Markets climb as America goes to the polls

Voters
Voters cast their ballots at a polling station in Virginia Credit: ANDREW CABALLERO-REYNOLDS/AFP via Getty Images

Wrap-up

Time to wrap up! The blog will return at midnight as we cover the latest market developments in response to the US election result. These were some of the day’s top stories:

Thanks for following along today!

Wirecard short-seller: I’m betting against dud Covid vaccine companies

An investor who bet against Wirecard before it collapsed in an accounting scandal has turned his focus to pharmaceutical companies that he claims are developing “dud” Covid vaccines

My colleague Michael O’Dwyer reports:

Barry Norris, chief executive of Argonaut Capital, said his firm has taken short positions against several companies that he believes are overvalued because many investors have not realised that a Covid vaccine will not provide a silver bullet against the pandemic. 

The fund manager claimed there were many “witless investors that have been drawn to these stocks like a moth to a flame”.  

He said: “I don't think anyone's ever asked Matt Hancock, what are his expectations of what a vaccine might do. And if it doesn't stop human to human transmission, are we not going to still be locked down?”

Market moves

Wall Street shares have zipped higher since the open, and the S&P 500 is now up more than 2pc – putting it in line with strong gains in Europe. 

UK strikes post-Brexit trade deal with Kenya

Kenyan coffee can keep being exported to the UK tariff- and quota-free as Britain has agreed its sixth post-Brexit trade deal in Africa.

My colleague Lizzy Burden reports:

The agreement with Nairobi adds to the list of trade deals the Government has signed or agreed in principle with 52 countries over the past two years.

The Department for International Trade said the agreement, thrashed out in three months and due to be signed before the end of the year, was “a translation of the terms previously agreed between the EU and the East African Community” (EAC), which also includes Uganda, Rwanda, Tanzania, Burundi and South Sudan.

There had been concerns among businesses that Brexit could jeopardise trade ties between the two nations, closing off an important source of hard currency, investments and jobs.

Betty Maina, the Kenyan trade minister, said: “There is certainty at the beginning of January 2021.”

Kenya’s top exports to the UK include coffee, tea, spices, vegetables and flowers. British exporters sold £815m in goods and services to Kenya last year, 0.1pc of the UK’s total exports.

US industrial orders rise

New factory orders in the US rose slightly last month, slightly beating economists’ expectations with a 1.1pc increase in value. A recovery in orders has lost steam somewhat in recent months, and is moving past what could be called a ‘V-shaped’ recovery.

Dagenham industrial estate set for Hollywood makeover

A Hollywood property giant has jumpstarted plans to transform a rundown industrial estate into London’s biggest film and television studio complex. 

My colleague Ben Woods reports:

Hackman Capital Partners will pump £300m over three years into a project in Dagenham, east London, marking another boon for Britain’s burgeoning studio sector. 

Barking and Dagenham Council has signed a deal with HCP to create the Eastbrook Studios, the capital’s largest film and TV facility with 12 sound stages spanning 500,000 sq ft.

It is a major boost for the project after it was thrown into disarray last year when backers Pacfica Ventures withdrew investment over Brexit concerns. 

Wall Street opens in the green as voters head to the polls 

US stocks opened firmly in the green as millions of Americans head to vote. 

Credit: Bloomberg 

Ant Group says Hong Kong listing also suspended

Following the suspension of its Shanghai listing (see 1:34pm post), Ant Group says its proposed listing on the Hong Kong stock exchange has also been suspended. Trouble seems to be brewing in Jack Ma’s empire…

Pound climbs against dollar

The pound has gradually built gains against the dollar today, as part of a general weakening for the US currency. The dollar’s mild sell-off reflects a global increase in risk appetite.

Ant Group’s Shanghai listing suspended

The world’s biggest ever initial public offering has been dealt a huge blow after Shanghai's stock exchange suspended plans for the $35bn float of Ant Group.

My colleagues James Cook and Matthew Field report:

The Shanghai stock exchange will suspend the listing amid changes in the regulatory environment, it said in a statement Tuesday.

It claimed Ant had failed to meet disclosure thresholds ahead of the listing, without providing further details.

The debut was expected for Thursday, the same day as the Hong Kong portion.

The shock move comes after China’s regulators warned that Jack Ma’s firm faces increased scrutiny and will be subject to the same restrictions on capital and leverage as banks.

Supercar sales rev up Ferrari revenues

Cars such as the €1.6m SP1 boosted Ferrari's average selling price Credit: Chesnot/Getty Images

 

Ferrari has raced ahead of market expectations with third-quarter results showing profit margins and core sales rising.

My colleague Alan Tovey reports:

The number of cars the Italian company sold in the three months to the end of September dipped 7pc to 2,313, with revenues down 3pc at €888m (£800m).

However, Ferrari sold more top-of-the-range models such as the Monza SP1 and SP2 costing €1.6m, taking the average price to €314,000 - a tenth higher than the level a year ago.

Cost savings also kicked in, helping lift net profit by 1pc to €171m.

Ferrari was hit hard by the pandemic, halting production as coronavirus raged through Italy causing it to miss out on production of about 2,000 cars.

Full report: Xi says Chinese economy can double in size by 2035

My colleague Lizzy Burden has a full report on Xi Jinping’s claims that the Chinese economy could double in size over the next decade and a half:

State documents circulated after a party conference in Beijing last week revealed plans to achieve “modern socialism” in 15 years. 

The party said on Tuesday that this would happen through market-based reforms in the energy, railway and telecommunications sectors; encouraging mergers by companies in strategic emerging industries; research and development into China's own digital currency; the internationalisation of the yuan and safeguarding Chinese companies' legal interests overseas.

Crest Nicholson shares pop on positive guidance

File photo of a Crest Nicholson building site Credit: Chris Ratcliffe/Bloomberg

Crest Nicholson’s shares made a record jump this morning after the housebuilder said full-year adjusted profit would be “significantly ahead” of expectations, landing at the top of its guidance.

The FTSE 250 group said its trading had been “robust” over recent months, and slightly ahead of pre-lockdown levels.

It anticipates adjusted profit before tax to come in “at the upper end of the previously guided range of £35m–£45m”.

As of the end of October, its forward sales stood at 2,289 unit and £480.5 in gorsso development value, versus 2,013 units and £378m GDV for the same period last year.

The company’s board expects to reinstate a dividend at its interim 2021 results.

Chief executive Peter Truscott said:

For Crest Nicholson, in the early stages of implementing an updated strategy, the arrival of Covid-19 could not have come at a worse time. We saw a significant impact to earnings in our first half and had to adapt our strategy quickly to reflect a more challenging economic and market outlook…The introduction of another national lockdown will undoubtedly bring fresh challenges, but we welcome the Government's support to maintain construction activity and for the housing market to remain open for business.

Jefferies’ Glynis Johnson said the update was reassuring, but added the risk/reward balance offered by the group “will likely remain too heady for many” given uncertainties including Covid-19 and Brexit.

JP Morgan to send London workers home – Bloomberg

JP Morgan has joined rivals including Goldman Sachs and Deutsche Bank in asking most of its London-based employees to stay home rather than come into the office.

Bloomberg reports:

The Wall Street bank told staff in a memo Tuesday that most workers will be required to work from home from Thursday until further notice after government advice at the weekend.

The new measures mean that about 5pc of workers will be in the office, including around 20pc of its traders. The bank had as many as 30pc of staff return to its London offices in recent months, although most recently that was around a fifth.

Australian central bank cuts rates and injects $100bn in asset purchases

Australia’s central bank slashed rates and pumped A$100bn (£53bn) into its economy on Tuesday to fight the Covid-19 slump amid rising trade tensions with China.

My colleague Russell Lynch reports:

The Reserve Bank of Australia cut rates to a record low of 0.1pc and ramped up bond-buying plans as the nation struggles in its first recession for 30 years.

It has also pledged to keep interest rates on hold for at least three years to support the recovery of the A$2 trillion economy.

Philip Lowe, the Reserve Bank  governor, edged up growth forecasts but warned that “we need to recognise that the pandemic has inflicted significant damage on our economy”.

Unemployment has jumped from 5pc to 6.9pc since the pandemic erupted and the Reserve Bank predicts the jobless rate will still be as high as 6pc by the end of 2022. The economy contracted by 7pc in the three months to June.

China’s Xi says its economy could double in size by 2035

Xi Jinping during an event last month Credit: Zhang Ling/Xinhua via AP

Chinese President Xi Jinping has said the country’s economy can double in size by 2035, as part of new economic plans outlined by the ruling Communist Party.

In a speech to the party’s central committee, details of which were reported by state media Xinhua, Mr Xi said:

It is entirely possible to reach the high-income country status by current standards by the end of the 14th Five-Year Plan, and to double the total economic output or per capita income by 2035.

He reportedly cired instability and uncertainty in the global economy as potential risks to China’s domestic economy, adding that Covid-19 has had far-reaching impacts.

Amigo expects complaints bill to top £150m

The cost to Amigo Loans of dealing with complaints is expected to rise to £150m as the high interest lender struggles to deal with a growing number of customer grievances. 

My colleague Michael O’Dwyer reports:

Amigo also said that it did not expect to restart lending until 2021 citing “continued uncertainty”. 

The cost of dealing with a surge in customer grievances dragged Amigo to a £38m loss for the 12 months to March. It revealed on Tuesday that the cost of handling complaints is expected to reach £150m, up from the £116m provision it had previously announced. 

The firm admitted that complaints had remained at a high level for longer than it expected and said it had seen an increase in claims made through claims management companies.

Ryanair and Wizz Air sees heavy October hit from pandemic

Airlines Ryanair and Wizz Air have both released passenger figures for Octobver today. As might be expected, both figures are pretty grim:

  • Ryanair said traffic was down 70pc last month to 4.1m passengers, versus 13.8m for the same time last year. So far this year, its traffic is down 53pc.
  • Wizz Air said its passenger numbers were down 69.1pc in October to 1.1m, and down 43.3pc so far this year.

Market moves

European market are only growing stronger today, extending their gains as a rebound from last week’s losses continues strongly.

Given the US election is the major question mark hanging over markets, it’s tough to read too much into the move. The most simple answer is that polling points to a solid Joe Biden victory, and investors are taking comfort in that – but given 2016’s shock result, and the unique pressures surrounding this year’s vote, it seems hard to believe there’s a single-factor impetus for the rally.

Twitter’s Dorsey keeps job after leadership review

A recent photo of Jack Dorsey Credit: Greg Nash/The Hill/Bloomberg

Twitter’s chief executive Jack Dorsey has survived a review of his leadership from the company’s own board members after questions about his leadership from activist investors.

My colleague James Titcomb reports:

A committee of Twitter directors has “confidence in management and recommended that the current structure remain in place”, the company said on Monday night.

The announcement, which follows a months-long review of Twitter’s leadership, is effectively a statement of confidence in Mr Dorsey, who co-founded Twitter in 2006. 

The review was launched as part of an agreement between Twitter and the prominent activist investor Elliott Management, which had raised questions over Mr Dorsey’s part-time role in charge of the company.  Mr Dorsey also runs financial technology company Square, and before this year’s pandemic, had expressed a desire to spend much of this year in Africa.

Coats shares jump after update

Shares in sewing supplies manufacturer Coats have jumped this morning after it predicted profit ahead of market expectations.

The FTSE 250 group said its operating profit would be in the range of $100m to $110m, as a result of an “improving trading performance”. It said the outlook for the rest of 2020 looks “encouraging”, but noted uncertainties related to the virus.

The group’s reported sales we down 11pc year-on-year between July and October, compared to 24pc down in the first half.

Coats’ board said it would keep future dividends under review.

Citi analyst Charles Mortimer said the update point to improved trends, noting that even the midpoint of Coats’ guidance presented a 18pc upside to underlying profit forecasts. He added:

However, given the current uncertainties around 2021 we wouldn’t expect material changes to consensus at this stage

Money round-up

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

G4S confirms it rejected Allied Universal offer

Following that Bloomberg report (see 8:43am update), G4S has confirmed that it rejected a takeover bid from Allied Universal, a US-based security group.

In a statement, the London-listed company said it had been unable to reach an agreement with Allied through which it could supply “commercially de-sensitised information” relevant to a potential takeover bid. It added:

G4S confirms that on Wednesday 28 October, 2020, the Board received a highly conditional indicative offer from Allied, subject to substantial due diligence requirements, at a price of “at least 210p per share”…

The board carefully considered this proposal with appropriate advice from the company’s financial and legal advisers and rejected it on the basis that the highly conditional offer, at 210p per share, significantly undervalues G4S and its prospects.

Premier Oil shares jump as creditors back Chrysaor merger

Shares in Premier Oil have jumped as much as 14pc this morning, after the North Sea-focused explorer’s creditors backed plans for a merger with rival Chrysaor.

Under a binding support letter, Premier’s creditors have “irrevocably undertaken to vote in favour of the court-approved restructuring plans”, the group said. The transaction is now expected to take place by the end of the first quarter of 2021.

As my colleagues Ed Clowes and Jon Yeomans reported last month, the deal end 86 years of independence for premier and creates one of the largest fossil producers in the North Sea:

Under the terms of the merger, its $2.7bn (£2bn) debts will be cancelled and a cash payment of $1.2bn will be made to Premier’s creditors. Some Premier creditors will also swap debt for shares.

Premier stakeholders including existing shareholders will hold 23pc of the combined group, with Chrysaor shareholders owning the rest. Chrysaor’s largest investor, Harbour, is expected to have a 39pc stake.

Premier’s shareholders have yet to vote on the the deal.

G4S turns away second suitor – Bloomberg

Security outsourcer G4S has turned away a second suitor in recent days, even as it fights a hostile takeover bid from a Canadian rival, Bloomberg reports, citing sources.

The news service says:

Allied Universal proposed a potential bid price as it sought to gain access to G4S’s books and continue talks, said the people, who asked not to be identified because the information is private. G4S last week rejected the proposal as too low and didn’t engage, the people said…

The move marks the second suitor to be turned away by the British firm, which is publicly fighting a hostile bid from Canada’s GardaWorld. G4S Chief Executive Officer Ashley Almanza said in an interview last week that the company hasn’t seen any mergers that make sense and will push ahead with a turnaround plan.

DS Smith sees ‘significant improvement’ in trading

Packaging group DS Smith says it has seen a “significant improvement” in trading during the second quarter of its financial year.

The FTSE 100 company said its guidance remains unchanged in a update cover the half year to the end of October.

Corrugated box volumes grew on both sides of the Atlantic during the second quarter, the group said, and it expects overall volumes to be down 1.5pc compared to the year before.

It added:

We remain highly focused on costs and margin, together with robust cash generation, as we continue to see the anticipated year on year modest price deflation in box pricing. We note that the Q2 increases in packaging demand are  being reflected in upward pressure on paper pricing in Europe and the US, providing  a support for corrugated box pricing.

DS Smith said it intends to declare a dividend for the first half period, as previously announced, despite expecting profit lower than in 2019.

Chief executive Miles Roberts said:

I am pleased with the performance of the group in the first half of the year, in what remains a difficult and uncertain economic environment caused by Covid.

Goodbody David O’Brien said he remains “cautious on the outlook for the sector”, questioning whether “robust demand can continue into the new year alongside the ramp up of new capacity”.

FTSE pops higher at open

European markets have opened solidly higher, with the FTSE 100 leading risers after lagging slightly during yesterday’s rally.

Credit: Bloomberg TV

Associated British Foods beats profit expectations despite Primark hit

People pass a Primark in London Credit: ANDY RAIN/EPA-EFE/Shutterstock

Associated British Foods, owner of Primark, beat expectations for full-year operating profit despite the discount clothing retailer’s closures hitting its bottom line.

It operating profit for the year to the 12th September was £1.024bn, down 31pc but ahead of the highest analyst estimate. Revenues fell short of estimates at £13.94b, down 12pc, while its statutory profit before tax dropped 40pc to £686m.

Across its operations, operating profit rose in all divisions except retail (i.e. Primark), which dropped about 60pc, with the biggest contribution coming from its grocery segment as Primark sales withered.

ABF warned it anticipates a sales decline over the first half of its new financial year, but that higher sales would follow in the second half given the favourable comparison with this year.

It did not declare a full year dividend, saying it would wait to “monitor the impact of further Covid-19 restrictions on Primark during this important trading season”.

Yesterday, it warned it would take a £375m hit due to the enforced closures of its stores in the UK and in other parts of Europe. 

The FTSE 100 group said trading had been strong since reopening, highlighting the importance of the run-up to Christmas for sales. On Brexit, it said its businesses have “completed all practical preparations” for the UK’s looming exit from the transition period.

Chief executive George Weston said:

Following a three-month closure, Primark delivered a robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores. Uncertainty about temporary store closures in the short-term remains, but sales since reopening to the year end of £2bn demonstrate the relevance and appeal of our value-for-money offering.

Jefferies’ James Grzinic said the results were “slightly ahead of expectations”, saying adding that the group should once again see sales boom when it can reopen:

There is little reason to doubt that the second unlock won't be as successful as the first.

IWG says pandemic hit has been worse than feared

IWG, formerly Regus, provides co-working spaces Credit: Joe Amon/The Denver Post via Getty Images

Office landlord IWG warned that the impact of the pandemic had been worse than feared as its shut 66 of its buildings during the third quarter. 

My colleague Simon Foy reports:

The FTSE 250 company, previously known as Regus, posted a 14.3pc drop in revenues to £583m for the three months to September and said it could take a £100m hit this year from offering relief to its tenants, including rent deferrals.

“The impact of the pandemic has been greater than we imagined, and we remain in the eye of this global crisis,” the company said.

Trading picked up between July and September when the UK economy was beginning to reopen, but the second wave of the virus has made market conditions “very challenging”, it said.

The company closed 66 locations during the period and it expects to shut more office buildings as a result of the pandemic. 

Agenda: America goes to the polls

Good morning. The FTSE 100 is set to open in green, following its European counterparts higher, as Americans prepare to head to the polls. 

Investors are bracing for volatility as the final result may be delayed due to the slower counting of postal votes.

5 things to start your day 

1) Second lockdown to wipe 12pc off GDP in NovemberThousands of businesses are braced for a "truly devastating" blow from a second lockdown amid fears the economy will collapse 12pc this month.

2) How FB and Twitter could break the web to stop election chaos: Alongside other firms like Twitter, Facebook is scrambling to shut down incitement and disinformation and alter its fundamental building blocks.

3) The $10bn gamble that Boeing can’t afford not to take: In the midst of a disastrous downturn in air travel driven by coronavirus, Boeing is pumping billions into a new aircraft to compete with Airbus.

4) ‘Ryanair of long-haul travel’ wins taxpayer Covid fund: Ex-Lehman Brothers trader has been given over £1m of taxpayer cash to set up a new airline, despite established carriers being refused bailout.

5) Alibaba to invest $300m in online retailer Farfetch: China's Alibaba is close to a $300m (£232m) investment in British online retailer Farfetch, as it continues its push into the Asian market.

What happened overnight 

Asian stock markets followed Wall Street higher on Tuesday as investors watched for US election results, hoping a win by challenger Joe Biden in the presidential race might lead to more economic stimulus.

Benchmarks in Shanghai, Hong Kong, Seoul and Sydney advanced. Japanese markets were closed for a holiday.

The Shanghai Composite Index rose 1.1pc to 3,271.71 and the Hang Seng in Hong Kong added 2pc to 24,956.10.

The Kospi in Seoul gained 1.7pc to 2,339.29.

In Sydney, the S&P-ASX 200 rose 2.3pc to 6,087.80 after the Reserve Bank of Australia cut its key interest rate by 0.15 percentage point to a record low 0.1pc.

India's Sensex opened up 0.9pc at 40,131.45. New Zealand and Southeast Asian markets advanced.

Coming up today

Corporate: AB Foods (Interim results); DS Smith, IWG, Senior, Weir (Trading statements)

Economics: Election, factory orders (US)​