- FTSE 100 rises after Pfizer vaccine goes to emergency approval
- Government borrowing soars to record high
- Early Christmas shopping boosts retail sales
- Thousands of jobs at risk as Jaeger and Peacocks collapse
- Wall Street opens lower
- Garry White: Trump’s final act will be to goad the Chinese dragon
- Sign up here for our daily business briefing newsletter
That's all from us this week.
London's FTSE 100 inched higher today, up 0.3pc during the day and 0.5pc through the week, to log its third straight week of gains.
Aero and pharmaceutical stocks moved higher. Optimism ensued over the prospect of easing restrictions, a potential vaccine and hopes of a Brexit trade deal with the EU.
Here are some of today's stories to see you into the weekend:
- Cineworld weighs up rival rescue deals
- UK and Bharti take control of failed satellite firm OneWeb
- Nationwide braces for customers failing to repay loans after strong summer
- Private firms go to the back of the queue for Covid vaccines – for now
- Corporate art collections go under the hammer to raise cash
Thank you for following along! Have a good weekend and Louis will be back with you on Monday.
US stocks slip
US markets are slipping just before midday as traders weigh a conflict between the White House and Fed over emergency lending programs, against government assurances it has plenty of room to help the economy.
Here's how they're doing:
- S&P500: -0.2pc
- Dow Jones: -0.4pc
- Nasdaq Composite: +0.1pc, boosted by tech stocks.
Among stocks: tech is outperforming; Pfizer rose after saying it will file for emergency approval of its coronavirus vaccine; Gilead Sciences fell after authorities advised against using its remdesivir drug to treat Covid-19.
BP sells head office
BP has confirmed it has sold its London head office to Hong Kong-based property investment firm Lifestyle International for £250.1m in cash.
The energy firm has agreed to lease the office in St James's Square back for another two years.
BP aims to sell $25 billion of assets by 2025 in an effort to reduce debt as it shifts to low carbon energy investments. Around half of that has already been divested or agreed a deal on.
Nationwide braces for customers failing to repay loans
Nationwide reported a strong summer and a rise in profits, but is bracing for customers failing to repay loans.
My colleague Lucy Burton reports:
The UK's biggest building society Nationwide is bracing for customers to struggle to repay loans after putting aside £139m for bad debts due to the pandemic.
The mutual, which has received more than 100,000 calls from members every month since the pandemic erupted in March, doubled its provision for loan losses from £57m a year ago.
Christmas comes too early for retailers
Lockdown has spurred shoppers to buy their Christmas gifts early, judging by today's jump in retail sales.
But this could be a bad omen for British shops relying on a bumper festive season to save them the disastrous impact of 2020's lockdowns, writes City commentator Ben Marlow.
For more incisive analysis of the daily business agenda, sign up to Ben's City Intelligence newsletter here.
IATA: Airlines will need $80bn in additional state support to weather crisis
More grim news for the aviation industry. Alexandre de Juniac, head of the International Air Transport Association, has said that airlines will need as much as $80nm (£60bn) in additional government support to get through the Covid-19 pandemic.
He added that airline losses will likely reach $100bn this year, more than the combined $87bn forecast from June, while air traffic is forecast to be just a third of last year's levels.
Nomura plans to introduce flexible work on a permanent basis
Nomura plans to introduce flexible work on a permanent basis for its overseas staff, Bloomberg is reporting.
The agency has the details:
While the planning is at an early stage, Nomura sees both an “appetite and ability to support an operating model in which 50pc of our Corporate workforce across our international offices will work remotely at any one time,” the company said in an internal memo seen by Bloomberg.
Japan’s biggest brokerage joins banks including Standard Chartered Plc and Deutsche Bank AG that are considering keeping flexible work arrangements even after the health crisis subsides.
Such a move might allow Nomura to cut office space, Chief Executive Officer Kentaro Okuda said earlier this year.
The move would provide the “right mix” of flexibility and work-life balance while maintaining productivity and face-to- face contact, Nomura said in the memo, which was circulated in recent months and remains under discussion.
UK to complete purchase of OneWeb
OneWeb is set to emerge from bankruptcy after the British government completed its acquisition of the troubled satellite operator, Bloomberg reports.
Completion of the $1bn deal is expected to be announced on Friday afternoon after the deal cleared regulatory hurdles, according to people familiar with the matter who asked not to be named. A new chief executive officer and a target date to resume launches in mid-December are also set to be announced, they said.
The deal signals a more interventionist industrial strategy after Brexit and was a pet project of the now departed government adviser Dominic Cummings. It will be interesting to see what the government does with its new purchase now he has gone.
FTSE and pound rise
The two don't always work in tandem, but the FTSE 100 is currently up around up 0.6pc at 6,371 after the latest positive news from Pfizer.
Sterling edged higher against the euro after a European Union official said the bloc and Britain are very close to agreement in trade talks on most issues, even if they are still at odds over three main points. It's up 0.2pc against the euro and the dollar.
However futures tracking the S&P 500 and the Dow have dipped as fears over rising coronavirus infections and fading stimulus threaten to hamper a slowing economic revival. Dow futures were down 67 points, or 0.23pc, S&P 500 e-minis were down 5 points, or 0.14pc, and Nasdaq 100 futures were up 14.25 points, or 0.12pc.
Pfizer shares were up 1.8pc in pre-market trading.
Patel's behaviour 'can be described as bullying'
More chaos over in Whitehall. After his investigation found that Priti Patel bullied staff and broke the ministerial code, Sir Alex Allan has resigned after Boris Johnson allowed the Home Secretary to keep her job.
Morrisons to give key workers 10pc Christmas discount
David Potts, Morrisons chief executive says:
Our emergency services, social care sector and armed forces have worked tirelessly this year to provide support to the many people who need it across the UK, often in exceptionally difficult circumstances. This discount is a thank you for all that they have done and continue to do for us all.
Tesla’s S&P 500 debut may spark $8bn demand, says Goldman
Tesla's stock market rally might be on the verge of a further massive boost after it joins the S&P 500, according to Goldman Sachs.
Bloomberg has the details:
The electric carmaker’s scheduled Dec 21 inclusion in the S&P 500 Index could result in $8bn (£6bn) of demand from active US large-cap mutual funds, analysts at Goldman wrote in a note on Friday.
“Of the 189 large-cap core funds in our universe, 157 funds that manage around $500bn in assets under management did not hold Tesla on Sept 30,” the analysts wrote.
Assuming those funds chose to hold the carmaker at benchmark weight, they would need to buy $8bn of the stock, or about 2pc of Tesla’s market value, the analysts said.
The shares were 0.5pc lower US pre-market trading, but set for a 22pc weekly gain after Thursday’s all-time high.
Tesla is the best-performing large-cap stock in the US this year, soaring about 500pc, as investors show increasing confidence that electric cars, trucks and buses will dominate the future of the auto and transportation industries.
Shares in Sage slump after profits decline
Shares in Sage Group slumped by almost 13pc after the software company posted a drop in full-year profits.
The Newcastle-based group reported a 3.7pc decline in operating profits to £391m for the year to September. However, revenue grew by nearly 4pc to £1.77bn due to strong sales in its North America and Northern European markets.
Shares declined by 12.8pc to 592.6p, making it the biggest faller on the FTSE 100 in early trading.
Chief executive Steve Hare, said: “We’ve delivered a strong performance in full-year 2020, achieving recurring revenue growth in line with the guidance we gave at the beginning of the year, despite the Covid-19 pandemic."
Public sector pay freeze will 'not create nasty party image around Tories', says former No 10 pollster
The Chancellor will have some big decisions to make ahead of next week's spending review, with reports this morning suggesting he will freeze public sector pay again.
But considering the hardship workers in the private sector are facing, a pay freeze for public sector workers (excluding NHS staff) will not face much opposition from voters, according to a former No 10 pollster.
Relaxation of company capital raising rules to end
A relaxation of City rules that allowed companies to raise 20pc of their existing share capital during the pandemic without first offering existing shareholders a chance to participate will end this month.
My colleague Michael O'Dwyer reports:
The Pre-Emption Group (PEG), which oversees the rules, said it will not extend the increased flexibility which allowed the likes of catering firm Compass and estate agent Foxtons to raise cash during the Covid pandemic.
“Whilst considerable uncertainty remains, companies have had eight months to assess their situation and respond accordingly,” PEG said.
From Dec 1, UK listed companies raising funds by issuing new shares will have to follow the usual restrictions on offering shares to new investors without first giving existing shareholders a chance to participate.
The rules generally cap capital raisings at between 5pc and 10pc of existing shares unless existing investors are given a right of first refusal on taking up the new shares.
Brexit deal still snagged on three main issues, EU envoys told
After being forced to move the talks online due to a confirmed Covid case, UK-EU negotiations are still being held up over three issues: fishing rights, guarantees of fair competition and ways to solve future disputes.
The pound has risen slightly against the dollar to $1.33 this morning.
Reuters has the details:
The EU and Britain are very close to agreement on most issues as time runs out for a trade deal but they are still at odds over fishing rights, guarantees of fair competition and ways to solve future disputes, an EU official told ambassadors in Brussels.
“We are both close and far away. It seems that we are very close to agreement on most issues but differences on the three contentious issues persist,” a senior EU diplomat said after ambassadors were briefed on Friday by an EU negotiator.
The chief Brexit negotiators suspended direct talks on Thursday after a member of the EU team tested positive for COVID-19, but officials continued working remotely to clinch an EU-UK trade deal that would come into force in just six weeks.
A second EU diplomat said of the three main sticking points between negotiators: “They still need their time. Some things on the level playing field have moved, albeit very very slowly. Fisheries are not really moving anywhere right now.”
Nationwide posts 'steady' first half profits
Corporate updates are few and far between this morning, but building society Nationwide has published its interims and they are largely upbeat.
The company said underlying profits held "steady" in its first half despite putting aside £139m for loan losses due to the crisis.
On a reported basis, pre-tax profits rose 17pc to £361m for the six month period.
However, the mutual lender booked a £139m hit for loans that may not be repaid due to the pandemic and warned the outlook for the wider economy remains "unpredictable".
Chief executive Joe Garner said:
Looking ahead, as and when government support winds down, it is clear that many more people are likely to lose their jobs and family finances will come under strain.
He added: "It is very hard to predict what will happen to the economy, jobs and the housing market in the near future as a result of the pandemic and Brexit.
The scale of interventions to support people and jobs to date has been extensive and will limit the long-term damage, but the outlook remains unpredictable.
'Government debt has not been this high since the early 1960s'
Total Government debt is now 100.8pc of the size of the UK economy. Jonathan Gillham, chief economist at PwC, says this will rise to 105pc in the coming months.
Government debt has not been this high since the early 1960s. Large-scale spending announcements around defence, reducing carbon emissions and emergency coronavirus support measures combined with lower tax receipts and weak economic growth will inevitably mean Government debt will reach 105pc of GDP in the next few months.
However, markets are not overly concerned by this news - the Bank of England has committed to buy another £150bn of public debt, the UK’s credit rating is relatively stable and borrowing remains cheap. ONS figures for October show interest on borrowing fell by £4.4bn compared to October last year.
All eyes will now turn to next week's mini spending review. It’s not the comprehensive review we were expecting and the lack of a root and branch review may put pressure on the Government’s ability to push through some of its big agenda items like civil service reform and levelling up.
More reaction to the record Government borrowing
Michael Hewson, chief market analyst at CMC Markets, says:
While it is entirely understandable for there to be a debate about these unprecedented levels of public borrowing, one has to question whether now is the right time to do it, given that we haven’t as yet defeated the virus, or even got a vaccine program in place yet.
It’s hard to imagine that there would have been similar conversations being had in 1940, when the country was one year into the second World War, yet suddenly here we are fretting about the costs of an invisible pandemic that has the potential to wreak economic havoc for some time to come.
There will be a time to worry about how all of these emergency measures will eventually be paid for, however one has to question whether now is the best to time to be talking about this, at a time when businesses are having to deal with so much uncertainty.
BRC: October growth now a 'distant memory'
October's retail growth figures were encouraging, but they're now a distant memory for locked down retailers, explains Helen Dickinson, chief executive of the British Retail Consortium:
October’s sales growth will seem a distant memory for many retailers as ‘non-essential’ shops remain locked down for the second week. AV equipment, electrical appliances and household goods retailers all showed strong growth, while clothing and footwear stores continued to see decline.
Retailers are now holding their breath on the Government’s plans for rents, rates and reopening. With shops closed for November, many will struggle to pay rents from 1st January, when the moratorium ends, and it is essential that Government extends this to allow for successful negotiations between retailers and landlords.
The Treasury must also address the incoming business rates burden to avoid burying retailers under an £8bn bill from 2021. However, the most important issue is to ensure all shops can reopen from the start of December as the all-important Christmas shopping period gets into full swing. Retailers have spent hundreds of millions on safety measures to protect colleagues and customers, and they stand prepared for reopening.
Some reaction to retail sales..
Commenting on this morning's retail figures, PwC's Lisa Hooker, says:
Retail sales continued its gravity-defying recovery from the pandemic last month, growing by a whopping 7.7pc year-on-year excluding fuel - the sixth consecutive month of growth since the lockdown, and reinforcing the resilience of both the consumer and the sector’s ability to adapt and respond to the challenges it is facing.
There was a recovery in almost every category of the sector, and measuring the period to 31 October, these figures don’t include the last minute rush to the high street after the second lockdown was announced. In fact, the only category to show a material decline in sales was fashion, with less demand for occasionwear and workwear continuing to hit an already beleaguered part of the market.
However, October is normally the quietest month of retail’s Golden Quarter and would also have benefitted from consumers bringing forward their Christmas shopping in anticipation of high street restrictions and delivery delays for online purchases.
Borrowing comes in below estimates
Despite the £22,3bn rise in public borrowing last month being the sixth highest total in any month since record began in 1993, the figure still came in below economists' estimates of £31bn.
Commenting on the data, Chancellor Rishi Sunak said:
We've provided over £200bn of support to protect the economy, lives and livelihoods from the significant and far reaching impacts of coronavirus.
"This is the responsible thing to do, but it's also clear that over time it's right we ensure the public finances are put on a sustainable path.
ONS: 'Consumers brought forward their Christmas shopping'
Jonathan Athow, deputy statistician at the ONS, says:
Despite the introduction of some local lockdowns in October, retail sales continued its recent run of strong growth.
Feedback from shoppers suggested some consumers may have brought forward their Christmas shopping, ahead of potential further restrictions. Online stores also saw strong sales, boosted by widespread offers.
However, the slow recovery in clothing sales has stalled after five consecutive months of increased sales.
Retail sales grow 6pc in October
It also looks like the UK experienced something of a pre-lockdown retail surge, with sales volumes growing by 5.8pc on the same period last year.
Compared to the previous month, they were 1.2pc higher.
Agenda: Public borrowing set to be revealed
Good morning. We have a double whammy of economic data releases coming up. In ten minutes, the ONS will release the latest public sector borrowing figures as well as the latest retail sales.
Meanwhile the FTSE 100 is set to open marginally higher in just over an hour.
5 things to start your day
1) Thousands of jobs at risk as Jaeger and Peacocks collapse: Both chains are part of Philip Day's Edinburgh Woollen Mill retail group that has been under pressure this year following a slide in sales .
2) Online bank Starling says it will be first to make a profit: The fintech firm, founded by Anne Boden in 2014, believes it will be in the black this month, as the sector is under pressure to rein in losses.
3) Public sector pay freeze could save £23bn: Sunak could save the Treasury £23bn over the next three years, say economists, by freezing pay for the 5.5m people on the public pay roll.
4) £16bn defence spending must help British industry, firms say: The Prime Minister has pledged to use the £16.5bn defence spending to create 40,000 jobs, stimulate growth and support the UK's nations.
5) BuzzFeed buys HuffPost to join in ad battle with Facebook and Google: BuzzFeed and HuffPost’s ad revenue has been hit by tech giants like Facebook and Google which diversified into revenue making services.
What happened overnight
World financial markets stalled on Friday as news US Treasury was ending emergency loans programmes dealt a blow to economic recovery hopes just as California announced curfews to try and fight surging coronavirus infections.
In Asia, Japan's Nikkei stumbled 0.5pc while Australian shares were flat. Chinese shares were little changed while South Korea's KOSPI index was a shade firmer.
That left MSCI's broadest index of Asia-Pacific shares excluding Japan up 0.3pc. It is up 1.5pc so far this week.
Coming up today
Corporate: Worldwide Healthcare Trust (Interim results); Sage (Full year); Softcat (Trading Statements)
Economics: Public sector net borrowing, retail sales, GfK consumer confidence (UK); consumer confidence (eurozone)