- FTSE 100 treads water
- Negative rates may be needed to boost recovery, says Bank official
- Reckitt Benckiser ups revenue growth forecast
- Bellway banks on housing market rebound after Covid hammers profits
- US charges Google with violating monopoly law
- Co-op Bank finance chief Nick Slape takes top job
- Exclusive: Government spends £320m on PPE from China-linked firms
- Matthew Lynn: Scotland and Wales should pay for their own lockdowns
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Time to wrap up. These were some of the day’s top stories:
- Negative rates may be needed to boost recovery, says Bank official: Negative interest rates could soon be needed to boost the economy as the second Covid wave hits the recovery, a top Bank of England policymaker has indicated.
- US charges Google with violating monopoly law: The US government is suing Google for breaking monopoly law in the most significant legal action taken against a big tech company since its crusade against Microsoft two decades ago.
- Trainline shares slide as boss departs: Shares in Trainline sank after the chief executive who guided the ticketing app through its stock market float last year announced her departure.
- Co-op Bank finance chief Nick Slape takes the top job: The Co-operative Bank has named chief financial officer Nick Slape as its new boss after chief executive Andrew Bester announced plans to quit just two years after taking on the role.
- Bellway banks on housing market rebound after Covid hammers profits: Profits at housebuilder Bellway plunged by almost two-thirds after lockdown hammered sales and led to surging costs.
Thanks for following along today! We’ll be back tomorrow morning for inflation data fun.
Daimler warns hard Brexit would carry heavy costs
A hard Brexit will cost Daimler hundreds millions of euros, the boss of the Mercedes-Benz parent warned.
My colleague Alan Tovey reports:
If the UK fails to secure a free trade deal it will mean a 10pc tariff being slapped on car imports, pushing up prices which could be passed on to consumers, denting demand.
Ola Kallenius, chief executive, said Britain crashing out of the bloc would have deliver a “low three-digit” million-euro hit to the company.
Daimler, which does not have any production plants in the UK, would not set up a factory to get round tariffs he said because sales of the company’s vehicles are too low in the UK.
Last week, UK car industry group SMMT issued a dire warning after Prime Minister Boris Johnson warned British businesses to prepare for the prospect of no trade deal being agreed.
Barnier expected in London on Thursday
EU chief Brexit negotiator Michel Barnier is mulling a surprise visit to London amid cautious optimism of a breakthrough on the talks.
My colleagues Christopher Hope and James Crisp report:
The visit would be the most tangible signal that the optimism of the past 24 hours could lead to a trade deal between the UK and EU.
Sources have told The Telegraph in London and Brussels that Mr Barnier is considering a trip to London on Thursday.
One senior UK Government source said ministers were "hoping to hear more from the EU" before the end of this week. A second source said Mr Barnier could be in London on Thursday.
A few minutes ago, Mr Barnier tweeted that he spoke to UK chief negotiator David Frost earlier today:
Breaking: Government set to force Manchester into Tier 3
Our political editor Gordon Rayner is reporting that Manchester will go into lockdown without agreement between the Government and regional leaders.
The restrictions will be in place for a month, meaning the closure of pubs, betting shops, casinos, bingo halls, adult gaming centres and soft play areas. However, gyms will remain open.
Sky News: Top English clubs in talks to join FIFA-backed European Premier League
Sky News is reporting that Liverpool and Manchester United are in talks about a plot involving Europe's biggest football clubs to join a new FIFA-backed tournament that would reshape the sport's global landscape.
They have the details:
Sky News has learnt that financiers are assembling a $6bn (£4.6bn) funding package to assist the creation of what could become known as the European Premier League.More than a dozen teams from England, France, Germany, Italy and Spain are in negotiations about becoming founder members of the competition.As many as five English clubs could sign up to join it, with a provisional start date said to have been discussed as early as 2022.Sources said that FIFA, football's world governing body, had been involved in developing the new format, which is expected to comprise up to 18 teams, and involve fixtures played during the regular European season.
US launches legal suit against Google
The US Justice Department is reportedly preparing to launch a lawsuit accusing tech giant Google of having an illegal monopoly over search and search advertising.
The New York Times reports, citing agency officials:
In its suit, to be filed in a federal court in Washington, DC, the agency will accuse Google, a unit of Alphabet, of illegally maintaining its monopoly over search through several exclusive business contracts and agreements that lock out competition, said the officials, who were not authorized to speak on the record.
Such contracts include Google’s payment of billions of dollars to Apple to place the Google search engine as the default for iPhones.
Full report: Vlieghe’s says negative rates may be needed to boost recovery
My colleague Tim Wallace has a full report on Bank of England policymaker Gertjan Vlieghe’s speech this morning. He writes:
The Bank has taken interest rates to a record low of 0.1pc and used quantitative easing (QE) to inject more money into the system and lower rates in financial markets.
However, Mr Vlieghe said that “QE is probably less potent now than in March”, which meant the Bank needed to consider other options including taking rates below zero.
He fears that without more help, the economic recovery would struggle.
Next shares rise at Goldman and Barclays back group
Next’s shares have pushed higher today, after a brace of positive notes from analysts who said current retail trends should play well for the group.
Goldman Sachs upgraded the FTSE 100 group’s rating from ‘sell’ to ‘neutral’, raising its price target from £57 to £65, noting high demand for casual clothing.
Analyst Richard Edwards sure pandemic-driven interest in leisure and sportswear products was “driving strong search activity” for Next, saying it could “largely offset” lower demand for going out clothes, holiday and work apparel.
Separately, Barclays initiated coverage of Next’s shares at a positive ‘overweight’ rating, saying gains in its online business should offset current pain in the wider retail sector.
Setting a price target of £72, analyst James Anstead said Next has “quietly built a sizeable and profitable online business”, adding: “for investors with a longer-term horizon we think the shares still offer attractive upside”.
PizzaExpress concludes sales process
Restaurant chain PizzaExpress says it has concluded a sales process, having received “several proposals which did not exceed the set minimum purchase price guidance or were otherwise non-compliant”.
The company has previously said its bondholders would take ownership of the majority of the business unless it could find a better offer.
Hony Capital, its current owner, transferred the group’s Chinese assets to an entity under its control last week, PizzaExpress said in a statement.
A call with bondholders to discuss the restructuring of £465m in senior secured bonds will take place tomorrow.
Logitech shares hit a record high as sales surge
Shares in computer accessories maker Logitech have jumped to a record high after it reported a surge in second-quarter profit amid a working-from-home boom.
Its stock gained more than 18pc in early trading, the highest riser on the Stoxx 600 index, to a record for the Swiss-US company.
The maker of keyboards, mice webcams and headsets said it was benefiting from a shift to working from home during the COVID-19 pandemic.
It now expects annual sales to increase between 35pc and 40pc in constant currencies, up from its previous view for a 10pc to 13pc increase.
BoE’s Vlieghe: Risks of negative interest rates are low
Bank of England Monetary Policy Committee member Gertjan Vlieghe has warned there is “huge uncertainty” over the scale of looming job losses and defended a possible negative interest rates policy.
Mr Vlieghe struck a dovish tone in a speech given today, saying Threadneedle Street must consider ways to extend its monetary policy headroom. he said “ the outlook for monetary policy is skewed towards adding further stimulus”, warning that further cracks in the damaged economy are “starting to materialise”.
Pointing to the 9pc of workers who remain on furlough according to the latest data, he warned it is difficult to see a scenario in which they are all “reintegrated seamlessly into the labour force”.
There is huge uncertainty about the scale of job losses, in both directions, but in my view, the risks are skewed towards even larger losses, implying even more slack in the economy than in our central projection.
On negative interest rates, a topic which has been the focus on intense debate over recent weeks, he pointed to what he described as the successful examples of other central banks that have gone sub-zero, saying:
There is some debate about the scale of the stimulus that negative rates have imparted on these economies, but the growing empirical literature finds that the effect has generally been positive, i.e. negative rates have not been counterproductive to the aims of monetary policy.
My own view is that the risk that negative rates end up being counterproductive to the aims of monetary policy is low. Since it has not been tried in the UK, there is uncertainty about this judgement, and the MPC is not at a point yet when it can reach a conclusion on this issue. But given how low short term and long term interest rates already are, headroom for monetary policy is limited, and we must consider ways to extend that headroom.
Bellway profits sink by two-thirds
Full-year profits at housebuilder Bellway sank by two-thirds as disruption caused by the pandemic knocked home sales.
The group posted a £236.7m pretax profit for the twelve months to the end of July, compared to £662.6m the year before. Revenues fell almost a third to £2.2bn.
Bellway sold 7,522 homes over the period, compared to 10,892 the prior year.
The FTSE 250 company incurred costs of £18.9m due to extended site closures and enhanced safety measures.
It said trading since the start of the new financial year had been “encouragingly strong”, with reservations up 30.6pc in the nine weeks since the start of August.
The group will pay a reduced final dividend of 50p per share – half last year’s levels – but said it would keep future payouts under review.
Here are some of the day’s top stories from the Telegraph Money team:
- Millions paying over the odds in tax, as reliefs deemed too complex to claim: Close to a fifth of Britain’s 5.3 million sole traders and micro business owners are paying on average £722 over the odds each year, to the tune of £650m, according to data collected by the online accountants Coconut.
- The areas that missed the post-lockdown summer house price boom: Activity is up almost everywhere, but in these micro-markets, supply is already far-outstripping demand.
- Isabelle Fraser: The property market's early warning signs are flashing red: Some top-line figures include theoretical property sales that – given the turbulence ahead – may never actually happen.
Softcat profit jumps, but shares drop on analyst caution
Profits at Softcat jumped over the twelve months to the end of July as the company saw “resilient growth”.
The IT infrastructure provider’s pretax profit rose about about 10pc to £91.6m, from 2019’s £84.8m. Revenues rose 8.6pc to £1.08bn.
The FTSE 250 group said it had seen a strong performance across the year despite the pandemic, marking a sixty-quarter streak of revenue and profit gains.
Its staff headcount rose 15pc over the year, which Softcat said reflected continues investment “across all areas of the business”.
Chief executive Graeme Watt said:
The robust nature of our growth and the strength of our bank debt-free balance sheet means we are well-positioned to seize the long-term opportunities within our market. We were able to deliver these results without the need for redundancies, and our plans for 2021 are to continue to invest in skills and talent to meet our growth ambitions and further enhance our market share.
Softcat said its 2021 financial year performance had “started well”, but said “we do expect corporate customers to continue to be circumspect with their spending over the coming months”.
Citi’s Ross Jobber said the group’s growth expectations “are some of the most modest of recent time”, which he added was unsurprising given Covid-19 and Brexit. He added:
The results show that the business model remains robust but with public sector spending now more normalized following the early Covid boost, it is a case of waiting for the storm to blow over before we get a better handle on how the medium-term growth prospects for the group are evolving and the impact that this has on valuation.
Trainline boss Gilmartin to step down
Trainline boss Clare Gilmartin has announced plans to step down at the end of February, causing its share price to slip.
She will be succeeded by Jody Ford, currently the FTSE 250 group’s chief operating officer, but will maintain a role at the company as senior advisor.
Ms Gilmartin said:
The decision to step down next year is a personal one; after seven years at the helm the time has come for me to spend more time with my family.
Chair Brian McBride said:
I would like to thank Clare for her outstanding leadership during her time as our CEO. During her tenure, she has led the business through a period of rapid growth and expansion across Europe and steered the company through a successful IPO…
I am looking forward to continuing to work with Jody and the team to achieve our long-term growth plan.
Hargreaves Lansdown names new non-executive director at founder’s behest
Hargreaves Lansdown has named Adrian Collins as a new non-independent non-executive director at the request of founder Peter Hargreaves, following a new shareholder agreement.
Following talks over “how best to reflect Peter's continuing interest in the company whilst respecting the strong independent governance principles of the board”, HL adopted the new agreement, under which Mr Hargreaves is entitled to nominate one non-independent, non-executive director.
Mr Collins has over 40 years of fund management experience, including as chair of Liontrust Asset Management from 2009 to 2019.
Chair Deanna Oppenheimer said:
I’m delighted to welcome Adrian to the Board and look forward to working with him going forward. Adrian’s presence on the Board will provide an avenue to harness Peter's wealth of experience, while also allowing us to benefit from Adrian’s considerable expertise in the fund management industry.
AstraZeneca lung cancer treatment Tagrisso gets priority review in US
Tagrisso, AstraZeneca’s under-development treatment for lung cancer, has been granted priority review status in the US for the adjuvant treatment of patients.
The status change, granted to medicines that “offer significant improvements over available options”, may speed up Tagrisso’s path to full approval.
Britvic rises as it strikes 2-year bottling deal with PepsiCo
Shares in Britvic have popped higher this morning, after the drinks-makerannounced it has reached a 20-year UK bottling, distribution, marketing and sales sales detail with PepsiCo.
The deal extends a partnership that first launched in 1987 to the end of 2040, and now includes the Rockstar energy drink brand.
Chief executive officer Simon Litherland said:
The powerful combination of the Britvic-owned and PepsiCo portfolio offers customers and consumers a broad range of great-tasting, trusted brands for any occasion. We are excited to add Rockstar to our offering and look forward to working together to grow the brand.
In an accompanying trading update, Britvic said its underlying profit is expected to be ahead of consensus following “better than expected trading” across the peak summer period.
The group also announced all its plastic bottles in the the UK will be made from 100pc recycled plastic (rPET) from the end of 2022, thee years earlier than originally planned.
Citi’s Simon Hales said:
Given the consistent and strong growth of the Pepsi brand portfolio under Britvic stewardship, the signing of a new long-term agreement with Pepsi was never in doubt. However, the addition of Rockstar should provide an exciting new growth leg to the franchise over time, while the new and accelerated recycled PET commitments should be applauded.
Boohoo shares drop further as auditors snub group
Shares in online fast fashion retailer Boohoo have dropped sharply for a second day, falling 11pc at the open following our report that four of Britain’s top auditors have ruled out working for the group after PwC resigned at its appointed bean counter.
As my colleagues Michael O’Dwyer and Simon Foy reported:
Deloitte, KPMG, BDO and Grant Thornton have all decided not to bid for a contract to oversee Boohoo's books, sources said. EY is the only top six firm still in the running.
Auditors are concerned by the reputational risks of being associated with Boohoo as well as its governance and supply chains.
Reckitt Benckiser raises revenue growth forecast as coronavirus shifts sales
Reckitt Benckiser has raised its estimates for like-for-like revenue growth in 2020 to the “low double digits” – up from a previous estimate of a “high single digit” increase – amid continued high demand for its cleaning products.
Sales were up 6.9pc over the third quarter, driven by a 12.4pc increase in reported sales across its hygiene products offsetting weaker growth in its health and nutrition divisions.
For the year to date, its sales are up 9.4pc on a reported basis, and 12.4pc like-for-like.
It said growth was being driven partially by increased hygiene sales penetrations, including the launch of Dettol and Lysol products into new markets.
RB said stay at home dynamics “have had significant effects on some of our brands”: with air freshener sales rising as more people stay in, while an expected drop in global birth rates should hit its infant nutrition sales.
The Durex-maker said demand for sexual health products had fallen due to “reduced social interactions”, and cautioned a weaker than usual flu season would hit the demand for its over-the-counter medication.
Royal Bank of Canada’s James Edwardes Jones said it had been another “excellent” quarter for RB, adding: “Reckitt is starting to get its act together and do more than simply meet insatiable demand for hygiene products”.
Co-operative Bank names Nick Slape new chief executive
The Co-operative Bank has named Nick Slape, currently its chief financial officer, as its new chief executive.
Mr Slape, who joined the bank as CFO in 2018, will become its sixth boss in seven years. He previously held roles at Lloyds Bank, Deutsche Bank and Merrill Lynch.
Predecessor Andrew Bester announced a surprise decision to resign earlier this month.
Co-op Bank chair Bob Dench said:
I am delighted to be appointing Nick as CEO. He has played a leading role in shaping and delivering key elements of the turnaround plan and as a result of robust succession planning, he is the natural choice to lead the bank as we move towards achieving sustainable profitability.
Agenda: FTSE set to slide
Good morning. The FTSE 100 is set to slide as parts of England prepare for further local lockdowns.
Wales also announced a "firebreak"lockdown for two weeks, while Ireland prepares for a draconian six-week lockdown.
5 things to start your day
1) Big Oil bets big to save itself from extinction: The Telegraph's four-part series continues with an analysis of BP and Shell's spending spree to secure their futures.
2) One in 10 Britons stockpile cash in pandemic: Despite the rise in contactless payments because of coronavirus, more of us are hoarding bank notes amid an uncertain economy.
3) Deloitte to close four regional offices: Bean-counter offers home working to 500 staff in the latest sign of a permanent shift in working patterns.
4) Google to buy £750m London office complex: By contrast, the search engine giant is set to snap up the office it already part-lets despite not welcoming workers back until July next year.
5) BBC to spend £800k on annual accounts: Critics have blasted Broadcasting House for its decision to splurge on what one termed 'gimmicky graphics' in its yearly financial reports.
What happened overnight
Asian shares fell moderately on Tuesday, echoing Wall Street's decline as hopes faded Washington will come through with badly needed aid for the economy before the US presidential election.
Market focus has been on the US aid amid global uncertainty about the continuing economic damage from the coronavirus pandemic, which has slammed growth with social distancing restrictions, unemployment, crimped trade, as well as tourism and business closures.
Japan's benchmark Nikkei 225 declined 0.3pc to 23,600.98 in morning trading. South Korea's Kospi slipped 0.2pc to 2,341.35. Australia's S&P/ASX 200 fell nearly 0.3pc to 6,212.80. Hong Kong's Hang Seng inched down less than 0.1pc to 24,533.47, while the Shanghai Composite slipped 0.3pc to 3,303.67.
Coming up today
Corporate: Bellway, Softcat (Full-year results); BHP, Gamesys, IntegraFin, McBride, Reckitt Benckiser (Trading statements)
Economics: New house prices (China); building permit and housing starts (US)