy, tells Radio 4’s Today programme: “Huawei claims that national security is being used as a cloak in the trade war between the US and China.

“The whole context of this is the tension between the US and China.”

She says there are also issues around the roll-out of 5G, the next generation of mobile phone networks.

“There are a lot of strands to it,” says Ms Taylor. “In the US rhetoric there are a lot of accusations, but very little evidence.”

The New Zealand Treasury has said its systems were hacked in a statement released on Tuesday.

“The Treasury has gathered sufficient evidence to indicate that its systems have been deliberately and systematically hacked,” Treasury Secretary Gabriel Makhlouf said in a statement.

He said the Treasury had referred the matter to the police.

“The Treasury takes the security of all the information it holds extremely seriously.”

Shares in China’s rare earth producers have jumped amid reports Beijing is considering restricting exports of the minerals to the US.

China Rare Earth Holdings surged more than 30%, while China Northern
Rare Earth Group High-Tech put on 5% and China Minmetals Rare Earth added more than 6%.

• What are rare earths?

China has been signalling that it may limit exports of rare earth minerals – vital for many US technology industries – to the US as the trade conflict between the two countries escalates.

On Wednesday, China’s Communist Party newspaper the People’s Daily warned the US that Beijing could use rare earths to hit back in their bruising trade war, saying in a commentary: “Don’t say we didn’t warn you.”

Huawei’s top legal officer has said a US move to put the company on a trade blacklist could hurt more than 3 billion consumers around the world.

“Two weeks ago, the US Commerce Department added
Huawei to their ‘Entity List.’ This decision threatens to harm our
customers in over 170 countries, including more than three billion consumers
who use Huawei products and services around the world,” said Song Liuping, Huawei’s
chief legal officer at a press conference .

He said US firms and the US economy would also be hit.

“By preventing American
companies from doing business with Huawei, the government will directly harm
more than 1,200 US companies. This will affect tens of thousands of American
jobs.”

Welcome to Business Live.

US-China trade talks – or lack thereof – continue to dominate headlines and will no doubt continue to weigh on stock markets today.

Closer to home, WH Smith has the dubious pleasure of being named Britain’s worst retailer, again.

Follow us throughout the day as we bring you all the breaking news from the world of business and economics.