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House for sale
July 28, 2014, 2:05pm

The Land Registry has released new data on house prices in England and Wales and the figures show the market is cooling.

The average across England and Wales shows that prices are stagnant - showing no change at all. The average selling price for a house in England and Wales during June was £172,011: a zero per cent monthly change and a 6.4 per cent rise compared to June 2013.

The Land Registry works out its figures by looking at all the sales across the country. Sales have been increasing year on year, with 65,679 sales taking place between January and April 2014, up from 48,597 in the same period in 2013. 

A look at the data by county shows that there are differences between different areas of the country. The map below shows the most recent changes in the market. By clicking on your county you can see monthly and annual changes as well as the average selling price of a house. 

Here are some graphs breaking down the data to find the outliers. First here are the 20 counties showing the biggest monthly swings (10 biggest increases and 10 biggest decreases). It is also interesting that although London prices have grown the most over the last year, they did not grow the most in June.

Over the course of twelve months the changes are more pronounced, but all of them fall below the 10.5 per cent increase measured using data from the council of mortgage lenders. The Registry data is more accurate because it includes all purchases, rather than a selection of mortgage lenders.

These are the 10 cheapest and the 10 most expensive places to buy a house in England and Wales, excluding London. When data from the capital was included, the top 10 was made up entirely of London boroughs. You can see that list in the next chart.

Here are the most expensive London boroughs (and the most expensive areas in the UK): 

Another piece of data to come out of the report is that not all house types have increased evenly over the last 12 months. Flats have actually increased the most, which could well be because London has seen the biggest rises in average price, and the average price of a house in the capital is high enough to mean people tend to look to buy a flat rather than a house. 

One final chart to complete the picture, and this one shows how house prices have change across different regions. Click on the tabs at the top to flit between measures. 

So what are the reasons for the slowdown? Many fingers will be pointing to new MMR restrictions on mortgage spending which aim to keep the amount home buyers borrow at a sustainable level. Other candidates include a change in buyer sentiment meaning the demand has come slightly below supply: meaning less upward pressure on prices. 

Howard Archer of IHS Global Insight said:

The Land Registry data for June suggest that house prices have temporarily at least lost momentum amid a recent cooling in activity which has been influenced by the introduction of new regulations under the Mortgage Market Review (MMR). Admittedly, data from the British Bankers Association indicates that mortgage approvals picked up to a limited extent in June but they remained below the peak levels seen earlier this year.

Furthermore, a survey released in late-July by the Halifax indicated that people have become much warier about buying a house. Specifically, the balance of people who felt it was a good time to buy fell sharply from +34 to +5 in the second quarter, which was the largest fall since the survey began in April 2011.

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This graph shows year-on-year percentage changes in house prices, as calculated by Halifax, the Land Registry and Nationwide. They are not seasonally adjusted.

Virgin America plane
July 28, 2014, 2:02pm

The US airline part-owned by Sir Richard Branson is preparing to go public after posting its first annual profit in March.

Branson owns a 22 per cent stake in the airline through Virgin Group with VAI Partners, controlled by hedge fund Cyrus Capital Partners, its biggest shareholder with a 71.6 per cent stake.

Barclays and Deutsche Bank Securities are leading the listing of the upscale carrier which began flying in 2007 and now has routes to 23 airports in the US and Mexico.

The number of shares on offer or a price have yet to be determined.

Chief executive of the airline David Cush signalled last year that the airline would likely file for an IPO by 2015. It posted revenues of $1.4bn and profit of $145m for 2013.

Mothercare store inside
July 28, 2014, 11:13am

Mothercare’s share price has taken a tumble this morning after a takeover bid by US chain Destination Maternity was ruled out.

Shares opened 11 per cent down after the struggling babywear retailer said it was now “fully focused on the company's plan to turnaround the UK business and to continue its strong international growth. The board remains confident in the ongoing execution of Mothercare's strategy as an independent company.”

The turnaround plan will be spearheaded by chief executive Mark Newton-Jones who is now fully on board as a replacement for Simon Calver who departed in February after poor trading performance.

The high street chain brushed off two bids from the US firm which said it was disappointed that it was not supported by Mothercare’s shareholders or board.

Ed Krell, Destination Maternity chief executive said:

"We are disappointed that the shareholders of Mothercare have not supported our proposal and that the board of Mothercare was unwilling to allow us to conduct customary due diligence and engage in discussions with us regarding our proposal… We believe that Destination Maternity's management expertise and strong maternity apparel offering would have provided an attractive enhancement to the Mothercare UK turnaround plan.”

Cantor analyst Mike Dennis said if the due diligence had been permitted, a revised bid would have been lower rather than higher and pointed the lack of international growth potential and that any bid was “a significant risk” considering the retailers losses.

“...the list of issues around the circa £20m loss making UK Mothercare operations we believe are worth reiterating; very low store sales densities, lack of branded clothes, limited penetration in clothing for older children, low gross margin in baby equipment, high rental costs, lack of cash to exit leases early and a falling gross margin due to a reduction in buying power with suppliers, we also believe there is limited growth potential in International.”

Destination Maternity itself issued it own profit warning less than three weeks ago.

Mothercare has not been buoyed either by the fact that finance director Matt Smith has jumped ship to another troubled retailer- this time Debenhams.

Yukos building
July 28, 2014, 10:22am

As Putin's international image slips to a new nadir over Ukraine, Russia has been ordered by the Hague's arbitration court to repay $50bn to shareholders in defunct oil company Yukos.

The Russian state had expropriated the assets of Yukos, forcing the company into bankruptcy.

A $50bn hit will come as a large blow to the former-soviet power, as its economy creaks under the weight of economic sanctions and the threat of recession edges closer.

Russia is expected to begin payments of the $50bn by 2 January next year, or face fines. 

Of all the stakeholders in the action, Leonid Nevzlin stands to gain the most: he holds a stake of around 70 per cent. 

Yukos had been controlled by Mikhail Khodorkovsky until 2003, when the oligarch was arrested at gunpoint on charges of fraud and tax evasion. Yukos's assets were seized by the Kremlin and many of them ended up in the hands of Rosnef, a company run by a prominent Putin ally. 

Khodorkovsky was pardoned last year after spending ten years in prison. He now lives in Switzerland.

The case is still awaiting a second verdict, this time from the European Court of Human Rights (ECHR), which is expected to rule on whether shareholders are to receive satisfaction of debts or compensation. 

Person wearing oculus VR device
July 28, 2014, 10:03am

BSkyB is investing nearly half a million dollars in Jaunt, an immersive video startup which is developing ways to bring the cinema experience to virtual reality devices.

The $400,000 funding is the second round of investment in the California-based company for Sky, previously investing $350,000 in the early stage startup at the end of last year.

The investment provides Sky “with additional insight into developments within the field,” it said in a short regulatory filing.

The broadcaster, which last week expanded its media empire in Europe after acquiring its counterparts in Germany and Italy, has previously made similar investments in startup technology, including streaming device Roku and social TV app Beamly (previously called Zeebox).

In April Jaunt said its funding totaled $6.8m from Redpoint Ventures, Peter Gotcher, Blake Krikorian and SV Angel in addition to Sky.

Citing the rise of VR technology such as Oculus, bought up by Facebook for $2bn, and Sony’s Project Morpheus, Jaunt CEO Jens Christensen said at the time:

“VR as it exists today is mainly about video games. We want to broaden the VR experience to mainstream entertainment. Jaunt has built the technology to put virtual reality in the hands of the best content creators in the world to deliver stunning, reach-out-and-touch-it entertainment experiences using VR goggles.”

The investment is understood to be a second round of funding for Jaunt, which has yet to reveal other investors at this stage.

Jaunt creates hardware, software and content for virtual reality devices to create an immersive experience for users watching films or TV shows.

Nurofen packets
July 28, 2014, 8:56am

Reckitt Benckiser’s share price opened almost two per cent higher this morning, up by more than three per cent at its peak, after announcing it will spin off its pharmaceutical business into a separately listed company over the next 12 months.

The maker of household brands such as Nurofen confirmed the move which has been mooted since last year, saying it would concentrate on its consumer health and cleaning brands.

The pharmaceutical side of the business which makes Suboxone, used for treating drug addiction, has faced declining sales and profit, with revenue falling eight per cent in the six months to June.

Chief executive Rakesh Kapoor said:

“We believe that RB Pharmaceuticals has the potential to deliver significant long term value creation as a stand-alone business."

The move was announced with half yearly results which saw revenue rise three per cent across the business.

Ryanair plane
July 28, 2014, 8:16am

There is the cliche of blue skies ahead for Ryanair, after the budget airline raised the upper limit of its profit expectations to €650m from €620m. Shares climbed on the news and were up 4.6 per cent at pixel time. 

The revision comes, Ryanair said, because of expectations that full-year traffic will rise by 5 per cent to 86m passengers. The statement read:

In summary, we now expect full year traffic to grow by 5% to 86m. This increased traffic and higher load factors, combined with a slightly improved performance on unit costs allows us to cautiously raise our full year profit after tax guidance (from the previous range €580m to €620m) to a range of €620m to €650m. However this guidance, which is about a 21% rise over last year’s net profit, is heavily, reliant upon the final outturn for H2 yields over which we currently have zero visibility.

Ryanair is the second biggest airline in Europe by passengers flown (chartered and scheduled, figures for 2013 full year), and flew 24.3m passengers in Q1, according to the company report. The leading airline is Germany's Lufthansa,  while EasyJet, the Ryanair nemesis, sits in 5th place 20m passengers back.

Ryainair has also been fighting to improve customer experience. It has improved cabin luggage allowance and implemented allocated seating. To the relief of some, it's punctual-landing jingle has also been changed. 

Ryanair’s Michael O’Leary said:

Q1 profits were boosted by a strong Easter (but are somewhat distorted by the absence of Easter on the prior year Q1). The earlier launch of our summer schedule and actively raising our forward bookings has delivered a four per cent increase in load factor to 86% and enabled us to better manage close-in yields. Ancillary Revenues rose four per cent in line with traffic growth, as airport and baggage fee reductions were offset by the rising uptake of allocated seating.  

July 28, 2014, 7:30am

European markets look set to open up this morning after positive economic news from China, although geopolitical tensions continue to hold centre stage.

Investors will be watching for news on further sanctions against Russia and the next steps in the Gaza conflict, where 1,000 Palestinians have been killed in 20 days of fighting. 

Industrial profits in China grew at a faster pace in the first six months of 2014 than in the corresponding period last year, meaning mining stocks with exposure to the Asian superpower are looking at gains. 

In Gaza calls for a ceasefire from both sides have failed and the conflict rages on, while the European Union has agreed to impose more sanctions on Russia, but they are not expected to affect the energy sector. 

The FTSE is expected to be up 14 points at 6,799, the German Dax  7 points higher at 9,639 and the French CAC is called up 7 points at 4,330.

Corporate news

Budget airline Ryanair has revised its profit expectations for the financial year, citing its ability to persuade customers to change to its services. The company now expects full-year profits to be a maximum of €650m, up from a previous upper bound of €620m.

Trinity Mirror released its half-yearly financial report, showing large increases in online readers.

Pace has seen its pre-tax profit for the first half of 2014 rise five per cent year on year, despite lower revenue. The company, which makes hardware for the pay TV industry, said the rise in profit was due to better efficiency and the release of new products. Profit before tax was $72.0m for the first six months of 2014, up from $68.8m for the same period last year. 

BSkyB is in demand after it revealed plans to invest $400,000 in video start-up Jaunt. 

Data in focus

2.45pm: US, July, Markit services PMI

3.00pm: US, July, pending home sales  

 
GlaxoSmithKline
July 27, 2014, 11:11pm
The chief executive of GlaxoSmithKline has said that he is open to the idea of creating a breakaway consumer healthcare business, the FT reports.
 
Sir Andrew Witty said that a breakup of the group would be reasonable if a time came when a standalone consumer business offered more value.
 
He said that his current strategy for a cohesive business has the potential to lead to growth, particularly in light of the $20bn deal GSK secured with Novartis in April. The two companies have agreed to set up a joint venture in consumer healthcare. 
 
“Through our transaction with Novartis we are making all of our businesses stronger together and stronger as individual components. This will deliver enhanced value through the existing structure and it delivers enhanced optionality for the long run,” he said.
 
But he added that he was “willing to accept” that at some point a better option might be to separate the group into standalone businesses. 
 
He emphasised that such a move would not happen any time soon, since the relationship between pharmaceuticals and over-the-counter drugs created a strong incentive to maintain the business as one, particularly in emerging markets where the categories are especially fluid.
 
Britain's biggest drug-maker has faced a number of challenges recently, including last week's disheartening results for the second quarter. 
 
It has also been caught up in bribery scandals involving China, and more recently Syria, Poland, Jordan and Lebanon. Last year, Chinese authorities accused the company of bribing doctors to prescribe its products to patients. 
Vincenzo Nibali wins Tour de France
July 27, 2014, 8:50pm
Italy's Vincenzo Nibali was named the winner of the 101st Tour de France today, after finishing first in the final stage on the Champs-Elysees in Paris.
 
The 29-year-old from Sicily took the lead in Sheffield during the second stage, and from that moment on dominated the competition, wearing the race leader's yellow jersey for 18 days of the 21 day competition. 
 
When it came to the final stage, the tradition of the Tour is that the leader should not be challenged, so at that point Nibali just had to reach the finish safely.
 
He has shown steady progress throughout the years, with his Tour de France track record suggesting this moment might come: in 2008 he came twentieth, in 2009 he came seventh, and in 2012 he came third.
 
Nibali previously won the Giro d'Italia and the Vuelta a Espana, and this latest win has made him the sixth man ever to win all three Grand Tours.
 
He is also Italy's first winner in 16 years. Marco Pantani was the last Italian to take the title in 1998.
 
France's Jean-Christophe Peraud came in second place, 37 seconds behind Nibali. Two of the most likely contenders at the start, Chris Froome and Alverto Contador, had to leave the competition because of crash-related injuries. 

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