Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Deutsche Bank counts cost of turnaround
Deutsche Bank (DBK.DE) on Thursday reported worse-than-expected full-year results, with steep losses driven by the cost of its turnaround plan.
Deutsche Bank made a net loss of €5.3bn last year, against a forecast of €5.1bn. The bank made a net loss of €1.6bn in the fourth quarter, where analysts had expected a loss of €1bn.
The steeper losses were driven by “transformation-related effects”, the bank said. Deutsche Bank announced a sweeping overhaul of the bank last July aimed at stabilising the struggling lender.
Revenue in the fourth quarter was slightly better than expected. The bank pulled in €5.34bn in revenue, against expectations of €5.29bn.
“Our new strategy is gaining traction,” chief executive Christian Sewing said. “Stabilising revenues in the second half of 2019 and our consistent cost discipline both contributed to better operating performance than in 2018. Our client business is developing well, right across the bank.
“With our strong capital position and a Common Equity Tier 1 capital ratio of 13.6%, we’re very confident we can finance our transformation with our own resources and return to growth.”
Shares rose 0.3% in Germany,
Stock markets sold off on Thursday, as fears continued about the spread of the deadly coronavirus.
Asian markets sold off sharply overnight, extending a protracted slide that began last week. The Hong Kong Hang Seng (^HSI) shed 2.6% and Japan’s Nikkei (^N225) dropped 1.7%. The Shanghai Composite remains closed.
China’s currency, known as the yuan or renminbi (CNY=X), also slipped. The currency dropped below the psychologically significant level of 7 yuan to the dollar.
US stocks ended flat on Wednesday but futures were pointing to a sell-off at the open later today. Dow Jones Industrial Average futures (YM=F) were down 0.7%, S&P 500 futures (ES=F) were down 0.8%, and Nasdaq futures (NQ=F) were down 0.8%.
Global markets sold off amid continued fears about the spread of coronavirus, a novel deadly virus that has been spreading rapidly in recent weeks.
The death toll from the outbreak in China has risen to 170, authorities in Beijing said Thursday, with 7,711 cases reported within the country.
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The CEO of BT (BT-A.L) warned on Thursday that the UK’s restrictions on Huawei’s role in the country’s 5G networks could cost his company around £500m over the next five years.
Philip Jansen said that while BT welcomed the “clarity” provided by Tuesday’s decision, the telecoms giant would need to review the government’s guidance in detail to determine its full impact.
The UK government announced on Tuesday that, while Huawei had been cleared to work on some parts of the country’s next-generation networks, restrictions would be put in place to limit potential national security risks.
It will be excluded from sensitive areas of the network, such as nuclear plants and military bases, and limited to a 35% market share of the “periphery” or non-core aspects.
Spirit giant Diageo warns on uncertainty
Diageo (DGE.L), the alcohol giant that owns brands like Gordon’s gin, Guinness, and Johnnie Walker whisky, trimmed its forecasts for sales growth this year, blaming globally “uncertainty”.
Diageo said Thursday sales growth for the year would likely be at the lower end of its guided range of 4-6%.
”There is ongoing uncertainty in the global trade environment and we would not be immune from further policy changes,” chief executive Ivan Menzies said.
However, the London listed firm hailed a “good” half-year’s trading performance as it said net sales increased by 4.2% to £7.2bn for the six months to December 31. Operating profit increased by 0.5% to £2.4bn as organic growth was offset by unfavourable exchange rates.
Shell’s underlying profits crashed 36% last year, as weak oil prices hit the company.
Oil giant Royal Dutch Shell said Thursday that underlying earnings fell 36% to $15.3bn (£11.8bn) in 2019. The company blamed lower oil and gas prices, and squeezed margins in refining and chemicals businesses.
The results were below market expectations. Shares (RDS-B.L) fell 0.8% in London.
Traders and analysts are split on whether the Bank of England will cut interest rates on Thursday, setting the stage for one of the most eagerly awaited monetary policy decisions in years.
A run of weak economic data — including stubbornly low inflation, dismal retail sales, and a shrinking economy — could persuade the bank’s policymakers to lower the benchmark interest rate from 0.75% to 0.5%. It would be the first rate cut since 2016.
But other closely watched indicators point to a clear, if modest, rebound for the economy in the wake of December’s emphatic election result. It may convince the Bank of England no action is needed to stimulate economic growth.
The divided data sets up the most closely watched interest rates decision in years, with markets pricing a 50-50 chance of either a rate cut or no change. The Bank will deliver its decision at 12pm UK time.
UK car manufacturing plunged a further 14.2% last year, sending overall production to its lowest level in nearly a decade.
The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that weak consumer and business confidence, slower demand from overseas, a shift away from diesel, and Brexit-related factory slowdowns were to blame.
The country’s auto industry produced 1.3 million units in 2019, the weakest output since 2010, the SMMT said. It was the third consecutive year of declines for the sector.
The figures come as it emerged that Ralf Speth, the long-standing CEO of Jaguar Land Rover, will step back from his position later this year.