BoE’s Ramsden says asset purchases can ramp up ‘significantly’ if needed

Bank of England

Blog wrap:

Well, that's all from us today, thanks for following along as always. Be sure to join us again in the morning.

What to look forward to tomorrow:

  • Interim results: Melrose, The Restaurant Group
  • Economics: Final services PMI (UK, eurozone, Germany, France, Spain, Italy, US); jobless claims, trade balance (US)

FTSE pushes higher

The FTSE 100 ended 1.35pc higher today to 5,940.95 while the FTSE 250 closed 0.57pc higher at 17,704.42.

Housebuilders led the rally, with Barratt Developments the biggest gainer on account of its full year update, and Taylor Wimpey, Persimmon and Berkeley Group following close behind.

The pound was hit by the positive move in the dollar. A spokesman for Boris Johnson said that major differences still exist between the UK and the EU in relation to reaching a deal. The EU chief negotiator, Michel Barnier, said he has flexibility in regards to negotiations and that he will be in London next week.

David Madden of CMC Markets said:

Broadly speaking, European indices lost ground in the past two days, and today those losses have been mostly recovered.

The mood on this side of the Atlantic is still optimistic in relation to the US coronavirus stimulus package, even though there are ‘serious differences’ between what the two sides want.

Steven Mnuchin, the US Treasury Secretary, said that a ‘bipartisan agreement still should be reached’. The politicians are playing politics with the issue, but dealers are still hopeful that some sort of agreement will be achieved at some point.

Treasury committee hearing wrap

The final questions have just drawn to a close so we will take a look at how things finished up with European equities very shortly.

For now here's a short summary:

  • Andrew Bailey said that the UK economy is facing a “record level” of uncertainty about its future, with a significant risk that growth will be far weaker than currently forecast.
  • The Bank of England governortold MPs that forecasts drawn up in August were done in the face of huge uncertainty caused by the continued battle against COVID-19, structural changes in the economy, and Brexit trade talks.
  • Bailey said the Monetary Policy Committee’s measure of uncertainty stood at its highest level in history during the August meeting.
  • Bank of England Deputy Governor Dave Ramsden and another interest-rate setter, Gertjan Vlieghe, also warned of risks that Britain's economy could suffer more damage than spelt out by the central bank last month. 
  • Dave Ramsden told lawmakers that the Bank of England had estimated the level of Britain's economic output would permanently be about 1.5 percentage points lower than it would have been without the pandemic. 

BoE on the banking sector

Dave Ramsden says: 

"What’s really striking about this crisis and the recovery phase, is that banks are part of the solution.

They were the problem in the financial crisis, they exacerbated a real economic downturn and the meant that the recovery was more prolonged.

This time round banks are playing their part, as part of the solution."

 He says that commercial banks are well-capitalised and in a position to help customers.

Pound slips to low of the day

The pound has fallen to its low of the day in the last 15 minutes, down 0.7pc at $1.3294. Government bonds rose, pushing 10-year gilt yields down.

It came as the Bank of England said it can significantly increase the speed and volume of its bond purchases if needed to aid the economic recovery, according to deputy governor Dave Ramsden.

“We have headroom to do materially more quantitative easing if we need,” Ramsden told U.K. lawmakers on Wednesday, speaking alongside Governor Andrew Bailey and fellow policy maker Gertjan Vlieghe.

“We have the operational and other capabilities to do it fast if market dysfunction required that. So we can influence both the size and pace.”

Dollar against the pound:

Key points from the Treasury Committee 

 The Treasury Committee have tweeted the below key points...

Broadbent pushes back against monetary financing claims

Bank of England deputy governor Ben Broadbent pushed back against accusations that the central bank is improperly funding the government through bond purchases, saying its focus is solely on inflation.

“Aggressive monetary easing by central banks, occurring as it has alongside very large government deficits, has raised fears in some quarters about “monetary finance”,” Mr Broadbent said. “These are misplaced.”

He said both the government and the BOE are responding to the needs of the economy, and key to the question is their objectives and whether they operate independently in a “stable” and “credible” regime.

“If inflation rises materially above its target, and if it tends to do so in particular when the public finances are under strain, that may be evidence of ‘fiscal dominance’,” he said, referring to a situation where the central can’t tighten policy because the government can’t afford higher interest rates.

“If, on the other hand, easier monetary policy is necessary simply to stabilize inflation, and succeeds in doing so, it’s hard to see how it can qualify."

Handover

With questions likely to head on a while longer, it’s time for me to hand over to my colleague LaToya Harding, who will steer the blog into the evening. Thanks for following along today!

Ramsden: Market conditions are good for companies

Sir Dave is addressing the situation on markets. He says that vis-a-vis the financial crisis, markets are much more stable now, saying this means companies are much more able to access funds if needed than during the last recession.

He warns, however, that some companies are bound to collapse.

Bailey: Uncertainty will remain

Andrew Bailey’s addressing the uneven impact of the virus on the economy, noting that while some areas such as car sales have bounced back strongly, areas such as entertainment and leisure face a more unclear prospect. 

Bank can produce sizable response to trade problems

Pushed further on what the Bank of England would do in the event it faced raised trade and virus threats, Mr Bailey says Threadneedle Street could manage a sizeable reaction, without going into more specific details.

He notes that negative interest rates remains in the “toolbox” available to the MPC.

Sir Dave says that while there is a limit to how much the MPC can do by “going big and going fast”, there is the potential for the BoE’s QE (asset purchasing) programme to “significantly” ramp up. He notes that the impact of changed trading relationships would occur in the long term, and need to be counterbalanced with the potential for new deals. he says:

We have headroom to do materially more QE if we need to add to it. And also, we have the operational capabilities and other capabilities to do it fast if market dysfunction required that. So we can influence both the size and pace

Questions resume

Back with the Treasury Select Committee, questions have continued. Steve Baker is AWOL so Labour’s Rushanara Ali is now asking questions.

Asked about what the impact of a major resurgence in the virus combined with a failure by the UK to reached trade deals would be, Mr Bailey is equivocal. He says that the impact of the virus is concentrated in the short-term, but said the longer-term adjustments are harder to quantify.

In the event of a second wave, he says the Bank of England has ensured that it that it is ready to respond, echoing his comments from last week.

Sunak tells Tories there won’t be a ‘horror show’ of tax rises

Chancellor Rishi Sunak has told Conservative MPs  there won’t be a “horror show” of tax rises, following reports over recent days that levies could rise in a variety of areas.

His notes, which have since been confirmed as matching those he delivered to MPs, were pictured as he left his office on Downing Street.

Williams and Lotus caught in legal row

Williams is preparing to sue Lotus over a contract to build the £2m hypercar Evija Credit: CHARLIE MAGEE/AFP/Getty Images

Two of the best-known names in British motorsport have become embroiled in a bitter legal row over the building of the world’s first all-electric hypercar.

My colleague Oliver Gill reports:

Williams Advanced Engineering (WAE), spun out of the Formula One team that boasted Nigel Mansell, Damon Hill and Ayrton Senna as drivers, is preparing to sue Lotus over a contract to build the £2m Evija hypercar.

Williams claims it has not been paid by Lotus since April. A decision this week to terminate the contract “is wrongful and without any legal basis”, Williams added.

Williams is understood to have appointed City law firm Quinn Emanuel as it pursues a multimillion-pound claim against Lotus, the carmaker that was founded in the 1950s by influential engineer Colin Chapman. It is now majority owned by Chinese firm Geely, the owner of Volvo and black cab maker the London Electric Vehicle Company.

Lotus said it had brought the Evija project in-house “pre-Covid lockdown” after “delivery problems” by Williams. 

Break

MPs have been called to the Commons chamber for a division. A 15-minute break has begun.

Brazier: We shouldn’t expect a rush back to offices

Alex Brazier, the BoE’s executive director for financial stability strategy and risk, raises a number of issues around the return to work. He notes that it still isn’t clear at all at this point whether people will return to city centres in large numbers in the coming months, and points out that everyone can’t return at the same time currently.

External financial policy committee member Dame Colette Brown adds that although more affluent families appear to have saved more money during lockdown – raising the risk of increasing wealth inequalities – it’s not clear what the long-term effect will be on this front.

Bailey: Household spending back to pre-virus levels… but problems remain

Andrew Bailey says that although household spending is back at pre-virus levels, it’s a “very uneven picture”, with high demand in some areas offset by falls elsewhere. Concentrating on retail sales, he points to the increase in online sales during the pandemic as an indicator of more fundamental changes occurring.

Asked whether he is concerned about London’s recovery (swathes of the centre of the city remain extremely quiet), he says geographically-weighted credit card data points to the capital being a particular weak point. The Governor says the picture on this front will become clear, but says the BoE is watching development closely.

Vlieghe: Unemployment likely to fall more quickly during this recession

Dr Vlieghe says that the employment impact of this recession should be longer than in previous recessions, with the impact of changes to companies and the furlough wind-down meaning people may have more difficulty finding work, combined with the effect of the permanent scarring referred to earlier.

Bailey: Different policy needed after furlough

Concluding the inflation discussion, Andrew Bailey said he doesn’t expect inflation to turn negative in the near term.

Following that, he gives a slightly cagey response to question from Labour’s Angela Eagle, who asks why the Governor supported the winding down of the furlough scheme, given continued threats to the labour market.

Mr Bailey says it is a difficult question, and suggests a different kind of job support programme may be needed once the furlough scheme lapses. He says such policy decisions are beyond the Bank’s remit, however.

Wall Street opens at record high

Over in the US, Wall Street has opened higher – meaning new intraday records for the S&P 500 and the Nasdaq.

Vlieghe: Output gap could take a while to close

MPC member Dr Gertjan Vlieghe says the risks are “to the downside” for the UK’s output gap (i.e., the difference between its potential and actual output), and warns this may take longer to close than the one year currently projected.

Asked about the signals markets are showing, he says gold is a “terrible” indicator of inflation expectations. Looking at other measures, he says inflation now looks like it is settling back towards pre-virus levels, and should be in line with the MPC’s 2pc target.

On this point, Sir Dave says that the downwards skew to inflation brought on by Covid-19 are less extreme than the GDP impact, but says supply-side concerns mean deflation is not as big of an issue as some might have feared.

He says the BoE’s analysis and surveys suggest inflation expectations have recovered, but adds “you have to be very vigilant when you’ve had a shock like this”.

Sir Dave says he’s comfortable where expectations currently are.

Ramsden: Scarring could take many forms

Deputy governor Dave Ramsden says GDP will be permanently at least 1.5pc smaller “after” the pandemic, with concerns likely to arise if it is any worse than that. He says scarring could take a variety of forms, with the labour market in particular a weak point, adding:

Unless the adjustment is very quick and happens quite easily, the chances are the scarring effects over time may be larger than that

He says it’s clear that the impact across different part of the economy will be uneven, which could create a mismatch in skills: people losing their jobs may find they can’t quickly shift to growing sectors.

Sir Dave says there may be a “semi-permanent effect” to the commercial real estate sector, which may see less investment in the immediate future due to the widespread adoption of homeworking practices. He warns that shift may have an impact on productivity, something which is not yet clear.

As more retailing moves online, he warns, he says more investment may occur in the stock areas, rather than in high street roles.

“These are a really complex set of factors to untangle,“ he told MPs.

Bailey: ‘Structural’ change is crucial

In his opening comments, Andrew Bailey says that the “structural” shape of the post-virus economy is the key unknown currently, adding that there will likely be extensive debate over what that means from a policy standpoint.

He says there’s a “huge amount of uncertainty”.

Bailey in front of Treasury Committee 

Bank of England Governor Andrew Bailey is up in front of the Treasury Select Committee in just over five minutes. 

He’ll be appearing alongside several other monetary policy committee members.

Last week the Governor said the Bank has the firepower to "go big and go fast" with vast stimulus to tackle future downturns in the wake of Covid-19 at an online Jackson Hole event.

Read Russ Lynch's report on Mr Bailey's speech last Friday: 

Threadneedle Street is reviewing its arsenal of policy tools, including the “possibility” of using controversial negative interest rates for the first time, the Governor said. 

Policymakers have already slashed interest rates to a record low of 0.1pc and pumped £300bn into the economy through quantitative easing (QE) since the Covid-19 pandemic struck in March.

But Mr Bailey said: “We are not out of firepower by any means, and to be honest it looks from today’s vantage point that we were too cautious about our remaining firepower pre-Covid. But, hindsight is a wonderful thing when you have it.”

The Governor said there were “times when we need to go big and go fast” on QE, after the pandemic threatened to overwhelm gilt markets when panicked investors made a “dash for cash”. 

The Monetary Policy Committee made a rapid £200bn injection to calm markets in March before it slowed the pace of its next £100bn move in June. 

Mr Bailey said: “Looking at the UK case, there indeed is some evidence that the impact of QE over the past decade has been largest at times of market dysfunction and illiquidity … but, if this result proves robust, it suggests that 'going big and fast' with QE is particularly effective in these conditions.”

He emphasised that big moves to shore up markets are likely to be temporary, and added that policymakers will need to cut the size of the balance sheet, which stands at £745bn or 30pc of GDP, to give themselves headroom to tackle future crises.

Pendragon shift focus online

Car dealer Pendragon is eyeing the used car market as part of a major strategic review of the business, as it seeks to become more digital-focused post-lockdown.

My colleague Simon Foy reports:

The company – whose brands include Evans Halshaw and Stratstone – will look to focus more on standalone used car sales, developing its UK franchised motor unit, and "growing and diversifying" its Pinewood software business.

Under the plan, its “Car Store” vehicle supermarket concept will be rebranded and restructured around eight propose-built sites designed to provide digital sales and home delivery. The larger-footprint sites will cost around £7.5m each to construct. 

It said: “Whilst we fundamentally believe that there will always be a major role for bricks and mortar in vehicle purchasing, we expect these shifts in consumption habits to be permanent and that better digital and fulfilment experiences will be necessary to augment physical retailing.”

It comes a month after the car dealer axed 1,800 jobs due to a drop in demand at its physical stores.

Wall Street set to rise

Those jobs figures don’t seem to have caused a major upset on Wall Street, where equity futures point towards moderate gains on the main US indices. Here are the expected opens:

  • Dow Jones Industrial Average: +0.5pc
  • S&P 500: +0.6pc
  • Nasdaq: +1.1pc

Gains across almost all sectors

ADP has produced this handy infographic, showing where job gains occurred. Only the Information sector shed payrolls over the month, but overall the figures were weaker than anticipated. 

ADP: US added 428,000 jobs in August

It’s another miss for ADP, although by a less wide margin: the group says 428,000 private payrolls were added in August. July’s figure was revised up to 212,000.

Coming up: ADP report on US private payrolls

In a few minutes, we’ll get the latest ADP report on US private employment. The payroll software group’s monthly report, based on its own data, is closely watched as a signal of how the headline non-farm payrolls figures, due on Friday, will look.

Economists are expecting ADP to say 1m jobs were added during August, amid re-opening efforts in the US – but July’s figure of 167,000 jobs added was a big miss, so brace for possible surprises.

Diner numbers more than doubled on last day of voucher scheme

Brits rushed to take advantage of the final day of ‘Eat Out to Help Out’, Rishi Sunak’s signature meal voucher scheme.

Seated diner numbers were more than double their 2019 levels on Monday, and up an average of 65pc on last year across all the days that discounts were available. The timing of the bank holiday is also likely to have flattered the figures.

Customers could get up to 50pc off their meals on Mondays, Tuesdays and Wednesdays over the past month, in a scheme that wound up on Monday.

There have been calls for the scheme to be extended, with some restaurant reported to have created their own versions due to its popularity.

Virgin Atlantic bailout gets court backing

A UK judge has cleared the path for Virgin Atlantic’s £1.2bn bailout plan, meaning Richard Branson’s airline should be able to stay afloat.

Bloomberg has more details:

The ruling by judge Richard Snowden clears the path for a bailout that will see U.S. hedge fund Davidson Kempner Capital Management provide funds to the carrier alongside Branson, its founder. Snowden said he was “satisfied” with the plan.

None of the creditors opposed the approval at the hearing.

HSBC scraps ‘first-time buyer’ mortgages after high demand

HSBC has withdrawn its range of 90pc mortgages after being inundated with applications from first-time buyers desperate to get on to the property ladder.

My colleague Adam Williams reports:

The bank has struggled to cope with the spike in demand since the Government announced that stamp duty would be waived for the vast majority of purchases.

The tax giveaway has caused a rush of buyers looking to purchase properties, pushing prices to a record high.

Mortgages that require 10pc deposits or smaller are typically only for first-time buyers. Those looking to make their first property purchase with larger deposits can still get a loan with the bank.

The decision is another blow to those with small deposits as the market for mortgages shrinks. As well as first-time buyers, movers who have little equity in their property have also found it difficult to obtain finance. 

Market moves

Stock markets are rising across Europe, although the FTSE 100 is lagging the pack somewhat despite a weaker pound.

Switzerland cranks up Credit Suisse probe

Switzerland's financial regulator has ramped up its probe into Credit Suisse by unveiling plans to dig deeper into an explosive spying scandal that led to the exit of its former boss Tidjane Thiam. 

My colleague Lucy Burton reports:

The Swiss Financial Market Supervisory Authority (Finma) has begun enforcement proceedings against the bank after opening an investigation last year following a spying case that gripped the Swiss banking world. 

The scandal first erupted in September when it emerged that Credit Suisse's former wealth management boss Iqbal Khan had been chased through the streets of Zurich by detectives hired to track him after he quit to work for arch-rival UBS. 

What the bank initially said was a rogue spying case widened as details emerged of other instances of surveillance. In December, it was forced to admit it spied on a second member of staff, its former HR chief Peter Goerke.   

Germany’s first green bond draws €30bn of orders

Germany received €30bn of orders for its first green bond, as it launched efforts to grab a dominant foothold in the fledgling market.

The debt, which will be used to fund environmental projects, will mature in 10 years and carries a 0pc coupon (higher than the minus 0.45pc coupon on comparable standard bonds).

Bloomberg reports:

German Deputy Finance Minister Joerg Kukies said last week that the country was aiming to be the benchmark issuer for green debt in Europe, taking up a mantel that it has long held with its normal bonds thanks to its AAA rating.

Eurozone producer prices rose 0.6pc in July

Producer prices, reflecting prices ‘at the factory gate’ rose 0.6pc on average across the eurozone during July – climbing slightly quicker than the 0.5pc expected.

Prices are down 3.3pc year-on-year, reflecting some strong deflationary effects brought on by the pandemic.

Money round-up

Here are some of the day’s top stories from the telegraph Money team:

Computacenter shares jump to 20-year high

Shares in IT group Computacenter have jumped to their highest level since the dot-com bubble, after it said trading was likely to be “materially above” its previous expectations.

In a succinct trading update, the FTSE 250 group said:

The successful trading performance seen in the first half of the year has continued for the first two months of the second half.  As we consolidate our forecasts for the rest of the year, it has become clear to the board that the likely out turn for the year as a whole will be materially above the board’s previous expectations as set out in the group’s trading update statement announced on 22 July 2020.

Stifel’s George O’Connor said Computacenter’s leadership had knocked out consensus once again, with a “superb unblemished track record” of earnings per share growth now “back on the cards”. He added that there are still some execution risks, but that companies are likely upping their IT spends as they adapt to the new working world.

IAG will never return to ‘former glory’

British Airways-owner owner International Consolidated Airlines (IAG) –  which also owns Iberia and Aer Lingus – will never fully recover from Covid-19, Citi says.

Analysts for the US bank say even an upcoming rights issue can’t now correct the airline’s fortunes, adding:

Essentially, no matter what the dilution, we never see the company returning back to previously peak profits nor its former glory. 

They cut their target price for IAG from 250p to 220p. It is currently trading just above 200p.

Ryanair and Wizz Air report August traffic slumps

Budget airlines Ryanair and Wizz Air have both reported poor, if improving, AUgust passenger figures this morning.

  • Ryanair said its traffic was down 53pc to 7m passengers, versus 14.9m for the same month in 2019. It operated at a load factor of about 73pc, 
  • Wizz Air said passenger numbers were down 41pc to 2.3m, from 4m in August 2019. Its load factor was 70.9pc, versus 96.3 a year ago

House prices: ‘Disconnected from economic reality’

The reaction to this morning’s house price figures has been skeptical to say the least.

Goodbody analysts John Cronin said “we categorically do not believe this is sustainable”, while Guy Harrington from residential lender Glenhawk said:

The speed of the market’s recovery is almost jaw dropping, with the recent stamp duty holiday and whimsical consumer behaviour seemingly turbo charging a market that looks increasingly disconnected from economic reality.

The government money train cannot go on forever however. The end of furlough, which will be the trigger for winter of pain for millions, is imminent, and that’s before we even factor in a second spike. The market looks dangerously close to bubble territory; it’s a matter of if, not when, it bursts.

Mike Scott from estate agent Yopa (which, of course, has a vested interest in a strong housing market), said the looming stamp duty deadline should mean the housing market remains “strong and active for the rest of this year”.

European stocks rise

European stocks have risen at the open, amid global stock momentum after a US report said a Covid-19 report may be available sooner than expected. It leaves the continent’s equities poised to end their longest streak of consecutive losses since June.

Credit: Bloomberg TV

Domino’s Pizza names permanent CFO

Neil Smith has been named the permanent chief financial officer of Domino’s Pizza, where he was already in place on an interim basis.

The FTSE 250 group also announced the appointment of Natalia Barsegiyan and Lynn Fordham to its board as independent non-executive directors. Ms Barsegiyan was formerly CFO of Taco Bell, while Ms Lynn is a managing partner at private equity firm Larchpoint Capital.

Chairman Matt Shattock said:

These appointments mark an important milestone in the evolution of the board and I am looking forward to working with them.

Jefferies’ Becky Lane said the non-executive appointments look “suitable” to tackle the challenges the pizza delivery group is facing, and said Mr Smith’s appointment is “positive for business continuity and sentiment”.

Barratt reports high demand as profits slump

A builder works on a scaffolding platform at a Barratt Developments site Credit: Simon Dawson/Bloomberg

Barratt Developments reported a surge in demand for new homes post-lockdown but scrapped its special dividend for 2021. 

My colleague Simon Foy reports:

The housebuilder said it would withdraw the £175m payout due to “the unprecedented impact of Covid-19 and the importance of a resilient balance sheet”.

It came as pre-tax profits plunged 46pc to £491.8m for the year to June, while revenues slumped by more than a quarter to £3.4bn. 

However, the firm reported an upbeat outlook, saying forward sales and home completion volumes for the eight weeks to Aug 23 were ahead of last year.

It said the increased activity levels were driven by a combination of pent-up demand, a holiday on Stamp Duty and an “understanding that Help to Buy will only be available to first time buyers and regional home price caps will exist from April 2021”.

House prices rebound to record high, says Nationwide

Average house prices rose by a little over £3,000 in August as the property market reversed losses made during the pandemic and hit a new all-time high.

My colleagues report:

The cost of a home in the UK hit £224,123 in August, a 2pc increase from the month before, according to the Nationwide building society. It also marks a rise of 3.7pc compared to August last year.

Nationwide said that the market had recovered “unexpectedly” rapidly.

Nationwide chief economist Robert Gardner said: “House prices have now reversed the losses recorded in May and June and are at a new all-time high.

“The bounce-back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”

Agenda: FTSE set to rally 

Good morning. The FTSE 100 is set to rally after slumping to a three-month low on Tuesday when a rising pound weighed on the index. 

Crude oil also climbed above $43 a barrel as the pick-up in economic activity in the US and China signalled a pronounced recovery in crude consumption. 

5 things to start your day 

1) The UK's corporation tax rate is not as low you might think: Eager to boost the economy by encouraging businesses to start up and grow in Britain, the Government cut the headline rate from 28pc in 2010 to 19pc by 2017, with promises to lower it further.

2) Jobs on the brink as aviation struggles to weather the storm: Holland-Kaye, who is leading the charge to get blanket quarantine restrictions replaced with mass testing, has taken experimental Covid tests that deliver results within 20 seconds, and says the new technology could be a game changer for the beleaguered industry. 

3) Coach bosses warn 27,000 jobs at risk this winter: Bosses are urging ministers to ban the repossession of coaches by lenders to give operators breathing space over what is traditionally a quieter period. It follows the loss of 2,500 roles when the owner of Shearings collapsed into administration in May.

4) The rise and fall of ITV as it faces FTSE 100 drop: At the start of the year, hopes were high for ITV. The Euro 2020 football tournament was on the horizon, and Winter Love Island was about to kick off - both drawing in advertisers. Months later, and reality has hit hard.

5) Ted Baker founder Ray Kelvin has appointed a representative to the company's board, 18 months after he quit as its boss amid a "forced hugging" scandal and claims of inappropriate behaviour towards staff. The retailer has appointed Colin La Fontaine Jackson to be a nominee director on behalf of Mr Kelvin, who still owns almost 12pc of the business.

What happened overnight 

Asian shares were mixed on Wednesday after another US rally spurred by positive economic data, even while the coronavirus pandemic has regions around the world battling recessions.

Benchmarks rose in Tokyo and Sydney but fell in Hong Kong and Shanghai.

Australia reported its worst drop in GDP ever, with a 7pc contraction in the April-June quarter. That resulted in the country's first recession in 30 years.

However, regional market sentiment was boosted by some better-than-expected data on the US economy.

Japan's benchmark Nikkei 225 edged up 0.3pc in morning trading to 23,204.94. Australia's S&P/ASX 200 rose 1.5pc to 6,043.20. South Korea's Kospi was flat, at 2,350.10. Hong Kong's Hang Seng slipped 0.5pc to 25,059.92, while the Shanghai Composite shed 0.5pc to 3,393.58.

Wall Street kicked off September with another set of milestones on Tuesday, as an afternoon rally carried the S&P 500 and Nasdaq composite to all-time highs.

Coming up today

Interim results: Eddie Stobart

Full-year: Barratt Developments

Economics: BoE’s Bailey, Ramsden and Vlieghe at Treasury select committee (UK); ADP employment change, factory orders (US)