- Stocks soar after Moderna says vaccine 94.5pc effective
- Aviation and hospitality stocks lead FTSE higher
- Retail footfall 'resilient' despite restrictions
- Sterling dips as Brexit crunch week begins
- Asian stocks climb on new regional trade deal
- Japanese economy grows 21.6pc in third quarter
- Biggest William Hill investor backs Caesars bid
- Roger Bootle: Paying for the pandemic does not mean an impoverished future
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That's it from us today - we're wrapping up a positive markets session on the back of Moderna's vaccine news.
Here are some of our top stories today:
- Treasury faces 'pay per mile' road tax backlash
- Thousands of interest-only borrowers risk losing homes
- Gordon Brown warns of Northern ‘revolt’ without government spending spree
- Free ports to offer tax breaks for workers
- Mission impossible? Britain races to get ready for 2030 switch to electric cars
Thanks for joining, and we'll be back tomorrow!
UK markets track global gains
The FTSE 100 index closed up 104.9p, or 1.66pc, to 6421.29 - its highest level since June 8. It jumped after US biotech firm Moderna said its vaccine was 94.5pc effective in preventing coronavirus.
Europe was in on the trend. Here are the continent's key market moves:
- Germany's DAX: +0.47pc to 13,138.61
- France's Cac 40: +1.7pc to 5,471.48
- Italy's FTSE MIB: +1.98pc to 21,317.01
Treasury faces a backlash to new road tax
Industry experts warned the new "pay per mile" proposals will squeeze small businesses, hauliers and low income families outside of London hardest.
My colleague Tom Rees reports:
Officials were urged not to use a new road pricing system as a “post-Covid cash cow” as the Government considers the plans to replace £40bn in lost tax revenue from the switch to electric vehicles.
Experts said an increase in motoring taxes faced widespread opposition from drivers and would be borne by poorer households unable to buy electric cars and families living outside big cities.
Bloomberg Forum highlights
Bloomberg's annual New Economy Forum kicked off today, with worldwide country and company leaders from speaking via video link.
Here are some top highlights so far, as reported by Bloomberg:
- China's vice president Wang Qishan called for global solidarity and a shift away from protectionism. Beijing is grappling with a fresh incoming US administration, after a volatile relationship with Trump.
“Countries must rise above exclusive blocs and reject the zero-sum mentality,” said Wang, without specifically mentioning the US.
“We should build an open world economy that works for all. We must firmly safeguard the multilateral trading system under the WTO and unequivocally reject unilateralism and protectionism.”
China was slow to recognise Joe Biden’s victory, and US tensions are likely to continue. Biden has criticised China’s assertive policies and Beijing’s human rights record, branding president Xi Jinping a “thug” in February.
- McDonald’s CEO sees long-term Covid impact
McDonald’s will need to be thinking about PPE and tracking transmission rates for in-restaurant staff for the foreseeable future, said chief executive Chris Kempczinski.
“There’s now a much higher level of appreciation and understanding on the safety component. We have, like I think everybody, learned through this,” he said.
Earlier this year, the fast-food chain engaged the Mayo Clinic to help counsel it on health and coronavirus infection prevention and control.
- UN secretary-general sees Joe Biden helping with climate change
Antonio Guterres said he sees President-elect Joe Biden rejoining the Paris climate agreement and eventually committing to a net-zero pledge by 2050.
“With a government committed to move forward, I believe the extraordinary dynamic of the American society will allow us to arrive at net zero by 2050,” said Guterres. “This is the moment for a great global coalition for net zero.”
Former Fed chair Janet Yellen in the running to be Biden's Treasury Secretary
Janet Yellen, the former chair of the Federal Reserve, is under consideration to be Joe Biden's Treasury Secretary, Bloomberg is reporting.
The agency said Ms Yellen has withdrawn from at least one upcoming speaking engagement because she is now in contention for the top job at the US Treasury.
Zambia blames creditors after Africa's first pandemic-era default
Zambia’s finance minister said creditors were at least partly to blame for the country defaulting on one of its eurobonds last week, while a group of bondholders said the missed payment risked setting a more adversarial backdrop for debt negotiations.
Bloomberg has the details:
The southern African nation became the continent’s first pandemic-era sovereign default, after holders of the debt refused to grant it a six-month interest payment freeze on Friday.
The bondholders demanded more information on Zambia’s debts to Chinese lenders, but would not sign the necessary confidentiality agreements, Bwalya Ng’andu said.
Zambia missed a $42.5m (£32.3m) interest payment on $1bn worth of eurobonds maturing in 2024. The default was unavoidable because the country, which had received some debt relief from the China Development Bank, had to treat all creditors equally and had already built up arrears on other loans, Mr Ng’andu said.
The country’s $1bn in eurobonds, due 2024, fell 1.8pc to 44 cents on the dollar in London. The non-payment has triggered cross-default provisions in all the outstanding dollar bonds.
The bondholders committee, whose 15 members represent in aggregate more than 40pc of Zambia’s $3bn in outstanding Eurobonds, said on Monday that investors had been unable to consent to a debt standstill because they never received information they needed for an informed decision.
Gordon Brown warns of Northern 'revolt' unless South is made to pay for huge spending spree
Britain is being torn apart by a wave of poverty which can only be assuaged by a huge injection of Government spending, Gordon Brown has warned.
My colleague Tim Wallace reports:
Rising unemployment and a spike in the number of small businesses facing collapse will increase poverty, said the former Labour Prime Minister as he called for Rishi Sunak, the Chancellor, to make permanent the temporary £20 a week rise in universal credit.
“I say to the Chancellor – we supported you when you did the right thing when the crisis began. Now, unfortunately, you are behind the curve. You must get ahead of it immediately by promising that £20 per week support will continue, and by raising child benefits,” he said.
“We have got to do something about child poverty, otherwise in the new year we will see a far more divided, fragmented, polarised, angry and really desolate Britain.”
If the Government does not crank up spending even further, Britain will see "a northern revolt from the poorest communities of the UK who do not see any levelling up, but have seen levelling down."
Spanish bank bails out of the States in $11.6bn deal
Spain's BBVA will sell its US operations to PNC Financial Services for $11.6bn in cash in one of the biggest global bank deals this year.
The sale will further consolidate the US banking sector and prompted speculation that BBVA could use the cash to buy a rival bank in its home market.
The deal is the second-largest in US banking since the 2008 financial crisis and creates an American lender with nearly $560bn of assets and a presence in two dozen states.
The move underscores how a loosening of financial regulations and lowering of corporate taxes under President Donald Trump has emboldened regional lenders to pursue scale through deals in a bid to compete with bigger players such as JPMorgan and Wells Fargo.
PNC and BBVA had been in talks about a deal for several weeks and decided to press on because they believe the regulatory environment will not change with Joe Biden as president and the Republicans likely controlling the Senate, sources said.
Reaction to Moderna vaccine..
Ayush Ansal, chief investment officer at the hedge fund, Crimson Black Capital said:
News of a second highly successful vaccine will be another metaphorical shot in the arm for markets globally.
The FTSE 100 was up immediately when news of the early results from the Moderna tests came in and the feel-good factor created by Pfizer’s vaccine should further rally markets in the days ahead.
More than anything markets need certainty, and the knowledge that the pandemic could be brought under control a lot sooner than most imagined could see stocks surge as sentiment rebounds.
The light at the end of the tunnel for the global economy following the Covid-19 crisis may not be a train after all.
Office landlords join the rally
Office and retails landlords, which are largely reliant on a vaccine to get city life back to normal, have joined the FTSE's rally on the Moderna announcement.
British Land and Landsec are up 7pc and 5.9pc respectively.
The only downside about this update is that the UK does not yet have an agreement to purchase any doses of the Moderna vaccine.
'We are going to have a vaccine that can stop Covid'
More on Moderna. My colleagues report:
Moderna said its experimental vaccine was 94.5pc effective in preventing Covid based on interim data from a late-stage clinical trial, becoming the second US company in a week to report results that far exceed expectations.
Together with Pfizer's vaccine, also shown to be more than 90pc effective, and pending more safety data and regulatory review, the US could have two vaccines authorised for emergency use in December with as many as 60m doses of vaccine available by the end of the year.
Next year, the US Government could have access to more than 1bn doses just from the two vaccine makers, more than needed for its 330m citizens.
The vaccines, both built using new technology known as messenger RNA or mRNA, represent powerful new tools to fight a pandemic that has infected 54m people worldwide and killed 1.3m. The news also comes at time when Covid cases are soaring, hitting new records in the United States and pushing some European countries back into lockdowns.
"We are going to have a vaccine that can stop Covid," said Moderna president Stephen Hoge.
PA: Mitchells & Butlers set to axe 20 outlets
The owner of All Bar One and Toby Carvery will axe up to 20 of its pubs and restaurants as the hospitality sector battles Covid restrictions, PA is reporting.
The news agency has the details:
Mitchells & Butlers has confirmed the move which is set to put scores of jobs at risk after sales slumped in the face of temporary site closures.
It is understood the company is working with advisers at CBRE to offload the string of sites, which will be closed if M&B cannot sell them to new owners.
An M&B spokeswoman said: "As announced in September, M&B re-opened the vast majority of its estate, approximately 95pc, after the first lockdown ended.
"The remaining sites have been under review on a case-by-case basis since, taking into account factors such as expected footfall and business layout.
"We have taken the difficult decision not to reopen some of these sites and are working with leaseholders on next steps."
Last month, the group, which also runs the Harvester and Miller & Carter chains, started redundancy consultations with staff.
The pub and bar group said it was facing "significant difficulties" after restrictions tightened again but did not disclose how many jobs would be impacted by the cuts.
Rivals including Greene King, Young's, Fuller's and City Pub Group have also made redundancies during the pandemic.
Recovery sentiment boosts FTSE
London's blue-chip index is trading 0.6pc higher this morning and is being boosted by stocks in the aviation and hospitality sectors on hopes of a vaccine-induced recovery.
- Rolls Royce +7pc
- IAG (British Airways) +7pc
- Whitbread (Premier Inn) +5.1pc
- InterContinental Hotels (Holiday Inn) +4.6pc
China shakes off pandemic hit as industrial output beats forecasts
China’s economic rebound gathered pace in October, cementing the nation’s status as the only major economy tipped to grow this year and as a pillar of support for a faltering global recovery.
Bloomberg has the details:
While the US and Europe grapple with a resurgence in coronavirus infections, China’s early control of the pandemic means its economic recovery is expected to accelerate through the end of the year as consumers spend more.
An export boom on the back of global demand for medical equipment and work-from-home electronics is also expected to sustain the momentum.
Industrial output rose 6.9pc in October from a year earlier, the National Bureau of Statistics said Monday, higher than the 6.7pc median estimate in a Bloomberg survey of economists. Retail sales growth accelerated to 4.3pc from 3.3pc in September, though missing expectations for a 5pc increase.
Even with the headline miss on retail sales, a broader recovery in consumer confidence remains underway as evidenced by domestic tourism and spending during the golden week holidays in October, Julia Wang, an executive director and global market strategist at JPMorgan Private Bank, told Bloomberg Television.
Retail footfall 'resilient' despite restrictions
Retail footfall across the UK fell by 57pc last week compared to the same period last year but remained resilient in certain locations, according to new data from Springboard.
Shopping centres and high streets saw customer traffic fall by almost two-thirds, however footfall at retail parks was just a third lower. During the first week of the March lockdown, footfall plunged by more than 75pc.
After an initial slowdown at the beginning of the second lockdown, shoppers returned to retail outlets towards the end of last week, the data shows.
Springboard's Diane Wehrle said:
The first complete week of Lockdown 2 drove footfall down across UK retail destinations, although the decline wasn't nearly as severe as it was in Lockdown 1 or indeed as comprehensive.
This was partly due to schools remaining open, although the vast majority of school related journeys take place outside of retail destinations and so would not directly impact footfall in high streets, shopping centres and retail parks.
The fact that footfall is more resilient may well be a function of the proximity of Christmas, and the concern of shoppers to buy well in advance this year to avoid queues, facilitated by the wide range of non-food products offered in stores selling essential goods .
In the second half of the week, from Thursday to Saturday, footfall was significantly higher than on the same three days in the previous week which were the first three days of the lockdown, indicating that as the week progressed shoppers began to make trips out of their homes.
Japanese economy grows 21.6pc in third quarter
Japan's economy grew at the fastest pace on record in the third quarter, rebounding sharply, driven by improved exports and consumption.
Reuters has the details:
However, analysts painted the sharp bounceback as a one-off from the depths of recession, and cautioned that any further rebound in the economy will be moderate as a resurgence in infections at home and abroad clouds the outlook.
The world's third-largest economy expanded an annualised 21.4pc in July-September, beating a median market forecast for an 18.9pc gain and marking the first increase in four quarters, government data showed on Monday.
It was the biggest increase since comparable data became available in 1980 and followed a 28.8pc plunge in the second quarter, when consumption took a hit from lock-down measures to prevent the spread of the virus.
"The strong growth in July-September was likely a one-off rebound from an extraordinary contraction caused by the lock-down steps," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
Sterling drops ahead of crunch week for Brexit
Downing Street has rubbished reports that the departure of Dominic Cummings will result in Boris Johnson abandoning his "red lines" on a Brexit trade deal.
Speaking this morning on a media round, health secretary Matt Hancock stressed that the UK won't budge on key areas of contention such as fishing rights.
The pound has fallen about 0.3pc against the dollar this morning and is trading at $1.319.
Asian stocks near record highs after trade deal boosts sentiment
The world’s largest regional free-trade agreement between 15 Asian nations has boosted risk sentiment, sending Asia Pacific stocks near an all-time high.
The accord, known as the Regional Comprehensive Economic Partnership, or RCEP, was struck between nations including China, Japan and South Korea after nearly a decade in the making.
Sean Darby, global equity strategist at Jefferies, said:
RCEP shows that globalization is making a comeback. The ongoing steepening of the yield curve and quiet dollar depreciation are reinforcing the cyclical trade but it is global trade that is the biggest winner as economies and companies see reciprocal orders.
Coveney: 'We're in trouble if there's no breakthrough in next week'
The Irish foreign minister has warned that both sides will be in "trouble" if there is not a "major breakthrough" in trade talks over the next 10 days.
Speaking on Ireland's Newstalk radio station, Simon Coveney said:
We really are in the last week to ten days of this, if there is not a major breakthrough over the next week to 10 days then I think we really are in trouble and the focus will shift to preparing for a no trade deal and all the disruption that that brings.
I think the British government understand only too well what's required for a deal this week, the real question is whether the political appetite is there to do it. I think we will (get a deal), that's been my prediction for a while but I won't be shocked if it all falls apart.
Stagecoach agrees new extension to covenant waivers
Britain's biggest bus operator has agreed a further extension to its banking covenant waivers.
The troubled transport company said further waivers have been agreed to Oct 30, 2021.
In a brief statement, Stagecoach said:
In June 2020, we took the precautionary measure of agreeing covenant waivers, in respect of the periods ending 31 October 2020 and 1 May 2021, with our group of lending banks for our facilities expiring in March 2025.
Further waivers have now been agreed with the same group of lending banks in respect of the period to 30 October 2021. As an alternative to the covenants, we have agreed to a minimum liquidity threshold as at 30 October 2021.
It added that the company still has "strong liquidity", with available cash and undrawn, committed bank facilities of over £800m.
Shares rose 0.9pc to 59.2p in early trading.
Profits at Diploma fall by 20pc
Technical goods company Diploma posted a 20pc drop in pre-tax profits to £66.7m for the year to the end of September.
The group also reinstated its dividend, paying shareholders 30p per share – a 3pc increase on last year.
Chief executive Johnny Thomson said:
Diploma is responding well to the Covid-19 crisis and our fantastic colleagues continue to make a difference for our customers and our communities. The Group has reported a resilient financial performance with strong margins and cash flow generation. All sectors saw improving revenue momentum in Q4 which is expected to continue into 2021.
It has been a year of significant progress as we have built on the strong foundations of Diploma's value-add distribution model, developing high-quality, scalable businesses that can sustain our future growth ambitions in our core markets and products. We have made great progress with acquisitions and have a very healthy pipeline of further bolt-ons.
Shares rose 0.6pc to £23.10 in early trading.
Vodafone suffers from pandemic hit to international travel
Vodafone has suffered a blow to revenues and profits as it grappled with falling mobile phone sales and pandemic-induced restrictions on international travel.
My colleague Ben Woods writes:
The mobile giant recorded a 2pc fall in revenues to €21.4bn (£19bn) for the six months to the end of September, with adjusted profits slipping 1.9pc to €7bn.
Income from roaming charges - the fees some customers pay when using their mobile phone abroad - fell during the period in response to fewer people travelling overseas at the height of the Covid crisis.
Nick Read, Vodafone's chief executive, said the lower income from roaming had obscured its "underlying commercial progress", with service revenues growing 1.5pc in the second quarter.
He said it was a "resilient first half performance" with "good commercial momentum across the group" that underlined the confidence in its full-year outlook.
Agenda: Stocks set to climb higher
Good morning. The FTSE 100 is set to open higher after posting its best week since April last week.
The pound was slightly lower against the dollar as Brexit trade talks head for another crunch week, with fishing, the level playing field and governance remaining the key sticking points.
Meanwhile, China, Japan and South Korea were among 15 countries to sign a new trade agreement overnight, known as the Regional Comprehensive Economic Partnership, or "RCEP", sending Asian stocks higher.
5 things to start your day
1) Betting tycoon Fred Done is backing the £9bn takeover bid for William Hill by Las Vegas casino operators Ceasars Entertainment
2) Sir Philip Green's Arcadia Group has denied claims it is on the brink of administration. The Topshop owner is in talks with lenders to secure new loans.
3) Paying for the pandemic does not mean an impoverished future, argues Roger Bootle
4) Sunak's listing regime reform is unlikely to convince British start-ups to choose London, Nasdaq chief says
5) John Lewis' new strategy makes sense - but Covid could derail its plans, argues John Timpson
What happened overnight
Asian stocks hit a record high on Monday as vaccine optimism and strong economic data from China and Japan outshone worries about rising coronavirus cases, lifting just about every sector.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 1pc to hit its highest since its launch in 1987 with markets across the region making milestone peaks.
Japan's Nikkei traded at 29-year highs, South Korea's Kospi at its highest since early 2018 and Australia's ASX 200 hit an eight-month peak in the morning, before a glitch halted trade.
S&P 500 futures rose 0.6pc following the index's record close on Friday, Nasdaq 100 futures leapt one per cent and European futures were up strongly with EuroSTOXX 50 futures up 0.8pc and FTSE futures up half a per cent.
Currencies and commodity markets were a little more circumspect.
Coming up today
Interim results: Kainos, Smiths, Vodafone
Trading statement: Kingspan
Economics: Industrial production (China, Japan); retail sales (China); Empire State manufacturing (US)