Tuesday, 27 June: This morning the Bank of England’s Mark Carney announced plans for UK banks to raise their capital requirements to protect the UK financial system from future economic shocks. By increasing the countercyclical capital buffer by 0.5%, banks will have to set aside £5.7bn over the next 6 months, ultimately leaving them with more capacity to absorb any future losses. A further £5.7bn (another 0.5% rise) will have to be found by the end of 2018. Global risks such a s a slowdown in China, alongside more localised risks such as the ongoing Brexit negotiations are only “pockets of risk” in the financial system that warrant vigilance from regulators and lenders. Alongside this, the BoE said unsecured consumer borrowing in the UK is growing rapidly, with lending standards in the mortgage market appearing to deteriorate. An explanation of the Financial Stability Report can be found at http://www.bankofengland.co.uk/publications/Pages/news/2017/270617.aspx
If you Google “Google fine” your top stories will more than likely cover the record fine Google have been faced with today. The European Union slapped the search engine giant with a €2.4bn fine for skewing results to favour is own shopping service. It follows a 7-year long investigation fuelled by complaints from both smaller shopping websites as well as bigger names. Alphabet, the parent owner of Google, now has 90 days to end its anti-competitive practice. Google can choose how to do this but must inform the EU of its plans within 60 days and failure to do so brings a risk of fines up to 5% of its daily revenue. Shares in Alphabet were down c.1.5% at the time of writing @ c.$972, after breaching the $1,000 mark in early June.
In UK equity markets, miners dominated the top of the blue chip index, after China’s large industrial companies further accelerated profit growth. Glencore, Rio Tinto and Anglo American took podium positions at the close, gaining 3.77%, 3.27% and 3.23%% respectively. More domestically, Debenhams fell 2.25% as the retailer warned 2017 pretax profits could be towards the lower end of expectations, while the new Chief Executive plans to boost shopping by mobile.
At the close European equities were in the red with the CAC in France lower by 0.70%, the DAX in Germany -0.79% and the FTSE 100 -0.17%. The FTSE MIB in Italy reversed yesterday’s bank rally, closing -1.01%.