Key events

Anxiety in Turkish markets as election looms

Turkish financial assets are taking a hit this morning after yesterday’s presidential election failed to deliver a winner.

The lira has weakened to 19.67 against the US dollar, as traders brace for a runoff between President Recep Tayyip Erdoğan and his opponent Kemal Kilicdaroglu.

Turkish lira extends post-election trading weakness

The Turkish lira weakened to as low as 19.7 per dollar and hit fresh record lows as traders reacted to the country’s presidential and parliamentary elections, with preli…

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— TRADE ECONOMICS (@tEconomics) May 15, 2023

The cost of insuring Turkish government debt against default has risen, while bond prices have fallen.

And trading on the Istanbul Stock Exchange had to be halted after the market fell more than 6% in premarket trade, triggering a circuit breaker.

My colleague Jon Henley explains:

As Turkey awaits the official results of a presidential election that looks almost certain to go to a second round, some international analysts believe Recep Tayyip Erdoğan have the wind in their sails.

His main rival, Kemal Kılıçdaroğlu, underperformed expectations in the vote: on Friday, two opinion polls projected the unified opposition candidate to clear the 50 percent barrier needed to avoid a runoff.

Mujtaba Rahman, of the Eurasia Group, says the election is Erdoğan’s to lose:

🇹🇷: All speed now with Erdogan. Has taken parliament, despite expectations to the contrary. Has performed much better in the first ballot of the presidential election than the polls predicted. Has seniority benefits. For these and many other reasons a @kilicdarogluk win on May 28 is now very unlikely

— Mujtaba Rahman (@Mij_Europe) May 15, 2023

Our live blog has all the latest news:

The private equity group Apollo has been thwarted in its bid to buy UK oilfield services and engineering company John Wood.

Apollo had until later this week to either make a formal offer or walk away from talks after its exploratory offer of 240 pence per share was rejected by John Wood.

But both companies have told the city this morning that Apollo does not intend to make a bid.

John Wood says:

The Board remains confident in Wood’s strategic direction and long-term outlook and believes that, after a disruptive year in 2022, including new executive leadership and a new strategy, Wood is well positioned to deliver significant shareholder value.

Shares have fallen 35% in early trade, from 219p to 140p.

Vice: what the media says

Vice Media’s filing for bankruptcy protection marks “a relatively rapid decline for the media upstart,” says Bloomberg, adding:

The Brooklyn-based company listed both assets and liabilities in the range of more than $500 million to as much as $1 billion in a Chapter 11 filing filed in the Southern District of New York. Fortress Credit Corp. ranked among the largest secured creditors, with claims totaling approximately $475 million.

The move caps a tumultuous couple of months for the company. Vice ended its flagship TV news program and laid off more than 100 employees the end of April.

The WITH points out that Vice was once celebrated, but now proposes to sell its business to a consortium of its lenders:

The group, home to Vice News, Motherboard, Refinery29 and Vice TV, was once among the hottest media startups, winning a multibillion-dollar valuation based on its popularity with millennials attracted to an often anarchic style that reflected its roots as a point newspaper in Montreal.

However, the group has struggled to turn its mix of news, entertainment and lifestyle into lasting financial success, undermined by the shift of audiences to more traditional media groups and tech giants such as Facebook’s tightening grip on digital advertising in recent years.

The New York Times (one of these “more traditional media groups”) dubs Vice a “decadent digital colossus,” adding:

Vice, which had courted media giants, has struggled to adapt to the punishing reality of digital publishing. A group of creditors was able to buy Vice for $225 million.

Vice files for Chapter 11 bankruptcy protection

Vice logo.
Photo: Nathan Denette/AP

Vice, the global news publisher and broadcaster once valued at nearly $6bn (£5bn), has filed for bankruptcy protection.

The company, whose assets include Vice News, Motherboard, Refinery29 and Vice TV, has announced that it has filed for Chapter 11 in the US Bankruptcy Court for the Southern District of New York.

Vice has also agreed to a deal with a consortium of its lenders, including Fortress Investment Group, Soros Fund Management and Monroe Capital.

They have agreed to buy nearly all of Vice’s assets for $225 million and assume some of its debt.

Vice says it:

Expects to emerge as a financially healthy and stronger company in two to three months.

The sales process will likely take two to three months. Vice expects to be authorized to continue paying employee salaries and benefits and to continue paying vendors and suppliers.

Vice says its multi-platform media brands, including VICE, VICE News, VICE TV, VICE Studios, Pulse Films, Virtue, Refinery29 and iD, will continue to operate.

Its international units, and the VICE TV joint venture with A&E, are not included in the Chapter 11 filing.

Vice began as a tabloid in Montreal nearly three decades ago, before expanding into digital media and television contracts with companies such as Sky and HBO.

The move to Chapter 11 follows sales talks with several companies in an effort to avoid filing for bankruptcy, according to the New York Times earlier this month.

Bruce Dixon and Joseph Lokhandwala, VICE’s The Co-Chief Executive Officers explain:

“This expedited court-supervised sale process will strengthen the company and position VICE for long-term growth, securing the kind of authentic journalism and content creation that make VICE such a trusted brand for young people and such a valued partner to brands, agencies and platforms.

We will have new ownership, a simplified capital structure and the ability to operate without the legacy debt that has burdened our business. We look forward to completing the sale process over the next two to three months and charting a healthy and successful next chapter at VICE.”

Parts in Curry’s has jumped nearly 6% in early trade, after it lifted its earnings guidance this morning.

They hit their highest level since early April at 59.45p.

Introduction: UK tipped to avoid recession; Curry’s raises profit outlook

Good morning and welcome to our rolling coverage of business, financial markets and the world economy.

Hopes that Britain will avoid recession this year are rising after the economy has performed better than expected so far this year.

Forecasters at the EY Item Club have predicted this morning that the UK will grow by 0.2%% in 2023, rather than shrinking as previously forecast.

That improvement is due to falling inflation, lower-than-expected energy bills and a resilient labor market, they say, with UK inflation expected to start falling sharply from current double-digit levels.

Anna Anthony, UK Financial Services Managing Partner at EYcomments:

“We are still on the path to economic recovery and many businesses and consumers – particularly the most vulnerable in society – continue to face significant cost of living pressures.

This cannot be underestimated, and appropriate support still needs to be provided, but we are in a more optimistic place than we were a few months ago.

The recession that many thought was inevitable is now likely to be avoided and energy prices have fallen, boosting consumer and business sentiment.

This improved economic outlook means that EY now expects higher bank lending this year and next.

Total UK bank lending to businesses and households is expected to increase by 1.2% this year, upgraded from a 0.1% decline forecast in February, with further growth of 2.1% for 2024.

Anthony says the economic conditions expected to improve over the course of 2023 and into 2024:

“While encouraging, enthusiasm should be tempered, at least in the short term. UK banks continue to face a tough environment with historically low loan growth.

However, the sector has a strong capital position and continues to provide continuous support to customers, businesses and the wider economy.

On Friday we learned that UK GDP grew by 0.1% in the first quarter of this year, a better result than was feared a few months ago when high energy prices and mini-budget chaos hit the economy.

A graph showing UK GDP

The Bank of England also upgraded its forecasts last week, six months after warning Britain was facing its longest recession in half a century. However, GDP is now expected to be 2.25 percentage points higher than previously forecast over the next three years

Electronics retailer Curry’s has added to the upbeat mood this morning by raising its profit outlook for the latest financial year.

It now expects to make adjusted pre-tax profits of £110m-£120m in the year ending April 29, up from previous guidance of around £104m.

Curry’s says trading in the UK and Ireland has been “better than expected, particularly in the last two months of the year”.

Profits have been boosted by “continued gross margin improvements” and cost efficiencies, it said.

But like-for-like unit sales in the UK and Ireland were down 7% year-on-year and down 10% year-on-year in the Nordic regions, where trade problems have affected the group.

Curry’s says:

The Nordic trading environment remains challenging, but under new management we have made progress in terms of margins and costs.

Also coming today

Investors are watching Turkey closely, where yesterday’s election looks set to be a runoff. None of the presidents continue with the count Recep Tayyip Erdoğan or his main rival Kemal Kılıçdaroğlu seems likely to reach the 50% mark to win the presidential election outright.

We also expect the EC to publish its spring economic forecasts this morning, with new forecasts for gross domestic product, inflation, employment and public finances.

The agenda

  • 09:00 BST: EC spring economic forecasts

  • 10:00 BST: Eurozone industrial production for March

  • 11:00 BST: Spanish consumer confidence for April

  • 1.30pm BST: New York Empire State Manufacturing Index index for May