What to watch: new PM, Santander profits slide, Huawei delay and supermarket woes

Tom Belger
Finance and policy reporter
Santander reported weak performance in the UK. Photo: Press Association

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

New prime minister in waiting

Britain will discover its next prime minister today, with Boris Johnson widely expected to be announced the winner of his party’s leadership contest today.

The winner will begin assembling their top team around the cabinet soon after being announced, with the results expected at around 11.45am local time.

The current UK prime minister Theresa May is likely to step down on Wednesday afternoon, and their successor will be sworn in soon afterwards.

The bookmakers’ favourite Johnson has spooked the markets and the business world with his pledge to take Britain out of the EU by 31 October “come what may,” with fears the UK will crash out without a deal.

Sterling has sunk in recent months as expectations have grown of a Johnson premiership.

Santander profits plummet in Britain

Santander’s half-year profits in the UK plummeted by 41%, with its mortgage lending arm struggling and the bank hit by one-off costs from a major programme of cutbacks.

The eurozone’s biggest bank announced plans to cut 140 branches in Britain earlier this year, with more than 1,200 jobs said to be at risk.

It also blamed a “highly competitive” mortgage market in Britain, which could be exacerbated by the slowdown in the UK property sector since the Brexit vote.

The woes in Britain dragged down the bank’s net profits globally by 18% year-on-year, with profits also hit by its takeover of troubled lender Banco Popular.

“Like its European rivals, Santander is struggling to lift earnings from loans in its home market with interest rates hovering at historic lows,” according to Reuters, but it said the results were better than expected.

Santander (BNC.L) shares were trading 1.3% higher.

Supermarket sales slide for first time since Brexit vote

Supermarket sales in Britain fell by 0.5% in the three months to 14 July, marking the first overall decline in the supermarket industry since the Brexit vote in June 2016.

Every supermarket giant except online juggernaut Ocado (OCDO.L) experienced a slowdown in growth, Yahoo Finance UK’s Edmund Heaphy reports.

Set against the same period last year, during which an unprecedented heatwave saw record sales, “the tough period was not unexpected,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

Customers spent £75m less on alcohol compared to last year, while soft drink sales plummeted by £56m. Ice cream sales fell by £55m.

“The main factor behind the sales drop-off is shoppers heading out to stores less often,” said McKevitt.

Huawei 5G decision delayed

Britain will keep using Huawei equipment in its 5G network for the immediate future, the UK government has announced.

Culture secretary Jeremy Wright said the UK had delayed its decision on curbing Huawei access over spying fears because it is still weighing up the impact of US sanctions on the firm.

Wright said it not be “sensible, helpful or responsible” to make a final decision yet, the BBC reports.

The looming change of prime minister may also be behind the delay, with many other policy areas also reported to be in limbo as officials and ministers await a potential change of direction.

European markets rising

Markets reacted positively in Europe to the latest string of results from Haliburton, Swiss bank UBS and Applie supplier AMS.

Germany’s DAX (^GDAXI) was up by 0.8%, France’s CAC 40 (^FCHI) and the Euronext 100 (^N100) were both up 0.4%.

Britain’s FTSE 100 (^FTSE) continued its recent rise, climbing 0.5% because of the weakness of the pound amid no-deal Brexit fears.

Overnight in Asia, Japan’s Nikkei (^N225) closed up by 1%, the Hong Kong Hang Seng (^HSI) was up by 0.3%, and China’s Shanghai Composite index (000001.SS) was up by 0.5%.

What to expect in the US

US stocks look set to open marginally higher later today. S&P500 futures (ES=F), Dow Jones futures (YM=F) and Nasdaq futures (NQ=F) were all up by 0.1%.