European indices are on the up with a host of blue chips turning in good results.
Still licking its wounds after a shareholder revolt forced it to scrap plans to close its London headquarters Unilever reported good third quarter sales growth amid slight price increases. Zurich-listed Nestle also managed to pass on slight price increases on its famous chocolate products and upped nine month sales by 2.8%. France’s Carrefour faced a reduced revenue stream in Latin America as a depreciation of local currencies worked against it but sales in its core domestic market increased by 2.1%. In all, the numbers paint a picture of slow but steady growth in consumer demand in Europe across food and other products indicating underlying economic stability. Italy, though, has the capacity to upset the apple cart over two issues.
The European Commission is due to review the country’s runaway budget which breaches the Eurozone’s annual deficit target hence giving the Commission little option but to reject it. If that happens it would trigger a long legal dispute that would keep putting pressure on Italy until it is resolved. But Italy also opened a new front of friction with the EU with a threat to veto sanctions against Russia brought in after the country invaded Crimea. Though politically this would be frowned upon in Europe numerous businesses which still deal with Russia including metals, gas and oil companies would quietly welcome the suspension of sanctions.
May signals willingness to extend transition
Risking the ire of the strongly pro-Brexit fraction in her own party Theresa May said she is willing to accept an extended Brexit transition period which would mean that Britain stays in the EU beyond 2020. During that period Britain would remain a member of the single market and customs unions but would also continue its budget payments to the EU. The last 12 months has been fairly rocky for British businesses, retailers facing lower sales, house prices stalling and big companies like AstraZeneca and Unilever either halting UK-related business plans or trying to completely pull out. A prolonged exit period would keep the level of uncertainty high and for many companies would stifle the normal flow of business.
Tesla buys land in China for major car plant
Demonstrating that for some US businesses the trade spat between the US and China is not enough to thwart their long term China plans Tesla bought land near Shanghai to build a large-scale electric cars plant. Does that mean that Elon Musk is looking beyond the next US election?