FTSE soars on vaccine hopes

City of London

Markets wrap

That's all for today. With the FTSE 100 set to close firmly in the green, here is a reminder of the day's main events:

  • Stocks soared on renewed hopes for a coronavirus vaccine and some easing of tensions between the US and China. 
  • Mike Ashley swooped on arch rival Dave Whelan's sports empire, buying some assets of DW Sports, which went into administration earlier this month
  • Tesco announced plans to create 16,000 new jobs amid a boom in demand for online grocery shopping during the pandemic
  • The video chat system Zoom was investigating a rare outage that has left many people unable to make video calls as they are working from home
  • Educational publisher Pearson appointed ex-Walt Disney executive Andy Bird as its new boss ​

Thanks for following! Louis will be back tomorrow morning. 

Moderna plans to supply 80 million doses of Covid vaccine to EU

As mentioned earlier, Moderna plans to provide 80 million doses of its experimental Covid jab to the European Union following a string of supply deals between vaccine developers and governments.

Bloomberg has the details:

The US biotech company has finished talks with the European Commission over a potential agreement, which includes an option for EU member states to purchase an additional 80 million doses, according to a statement Monday.

The European Union, the US and UK have led the way in snapping up doses of potential Covid immunizations in advance of knowing which vaccines will work and get across the finish line. The need for a vaccine is rising with the number of global coronavirus deaths surpassing 800,000.

Moderna’s final-stage study began on July 27 and enrollment of about 30,000 subjects is on track to be completed in September, it said. The company is scaling up global manufacturing to be able to deliver about 500 million doses and possibly as many as 1 billion doses per year, beginning in 2021.

The commission previously announced preliminary plans to secure hundreds of millions of doses of vaccines being developed by the likes of Johnson & Johnson, AstraZeneca Plc with the University of Oxford, Sanofi and partner GlaxoSmithKline Plc, as well as CureVac NV.

Moderna shares gave up early gains, trading 1.3 lower in New York.

Balfour Beatty wins £1.3bn contract to extend Hong Kong airport

Construction giant Balfour Beatty has won a £1.3bn contract to extend Hong Kong airport, the company announced on Monday.

My colleague Ben Gartside reports:

Awarded to its subsidiary Gammon, which is run by Balfour in conjunction with Hong Kong-based Jardine Matheson, the project will encompass an expansion of the airport’s second terminal, construction of interconnecting bridges, mechanical and electrical works as well as associated viaducts and roads.

Leo Quinn, Balfour Beatty's chief executive, said: "This award marks Gammon's second significant contract for the Airport Authority Hong Kong this year and the largest single contract ever awarded to Gammon." 

Gammon had already secured another valuable contract in relation to Hong Kong Airport earlier in the year, comprising of tunnel construction and baggage management worth £760m.

Balfour announced a half yearly loss last week of £24m, largely down to the lockdown earlier in the year which had negatively affected their construction business. 

Wall Street rally continues 

US stocks have opened in the green, pushing on from last week's rally as investors cheer vaccine developments and some easing of tensions between the US and China. S&P hits another record high.

Credit: Bloomberg 

Some more vaccine news..

Shoppers step up retail therapy amid rising confidence 

Visits to shops increased by more than 4pc last week compared with the previous seven days, as families become increasingly confident about returning to spending money in physical stores.

My colleague Tim Wallace reports:

Retail parks are back to almost 90pc of their usual footfall levels, according to data company Springboard, as shoppers can spend time outdoors and in large, spacious units.

Compared with the same period a year ago, shopping centres are back to just over two-thirds of their normal visitor numbers, marking a sharp increase on the week.

The high street is struggling most to bring customers back, with footfall still down almost 40pc on the year.

Overall, retail footfall is down by 30.7pc compared with the same week in 2019.

 
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This is still painful for the industry, but is a vast improvement on the peak of lockdown in April when footfall was down by more than 80pc and only shops selling "essentials" were allowed to open.

Retail sales volumes last month were firmly above their pre-crisis levels, the Office for National Statistics said, as consumers are happy to spend money.

Although people had started to return to the shops in bigger numbers in July, online sales remained the big winner, up 50pc on February’s levels.

One possible reason for stronger footfall is that the usual summer exodus on holiday has been hindered by quarantine measures, encouraging more people to stay either at home or at least in Britain.

Amigo founder could launch a competitor high-interest lender, says analysts 

More on Amigo from my collegaue Michael O'Dwyer:

The founder of Amigo could launch a competitor to take on the high-interest lender if he fails to secure a third spell on the troubled company’s board, analysts said.

James Benamor, who resigned from Amigo’s board for a second time in March, demanded in a blog post on Friday night that he be installed as chief executive of Amigo.

Glen Crawford, who is set to be reinstated as chief executive once he receives regulatory approval, should instead run only the firm’s subsidiary which is regulated by the Financial Conduct Authority (FCA), Mr Benamor said.

He also demanded that interim chairman, Roger Lovering, be sacked and that the chief financial officer, Nayan Kisnadwala, be replaced by a “capable” successor within 30 days.  

Amigo said on Monday that Mr Crawford had told the board he is not prepared to work for the firm in any circumstances where the colourful founder returns to a position of influence.

The company, which lends up to £10,000 to borrowers with low credit ratings provided a friend or relative agrees to step in if they fail to repay, said the board has agreed that Mr Crawford can terminate his contract if Mr Benamor calls a shareholder meeting and succeeds in winning a seat on the board.

Mr Crawford's return as chief executive just over a year after he resigned for health reasons was predicated on Mr Benamor’s declaration that he was selling down his entire 61pc shareholding, Amigo added.

Mr Benamor has been selling his shares since he failed to oust the previous bosses at a shareholder vote in June, at which he agreed not to vote his shares. The addition of new shareholders could strengthen his hand in future votes.

Analysts from Goodbody said that once Mr Benamor’s shareholding falls below 10pc he will be free from a non-compete clause that prevents him setting up a rival UK lender.

Mr Benamor’s Richmond Group, through which he owns his Amigo shares, already has an international guarantor lending business.

Any attempt to launch a competitor to Amigo would face regulatory hurdles, warned John Cronin of Goodbody.

He said: “We see the risk that Richmond would commission the establishment of a competitor as more of a threat than a likely outcome given the not insignificant associated regulatory and funding questions.”

Mr Cronin also warned that Amigo’s share price could “head towards zero”.

Amigo’s market value dipped below £60m yesterday [MONDAY] as shares tumbled following the latest spat with Mr Benamor, who helped grow the firm into a £1.3bn business between 2005 and 2018.

The lender has been hit by a raft of customer complaints that forced it to pencil in a £127m charge in its accounts for the 12 months to March - a figure that is expected to rise this year. It is currently under investigation by the FCA.

Mr Benamor lashed out at City watchdogs as he launched his campaign to return for a third spell on Amigo’s board.

He accused the FCA and Financial Ombudsman Service (FOS) of failing to ensure a “fair and stable rule of law” for high-interest lenders in the UK.

The self-confessed former petty criminal said: “The UK regulator’s actions have supported fraud by consumers against lenders, and a campaign of looting led by claims management companies, many linked to the most unscrupulous vultures the industry has to offer.”

Mr Benamor’s attack on the regulators was in contrast to Amigo’s statement that the company must work constructively with the FCA and FOS to resolve customer disputes.

Tesco's online push behind jobs bonanza

UK boss Jason Tarry says Tesco has more than doubled its online capacity since the start of the pandemic, serving nearly 1.5m customers a week.

"These new roles will help us continue to meet online demand for the long term and will create permanent employment opportunities for 16,000 people across the UK,” he says.

About 9pc of Tesco sales were online pre-Covid but that figure is now in excess of 16pc, which will be worth more than £5.5bn this year - up from £3.3bn last year.

More on Tesco creating 16,000 new jobs...

A Tesco store in Winchester

The jobs are in addition to the 4,000 permanent roles it has added since the start of the pandemic.

The roles will include 10,000 pickers to assemble customer orders and 3,000 drivers to deliver them, plus other roles in stores and distribution centres.

Tesco expects most these roles to be filled by colleagues who joined on a temporary basis at the start of the crisis and want a permanent role. Vacancies will first be offered to them first, with remaining vacancies then recruited externally.

BT shares soar

In the wake of reports that BT is bolstering its defences against a potential takeover bid following a slump in its shares, the telecoms giant is up more than 5pc and leading the FTSE 100 risers. 

Neil Wilson of Markets.com comments: "While BT has a lot of legacy baggage – notably £18bn in net debt and a major pension deficit - it’s also got the Openreach crown jewel, which would be worse considerably more on its own than the group is valued today.

"Of course, there is no formal offer, but shares could jump further if one emerges. Deutsche Telekom, which owns 12pc of BT, is seen as a likely candidate. "

Stocks climb higher 

This European rally shows no signs of letting up. Equities are still advancing across the continent.

US futures are also pointing higher.

Credit: Bloomberg 

Japan running out of credit card numbers after online shopping surge

Japan is facing a shortage of 16-digit credit card numbers after the pandemic sparked an online shopping boom.

My colleague Tom Rees reports:

Card providers are reportedly mulling an increase in the number of digits after shoppers turned to e-commerce as Covid-19 kept them at home.

The pandemic has helped with Tokyo’s push to boost cashless transactions with notes and coins still used for the vast majority of small purchases. Japan has lagged behind in the cashless shift but Shinzo Abe’s government plans to double usage to 40pc by 2025.

However, the industry fears the flurry of card issuance since the pandemic struck will cause a shortage of digit combinations, the Mainichi Shimbun newspaper reported. 

The first six digits on a card indicate the country, brand and other details, while the last 10 are determined by the issuer. The rush of new cards means there is a shortage of combinations from the seventh digit onwards.

Most Japanese banks provide cards with 16 digits to help them partner with international transaction giants Visa and MasterCard.

Tokyo was already attempting to encourage shoppers to go cashless by offering a rebate on electronic transactions after increasing the sales tax from 8pc to 10pc last October.

“Increasing the number of digits is the only real way to deal with the problem,” a credit card industry source told the newspaper.  “There will likely be a shift toward increasing the number of digits in the first half of this decade.”

Retail footfall jumped 4pc last week

Retail footfall jumped 4pc last week, a fourfold increase on the previous seven days, as shoppers returned to the UK's shopping centres and high streets. 

The Greater London area and the south east of England drove the acceleration, seeing a 6.8pc and 7.1pc rise respectively, according to new data from Springboard. 

Shopping centres, high streets and retail parks all saw a significant rise in footfall, the survey found. 

Diane Wehrle of Springboard said:

It seems that the increased quarantine measures imposed last week on a number of overseas destinations are having a positive impact on UK footfall.  

Footfall in UK retail destinations last week not only rose on a week on week basis, but the uplift was more than four times as large as the week before, and two and a half times as large as the same week last year.

The outcome is a further incremental recovery in footfall compared with 2019, and the sixteenth consecutive week in which the annual decline has lessened which offers a glimmer of hope for retailers.

Breaking: Tesco to create 16,000 permanent roles 

Tesco is to create 16,000 permanent roles to support its online business after seeing "exceptional growth". 

Most of the roles are expected to be filled by staff who joined on a temporary basis at the beginning of the crisis but who now want to remain with the business for the longer term, the grocer said.

Tourist hotspot Bali to remain closed to foreigners all year 

The Indonesian island of Bali will remain closed to foreign visitors for the rest of 2020 after authorities postponed a plan to welcome back international tourists from Sept. 11 as the coronavirus continues to spread.

Bloomberg has the details:

“The Indonesian government couldn’t reopen its doors to foreign travelers until the end of 2020 as we remain a red zone,” Bali Governor Wayan Koster said in a statement. “The situation is not conducive to allowing foreign tourists to come to Indonesia, including to Bali.”

After some success in containment early on, Bali’s infection rate jumped in June as migrant workers returned home and testing increased. The island had 4,576 confirmed cases as of Monday and 52 deaths, while Indonesia as a whole has more than 155,000 confirmed cases and 6,759 deaths, government data show.

Bali has been open to local travelers since the end of July, and as many as 2,500 people have been arriving through its airport every day without causing a spike in infections, Koster said. The local government will focus on increasing the number of domestic visitors to help the tourism industry and economy recover, he said.

Over 6 million foreign tourists visited Bali last year, accounting for more than a third of Indonesia’s total. The government warned in April that the pandemic could wipe out more than $10 billion of Indonesia’s tourism revenue this year, a forecast that is likely to worsen now because it assumed there would be some recovery in the second half.

Amigo board urges founder not to waste money in battle over embattled lender 

Amigo's board has called on its founder not to push ahead with a series of proposals, including calling a shareholder vote which could seriously shake up the way the embattled company is run.

Shares crashed by a quarter in early trading to 13.6p. 

The board said that James Benamor should not "waste further time and expense" in his battle with the lender. 

It has agreed with Glen Crawford, Amigo Holdings' newly appointed chief executive, that he can leave the business if Mr Benamor calls and wins the vote.

On Friday, Mr Benamor suggested that the board should appoint him chief executive of Amigo Holdings, while putting Mr Crawford back in charge of its subsidiary, Amigo Loans.

He said the chief executive had a lot of work to do at the UK business, including replacing board members who, he charges, "mismanaged Amigo".

In June, the founder said that he would sell his 61% stake in the lender after losing a fight to remove several of its directors.

Only around one vote out of 10 among independent shareholders was cast in favour of Mr Benamor and his company Richmond Group.

On Monday, the board said that Mr Crawford will not want to continue at Amigo "in any circumstances where Mr Benamor returns to Amigo's governance structure in a position of influence".

"Mr Crawford's decision to return as CEO was predicated on the clear statement from Mr Benamor that he was selling down Richmond Group Limited's controlling shareholding in Amigo to a position of zero," it said to shareholders.

"Mr Crawford and the board are therefore equally aligned in their unanimous rejection of the views and proposals put forward by Mr Benamor on Friday evening," it added.

"The board therefore urges Mr Benamor not to waste further time and expense for either Richmond Group or Amigo in seeking to bring his proposals to a shareholder vote."

Rio Tinto boss loses £2.7m bonus in wake of Aboriginal cave destruction

Rio Tinto has stripped its chief executive of bonuses worth £2.7m after the mining giant destroyed a 46,000-year-old Aboriginal heritage site to expand an iron ore mine in Australia.

We report:

The FTSE 100 firm blasted rock shelters in the Juukan Gorge in Western Australia's Pilbara region on May 24, destroying one of the earliest known sites occupied by Australia's indigenous people.

Jean-Sebastien Jacques will forfeit $3.5m in performance bonuses as a result of the incident, the company said on Monday following a high-level review.

Head of the iron ore division Chris Salisbury and corporate relations head Simone Niven will also lose $792,000 and $687,000 respectively.

The board-led review found Rio Tinto had obtained legal authority to blast the sites but doing so "fell short of the standards and internal guidance that Rio Tinto sets for itself".

It found "no single root cause or error" directly led to the destruction, rather it was "the result of a series of decisions, actions and omissions over an extended period of time".

Rio Tinto chairman Simon Thompson said there had been "numerous missed opportunities over almost a decade" and the company had failed to respect local communities and their heritage.

"While the review provides a clear framework for change, it is important to emphasise that this is the start of a process, not the end," he said.

"We will implement important new measures and governance to ensure we do not repeat what happened at Juukan Gorge."

Europe pushes higher 

European stocks are on a roll this morning. The FTSE is now 1.8pc higher, while France's CAC 40 and the German Dax have both broken the 2pc mark.

Equities are being boosted by signs of a progress in coronavirus treatments and a thaw in US and China relations.

Over the weekend, President Trump moved to expand access to a virus treatment involving blood plasma from recovered patients.

Wetherspoon warns of annual loss 

JD Wetherspoon warned that the fallout from the pandemic will push the pub chain to an annual loss, as it said the boost from the Eat Out to Help Out scheme will fade when the programme ends. 

The operator also said it was looking to discuss waivers for the current fiscal year with its lenders in due course.

Sales have been given a boost from the Government’s subsidised meal scheme but were still sharply lower compared with the same period last year. 

It also appealed to the Government to maintain a lower VAT rate for food when the meal subsidy scheme ends.

The firm said: 

Sales have gradually improved, with a rapid acceleration recently, largely due to subsidised food, coffee and soft drinks in the early part of the week. The company nonetheless expects a period of more subdued sales once the scheme for subsidised early-week meals and drinks ends.

Chairman Tim Martin also challenged claims made by medical experts that pubs were transmission hubs for Covid-19. He said:

Risk cannot be eliminated completely in pubs. But sensible social distancing and hygiene policies, combined with continued assistance and co-operation from the authorities, should minimise it.

Shares rose 1.1pc to 985p. 

Bunzl resumes dividend 

Bunzl resumed dividend payouts after reporting a 16.6pc rise in first-half profit.

Pre-tax profits came in at £306.8m for the six months to June compared to £264.2m a year earlier.

Trading was boosted by robust demand for facemasks, gloves as well as food packaging for the grocery sector.

The company, which supplies products ranging from disposable tableware to latex gloves and cleaning chemicals, also announced that it had entered into deals to buy MCR Safety, a US-based personal protection equipment business, and Abco Kovex, a packaging distributor in Ireland. 

Shares rose 3.9pc to £24.98 in early trading. 

Chief executive Frank van Zanten said:

The recent substantial declines in profitability in the lower margin food service and retail sectors were more than offset by strong performances in the generally higher-margin safety, cleaning & hygiene and healthcare sectors, primarily driven by significant sales volumes of Covid-19 related products including masks, sanitisers, gloves, disinfectants, coveralls, disposables wipes, face shields and eye protection...We have also seen good growth in our grocery businesses.

Mike Ashley swoops on arch rival Dave Whelan's sports empire

More on Frasers...We report:

Mike Ashley has swooped on arch rival Dave Whelan's sports empire, buying some of the assets of DW Sports, which entered administration at the start of August.

Frasers Group, which owns Sports Direct and House of Fraser, said the move will "save a number of jobs". About 1,700 role were put at risk when DW called in administrators.

Frasers will pay £37m to the administrators of DW and the total could rise to £43.9m if it also acquires some leaseholds.

The retailer said the deal was for parts of DW's gym and fitness business, including some stock, but did not include the DW business name and its intellectual property.

Frasers said the acquisition compliments its existing gym and fitness club portfolio and would place them under its Everlast brand.

The move comes after Mr Ashley's retail empire announced last week that it would plough £100m into online expansion and open stores in shopping centres in an attempt to profit from the collapse of high street rivals.

Analysts at Peel Hunt said: "Mr Ashley has a long record of buying from the administrator, but commentators have pointed out that the DW gyms are 'wet' gyms, which are hard to run very profitably.

"Frasers will doubtless argue that property-wise it has bought a tenner for a fiver, but the main thrust of last week's prelims was that the online strategy would be to the fore, so buying more bricks-and-mortar assets is not aligned."

DW appointed insolvency specialists earlier this month after trading plummeted when it was forced to shut its stores and gyms during lockdown.

Pearson appoints ex-Walt Disney executive Andy Bird as new boss

Pearson has appointed former Walt Disney International chairman Andy Bird as its new chief executive, replacing longstanding boss John Fallon. 

We report:

The struggling educational publisher said Mr Bird, who is a non-executive director on its board, will take up the new role from October 19.

A media veteran who ran the international arm of Walt Disney, overseeing its transformation into a "digital-first" brand, Mr Bird will seek to steer Pearson through the fallout from the coronavirus pandemic.

Mr Fallon, who has led the FTSE 100 firm since 2013, announced last December that he would leave this year. He will step down from the board but remain as an advisor until the end of the year. 

Pearson has struggled in recent years as the publishing industry has been battered by the rise of online rivals, with the firm issuing a string of profit warnings.

Pearson has appointed former Walt Disney International chairman Andy Bird as its new chief executive, replacing longstanding boss John Fallon. 

The struggling educational publisher said Mr Bird, who is a non-executive director on its board, will take up the new role from October 19.

A media veteran who ran the international arm of Walt Disney, overseeing its transformation into a "digital-first" brand, Mr Bird will seek to steer Pearson through the fallout from the coronavirus pandemic.

Mr Fallon, who has led the FTSE 100 firm since 2013, announced last December that he would leave this year. He will step down from the board but remain as an advisor until the end of the year. 

Pearson has struggled in recent years as the publishing industry has been battered by the rise of online rivals, with the firm issuing a string of profit warnings.

Europe opens firmly in the green

A strong start for Europe. All major indices start the week firmly in positive territory amid signs of easing US-China tensions.

Credit: Bloomberg

Frasers buys DW Sports assets 

Mike Ashley's Frasers Group has bought some of the assets of DW Sports, which entered administration at the beginning of the month, saving "a number of jobs".

The deal will see Frasers hand over £37m to the administrators of DW, a figure that could rise to £43.9 million if some conditions are met.

The deal is for some parts of DW's gym and fitness business, including some stock, but does not include the DW business name and its intellectual property, Frasers said.

Around 1,700 jobs were put at risk when DW went into administration at the start of August.

Agenda: Stocks set to climb

Good morning. European equities are set to start the week in the green on signs of a thaw in US-China tensions.

It comes amid reports that the White House is privately seeking to reassure US companies that they can still do business with the WeChat messaging app in China.

Meanwhile, virus cases are continuing to spike in Europe, with France reporting almost 5,000 new cases on Sunday – the largest one-day increase since mid-April. 

5 things to start your day 

1)  The Treasury denies digital services tax could be scrapped. Number 11 rushed to pour cold water on claims that it could be about to scrap the Digital Services Tax on Big Tech after reports over the weekend.

2) UK investors are among hardest hit globally. The coronavirus pandemic wiped $108.1bn, a record 22pc, off dividend payouts worldwide, according to Janus Henderson.

3) A Vote Leave AI firm has been handed a new Government contract. Faculty will be working with the Department for Business, Energy and Industrial Strategy to map the coronavirus impact on companies.

4) Veridium appoints new chief executive to lead expansion. The Michael Spencer-backed company will increase its footprint in Europe and the US as it makes a play for the growing biometrics market.

5) Huwaei has trimmed its London finance team amid deteriorating ties with the UK. The Chinese telecoms firm revealed the number of people working at Huawei Global Finance was down at the end of last year.

What happened overnight 

Asian markets rose on Monday, tracking another record on Wall Street. Hong Kong led gains, rallying 1.7pc with traders also cheered by a pledge from China's banking regulator that it would continue to back the city as a financial hub. Shanghai put on 0.4pc and Tokyo added 0.3pc. Seoul piled on more than 1pc and Taipei gained 0.5pc. Sydney, Singapore and Wellington were also in positive territory.

Coming up today

Interim results: Bunzl