Pubs, retailers and hotels under pressure as further lockdowns launch

A National Trust staff members cleans as a house prepares to reopen. Britain’s tourism industry has been hit hard by the pandemic Credit: Andrew Matthews/PA Wire


Time to wrap up. Here are some of the day’s top stories:

Thanks for following along today! We’ll be back bright and early tomorrow for the latest data on the UK’s labour market.

Market moves

The FTSE 100 fell close to the day’s lows in recent minutes, but more broadly is basically just cruising along flat. US shares are outperforming as the rest of Europe grabs moderate gains.

OECD: No deal on global digital tax this year

A deal to re-write the global rules around the taxation of multinational tech giants will not be agreed this year as had previously been hoped for, the OECD has conceded.

My colleague Michael Cogley reports:

Negotiations over how to tax companies like Facebook, Amazon, Apple and Google in future will continue between 137 countries until summer of next year.

The countries agreed to the extension after the pandemic culled any chance of meeting the original deadline. The OECD fears that a collapse in the talks could wipe 1pc off the global economy every year.

By comparison, a new agreement could increase global corporate tax worldwide by between 1.9pc and 3.2pc - the equivalent of around $50bn to $80bn (£38.4bn to £61.4bn) a year, the OECD claimed. If including an existing US minimum tax on overseas profits, that figure could reach $100bn.

Follow live: Johnson addresses commons

My colleague Lizzie Roberts is covering the latest news as Boris Johnson announces fresh restrictions in the House of Commons. Follow live:

Amigo boss says claims companies ‘behaving like vultures’

Shares in doorstep lender Amigo have risen strongly today, after chief executive Gary Jennison released an open letter to shareholders.

Last month, its founder James Benamor failed in an attempt to return to the group’s board, but received 43pc backing in a sign of discontent among some investors.

In his letter, Mr Jennison said:

I know that the dynamic of our shareholder register has changed enormously since our IPO in 2018 and we recognise that many of you will have lost a lot of money from being a shareholder in Amigo.

My job is to make sure that we engage with all types of shareholders, whatever your size of holding. I want to get involved and listen to what you have to say. I am here because I am motivated by achieving results. I want to turn this business around and get it back on track.

Most interesting, however, were his comments in a video released this morning:

In it, Mr Jennison said claims management companies “are behaving like vultures”, after the group was hit by a huge wave of customer complaints, which it has put aside £127m for. The CEO said:

They're only doing it with us now because they've been told by law they can't do PPI claims anymore. That was their business model.

Clearly, if there is a valid claim and we've done something wrong, we're going to do the right thing for the customer to put that right and, where required, to give the necessary redress.

There are undoubtedly cases where we have done the wrong thing but a lot of these claims that we're getting are not genuine claims.

His words certainly seem to have cheered investors somewhat:

Pubs, retailers and hotels under pressure as further lockdowns loom

Markets are fairly calm overall today, with the FTSE 100 once again dipping slightly as the FTSE 250 grabs small gains. Looking across the board, it’s retailers, hospitality companies and pubs that are coming under pressure as the Government prepares to announce further lockdowns.

Among the blue-chips, retailer Next and Premier Inn-owner Whitbread are the tow biggest fallers, while travel food group SSP, pub chain Mitchells & Butlers and cinema operator Cineworld are all down on the FTSE 250.

Wall Street opens in the green 

US stocks have opened higher amid a rally in tech stocks as traders await earnings from banks and news on a fresh round of economic stimulus.

Credit: Bloomberg 

Sanne rises after RBC upgrade

Shares in fund administrator Sanne have popped higher today, after Royal bank of Canada analyst Andrew Brooke upgrade the group’s rating to ‘outperform’.

Mr Brooke said that while Covid-19 may result in slower growth next year, Sanne appears to have shaken off cost issues and “looks in good shape to continue its strong organic profit growth trajectory with M&A on top”.

He said the group may be able to go on a buying spree, thanks to an abundance of smaller companies in the fund administration market:

The market is large and there are many smaller players. We believe consolidation will continue as players looks to add services, jurisdictions and technology capability. Sanne looks well-placed to be able to continue to add bolt-on acquisitions.

Pensions minister says Government exploring ways pensions could be used for home deposits

The UK’s pensions minister Guy Opperman has told a webinar that he is exploring ways that young workers could be allowed to dip into their pension pot to found deposit payments for house purchases.

The FT’s Josephine Cumbo tweets: 

It hopefully goes without saying that such a policy would be incredibly controversial – sabotaging young people’s savings in order to prop up continuing house price growth.

As the Observer’s Sonia Sodha notes:

Wall Street hopes for improvement as US bank reporting gets underway

JP Morgan boss Jamie Dimon. The group will report results tomorrow

Wall Street's biggest banks are hoping to report a more upbeat earnings season this week after beefing up their war chests for loans that could go sour earlier in the year. 

America's largest lender JP Morgan will be the first to post its third-quarter numbers tomorrow alongside Citigroup, with rivals Bank of America, Wells Fargo and Goldman Sachs reporting on Wednesday. Investors will keep a close eye on the numbers as they search for clues about the health of America’s economy. 

My colleague Lucy Burton has taken a closer look. She writes:

The expectation is that the third-quarter figures will show an improvement on the previous quarter. A brutal April-June quarter saw the world’s biggest economy shrink by a record 9.4pc, forcing US banks to put over $33bn (£25bn) aside to cover for potentially toxic loans which took a toll on their profits. But analysts believe that a recovery in the US economy since June means that banks can hold off on increasing loan loss provisions further.  

Russ Mould, investment director at AJ Bell, said analysts are expecting a “big rebound in earnings per share” at JP Morgan, Wells Fargo, Citigroup and Bank of America before a slight dip again next quarter “when lenders tend to provision most heavily for any bad news”.

Earnings at US lenders’ investment banking and trading divisions are also expected to be strong although may not reach the heights seen during the second quarter when market volatility caused by coronavirus triggered a trading boom that significantly beat market estimates. Goldman Sachs and Morgan Stanley rely heavily on their investment banks. 

However, interest rates remain low and banks are under intense pressure to keep costs down as they face huge loan losses caused by the pandemic. 

PM plans Office for Investment – Sky

Boris Johnson plans to create an Office for Investment, Sky News reports, as the Government aims to coax international investors to back large-scale infrastructure projects.

The broadcaster says:

It is understood to have been orchestrated by Lord Grimstone, the minister for investment, who was recruited into government by the prime minister earlier this year…

By basing the new investment office in Downing Street, the PM hopes to send a signal to foreign investors that their interest in ploughing money into the British economy will be "closely chaperoned", according to one insider.

Wall Street set for gains

With a couple of hours until the Wall Street opens, futures trading is point toward moderate gains on US indices.

Credit: Bloomberg TV


Here are more of the day’s top stories:

Market moves

Despite poking into positive territory earlier this morning, the FTSE 100 has returned to being flat – lagging behind European indices amid pressure from a rising pound.

Eddie Stobart says accounting scandal is in the past as it returns to profit

Eddie Stobart said it has signed several new contracts Credit: Chris Ratcliffe/Bloomberg

The owner of trucking business Eddie Stobart has returned to profitability and put an accounting scandal that rocked the business behind it, the company said.

The Press Association reports:

GreenWhiteStar Acquisitions (GWSA), the holding company of Eddie Stobart, said the haulier had benefited from the pandemic as demand from customers increased.

The business added that it had left old loss-making contracts and signed new ones - most recently announcing a deal to shuttle products between Morrisons' distribution centres and stores.

Other wins include Hillebrand and McBride in the UK, with Nike and Amazon using the services of its EU business, it added.

GWSA executive chairman William Stobart said: "These results show we have put past challenges firmly behind us.”

Economics Nobel Prize winners announced

The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (a.k.a. the Economics Nobel Prize, although it technically isn’t one) has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats.”

Speaking of the labour market report…

The Office for National Statistics says it is making some adjustments to its measurements, to account for workforce changes that have occurred due to the pandemic.

In a blog post, the stats body says:

In normal times, if we were making such a significant change to how data are collected, we would first undertake a period of dual running to see if the new approach gave us different results. However, we had to move very quickly to meet the challenge of measuring the labour market during the pandemic and this approach was simply not possible.

Warning its labour force survey statistics are now picking up a possibly less representative sample due to restrictions on certain types of surveying, statistician Jonathan Athow said:

We drew attention to this issue in last month’s labour market bulletin, and since then we have continued to look into it. We are now in a position to gauge the scale of this problem and to make allowances for it. For tomorrow’s release we will therefore reweight the estimates so that the shares of owner occupiers and renters are the same as before the pandemic hit in March. This should give us a much more representative set of labour market statistics.

The Resolution Foundation’s Torsten Bell has some thoughts of what those changes might mean for tomorrow’s numbers:

IPPR: Just Support Scheme may only save 230,000 jobs

As the end of furlough looms, progressive think tank the IPPR has warned the Job Support Scheme – the top-up scheme announced by Chancellor Rishi Sunak last month – will save only 230,000 out of around 2m viable jobs that could be protected.

The think-tank says this means “1.8m viable jobs which could otherwise be preserved will be lost”, at a steep individual and wider economic cost.

It said:

To prevent these job losses the government should make the Job Retention Bonus (JRB) proportional to wages for hours worked part-time (up to a ceiling of £2500). This would replace the flat payment with a proportional one, paid in monthly instalments instead of a one-off.

This ‘JRB+’ would have the advantage of benefitting those workers who need support and are outside the narrow corridor of wages for which the scheme currently acts as an incentive to keep workers on. The timing of the JRB+ should also be aligned with that of the JSS, to make sure that their joint benefits are effective until April.

Tomorrow morning, we’ll get the latest data on the UK labour market, which is expected to show widening cracks.

Aveva slips after trading update

Industrial software maker Aveva has slipped slightly today, after showing signs of caution in a trading update ahead of its interim results.

The FTSE 100 group said it expects to report revenues of “approximately £333m” for the period from the start of April to the end of September. It said that figure would be “broadly in-line” with its plan for the year – suggesting some slight slippage.

It said trading had been solid despite the pandemic, but hinted as foreign exchange headwinds and some delayed deal agreements.

Aveva’s full first-half results will come out on November 5th.

In a separate announcement, the group said it had agreed a $900m term loan for its proposed acquisition of Softbank-back rival OSISoft.

The loan will be directly provided by Schneider Electric, rather than syndicated. Aveva said the new arrangements are “identical in all material respects to those originally envisaged”, but with an improved interest rate margin and fewer fees.

Money round-up

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

National Express names new boss

National Express shares have dipped slightly Credit: Chris Ratcliffe/Bloomberg

Shares in National Express have dipped slightly this morning, after it named Jose Ignacio Garat as its new chief executive.

Chris Davies, the current CEO, will step down at the start of nest month.

Mr Garat was until recent senior vice president for southern European, France and Benelux operations for FedEx.

Sir John Arnitt, National Express’s chair, said:

Ignacio has the extensive international operational and strategic experience to lead National Express Group through the challenges presented by the pandemic, as well as the significant future opportunities that exist.

Liberum analyst Gerald Khoo expressed some surprise at the decision, saying Mr Garat seemed like a “higher risk” choice given he has no experience with public transport.

Heathrow passenger numbers down 81.5pc in September

Traffic numbers at Heathrow were down 81.5pc year-on-year in September, with just over 1.2m passengers using its terminals.

Chief executive John Holland-Kaye said the Government “needs to act quickly to save the millions of UK jobs that rely on aviation”. He added:

Implementing ‘test and release’ after 5 days of quarantine would kick start the economy. But the government could show real leadership by working with the US to develop a Common International Standard for pre-departure testing that would mean that only Covid-free passengers are allowed to travel from high risk countries.

Founder Shetty seeks India probe into NMC and Finablr – Reuters

Indian businessman BR Shetty has called on India’s investigative agencies to launch a probe into two former executives of his companies – London-listed NMC Health and Finablr – as well as two Indian banks in connection with the multi-billion financial scandal engulfing the groups, Reuters reports.

The news wire says:

Shetty’s 55-page complaint, a copy of which was seen by Reuters, accuses the former chief executives of NMC and Finablr, along with their associates and bankers, of inflating the companies’ balance sheets, arranging “illegal” credit facilities and misappropriating funds since 2012.

It calls on India’s federal police, the Central Bureau of Investigation (CBI), and the Enforcement Directorate (ED) - India’s financial crime fighting agency - to investigate.

The complaint, with more than 100 pages of supporting documents, indicates it was also sent to India’s prime minister’s office, central bank and other investigative agencies.

A spokesman for the two former CEOs, brothers Prasanth and Promoth Manghat, rejected Shetty’s allegations, saying he had significant control over the running of NMC after stepping aside as CEO in 2017 and that he or his family remained on the boards of companies including Finablr.

Petrofac appoints new chief executive

Oilfield services provider Petrofac has named Sami Iskander as its new chief executive officer, with incumbent Ayman Afari due to retire at the end of the year.

Mr Iskander will become deputy chief executive on November 1st, and take the helm at the start of January. He was executive nice president of Shell’s upstream joint ventures business until last year.

Chair René Médori said:

After nearly 40 years in the industry and 30 years with Petrofac, Ayman has decided the time has come to step back from his executive duties to focus on his family, health and charitable interests.

The Board has been planning for his retirement for some time and I am delighted that we have been able to attract a candidate of Sami Iskander's calibre, who was identified following a comprehensive external and internal search process.

FTSE’s stumble continues

Today’s underperformance will further cement the FTSE 100’s underperformance this year – Britain’s blue-chip index is the worst performing across all its major European and US peers, down 20.4pc year-to-date. 

Pound rises to one-month high

Sterling has risen this morning, touching as high as $1.306 – its highest level since September 8th.

FTSE falls

Despite futures pointing upwards earlier this morning, the FTSE 100 has opened lower – underperforming the rest of Europe.

Credit: Bloomberg TV

Bank of England asks commercial lenders for views on negative rates

The Bank of England is calling on commercial lenders to offer their views on the feasibility and challenges of implementing negative rates.

Sam Woods, boss of the central bank’s Prudential Regulation Authority, wrote to bank in a letter published today, “seeking information to understand firms’ operational readiness and challenges with potential implementation, particularly in terms of technology capabilities”.

The PRA has produced a survey for lenders to complete, which includes questions on the cost of implementation and the preparedness of systems for negative rates.

Mr Woods said:

Responding to this letter and the structured survey questions attached will help us and firms to identify whether there are any technical operational challenges associated with the implementation of a zero or negative Bank Rate, and to consider how best to prepare and prevent any unintended operational disruption that could be associated with a change should the MPC decide it was appropriate.

The Bank of England’s Monetary Policy Committee is exploring the concept of introducing negative rates as a further stimulus tool. Members of the committee have said it is months away from making a decision, however.

The day ahead

It’s a typically quiet Monday, with the imposition of new restrictions across big parts of the North-West overshadowing the business news. There are two key timings today:

  • 3:30pm: Boris Johnson will announce widely-briefed new measures to the House of Commons, including the introduction of a new alert levels system (reportedly to replace the ‘Nando’s’ system that was previously unveiled and then swiftly abandoned.
  • 6pm: The PM will host a televised press conference alongside Chancellor Rishi Sunak and Chief Medical Officer Chris Whitty.

Politico’s Alex Wickham has more of the nitty-giritty:

BA boss Cruz out with immediate effect

Alex Cruz in a photo from earlier this year Credit: GEOFF CADDICK/POOL/AFP via Getty Images

The chief executive of British Airways Alex Cruz has stepped down with immediate effect after a turbulent four years in the role. 

My colleague Simon Foy reports:

Mr Cruz will be replaced by Sean Doyle, the boss of IAG stablemate Aer Lingus, but will remain on the airline's board as non-executive chairman. 

The Spanish businessman ran IAG's most profitable airline during a testing period for the carrier, which involved having to navigate threats from Brexit, industrial action and the Covid-19 pandemic. 

He become embroiled in the first pilot strike in BA history last year. The dispute grounded more than 1,700 flights over two days and cost the airline close to £125m.

He also presided over years of IT problems, which sparked periodic cancellations and delays.

Agenda: Stocks set to open higher 

Good morning. The FTSE 100 is set to start the week in the green despite the Government preparing to announce stringent local lockdowns in Northern England.

But keep an eye on stocks in the hospitality and leisure sectors today, as the new restrictions in some areas will shutter pubs, gyms, casinos, bookmakers and social clubs. 

Brexit will also be back in focus this week as Boris Johnson's October 15 deadline for the outline of a trade deal looms. 

5 things to start your day 

1) Arm is racing to double its UK staff headcount: The British microchip company has to hire 490 staff by September 2021 to meet legally binding pledges it made when it was bought by SoftBank.

2) Ocado boss says tougher lockdown rules are ‘counterproductive’: The chairman of Ocado Stuart Rose describes the 10pm curfew imposed on pubs and restaurants as “bungled”, demonstrating a “lack of foresight and strategic thinking” from ministers and risking millions of jobs.

3) CBI chief calls for a free ports watchdog:  The head of Britain’s biggest business group warns that free ports risk becoming “a magnet for trade operating on the borders of the law”.

4)  Firms move €150bn of UK assets to France ahead of Brexit: The Banque de France governor says that since September, 31 entities – mainly investment firms – have also applied for a licence in France. 

5) Levelling up the North ‘must have a more surgical approach’: The first report of the new Covid Recovery Commission, led by Tesco and Barratt chairman John Allan, sets out a damning picture of the impact of the pandemic on the poorest regions of the UK.

What happened overnight 

Chinese stocks led Asian markets higher on Monday as investors bet on a steady recovery for the world's no. 2 economy, though caution about the fate of US stimulus kept the dollar firm and a central bank policy tweak unwound some of the yuan's gains.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8pc to 2.5-year highs, buoyed by a 2pc gain in Chinese blue chips and a 1.5pc rise by Hong Kong's Hang Seng index.  Japan's Nikkei slipped 0.3pc as investors fretted about corporate earnings.

China has returned from an eight day mid-autumn festival with investors encouraged by a robust rebound in tourism and ebbing coronavirus cases.

Chinese blue chips have gained nearly 17pc this year, compared with an almost 8pc gain by the S&P 500.  Foreigners' purchase of Chinese government bonds hit its fastest pace in more than two years last month.

Coming up today

No FTSE 350 companies are set to report.

Economics BoE’s Bailey and Haskel both due to speak (UK)