- World Economic Forum postponed to Summer next year
- European shares steady out after opening in the red
- FTSE extends Tuesday’s fall
- US durable goods orders come in above expectations
- Tourism collapse threatens £22bn blow to economy
- Provident Financial says £28m loss better than expected
- New Look launches CVA
- JPMorgan and Linklaters signal end of the daily commute for City workers
- Jeremy Warner: What Rishi Sunak must do to sustain the recovery
- Sign up here for our daily business briefing newsletter
Well that's all from us today, thanks for following along. Here's how things ended in Europe...
- European equity markets closed largely in positive territory today.
- The FTSE 100 was flat as internationally exposed stocks like British American Tobacco, Diageo, GlaxoSmithKline, and AstraZeneca were some of the largest fallers in terms of index points.
- London's benchmark index closed 0.14pc higher to 6,045.60 while the FTSE 250 closed 1pc up to 17,753.57.
- The firmer pound was holding back the stocks in question as they earn a large portion of their total revenue from outside the UK.
- Continental indices are higher as China pledged to buy a record amount of soybeans from the US in 2020.
- Oil prices continued to test five-month highs with North American producers bracing for the arrival within hours of Hurricane Laura in the US Gulf Coast region.
What to look forward to tomorrow:
Interim results: Anglo Pacific, Hunting, OneSavings Bank, Rolls-Royce Holdings, WPP
Full-year: Hays, TheWorks
Trading statement: Diploma
Economics: Industrial profits (China); money supply (eurozone); virtual Jackson Hole Economic Policy Symposium begins, Q2 GDP second estimate, jobless claims (US)
B&M could replace ITV in FTSE 100 index
ITV could potentially be demoted from the FTSE 100 Index and B&M European Value Retail SA could potentially be added to the benchmark, FTSE Russell says in a statement.
The index review will be announced after market close on Sept 2, using market capitalization of companies at close of trading on Sept 1, according to the statement.
D&D to open 16 more restaurants
Restaurant owner D&D has said it will reopen 16 more restaurants in the next two weeks after reporting trading "well above expectations" at open sites in August.
PA has the details...
The restaurant group said it will reopen the balance of its sites in central London, including high-profile restaurants such as Quaglino's and 100 Wardour Street.
The company had already welcomed customers back to 17 venues in London, Leeds and Manchester through its first phase of reopenings.
Des Gunewardena, chairman and chief of D&D, said it has been boosted by the Government's Eat Out to Help Out programme throughout August but said the London market has remained "tough" with City sites trading at 50%-60% of previous levels.
Jim Ratcliffe's Ineos set to make Defender rival in France
Hopes that billionaire Sir Jim Ratcliffe’s new 4x4 vehicle could be built in the UK are fading after his Ineos company made an official offer to buy a car factory in France.
Ineos’s automotive division has made a formal offer to Mercedes-Benz owner Daimler to buy the plant in Hambach, north-east France, which produces Smart cars.
Sir Jim had previously talked about building the Grenadier in the UK “if the economics made sense” and had revealed plans for a vehicle assembly plant in south Wales that would create 500 jobs.
Stocks progress without incident ahead of Jackson Hole Symposium
Stocks in London have just closed and we will round up with how they finished shortly. It was a mixed, uninspired session today, with investors choosing to sit on their hands ahead of the Jackson Hole Symposium in the second half of the week.
Connor Campbell of SpreadEx said:
The Dow Jones was one of the less enthusiastic indices, opening down 0.1pc. Tomorrow the Dow will have its eyes glued on Jerome Powell’s online speech at the virtual symposium, seeking confirmation of reports that the Federal Reserve is going to soften its stance on inflation in favour of an approach that would look for an average 2pc rate across the year, overshooting that target when needed in order to balance out softer months. If so, further monetary stimulus in 2020 arguably moves from possibility to likelihood.
The Eurozone indices were more eager to move than the Dow, with the DAX and CAC rising 0.5pc and 0.4pc respectively, aided by Germany extending its furlough scheme.
The FTSE, meanwhile, directly echoed the Dow, at most dipping 0.1pc. It was a dull performance from an index that might be looking towards Andrew Bailey’s own address on Friday, even if the BoE chief’s speech is less anticipated than Powell’s.
Shoe Zone bosses increase stakes
The chief executive and chairman of Shoe Zone have both increased their stakes in the budget footwear business as it also announced the departure of a non-executive director.
Shares in the company nudged lower after it confirmed that Jeremy Sharman has stepped down as deputy chairman after nine years.
The Sharman Family Pension fund, of which Mr Sharman is a beneficiary, has sold its entire holding of 234,375 shares to the investment vehicles of chief executive Anthony Smith and chairman Charles Smith at 61p a share as part of the move.
Wahaca to close a third of restaurants
Mexican restaurant chain Wahaca is to close more than a third of its restaurants, after becoming the latest dining firm to be hammered by Covid-19.
The group, which was founded by former Masterchef winner Thomasina Miers and Mark Selby, said on Wednesday that it will close ten of its 28 sites.
The founders said they intend to “try and save jobs” wherever possible, in an email to staff.
Sites in London, Bristol, Manchester, Liverpool, Chichester and Southampton have been earmarked for closure, after it saw a “significant” depletion in cash reserves over the past four months.
It said it has seen the rent, as a percentage of sales, of sites in city centre locations increase dramatically, making a number of these restaurants “untenable”.
The sites that will close permanently are:
- Bluewater, Kent
- Brixton, London
- Charlotte Street, London
- Kentish Town, London
- St Paul’s, London.
Global stocks hit a record high
Global equities have touched a record high, as hopes on trade and vaccine progress outweigh fears over a second pandemic wave.
The MSCI All-Country World Index, the broadest measure of global equity prices, has topped the previous peak reached in February – before markets went sharply into reverse.
It reflects a stunning comeback for global equities, with a storming performance by US tech giants perhaps the highlight.
What to expect from Jackson Hole
My colleague Tim Wallace has written a curtain-raiser for the Jackson Hole banking summit, which kicks off tomorrow. He writes:
Jerome Powell, chairman of the Fed, is giving the main speech at the Jackson Hole symposium, an annual get together of central bankers.
Usually held in a ski resort in Wyoming, this year it is a virtual event. Nevertheless, financial markets, economists and officials will still be hanging on to his every word.
The key hope among observers is that Powell will give a strong indication of the results of the Fed’s long-running review of its policy tools and options.
Virgin Media offers cut-price broadband to Universal Credit users
Virgin Media is to launch an essential broadband plan aimed at those facing financial difficulty sparked by the Covid-19 crisis.
My colleagues reports:
The budget service, which will be offered to those receiving Universal Credit, will cost £15 per month and have no fixed-term contract length.
Customers will receive a limited speed of 15 Mbps, designed to help the most vulnerable stay online and apply for jobs during uncertain times.
People taking up the broadband-only plan will have to provide proof of their Universal Credit status.
Just in: Gatwick to cut up to 600 jobs
Gatwick airport is to cut up to 600 jobs in response to the “devastating impact” of Covid-19.
My colleague Oliver Gill reports:
The redundancies, which represent almost a quarter of the airport’s workforce, come as passenger numbers fell 80pc in August.
Boss Stewart Wingate said: “If anyone is in any doubt about the devastating impact COVID-19 has had on the aviation and travel industry then today’s news we have shared with our staff, regarding the proposed job losses, is a stark reminder.”
Earlier this month The Telegraph disclosed that Britain’s second-busiest airport was preparing to keep one of its two terminals shut until next summer and told staff that redundancies were likely.
- Read more: Gatwick set to axe hundreds of jobs
WEF will go ahead next summer – Bloomberg
Bloomberg reports the World Economic Forum has been rescheduled to early next summer. Its organisers said:
The decision was not taken easily, since the need for global leaders to come together to design a common recovery path and shape the ‘Great Reset’ in the post-Covid-19 era is so urgent. However, the advice from experts is that we cannot do so safely in January.
Davos cancelled – local media
Multiple local media reports are saying that the World Economic Forum in Davos has been postponed due to Covid-19.
Swiss radio station SRF reports (per Google Translate):
The managing director of the World Economic Forum WEF in Davos, Alois Zwinggi, confirmed to Radio Südostschweiz that the annual meeting will not take place next year.
ONS: Furlough covered up number of workless households
The number of workless households in the UK actually fell by 133,000 during the deepest economic plunge in the country’s history, the Office for National Statistics has claimed.
My colleague Russell Lynch reports:
Between April and June it estimated that 13.1pc of all households - 2.73m - had nobody in work due to unemployment or economic activity, down from 2.86m in the first quarter of the year.
But the figures have been badly skewed by the influence of the Government’s furlough scheme, which has protected more than 10m jobs, as well as provided support for some 2.5m self-employed workers.
Workers on furlough are not defined as unemployed, which has kept the jobless rate artificially low despite a record 20.4pc collapse in the economy due to an extended coronavirus shutdown.
Mark Carney joins asset manager Brookfield
Look who’s back! Former Bank of England Governor Mark Carney has joined Brookfield Asset Management, where he will develop a group of funds aim at achieving positive environmental and social impacts.
Mr Carney was the BoE’s Governor until March. He has also served as a United Nation special envoy, focusing on the intersections of climate change and finance.
Car demand sends US durable goods orders sharply higher
High levels of automobile demand drove US durable good orders 11.2pc higher last month, blowing out economists’ expectations for a 4.8pc rise.
The gain – which builds on a 7.7pc jump in June – points towards strong factory demand that should support the US’s economic recovery.
Pompeo ‘dismayed’ by reports of pre-democracy Hong Kong bosses being unable to access HSBC accounts
US Secretary of State Mike Pompeo has said American is “dismayed” by reports that Hong Kong-based executives of pro-democracy outlet Next Media have been unable to access their HSBC bank accounts.
The FTSE 100 bank has been criticised over its support for the city’s repressive new security laws.
In a statement, Mr Pompeo said:
Free nations must ensure that corporate interests are not suborned by the CCP (Chinese Communist Party) to aid its political repression. We stand ready to help the British government and its companies resist CCP bullying and stand for freedom.
Media tycoon Jimmy Lai, Next Digital’s boss, was arrested under the new laws earlier this month.
Carnival begins cancelling 20201 trips
The world’s biggest cruise company has begun cancelling next year’s trips in a fresh blow to an industry devastated by the coronavirus pandemic.
My colleague Oliver Gill reports:
Former FTSE 100 cruise operator Carnival blamed border restrictions and the “continued uncertainty of airline travel” for axing Princess Cruises sailings in early 2021.
Jan Swartz, Princess Cruises president, said: “We share in the disappointment of this cancellation for guests of our world cruises.”
The cancellations follow an announcement by Cunard, also owned by Carnival, that services will be suspended until March next year.
All sailings have been cancelled for Queen Elizabeth until Mar 25, Queen Mary 2 until Apr 18, and Queen Victoria until May 16, Cunard said.
Mexico suffers record economic contraction
Mexico’s GDP shrank by 17.1pc during the second quarter, putting the country – a major tourist destination – among the worst-hit economies as a result of the pandemic.
Italy rules out new lockdown
Italy has ruled out imposing a new national lockdown despite an upsurge in coronavirus cases.
In an interview with Bloomberg, health minister Roberto Spereanza said the increase in contagion has been low, with health services suffering a very low impact.
The news service reports:
“I exclude the hypothesis of a lockdown for our country now,” Speranza, 41, said at his Rome office Wednesday. “We have few cases and the situation is under control, with pressure on hospitals that is very low, minimal.” The minister noted that during the peak of the virus crisis Italy had 4,068 patients in intensive care, compared with just 66 as of Tuesday.
“A generalized lockdown is not a prospect for us, also because we have reinforced the health service, we are faster at doing tests,” said Speranza, a lawmaker from junior coalition party Article One.
Grosvenor Estates offer discount dining extension
One of London’s biggest commercial landlords will extend the Government's Eat Out To Help Out scheme for its restaurant tenants when it ends next month.
My colleague Hannah Uttley reports:
The Grosvenor Estate, which owns properties in some of the capital’s most upmarket areas including Mayfair and Belgravia, has agreed to subsidise the Chancellor’s discount scheme until the end of September in an effort to boost patronage.
Grosvenor will replicate the Chancellor’s scheme throughout September but reimburse the cost of a half-price meal in the form of reduced rent for its tenants.
The Treasury-funded initiative gives diners a 50pc discount on food and soft drinks, up to a maximum of £10 per head, from Monday to Wednesday during August. It has been praised by operators for giving consumers the confidence to visit restaurants again after lockdown.
Round-up: news from elsewhere
It’s quiet. It’s August. Here are some headlines from elsewhere that may be of interest:
- Yahoo Finance: Banks set to extend mortgage holidays for hardest-hit homeowners: Britain’s lenders are set to extend support to homeowners hardest-hit by the coronavirus crisis, but a watchdog has stopped short of ordering another round of three-month mortgage holidays.
- Financial News: Ex-Goldman Sachs president and Trump adviser Gary Cohn launches blank cheque company: Gary Cohn, the former president of Goldman Sachs, has launched a $600m blank cheque company, making him the latest high-profile Wall Street executive to enter the Spac craze that is sweeping the US financial sector.
- City AM: Craft brewer Beavertown builds new London brewery: Craft brewer Beavertown is moving production from its Tottenham home, with its new brewery in Enfield allowing it to make enough beer for 90m pints.
Tourism collapse could deal £22bn hit to UK economy
Collapsing international travel could cost the UK economy £22bn this year and put three million jobs at risk, the World Travel & Tourism Council (WTTC) has warned.
My colleague Russell Lynch reports:
Its latest assessment of the devastating impact of Covid-19 on the tourism industry said spending by international visitors could plunge by almost 80pc compared with 2019 – equating to a loss of £60m a day, or £420m a week, to the economy.
The council's latest economic impact report said the £200bn travel and tourism sector was responsible for almost 4m UK jobs – or 11pc of the workforce – last year. Office for National Statistics figures showed that tourists spent £28bn in 40.9m visits to Britain in 2019.
The organisation warned that the sector was being hammered by “stop-start” quarantine measures for overseas visitors, who account for 17pc of the country’s total tourism spending.
Probe into former McDonald’s boss examines claims of cover-up
McDonald's said its investigation into former boss Steve Easterbrook will examine whether he covered up alleged improprieties by other employees alongside allegations of potential misconduct within its human resources department.
My colleague Simon Foy reports:
The latest developments in the investigation, first reported by The Wall Street Journal, came from a tip to chairman Rick Hernandez last month about an alleged sexual relationship between Mr Easterbrook and an employee.
Executives at the fast food giant said the tip also raised questions concerning the HR department and possible misconduct by other workers. The firm did not provide details about allegations relating to the HR department.
David Fairhurst, head of human resources at McDonald’s, left a day after Mr Easterbrook resigned. His contract was terminated for conduct inconsistent with its values, the company said.
New Look launches restructuring plan
High street fashion retailer New Look has triggered negotiations with its landlords.
The company has launched a company voluntary arrangement, aiming to reset the rent costs at 402 stores.
Under the proposals, which will require approval from three-quarters of its landlords and creditors in a September vote, New Look will not pay rent on its 68 other stores. No stores will close when the process begins, and restructuring partner Deloitte said all suppliers will be paid on time.
Chief executive Nigel Oddy said the decision had been taken “out of absolute necessity”.
Covid-19 has changed the retail environment beyond recognition, accelerating the permanent structural shift in customer spend and behaviour from physical retail to online, which we have seen in recent trading,” he said.
Despite this, we still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy.
Here are some of the day’s top stories from the Telegraph Money team:
- The postcodes driving the property market mini-boom (and the ones being left behind): The suburbs of England’s regional cities are driving the country's mini-boom while London's central postcodes are left flailing, new research shows.
- Landlords blocked from buy-to-let mortgages as banks avoid ‘high risk’ customers: Landlords looking to take advantage of the stamp duty tax giveaway have been blocked from mortgages as banks restrict buy-to-let loans to those with large deposits.
- Sam Brodbeck: The Tories should take inspiration from Gordon Brown and put money in kids' pockets
Polymetal raises dividend as revenues improve
Gold miner Polymetal has doubled its interim dividend, after reporting a boost in revenues for the first half of the year.
The FTSE 100 group will pay out $0.40 per share, after what it labelled a “strong financial performance… amidst a challenging global backdrop”.
It revenues rose by 21pc to $1.1bn, with profit before tax more than double to $476m from $210m for the same period in 2019.
Vitaly Nesis, group chief executive, said:
Favourable commodity prices and our tight cost control, as well as the impact of foreign exchange and improved grades, drove a significant increase in the Group's earnings, cash flow and dividends.
Importantly, we've been able to minimise the impact of the Covid-19 pandemic on our people, communities, and operations.
The group said it is on track to meet its production guidance for 1.5m ounces of gold, with a depreciation in the Russian Rouble and Kazakh Tenge offset by costs related to the pandemic, and increased taxes prompted by rising gold and silver prices.
Citi’s Krishan Agarwal said the results were in line with expectations, noting that Polymetal’s cash costs are likely to land at the lower end of guidance.
WH Smith rises after Goldman upgrade
Shares in retailer WH Smith have picked up slightly this morning, after analysts at Goldman Sachs raised the group’s price target to 1,500p – nearly 50pc higher than current levels.
The group is down about 59pc so far this year, underperforming the 20pc decline in the the FTSE 250 index after Covid-19 devastated its travel stores.
Goldman’s analysts said the group was nearing the bottom of an “earnings revision cycle” – a strady stream of downgrades in the face of the virus. They said it offers a strong opportunity for growth over the longer term at an attractive price.
Go-Ahead gets extension on Singapore bus contract
Transport operator Go-Ahead says Singaporean authorities have extended its contract to operate 450 buses in the island’s Loyang region.
The extension, granted by the Land Transport Authority on the basis of Go-Ahead’s “strong operational performance”, will begin in September next year, and last until September 2023.
It has been operating buses in the country since 2016, drawing on its experience running London’s biggest bus network.
David Brown, Go-Ahead chief executive, said:
Go-Ahead Singapore has been a great addition to the Group and I am delighted that we will be running buses in Singapore until at least 2023.
Our experienced management team has led the delivery of remarkable performance on behalf of the LTA in recent years and has played an important part in Singapore’s response to the Covid-19 crisis.
House brokers Peel Hunt said they “expect to hear further news on contract bids relatively soon, including an additional contract in Singapore”.
Provident Financial swings to £28m loss
Doorstep lender Provident Financial swung to a £28m loss over the first half of the year as Covid-19 hit its revenues.
The FTSE 250 group said it would not propose an interim dividend in light of the results, despite its loss for the period being “better than internal plans drawn up after lockdown started”.
Revenues fell 10.3pc overall, dropping from £291.1m to £261.1m.
Its cash collection levels were running at more than 90pc fo pre-virus levels in June, with 19pc occurring in cash and the other 81pc remotely. The group said it has focused on lending to pre-existing customers since lockdown began.
Malcolm Le May, its chief executive, said the group would pay back the furlough money it borrowed:
Provident Financial has performed robustly in the first half of the year because we focused on our customers, colleagues and strengthening our balance sheet for the challenges the pandemic would bring. In fact financial and operational performance were better than expected, and therefore we have decided to repay all furlough support to the government.
Agenda: Stocks set to rise
Good morning. European markets are set to open in the green as Germany extended its furlough scheme until the end of 2021.
The German government agreed to prolong the job-preserving programme that will see it pay the bulk of wages to allow companies hold on to workers in Europe’s biggest economy.
The subsidies, known in German as “Kurzarbeit”, was originally intended for just 12 months.
5 things to start your day
1) Two of the City's most powerful firms have called an end to the daily commute by allowing staff to permanently split their time between home and the office after the Covid crisis. The world’s biggest investment bank JP Morgan has told staff in London that they will be continuing to work remotely on a part-time basis.
2) Italy fears ‘catastrophe by October’ as tourists vanish: As the country awaits a €209bn stimulus from the EU in 2021, Italians hope their businesses will survive long enough for recovery to kick in
3) How the pandemic has radically altered the flow of money: The shift in just a few months has been dramatic. Businesses stuck with bills to pay but no customers have racked up vast debts. The Government backed a series of lending schemes to keep firms alive. Now they have to work out how to repay the funds.
4) A former appeals court judge has hit out at the City watchdog for “unacceptable” hold-ups after twice being forced to delay a report into one of Britain's biggest savings scandals. Dame Elizabeth Gloster criticised the FCA for delaying her work on the failure of firm LCF with a late dump of 3,500 previously undisclosed documents.
5) Business groups given unprecedented access to trade talks: Bosses in 11 sectors including agriculture, manufacturing and financial services have signed non-disclosure agreements so they can help to shape potential agreements with other countries - including commercially sensitive rules on tariffs and rules of origin.
What happened overnight
Asian shares were mostly lower on Wednesday after a lackluster session on Wall Street following talks between the United States and China on the status of a deal meant to work as truce in their trade war.
The market has meandered recently on snippets of news about the coronavirus, developments on a potential vaccine for it and other concerns. But the global economy is still hurting overall, with airlines running at a fraction of their capacities and restaurants still mostly empty.
Japan's benchmark Nikkei 225 dipped nearly 0.2pc to 23,254.30 in morning trading. Australia’s S&P/ASX 200 lost 1.0pc to 6,098.70. South Korea's Kospi slipped 0.6pc to 2,352.35. Hong Kong’s Hang Seng edged 0.1pc higher, to 25,514.41, while the Shanghai Composite inched up less than 0.1pc to 3,374.87.
Coming up today
Interim results: Provident Financial, Polymetal International
Economics: BoE chief economist Andy Haldane webinar (UK); consumer confidence (France); durable goods orders (US)