The Morning Call - Four former Barclays executives charged by Serious Fraud Office

Highlights of the Day

Asian Markets

Asian shares were slightly lower, erasing initial gains, but Tokyo’s benchmark rose, cheered by gains on Wall Street led by technology shares.

U.S. Markets

U.S. stocks rose, with the U.S. 500 and the U.S. 30 hitting record highs helped by a technology sector rebound and strength in healthcare and financial stocks.

Today's News

The UK Serious Fraud Office has charged four former Barclays executives in relation to its Qatar fundraising during the financial crisis in 2008. The four individuals charged by the SFO include Barclay’s former chief executive officer, John Varley. Also charged are Roger Jenkins, former executive chairman of investment banking & investment management in the Middle East & North Africa for Barclays capital; Thomas Kalaris, former chief executive of Barclays Wealth & Investment Management; and Richard Boath, former European Head of Financial Institutions Group.

David Davis is taking his Brexit message across Europe after suffering a setback in Brussels. The Brexit Secretary is meeting members of Spain’s government as part of his effort to build bridges across the continent. Davis’s meeting with the administration of Prime Minister Mariano Rajoy came after UK officials agreed to the Brexit timetable set out by the European Commission’s chief negotiator Michel Barnier. Talks in Spain are expected to include the thorny issue of Gibraltar after the EU’s guidelines for talks suggested the disputed territory’s future economic status might be subject to a veto from Madrid.

The Confederation of British Industry forecast a steady, but subdued economic growth for the UK over the next couple of years as the country faces several headwinds. In its latest economic forecast, released Tuesday, the business lobby said British businesses and the government should navigate carefully in the months ahead amid the ongoing political uncertainty and Brexit negotiations. The business group forecast 1.6% growth for this year and 1.4% for 2018. The outlook for this year was revised up from 1.3% and that for next year from 1.1%. Nonetheless, the CBI’s projection remains unchanged compared to its previous November forecast, with the same average quarterly growth of 0.3% seen for the second half of this year as in November.

Moody’s Investors Service has upgraded its outlook on the UK life insurance sector to stable from negative, buoyed by an expectation of a “moderate and manageable impact from Brexit”. Additionally, Moody’s said low interest rates are not a key risk for UK life insurers, although cautioned that the industry’s margins could be pressured by ongoing regulatory probes. “Our stable outlook primarily reflects our base scenario that Brexit’s impact on UK life insurers will be moderate over the next 12 to 18 months, given the resilience of the UK’s economy and financial markets following last year’s referendum. Furthermore, we don’t expect the loss of ‘passporting’ to be a material issue for the industry,” said Moody’s Senior Credit Office Dominic Simpson.

Wolseley turned up the dial on sales in the third quarter, as the heating and plumbing group enjoyed good growth from its main US residential and commercial markets and improving industrial markets. The company, which is changing its corporate name to Ferguson to reflect the importance of its main US brand, saw sales rise 16.7% to £4.27bn in the three months to the end of April, up 4.6% at constant exchange rates and 6.6% on a like-for-like basis.

Asking prices for houses in the UK are being cut at the sharpest rate in over four years amid political and economic uncertainty, as London and the South East underperformed the rest of the UK. The price of residential property coming to market in June dropped 0.4% compared to May, Rightmove research revealed, with the year-on-year annual rate of price increase slowing to 1.8%, the lowest since April 2013. It was the first time sales had fallen month-on-month in June since 2009, the height of the credit crunch.

Interserve, the international support services and construction group, has been awarded a two-year contract extension worth up to £265m to continue as the infrastructure support provider for four strategic international UK Armed Forces bases. The contract has been awarded by the Defence Infrastructure Organisation (DIO) on behalf of the Joint Forces Command (JFC). The four sites comprise the JFC’s international permanent joint operating bases in the Falkland Islands and Ascension Island in the South Atlantic Ocean, as well as Gibraltar and Cyprus in the Mediterranean. Interserve is responsible for infrastructure support at the bases, including planned and reactive work to maintain the sites.

Ultra Electronics will deliver a major surveillance and security system valued at $18m over the next 26 months. It was also planned for the group’s Communications & Integrated Systems business (CIS) to provide five years’ specialist support over the course of the system’s use.

BT Group intends to buy back up to £200m of its shares from Orange. BT issued 398,725,107 new ordinary shares to Orange in January 2016, as partial consideration for the purchase of EE. The shares were subject to lock-up provisions which expired in January this year. Orange yesterday announced its intention to offer approximately a third of these shares – 133 million – to institutional investors through an accelerated bookbuild. BT said it had committed to participate in the offering and had placed an order to repurchase shares up to a maximum total value of £125m. It said that separately, Ilford Trustees (Jersey) Limited, trustee of the BT Group Employee Share Ownership Trust had placed an order to purchase additional shares with a maximum total value of £75m from Orange which BT would fund.

Oil prices flirted with this year’s lows as market players saw more signs that rising crude production in the United States, Libya and Nigeria were undercutting OPEC-led efforts to support the market with output curbs.

Gold hit a one-month low of $1,243.2 an ounce as risk sentiment improved, before bouncing back a tad to $1,245.5.

Companies Reporting this week

Tomorrow:

Berkeley Group Holdings * (The) Hornby Immunodiagnostic Systems Holdings * Sirius Real Estate Ltd.

Early Market Movements

UK 100	7,525.5	+1.7	+0.0%
UK 250	19,875.3	+2.0	+0.0%
GER 30	12,936.4	+47.4	+0.4%
FRA 40	5,334.7	+24.0	+0.5%
U.S. 30	21,528.99	+144.71	+0.7%
U.S. 500	2,453.5	20.3	+0.8%
OIL (BRENT)	47.12	+0.21	+0.5%
GOLD	1,246.42	+2.58	+0.2%

UK Risers & Fallers (8:15am)

Melrose Industrial	258.6	+4.7	+1.9%
Persimmon	2310	+32	+1.4%
Sage Group	720.5	+8	+1.1%
IWG	337.5	-22	-6.1%
Wolseley	4683	-201	-4.1%
BT Group	286.5	-3.2	-1.1%

Latest Broker Views

Inmarsat	Deutsche Bank	Buy	795.00	1,020.00
Sainsbury (J)	Citigroup	Buy	260.00	305.00
Vodafone Group	Berenberg	Buy	222.50	259.00
Wolseley	Liberum Capital	Buy	4,900.00	5,300.00