Tesco warns on profits and slashes dividendSurprise fall in US consumer spendingWall Street opens higherUK house prices rise 0.8% in AugustEurozone inflation falls; unemployment stable 3.06pm BST Over to Greece, where new figures suggest the countrys archaeological gems are the biggest source of untapped revenue. It may be a no-brainer but, finally, Greek authorities have caught onto the fact that the countrys myriad archaeological treasures sell. Data collated by the culture ministry has shown a phenomenal rise in the number of visitors to sites since prime minister Antonis Samaras, a former culture minister who is known to take an active interest in the sector, announced that opening hours would be extended from 8am to 8am to capitalise on the record number of tourists (at 21.5 million almost twice the entire Greek population) this year. 2.53pm BST The pound is heading for its first week of gains in eight against the dollar as expectations persist that the Bank of England will be the first major central bank to raise interest rates.Sterling is roughly flat against the dollar this afternoon, at $1.6584, above the five-month low of $1.6501 it hit on Monday. 2.38pm BST US shares rose in early trading on Wall Street, ahead of the long Labor Day weekend.Dow Jones: +0.13% at 17,101.21 2.32pm BST The European Union must consider additional sanctions against Russia according to the Dutch prime minister Mark Rutte.Current sanctions have not worked in curbing Moscows behaviour towards Ukraine, he told journalists. 2.14pm BST Rob Carnell, economist at ING, is putting the weak US consumer spending numbers down to volatility in the monthly data. But, he adds, we will have to consider downward revisions to growth forecasts if the August numbers do not improve markedly. 2.04pm BST US consumers were unwilling to part with their cash in July, instead choosing to bolster their savings. Spending fell unexpectedly by 0.1%, marking the first fall since January according to the Commerce Departments data. 1.53pm BST The Guardians Julia Finch has given her verdict on Tesco after its profit warning this morning. Tescos arrogance and complacency towards rivals has cost them dearlyWhat has gone wrong? In short, there is a revolution under way in the grocery business and Tesco has taken way too long to wake up to that fact. Complacency and arrogance set in, and the current problems are the result.The discounters and upmarket rivals Aldi, Lidl and Waitrose are eating Tescos breakfast, lunch and tea. Shoppers are moving away from the grocers vast out-of-town stores in droves, as they find better prices and easier ways to shop - the high street and on their sofa with an iPad. 1.21pm BST Berenberg economists Holger Schmieding and Christian Schulz have put a note out entitled The impact of Putins war.This week, Russia has seriously escalated the conflict by opening a new front.Near-term, the war could still become worse as Ukraine tries its utmost to stop the aggressor, while Russias more open incursions into Ukraine have raised fears that Russian-backed forces may possibly move all the way along the coast to occupied Crimea. 1.01pm BST The Guardians Sarah Butler and Julia Kollewe have put together a handy timeline on Tesco here. 12.27pm BST @SimonNeville I doubt he will be taking "for pleasure seekers" 12.23pm BST Back to the big corporate story of the day - Tescos surprise profit warning.Tescos shares have recovered some of the earlier losses but are still down 4%. Retail analysts have been busy cutting their price targets for the supermarket chain.We have now lost count of the number of times that we have downgraded our forecasts for Tesco over the last three years. Whilst so, we have another announcement today (29th August 2014) that represents the inverse of whatever the icing on the cake stands for. It is very disappointing to see this update, which fundamentally raises questions in our minds about the capability of the management under Mr. Clarke at this once great company. As such, we expect, as part of a range of measures, there to be considerable senior management change under Mr. Lewis in time, as Tesco needs a world class top team to take it forward.A dividend cut of this degree underlines the extent of the problems Tesco is facing. Throw in the fact that Dave Lewis is being parachuted in a month early and you have a grocer that is truly on the rack.Dave Lewis has his work cut out, and then some, when he joins next week. Dave Lewis will probably be delighted that such bad news precedes his start. It highlights the continuing saga of profit leak that clearly runs deeper than most feared. 11.56am BST Ukraines prime minister Arseny Yatseniuk has urged the IMF to release the next tranche of a $17bn loan as fighting with pro-Russian rebels continues.The heavily industrialised areas of Donetsk and Luhansk contributed almost 17% of Ukranian GDP in 2013 and have been plagued with fighting.The [revenue] that we havent been receiving from Donetsk and Luhansk is miniscule compared with the billions we are spending on war.For us it is critically important to get a positive decision from the IMF and weve done everythin [to achieve] this. 11.05am BST Martin van Vliet of ING says the pressure is on Mario Draghi and the ECB as the eurozone heads closer towards deflation.The very low eurozone inflation reading for August reinforces pressure on the ECB to consider further monetary stimulus on top of what is already in the pipeline.The ECB may argue that the latest down-leg in eurozone inflation is driven by the volatile energy component and therefore does not warrant a reassessment of the medium-term inflation outlook. But to the extent that it further dampens inflation expectations, the latest inflation drop is of significance. Moreover, with inflation inching towards zero, the cushion against deflation is getting smaller and smaller. 10.59am BST James Ashley, chief European economist at RBC Capital Markets, says the ECBs inflation forecasts are looking hopelessly out of date.This latest inflation reading is surely the demise for the ECB staffs existing forecasts. Since the moment those projections were published in June we have been arguing that the ECBs baseline profile contained more than a tincture of rose-tinted optimism: the belief that inflation this year would manage to average 0.7%, and would subsequently eke out an improvement to 1.1% in 2015, seemed fanciful to us from the very outset. And in light of subsequent outturns, our more grim prognostication has been largely vindicated (our own forecasts are annual averages of 0.5% and 0.8% respectively). As a consequence, it is now highly likely (in our view) that those staff projections will be cut down to size next week. 10.50am BST Reaction is coming in on this mornings eurozone data.Christian Schulz, senior economist at Berenberg on inflation:What looks like good news for many Eurozone consumers is mixed news for the ECB. Eurozone headline inflation edged down further in August, reaching only 0.3% yoy. That strengthens households real spending power, but for the ECB, the distance of actual inflation to the 2% target keeps growing. That is likely to feed into more discussions in Frankfurt about further policy easing. However, most of the decline continues to be driven by volatile energy and food prices. Core inflation actually increased slightly from 0.8% to 0.9% in August. The ECB will look through the monthly volatility in inflation at its forthcoming meetings.The eurozones labour market is not showing any impact from the Ukraine crisis yet. Unemployment was virtually unchanged in July and the rate stayed at 11.5%. The trends at the country level were unchanged: unemployment fell in Germany and the reform countries on the periphery. 10.27am BST The Eurostat figures on eurozone unemployment show the number of people out of work in the region was roughly stable in August at 18.4m.Germany and Austria had the lowest unemployment rate at 4.9%. 10.00am BST Eurozone annual inflation fell to 0.3% in August from 0.4% in July, as expected. Economists also got it right on the regions unemployment rate, which was unchanged at 11.5% in July. 9.59am BST The Office for National Statistics has published bonuses data for the period May 2013 to April 2014. The bonus pot increased by 4.9% to £40.5bn. Bonuses amounted to 6% of total pay during the year, the higest since before the financial crisis. 9.52am BST Malaysia Airlines is cutting 6,000 jobs - a third of the workforce - in the wake of the disappearance of flight MH370 over the southern Indian Ocean in March and the shooting down of flight MH17 over Ukraine last month.Press Association reports:The job losses, announced in Kuala Lumpur, are part of a major restructuring of the airline which will see a new chief executive in place next year, as well as the carrier being completely taken over by the Malaysian government.There will also be a restructuring of routes flown, although the twice-daily service between Heathrow airport in west London and Kuala Lumpur, on which the worlds largest passenger plane the Airbus A380 superjumbo operates, is set to continue. 9.35am BST Overnight we had GfKs latest snapshot of the UK consumers mood. The headline confidence index increased three points in August to 1. It might not sound too impressive, but it is only the second time since March 2005 that the index has made it into positive territory.It looks as if we might be in a new period of relative stability for the Index. After several months of almost constant increase, the last four months have all seen the Index within a range of 0 (plus or minus 2). And indeed the last five months have all been within a range of -1 (plus or minus 2). There is no guarantee how long this stable position will last a rush of good or bad economic news could set off a marked rise or fall, but things could stay like this for a while in 2011/12 there was more than a year when the index stayed in the range of -31 (plus or minus 2). 9.15am BST The International Monetary Funds board will meet today to review Ukraines programme and decide on a $1.4bn (£844m) tranche of funding.At a regular press briefing on Thursday, Gerry Rice, IMF communications director, had this to say on Ukraine:If the situation was exacerbated, the programme would have to be significantly recalibrated, including the financing. The degree of uncertainty is large. 8.52am BST Investors in Europe do not appear overly concerned this morning by the news that there are more than 1,000 Russian soldiers fighting in Ukraine.FTSE 100: +0.3% at 6,827.34For all President Putins denials that Russian troops arent operating in Ukraine, we get new evidence every day to pretty much confirm that they are, and yesterdays reports of Russian backed separatists moving into Ukraine further south appears to have raised the stakes further in the ongoing conflict between the Ukrainian army and separatist forces.There had been some optimism earlier this week that the meeting between President Putin and Ukraine President Poroshenko could well be a catalyst for a reduction in tensions, while in fact it turns out the opposite could well be the case, as once again President Putins conciliatory words are not matched by his deeds, or more to the point to the actions of his forces. 8.35am BST Later this morning we will be bringing you the latest news from the eurozone:Annual inflation is expected to slow to 0.3% in August from 0.4% in July. A bigger fall will pile some serious action on Mario Draghi and his colleagues at the European Central Bank to take action next week at its September policy meeting. 8.14am BST Tesco shares are down 7.5% at 227.6. It is the FTSEs biggest faller in early trading and has dragged its fellow supermarkets down with it. Tesco lowers full year forecast & cuts interim dividend by 75% - not unexpected! CEO Dave Lewis - fresh from Unilever, has his work cut out! 7.58am BST Another day, another gloomy statement from Tesco. The supermarket chain has published a surprise trading update this morning, warning trading profit is likely to be between £2.4bn-£2.5bn in 2014/15. Previously it was guiding £2.8bn. The boards priority is to improve the performance of the group. We have taken prudent and decisive action solely to that end. Our new chief executive, Dave Lewis, will now be joining the business on Monday and will be reviewing every aspect of the groups operations. This will include consideration of all options that create value for customers and shareholders.The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position and strategic optionality. 7.49am BST Annual house price inflation over the past couple of years looks like this according to Nationwide 7.46am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.There are no signs of a cooling UK housing market according to the headline data from Nationwide this morning. UK house prices edged up by 0.8% in August, marking the sixteenth successive monthly price rise. As a result, the annual pace of house price growth is up to 11% from 10.6% in July. While this is still below the 11.8% recorded in June, house price growth continues to outpace earnings by a wide margin, with average wage growth running at less than 1% in recent months. Continue reading...
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