Post Office CEO Nick Read appears before Horizon inquiry
Nick Read, the outgoing chief executive of the Post Office, is appearing before the inquiry into the Horizon IT scandal.
He is due to give three days of testimony from today. Read, who was brought in to replace Paula Vennells in 2019 and “right the wrongs of the past”, announced in the summer that he was stepping back from running the company to focus on preparing and proving that “nothing like this could happen again”.
The executive, who has given himself 88 days to prepare for his appearance, has come under heavy criticism from witnesses and become embroiled in a reputational crisis of his own.
You can watch the hearing here:
My colleague Mark Sweney has looked at the key issues the judge-led inquiry is likely to ask him to explain.
Key events
German exports rise amid demand from UK, US
Some good news for the German economy, the biggest in Europe: exports unexpectedly rose in August thanks to strong demand from the UK and US.
Exports increased by 1.3% in August compared with the previous month, according to data from the federal statistics office. Economists had expected a 1% decline. Germany’s foreign trade surplus widened to €22.5bn from €16.9bn in July, boosted by a sharp drop in imports, down by 3.4%.
Volker Treier, head of foreign trade at the German Chamber of Commerce DIHK said:
The second slightly increase in exports in a row is a small glimmer of hope, but no reason to sound the all-clear.
He said manufacturers are still under pressure because of high costs for energy, tax and labour, along with too much paperwork.
Fundamental improvements are urgently needed in Germany as a business location if the German export engine is to pick up in the long term.
Exports of goods to the US were rose by 5.5% in August while shipments to the UK climbed by 5.7%.
Here is our full story on Google:
The US government may ask a judge to force the breakup of Google’s business as it attempts to challenge the tech corporation’s monopoly over the internet search market.
The Department of Justice has filed court papers that say it is considering enforcing “structural remedies” that would prevent Google from using some of its products such as Chrome, Android and Play, which the DoJ argues give the company an advantage over rivals.
Other actions being considered include blocking Google from paying to have its search engine pre-installed on smartphones and other devices.
Google, which is owned by Alphabet, said it would challenge any case by the DoJ and that the proposals marked an “overreach” by the government that would harm consumers.
Rio Tinto to buy US lithium miner Arcadium in £5.1bn deal
Rio Tinto has swooped on the US company Arcadium Lithium in a £5.1bn takeover, trying to get a foothold in the supply of lithium, a key component in electric car batteries.
It is a huge bet on the energy transition despite tough conditions in the global electric car market. Lithium is known as “white gold” due to its market value and silver colour.
The London-listed metal and mining giant’s shares fell by 2.3%, while New York-listed Arcadium shares jumped by 31% in pre-market trade.
Rio Tinto said it will pay $5.85 a share for the Pennsylvania-based lithium miner. That represents an almost 90% premium to Arcadium’s closing price of $3.08 a share on 3 October, the day before news of a potential deal emerged.
The acquisition will give the Anglo-Australian company access to lithium mines, processing facilities and deposits in Argentina, Australia, Canada and the US, as well as a client roster that includes the carmakers Tesla, BMW and General Motors.
Lithium prices have fallen because of Chinese oversupply and a slowdown in electric vehicle sales, turning miners of the metal into attractive takeover targets.
If the deal goes through, Rio Tinto will become the world’s third largest supplier of lithium, behind Albemarle and SQM.
Rio Tinto’s chief executive Jakob Stausholm said the purchase is a
significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition.
In Europe, stock markets are mixed.
The FTSE 100 index in London has climbed by 30 points, or 0.38%, to 8,221 while Germany’s Dax and Italy’s FTSE MiB have slipped by 0.1%, and France’s CAC is up by 0.1%.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, has looked at the markets:
Investors are searching for a sense of direction amid a cacophony of developments, as harsh geopolitical winds swirl and a fierce storm barrels towards Florida. Oil prices have tracked higher again, as hopes for a ceasefire between Israel and Hezbollah fade, while Hurricane Milton threatens to disrupt energy supplies, with some pipelines and delivery terminals in Tampa already shut.
Brent Crude is currently trading around $77.5 a barrel. Prices had dipped sharply yesterday, amid hopes the Hezbollah leadership would not tie negotiations for a ceasefire to what’s happening in Gaza. But given how previous deals in stopping violence in the Middle East have seemed so close, but have ultimately collapsed, it’s not surprising that confidence in agreeing even a limited break in the war is waning, prompting supply concerns to swirl again.
The FTSE 100 is set to gain back a little ground, following yesterday’s losses, but caution is in the air following another highly volatile session for indices in Asia.
The wave of enthusiasm which greeted the kitchen sink stimulus from the People’s Bank of China is ebbing away, given the lack of detail for further fiscal stimulus. Banks in China might be ready to lend, with lower rates and deposit requirements on offer, but if the demand isn’t there, it’s still set to hold back an economic rebound.
Investors had been hoping for more details on an expected fiscal stimulus, hoping tax breaks would reinvigorate consumers and companies to borrow, but the vague plan put on the table yesterday by authorities disappointed. The Nikkei has climbed higher again, helped by ongoing weakness in the yen, up against the stronger dollar, which has been bolstered by expectations that the next rate cut from the Fed will be smaller than September’s big reduction.
China stocks plunge as stimulus rally fades
Stocks in China plunged, after a press briefing by Beijing’s top economic planner on Tuesday disappointed investors.
They had hoped for more stimulus measures, but officials did not announce any major new steps.
The Shenzhen Composite Index tumbled by 8.2% in its biggest fall since May 1997, while the Shanghai stock exchange lost 6.6% and the benchmark CSI 300 slid by 7.1% after the Golden Week holiday. Hong Kong’s Hang Seng was down by 1.8%.
Before the week-long holiday, Chinese stocks rallied when a raft of measures were announced by the People’s Bank of China and other authorities to revive the economy, the boldest stimulus package since the pandemic.
China’s finance ministry is due to set out its plans on fiscal stimulus in more detail at a news conference on Saturday. Finance Minister Lan Fo’an will attend the conference, whose theme is “intensifying countercyclical adjustment of fiscal policy to promote high-quality economic development”.
Investors are expecting a spending package between 4 and 10 trillion yuan (£220bn to £1.1tn).
Richard Hunter, head of markets at the trading platform interactive investor, said:
Shares in China underwent another difficult session as investor disappointment in the region persisted. The main concern was that the raft of measures announced prior to last week’s holiday – which had lit the fire under a moribund market – were not followed up with any specific actions from the authorities, or indeed further plans. The puncturing of enthusiasm fed through to commodity stocks.
The minutes of the US Federal Reserve’s last meeting will be published tonight and may attract less interest than usual, given the raft of recent comments from Fed members as the economic picture has evolved.
Hunter said:
Indeed, any comments over concerns around a deteriorating labour market will have been eclipsed by last week’s bumper non-farm payrolls report, the result of which has been the tempering of interest rate cut expectations. Of rather more interest, perhaps, will be tomorrow’s reading on inflation in the form of the Consumer Price Index, which could show that the taming of inflation is just a whisker away from the Fed’s target. In the meantime, there is now a near 90% probability of a more subdued 0.25% cut in November in terms of consensus, with a small chance of no change at all beginning to surface.
Oil prices are pushing higher again, after sliding yesterday amid talk of a potential ceasefire between Israel and Hezbollah.
Brent crude, the global benchmark, is up 0.5% at $77.55 a barrel, a 37 cent gain, while US light crude has advanced by 0.3% to $73.78 a barrel.
Prices lost more than 4% yesterday but markets are still concerned about a potential Israeli attack on Iran’s oil infrastructure. The selloff came after a rally in oil prices that began after Iran launched a barrage of missiles at Israel on 1 October, culminating in an 8% gain last week, the biggest in more than a year.
Priyanka Sachdeva, senior market analyst at the brokerage Phillip Nova in Sinagpore, said:
The everyday dilemma of ‘Middle Eastern headlines’ moving like a pendulum between ‘ceasefire talks’ and ‘further escalation in attacks’ has been distracting investors from reality.
Oil markets are twirled in sentiments of ‘buying the rumour’ and sidelining the real fundamentals that should matter.
Central bankers in New Zealand have been busy overnight, cutting their key interest rates by half a percentage point.
The Reserve Bank of New Zealand lowered the cash rate to 4.75%, from 5.25%, a move which knocked the New Zealand dollar (known, rather sweetly, as the ‘kiwi’ in FX circles).
The kiwi dollar tumbled 0.9% to $0.6084, the lowest since 19 August.
Antonio Ernesto Di Giacomo, senior market analyst at XS.com, says:
The main objective of this decision is to keep inflation within the target range of 1-3% and stabilize the economy, which has shown signs of weakening in recent months.
This indicates that monetary authorities are willing to take additional measures, if necessary, to support growth.
Google: DOJ’s radical and sweeping proposals risk hurting consumers, businesses, and developers
Google has criticised the DoJ’s proposal, calling them “radical” and arguing they “go far beyond the specific legal issues in this case.”
In a corporate blog post, Lee-Anne Mulholland, Google’s vice president for Regulatory Affairs, claims that the US government is pursuing “a sweeping agenda that will impact numerous industries and products”, rather than simply focusing on the issue of search contracts.
Mulholland argues that:
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Forcing Google to share your search queries, clicks, and results with competitors risks your privacy and security.
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Hampering Google’s AI tools risks holding back American innovation at a critical moment.
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Splitting off Chrome or Android would break them — and many other things
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Changes to the online advertising market would make online ads less valuable for publishers and merchants, and less useful for consumers.
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Unreasonable restrictions on how Google promotes our search engine would create friction for consumers and harm businesses.
You can read the argument here.
Boeing withdraws 30% pay rise offer to striking workers
Also in the US overnight, attempts to end the Boeing workers strike have hit a roadblock – with the company withdrawing its pay rise offer.
Boeing and the union held their latest round of negotiations with federal mediators on Monday and Tuesday, but talks collapsed and the sides were left locked in acrimonious stalemate showing no signs of being resolved anytime soon, a person briefed on the talks said.
Nearly four weeks after the walkout began, no further negotiations were planned between Boeing and union representatives.
Both sides blamed the other for the deadlock.
“Unfortunately, the union did not seriously consider our proposals,” Boeing Commercial Airplanes head Stephanie Pope said in a note to the employees, calling the union’s demands “non-negotiable“.
Pope added:
“Further negotiations do not make sense at this point and our offer has been withdrawn.”
But, the International Association of Machinists and Aerospace Workers union said in a statement that Boeing was “hell-bent on standing on the non-negotiated offer” proposed last month.
The union said:
“They refused to propose any wage increases, vacation/sick leave accrual, progression, ratification bonus, or the 401k Match/SCRC Contribution. They also would not reinstate the defined benefit pension.”
US considers breakup of Google in landmark search case
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Google is facing the threat of being broken up, as the US government weighs up how to tackle its monopoly in online search.
In a court document filed overnight, the US Department of Justice suggests it could seek ‘structural remedies’ such as forced product sales – to prevent Google using its Chrome browser, Android operating system and Play app store to unfairly dominate the search market. Other, less radical, options are also under consideration, though.
Introducing their case, the DoJ say:
Google’s anticompetitive conduct resulted in interlocking and pernicious harms that present unprecedented complexities in a highly evolving set of markets.
These markets are indispensable to the lives of all Americans, whether as individuals or as business owners, and the importance of effectively unfettering these markets and restoring competition cannot be overstated.
The DoJ’s “proposed remedy framework” comes a month after a US judge ruled that Google had violated antitrust law and created an illegal monopoly. The case centred on Google’s use of exclusive agreements with device makers like Apple and Samsung, in which it paid billions of dollars to make sure that its product was the default search engine on their phones and tablets.
The DoJ argues that the courts must address Google’s unlawful conduct is undoing its effects on search distribution, so rivals can compete for customers fairly.
The court filing says:
Fully remedying these harms requires not only ending Google’s control of distribution today, but also ensuring Google cannot control the distribution of tomorrow.
At this stage, the plaintiffs are only “considering” behavioral and structural remedies – legal-speak for breaking the tech giant up.
Other options include potentially restricting Google from using contracts and “monopoly profits” to control distribution channels and search-related products. Or, Google could be forced to share users’ search data with rivals.
The plaintiffs also want the remedies to be forward-looking; they could include restricting Google from using search results to train new generative artificial intelligence models and products.
They say:
Google’s ability to leverage its monopoly power to feed artificial intelligence features is an emerging barrier to competition and risks further entrenching Google’s dominance.
The Justice Department is expected to file a more detailed proposal with the court by 20 November, Reuters reports, while Google will have a chance to propose its own remedies by 20 December…..
The agenda
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7am BST: German trade data for August
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10am BST: Post Office chief executive, Nick Read, to give evidence at the Horizon IT inquiry
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Noon BST: US weekly mortgage approval data
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2pm BST: Bank of Israel’s interest rate decision
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3.30pm BST: EIA oil stocks data
