Daily Briefing: 31 August 2016
The front pages are dominated this morning by the news that the European Commission has ordered Apple to pay €13 billion in back taxes to the Irish government, claiming the company had been operating with an effective tax rate of 0.005 per cent.
This ruling has prompted a furious backlash from both the US authorities and Apple. Tim Cook, the Apple CEO, penned a scathing open letter citing that the company “never asked for, nor did it [it] receive, any special deals”. The US Treasury went further, arguing that the ruling could undermine foreign investment into Europe and threaten the business climate in Europe.
The Times is reporting this morning that Jeremy Corbyn is on course to increase his mandate in the Labour leadership contest. In a YouGov poll of 1,248 members commissioned by the paper, Jeremy Corbyn is set to win 62% of the vote to his rival Owen Smith’s 38%. Last year, Corbyn won 58% of the vote.
Whilst this may not come as a surprise, perhaps the most interesting statistic from the article is that amongst long standing members who joined before May last year, Smith wins 68 per cent support to Corbyn’s 32 per cent. With such a large gulf between long standing members, MPs and new registered supporters, a split in the party appears a distinct possibility.
A leading figure in the Islamic State has been killed in the Aleppo province of Syria. Abu Muhammad al-Adnani was a chief strategist and spokesman for the group. A Pentagon spokesman described Adnani as the “principal architect of Isil’s external operations”. Adnani was one of the group’s founding members and his death will be a significant blow to Isis.
Despite rumblings to the contrary yesterday, the UK and France have restated their commitment to the border treaty signed in 2003 which maintains the “shared border” at Calais. With recent debates surrounding the UK’s future diplomatic relations with EU nations in light of Brexit, this is a strong show of unity and cooperation between the UK and France.
Theresa May has ruled out both an early general election and a second referendum on the terms of the deal to leave the European Union. Parliament will be given a “say on the terms of Brexit”, but will not be able to block its implementation.
Finally, despite saying for almost a year that he will build a massive wall and get Mexico to pay for it, Donald Trump will meet Mexico’s President Enrique Pena Nieto on Wednesday for the first time. US commentators have argued that this may even make him appear statesmanlike, as he travels to a country he has openly mocked in the past.
BUSINESS AND ECONOMY
The Nationwide house price index has this morning reported that house prices in the UK rose by 5.6 per cent in August compared to the same month a year earlier. This is stronger growth than the 5.2 per cent increase in July and highlights that, as of yet, Brexit has shown no discernible impact on British house prices. While these figures highlight resilience in the market, it will be interesting to see whether they signal a long term trend. According to housing experts, prices are being maintained “by a lack of available supply coming onto the market.”
Record low interest rates are discouraging Britons from saving. A monthly report conducted by GfK finds that “people’s desire to save money plummeted in August, dropping 16 points from July”. As well as low interest rates, high employment levels and lower consumer prices are encouraging people to spend. This has been confirmed by GfK who in the report highlight an uptick in consumer confidence in August.
Mining stocks hindered the FTSE 100 yesterday, as it closed down 0.25 per cent at 6,820.79. This fall was largely due to the price of copper, which slipped to a 10 week low. The biggest losers were Antofagasta and Rio Tinto, whose stocks fell 5.5 per cent and 4.7 per cent respectively.
In the US, stocks were weighed down by Apple upon news the company has been ordered to pay €13 billion in taxes to the Irish government. The S&P 500 closed down 0.20 per cent.
On the currency markets, the pound fell 0.15 per cent against the resurgent dollar, dropping to $1.3087, but fared better against the euro, up 0.24 per cent at €1.1741.
Arrow Global Group, Brave Bison Group, Cathay International Holdings Ltd, Grafton Group Units, The Gym Group, HSS Hire Group, Surgical Innovations Group
Aberdeen New Dawn Investment Trust, Jupiter Green Inv Trust, Maven Income And Growth VCT 6
Today’s UK Economic Announcements
(00:05) GFK Consumer Confidence, (07:00) Nationwide House Price Index
Today’s EU Economic Announcements
(07:00) Retail Sales (GER), (08:55) Unemployment Rate (GER), (10:00) Unemployment Rate (EU), (12:00) MBA Mortgage Applications (US), (15:00) Pending Homes Sales (US), (15:30) Crude Oil Inventories (US)
COLUMNS OF INTEREST
Roger Boyes is warning of the prospect of war between the United States and China in this morning’s Times. He argues that the common assumption the nations are too interlinked economically to wage a war against each other is lazy and foolish. As military technology has increased and political decisions are taken at ever increasing speed, we could all be heading for catastrophe…
Richard Wolffe writes in the Guardian that the problems in the US election are a product of the George W. Bush era and have very little to do with the legacy of Barack Obama. He argues that after eight years the Republican party hasn’t escaped the Bush years and is unlikely to do so any time soon. With some right wing US commentators arguing the Trump phenomenon may improve Bush’s legacy in the long term, it will be intriguing to see who is right.
ON THIS DAY
In the early hours of the 31st August 1997, Princess Diana of Wales and Dodi Fayed were killed when the car they were travelling in crashed in central Paris.
TODAY IN PARLIAMENT
House of Commons
Parliament in Recess
House of Lords
Parliament in Recess
Parliament in Recess
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