FTSE, US markets slip on economic recovery worries

NYSE Nov 19

Wrapping up

We're wrapping up the blog for today. US markets are continuing to slip, just after midday, tracking London's declines as worries surrounding the economic impact of coronavirus take a stronger hold.

Here are some of our top stories today:

Thanks for joining and see you tomorrow!

FTSE wipes out gains

London's FTSE ended down 51p in trading to 6,334.35 - lower than its level on Tuesday morning - to wipe out this week's gains.

A third announcement from AstraZeneca failed to impress traders, as it didn't reveal how effective its vaccine is after Moderna and Pfizer's earlier positive announcements. Fears of rising Covid cases, tighter lockdowns and economic impact prevailed.

Jaeger and Peacocks collapse 

Fashion chains Peacocks and Jaeger - liked by the Royals - have gone into administration, putting more than 4,700 jobs and almost 500 shops at risk.

My colleague Laura Onita reports:

Both chains are owned by retail tycoon Philip Day. Administrators at FRP said the search for buyers continues despite their collapse, so there were no immediate job losses and no branch closures. 
The latest development is likely to infuriate Mike Ashley, whose retail group Frasers has previously claimed it was frozen out of the auction process for three of Mr Day's brands.  

Mike Ashley weighs up bid for Mulberry 

Mike Ashley's Frasers Group is considering a takeover of Mulberry after increasing its stake in the luxury handbag maker to more than a third.

My colleague Hannah Uttley reports:

Frasers, which owns Sports Direct and House of Fraser, has bought 4.3m Mulberry shares at 150p each from Icelandic bank Kaupthing to increase its ownership of the company to 37pc.
Mr Ashley’s retail empire first took a stake in Mulberry in February, before more than doubling its holding to about 29pc earlier this month.

Britain - Canada deal is close

Britain and Canada are very close to agreeing the terms of a free trade deal, and an announcement could come in the next few days.

British Trade Minister Liz Truss earlier said the government of Boris Johnson was determined to reach a trade deal with Canada before the end of the year.

News that the deal could be imminent was first reported by the Bloomberg news agency.

China's Yatsen raises almost £500m in US float

Chinese cosmetics company Yatsen raised $616.9m (£466.5m) in a US IPO priced at the top of a marketed range.

Bloomberg has more:

The company behind the fast-growing Perfect Diary brand sold 58.75m American depositary shares for $10.50 each, it said in a statement.
It comes as US regulators push ahead with a plan that could lead to the delisting of Chinese companies from the country’s stock exchanges if they don’t comply with regulators’ auditing rules. The move is an escalation of an issue that has been unresolved for more than a decade.
Yatsen's three brands served 23.5m customers in the nine months ended Sep 30, the prospectus shows. About 91pc of gross sales in that period were generated through online channels such as WeChat and Tmall. Yatsen also has a network of more than 200 offline retail stores.

Hinkley Point B to close by July 2022

France's EDF has said Hinkley Point B in Somerset is to move into decommissioning no later than July 2022.

Reuters has more:

The plant in Somerset, southwest England, which began operation in 1976, is capable of generating enough electricity to power around 1.8 million homes.
Hinkley Point B had approval to run until March 2023 but has suffered with aging issues, such as cracks in the graphite reactor cores.

A new plant being built by EDF, with backing from China’s CGN at the Somerset site - Hinkley Point C - is expected to start generation in 2025.

Inspecs to buy German eyewear firm

AIM-listed Inspecs, chaired by former Tesco boss Lord MacLaurin, announced it is acquiring Eschenbach, Germany's top eyewear firm for £85m. 

Bath-based Inspecs makes glasses for brands including Superdry, while Eschenbach supplies frames for those like Ted Baker. Its two biggest markets are the US and Germany.

Inspecs is doing a share placing to raise £64m, to help fund the purchase. It would create one of the world's largest eyewear companies, with over 250 salespeople.

Its shares are up over 11pc to 234p this afternoon.

Handover 

That's all from me. My colleague Louise Moon will take over for the rest of the evening.

Thanks for following!

M&S to open most stores until midnight in run up to Christmas 

Marks & Spencer has said it plans to open most of its stores until midnight from December 21-23 to give shoppers and staff "the time and space they need to social distance".

The retailer said the move would represent its "longest ever store opening hours".

Last year, 15 M&S stores stayed open until midnight, but this year 400 shops, about two-thirds of its total, will take part.

Indoor dining in New York could be shut as early as next week

The lockdown restrictions we're experiencing in Europe look to be making their way across the pond..

One in three restaurants, bars and hotels don't expect to survive winter

More than one-third of Britain’s hospitality industry could collapse over winter as England’s second lockdown combined with the Welsh "circuit-breaker" and restrictions in Scotland and Northern Ireland combine to deal a fatal blow to businesses.

My colleague Tim Wallace reports:

A total of 34pc of accommodation and food services businesses told the Office for National Statistics they have low or no confidence they will survive the next three months due to missing out on the crucial pre-Christmas trade.
Lockdown rules vary, but typically limit venues to takeaway sales only. Even when the national lockdown lifts, tiers with sustained limits on household mixing and group size are expected to keep pressure on businesses.
Another third have "moderate" confidence while one-fifth have high confidence. The remainder are unsure.
Across all industries, 14pc think there is little chance they will stay afloat.

Wall Street opens lower 

US stocks have opened lower for the third straight day as concerns grow that tighter restrictions will weigh heavily on economic growth. 

Credit: Bloomberg 

William Hill shareholders back Caesars takeover

This just in from the City: shareholders in William Hill have voted by a pretty subtantial margin to approve the bookie's £2.9bn takeover by US giant Caesars Entertainment. Around 87pc voted for the takeover to go ahead. 

Caesars has said that it will look to sell off William Hill’s operations in the UK and Europe to a third party if the takeover is successful, focusing instead on growing the firm's 29pc share of America's booming sports betting market.

'Dividend controversy would overshadow Kingfisher's revival'

Here's our Chief City Commentator Ben Marlow weighing in on Kingfisher's results earlier. The owner of B&Q is having good lockdown, he writes:

People have been reaching for the paintbrush, updating the garden furniture and buying new kitchens. In fact, demand is so strong for some products that Kingfisher’s logistics capabilities have buckled under the strain. 
That probably explains the 4pc fall in the share price after the company posted a  big surge in turnover between the beginning of August and the end of October. Sales are up 18pc to £3.5bn group-wide, and B&Q reported a jump of a quarter. 

Read more of Ben's column here. And sign up for his daily lunchtime newsletter here.

US futures slip

Those jobless figures haven't exactly given markets a spring in their step.

Dow futures were down 76 points, or 0.26pc, S&P 500 futures were down 10 points, or 0.28pc, and Nasdaq 100 e-futures were down 30.5 points, or 0.26pc. All three dipped after the US jobless numbers were released.

The FTSE 100 remains in the red, down around 0.68pc at 6,342.

US jobless claims unexpectedly rise

As if to prove the IMF's point, here's the latest from the US and its jobless figures. 

The number of Americans filing new claims for jobless benefits unexpectedly rose last week as new business closures to control spiralling infections unleashed a fresh wave of layoffs, Reuters reports.

Initial claims for state unemployment benefits totalled a seasonally adjusted 742,000 for the week ended Nov 14, compared to 711,000 in the prior week, the Labor Department said. Economists polled by Reuters had forecast 707,000 applications in the latest week.

Daily new COVID-19 cases in the United States have been exceeding 100,000 since early this month.

'We need continued strong policy action to combat uncertainty'

Here's a little more from IMF chief Kristalina Georgieva, who has set out her thoughts on the global economy in a blog post.

She says countries need to keep up "strong policy action to combat continued certainty". In a nutshell, she says the world needs to:

  1. End the health crisis
  2. Reinforce the economic bridge to recovery

Part of this means not withdrawing support for workers and economies too quickly. She adds:

While a medical solution to the crisis is now in sight, the economic path ahead remains difficult and prone to setbacks.
On the upside, faster-than-expected containment of the virus or the development of better treatments would allow for a quicker return to normal activity, limit economic scarring, and boost growth.
On the downside, if new outbreaks require more stringent mobility restrictions, or if the development, production, and widespread distribution of vaccines and treatments is delayed, social distancing will persist for longer. As a result, growth will be lower, public debt higher, and the scars on the long-term potential of the economy more severe—think of how extended job losses can harm the human capital of workers.

IMF warns recovery may be slowing down

The IMF has issued a pretty gloomy update on its outlook for the global economy. 

The body has warned that the economic recovery may be losing momentum, with poverty and inequality worsening. 

IMF chief Kristalina Georgieva said elevated asset valuations show a disconnect between financial markets and the real economy, with "inherent risks to financial stability". 

Market update 

Red all over. The vaccine fever gripping equity markets earlier in the week has well and truly faded. 

BAE Systems, the UK's largest defence contractor, is one of the few stocks in positive territory, following the Government's announcement on defence spending. 

Credit: Bloomberg 

£2bn handed out in Bounce Back Loans in the last month

The Treasury has released its latest Covid lending data and it shows that almost £2bn was handed out in Bounce Back Loans in the last month, bringing the total lent through the scheme to £42.2bn.

Meanwhile a further £1.3bn was lent through the CBILS programme.

German steel giant to slash 11,000 jobs

German industrial giant Thyssenkrupp is cutting a tenth of its workforce - some 11,000 jobs - as its steel operations continue to bleed cash.

My colleague Alan Tovey reports:

The company announced on Thursday a further 7,000 positions were going, raising the total number of jobs it is eliminating from that set out in a restructuring plan in the summer that includes selling off smaller business.
Thyssenkrupp is struggling to compete against imports of cheap steel from China and Asia, leaving it with excess production capacity and the pandemic reduces demand.
British-based industrial conglomerate Liberty is attempting to buy Thyssenkrupp’s steel business.
The company controlled by entrepreneur Sanjeev Gupta says a tie-up would create synergies that would end losses and take up unused capacity at the German powerhouse.
Martina Merz, the third chief executive at Thyssenkrupp in less than two years, warned that restructuring would be “more painful than the previous ones - but we will have to take them”.

Mike Ashley's Frasers Group increases stake in handbag maker Mulberry 

Shares in Mulberry have climbed more than 8pc after Mike Ashley's Frasers Group increased its stake to own more than a third of  the luxury handbag maker in a move worth more than £6m.

The company, which owns Sports Direct and House of Fraser, said it has bought 4.3 million shares at 150p each to increase its ownership of the Somerset-based company to 36.8pc.

Frasers Group first took a stake in Mulberry in February, before it more than doubled its holding to around 29pc earlier this month.

Under Takeover Panel rules, any group which takes a stake of more than 30pc in a business is typically required to make an offer to buy the whole business.

However, the takeover authorities said on Thursday that Frasers Group does not have to place a bid as another investor already owns a majority stake in Mulberry.

European Commission passes O2/Virgin deal probe to UK's competition watchdog 

Officials in Brussels have handed over responsibility for probing the proposed £31bn merger deal between the owners of O2 and Virgin Media to the UK's Competition and Markets Authority.

PA has the details: 

The European Commission said that the merger is only likely to affect competition in the UK, so can be dealt with by regulators in London.
Under EU law, major takeovers and competition concerns have to be dealt with by the commission's regulators in Brussels, once they grow beyond a certain size.
CMA chief executive Andrea Coscelli said: "We welcome the European Commission's decision to transfer the proposed deal between Virgin and O2 to the CMA for investigation.
"These are incredibly important UK markets that continue to evolve, and the deal needs to be carefully reviewed to make sure that consumers are protected.
"We have worked closely with the European Commission so far and we will build on the work that has already been carried out to make sure that the case can be investigated as quickly and efficiently as possible." 

Turkish central bank raises rates by almost 5pc 

BOOM, indeed. 

Barnier cancels briefings with EU officials 

It looks like trade negotiations are reaching a climax, with Michel Barnier cancelling EU briefings next week. The pound is still trading slightly lower today.

'There will be significant pent up demand post-lockdown,' says HSBC 

Commenting on the impact of vaccines on markets, Willem Sels, chief market strategist at HSBC Private Banking, says:

The vaccine news makes investors more optimistic that there will be a consumer recovery in 2021, which should allow economic growth to broaden. Many consumers who have held on to their jobs have considerably increased their savings in recent months. When lockdowns end, and consumer confidence increases, there will be significant pent-up demand from these types of households.
Of course, the high unemployment rate is an issue for other consumers, and this is why some commentators are talking about a K-shaped recovery. The timing of vaccinations, and when this will lead to a pickup in consumption is also uncertain. Nevertheless, markets are likely to look through the short term uncertainty, and towards the ultimate recovery some time in 2021.

Revenue jumps at Naked Wines 

Naked Wines raised its full-year sales forecast after revenue rose by nearly four-fifths in the first half. 

The online wine retailer says it now expects sales growth of 55pc to 65pc, compared with an earlier forecast of 40pc, after lockdowns boosted sales.

The company said: "Many customers did not know they could order wine online, to be delivered to their door, until COVID-19 motivated them to look, and they are now embracing it."

Shares fell 0.3pc to 497.5p in early trading. 

Jet2 flies to £119m loss 

Holiday and airline firm Jet2 has slumped to a first-half loss and said it remained cautious over next summer despite recent positive developments on a coronavirus vaccine.

The company reported pre-tax losses of £119m for the six months to September, while revenues declined by 88pc to 300m. 

In what would normally be its busiest period, the airline flew just 990,000 passengers in the half year, down from 10.07 million a year earlier as plunging demand and restrictions amid the pandemic crippled the aviation sector.

Jet2 warned over further losses in the traditionally quieter half of the financial year and cautioned that it expects to slash its winter 2020-21 services by half year-on-year.

Chairman Philip Meeson said: "Whilst the recent positive news about a potential vaccine was welcome, we continue our cautious approach to summer 2021."

Shares fell 2.7pc to £13.46 in early trading. 

Sales jump at B&Q owner Kingfisher 

B&Q owner Kingfisher has reported a jump in sales as the pandemic helped to drive spending on home improvements.

The company revealed that total group sales rose by 17.6pc to £3.5 billion for the quarter to October 31, with a 17.4pc increase in like-for-like sales.

It added that like-for-like sales growth slowed to 12.6pc in the first weeks of the current quarter as it was impacted by a tightening of restrictions across Europe.

Thierry Garnier, chief executive of Kingfisher, said:

We achieved strong sales growth in the third quarter across all retail banners and categories, with higher footfall and average transaction value.
Our growth was supported by strong market demand, as consumers spent more time in their homes and focused on improving them.

Shares fell 4.1pc to 286.9p in early trading. 

Watchdog fines ComparetheMarket £17.9m for competition breach

The competition watchdog has slapped price comparison site CompareTheMarket.com with a £17.9m fine after it found that clauses in its contracts with home insurers broke competition law.

My colleagues report:

The Competition and Markets Authority (CMA) said the website prohibited home insurers on its platform from offering lower prices on other comparison websites, ensuring it was not undercut elsewhere.
As a result, competition between CompareTheMarket and its rivals was restricted and it is likely to have resulted in customers paying higher insurance premiums, the CMA said.
Michael Grenfell, the CMA's executive director for enforcement, said: "Price comparison websites are excellent for consumers.
"They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains.

Lagarde: ECB will act forcefully to help euro-area economy

Speaking at the European Parliament's committee on economic and monetary affairs, ECB president Christine Lagarde has said that the central bank will act forcefully to help the euro-area economy.

She added that the second wave of the virus is weighing particularly heavy on the services sector and any EU fiscal spending package "must be operational without delay".

Europe opens in the red 

We're back to this constant market tug-of-war between positive vaccine updates and grim Covid data, leading to tighter restrictions. Today, the latter is winning.

Credit: Bloomberg 

Oxford vaccine 'provokes a robust immune response'

Another day, another vaccine update. This time, the University of Oxford's candidate is said to produce a strong immune response in older adults, according to latest trial results.

It's important to note, however, that this is data from phase two trials rather than phase three. We can expect readings on the possible efficacy of the vaccine in the coming weeks.

Royal Mail makes more money from parcels than letters for first time

Royal Mail said revenue from parcel deliveries outstripped those from letters for the first time, as it reported a rise in turnover and a fall in profits.

Keith Williams, interim executive chair, said parcels made up 60pc of total revenue in the six months to Sept 27, compared with 47pc in the prior period. 

He added: "The growth in online shopping and parcels during the pandemic, combined with our increased focus on delivering more of what customers want, has led to revenue growth of nearly 10pc for the group in the first half, with Royal Mail revenue up nearly 5pc."

Overall revenue climbed 9.8pc to £5.67bn, but pre-tax profits plunged to £17m from £173m the year before.

Its GLS parcels division recorded a £166m operating profit while its Royal Mail postal arm plunged to a £129m underlying operating loss.

Agenda: FTSE set to slide

Good morning. The FTSE 100 is set fall at the open as global virus restrictions are tightened once again. 

New York City shut schools, while Tokyo raised its Covid alert to its highest level.

The pound also declined against the dollar as Brexit trade negotiations continue.

5 things to start your day 

1) Driving the electric dream will be a costly journey: The UK made 1.3m cars in 2019, but less than one in ten had powertrains. Reversing that ratio will be tough: tech isn't the challenge, funding is.

2) One in five companies hit workers with pay freeze: One-fifth of companies imposed pay freezes in the three months to October despite the resurgence in GDP growth as industries reopened.

3) Fenwick's new boss: 'Online is fundamental to the department store's future': John Edgar was appointed to helm the historic department store group Fenwick in April, just weeks after the UK was plunged into lockdown. 

4) Electric car push set to drive energy bills higher: Former Ofgem boss Mr Nolan warns consumers will face higher energy bills over next decade to fund vital upgrades to the electricity grid.

5) Founders of M&C Saatchi quit in boardroom shake-up: A trio of admen behind the legendary campaign that catapulted Margaret Thatcher to power have left M&C Saatchi in a management shake-up.

What happened overnight 

Most Asian stock markets followed Wall Street lower on Thursday as anxiety about the economic fallout from rising coronavirus infections in the United States and Europe clashed with optimism about a possible vaccine.

Tokyo, Hong Kong and Seoul declined, while Shanghai advanced.

On Wall Street, the benchmark S&P 500 index lost 1.2% on Wednesday, erasing early gains after Pfizer and BioNTech reported more promising vaccine data. Losses accelerated after New York City said it would close its public schools to in-person learning following a surge in infections there.

The Nikkei 225 in Tokyo fell 0.9% to 25,479.27 and the Hang Seng in Hong Kong shed 0.6% to 26,394.26. The Kospi in Seoul sank 0.5% to 2,533.47.

Sydney's S&P-ASX 200 was up less than 0.1% at 6,536.90 after the government reported the Australian economy added 178,800 jobs in October, well above forecasts of fewer than 30,000.

Coming up today

Corporate: Syncona, Naked Wines, Londonmetric Property, Halma, Cmc Markets, Investec, Royal Mail, Mitie, Johnson Matthey (Interim results); Grainger, Euromoney, Countryside Properties (Full year); Card Factory, Kingfisher, Keller (Trading Statements)

Economics: CBI industrial trends survey (UK); jobless claims, existing home sales (US)