Rio Tinto slapped with £27m fine, Reckitt Benckiser endures 'soft' quarter
London open
The FTSE 100 is expected to open six points higher on Wednesday, having closed down 0.14% at 7,516.17 on Tuesday.
Stocks to watch
Rio Tinto was slapped with a £27.4m fine by the City watchdog for failings in its financial reporting process relating to the $3.7bn purchase of mining assets in Mozambique, an issue that US regulators have now begun to investigate. The Financial Conduct Authority said Rio Tinto misled investors by failing to carry out an impairment test that would have resulted in a material impairment being made to its 2012 half year results, which it did not remedy until in January 2013 when it wrote off roughly 80% of the value of the investment.
AstraZeneca said on Wednesday that it and Merck & Co have been granted priority review by the US Food and Drug Administration for a supplemental new drug application for the use of Lynparza (olaparib) tablets in patients with metastatic breast cancer who have been previously treated with chemotherapy. The London-listed pharmaceuticals giant said a prescription drug user fee act date is set for the first quarter of 2018. It added that this is the first submission for a poly ADP-ribose polymerase (PARP) inhibitor outside ovarian cancer and the third indication submission for Lynparza in the US.
Reckitt Benckiser endured a "soft" third quarter amid a continued challenging market and has downgraded its full year guidance. With like-for-like net revenue down -1% in the year to date, the base RB business is now expected to be flat for the full year, while guidance for newly acquired Mead Johnson was kept at '-2% to flat'.
Newspaper round-up
Sainsbury’s is axing 2,000 store and back office roles as the supermarket chain looks to slash costs by £500m amid an intensifying price war with Aldi and Lidl. The retailer is restructuring its HR departments, getting rid of 1,400 store-based clerks and another 600 staff based in the back offices that serve the chain as well as Argos and Sainsbury’s bank. - Guardian
Proposals to crack down on “overpriced” service charges and “unfair” costs paid by renters and leaseholders in England have been unveiled by the government. Sajid Javid, the communities secretary, said ministers were considering changing the law to create a fairer property management system and make it easier to outlaw “rogue” letting and management agents. – Guardian
Rio Tinto has been charged with fraud in the US and handed down a £27.4m fine in the UK over its handling of its coal assets in Mozambique. FTSE 100 miner Rio was charged in the US together with two of its former executives for allegedly inflating the value of the assets, which it bought at $3.7bn (£2.8bn) in 2011, but sold a few years later at $50m. - Telegraph
The UK Government is hoping to tighten its grasp on merger and takeover deals in the interest of national security, setting out fresh rules that has left some City advisers on edge. Business and energy secretary Greg Clark has proposed new laws aimed at enabling the Government to intervene in deals in certain sectors, such as companies making military products, even if they are below a certain size. - Telegraph
Complacent water companies that are not delivering a good enough service and lack transparency are making the case for renationalisation better than the Labour party, the industry’s regulator has warned. In a withering attack on a sector that she believes is ignoring growing calls for it be taken back into public hands, Cathryn Ross, chief executive of Ofwat, said that the industry needed to wake up to claims that private investors were “lining their own pockets”. – The Times
The Civil Aviation Authority has defended its actions over the collapse of Monarch Airlines, saying that it was not to blame for the carrier going into administration. Responding to suggestions that Monarch had been capable of continuing to operate after October 2, the regulator said that it could do nothing because the airline had failed to make a credible application for the renewal of its Atol consumer protection licence. – The Times
US close
US markets finished in the green on Tuesday, with the Dow closing just short of the 23,000 mark which it breached for the first time ever earlier in the session, amid a busy third quarter earnings season on Wall Street.
The Dow Jones Industrial Average finished up 0.18% at 22,997.44, the S&P 500 added 0.07% to 2,559.36, and the Nasdaq 100 ended the session 0.13% firmer at 6,122.61.
Morgan Stanley was on the front foot, rising 0.37% after it reported an 11% jump in quarterly profit thanks to a solid performance from its investment banking and wealth management businesses.
Gains for the Wall Street heavyweight traded in contrast to Goldman Sachs, with shares in the latter closing 2.61% lower despite having managed to beat the Street consensus for both quarterly earnings and sales.
Instead, investors seemed very much focused on a 26% drop in fixed income trading revenues.