US house sales rise to fastest pace since 2006

Homes
US existing house sales rose to an annual rate of 6m Credit: Roger Kisby/Bloomberg

Wrap-up

Time to wrap up. European markets are making a decent close, with the FTSE 100, up about 0.8pc, the top performer.

These were some of the day’s top stories:

Thanks for following along today. We’ll be back tomorrow morning!

Deutsche Bank to close a fifth of German branches

Deutsche Bank is to shut one in five branches in Germany as it attempts to cut costs and react to customers switching to online services during the pandemic. 

My colleague Michael O’Dwyer reports:

The move is the latest step in Deutsche’s attempts to overhaul its operations and return to profitability after it announced a major restructuring last year. 

Philipp Gossow, who heads Deutsche’s retail business, told staff the bank plans to reduce the number of branches in Germany from 500 to 400 “as quickly as possible”. 

German banks have retained extensive branch networks as many customers have been reluctant to turn to digital banking but the virus pandemic has forced a rethink.

“Coronavirus has further changed the demands placed on advisory services and the branch business,” Mr Gossow told Reuters.

Full report: Factories already struggling as restriction loom

My colleague Tim Wallace has a full report on this morning’s CBI data. He writes:

Factories were struggling to get back to growth even before the latest threat of Covid restrictions, with weak demand undermining efforts to return to normality.

Most parts of the manufacturing industry reported weak output in the three months to September, the Confederation of British Industry (CBI) said.

Businesses making motor vehicles and transport equipment suffered the most, according to the group’s regular survey.

US existing home sales rise to fastest pace since 2006

US existing home sales climbed 2.4pc to an annual rate of 6m last month, the fastest pace since 2006.

Median prices jumped 11.4pc year-on-year to hit a new high of $310,600. Although the gains are a slowdown from the month before, they point to a steady recovery.

Real estate has proved to be one of the strongest elements of the US economic recovery.

Lawrence Yun, the National Association of Realtors chief economist, said:

Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market. Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3pc and with continued job recovery.

Eurozone confidence rises

Consumer sentiment across the Eurozone has inched higher this month, according to the latest data from the European Commission.

Its consumer confidence gauge rose to –13.9, from a previous reading of –14.7. That’s better than expected – economists polled by Bloomberg had anticipated little change.

Just in: Trump to announce supreme court nominee on Saturday

Leading Republican senators have said they have the numbers to confirm the nomination before November’s election.

Wall Street gains at the open 

US stocks have opened in the green as a rally in technology shares tempered concern over tighter restrictions to combat the coronavirus.

Credit: Bloomberg 

Small firms plead for more business support as unions demand job support

Here’s more reaction to Boris Johnson’s latest announcements.

Federation of Small Businesses chairman Mike Cherry says:

We’ve already suffered from six months of disruption linked to this virus, and small businesses and the self-employed will be dismayed at facing another six months of restrictions…

While some may’ve had cash reserves to carry them through the first lockdown, that cash will now be gone. Some of those who’ve taken on emergency finance will be finding that the initial injection of funds will not be enough to keep them afloat for another two quarters…

Policymakers now urgently need to map out the support measures that will follow-on from the job retention scheme, cash grants announced earlier this month and emergency finance initiatives.

Frances O’Grady, general secretary of the TUC, added:

It’s clear that this pandemic will not be over by Christmas – so neither should state support for jobs.

The PM says he will put his arms around the workforce. Let’s see him prove it.

Warm words will not pay the bills or save livelihoods. The government must come forward with a new jobs protection and training deal that supports short-time working to stop the disaster of mass unemployment.

Analysis: New restrictions threaten recovery

Pubs and restaurants now face a 10pm curfew Credit: Chris J Ratcliffe/Getty Images

My colleague Tom Rees has taken a look at what today’s measures mean for the economy. The assessment: bad, but it could be worse. He writes:

Operation “Save Pret” is back in the fridge. Office workers barely got their feet back under their socially distanced and sanitised desks before being sent back to spare bedrooms.  Michael Gove confirmed that Britons are once more being told to work from home if possible – a “shift in emphasis” rather than a screeching U-turn, the Cabinet Office Minister claimed.

Boris Johnson has held off from the most economically damaging options put on his desk as a second wave of Covid cases takes off.  But economists warn even these minor restrictions threaten a recovery still facing the “hard yards” as Bank of England Governor Andrew Bailey put it this morning. And the prime minister’s new measures could just be the first step.

GDP may not rise at all in the final quarter of the year if a 10pm curfew on restaurants and bars lasts for months and people are made to work from home, warns Paul Dales at Capital Economics. 

BCC: Businesses need a clear roadmap

BCC director-general Adam Marshall says:

Businesses understand that further restrictions are necessary to tackle the rising number of Coronavirus cases, but these measures will impact business and consumer confidence at a delicate time for the economy.

Businesses, their employees and customers need to see a clear road map for the existing restrictions and those that may be introduced in the future. This must include transparent trigger points, and clarity about the support available to protect jobs and livelihoods.

The government should waste no time in setting out a comprehensive support package for firms forced to close or reduce capacity through no fault of their own.

Newspaper City A.M.’s editor Christian May has a grim assessment:

IoD: Businesses need more support

Responding to the PM’s announcements, the IoD’s Roger Barker said:

These new measures will inevitably put the brakes on the economic recovery somewhat, but businesses will hope they prevent stricter measures down the road. With the return of more restrictions, the onus is squarely on the Government to set out the next phase of its support.

Key schemes are set to wind down in the months ahead, but it's clear that businesses aren't out of the woods yet. Even where the Treasury wants to move away from the current shape of flagship measures, it should look to fill the gap to prevent a steep rise in unemployment and insolvencies. The Government should also seek to help small firms adjust and adapt to the circumstances.

The spread of the virus isn't wholly predictable, but the back and forth on offices will cause frustration. Business leaders are eager for the Government to focus on the foundations, issues like childcare, public transport, and getting the testing system firing on all cylinders.

Pub bosses warn curfew will prompt further job cuts

Pub bosses have warned that plans to impose a curfew on hospitality venues will “devastate” the sector and decimate consumer confidence.

My colleague Hannah Uttley reports:

A 10pm curfew on pubs and restaurants is set to be enforced by the Government from Thursday as part of new restrictions that Boris Johnson will say are needed to slow the rate of coronavirus infections.Pubs will also be banned from serving customers at the bar with a blanket table-service only rule implemented.The proposed measures have prompted a furious response from pub bosses, who claim there is no evidence linking the increase in coronavirus infections to socialising in bars and restaurants. 

Johnson: restrictions likely to last six month

The PM has confirmed new plans for a 10pm curfew on restaurants and pubs to try and prevent the virus’s spread. He says the measures will remain in place for about six months.

He also confirmed the Government’s messaging U-turn, saying Britons should work from home where possible.

Johnson about to speak in Commons

 

Market moves

European equities are still fairly shaky today, but have steadied out overall:

Markets.com’s Neil Wilson said:

Selling pressure has been building for some time and the dam broke yesterday. A recovery in the final hour of trade lifted the market off the lows so it wasn’t full capitulation, but there could yet be more downside as the S&P 500 approaches correction territory. 

Beazley doubles expected Covid losses to $340m

Insurer Beazley came under fire on Tuesday as it revealed a second wave could double its losses from Covid-related claims to $340m (£266m). 

My colleague Michael O’Dwyer reports:

Shares in the Lloyd’s of London insurer, which sells commercial insurance products, tumbled 12.1pc in morning trading as it told investors continuing high levels of infections would lead to a slew of event cancellations. 

The company said it was particularly hard hit as selling cover for conferences in the US and UK is its biggest business and most of these still cannot go ahead due to government restrictions. 

On Tuesday, it warned that conferences that were previously postponed are now being cancelled causing an increase in its expected losses. The insurer also anticipates claims for events in 2021. 

The updated estimates are based on the assumption of a return to “some form of normality” in the second half of 2021 but further disruption throughout next year would lead to an extra $50m of losses net of reinsurance, Beazley said. 

Sky’s Rigby: Talks going better than expected

Sky’s political editor adds:

BBC’s Kuenssberg: Barnier coming to London for talks tomorrow

 The BBC’s political editor tweets:

US private equity fund drops out of race to buy Asda

A pre-pandemic file photo of an Asda store Credit: Simon Dawson/Bloomberg

US private equity fund Lone Star has dropped out of the race to buy Asda, leaving peer Apollo in pole position to take control of Britain’s third-biggest supermarket.

My colleague Oliver Gill reports:

Lone Star was unable to match price expectations of Asda owner Walmart, according to City sources.

It is unclear whether a third private equity suitor, UK-based TDR Capital, remains in the running with bidding expected to come to a climax this week

The two US funds were seen as frontrunners after Walmart restarted an auction for a majority stake in Asda.

The world's biggest retailer was forced to put Asda back on the market after a merger with Sainsbury’s was controversially blocked last year by the competition watchdog.

Manufacturing orders disappoint – CBI

The CBI’s manufacturing order book balance gauge for September came in at -48pc.

Overall, 60pc of UK manufacturers said order books were below normal levels, with 12pc saying they were above.

That marks a fall from August’s levels, and misses estimates – leaving the gauge well below average levels. Polling by Bloomberg had predicted a reading of -40.

House sales climbed 15.6pc in July

The housing market recovery has continued steadily through August but the stamp duty holiday and summer “mini-boom” has not yet been enough to bring transactions up to 2019 levels, new HMRC data shows.

My colleague Melissa Lawford reports:

There were 81,280 residential transactions in the UK in August, a jump of 15.6pc compared to July, according to HMRC’s seasonally adjusted estimates. But the numbers are still 16.3pc lower than in August 2019.It takes several months for house sales to complete and mortgage lenders and conveyancers are facing delays due to the backlog from lockdown and a new wave of demand. This means that the full impact of the stamp duty break announced in July will filter more clearly into the statistics in the autumn.The numbers are based on provisional data, rather than on completed tax payments, so the values could be revised in the coming months. 

NB!

Its worth noting that those figures don’t all represent the same type of spending: some of the schemes here are direct Government outlay, whereas others such as CBILS constitute bank lending that is substantially backed by the Government. At the end of the day, the cost to the Government may look different depending on rates of repayment and other factors.

Total cost of Government support schemes passes £100bn

After several weeks of pause, we’ve finally been given updated figures on the Government’s Covid-19 spending. The latest figures for up to Sunday show spending cleared past the £100bn mark over the past month.

HMRC and the Treasury had previously released figures weekly, but this is the first update since August 16th.

Here’s a breakdown of the total costs per scheme, per the latest figures for each:

Truss: ‘Productive’ talks held on UK–US trade deal

International trade secretary Liz Truss says the UK and US had ‘productive’ talks during a fourth round of trade negotiations,which included the exchange of tariff offers.

She added:

Both sides reiterated their commitment to continue negotiations at pace throughout the Autumn in advance of the US presidential elections.

You can see a full list of topics discussed via the link the tweet below:

Pound reverses losses

The pound has reversed its losses following Andrew Bailey’s comments, and is now back near its day highs:

Network International shares jump after insider buying

Shares in Middle East-focused payments provider Network International, part of the FTSE 250, have jumped this morning after its bosses bought shares in the group.

The group’s price dropped 41pc over five sessions ending today, leaving analysts confused.

One, Citi’s Ronit Ghose, said yesterday:

We see no concrete evidence to justify the heightened concerns around NETW over the past few days, and the scale of the recent stock price moves are surprising

Bailey: BoE needs time to assess negative rates

Governor Andrew Bailey has offered some support to a struggling pound, after saying technical work on the feasibility of negative rates will take a little bit of time. 

Money markets have pushed back their bets on the timing of further cuts in the wake of his comments, made at a BCC webinar (see 8:50am update).

Wetherspoons plans to cut 450 airport jobs – PA

Pub chain Wetherspoons plans to cuts 450 job at its airport locations, PA reports, citing a letter sent to staff.

Money round-up

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

BoE’s Bailey: UK recovery is very uneven

Bank of England Governor Andrew Bailey has warned the UK’s economic recovery is very uneven.

Speaking at a BCC webinar, Mr Bailey has said:

  • The UK’s recovery in the third quarter has likely be quicker than expected
  • Unemployment is probably higher than currently reported
  • Investment is very weak
  • Output is probably currently about 7pc to 10pc lower than at the end of 2019
  • The BoE has looked closely at the possibility of cutting interest rates further

We’ll have a full report on his comments later.

Pound drops

The pound had dropped sharply today, falling 0.6pc against the dollar to its lowest level since late July as investors brace for a new wave of restrictions.

 Or, as the FT’s Katie Martin neatly puts it:

Kingfisher profits jump

Socially-distanced queuing at a B&Q in east London in May Credit: Hollie Adams/Getty Images

Profits at B&Q-owner Kingfisher jumped in the first six months of its financial year, as locked-down Brits splashed out on home improvement.

It profit before tax for the six months to the end of July jump 62.4pc to £398m, despite a slight fall in overall sales. Its online sales soared 164pc, and now represent 19pc of Kingfisher’s total online sales (versus 7pc over the same period last year).

The group announced it intends to repay its UK furlough claim, of roughly £23m, during the second half of the year “unless any material changes in the trading environment occur”.

Chief executive Thierry Garnier said:

We delivered a resilient financial performance in the first half of the year, with the adverse impact of COVID-19 in Q1 offset by a strong recovery in Q2.

This recovery has continued into Q3 to date, with growth across all banners and categories.The crisis has prompted more people to rediscover their homes and find pleasure in making them better. It is creating new home improvement needs, as people seek new ways to use space or adjust to working from home.

It's also clear that customers are becoming more comfortable with ordering online. And delivering value to consumers is imperative against a challenging economic backdrop.

He warned the group’s outlook remains “uncertain”, but said the FTSE 100 group has a “significant” longer-term opportunity.

Royal Bank of Canada’s Richard Chamberlain said the results were stronger than expected, saying Kingfisher was improving its strategy and execution,

Market moves

European markets have risen slightly, in what may be seen as a ‘dead cat bounce’ after Monday’s plunge.

Credit: Bloomberg TV

Public told to work from home if possible

The UK Government is telling customers to once again work from home if possible, as it tightens restriction in the face of a feared second virus wave.

Speaking to Sky News, minister Michael Gove said:

If it is possible for people to work from home, then we’d encourage them to do so. There is going to be a shift in emphasis.

That is quite the reversal from what the Government was briefing just week ago…

Boris Johnson will conduct a meeting of Cobra, the UK’s top-level emergency committee, today, and also speak to his Cabinet. He will then make a broadcast to the nation at 8pm.

Downing Street said:

No-one underestimates the challenges the new measures will pose to many individuals and businesses. We know this won’t be easy, but we must take further action to control the resurgence in cases of the virus.

Watchdog to crack down on insurance ‘price walking’

The Financial Conduct Authority, the City watchdog, has announced plans for a “significant reform” of the general insurance market, including blocking firms from gradually increasing prices for customers who renew their cover.

Under the FCA’s proposals, customers would “pay no more than they would if they were new to their provider through the same sales channel”.

It also plans to clamp down on “complex and opaque” practices through which loyal customers are punished with higher prices, and some regular switchers are also locked out of the best possible prices. The watchdog claimed six million customer would have saved as much as £1.2bn in 2018 if they had paid the average for their risks level.

It is also consulting on the following measures:

  • Product governance rules requiring firms to consider how they offer fair value to all insurance customers over the longer term.
  • Requirements on firms to report certain data sets to the FCA so that it can check the rules are being followed. 
  • Making it simpler to stop automatic renewal across all general insurance products.

The FCA estimates is proposed changes could save customers £3.7bn over 10 years.

Christopher Woolard, the FCA’s interim chief executive, said:

We are consulting on a radical package that would ensure firms cannot charge renewing customers more than new customers in future, and put an end to the very high prices paid by some long-standing customers. The package would also ensure that firms focus on providing fair value to all their customers. We welcome feedback on the proposals.

Whitbread to cut 6,000 jobs

FTSE 100-listed Whitbread had seen low demand for its hotels Credit: Chris Ratcliffe/Bloomberg News

 Premier Inn owner Whitbread will axe up to 6,000 jobs as further coronavirus restrictions are set to keep demand for its hotels and restaurants depressed for many months.

My colleague Simon Foy reports:

The FTSE 100 company said the cuts, which represents almost a fifth of its workforce, are necessary to “protect the business”.

It added: “This is a regrettable but necessary step to ensure that we emerge from the crisis with a lower cost base, a more flexible operating model and a stronger more resilient business.”

It comes as Prime Minister Boris Johnson is expected to announce a string of new restrictions on the hospitality industry on Tuesday, raising fears of further mass job losses in the already embattled sector. 

Holiday company Tui also fired the starting gun on its programme to cut 8,000 roles, which it announced in May.

Whitbread reported a 77pc decline in revenues in its first half, reflecting the closure of the vast majority of its hotels and restaurants for a large part of the period. 

Agenda: Stocks set to stabilise 

Good morning. European markets are set to stabilise following their worst sell-off since June on Monday.

Keep an eye out for hospitality stocks, however, as Boris Johnson is expected to announce new restrictions on pubs and restaurants in England, including strict 10pm curfews. 

5 things to start your day 

1) We can beat Covid without national lockdowns, Germany's top virologist tells Ambrose Evans-Pritchard

2) The hype machine: As Tesla holds its "battery day" today, investors are more sceptical than ever about electric cars.

3) Facebook warns it may have to pull out of Europe: US giant says more than 410m people may lose access to its services following a data protection ruling by the European Court of Justice.

4) Why Rishi Sunak should follow Trump's lead and ramp up unemployment benefits 

5) A trade deal with the US is deemed unlikely before the presidential elections, as Britain's quest for trade deals takes it into turbulent seas  

What happened overnight 

Asian shares extended losses for the second day on Tuesday while the dollar rose, as possible delays in expanded US stimulus and concerns about fresh pandemic lockdowns in Europe knocked investor sentiment.

Hong Kong shares of HSBC and Standard Chartered fell more than 2pc each, as global banking stocks remained under intense pressure on reports about financial institutions allegedly moving illicit funds.

British lenders HSBC and StanChart were among global lenders named as having transferred more than $2 trillion in suspect funds over nearly two decades.

Hong Kong's Hang Seng lost 0.3pc to 23,894.72 and the Kospi in South Korea sank 1.7pc to 2,348.24. The S&P/ASX 200 in Australia lost 0.6pc to 5,787.00 and the Shanghai Composite index edged 0.1pc lower to 3,312.88.

Tokyo's markets were closed for a national holiday.

Coming up today

Interim results

AG Barr, Kingfisher

Economics

CBI industrial trends survey (UK); consumer confidence (eurozone); existing home sales (US)