- European and US stocks drop on virus fears
- Dax leads fall after SAP cuts revenue forecast
- German business confidence dips as outlook sours
- Jack Ma gears up to break yet more records with Ant’s $34bn listing
- Roger Bootle: A Brexit deal must do more than maintain the status quo
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Time to wrap up. with the Dax looking to have locked in its worst performance since late September. These were some of the day’s top stories:
- SAP shares drop as lockdowns prompt corporates to curb spending: Almost €30bn (£27bn) was wiped off the value of German software company SAP on Monday after it cut forecasts for the year due to corporates pulling back spending.
- China sanctions US defence giants for selling weapons to Taiwan: China will sanction US defence giants Lockheed Martin, Boeing, Raytheon and other companies selling weapons to Taiwan.
- Hut Group shares surge as sales soar: Online retailer the Hut Group raised its sales guidance by a third after reporting a robust performance in its lifestyle and beauty divisions in the third quarter.
- Aviva censured for breach that sparked share selloff: The financial regulator has censured Aviva for breaching City rules when it threatened to cancel its high-yielding preference shares at below market value in 2018.
- Ant Group to raise $34bn in world’s biggest float: Alibaba’s mobile payments spin-off Ant Group will raise more than $34bn (£26bn) in its market debut this week, in what will be the world's largest listing.
Thanks for following along today. We’ll be back tomorrow as London’s third-quarter results season kicks off in earnest with updates from BP and HSBC.
Analysis: Farewell to furlough
Rishi Sunak’s furlough scheme comes to an end this week, at least in its original form.
My colleague Tim Wallace has taken a closer look at the scheme, asking whether it worked, and how things stand as its demise looms:
Initially a three-month offer to those who would lose their jobs to Covid restrictions, the Job Retention Scheme became a six-month spending binge on a scale never seen before.It is being followed by a Job Support Scheme, which after a few last-minute tweaks will look remarkably similar to furlough.So did the initial scheme work? Was it worth the cost – and where does it leave the economy?
- Read more: Farewell to the £70bn furlough scheme
Diageo buys up Herefordshire’s Chase Distillery
Spirit giant Diageo has agreed a deal to snap up Herefordshire gin and vodka-maker Chase Distillery.
My colleagues report:
The takeover, for an undisclosed amount, will further expand the Tanqueray and Gordon's owner's UK gin business as customer demand for spirits continues to rise.
Dayalan Nayager of Diageo said the company was thrilled to bring a quintessentially British portfolio of high-quality under its umbrella.
“We are excited about the growth opportunity within the premium plus segment and are very much looking forward to working with the Chase team to build on the portfolio's considerable potential.”
BA 747 Jumbo to become a Cotswold cinema
Yes, you read that correctly. One of the last British Airways’ jumbo jets to fly out of the airline’s Heathrow base is getting a new lease of life, with the airliner being transformed into a cinema and conference centre.
My colleague Alan Tovey reports:
The Boeing 747, painted in one of the airline’s historic liveries, departed the London airport on October 8, attracting huge crowds as it made the short flight to its new home at Cotswold airport in Gloucestershire.
Airport operator Kemble Air Services revealed on Monday it had signed a deal with British Airways to buy the aircraft and repurpose it for public use.
Although grounded, the giant jet with the registration G-CIVB will be maintained, with part of it converted into a cinema and space which can be hired for events such as conferences.
The aircraft which will be opened to the public early next year, will also be used as an educational facility for school trips.
Ant Group to raise $34bn in world's biggest float
Alibaba's mobile payments spin-off Ant Group will raise more than $34bn (£26bn) in its market debut this week, in what will be the world’s largest listing.
My colleague Hannah Boland reports:
Ant, which owns payments service Alipay, released the terms for its dual-listing on Monday, revealing it was aiming to raise around $17.2bn in Shanghai and the same amount in Hong Kong.
This will be significantly more than the $29bn that was raised by oil giant Saudi Aramco late last year, and would see Ant valued at more than $313bn, before an over-allotment option is exercised. The company will still be ultimately controlled by billionaire Jack Ma.
The dual-listing is seen as a win for China and Hong Kong's capital markets, which have previously missed out on major IPOs of Chinese firms. Alibaba, the ecommerce giant which Ant Group was spun out of, went public on the New York Stock Exchange in 2014, for example.
Following the float, Ant will be worth more than the world's largest bank by assets, Industrial and Commercial Bank of China.
AstraZeneca rises on vaccine hopes
Pharma giant AstraZeneca is among the biggest risers on the FTSE 100 today, after the company said it had seen a positive response to its experimental Covid-19 vaccine.
The vaccine, developed by the University of Oxford, also triggers lower adverse responses among the elderly, British drug maker AstraZeneca, which is helping manufacture the vaccine, said on Monday…
“It is encouraging to see immunogenicity responses were similar between older and younger adults and that reactogenicity was lower in older adults, where the COVID-19 disease severity is higher,” an AstraZeneca spokesman said.
“The results further build the body of evidence for the safety and immunogenicity of AZD1222,” the spokesman said, referring to the technical name of the vaccine.
St James’s Place investor calls for cost cuts
A leading investor in St James’s Place (SJP) has demanded that the wealth manager slash costs and “excessive pay” to double its share price.
My colleague Michael O’Dwyer reports:
PrimeStone Capital, an activist investor, attacked the company for its “bloated organisational structure, excessive hiring, excessive pay and mounting losses in Asia with little prospect of a recovery”.
In an open letter to the board of the FTSE 100 company, PrimeStone said the company’s share price failed to reflect a doubling of the firm’s assets under management over the past five years.
The shares have fallen in value over the same period and shareholders had received an annualised return of 2pc over the same period, PrimeStone said.
PrimeStone, a London-based group founded by former private equity specialists from The Carlyle Group, said it has built a 1.2pc stake in SJP since last year and believes the company could increase its market value from £5bn today to nearly £18bn within three years.
“SJP has delivered tremendous value for clients, advisers, employees and management … but not so much for shareholders over the last five years,” PrimeStone partners Benoît Colas and Damian Hahnloser said.St James’s Place said: “SJP proactively engages with shareholders with regards to group strategy and structure and looks forward to commencing a dialogue with PrimeStone in regard to the views outlined in its letter.”
Oil slides under joint pressures
The price of Brent crude oil has slipped slightly today:
Bjarne Schieldrop, chief commodities analyst at SEB, says oil is coming under joint pressure from rising production in Libya, and uncertainty over the looming US election. he added:
What is also going to be true is that the moment global oil demand starts to move higher along with a release of a Covid-19 vaccine, then oil prices are going to move higher as well because demand weakness is the biggest worry in the market right now.
Northern Ireland refuses SSE permission for wind farm
Northern Ireland’s infrastructure minister Nichola Mallon has refused planning permission for SSE Renewables’ planned wind farm at Doraville.
The proposed 33-turbine wind farm would have cost £150m, and would have been located in the Sperrins Area of Outstanding Natural Beauty.
Ms Mallon said:
I am a huge advocate for renewable energy that will create sustainable infrastructure for future generations. Green infrastructure represents a real opportunity for tackling the climate emergency and helping boost the economy but this should never be at the cost of the surrounding environment.
Post Office to axe 600 cash machines
The Post Office is to axe 600 free to use cash machines from its branches in a fresh blow to Britons who rely on cash to make everyday purchases.
My colleague Michael O’Dwyer reports:
There are 2,000 ATMs at Post Office branches but this will fall to 1,400 as the business prioritises cash points that it believes are commercially viable.
The cuts come against a backdrop of bank branch and cash point closures, making it more difficult for people who rely on cash to access it.
The rise of card, contactless and mobile payments, which has been accelerated by the pandemic, has made running many cash machines unprofitable.
However, cuts in the number of cash machines and bank branches are making it more difficult for people who rely on cash to access it, particularly elderly consumers or those without access to the banking system.
China sanctions US defence companies over Taiwan sales
China will sanction US defence giants Lockheed Martin, Boeing, Raytheon and other companies selling weapons to Taiwan.
My colleagues Sophia Yan and Alan Tovey report:
“China has pointed out many times [that] arms sales from the US to Taiwan seriously violate the ‘one China’ principle,” China’s foreign ministry said on Monday. Beijing also “strongly condemns” the practice.
As such, Beijing is taking “necessary measures to impose sanctions … to safeguard national sovereignty” against entities that have “acted maliciously” by selling arms to Taiwan, said a foreign ministry spokesman.
Beijing has not provided specific details on the nature of sanctions that it plans to impose and the specific impact on the US defence giants thus far remains unclear.
China has long considered Taiwan – a self-governed democratic island of 23m people with its own military, currency, passport and foreign policy – as a renegade province.
Debenhams bidders face deadline – Times
There are only a few days left for would-be bidders for Debehams to make a binding offer for the group, the Times reports.
Prospective buyers, which include Mike Ashley’s Frasers Group, have been told to make a binding commitment by the close of business on Wednesday, or walk away.
Advisers for Debenhams are turning up the heat on bidders, while they weigh alternative options for the ailing retailer. They could liquidate the chain or sell parts of the business to the group of hedge funds that owns its debts, led by Silver Point Capital.
The department store chain, Britain’s biggest, entered administration once again in April.
Aviva censured over rules breaches
The Financial Conduct Authority has officially censured Aviva over an announcement that the watchdog said “had the potential to mislead the market”.
The ruling relates to an announcement made by Aviva on March 8th 2018, which the FCA said:
…was reasonably capable of giving the impression that Aviva intended to take action to cancel at par value certain preference shares (which had been described at the time of issue in the early 1990s as “irredeemable”).
It said that at the time, the preference shares in question were trading above their par value, meaning Aviva’s statement caused concern among investors that they could incur losses on cancellation.
The FCA said Aviva had failed to properly consider its obligations, and said it “should have been obvious” that the announcement would be misleading. It concluded:
The FCA considers Aviva’s breach was serious but not intentional. The FCA also recognises that Aviva acted to clarify the announcement and provided a payment scheme for affected preference shareholders. Accordingly, it is appropriate to issue a public censure.
James Bond ‘not for sale’, claims MGM
The Hollywood studio behind James Bond held talks with Apple and Netflix about releasing No Time To Die directly to streaming following repeated delays in its release, reports have claimed.
My colleagues report:
Metro-Goldwyn-Mayer's latest installment in the spy franchise could fetch hundreds of millions of dollars in a sale to streaming platforms.
However, MGM declined to comment on any talks and said No Time To Die was “not for sale”.
“The film’s release has been postponed until April 2021 in order to preserve the theatrical experience for moviegoers,” a spokesman said.
Netflix and Apple declined to comment, while Amazon Studios said it was not in talks to acquire the film.
The MGM feature was originally due to be released in cinemas in April, but it was delayed until November after the pandemic forced their closure.
WPP names former Baidu president Zhang as non-executive director
Ad giant WPP has appointed Dr. Ya-Qin Zhang to its board as a non-executive director, with effect from the start of January.
Dr Zhang, who WPP called a “world-renowned technologist, scientist and entrepreneur”, was president of Baidu, the Chinese tech giant, from 2014 to 2019. before Baidu, he worked at Microsoft for sixteen years in the US and China.
WPP chair Roberto Quarta said:
Dr Zhang is one of the world's most celebrated technologists and business leaders. With his diverse career experience which includes leadership roles at both US and Chinese companies, and his particular understanding of the changing consumer technology landscape within China, he will make an extremely valuable contribution to the WPP board.
Here are some of the day’s top stories from the Telegraph Money team:
- Four surprise stock market winners you might not have noticed: Zoom and Ocado have been popular with investors but other success stories have slipped off the radar.
- Families waiting months for inheritance as probate backlog grows: Complicated estates require physical documents to be passed and checked over by individuals.
- Lockdown-induced car insurance savings wiped out as costs start to rise: The costs of renewing car insurance in September rose for the first time in months undoing a trend of cheaper premiums.
Ifo survey reaction: Germany’s recovery running out of steam
Andrew Kenningham from Capital Economics says today’s Ifo survey readings show Germany economic recovery is “running out of steam”. He noted that the improved view of current conditions could be pinned on Germany’s late, but still strong, recovery in manufacturing, adding:
Crucially, though, the fall in the expectations component of the Ifo adds to the growing evidence that the second wave of Covid-19 will hit demand for German exports from the rest of Europe and dampen demand for services in Germany itself.
Later this week we expect to learn that GDP increased by a chunky 7.5pc or so in Q3. The increase in Q4 will be much smaller and growth could grind to a halt in Q1 next year.
As a reminder, last week’s purchasing managers’ index surveys showed increasing divergence across the eurozone, with services slowing down despite manufacturing expansion.
Carsten Brzeski from ING concurred that the drop shows Germany finally doing much of the rest of Europe in facing a fresh downturn. He said:
Looking ahead, as painful as the ‘smart’ lockdowns are for the already hard-hit sectors, the impact on the total economy will be much less accentuated than at the start of the crisis. However, with even more social distancing restrictions on the horizon, there is a significant risk that ‘smart’ lockdowns across Europe turn into more severe ones, which in turn would bring the third quarter rebound to an abrupt halt in the last few months of the year.
At face value, today’s Ifo index is not weak enough to fear another collapse of the economy but as all of Europe is in the second wave of the virus, today’s Ifo index definitely marks the end of the rebound and the start of double-dip fears.
Hut Group shares jump on soaring sales
Online retailer the Hut Group raised its sales guidance by a third after reporting a robust performance in its lifestyle and beauty divisions in the third quarter.
My colleague Simon Foy reports:
In its first update as a public company, the Manchester-based company said it expected annual revenues to be between £1.48bn and £1.52bn, up from its previous estimate of £1.43bn.
It came after the online health and beauty retailer said third quarter sales soared by 38.6pc to £378.1m compared with the same period last year.
The solid performance was driven by its lifestyle and beauty sections, which grew by 80pc and 45pc respectively during the period.
- Read more: Hut Group shares surge as sales soar
German business confidence falls
Overall German business confidence has slipped this month, according to the latest surveys by the Ifo Research Institute. The fall was driven by a drop in future expectations as restrictions ramp up, with economists’ assessment of current conditions actually rising slightly.
Coca-Cola European Partners makes bid for Australian peer
British-based bottling giant Coca Cola European Partners (CCEP) has made a A$9.2bn (£5bn) offer for its Australian counterpart in what would be the biggest deal in Australia this year.
My colleague Michael Cogley reports:
Reports emerged of a potential bid over the weekend before CCEP confirmed it had made a bid for Coca Cola Amatil.
The company operates in six Asia-Pacific countries including Australia, New Zealand, Indonesia, Papua New Guinea, Fiji and Samoa.
Late Sunday night CCEP said the deal would help it create a “broader and more balanced footprint”.
The world’s largest independent bottler of Coca-Cola is offering about A$12.75 a share - a premium of 18.6pc on Friday's closing price.
Hedgie Hohn hits out over climate failures
One of Britain’s top hedge fund chiefs has hit out at the world’s biggest money managers over their record on climate change, accusing them of a “total greenwash”.
My colleague Michael O’Dwyer reports:
Sir Chris Hohn, who runs TCI Fund Management, wrote to asset managers urging them to pressure firms into setting out how they can speed up the shift to a low-carbon world.
In letters sent through his charity The Children’s Investment Fund Foundation, he said big asset managers were taking “insufficient and ineffective action” on global warming, The Financial Times reported. He said BlackRock, Vanguard, Fidelity Investments, Goldman Sachs and State Street all had appalling voting records on climate resolutions.
Vanguard said it “cares deeply about the long-term impact of climate change”. BlackRock, whose boss Larry Fink announced a big push into sustainable investing this year, said climate change was an “investment risk”.
Unite Group grabs Future’s Huntingford as new chair
Student accommodation developer Unite Group has named Richard Huntingford as its next chairman, with incumbent Phil White set to retire at the end of March.
Mr Huntingford, currently chair at publisher Future, with take up the role at the start of April next year.
Unite chief executive Richard Smith said:
On behalf of the board, I would like to thank Phil White for his leadership over many years and his contribution to the growth of Unite and making Unite the business it is today.
Great people are at the heart of any business and Phil led this from the top. On a personal note, I would like to thank Phil for his support and guidance.
I look forward to working with Richard as we look to the future with confidence and embrace the exciting opportunities ahead.
Lira weakens past eight per dollar
Turkey’s lira has weakened beyond eight per dollar for the first time ever, amid escalating tensions between the country and France.
As my colleague David Chazan reported yesterday:
France has recalled its ambassador from Turkey “for consultations” after Recep Tayyip Erdogan, the Turkish president, suggested that his French counterpart, Emmanuel Macron, needed a mental health examination.
Mr Erdogan’s outburst came after Mr Macron declared “war” on political Islam in France following the beheading of a teacher who showed his class cartoons of the Prophet Muhammad.
Calls for boycotts of French goods are growing in the Muslim world since Mr Macron vowed “not to give up caricatures and cartoons” last week. Even before Samuel Paty’s murder, Mr Macron had triggered a backlash by describing Islam as "a religion that is in crisis all over the world” and pledging to combat “Islamist separatism”.
Agenda: Europe set to slide
Good morning. European stocks are set to slide as tighter virus-induced restrictions come into force across the continent.
Italy introduced its toughest restrictions since May, including a 6pm curfew on bars and restaurants and forcing gyms to close, while Spain imposed an 11pm nationwide curfew.
5 things to start your day
1) Government struck £119m Covid advertising deal weeks before first lockdown: The Cabinet Office signed the lucrative contract with London-based OMD Group as the Government began to gear up its response to the crisis.
2) UK-US trade deal cannot happen if Brexit talks fail, ex-official says: Any trade deal with the US is likely to depend heavily on Britain striking an exit agreement with the EU, according to Barbara Weisel, a former US assistant trade representative.
3) Rolls-Royce promises production overhaul to secure £2bn lifeline: Shareholders are pushing to see the engineer turned from an “empire into a proper business”.
4) Building 22 Bishopsgate isn’t a mistake, says Axa real estate boss: Despite it being a traumatic time for offices, Isabelle Scemama insisits that having a brand new 62-floor skyscraper will be an asset despite the pandemic.
5) Starling founder Anne Boden reveals rift with Monzo chief Tom Blomfield in new book: Excerpts from the veteran banker's memoirs paint a picture of her former associate as being naive and immature.
What happened overnight
Asian shares were little changed in muted trading on Monday amid widespread uncertainty over what the US presidential election will portend for markets and economic policy.
Investors remain worried over surging cases and deaths related to Covid-19, especially in parts of the US and Europe, and the implications for trade, tourism and economic activity.
Japan's benchmark Nikkei 225 lost 2 points to to 23,514.41, while South Korea's Kospi lost 0.4pc to 2,352.37. Australia's S&P/ASX gained 0.1pc to 6,173.20. The Shanghai Composite index declined 0.7pc to 3,254.54. Markets in Hong Kong, India and Malaysia were closed for holidays.
Coming up today
No FTSE 350 companies are reporting today.