What to Watch: FTSE falls further, Allianz slams ECB, Ted Baker slide

Edmund Heaphy
Finance and news reporter
The FTSE 100, which tracks the UK's top 100 companies, fell further on Thursday. Pic: Getty

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

FTSE 100 falls again after worst day since 2016

After it faced its worst one-day performance since 2016 on Wednesday, the FTSE 100 (^FTSE) fell a further 0.69% on Thursday.

The drop comes after an “ominous” purchasing managers’ index (PMI) reading from the services sector, which suggests that the largest sector of the UK economy has now been hit by an economic downturn.

The sector, which makes up around four-fifths of the UK economy, saw its activity unexpectedly shrink in September, according to the widely watched survey.

Firms reported the biggest drop in employment in nine years, with companies not replacing leaving staff and suffering from clients delaying orders because of Brexit.

“Now it’s Britain’s turn: The service sector has joined the construction and manufacturing sectors in decline. It’s not too extreme to suggest the recession warning light is flashing red following the 0.2% drop in Q2 GDP,” said Neil Wilson, chief market analyst at Markets.com, in a note.

Germany’s DAX (^GDAXI), which fell sharply on Wednesday, is closed. France’s CAC 40 (^FCHI), meanwhile, was up by 0.6%.

The pound climbed marginally on Thursday following some signs that the European Union was considering the latest Brexit proposals from the UK. It was up almost 0.13% against the dollar (GBPUSD=X) to around $1.23, and up 0.08% against the euro (GBPEUR=X), to around €1.12.

Prime minister Boris Johnson on Wednesday set out his proposals to break the Brexit deadlock, conceding some ground by suggesting Northern Ireland could remain under EU regulations for goods to reduce deeply controversial border checks with Ireland.

Allianz CEO slams outgoing ECB chief Mario Draghi

Oliver Bäte, the CEO of Allianz, said on Thursday that monetary policy had been politicised in the European Union, in a piercing critique of outgoing European Central Bank president Mario Draghi.

In an interview with the Financial Times, Bäte said that the ECB was “making it easy for people to spend money they don’t have,” saying it was the reason why EU governments have not implemented the fiscal reforms that Draghi has advocated for.

“I’m sorry. We actually created independent central banks in order to have this not happen, to have central banks not print money. [People] say Draghi is independent. No he isn’t,” he said.

The criticism comes after the ECB last month cut one of its key interest rates for the first time since 2016 and announced plans to revive its controversial asset-purchasing programme from November.

The moves have been criticised by members of the central bank’s governing council, including the top German and Austrian central bankers.

Draghi has said that countries need to increase spending in order to counter a potential global economic slowdown.

Ted Baker shares plummet 35% after profits evaporate

Shares in fashion brand Ted Baker (TED.L) crashed 35% on Thursday after the company swung to an unexpected loss and issued its third profit warning of the year.

Ted Baker’s half-year results, released on Thursday, show the retailer lost £23m before tax in the six months to the end of August, compared to a profit of £24.5m in the same period last year. The slump in earnings comes despite revenue shrinking by just 0.7% to £303.8m. Retail sales fell by 2.5% to £214.5m.

Chief executive Lindsay Page blamed the poor performance on “weak consumer spending, macro-economic uncertainty, and the accelerating channel shift towards e-commerce.”

“We remain actively focussed on cost control and driving further efficiencies,” Page said in a statement. “Despite the structural challenges and cyclical pressures on the industry, we remain confident in Ted Baker's ability to navigate the market and further develop as a global lifestyle brand.”

Imperial Brands CEO Alison Cooper to step down

Imperial Brands (IMB.L) said on Thursday that Alison Cooper — one of the exceedingly few women who lead FTSE 100 companies — will step down as CEO after nine years at the helm.

Her departure will bring an end to a 20-year career at the Bristol-based company, which is the fourth-largest tobacco company in the world.

Depending on when a successor is found, the FTSE 100 (^FTSE) index, which tracks Britain’s top 100 listed companies, could have only five female bosses until Alison Rose becomes CEO of the Royal Bank of Scotland Group (RBS.L) in November.

Cooper’s departure comes after Imperial Brands last week said that profits in its current financial year would be significantly lower than it had previously forecast, amid a crackdown on vaping in the US.

Shares in the company fell as much as 15%, hitting nine-year lows.

“The timing of the move is curious, given that the company as well as the sector is facing some serious headwinds as we move into the end of the year and look to 2020,” said Michael Hewson, the chief market analyst at CMC Markets.

What to expect in the US

Futures are pointing to a higher open for US stocks.

S&P 500 futures (ES=F) are up by 0.40% and Dow Jones Industrial Average futures (YM=F) are up by 0.33%. Nasdaq futures (NQ=F) are up by 0.48%.

Companies reporting later on Thursday in the US include: