What to Watch: Deutsche Bank's losses jump, ITV revenue slips, and Vodafone and O2 strike 5G deal
Here are the top business, market and economic stories you should be watching today in the UK, Europe, and abroad:
Deutsche Bank’s losses jump
Deutsche Bank (DBK.DE) shares dropped 5% on Wednesday after the bank suffered its worst quarterly loss since 2015.
The German lender lost €3.1 billion in the second quarter, compared to forecasts of a €2.8 billion loss and a profit of €401 million in the same quarter a year earlier. The worse-than-expected loss was largely down to restructuring costs, which came in at €3.4 billion for the quarter.
Deutsche Bank announced a sweeping overhaul of its business at the start of the month, including plans to axe 18,000 jobs and abolish its equities trading business.
CEO Christian Sewing said in a statement on Wednesday: “We have already taken significant steps to implement our strategy to transform Deutsche Bank. These are reflected in our results. A substantial part of our restructuring costs is already digested in the second quarter.
“Excluding transformation charges the bank would be profitable and in our more stable businesses revenues were flat or growing.”
Revenue fell by 6% to €6.2 billion in the quarter. Revenue at the investment bank fell by 18% to €2.9 billion, reflecting a depressed market globally.
Nissan jobs threat
Fears are growing for the future of Nissan’s Sunderland plant after reports the carmaker could axe 10,000 jobs worldwide.
Nissan has remained silent on reports in Japanese media and Reuters that the carmaker could more than double the number of planned job cuts after previously announcing 4,800 roles would go.
Analysts expect Nissan to report a heavy drop in profits when it announces its results on Thursday morning, with US profits particularly poor after heavy discounting. A source told Reuters job cuts could be announced alongside the results.
Aston Martin crashes
Shares in luxury car maker Aston Martin (AML.L) fell by 22% on Wednesday after the company unexpectedly cut profit and production guidance for the year.
Aston Martin said it expected to sell between 6,300-6,500 wholesale vehicles thisi year, versus a previous guidance of 7,100-7,300. Earnings margins were also downgraded.
The company blamed the “challenging external environment” and “macro-economic uncertainties.”
“Our wholesale performance is adversely impacted by macro-economic uncertainty and enduring weakness in UK and European markets,” CEO Dr Andy Palmer said.
“We are disappointed that short-term wholesales have fallen short of our original expectations, but we are committed to maintaining quality of sales and protecting our brand position first and foremost.”
ITV revenue slips despite Love Island boost
ITV (ITV.L) blamed slowing economic growth and political uncertainty as it reported a slump in revenues and earnings on Wednesday.
Total revenue at the broadcaster fell by 5% to £1.7 billion in the six months to the end of June. Non-adjusted earnings fell by 16% to £310 million.
“The economic and political environment remains uncertain but we are very focused on delivering our strategy and creating a stronger, more diversified and structurally sound business to enable ITV to take advantage of evolving viewing and advertising opportunities,” CEO Carolyn McCall said in a statement.
Total advertising revenue fell by 5% but this was above forecasts. ITV said this was down to an 18% rise in online revenues, helped by the success of its new season of reality show Love Island. The show is averaging 4.2 million viewers per episode and watched by 52% of all 16-to-34 year old TV viewers.
Pound in focus as Boris appoints cabinet
Sterling will be in focus on Wednesday as Boris Johnson gets ready to appoint his new cabinet.
Johnson won the race to be the Conservative Party leader and de facto next Prime Minister on Tuesday. The pound was largely unmoved by the result but may see bigger shifts as Johnson begins to appoint his cabinet.
“Focus will quickly switch to the next steps – namely, Cabinet appointments and the Brexit plan,” Michael Brown, a senior analyst at Caxton FX, said.
“The latter will be of more importance for markets, with sterling set to remain under pressure should Boris continue his ‘do or die’ Halloween Brexit stance.”
Johnson’s Cabinet appointments will likely be seen as a barometer of his Brexit position, with investors watching to see if he appoints only hard Brexiteers or a broader spectrum of MPs. The Sun reported late on Tuesday that Sajid Javid is being lined up to become Chancellor.
At 7.40am UK time, the pound was flat against the dollar at $1.24 (GBPUSD=X) and flat against the euro at €1.11 (GBPEUR=X).
Vodafone and O2 strike 5G deal
Vodafone (VOD.L) and O2 have announced a deal to share equipment to speed the roll-out of 5G technology for customers.
Under the deal the two mobile phone operators will share resources such as radio antennas to cut costs and increase the speed at which they can introduce the next-generation mobile data network.
Nick Jeffery, CEO of Vodafone UK, said: "We're driving our 5G roll-out forward with this agreement, and taking our customers, our business and the whole of the UK with us.”
Mark Evans, CEO of Telefónica UK, said: "This agreement will enable us to roll-out 5G faster and more efficiently, benefiting customers while delivering value for our business. It also importantly allows us to utilise the spectrum we acquired in the last auction very effectively."
Brexit-backing CEO calls for second referendum
One of the most prominent Brexit-backing UK bosses has questioned the “democratic mandate” for a no-deal Brexit and called for a second referendum if crashing out of the EU looks likely.
Richard Stone, the chief executive of the Share Centre, told Yahoo Finance UK: “You’ve got to go back and ask the people that that’s what they want. I’m not convinced that you wouldn’t get a majority for no deal at this stage.”
Forcing a no-deal Brexit through parliament would be “outrageous,” Stone said, adding: “You’ve got to try and build a consensus to take people with you.”
European markets under pressure
European markets were slipping on Wednesday, with poor earnings weighing on major indicies.
Britain’s FTSE 100 (^FTSE) was down by 0.3%, France’s CAC 40 (^FCHI) was down by 0.1%, Germany’s DAX (^GDAXI) was up by 0.1%, and the Euronext 100 (^N100) was flat.
Overnight in Asia, markets were solid, boosted by a strong session in the US. Japan’s Nikkei (^N225) closed up by 0.4%, the Hong Kong Hang Send Index (^HSI) was up by 0.2%, and China’s Shanghai Composite (000001.SS) was up by 0.8%.
What to expect in the US
US stocks look set for a quiet open later today. S&P500 futures (ES=F) and Dow Jones futures (YM=F) were flat, and Nasdaq futures (NQ=F) were down by 0.3% following news of a sweeping investigation into the market dominance of US Big Tech.
