Pound rises as UK steps back from no-deal brink

Pound
The pound slipped to a week low before rising again Credit: Dominic Lipinski/PA Wire

Wrap-up

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

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

Market moves

That pivot on the pound has taken the FTSE 100 for top performance to continental laggard, with the index set to lose solidly in the red as things stand. 

Pressure builds on FTSE 100 as pound climbs

It’s one of those days where the relationship between the pound and the FTSE 100 is hugely clear – as sterling strengthens on Brexit hopes, the blue-chips are being forced further into the red. 

Covid updates: Wales tightens borders as Manchester heads for lockdown

Apple pins smart speaker hopes on HomePod Mini

Apple’s new HomePod Mini smart speaker Credit: Apple Inc./Handout

Apple might be the world’s most valuable company at close to $2 trillion, but it remains an underdog in the smart home business.

My colleagues Laurence Dodds and James Cook report:

Its rival Google commands a 30.9pc market share, while Amazon has 53pc, according to smart speaker news site VoiceBot. By comparison, Apple has 2.8pc – beaten by Sonos, a far smaller but more specialised firm, with 4.7pc

It is a rare area of failure for Tim Cook's company, which has enjoyed success in everything from smartphones and watches to fitness and music streaming. If it can crack smart homes, it will represent a huge area of growth for the tech giant. 

According to TechUK, revenue from the global smart home market is expected to reach $91bn (£70bn) this year and £158bn by 2024. But right now, Amazon and Google are eating Apple's lunch. 

That could be about to change following Tuesday's unveiling for the HomePod Mini, a £99 Siri-powered smart speaker that is set to help Apple expand its reach into the home. 

Wall Street opens in the green 

US stocks edged higher at the open as investors weighed earnings from big banks and falling prospects for a pre-election stimulus deal.

Credit: Bloomberg 

Gourmet Burger Kitchen to axe 362 jobs and 26 restaurants despite rescue deal 

Gourmet Burger Kitchen is to close 26 restaurants and cut 362 jobs despite the restaurant chain being saved from administration.

The company has been snapped up in a rescue deal by Boparan Restaurant Group, which also bought Carluccio's out of insolvency earlier this year.

GBK, which had been owned by South African group Famous Brands, said it slid into administration after the pandemic hit trading and its liquidity. 

Gavin Maher, joint administrator at Deloitte, said: "As with a number of dining businesses, the broader challenges facing 'bricks and mortar' operators, combined with the effect of the lockdown, resulted in a deterioration in financial performance and a material funding requirement.

"We have been working closely with the management team under very difficult market conditions to try and find a funding solution and I am glad to be able to announce the rescue of this well-loved brand together with a large proportion of the sites and workforce.

"However, it's clearly disappointing that a number of sites have had to close resulting in today's redundancies."

OECD: UK borrowing could hit 120pc of GDP

 Britain’s national debt will hit 120pc of GDP in the coming years - a level not seen since the 1950s – as record peacetime borrowing combined with a slow, tough recovery trash the public finances.

My colleague Tim Wallace reports:

The Organisation for Economic Co-Operation and Development (OECD) warned that the surge, which translates to debt of about £2.4 trillion as a share of today’s economy, could make the nation’s finances unsustainable unless serious action is taken.Net debt is already above 100pc of GDP for the first time since the 1960s. Once the economy recovers from the pandemic, it recommends higher taxes, tight controls on spending and new measures to boost jobs and growth.

Asda gets The Entertainer on board for toy operations

Asda has outsourced the handling of toys in five stores to The Entertainer, the UK’s largest independent toy seller.

My colleague Laura Onita reports:

The move could serve as a blueprint for future tie-ups under its new owners, the Issa brothers and private equity firm TDR.

The supermarket’s US owners Walmart sold a majority stake last month in a deal that valued the chain at £6.8bn.

Asda said it will double-down on convenience, a fast-growing area of the grocery market, as well as more partnerships with other firms and online sales. Asda currently has another shop within a shop trial with B&Q, using some of the excess space in its large out-of-town branches.

The Entertainer will have branded concessions in Asda, selling a more extensive range of products from brands including Lego, L.O.L, Paw Patrol and Disney, as well as its exclusive range of more affordable Addo toys.

Round-up

Here are some of the day’s top stories:

  • German recovery loses steam: Germany’s economy is losing steam but will do slightly better than government forecasts as fears grow over rising coronavirus infections, according to the country’s five leading research institutes.
  • McDonald’s and Greggs boost Just Eat Takeaway: The addition of McDonald’s and Greggs to Just Eat Takeaway drove a big rise in third quarter sales as more households opted to dine at home. 
  • Barratt calls for stamp duty reform: The boss of Barratt has called for more permanent reform of stamp duty and did not expect the Government to extend the stamp duty holiday after it ends in a matter of months. 

FCA fines hedge fund over disclosure failings

A hedge fund that failed to disclose bets against Premier Oil has been fined more than £870,000 in the first case of its kind. 

My colleague Michael O’Dwyer reports:

Asia Research and Capital Management (ARCM), an investment firm based in Hong Kong, failed to publicly disclose major short positions taken between February 2017 and July 2019 as London-listed Premier Oil battled low oil prices and high debts. 

Short positions are taken by investors betting that a company’s share price will fall and must be disclosed to regulators and the public when they reach a certain size. 

By 5 July 2019, the firm had built a net short position to almost 16.9pc of Premier’s issued share capital, the Financial Conduct Authority (FCA) found. 

ARCM maintained its short position for another 106 trading days before eventually notifying the FCA and disclosing its position to the public. 

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Failure to report disclosable short positions undermines the integrity and efficiency of financial markets.”

Marshall Wace grabs 3pc stake in IAG

One of Britain’s most powerful hedge funds has taken a major stake in the British Airways owner as the flag carrier braces for a turbulent winter.

My colleague Oliver Gill reports:

Marshall Wace, which has bet against the fortunes of bailed-out airlines on the Continent, disclosed a 3pc stake in IAG worth about £140m.

The disclosure, which comes 48 hours after BA boss Alex Cruz stepped down, catapults the Mayfair fund among the ranks of IAG’s biggest backers. 

The £35bn fund entered into “big shorts” against the likes of Air France KLM and Lufthansa as the coronavirus crisis gripped the aviation industry.

Goldman smashes profit estimates

Goldman Sachs boss David Solomon Credit: Simon Dawson/Bloomberg

Goldman Sachs has knocked it out the park with third-quarter results, after posting a massive beat on profits after strong bond trading and asset management performances.

The investment banking giant posted earnings per share of $9.68, way ahead of the estimate of $5.57 compiled by Refinitiv.

Bloomberg has more details:

Third-quarter revenue from buying and selling stocks and bonds surged 29pc, driven by a 49pc increase in fixed-income trading and mirroring similar gains reported Tuesday by JPMorgan Chase & Co. and Citigroup Inc. Revenue at each of Goldman Sachs’s four divisions rose from a year earlier. 

Trading gains since the start of the pandemic have helped offset weakness in consumer businesses at the nation’s biggest banks, where loan-loss provisions piled up in the first half of the year.

8:30pm Brussels time, that is

Von der Leyen to hold talks with John and Michel at 8:30pm

Ursula von der Leyen, president of the European Commission, will hold a phone call with Boris Johnson and European Council president Charles Michel at 8:30pm Brussels time.

Pound recovers as Brexit optimism increases

Sterling has pulled back from the one-week low reached earlier in the day as Britain softened its stance on Brexit negotiations.

The pound dropped amid reports that insufficient progress had been made in talks. Boris Johnson had previously said he would walk away if talks has not reached a satisfactory stage ahead of tomorrow’s European Council meeting, but the UK has now indicated it will wait until after the two-day summit.

PageGroup sees UK hiring lag rest of world

Commuters on London Bridge this morning Credit: Dominic Lipinski/PA Wire

The Covid pandemic inflicted another quarter of reduced profits on recruiter PageGroup as its UK business lagged behind Europe and Asia. 

My colleague Michael O’Dwyer reports:

The FTSE 250 firm’s gross profits for the three months to September fell to nearly £144m, a third lower than the same period a year ago. 

The figures reflected a partial recovery from the previous quarter when lockdowns across the globe caused firms to halt hiring and workers to delay resigning from their jobs, driving profits down by almost half. 

Steve Ingham, chief executive of PageGroup, said: “The improving activity levels we saw in June progressed further in the quarter.” 

Gross profits in the UK, which accounts for about an eighth of the group’s business, fell 47.9pc to less than £18m for the quarter. 

Calm app raises money at $2.2bn valuation

Calm, the meditation app co-founded by British tech entrepreneur Michael Acton Smith, is planning to raise as much as $150m (£114m) in a new funding round that could more than double its valuation. 

My colleague Michael Cogley reports:

The San Francisco-based company is believed to be planning a raise that would value the business, which was founded in 2012, at $2.2bn, Bloomberg reported citing unnamed sources.

Any such deal could include a component that would allow some early investors to sell their stake in the business. It reported that no final decision had been made and that the intricacies of the agreement could change.

Calm did not immediately respond to a request for comment from The Telegraph.

UK insolvencies fell in third quarter – KPMG

The number of UK companies going into administration in the third quarter dropped 39pc compared to 2019, according to analysis of official figures by professional services giant KPMG.

In total, 249 companies filed for administration in July, August and September, it said, the lowest level since the final quarter of 2015. High levels of Government support was behind the low number of collapses, KPMG added.

109 of those insolvencies occurred in September.

Head of restructuring Blair Nimmo said the question is whether “the can is simply being kicked down the road”, adding:

We know that as the support schemes start to unwind, and the repayment of loans, tax arrears and rent starts to kick in, cash flow is going to come under significant pressure once more

China’s stock market valuation hits record high

Chinese stock valuations have hit a record high, topping the peak reached during its disastrous equity bubble five years ago.

The total value of the country’s listed companies hit $10.08 trillion on Wednesday, according to a Bloomberg measure, amid widespread confidence in the strength of a Chinese economic rebound.

The CSI 300 – the benchmark index of Shenzhen and Shanghai stocks – is up 17pc this year.

Despite being the initial epicentre of the Covid-19 pandemic, China’s apparently effective containment efforts meant that it quickly recovered from disruption in the first quarter. Its economy was rebounding even as many countries in the West initially entered lockdown.

Wednesday’s total stock valuation beats the $10.05 trillion peak reached in 2015, before a brutal sell-off that began when the authorities pulled the plug on excessive bank lending. 

This time, the record appears to be built on firmer ground: the CSI 300’s forward price-to-earnings ratio is less than half its 2015 level, and the proportion of shares held by institutional investors is higher at around 70pc, compared to roughly 50pc five years ago.

Market moves

With over a quarter of the session passed, European equities remain slightly higher. the FTSE 100 is continuing to lead the way, despite gains for the pound in recent minutes. 

Government mulls power to block past foreign takeovers

A new law that could retrospectively block foreign acquisitions of key British businesses is being considered by the Government.

My colleagues report:

The draft legislature could also give powers to tackle  deals which have already been sealed, meaning past agreements could be unwound as ministers try to safeguard critical companies in areas such as defence and infrastructure. 

The National Security and Investment Bill which could be published as soon as this month may include powers allowing the officials to intervene in foreign takeovers of companies deemed to affect national security, Bloomberg reported.

The development comes after concerns over Chinese telecoms firm Huawei’s role in setting up Britain’s 5G network.

Just Eat Takeaway jumps as orders soar

Just Eat Takeaway was formed by a merger earlier this year Credit:  Just Eat/DCDavies

Food delivery group Just Eat Takeaway is leading risers on the FTSE 100 today, after reporting orders rose by nearly half during the third quarter.

The company – formed by the merger of Just Eat with Dutch group Takeaway.com – said its order growth has accelerated to 46pc over the three-month period.

Sales growth was driven in part by a slew of new restaurant additions, including 800 McDonald’s locations and 300 Greggs sites in the UK.

Chief executive Jitse Groen said JET is “well-positioned for autumn and winter, our traditional growth season”.

Citi’s Monique Pollard said the update showed “very strong” trends, with rising customer numbers and the “lunchtime order opportunity” underpinning further expansion.

Money round-up

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

European markets rise

After a slightly wobbly open, European markets are in the green – albeit pretty narrowly for France’s CAC. The FTSE 100 is outperforming as the pound declines. 

Credit: Bloomberg TV

Pearson says trend is improving as sales fall softens

Education giant Pearson said it saw improved trading trends in the third quarter, with a fall in sales year-on-year growing less marked.

It said outturn for the full year would be “broadly in line with market expectations”, but warned of “larger than usual” uncertainties, particularly over international sales.

Sales in the third quarter were down 10pc year-on-year, a improvement on the second quarter’s 28pc decline. Online learning was the biggest driven of growth, up 32pc during the third quarter.

Overall, revenue for the first nine month of 2020 was 14pc lower than in 2019.

Outgoing chief executive John Fallon said:

This has been a challenging transformation for all of us but we are starting to see the benefit of all our work to ensure Pearson becomes the winner in digital learning.

It shares have hit a two-month high following the update. Shore Capital’s Roddy Davidson said there are signs that Pearson’s digital investment is paying off, adding there is a “positive medium-term outlook for global learning demand”.

Be right back

The Telegraph tech gremlins are briefly entering the system to make some adjustments, so there may be a brief gap before my next post. Thank you for your patience!

Barratt sees ‘strong customer demand’ for new homes

Housebuilder Barratt Developments says it is seeing “continuing strong customer demand” for its new-build properties, with net reservations up more than a fifth since the start of July.

In a trading statement release ahead of its annual general meeting today, the FTSE 100 group said it continues to anticipate 14,500 to 15,000 home completions across the full financial year.

It hit 4,032 home completions over the period, up almost a quarter on 2019’s figures, while recommencing the acquisition of 4,160 plots across 15 sites and approving the purchase of 484 more on four sites.

Barratt said it was in a “strong position” despite current uncertainty.

Chief executive David Thomas said:

There is continuing strong customer demand for our homes and we have a healthy forward order book. As we look ahead, whilst significant economic and political uncertainties persist, we believe our disciplined approach and strong balance sheet provide us with the resilience and flexibility to react positively to future challenges.

Bunzl expects revenue to grow ‘strongly’ in second half

Workers at a Bunzl warehouse

Shares in Bunzl have popped slightly higher at the open, after the group said it expects revenues to grow “strongly” in the second half of the year.

The distribution specialist said it had experienced “strong overall growth” since the end of June, with third-quarter revenues up 4pc at actual exchange rates.

The FTSE 100 group said:

Underlying revenue increased strongly by 8.0pc at constant exchange rates reflecting the continued growth in the sale of Covid-19 related products, such as masks, sanitisers, gloves and disinfectants.

It warned the outlook “remains uncertain”, but said strong Covid-19 linked sales and the benefit of recent acquisitions led it to an upbeat outlook for the rest of 2020.

Jefferies’ Will Kirkness praised the results, noting:

While large orders have moderated the on-going rate of small orders were better than expected

Pound drops amid Brexit nerves

The pound has dropped back below $1.29 today as it weakens against all global peers amid Brexit nerves.

 A meeting of top EU leaders over Thursday and Friday will say that there has not been sufficient progress on key issues during trade talks, Bloomberg reports.

Although tomorrow (the 15th) was set to be a deadline, strategists reckon there is a good chance of negotiation proceeding further once again.

Lee Hardman from Japanese bank MUFG said Covid restrictions have also been dampening enthusiasm for the pound, as well as lingering worries about the potential for negative interest rates.

Asos profits quadruple amid pandemic buying boom

Asos said it has emerged strongly from the lockdown Credit: REUTERS/Suzanne Plunkett/File Photo

Online fashion retailer Asos has cemented its position as a lockdown winner after posting surging profits and sales for its full year.

My colleague Simon Foy reports:

Pre-tax profits jumped by more than 300pc to £142m for the year to the end of August on revenues of £3.26bn, an increase of nearly a fifth on the previous 12 months. 

The fast fashion business said it saw strong demand during the pandemic and forecast further improvement in the current financial year. 

Popular with shoppers in their twenties, Asos was boosted by bored millennials buying clothes online, despite having their social lives restricted due to the crisis. 

The group said it had made a "solid" start to the new financial year but cautioned on the outlook for consumer demand whilst the economic prospects and lifestyles of 20-somethings remain disrupted.

Agenda: Europe set to rise 

Good morning. The FTSE 100 is set to open higher despite the threat of tougher lockdowns across the UK.

Reports overnight suggest that Northern Ireland could be the first region to test a a four-week "circuit breaker" lockdown, while Boris Johnson is facing mounting pressure to impose a similar blanket policy in England. 

The pound also slipped as the deadline to secure a Brexit trade deal looms.

5 things to start your day 

1) Bailey warns scourge of long-term unemployment threatens workers: The Bank of England Governor said Britain faced the prospect of long-term joblessness and ‘scarring’ which limits growth and living standards for years to come.

2) Everything you need to know about the iPhone 12 release: Apple's new iPhone 12 features improved cameras as well as 5G connectivity and new MagSafe capabilities.

3) Covid procurement falls victim to whiff of cronyism: The Government must publish the details of PPE contracts awarded in a hurry to dispel suspicions of misconduct.

4) Bosses tell Sunak to solve £5.7bn Tube funding crisis: Business leaders say that a cut in funding for Transport for London will deter companies from doing business in the capital.

5) The pandemic has destroyed a decade of rising employment in a matter of months: A decade of rising employment has been wiped out in a matter of months, destroyed by lockdown and the pandemic.

What happened overnight 

Shares were mostly lower in Asia on Wednesday after pandemic concerns snapped a four-day winning streak on Wall Street.

Rising coronavirus counts in many countries are raising the urgency to develop vaccines and treatments and setbacks in that process tend to discourage investors.

Japan's Nikkei 225 erased early losses to gain 0.2pc to 23,645.81 while the Hang Seng in Hong Kong gave up 0.2pc to 24,608.27. South Korea's Kospi lost 0.7pc to 2,386.54 and the S&P/ASX 200 in Australia declined 0.2pc to 6,185.30. The Shanghai Composite index shed 0.4pc to 3,346.53.

Coming up today

Interim results  Ashmore

Full-year Asos, Barratt Developments

Trading statement PageGroup, Pearson, Stock Spirits

Economics BoE’s Haldane to speak (UK); industrial production (Japan, Eurozone); producer price inflation (US)