Royal Mail shares dive 8% on parcel fearsRoyal Mail operating profits down 21%.Bank of England MPC minutes released 5.06pm GMT Over to Greece, where officials are saying they are working overtime to unlock stalled relations with the country’s troika of creditors. Our correspondent Helena Smith writes:Senior Greek officials say they have passed on by email “a final set of proposals” outlining the measures the government is willing to take to plug a fiscal hole in its 2015 budget. “We are expecting an answer by tomorrow at the latest,” said one insider speaking on condition of anonymity. The Greek prime minister Antonis Samaras is also believed to have hit the phones in a bid to break the impasse. He may start visiting EU capitals, aides say, to convey the government’s fear of the “political cost” further cost-cutting measures would have. Digging in their heels, mission chiefs representing the EU, IMF and ECB have reportedly stepped up demands, saying they will only return “at staff level” to the Greek capital once it is clear the ruling coalition is willing to implement reforms. Hopes of a solution being found in time for auditors to complete their review of the economy by December 8 when euro area finance ministers hold their last euro group meeting of the year, are fading fast. Well-briefed sources say the troika has toughened its stance precisely because of the political instability speculation of early elections has sparked in Greece. Some suggest that the turmoil may well continue into the New Year, dashing hopes of Athens launching talks on a “precautionary credit line,” the centerpiece of a follow-up program that would replace the financial adjustment, or bailout, accord that has governed Greece’s relations with creditors since the debt-stricken country sought international emergency funding. Amid growing calls for feuding politicians to break the gridlock, the radical left main opposition Syriza party announced that its leader, Antonis Tsipras, would be willing to meet Samaras (the two men have had almost no contact over the past year) but highlighting the degree to which consensus is missing from Greece’s fractious political arena, stipulated that such talks could not take place if Evangelos Venizelos, the deputy premier, was present.“We think that [the presence of] Venizelos would be unnecessary,” said Panos Skourletis the party’s spokesman insisting that Samaras, alone, should be able to convey the government’s views. 4.20pm GMT And after some confusion about the figures, there does indeed seem to be a Swiss poll ahead of this month’s gold referendum:To confirm... 38% would vote Yes, 47% would vote No and 15% undecided #goldIndeed the up move in #EURCHF & selling in #Gold was due to a poll from SRG showing support slipping in Swiss gold referendum 38% vs 47%^FRGold drops on reports that Swiss Favor 'No' Vote in Referendum. Poll shows 38% of Voters Back Initiative, 47% Against pic.twitter.com/KYVIvKz2QU 4.06pm GMT Gold is falling sharply on various rumours going round the markets, including supposed hawkish comments in the forthcoming Federal Reserve minutes.There was also talk that a new poll would show a majority against new gold reserve limits in the forthcoming Swiss referendum (on November 30). A yes vote would be expected to boost gold prices, said analysts, so a negative outcome would be likely to send the precious metal in the opposite direction.$Gold is falling as poll for Swiss gold referendum suggests less than 40% will say yes to new gold reserve limits. AB pic.twitter.com/6mDdQ4y1Ry 3.53pm GMT And Reuters now has a more detailed report on Dr Shafik’s appearance at the Treasury committee:The Bank of England’s regulatory arm will scrutinise bonuses awarded to traders involved in attempts to manipulate the currency market, a top official said on Wednesday.BoE Deputy Governor Minouche Shafik said some of the banks fined last week for attempting to manipulate the foreign exchange market were already clawing back bonus awards for traders that were involved. 3.32pm GMT Here’s some early Reuters snaps from Dr Shafik’s comments at the select committee: 3.19pm GMT Nemat (Minouche) Shafik, deputy governor of the Bank of England since August, is up before the Treasury Select Committee, talking about the foreign exchange markets.Link to the live stream is here. 3.04pm GMT US markets have opened and ahead of the lastest Federal Reserve minutes, due to be released later, they have got off to a downbeat start.After Tuesday’s new record - yes, yet another one - the Dow Jones Industrial Average is down 41 points or 0.23% in early trading. 2.05pm GMT Mixed signals from the US housing market.After Tuesday’s report showing housebuilders were increasingly confident about the outlook, comes news that housing starts fell unexpectedly in October. 1.27pm GMT A quick lunchtime recap.Royal Mail shares have been savaged this morning after the postal operator reported a 21% drop in operating profits, and warned that Amazon taking chunks out of the parcel market.So, what is or was the 'beer tie'? via Telegraph http://t.co/YJ7SWjkDlp 1.10pm GMT The news that average real wages shrank by another 1.6% in the 12 months to April has been seized, with gusto, by the opposition Labour party.“Working people are worse off under David Cameron’s government and millions face a further hit if the Tories win the election. David Cameron and George Osborne have promised to cut tax credits again while keeping a £3 billion a year tax cut for the top one per cent of earners.“We need a recovery for the many, not just a few at the top. Labour’s economic plan will tackle the cost-of-living crisis and earn our way to higher living standards for all. Our plan will raise the minimum wage, boost apprenticeships, get 200,000 new homes built a year and expand free childcare for working parents.ONS data shows pay rising 4.1% for those in a job for more than a year, further evidence #longtermeconomicplan working but more to do 12.22pm GMT The Bank of England minutes are a little more hawkish than expected, says Martin Beck, senior economic advisor to the EY ITEM Club.He points to the line about a “material spread of views” among MPC members about inflationary risks....but still doesn’t think rates will rise for several months. Despite the widening of viewpoints among the MPC’s doves, we think that the majority in favour of keeping rates on hold won’t be disappearing anytime soon. As a result, a rate rise won’t happen until well into 2015.“With the MPC forecasting that CPI inflation will drop below 1% in the next few months and remain below the 2% target for the next three years, it begs the question why the MPC isn’t taking action to loosen policy now.” 11.46am GMT The average full time male worker earned 9.4% more than their female counterpart, according to today’s data.That shows that more needs to be done to close Britain’s gender pay gap, says TUC General Secretary Frances O’Grady:“It’s good to see the gender pay gap narrowing again. But after last year’s widening we’re only back to where we were in 2012.“Part-time women’s pay still lags some way behind that of their full-time colleagues. Nearly six million women work part-time and they earn £5.15 less per hour than full-time men. Two in five of part-time women earn less than the living wage. 11.25am GMT Here’s some sobering news - UK real wages have fallen for the sixth year running.New figures from the Office for National Statistics today show the full scale of the squeeze on living standards, as earnings have stagnated in the face of economic ‘recovery’.The figures laid bare the financial pressures that continue to weigh on UK households, despite falling unemployment and economic recovery which has put the economy on course to grow by about 3% this year.Policymakers at the Bank of England have persistently cited unexpectedly weak wage growth as one of the reasons why interest rates remain at an all-time low of 0.5%, unchanged since March 2009.Britain's low pay recovery http://t.co/qloRoonN2A - wages are back on levels last seen in the early 2000s 10.52am GMT Shares in Royal Mail have now slumped by around 9%, as the City digests this morning’s results.The postal operator is the biggest faller on the FTSE 100 today, down 43.7p to 425.3p.We can expect more of the same from Royal Mail, while the expectation of hitting targets for the full-year hinges on a good Christmas and thus the risk of disappointment is high.The outlook for the parcel market is worse than expected, with expected volume growth of only 1%-2% for around 2 years, which implies parcel revenues would remain stable at best. This effect would be somewhat mitigated by higher than expected cost savings, but on balance we think the outlook has further deteriorated.Just conceivable Cable was not wrong about Royal Mail share price pic.twitter.com/eHLUsLsLNcRoyal Mail shares tanking. Down over 8% after crap results. They'd better hope Santa's tendering for his parcels deliveries this Christmas. 10.30am GMT The pound has risen almost half a cent against the US dollar since the Bank minutes came out, to $1.567. The inflation report cited the risks to the UK economy and that supporting inflation is still the top priority. The market may have priced more MPC members voting against an interest rate rise this morning, but the unchanged vote figures bode well for sterling. 10.23am GMT Today’s minutes reinforce expectations that UK interest rates won’t rise until the back end of next year, reckons Jake Trask, corporate dealer at UKForex:“Seven MPC members saw concerns over low inflation, sluggish wage growth and falling exports due to a stagnating Eurozone economy – obstacles that need to be negotiated before they would consider a rate rise. “It now seems likely that the earliest we can expect a hike is late 2015, though some are not forecasting an increase until 2016, especially if the situation in the Eurozone deteriorates further.” 10.19am GMT Reaction to the Bank of England minutes is coming in.Jeremy Cook, chief economist of World First, isn’t convinced by the argument from the Bank’s two hawks that wages will start to rise as ‘slack’ is mopped up“We hope this is true but we have heard this line from policymakers before and yet, have seen very little upwards pressure on wages in recent months.” 10.10am GMT My colleague Nick Fletcher explains why UK pub shares are being hammered today:Pub company shares are heading into the slops tray after MPs voted to give tenants more freedom over buying their beer.Overturning government plans for industry reforms, MPs unexpectedly gave the go-ahead to an amendment to allow tenants to buy beer on the open market. Around half of Britain’s 50,000 pubs are run by tenants under the beer-tie which mean they buy beer from the company which holds the pub lease - this is often at higher prices than the market rate in return for subsidised rent....UK pub shares going down faster than a tequila slammer after parliamentary vote http://t.co/x3DAZDddpN HT @ClaerB pic.twitter.com/ccnc9SLuiw 10.01am GMT The BoE minutes also show that there was “a material spread of views on the balance of risks to the outlook” among the seven members of the MPC who voted to keep rates at 0.5%.Some MPC members sound rather dovish, concerned that UK growth will fall faster than expected. In that case a premature tightening in policy would leave the economy vulnerable to shocks, with the scope for any stimulus that subsequently became necessary being limited by the effective lower bound on interest rates.That would potentially result in inflation rising to, and subsequently overshooting, the 2% target. Individual members ascribed materially different probabilities to these risks. 9.48am GMT McCafferty and Weale still think lower inflation largely the effect of the higher exchange rate and lower raw material prices #BOE 9.46am GMT The minutes show that Martin Weale and Ian McCafferty argued, in vain, that the MPC should ignore the fact UK inflation had fallen to a five-year low in September.After all, the committee resisted hiking rates when rising oil prices drove inflation up a few years ago, so it should resist keeping them low now.For two members, economic circumstances continued to justify an immediate rise in Bank Rate. While CPI inflation was well below the target, this was largely the effect of the higher exchange rate and lower raw material prices. Just as the Committee had looked through the first-round effect of external price pressures when they had pushed inflation up, it was appropriate to look through them at present when they were pushing inflation down. 9.35am GMT The Bank of England minutes are online here. 9.34am GMT The Bank of England’s monetary policy committee voted 7-2 on whether to leave interest rates unchanged this month, according to the minutes of the meeting (which took place a fortnight ago). 9.27am GMT And here’s our news story on Royal Mail’s results:Royal Mail warns Amazon delivery service will hit UK parcels business http://t.co/PLJfOx6dqr 9.26am GMT You can see Royal Mail’s results here.We have announced our Half Year results: http://t.co/p7kd5FBZsj 9.26am GMT Royal Mail had hoped that growth in parcel deliveries would cover the decline in its letters business, as more people order items online. But as Michael Hewson of CMC Markets explains, it’s an increasingly tough market:The explosion in on-line retailing, click and collect delivery and the use of mobile apps this year is likely to see fierce competition between logistics providers with UK Mail, UPS and Fedex likely to provide plenty of competition, while the recent tie-up between Amazon and Connect Group to provide a 24 hour service for parcel delivery to selected local locations, like underground stations, newsagents and shopping centres, could make a significant dent in Royal Mail’s revenue particularly since Amazon is Royal Mail’s largest parcel customer.This will inevitably place greater focus on Parcelforce’s volumes, as more and more people choose to pick up their parcel at a location more convenient to their day to day needs. 9.20am GMT City firm Panmure Gordon reckons that Royal Mail is performing broadly in line with expectations, but faces a struggle to grow: With limited revenue growth potential in the near term, it’s down on-going cost control to improve earnings. 9.14am GMT Shares in several British pub chains have slumped faster than a well-watered regular at last orders, after MPs voted to loosen the controls on tied landlords.Pubs getting hammered (hic) after the beer tie vote. Enterprise Inns -7.7%; Greene King - 5%; Punch Taverns -7% http://t.co/Sln6HR6Ph2 8.53am GMT After that early rally, Royal Mail shares are now down 1% at 463p as investors digest its warning that the parcels business is challenging. 8.49am GMT Royal Mail’s results are fairly unimpressive, reckons Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.“Having completed its first full year as a listed company, Royal Mail is now facing the harsh realities with the initial share price euphoria having waned.Most of the key metrics are flat to negative, with a decrease in operating profit, margin and earnings per share accompanied by an increase in costs. The quiet emergence of Amazon in the parcels space, already a fiercely competitive arena, could become a medium term threat, whilst the company openly concedes in its outlook that the Christmas period will set the tone for the full year performance. 8.44am GMT This chart shows how Royal Mail shares had rallied in the last couple of months, having fallen back during spring and summer to as low as 390p. 8.15am GMT Fancy that. Royal Mail - now a plc - says universal service (6 day delivery anywhere for same price) is under serious threat.:: 8.08am GMT Royal Mail shares have risen by 1.3% at the start of trading in London, gaining 6.1p to 475p.Today’s results are a little better than expected (Analysts had predicted that operating profits would fall by 30% in the six months to 30 September, not the 21% reported). 7.58am GMT Today’s results include a plea to the government and regulators to rewrite Royal Mail’s Universal Service obligations.We think there is an urgent need for a new framework that will secure the sustainable provision of the Universal Service for the future. 7.56am GMT The 1% increase in letter revenues was mainly due to “election mailings”, Royal Mail says (such as the May’s European elections and local council ballots).That could be a profitable area for the company next year too, with a general election due in May.)Profits down 6% at Royal Mail from £233m to £218m as Amazon eats into parcels market. Lot of election campaigning means letter revenues up 7.45am GMT Royal Mail has also halved its forecast for growth in its parcels division, as web giant Amazon continues to eat into the sector.It says:We estimate Amazon’s own delivery network will reduce the annual rate of growth in the UK addressable market to 1-2% for approximately two years. Royal Mail halves expected growth rates of its UK parcels market as first-half operating profits fall by 21%. 7.29am GMT Royal Mail has warned that the UK parcels market is a tough and “highly competitive” place to operate, after reporting that profits have fallen.“The UK parcels market remains challenging. As the pre-eminent UK parcels delivery company, we are targeting a number of new, growing areas, and delivered two per cent volume growth in a competitive market. We had a better than expected performance in UK letters. GLS, our European parcels business, demonstrated a strong performance with better than expected volumes in domestic and export parcels.“Our performance remains in line with our expectations for the full year. But, as always, this depends on us delivering another great Christmas, for which we are fully prepared.” 7.26am GMT Good morning, and welcome to our rolling coverage of the financial markets, the economy, business and the eurozone.Coming up today.... Royal Mail is releasing its financial results for the first half of the year; full coverage of that from 7am GMT.The BoJ policy board's voted 8:1 to expand the monetary base at an annualised ¥80tn vs. the 5:4 decision for more easing last month. Continue reading...
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