Wall Street mixed as Biden nears victory

Joe Biden

Wrapping up

As the US heads into a Friday afternoon of trading to conclude what has been an eventful and surprisingly positive week for global markets, we are heading off. 

Here are some of our top stories today:

Thank you for joining! Have a great weekend, and see you on Monday.

US stocks edging higher

US stocks are mixed, but mostly edging higher in afternoon trading, over better than expected jobs data and Congress rekindling stimulus optimism.

Here's how it stands:

  • S&P 500: up 0.02pc to 3,511.29
  • Dow Jones: up 0.11pc to 11,903.53
  • Nasdaq: down 0.2pc to 28,321.82

Codemasters hits highest ever share price

British video game developer Codemasters' shares have rocketed, after it announced a takeover offer from American video game holding company Take-Two Interactive.

Take-Two offered to buy all of Codemasters at a price of 485p per share, made up of 120p in cash and 365p in the American firm’s shares. Codemasters’ board is recommending unanimously its shareholders accept the offer. 

The offer would value the company at £739.2m.

Codemasters - known for its Formula One games for the Playstation 4 - shot up 8pc to hit its highest share price since listing in June 2018, of 470p. 

Europe ends mixed

London's FTSE 100 has had its best week since June, closing up just over 6pc to 5910.02 after rising for 5-straight sessions, predominantly on the back of a nearing Biden victory. The rally cooled slightly on Friday, with gains of 0.07pc in one-day trading.

Elsewhere in Europe markets lost their steam. France's CAC fell 0.5pc and Germany's DAX lost 0.7pc.

Goldman to shift £46bn in assets to Germany

Goldman Sachs plans to shift up to $60bn (£46bn) worth of assets out of the UK and into Germany due to Brexit, as the latest banking giant to make such a move. 

My colleague Lucy Burton reports:

With less than two months to go before the transition period ends, big banks are ramping up their plans to move assets out of the UK and onto the continent.

After Dec 31 the City will be stripped of its EU passporting rights, which  give full access to EU markets

Goldman, which has previously warned that a “difficult” Brexit would negatively affect its investment plans in the UK, will shift between $40bn to $60bn into its subsidiary in Frankfurt, sources said.

Read more:  Goldman Sachs to move $60bn in assets from UK to Germany

Brexit update

Boris Johnson will hold a call with Ursula von der Leyen, the president of the European Commission, on Saturday as they seek a Brexit trade agreement.

It was announced on Twitter by Eric Mamer, von der Leyen's spokesman:

The call comes before a week of talks in London to try to break the deadlock. This week, after 14 straight days of negotiations, the two sides gave a downbeat assessment on the state of talks, both blaming each other for the lack of progress.

Key issues are:

  • A 'level playing field' for business
  • Access to British fishing waters
  • How any potential deal is enforced

Edinburgh Woollen Mill collapsing

Games Workshop profit upgrade

Games Workshop said trading is ahead of previous expectations since a last update in September. It now estimates pre-tax profit to be at least £80m, compared to £58.6m in 2019: a 36.5pc boost.

Business has been driven by "a healthy growth in our online and trade channels," it said. "Our retail channel is still recovering from the Covid-19 closures both currently (170 stores) as well as earlier in 2020".

Shares shot up around 6pc.

GBP on track for weekly gains vs USD 

The pound looks on track for a weekly gain against the US dollar. It is up almost 1.5pc this week against the broadly weaker dollar, though it fell slightly on Friday to trade around $1.31.

Currencies, considered riskier, have strengthened as Joe Biden pulls ahead in the race to the White House. 

Sterling did lose slight ground against the euro, edging down roughly 0.2pc this week, as concerns over the outcome of Brexit negotiations continued.

Sterling lost ground elsewhere against the euro - one of the big gainers this week - falling around 0.5% on the day.

Toyota takes a swipe at Tesla

 Toyota’s boss Akio Toyoda, has predicted Elon Musk’s electric car company will lose out to established motor manufacturers as they catch up in battery vehicles.

“Tesla says that their recipe will be the standard in the future, but what Toyota has is a real kitchen and a real chef,” said Mr Toyoda in a reference to Tesla’s hopes its technologies will become widely adopted.

"When it comes to products, we have a full menu that will be chosen by customers.”

Biden leads Pennsylvania, Trump takes to Twitter

Joe Biden now leads by 6,737 votes in the crucial state of Pennsylvania. If Mr Biden wins, he will have the 270 electoral votes needed for the presidency. 

In reaction, Mr Trump took to Twitter for the first time in 8 hours, talking about the state's largest city:

 Despite accusations, there is no evidence of widespread fraud in the 2020 Presidential Election. 

Bitcoin highest since 2018

Bitcoin continued to storm ahead overnight, hitting just short of $16,000. This was the highest price, and first time above $15,500 since 2018. The rally faltered slightly on Friday - coming in at around $15,500 by 3:20pm UK time - though its still on track for huge weekly gains of around 12pc.

It is joining a slew of assets that have extended gains this week. For some, it is adding to the perception that the world's biggest digital token is getting more mainstream credibility.

Trump campaign: it's not over yet

Donald Trump's campaign has released a statement after Joe Biden's took the lead in Pennsylvania, saying the race to the White House "is not over". 

 Meanwhile, CNN is reporting 'national defence airspace' has been cleared above Biden's home and his secret service detail is being expanded.

US opens flat, then slips

US markets cut this week's rally short, opening flat before all slipping into negative. Democratic candidate Joe Biden took the lead in the key states of Pennsylvania and Georgia, putting him on the verge of winning the White House.

At open:

  • Benchmark S&P500: down 0.06pc to 3,508.34.
  • Tech-heavy Nasdaq Composite: down 0.18pc to 11,869.90.
  • Dow Jones: up 0.03pc to 28,399.13

Around 15 minutes into morning trading:

  • S&P500: down 0.5pc to 3,493.16.
  • Nasdaq: down 1pc to 11,775.76.
  • Dow Jones: down 0.4pc to 28,270.62

Rolls-Royce strikes

Staff of engine maker Rolls-Royce staff began their three-week strike (planned until November 27) today at a factory in Lancashire, over possible relocation of operations to Singapore.

Some 350 of 550 roles at the facility are at risk if the engine maker moves activities to Asia. Britian's biggest trade union slammed the plan and defended the strike.

"The workers... are fighting to preserve the long-term viability of the site, following the decision by Rolls-Royce to offshore the production of the manufacture of its Trent jet engine blades to a factory in Singapore," Unite said in a statement. 
"Unite believes that this would make the factory... potentially unviable. The proposed loss of jobs, let alone the total closure of the site, would have a devastating effect on Barnoldswick, where the company remains the principal employer."

My colleague Alan Tovey wrote about it last week:  Rolls-Royce faces strikes over sending work to Singapore

Handover

Time for a hot switch to my colleague Louise Moon, who will bring you the latest developments on the market reaction to the election results.

Latest vote counts

Biden takes lead in Pennsylvania

A huge moment: Joe Biden just flipped blue, with Joe Biden taking a lead as a slew of votes came in from major city Philadelphia.

Election results group Decision Desk is not projecting that the Democratic candidate has won the election.

It might be too early to say, but importantly if Donald Trump loses Pennsylvania he cannot win the Electoral College.

Stocks pare losses after strong jobs report

That expectation-beating jobs report has given European stocks a boost, lifting the pan-continental benchmark Stoxx 600 down just 0.2pc. It has dropped more than 1pc today.

Unemployment drops

That fall in unemployment, from 7.9pc to 6.9pc, means it is back at levels last seen in late 2013.

Payrolls back at 2015 levels

After October’s gains, total non-farm payrolls are back at levels last seen in 2015. Given the slowing pace, it looks like it could be a long time but America’s labour market fully heals – a sign of the major challenges facing America’s next president. 

US added 638k jobs last month

The US added an expectations-beating 638,000 jobs last month in a strong jobs report, but one which left total payrolls still some 10m below pre-pandemic levels. The unemployment rate fell to 6.9pc, dropping a whole percentage point in a single month. 

NMC administrators move to sue EY

Auditors at EY are facing legal action by administrators following a major accounting scandal at NMC Health.

My colleague Michael O’Dwyer reports:

In a bid to recover funds for the FTSE 100 company's out-of-pocket creditors, administrators at Alvarez & Marsal (A&M) said they have begun the process of making a legal claim against the Big Four firm by issuing a “preliminary notice of potential claim”. 

EY is reported to have raised red flags about shortcomings in NMC’s accounts last year but has faced questions over its independence because the former head of its operations in the UAE, Abdulrahman Basaddiq, served as a non-executive director at NMC until February. 

A preliminary notice is the first step in the litigation process. A decision by the administrators to press ahead and issue proceedings would be a fresh blow to EY, which is reeling from the collapse of another major audit client – German payments firm Wirecard. 

Coming up: US non-farm payrolls

The latest data on the US labour market is coming up at half past. Economists are expecting a 580,000 increase in non-farm payrolls, the key gauge of overall employment. Unemployment is expected to fall to 7.6pc from September’s 7.9pc.

Allan Leighton appointed chair of Pizza Express

Former Asda boss Allan Leighton Credit: Marina Imperi

Former Asda boss Allan Leighton has been appointed chairman of struggling restaurant chain Pizza Express after it secured a deal to reduce its debt pile by £400m. 

My colleague Hannah Uttley reports:

The 67-year-old, who is also chairman of the Co-operative Group, will work alongside former Wagamama boss David Campbell, who has been made chief executive of Pizza Express. 

The appointments came after Pizza Express secured a restructuring deal that will reduce its total debt from £735m to £319m, and includes the immediate injection of £40m of new capital. In addition, the chain has a further £90m of funds available from its bondholders, which took control of the business.

Zoe Bowley, managing director of Pizza Express’s UK and Ireland business, will join the group’s board alongside chief financial officer Andy Pellington. 

Mr Leighton, who made his name as boss of Asda in the 1990s, said: “This is a unique opportunity in casual dining. With a significant recapitalisation of the company, and substantial further funds committed, we look to building on our position as a leader in the casual dining market, once Covid restrictions are eased.”

James Fisher shares plunge after poor third quarter

Shares in James Fisher have dropped sharply after the engineering group warned the City of a weak third-quarter performance.

The FTSE 250 company warned trading in the three months to the end of September had “continued to be challenging”, with the “seasonal uplift” it had expected failing to materialise.

Revenues for the period were 17pc lower than for the same period in 2019, they company said. It added:

Swift actions taken to reduce costs and to improve liquidity, position James Fisher for an improvement in market conditions and the Group remains well placed to deliver future growth for its shareholders.

Jefferies’ Andy Douglas said the company’s longer-term trajectory looked strong, saying the near-term issues it faces should be “temporary in nature”.

Full report: Contraction fears building as German industrial recovery loses steam

My colleague Russell Lynch has a full report on this morning’s German factory data. He writes:

Economists warned that its industrial sector represented Germany’s “only hope” of avoiding a renewed slump following the nation’s move into a month-long partial lockdown this week with bars, restaurants, gyms, cinemas and theatres all closed.

Although bright spots included a 10pc rise in car production – Germany’s biggest manufacturing sector – during September, the overall rise was well below the 2.7pc forecast.

Co-op Bank narrows losses

The troubled Co-operative Bank narrowed its losses in the third quarter despite the coronavirus pandemic, but is still £68.1m into the red. 

My colleague Lucy Burton reports:

The bank said on Friday that the losses for the year to September were as expected and better than the same period a year ago, when losses hit £118.6m. 

Last month it made finance chief Nick Slape its new boss after chief executive Andrew Bester’s sudden resignation weeks earlier. Mr Slape, who like Mr Bester joined from Lloyds Banking Group in 2018, is the bank’s sixth chief executive in less than a decade. 

The Manchester-based bank, which has problems going back to its ill-fated 2009 merger with the Britannia Building Society, has been in recovery mode since 2013 when staff found a £1.5bn hole in its balance sheet. 

That same year it suffered a major reputational crisis after its chairman Paul Flowers – the ex-Methodist minister dubbed the “Crystal Methodist” – quit in the wake of an explosive drugs scandal.

Market moves

With just over three hours of trading past, European equities are moderately in the red, with the FTSE 100 outperforming despite flat trading for the pound. Gains are pulling back slightly after the strongest week since the spring. Wall Street is set for a similar slip at the open.

Digital revenues boost Murdoch empire

Murdoch’s newspaper empire was affected by advertising weakness Credit: REUTERS/David Gray/File photo

Rupert Murdoch's News Corp has increased profits despite taking a hit from pandemic disruption and offloading fringe businesses. 

My colleague Ben Woods reports:

The owner of News UK, which publishes the Sun and the Times, posted a 21pc rise in profits to $268m (£203m) for the three months to September compared with the same period last year.

The increase was driven by record first quarters from financial publisher Dow Jones and Move, the unit that owns US property website realtor.com. 

Revenues fell by a tenth to $2.1bn over the period following a $200m blow from the sale of advertising and data business News America Marketing in March.

News Corp also suffered from "continued weakness in the advertising market", which was made worse by the pandemic, and a $29m knock from local newspapers in Australia, some of which closed or moved online.

FRC fines Deloitte £362,500

Britain’s audit watchdog has fined Deloitte £362,500, reprimanded the accountancy giant and slapped one of its former partners with sanctions over failing in the audit of an unspecified company.

The following sanctions have been imposed against the Big Four group:

  • A financial penalty of £500,000 (discounted to £362,500 for admissions and early disposal);
  • A Reprimand; and
  • A non-financial sanction requiring Deloitte to prepare a progress report for the consideration of the FRC’s Audit Quality Review team (AQRt) setting out its current Engagement Quality Control Reviewer (EQCR) work programmes and how such work is documented during the course of the audit of Public Interest Entities.

A reprimand has been imposed against one of its former audit engagement partners.

The regulator offered few specifics on the failings that prompted the decision, but said:

The breaches of Relevant Requirements related to the audit of (i) the Company’s defined benefit pension scheme (DB Scheme) and (ii) the carrying value of the company’s intangible assets. 

[Deloitte and its former partner] failed to ensure that the review work carried out by the EQCR was adequately documented, failed to obtain sufficient appropriate audit evidence to substantiate the cash holding of the DB Scheme and failed to obtain sufficient appropriate audit evidence in respect of its stress testing of the Company’s impairment model.

Claudia Mortimore, the FRC’s deputy executive counsel, said:

The proportionate sanctions reflect the failures by the Respondents to obtain sufficient appropriate audit evidence and to properly document work in significant areas of audit risk, but also recognise the limited nature of the breaches, which did not call into question the truth or fairness of the financial statements.

Suitors confirm plan to carve up RSA

RSA, one of the UK’s oldest financial services firms, would be carved up under plans developed by the bidders readying a £7.2bn takeover offer for the insurer. 

My colleague Michael O’Dwyer reports:

The FTSE 100 firm revealed on Thursday that it had received a potential 685p-per-share cash offer, a premium of more than 50pc of its share price before the deal was announced. 

RSA, which also owns the More Than brand, said combining its businesses with Canadian insurer Intact Financial and Danish rival Tryg was “strategically compelling” and would result in a stronger foothold in both Canada and Scandinavia. 

The proposal, first made to RSA’s board on Oct 2, would result in the company being split in three. 

Biden takes lead in Georgia

Joe Biden has taken a 917 vote lead in Georgia, with further gains expected as results roll in this morning. If he flips the state, and can hold his lead in either Arizona or Nevada, he will pass the 270 votes needed to win the US election.

FTSE 100: Aviva vs Aveva

The FTSE 100 is now moderately in the red, with gains cooling off slightly after a strong week.

The top blue-chip riser is insurance firm Aviva, which has climbed solidly after rival RSA’s shares soared on a takeover approach, and fellow insurer Beazley reported a rise in written premiums.

At the other end of the index, the biggest faller (other than perennial wobbler Rolls-Royce) is engineering software-maker Aveva, which has dropped after announcing plans to raise £2.9bn through a rights issue to partly fund its takeover of US peer OSIsoft. Under the ‘7 for 9’ offer, existing Aveva shareholders can buy seven shares for every nine they currently own.

Credit: Hargreaves Lansdown

 

House prices rise to new record

UK house prices hit a new record average of £250,457 last month according to Halifax’s latest house prices index, marking a annual jump of 7.5pc – the sharpest since 2016.

On a monthly basis, prices were 0.3pc higher than in September, a slowdown from the 1.5pc August to September jump.

Halifax’s Russell Galley said:

 The average UK house price now tops a quarter of a million pounds (£250,547) for the first time in history, as annual house price inflation rose to 7.5pc in October, its highest rate since mid-2016. Underlying the pace of recent price growth in the market is the 5.3pc gain over the past four months, the strongest since 2006…

This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.

Trump just 463 votes ahead in Georgia

More votes in from Clayton County, in western Georgia. Joe Biden netted 202 votes, shaving Donald Trump’s lead across the state to just 463.

Votes are coming in 85pc for the Democrat, so if Clayton continues to report through the night, Mr Biden should take a lead. There are still a few more counties to report after that, but these late counts have tended to lean blue.

Last week’s losses quickly forgotten as market soar

Gains have been incredibly strong across the top Western stock indices so far this week – the FTSE 100 is up more than 6pc and on track for its best week since May.

That mean last week’s steep losses have been almost recouped and – in the case of the US’s benchmark S&P 500 – means a record high is once again in sight.

Premier Foods sells Hovis as private equity brings in the bread

The Hovis bread business is 134 years old Credit:  Premier Foods/PA

 Historic bakery brand Hovis has been bought by a UK private equity firm after a significant turnaround over the past four years.

My colleagues report:

The 134-year-old business has been bought by Endless LLP from joint venture owners Gores Group and Mr Kipling-owner Premier Foods for an undisclosed sum.

Premier Foods said it will receive £37m in proceeds from the deal, which was closed late on Thursday evening.

Endless, which has previously owned The West Cornwall Pasty Company and pork giant Karro Foods, said it will pump “significant investment” into Hovis to help its current management achieve their future plans.

It comes after a major turnaround at Hovis, which sold the majority of its milling business in 2018 to focus on baking operations.

European markets edge higher

After a small dip straight after the open, European markets have pushed slightly higher. Investors may be optimistic that things will be wrapped up in the US slightly faster than expected – we”ll have to wait and see. 

Credit: Bloomberg TV

EasyJet cuts expectations for capacity

EasyJet’s shares price has been devastated due to Covid-19 Credit: FABRICE COFFRINI/AFP via Getty Images

EasyJet said it expects to fly no more than 20pc planned capacity over October, November and December as it announced the sale and leaseback of another eleven aircraft.

In an update this morning, the FTSE 250 airline said:

Following the UK Government's announcement on Saturday, as well as similar announcements in Germany and France recently, easyJet now expects to fly no more than c.20% of planned capacity for Q1 of Financial Year 2021.

We remain focused on cash generative flying over the winter season in order to minimise losses during the first half and retain the flexibility to ramp capacity back up quickly when we see demand return.

Chief executive Johan Lundgren said early last month that it expected to fly 25pc capacity over the period.

It announced the sales and leaseback of eleven more aircraft, on top of the nine announced last month. The transactions generate total cash proceeds of $169.5m, the company said. It added:

On completion of these further sale and leaseback transactions, easyJet now retains 141 fully owned and unencumbered aircraft, representing approximately 41pc of the fleet.

Trump 665 votes ahead in Georgia

Donald Trump is now just 665 votes ahead in Georgia. It’s nearly certain that the state will end in a recount however this ends, but if Joe Biden takes the lead it would mean he is posed to meet the 270 Electoral College votes threshold.

Japan’s Nikkei closes at record

A person stands outside showing Nikkei securities Credit: AP Photo/Eugene Hoshiko

Tokyo's key Nikkei index closed up on Friday, hitting its highest level since 1991, despite continued uncertainty over the outcome of the US presidential election.

My colleagues report:

The benchmark Nikkei 225 index gained 0.91pc or 219.95 points to end at 24,325.23, the highest level since November 1991. Over the week, the index rallied 5.9pc.

The broader Topix index closed up 0.52pc or 8.55 points at 1,658.49. Over the week, the index climbed 5pc.

Japanese indices started in negative territory, adjusting recent gains and reacting to a stronger yen against the dollar.

“But investors later resumed bargain-hunting purchases on the backdrop of easing uncertainties over the US presidential election,” Okasan Online Securities said in a commentary.

Germany industrial production up 1.6pc in September

Industrial production in Germany rose 1.6pc in September, missing expectations for a 2.5pc rise but marking the fifth consecutive month of gains.

Despite the string of gains, production overall remains substantially below pre-pandemic levels.

Those figures aren’t likely to rattle markets that much, given they are such a lagging indicator.

How things stand

Sky’s Beth Rigby has a good overview of the current situation:

For anyone waking up in the UK amazed that we still don’t have a result, here is a example of how things look inside a counting station in Georgia – people have been working through the night:

Election officials in Georgia, which is probably the most exciting contest currently, expect all results to be in within hours.

Agenda: Biden edges closer to victory

Good morning. Markets are once again in wait-and-see mode as results continue to trickle on across crucial states in the US Presidential election.

It has been a long slog, but Georgia in particular looks close to a result, with Democrat candidate Joe Biden on the cusp of overtaking President Donald Trump.

European shares are set to dip slightly at the open in just under an hour’s time, taking the edge off several days of strong gains.

5 things to start your day 

1) Watchdog warns of Brexit border disruption: A National Audit Office (NAO) report forecast “widespread disruption” on Britain's borders from Jan 1, partly due to Covid-19 delaying work.

2) JoJo Maman Bébé boss hits out at forced store closures: Founder Laura Tenison said it is “extraordinary” pregnancy, new baby and toddler clothes and equipment are not included on list of essentials. 

3) Rail tunnel to Northern Ireland under consideration: Boris Johnson gives blessing to Network Rail chairman Sir Peter Hendy’s decision to conduct a review of a link between Stranraer and Larne.

4) Apollo switches interest in William Hill: Apollo Global Management, bidder for William Hill, is poised to switch focus to the bookie’s European operations rather than the entire firm.

5) Work when you want, wherever you want, StanChart tells staff: The bank is offering staff the option to select the hours, days and location they want, and is in talks to provide “near-home” work spaces.

What happened overnight 

Asian stock markets were mixed on Friday after Wall Street rose amid protracted vote-counting following this week's US elections.

Tokyo and Sydney advanced while Shanghai and Hong Kong declined. Seoul swung between gains and losses.

The Shanghai Composite Index lost 0.5pc to 3,302.02 while the Nikkei 225 in Tokyo gained 0.9pc to close at a 29-year high. The Hang Seng in Hong Kong shed 0.3pc to 25,617.47.

The Kospi in Seoul was down less than 0.1pc at mid-morning at 2,415.67. The S&P-ASX 200 in Sydney advanced 0.9pc to 6,193.20.

New Zealand and Jakarta gained while Singapore declined.

Coming up today

Corporate: Redrow (Full-year results); Beazley, Morgan Advanced Materials (Trading statements)

Economics: Halifax house prices index (UK); industrial production (Germany, Spain); non-farm payrolls, unemployment, earnings (US)