L&G to sell Glencore stake over thermal coal concerns; global economy ‘on track’ for soft landing – business live

Japan’s currency chief has said the government is watching the yen with a high level of urgency, as the Japanese currency hits its lowest level since 1986 against the US dollar.

Vice Finance Minister Masato Kanda told reporters that recent currency moves were rapid and one-sided, saying:

“I have serious concern about the recent rapid weakening of the yen and we are closely monitoring market trends with a high sense of urgency.

“We will take necessary actions against any excessive movements,.

Kanda’s comments came as the yen fell, to 160 yen to the US dollar.

The yen has weakened in recent months, as investors have lost confidence that the Bank of Japan will be able to raise interest rates, due to Japan’s weak economy.

Today’s weakness puts pressure on Tokyo to intervene to strenthen the yen, by selling dollars.

Over on Wall Street, shares in Rivian have surged after Volkswagen agreed to invest up to $5bn in the Amazon-backed electric carmaker.

Volkswagen will initially invest $1bn as part of a partnership with Rivian to form a new, equally controlled joint venture to share electric vehicle architecture and software, the companies said on Tuesday.

The deal is a significant win for Rivian, which is grappling with steep losses as it attempts to ramp up production of its electric trucks and sport utility vehicles.

While EV startups have been dealing with a slowdown in demand amid high interest rates and dwindling cash, traditional automakers have struggled to build battery-powered vehicles and advanced software.

Shares in Rivian’s stock have jumped by 30% in early New York trading, from $11.96 to $15.47, following yesterday’s announcement.

The global economy remain on track for a soft landing, as central banks start to lower interest rates followin recent falls in inflation.

So says credit rating agency S&P Global, in its latest global economic update.

S&P Global is still optimistic that policymakers will pull off a ‘soft landing’ – bringing down inflation without triggering a recession.

It explains:

GDP growth has moderated in most economies (the U.S. remains an outlier) and recessions have been avoided.

Demand pressures have come down, bringing inflation back toward target. Services demand and employment remain robust, moderating the speed of decline, and bolstering the probability of a soft landing.

S&P Global argues that central banks have reached “the beginning of the end-game”, as some – such as the Bank of Canada, the Swiss National Bank and the European Central Bank – have recently started cutting interest rates in response to falling inflation.

Although inflation has been stickier than hoped, S&P Global argues this is “just the flipside” of resilient spending and strong jobs markets, and compatible with a soft landing.

They say:

A recession with a sharp drop in employment and labor demand would likely produce a faster decline in inflation, but is that what we really want?

Back in the UK retail sector, the former head of BHS is digesting a court ruling that he must pay at least £50m to cover losses racked up before its collapse.

Yeterday, a judge found that Dominic Chappell had sought to “plunder” the UK department store chain, which collapsed in 2016.

Mr Justice Leech said Chappell had agreed to purchase BHS without “any prospect” of obtaining working capital to meet its day-to-day financial needs.

He then took the “opportunity to plunder the BHS Group as and when he could”, the judge explained.

The Financial Times has more details:

At a hearing on Tuesday, the judge said Chappell “should make the payments” set out in a draft order.

A copy of the order, seen by the Financial Times, shows the sums include £21.5m for a wrongful trading claim, £17.5m for breach of fiduciary duty, plus costs and interest, totalling at least £50m.

Back in 2020, Chappell was been sentenced to six years in jail for evading tax on the £2.2m income he received from his doomed takeover of BHS.

Takeover drama is, ahem, swirling in the kitchen electricals sector, with a report that German engineering group Robert Bosch is weighing a bid for U.S. appliances manufacturer Whirlpool.

According to Reuters, Bosch has been talking to potential advisers about the possibility of making an offer for Whirlpool, which has a market capitalisation of about $4.8bn.

Whirlpool makes washing machines, driers, fridges, freezers, ovens, microwaves, cooktops, cooking hobs, hoods and dishwashers.

The report has got Wall Street in a spin – shares in Whirlpool have jumped 18% in pre-market trading.

Just in: UK retail sales have fallen faster than expected this month, as the sector went into reverse after May’s modest recovery.

The CBI’s latest healthcheck on UK retailers, just released, found that retail sales volumes fell in the year to June, following a modest recovery in May.

The CBI’s retail sales volume gauge fell to -24% this month, from +8% in May, showing that a majority of retailers reported a drop in volumes compared to the previous year.

UK retailers also expect sales to be weaker than usual next month, following a drop in orders.

The CBI explains:

• Sales were reported to be well below “average” for the time of year (-39% from +2% in May). Sales volumes are expected to remain below seasonal norms in July, albeit to a lesser extent (-29%).

• Orders placed upon suppliers fell moderately in the year to June at a broadly similar pace to last month (-14% from -11% in May). Retailers expect the cutback in orders to continue next month (-16%).

Alpesh Paleja, CBI interim deputy chief economist, says:

“Last month’s nascent recovery in sales proved to be short-lived, with retailers reporting a faster-than-anticipated decline this month. Unseasonably cold weather in June may have played a role, but it’s notable that internet retail sales fell sharply in our survey, too.

Consumer fundamentals are improving, with inflation now at the Bank of England’s 2% target and real incomes rising. But it’s clear that households are still struggling with the legacies of the cost-of-living crisis, with the level of prices still historically high in some areas.

With consumer demand still on shaky ground, an incoming government can help business by ensuring that the UK is the most attractive place to start, grow and run a business. This will require bold action such as delivering a holistic cross-economy solution to the UK’s overly complex business rates system, which is a particular burden for retailers. This would help to alleviate the burden of higher costs.”

Legal & General Investment Management has also decided to divest its stake in US retail chain TJX, the parent company of UK chain TK Maxx.

LGIM says TJX, like Glencore, failed to sufficiently address concerns raised in recent years about its environmental impact.

LGIM says it concerned over TJX’s lack of a zero-deforestation policy and insufficient disclosure of “material Scope 3 emissions” that fail to account for its material value chains’ emissions.

Today’s decisions will raise the number of divestments through LGIM’s Climate Impact Pledge to 16.

LGIM says this “stewardship” of its investments is a critical lever in the global push to reach net zero.

Stephen Beer, senior manager sustainability and responsible investment at Legal & General Investment Management, adds:

We find that as time progresses, our conversations with companies can become harder-edged; not necessarily more difficult, but more focused. We use tools such as voting and divestment to encourage companies to meet our expectations on net-zero, while also sending a clear signal to the wider market. While divestment is one of the many stewardship tools we use as a mechanism for driving change, we see it as a last resort and by no means the last stage of engagement. Our engagement will continue, and where companies make sufficient progress, they will be reinstated.

Ultimately, whilst we are focused on a net-zero objective, there is no one size fits all approach; our engagement approach is nuanced, it is about listening to companies and understanding the challenges they face, as well as the potential opportunities ahead, in accelerating the pace of the transition at a global scale.”

LGIM took its decision to divest from Glencore after conducting its latest Climate Impact Pledge (CIP).

This is LGIM’s annual engagement programme to raise market standards and encourage companies to play their part in achieving the goals of the Paris Agreement.

Michelle Scrimgeour, CEO of LGIM, says:

“With the world recently experiencing its first annual average temperature overshoot of 1.5˚C, the message is clear: there is much more to do to mitigate climate change, and we need to act now.

“I have been encouraged by progress over the last 12 months, with many of the companies with which we have engaged making significant strides in important areas. However, it is clear that the pace of the transition is neither smooth enough nor fast enough. It is not the role of the asset management industry alone to tackle climate change: this is a whole of system transition, the pace of which is influenced by global public policy, regulatory standards and the nature of energy demand. Radical collaboration is therefore key – to drive aligned action and decarbonisation on a global scale.”