Section:GDN 1N PaGe:27 Edition Date:190731 Edition:01 Zone: Sent at 30/7/2019 20:48 cYanmaGentaYellowb
Wednesday 31 July 2019 The Guardian •27- 39.84
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FTSE 100 All share Dow Indl Nikkei 225 £/€ £/$
1.2152-0.0077 -0.0077Markets plunge after
Trump’s trade tweets
Sean FarrellMarkets fell sharply across Europe yes-
terday after Donald Trump reignited
trade war fears with a series of tweets
attacking China’s handling of negoti-
ations with the US.
With a two-day meeting between
the countries’ trade teams due to begin
in Shanghai, the US president said Chi-
na’s economy was “doing very badly”
and added that negotiators “just don’t
come through” on agreements, includ-
ing promises to buy US farm goods.
Trump also suggested China might
choose to delay a trade agreement
until after the US 2020 presidential
election to see if a Democrat wins.
“Then they could make a GREAT
deal, like in past 30 years and continueto ripoff the USA,” Trump tweeted.
“The problem with them waiting,
however, is that if & when I win, the
deal that they get will be much tougher
than what we are negotiating now ...
or no deal at all.”
Germany’s DAX index, already
weakened by disappointing company
results, fell 2.2% after Trump’s tirade.
The index is particularly sensitive to
trade tensions because of German
companies’ reliance on exports.
In France the CAC 40 fell 1.6% ,while
Spain’s IBEX dropped 2.5% and the
Italian FTSE MIB index lost almost 2%.The pan-European Stoxx 600 index
fell 1.5%, refl ecting the falls in Europe’s
major markets.
The UK’s FTSE 100’s 0.5% decline
was cushioned by the weak pound,
which increases the foreign earnings
of the global companies in the index.
US stocks also fell in early trad-
ing on Wall Street in response to
Trump’s tweets and before the Federal
Reserve’s monetary policy meeting
today, after reaching record highs on
Friday.
The benchmark S&P 500 index
was down 0.4% as shares in tech-
nology stocks fell, led by Apple. The
iPhone maker’s shares are sensitive
to US-China trade friction because it
depends on China for much of its man-
ufacturing as well as product sales.
Connor Campbell, an analyst at
Spreadex, a spread-betting fi rm, said:
“Trump poured a tanker full of cold
water on the embers of the market’s
trade optimism with a series of infl am-
matory tweets.”Kalyeena MakortoffFines imposed on accountants more
than doubled to a record £32m last year
in a crackdown on auditors as the regu-
lator scrambled to repair its reputation
after the collapse of Carillion.
The penalties mark a signifi cant
rise from the £13m in fi nes given bythe Financial Reporting Council over
the 2017 -18 fi nancial year. The total
would have reached £42.9m in the
year to March 2019 if the FRC had not
off ered discounts to fi rms that volun-
teered to settle cases early.
The rise in fi nes comes with acc-
ounting scandals at fi rms, including at
Patisserie Valerie, having put the work
of auditors under heightened scrutiny ,
attracting criticism from politicians
and regulators.
The accounting watchdog said the
rise in penalties last year was partly
due to the increased number of cases
closing over the period , more serious
misconduct by accountants and the
size of the auditing fi rms involved.
KPMG, Deloitte, PwC and EY
accounted for six of the nine fi nes.
These companies have attracted heavycriticism over the quality of their audit
work, particularly after the collapse
of Carillion. Critics said the auditors
KPMG should have spotted the prob-
lems at Carillion sooner, and claimed
the industry was prioritising profi ts
over proper scrutiny of companies
during their audit ing.
The FRC itself has been criticised
for failing to keep close enough tabs on
the industry, and is to be abolished and
replaced with a new regulator.
Elizabeth Barrett, the FRC’s exec-
utive counsel , said: “The clarity and
accuracy of fi nancial reporting is of
critical importance to us all. The sig-
nifi cant increase in the number, range
and severity of sanctions sends a clear
message that where behaviour falls
short of what is required we will hold
those responsible to account.”Accountancy
fi nes at record
£32m after audit
crackdown
▲ A US fl ag fl ies from a diplomatic
car in Shanghai. Trade tensions have
fl ared again PHOTOGRAPH: NG HAN GUAN/EPABusiness view
Larry ElliottAs sterling slides, will Johnson
change course – or risk rising
prices with an election ahead?
H
olidaymakers
heading abroad
for their summer
holidays might not
thank him for it, but
the fall in the pound
to its lowest level in 28 months is
evidence that Boris Johnson’s Brexit
strategy is having an impact.
The currency markets never took
the idea seriously that the UK would
leave the EU without a deal when
Theresa May was prime minister.
That has changed in the past fi ve
days as the new government has
rammed home the message that the
31 October deadline is set in stone.
Johnson believes the UK has
to show it is ready for no deal in
order to get an exit agreement that
has a chance of getting through
parliament. But so far the EU has
shown no sign of reopening the
withdrawal agreement signed by
May. The pound’s current level – at
risk of sliding below $1.20 against
the US currency – is the result.
The chances are that the pound
could go lower before it bottoms out.
No serious negotiations appear to be
in prospect for the next month and
nor are any of the usual weapons
for shoring up sterling available.
The Bank of England is not going to
intervene in the currency markets
to buy pounds when ministerial
rhetoric is pushing the exchange
rate lower. Higher interest rates are
not an option, either, because the
economy is weak.
There are two big risks for
the government. The fi rst is that
an intensifi cation of the selling
pressure on the pound means
Johnson blinks fi rst. A softening of
the N o 10 line would see the pound
gain on the currency markets but
force Johnson to eat humble pie.
The second risk is that the fall in
sterling cuts short the new prime
minister’s honeymoon by pushing
up the cost of imports. The eff ectof that would be to drive infl ation
higher and erode growth in living
standards.
Many in the currency markets
think the impasse between the UK
and the EU will only be ended by a
general election. A squeeze on living
standards caused by a depreciating
pound would make it harder for
Johnson to secure his own mandate- as May found to her cost in 2017.
Centrica’s poor run
Like the managers of football clubs,
the chief executives of FTSE 100
companies are judged by their
results. And the results that matter
are share price, dividend and market
capitalisation.
Iain Conn joined Centrica in
January 2015. Since then, its share
price has fallen by 70%, its stock
market value is down by a quarter,
and following a thumping pre-
tax loss in the fi rst half of 2019 its
interim dividend has now been cut
by 58% to 1.5 p a share.
Add in the loss of customers
to new energy suppliers and it
comes as no surprise to learn that
Conn is leaving the company that
owns British Gas next year. Conn’s
pitch is that he has restructured
the company since he took over,
and there’s truth in that. Centrica
is no longer a vertically integrated
business that both generates and
supplies energy. It has sold off large
power plants, got out of nuclear and
instead concentrated on consumer-
facing services, such as the Hive, a
smart thermostat app. It has taken
time but there is evidence that
the loss of UK domestic energy
supply accounts has halted. Its US
operations are successful.
It is also reasonable for Conn to
point out that recent conditions
have been challenging. Centrica has
been beset by headwinds, the most
signifi cant being the government’s
energy price cap.
But pointing to the problems
he inherited is a bit like a football
manager bemoaning the fact that
his predecessor left him with a lot
of dead wood. And blaming market
conditions for poor performance is
the equivalent of pointing to a long
injury list for a run of bad results.
Conn says he will leave Centrica
in a better place than he found it, but
it will up to a new chief executive to
prove whether he is right. And, let’s
face it, in the more brutal world of
the Premiership he would have been
out long ago.2.2%
The fall in Germany’s DAX index,
which is particularly sensitive to
trade tensions, after Trump’s tiradeThe pound could go
lower. No serious
negotiations are in
sight and the usual
weapons for shoring
it up are unavailableРЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS
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