- FTSE pushes higher amid European rally
- UK private sector continues to recover, albeit at slower pace
- PMIs shows mixed performance across Europe
- Cineworld shares plunge as it confirms plans to shut hundreds of sites
- Car sales fall for a second month
- Rail fares need an overhaul to help ‘level up’ the North
- Jeremy Warner: Donald Trump’s Covid diagnosis makes this one of the oddest US elections ever
- Sign up here for our daily business briefing newsletter
Time to wrap up, after a distinctly quiet Monday. These were some of the day’s top stories:
- Cineworld shares crash as it confirms UK cinema closures: Cineworld’s shares plunged as it confirmed plans to temporarily close its UK and US cinemas after big studios started to delay their major film releases to wait for larger audiences.
- Car sales slump to 20-year September low despite new reg plates: Sales of new cars in the normal boom month of September have fallen to their lowest level in more than 20 years as coronavirus continues to ravage the automotive sector.
- Weir to offload loss-making oil and gas arm: Weir Group has agreed to offload its loss-making oil and gas division as the company switches to focus on serving the mining industry.
- G-A-Y nightclub owner threatens legal action over 10pm curfew:The owner of London nightclub G-A-Y has threatened the Government with legal action over its 10pm curfew on the hospitality sector.
- Mulberry bemoans end of VAT-free shopping: Proposals to scrap VAT-free shopping for tourists will deliver a further blow to the struggling luxury sector, the boss of Mulberry said as he warned the industry faced “a very uncertain future”.
Thanks for following along today. We’ll be back tomorrow with the latest news of business, markets and economics!
Nvidia invests £40m to build UK supercomputer
Nvidia is set to build the most powerful supercomputer in the UK in a bid to help develop treatments to tackle diseases such as Covid-19.
My colleague Ellie Zolfagharifard reports:
The US graphics chipmaker will invest £40m in running its ‘Cambridge-1’ supercomputer which is due to come online by the end of the year.
It will be a Nvidia DGX SuperPOD system capable of delivering more than 400 petaflops of AI performance, the company said. That would mean it ranks 29th on the Top 500 list of the world's most powerful supercomputers.
Early access to the machine will be given to AstraZeneca, GlaxoSmithKline and Oxford Nanopore, as well as researchers at Guy’s and St Thomas’ NHS Foundation Trust and King’s College London.
BoE’s Haskel: I’d back further monetary support
Bank of England Monetary Policy Committee member Jonathan Haskel – seen as one of Threadneedle Street’s doves – has said he would support more monetary support for the UK if it is needed.
Mr Haskel told Bloomberg:
I stand ready to vote for more stimulus measures should they be needed
Most economists anticipate further easing by the end of the year, with negative rates under considerations.
US services growth beats expectations
Activity in America’s services companies beat expectations last month, with the Institute for Supply management’s services index climbing to 57.8 (where a score above 50 indicates growth).
Companies added to staff headcounts amid improving orders, although exports and inventories both fell.
Sky falls in on Cineworld
Our chief City commentator Ben Marlow meanwhile has weighed in on the crisis at Cineworld. He writes:
There’s certainly no shortage of irony in the prospect of a film called No Time to Die bringing down the curtain permanently on one of the country’s top cinema operators.
That raises the immediate spectre of a rights issue, though with its share price doing a very good impression of Skyfall, a fund-raising won’t be easy to pull off.
And then there’s appropriately named boss Mooky Greidinger, who sounds like he could replace Oddjob and Jaws as Bond’s new nemesis, especially with a staggering 45,000 job losses now on the cards, 6,000 of those in the UK, and a share price that lost more than a third of its value in early trading.
- You can read Ben’s latest column here.
Don't forget to sign up for his daily City Intelligence here.
Our economics editor Russell Lynch has given his thoughts on Rishi Sunak's debut party conference speech as Chancellor. Sunak bolstered his credentials with “an astute speech emphasising traditional Conservative values” he says.
The stress on the “free market economy”, creating opportunities, entrepreneurship and in particular the name-checking of the experience of several small businesses during the pandemic was testament to his presentational skills.
Pulling off the demeanour of a fiscal hawk when he will be presiding over a record deficit this year is also no mean feat but the Chancellor managed it, talking of the party’s “sacred responsibility to future generations to leave the public finances strong”.
Full report: Services sector rebound continues
My colleague Tom Rees has a full report on this morning’s PMI figures. He writes:
The closely watched PMI survey dropped from a five-year high of 58.8 to a still-strong 56.1 last month. Any reading above 50 indicates growth.
However, the sector, which accounts for around 80pc of the UK economy, recorded the slowest month of growth since before bars and restaurants reopened in July. Economists warned that a “far less impressive” performance was likely in the months ahead as new restrictions to curb a second wave of Covid-19 take effect.
G-A-Y owner threatens legal action over curfew
The owner of London nightclub G-A-Y has threatened the Government with legal action over its 10pm curfew on the hospitality sector.
My colleague Hannah Uttley reports:
Jordan Joseph, owner and chief executive of the G-A-Y group, said the curfew made “absolutely no sense” and did “the opposite of protecting people”.G-A-Y operates venues in London and Manchester and the nightclub Heaven in Charing Cross.Boris Johnson imposed a 10pm curfew on all hospitality outlets from Sept 24 as part of a new set of restrictions to try to limit the spread of coronavirus.
Sunak: We will get debt under control
Chancellor Rishi Sunak has told the Conservative Party conference that the Government will get borrowing and debt back under control in the “medium term”.
My colleague Cat Neilan reports:
The Government has a “sacred responsibility to future generations” to rebalance the books after coronavirus, Rishi Sunak has said.
The Chancellor told the virtual conference that if it was argued that there is “no limit on what we can spend” there is no point in a Conservative government.
“I have never pretended there is some easy cost-free answer," he adds. "Hard choices are everywhere.”
- Follow live: Politics latest news: Rishi Sunak pledges the ‘overwhelming might of British state is at your service’
Maduro government wins appeal over Bank of England gold stash
A British appeals court has ruled in favour of Venezuela’s government over the future of $1bn in gold stored in the Bank of England’s vaults.
Bloomberg has more details:
The judges Monday reversed a lower court ruling that the UK had unequivocally recognized opposition leader Juan Guaido as interim president.
Venezuela’s central bank sued the Bank of England for access to the bullion, which has been in limbo since US officials successfully lobbied their British counterparts last year to block [Nicholas] Maduro’s attempt to withdraw the assets.
FTSE 100 news is thin to the point of near-non-existence this morning, but there are a few notable job moves across London’s blue-chips:
- Ad giant WPP has appointed Tim Ilube to its board as a non-executive director. Mr Ilube, a UK tech-sector veteran, holds the same role at the BBC.
- Vodafone subsidiary Vantage Towers, which operates telecoms tower infrastructure, has named Rüdiger Grube as independent chair of its supervisory board, ahead of a planned float early next year.
- Intertek chief financial officer Ross McCluskey will move to an operational role from the start of April next year. His replacement as CFO will be Jonathan Timmis, currently CFO of Reckitt Benckiser’s Health division.
Here are some of the day’s top stories from the Telegraph Money team:
- Landlords use excessive rent increases to dodge eviction rules and force out tenants: Landlords have been accused of using underhand tactics such as raising rents to excessive levels to dodge tough new rules on evicting tenants.
- Revealed: London’s new buy-to-let hotspots: The pandemic has turned London's rental market upside down, as tenants shun the centre for the city's outer reaches.
- How to invest a £50,000 windfall: Telegraph Money takes you through the best ways to invest such a windfall depending on how long you can leave your savings untouched.
Mulberry shares fall after recovery warning
Mulberry has warned that it will only make a “gradual” recovery in sales after it was forced to close shops in the UK and abroad during the Covid-19 pandemic.
My colleague Ben Gartside reports:
Shares in the luxury handbag maker fell after it said it would scrap its full-year dividend.
The company said recent trading had been ahead of expectations thanks to a surge in online orders. But it warned that low footfall in tourist locations, particularly in the UK, which makes up 66pc of revenue, would hurt it for some time to come.
Sales for the half-year to Sept 26 were down 29pc, but Mulberry reported an “improving trend” where stores have re-opened. Sales in Asia, where shops began reopening in April, were up 27pc, while digital sales jumped 67pc.
- Read more: Mulberry shares sink on gloomy outlook
Housebuilders rise after Johnson’s ‘Generation Buy’ pledge
UK housebuilder shares are rising today, after Boris Johnson’s pledge in Saturday’s Telegraph to create “Generation Buy” – promising low-deposit mortgages to help get young people onto the housing ladder.
As my colleague Gordon Rayner reported:
The Prime Minister said he would “fix” the problem of unaffordable deposits that has caused millions of people to put their dreams of home ownership on hold.Mr Johnson told The Telegraph ahead of the virtual Conservative Party conference that he was determined to press ahead with a “massive domestic agenda” and deliver on manifesto promises, despite the coronavirus crisis.
- Read more: Exclusive: Boris Johnson vows to put ‘Generation Buy’ on the housing ladder
Car sales: Weakest-ever ‘new plate’ September
Just 328k cars were registered last month, making it the weakest September volume record since 1999 – during what is usually a key month for sales.
The 4.4pc year-on-year drop left sales 15.8pc down on their 10-year average for the month, according to the SMMT.
September was worse than 2019 and 2018 despite delays linked to regulatory changes around the WLTP emissions testing regime hitting sales during the month over both years.
Mike Hawes, chief executive of the SMMT< said:
During a torrid year, the automotive industry has demonstrated incredible resilience, but this is not a recovery. Despite the boost of a new registration plate, new model introductions and attractive offers, this is still the poorest September since the two-plate system was introduced in 1999. Unless the pandemic is controlled and economy-wide consumer and business confidence rebuilt, the short-term future looks very challenging indeed.
UK PMIs: Key takeaways
Here are some key points from today’s PMI report:
- Supporting activity was a further increase in levels of incoming new work
- A lack of international tourism was also reported to have weighed on foreign business
- There remained many reports that market demand was continuing to improve compared to earlier in the year
- The near-term outlook remains unusually uncertain and firms continued to take an extremely cautious approach to cost management and hiring
- Latest data indicated that employee numbers in the UK service sector continued to fall
- Competitive pressures, efforts to drum-up new business and promotional activities led to a first month of discounting amongst UK service providers since June
UK PMI beats expectations
The UK’s final PMI readings came in higher than indicated by the ‘flash’ estimates, indicating private sector activity continued to expand solidly last month – albeit at a lower pace than in August.
Here are the final numbers:
- Services: 56.1
- Manufacturing: 54.1
- Composite: 56.5
IHS Markit, which gathered the data, said:
Growth was supported by another upturn in new work amid reports that market conditions continued to improve.
However, growth across the services sector was uneven with gains principally focussed on areas such as business-to-business services. Those sub-sectors more exposed to social contact such as Hotels, Restaurants & Catering reported a downturn in business during the month, exacerbated in part by the withdrawal of government schemes or the tightening of restrictions related to COVID-19.
Chris Williamson, its chief business economist, added:
The UK service sector showed encouraging resilience in September, with business activity continuing to grow solidly despite the government’s Eat Out to Help Out scheme being withdrawn.
Unsurprisingly, spending in the restaurant sector slumped after spiking higher in August, and many other consumer services activities showed a similar slide back into contraction as renewed lockdown measures were introduced, causing the overall rate of expansion to moderate.
Optimism about the year ahead has meanwhile cooled somewhat, hinting that risks for coming months lie skewed to the downside.
Coming up: UK final PMI reading
With the rest of Europe out the way, we’ll get finalised readings for UK business activity in September at 9:30am. The UK’s ‘flash’ readings were pretty strong, albeit pointing to a slower pace of expansion than over the summer:
- Services (flash): 55.1
- Manufacturing (final): 54.1
- Composite (flash): 55.7
The worry, however, is that the readings will deteriorate once they fully take into account Britain’s second virus wave and new restrictions.
Eurozone growth stronger than feared
Final PMI readings for the eurozone were slightly better than initially thought.
The services reading rose from 47.6 to 48 (indicating a continued fall, albeit at a slower pace), and the composite reading climbed from 50.1 to 50.4.
IHS Markit, which gathered the data, said:
The composite PMI belied a two-speed economy during September. Led by a strongly performing Germany, overall regional manufacturing output rose at the fastest pace for over two-and-a-half years. In contrast, service sector activity slipped back into contraction by registering its worst performance since May.
There was some notable divergences in activity at the country level during September. On the one hand, Germany recorded a marked rate of growth, with its performance far outstripping the rest of the region. Italy was the only other nation to record expansion, although the gain here was marginal.
Chris Williamson, its chief business economist, added:
With the eurozone economy having almost stalled in September, the chances of a renewed downturn in the fourth quarter have clearly risen.
Spain has been especially hard-hit as rising Covid19 case numbers led to further disruptions to daily life. With the exception of the March-to-May period at the height of the first wave of infections, Spain’s service sector contraction in September was the largest recorded since November 2012.
However, renewed service sector downturns were also recorded in France and Ireland, while a near-stalling was recorded in Germany, underscoring the broad-based geographical spread of the worsening service sector picture.
PMIs offer mixed picture
We’ve had services-sector purchasing managers’ index readings rolling in from across the continent this morning.
With finalised figures from France and Germany, and initial readings for Spain and Italy, it’s something of a mixed picture.
Spanish services disappoint
Spain is the biggest disappointment – its services gauge came in at 42.4 (where a score about 50 indicates growth), suggesting activity has gone sharply into reverse. Its composite reading (a weighted balance of services and manufacturing) dropped to 44.3, versus the 47.7 expected by economist.
IHS Markit’s Paul Smith said:
With infection numbers rising, demand is again turning downwards, both from domestic and international clients, and weighing heavily on those services industries that are so crucial to Spain’s economy
Italian private sector expands
Italy’s performance was steady enough – despite a services reading of 48.8 falling beneath the growth threshold, its composite reading of 50.4 suggests the country’s private sector output grew overall:
IHS Markit’s Lewis Cooper said:
The Italian services sector remained in contraction territory in September, with business activity declining for the second month in a row whilst new orders fell moderately again.
Weir jumps after oil & gas sales
Shares in Weir Group have soared the most since 1999 this morning, after it announced plans to sell its oil & gas division to US giant Caterpillar.
Proceeds from the sale, at an enterprise value of $405m, will be used to cut down Weir’s leverage. Completion of the transaction is expected by the end of 2020.
The sale advances Weir’s attempted transition to a “pure play” mining technology group. The FTSE 250 company said a strengthened balance sheet would also give it “enhanced flexibility to invest in future growth opportunities”.
Caterpillar said the transaction includes ore than 40 Weir Oil & Gas locations, and around 2,000 employees.
Wizz Air passengers number down 59pc last month
Budget carrier Wizz Air’s passenger numbers were down 59pc year-on-year in September, as Covid-19 continued to weigh on demand.
It carried 1.6m passengers during the month, down from 3.8m for the same period in 2019. For the rolling 12-month period since last September, that leaves numbers 35.6pc down.
Its capacity last month was 40pc lower.
The group added a new base in Catania, Italy, during the month, with two based aircraft and five additional routes.
Car sales continue to fall
Ahead of the official data release at 9am, Bloomberg reports the Society of Motor Manufacturers and Traders will reveal a second consecutive month of falling car sales.
The 4pc drop, shown in preliminary data, follows a 5.8pc fall in August and “appears to dash hopes for an early recovery from a coronavirus-driven slump”, the news site says.
The figures are especially disappointing because September is usually a key month for UK auto retailers, with a change of year on license plates spurring purchases. The declines makes for the worst September since the two-plate system was introduced in 1999, the SMMT said.
Cineworld confirms closure plans
Cinema chain Cineworld has confirmed plans to temporarily close its sites in both the UK and the US after big studios started to delay their major film releases to wait for better audiences.
My colleagues report:
The decision will affect around 45,000 employees in the two countries – Cineworld's two main markets. An estimated 5,500 jobs will be affected in the UK.
It will shut 127 Cineworld and Picturehouse theatres in the UK from this Thursday, and 536 Regal theatres in the US.
Chief executive Mooky Greidinger said:
This is not a decision we made lightly, and we did everything in our power to support safe and sustainable reopenings in all of our markets – including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.
Agenda: Markets set to rise
Good morning. The FTSE 100 is tipped to open 0.9pc higher as markets respond to signs that President Trump's health is improving. It follows a broad rise across global markets.
5 things to start your day
1) Betfred boss mulls bid for William Hill: Fred Done, the British billionaire bookmaker, is weighing up a shock bid for William Hill that would gatecrash a takeover by the Las Vegas casino owner Caesars Entertainment.
The co-founder of Betfred and William Hill’s second-biggest investor is considering “all options” after the board of the FTSE 250 betting giant accepted an offer from the US operator.
2) Uber rival Ola banned from operating in London: London's transport regulator has banned taxi app Ola from working in the capital over what it says are the company's "safety failings".
Transport for London (TfL) told Ola, an emerging rival to Uber which has only operated in the UK since February, that it had been deemed not "fit and proper" to hold a licence.
3) Companies fear second wave of Covid more than no-deal Brexit: More than two-thirds of businesses see a second-wave of Covid-19 as a bigger threat to their existence than a no-deal Brexit, research suggests.
Asked whether they viewed another coronavirus spike or a Brexit cliff-edge as a greater risk, 66.5pc of mid-sized businesses said they were more concerned by the pandemic, according to a poll of 500 corporate leaders conducted by accounting firm BDO.
4) Cineworld set to close all UK screens after Bond delayed: Cineworld is drawing up plans to close all its cinemas in the UK and Ireland within the coming weeks. The move would put 5,500 jobs at risk across more than 120 cinemas.
The world's second largest cinema operator is understood to be writing to Boris Johnson, the Prime Minister, and Oliver Dowden, the culture minister, this weekend, warning that the industry is “unviable”.
5) Ministers press on with deal to save regional newspapers: Ministers are exploring a new rescue package for local newspapers as a Midlands publisher becomes the latest to execute an emergency overhaul.
The Government is weighing options for a bigger fund to support the future of the regional press after a £2m pilot ended in June.
What happened overnight
Stock markets rose on Monday on hopes that President Donald Trump could be discharged from hospital later in the day, easing some of the political uncertainty that shook global bourses in the previous session.
Mr Trump's doctors said he had responded well to treatment and might return to the White House on Monday.
That helped US S&P 500 e-mini futures rise 0.82pc in Asian trading, while Nasdaq futures gained 1.11pc.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.63pc.
Australian stocks jumped 2.37pc for the biggest daily gain in almost two weeks. Japan's Nikkei rose 1.39pc. China's financial markets are closed for a public holiday.
Coming up today
No FTSE 350 companies are reporting.
Economics: Services PMI (UK, EZ and US); retail sales (EZ), Sentix investor confidence (EZ)