Microsoft hits $1tn valuation; Sainsbury-Asda merger blocked - as it happened
All the latest economic and financial news, as tech stocks rally in New York and a UK supermarket merger is blocked
- Latest: Microsoft hits record high
- Facebook also rallying
Earlier:
- Latest: Sainsbury's shares hit by merger woe
- Introduction: CMA blocks deal to create UK's biggest supermarket
- CMA feared rising prices and lower quality
- Sainsbury's CEO Coupe under pressure (and not in the money)
9.24pm BST
And finally, Microsoft's share have ended the day solidly in the green, up 3.3% at $129.15.
That means the software giant's value has just dropped below $1tn again (at around $990m, I think). But it'll still hold the record of being the third tech firm to burst into the ten-digit club, thanks to last quarter's strong earnings - particularly on the cloud side.
8.16pm BST
Here's our news story about Microsoft's climb to the ranks of the one-trillion dollar companies.
Related: Microsoft becomes third listed US firm to be valued at $1tn
5.32pm BST
Sainsbury's travails helped to drag Britain's FTSE 100 index into the red too.
It finished 37 points lower at 7,434, down 0.5%.
5.23pm BST
Back in London, Sainsbury shares have closed almost 4.7% lower, as the City digests the collapse of the Asda merger.
At 216p, that looks like the lowest close in 33 months, and not far off a 30-year low.
J Sainsbury shares are now at their lowest level since 30 December 1988!!! #CMASmackdown pic.twitter.com/jSG04rlp9a
3.19pm BST
Microsoft and Facebook have helped to push the Nasdaq index of technology stocks to a new all-time high, over 8,138 points.
But the Dow Jones industrial average is looking rather sicklier. It's down 249 points or nearly 1% at 26,347 points. 3M is doing some damage, down around 10% after its disappointing results today.
3.01pm BST
Facebook is also romping higher, after posting strong results after the market closed yesterday.
Shares in the social media giant is up 7% to $195, the highest level since plunging by a quarter last July.
"We had a good quarter and our business and community continue to grow.
We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet."
2.50pm BST
Microsoft has overtaken Apple to become the most valuable tech company in the world.
Apple (which hit the $1tn mark last summer) is currently worth around $976bn. Amazon is close behind, at $940bn.
2.43pm BST
Boom! Microsoft is officially worth $1 trillion dollars, after impressing Wall Street with its latest financial results.
Shares in the software, cloud computing and games console firm have jumped almost 4.5% to $130.66 at the start of trading in New York.
"We continue to believe the shift to the cloud will be additive to Microsoft given a broader portfolio of products with deeper functionality as well as Microsoft's ability to enter new categories where it did not compete previously."
Cloud is clearly the way forward for Microsoft and demand for these services is expected to remain strong.
2.36pm BST
My colleague Larry Elliott says Sainsbury's boss Mike Coupe needs to move fast to reassure the City that he has a new strategy, now his merger with Asda has been rejected.
Coupe made a catastrophic misjudgment in assuming the CMA would wave the deal through. He compounded the error by allowing himself to be filmed singing "We're in the Money" on the day the merger plan was announced. And judging by the fall in Sainsbury's shares, taking them close to a 30-year low, investors don't think there is a plan B. To shake off the sense he is past his sell-by date, Coupe needs to come up with a different song - and fast.
Related: Failed merger leaves Sainsbury's investors fearing there is no plan B
2.19pm BST
Better economic news from America: new orders for durable goods have jumped at their fastest rate in seven months.
Increased demand for cars, aircraft and other defence equipment drove orders up - perhaps a sign that the global economy is picking up (although these figures are volatile).
New durable goods orders rebounded strongly, up 2.7% in March after falling by 1.1% in February. Defense and nondefense aircraft and parts orders, which can be highly volatile from month to month, were both up sharply in March, with motor vehicle and parts orders up 2.5%. pic.twitter.com/odtD6PcJL1
1.54pm BST
It's been a rough decade for Sainsbury's shareholders, as this chart show:
1.46pm BST
Newsflash: The number of Americans signing on for unemployment benefit has jumped unexpectedly.
Some 230,000 new claims for jobless support were filed last week, up from just 193,000 the previous seven days.
One week jump in initial claims? End times clearly, cue you favorite "Requiem" https://t.co/R7EhwYpANd
1.14pm BST
Over in New York, manufacturing conglomerate 3M has sent a shiver through the markets with some underwhelming results.
3M, which makes industrial, safety, health care and consumer goods products, cut its forecasts for profits this year. It now plans to cut 2,000 jobs as part of a restructuring programme.
"We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves."
3M plunges in pre-market trading after cutting its profit forecast for the year https://t.co/tIZURZS5zI pic.twitter.com/cKZ7FzfU04
12.29pm BST
Here's our profile on banker Alison Rose, a leading candidate to replace Ross McEwan as the head of Royal Bank of Scotland following his resignation today.
Alison Rose: the 49-year-old City high flyer in the running for the RBS top job. She would be the first woman to run a major UK bank https://t.co/rj2jhaj8MD
12.11pm BST
Back in the City, there's no respite for Sainsbury's yet.
After a morning of heavy selling, Sainsbury shares are down 4.5% at 216p. That's still their lowest level since July 2016, and not far from their weakest point since 1989:
"In our view, Sainsbury's is the weakest UK food retailer in terms of financial performance. Although the Argos merger has been beneficial, recent general merchandising sales have been weak. We prefer Tesco; its self-help measures are starting to pay off, it has exposure to the fast growing wholesale market via Booker, and has an attractive valuation. Tesco is transforming from a recovery play into a growth play, which should warrant a re-rating.
"Whilst parent company Walmart will ensure Asda has the resources it needs to keep delivering for customers, the question remains "who could buy it now?" Morrison's will struggle to bid for it, given its weak track record of mergers, and Tesco is unable to participate, due to its size. Private equity may be the only viable option."
11.16am BST
An influential group of academics supported by John McDonnell, Ed Miliband and Caroline Lucas have launched a radical thinktank to develop plans for a Green New Deal and inclusive ownership of businesses.
The new organisation, Common Wealth, is aiming to design democratic models of company ownership to curb rising levels of inequality, with close links to Labour in Britain and Bernie Sanders in the US.
"Radical but pluralistic, their commitment to designing ownership models for a democratic and sustainable economy is urgently needed and very welcome."
"They're doing important work on democratic and sustainable ownership models that would make the economy work for people and planet."
11.08am BST
Newsflash: UK retail sales have risen this month, for the first time since November 2018.
The survey of 110 firms, of which 55 were retailers, showed that sales volumes rose for the first time in five months, likely supported by the later timing of Easter this year.
Indeed, sales remained above average for the time of year. Orders placed on suppliers also grew and are expected to pick up further in the month ahead, with sales volumes also set to see somewhat faster growth.
11.05am BST
Ouch! Fashion and furnishings chain Laura Ashley have just issued a short, sharp profits warning.
It says:
Trading conditions have been very demanding over the third quarter.
The Board of the Company have reviewed the revised full year forecasts for the year ending 30 June 2019 and expect the results to be significantly below market expectations.
10.57am BST
Getting back to the Sainsbury-Asda (ex) merger.... veteran retail analyst Nick Bubb is a rare voice criticising the CMA for blocking the deal.
Bubb argues that the competition authorities should have insisted on some stores being sold off to protect customers, rather than vetoing the deal:
There is no sign of Sainsbury's CEO, Mike Coupe, falling on his sword, after the wretched CMA decided that the Sainsbury/Asda merger should be blocked completely, perhaps because there is some sympathy for his situation, as who would have thought the CMA would be so stupid as to ignore all the arguments about price competition and not even suggest a big chunk of store disposals"
10.32am BST
In an unexpected twist, the boss of Britain's largest gambling firm has called for a complete ban on betting adverts during TV sports broadcasts.
Under GVC's plan, bookmakers would be banned from broadcasting adverts on live sport, apart from horse racing. It wants competitors including Paddy Power and William Hill to back the voluntary plan (GVC won't do it unless the others join in).
Ladbrokes owner GVC has broken ranks to propose strict voluntary curbs on how the industry advertises. This will set the cat among the pigeons. (1/?) pic.twitter.com/X1dknUVa4u
Most eye-catching points:-
- An end to all gambling ads on TV at any time of day (except horse racing). Goes further than existing industry plan.
- No football shirt sponsorship/pitch perimeter ads (2/?)
- Levy to fund research, education and treatment increases tenfold from 0.1% to 1%.
By moving first on this, Ladbrokes casts itself as the most responsible of the gambling firms. Useful given recent stories. (3/?)https://t.co/0PyVboRHtm
I've a few questions/points about this though:-
- No mention of social media, the growth area for gambling ads.
- Are Chinese/Asian gambling firms who dominate football ads likely to follow suit voluntarily? (4/?)
- Ladbrokes has least to lose from advertising curbs. It is a household name already while smaller players need TV eyeballs to grow. If govt adopted Ladbrokes policies here, might it end up a net winner (along with William Hill, Paddy Power and maybe Bet365)? (5/?)
- Timing is curious. Govt is weighing up curbs on credit card betting, while affordability checks are also likely to be considered among tighter regulation of online. Are measures like these a sop to stave that off? (6/?)
In summary, it feels like GVC saw what happened to bookies who dug their heels in over FOBTs. Anticipating similar curbs to their much bigger online business, they want to ride the regulation tiger this time rather than let it run amok. I welcome input from others on this. (7/7).
10.07am BST
City workers were reminded about the climate change emergency this morning.
Environmental campaigners from the "Extinction Rebellion" blocked the road outside the Bank of England, and glued themselves across the entrance to the London Stock Market.
The financial industry is responsible for funding climate and ecological destruction and we are calling on them, the companies and the institutions that allow this to happen, to tell the truth".
"And we're asking the Government to take action to address the climate emergency."
Related: Mark Carney tells global banks they cannot ignore climate change dangers
9.54am BST
More banking news! Deutsche Bank's attempts to merge with German rival Commerzbank have collapsed.
Deutsche Bank has just announced that negotiations to combine the two German lenders have ended without a deal.
After thorough analysis, we have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration.
9.46am BST
It's also been a busy morning for UK banking.
Ross McEwan has resigned from Royal Bank of Scotland, after more than five years dragging the taxpayer-owned bank back to profitability (and plenty of criticism over his pay).
Related: Royal Bank of Scotland chief executive Ross McEwan resigns
Related: Barclays cuts bonuses for investment bankers as profits slide
9.46am BST
Britain's suppliers will also be cheering the demise of the Sainsbury-Asda merger, says Mark Jones, partner at law firm Gordons.
He predicts they'd have been squeezed hard if the new supermarket giant had been waved through:
The CMA said the risk was that customers would face higher prices. Maybe that is true but in the short term, suppliers would have been told that they have to supply the combined business at the lower of the two prices they charge Asda or Sainsbury's, or possibly provide a new even lower price. That would have been the immediate effect of the merger and, thankfully for suppliers, the CMA has done them a favour."
9.35am BST
Now that they can't merge, Sainsbury's and Asda may be forced into a new price war.
So argues Ratula Chakraborty, professor of business management at UEA's Norwich Business School:
"UK shoppers should rejoice at the CMA's decision to block the proposed merger between Sainsbury's and Asda. This merger would have reduced competition, resulting in higher prices and less choice. Consumers can now expect the supermarket wars to resume with full force, as the retailers now know that they cannot avoid competition by hiding behind anti-competitive alliances and tie-ups.
"The CMA decision has ensured that the only way to win in this market is by competing head-to-head to give consumers genuine better value for money rather than have giant monopolies stitching up the market and pretending to compete through illusory marketing gimmicks.
9.32am BST
Sainsbury's long-term share price chart is a chilling sight this morning.
At just 214p (-5% today), its shares are on track to close at their lowest point since 1989!
9.16am BST
Hardly anyone has a good word to say about the Sainsbury-Asda merger, as it shuffles off into retail history.
Here's Rebecca Long Bailey, Labour's Shadow Business Secretary:
"The CMA's decision is welcome and validates the concerns of many trade unions and industry groups that the merger risked stifling choice and quality in the groceries sector, as well as driving down terms for workers and supply chain businesses."
The Competition and Markets Authority's decision to block the merger of Sainsbury's and Asda is welcome and validates concerns of unions and industry groups - @RLong_Baileyhttps://t.co/EaRfUis7Js
9.11am BST
Despite that criticism, Clive Black isn't in the "Mike Coupe must go" camp.
He writes:
Mr Coupe was bold in seeking this merger and should be praised for this ambition and idea generation.
8.59am BST
Retail analyst Clive Black of Shore Capital has issued a stinging rebuke to the top management of Sainsbury and Asda for attempting to get their merger through.
He accuses both firms of "arrogance and naivety", for assuming that the competition authorities would roll over, just because they allowed Tesco to take control of wholesale business Booker recently.
There was a considerable sense of irony that the CMA announced its final decision on the proposed Sainsbury-Asda merger ahead of its self-imposed deadline of the 30th April. That irony emerges from the fact that Sainsbury and Asda took the CMA to the Competition Appeals Tribunal (CAT) to argue that there was the need for more time to consider a deal where the players felt that they knew the rules better than the referee.
Well, the referee has now blown the whistle on a deal that we give credit to its architect(s) for being bold but were set against a strategy and tactics that were most certainly not of a mould of the likes of Sir Alex Ferguson. Indeed, arrogance and naivety are words that come to mind when considering this proposed amalgamation from start to finish.
At the heart of the proposed deal's problems is an incorrect and over-extrapolation of the decision by the CMA, under a different managerial regime, to unconditionally clear the Tesco-Booker merger. We felt at the time that it was a surprising and poor decision. However, rather than analysing matters with a sense of rationality and perspective, Sainsbury and Asda seem to have decided that 1+1 can equal 10.
8.46am BST
The GMB union, which represents many Asda workers, says staff have suffered months of uncertainty thanks to the Sainsbury deal -- management now need to give them proper support.
For Asda workers, this is the right CMA decision on the proposed Sainsbury's 'merger'. Swathes of stores and depots would have to have been sold off, with jobs put at risk - and no real benefit for customers or communities.
The workforce has been through months of uncertainty, worrying what's going to happen, wondering if stores or depots would be sold from under them. It's time for Asda to move on, and give stability and security to the staff who work day in, day out to make the company profitable.
8.44am BST
Sainsbury's shares have sunk to the bottom of the FTSE 100 leaderboard.
They're now down 6% at 220p, which is still a 33-month low.
In a move that manages to be both shocking and unsurprising, the Competition and Markets Authority brought the game-changing Sainsbury's/Asda merger to a screeching halt on Wednesday, stating that it had no other option but to block the deal in the face of what it described as 'a poorer shopping experience' for all of the supermarkets' UK shoppers.
Sainsbury's - which has already had a tough start to 2019 due to speculation that the CMA wasn't happy about the potential tie-up - slid more than 6% on the back of the news, a decline that could worsen as the day goes on. It also leaves the supermarket barely hovering above 2.10, and means next week's full year results are going to make for interesting reading.
8.40am BST
If you're just tuning in, here's Zoe Wood's news story on the sinking of Sainsbury's merger with Asda:
Related: Sainsbury's-Asda merger blocked by competition watchdog
8.33am BST
The unions are also applauding the end of "Sasda".
Unite national officer Bev Clarkson says Sainsbury's workers will be particularly relieved.
"The merger and possibility of store closures and job losses as a result has been unsettling, causing great uncertainty at a time when the supermarket imposed changes to contracts that has left many workers out of pocket.
"Staff will now look to senior management to give them certainty so they can concentrate on serving customers."
8.28am BST
Caroline Normand, director of advocacy at consumer group Which?, says the CMA was quite right to slam the brakes on the deal:
"The CMA is right to block this merger, which could have reduced competition in the sector resulting in a number of problems for shoppers including increased prices, reduced quality and choice, and a poorer shopping experience.
"Sainsbury's and Asda have fallen behind the pack recently in this trusted sector - with both finishing in the bottom four of our annual supermarket survey as rivals like Aldi and Lidl have done a better job of giving shoppers what they want."
8.25am BST
Green Party MEP Molly Scott Cato is pleased that Sainsbury and Asda aren't merging, as it would have created even more pressure on suppliers.
I'm pleased to hear that competition regulator has intervened to prevent the Sainsbury's-Asda merger
I wrote to @CMAgovUK to ask them to take this action
Monopoly in our food system means pressure on our farmers and more food miles#LocalFoodRockshttps://t.co/rD2TGdQwyW
8.21am BST
Sainsbury's shares have slumped to their lowest level since the summer of 2016, as trading begins in London.
Shares have fallen by over 5%, as investors react to the termination of its merger with Asda. That takes them down to 214p, from 226p last night.
8.09am BST
City analysts are also speculating that Mike Coupe's position at Sainsbury's looks precarious, now his big deal with Asda is in ruins.
"Confirmation that the competition watchdog has blocked Sainsbury's planned merger with Walmart-owned Asda will surprise no-one after its forthright interim report in March made clear its deep reservations about the deal.
Mike Coupe, Sainsbury's chastened boss, will put a brave face on things as he announces results next week but this is a blow to his reputation and the company's prospects.
Mike Coupe remains absurdly disingenuous. "The specific reason for wanting to merge was to lower prices for customers," he said today in reply. No one, least of all the CMA, fell for it. Will Coupe stay? I doubt it, this could well be the time for Coupe to exit.
The real worry for Sainsbo's is what now? Sainsbury's is the squeezed middle, losing market share to discounters and simultaneously losing out to more premium brands. While Aldi and Lidl consistently gain market share and Tesco rebounds, Sainsbury's is feeling the pinch. The worry is that it had no credible plan except this merger.
8.02am BST
Late last year, Sainsbury's reported that it had spent 17m on costs related to the Asda deal.
Retail analyst Steve Dresser points out that the final bill will be higher - money that could have been spent on store improvements or price cuts.
JS had spent 17m on the Asda deal at the half year back in November. Total figure? ()
7.54am BST
Although the Asda-Sainsbury merger has failed, it wasn't entirely a wasted effort.
It did provide us with one of the classic CEO gaffes of recent years, when Mike Coupe was caught on camera singing "We're In The Money" on the day the deal was announced.
7.51am BST
Sainsbury's CEO Mike Coupe must now be feeling the heat after pursuing the ADSA deal so firmly, only to be thwarted by the CMA.
Professor John Colley of Warwick Business School points out that the whole process has been disruptive.
"This is good news for customers. Sainsbury's CEO Mike Coupe may have promised he would pass on 1bn of savings to customers over three years, but that figure was never verifiable nor credible.
"Prices move up and down all the time. Over three years it would have been impossible to assess what prices would have been without the merger.
Real pressure now on Sainsbury's boss Mike Coupe after collapse of Asda merger and falling sales. Insists: "Sainsbury's is a great business and I am confident in our strategy." Yet Sainsbury's share price down by a third since last summer.
7.41am BST
ASDA's parent company, Walmart, has also expressed disappointment at the move. So what happens now?
CEO Judith McKenna says Walmart's focus is to "continuing to position Asda as a strong UK retailer delivering for customers", adding
Walmart will ensure Asda has the resources it needs to achieve that.
Asda & Walmart terminate deal discusses as a result of deal veto from CEO . Walmart boss Judith McKenna says that "Walmart will ensure Asda has the resources it needs" to position the supermarket as a strong retailer. So not a knee-jerk sell off
7.33am BST
Roger Burnley, CEO of Asda, says he's disappointed with today's ruling.
He also acknowledges that the merger has worried many Asda staff, who could have lost their jobs if the merger had gone through, saying:
We're disappointed with their findings but will continue to find ways to put money back into customers' pockets and deliver great quality and service in an ever changing and demanding market.
I have always been hugely aware that the last year has been an unsettling time for all of our colleagues and am immensely grateful for their commitment and dedication during that time. Our focus is now on the most important job we all have - delivering for our customers."
7.25am BST
Sainsbury has confirmed that its 7bn takeover of Asda is now dead.
CEO Mike Coupe (for whom today's ruling is a bitter blow) says the two companies have agreed to terminate the transation.
"The specific reason for wanting to merge was to lower prices for customers. The CMA's conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking 1 billion out of customers' pockets.
"Sainsbury's is a great business and I am confident in our strategy. We are focused on offering our customers great quality, value and service and making shopping with us as convenient as possible."
7.14am BST
Good morning.
Attempts to create Britain's largest supermarket group have been crushed by competition authorities this morning.
It's our responsibility to protect the millions of people who shop at Sainsbury's and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.
We have concluded that there is no effective way of addressing our concerns, other than to block the merger.
We've blocked the Sainsbury's / Asda merger after finding that it would lead to:
Higher prices for groceries and fuel
Less choice and worse quality of products
i A poor shopping experience
Read more: https://t.co/FrOpssqwS7 pic.twitter.com/lJQtk9BbeC