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Tesco wins right to fire and rehire workers after legal battle

Tesco fire and rehire employment cost-cutting British Airways workers - Chris Ratcliffe/Bloomberg
Tesco fire and rehire employment cost-cutting British Airways workers - Chris Ratcliffe/Bloomberg

Tesco has won a legal battle over its use of so-called fire and rehire tactics in a move that could pave the way for other employers to use the controversial strategy.

The supermarket giant had been prevented from using the tactics following a case brought on behalf of 42 warehouse workers, who claimed the company was trying to fire and rehire them on a worse contract.

But judges today overturned the initial ruling blocking Tesco from dismissing the workers.

The practice has gained ground recently and has come under scrutiny after P&O Ferries abruptly fired hundreds of its crew and replaced them with cheaper agency workers.

The ruling could hand a boost to other companies looking to use the tactic to cut costs. British Airways tried to use fire and rehire during the pandemic but was blocked by workers.

06:07 PM

Wrapping up

That's all from us this week, we shall see you on Monday! Before you go, check out the latest stories from our reporters:

06:06 PM

Etihad Airways confirms Heathrow flights to run as normal in July amid travel chaos

Heathrow  - John Andrew Smith on Twitter
Heathrow - John Andrew Smith on Twitter

Abu Dhabi's Etihad Airways said it would operate all five return daily flights to London Heathrow at full capacity until at least the end of July after the Britain's busiest airport asked airlines to cut capacity to ease congestion.

"Our priority over the coming months is to maintain the resilience of our operation and to protect the travel plans of our customers flying to and from (Heathrow)," the airline told Reuters.

05:46 PM

BAE Systems gets slice of £2.3bn Typhoon jet radar contract

BAE Systems, the UK’s biggest defence contractor, and Italian rival Leonardo will spearhead a £2.35bn upgrade to the UK’s Typhoon jet fighter fleet. Howard Mustoe reports:

The new contract will involve updating the planes’ radar system and its ability to conduct electronic warfare, including monitoring targets and the ability to jam enemy signals. The deal keeps 1,300 jobs open on the programme.

The first 40 jets to be upgraded will be among the newest and they will be fitted with the new equipment by the end of the decade, the Ministry of Defence announced.

Read the full story here

05:27 PM

FTSE 100 closes week in the red

The FTSE 100 ended the week lower on worries about aggressive interest rate hikes and a sharp slowdown in the global economy, even as energy and defensive stocks propped up the index earlier today.

The benchmark added 1.7pc, supported by energy giant Shell, AstraZeneca and British American Tobacco . The FTSE 250 gained 1.9pc.

"Some of it is definitely down to investors buying the dip, and some of it is also down to the latest sort of update from the Fed," Danni Hewson, financial analyst at AJ Bell, said.

"Everybody is laser focussed on what the economy is going to look like six months down the line. Next week, the UK has its latest inflation figures out. I think those are going to look hot and that is going to rattle investors in the UK once again."

05:06 PM

Waiters win right to sue restaurants for withholding tips

Restaurant and bar workers will be able to more easily sue their employers for withholding tips under new laws set to be introduced by ministers. Tom Rees has more:

More than two million hospitality workers are set to enjoy a pay boost from legislation that will ensure they keep all of their tips.

Workers will be given the right to find information on an employer’s tipping record, helping them to “bring forward a credible claim to an employment tribunal,” business minister Jane Hunt said. The Tipping Bill will ban businesses from keeping the service charge when diners pay on card.

Read the full story here

04:44 PM

Oil price pares losses

Oil clawed back some of its weekly decline, with President Joe Biden’s trip to Saudi Arabia set to yield no announcement on oil.

West Texas Intermediate rose to trade above $98 (£82) a barrel, capping another hugely volatile week of trading, which saw prices at one point wipe out all of their gains since Russia invaded Ukraine.

Biden arrived in Saudi Arabia today as part of a Middle East tour but he is expected to leave the region without a public announcement on increasing oil supply, Bloomberg reported. Attention will turn to OPEC+’s next production moves in early August.

“The relief bump today is coming from stronger than expected US retail sales data and diminishing expectations for Saudi oil production growth,” said Rohan Reddy, director of research at Global X Management.

“Oil has been volatile, particularly to the downside in recent days because of concerns about the state of the Chinese economy and the red-hot inflation print from the US this week.”

04:20 PM

Over 40,000 BT workers to strike

There are more woes for BT as more than 40,000 workers have announced a two-day national strike over pay, the Communication Workers Union (CWU) said.

CWU General Secretary Dave Ward said the strike would cause "serious disruption".

04:05 PM

Handing over

That's all from me for today – thanks for following! Giulia Bottaro will see you through to the weekend.

03:54 PM

Cambridge professor raises £50m for 5-minute electric car charging

A Cambridge university professor has raised £50m for battery technology that could slash the time it takes to charge an electric car to less than five minutes.

Here's more from Matthew Field:

Nyobolt, a Cambridge start-up developing electric vehicle batteries, raised the cash from Vietnamese materials supplier Masan High-Tech Materials. It values Nyobolt at £300m.

The start-up uses battery research developed by Cambridge University scientist Dame Prof Clare Philomena Grey. Nyobolt's battery anodes use niobium, a grey, crystalline metal, and tungsten, which charge batteries more rapidly.

The company said its technology allowed batteries to be charged to 90pc capacity in less than five minutes, while improving power and durability tenfold. Nyobolt said its technology would “erase” range anxiety in electric vehicles.

Most modern electric cars only travel around 300 miles before needing to recharge, and many are limited to far shorter journeys. It raises the fear that many drivers may end up stuck by the side of the road waiting for their car to recharge.

Batteries that promise to slash charging times to provide more durable charge could prove key to curing range anxiety.

Read Matt's full story here

03:41 PM

Nadine Dorries accuses Channel 4 of breaking promise over privatisation

Nadine Dorries Channel 4 - Kirsty O'Connor/PA Wire
Nadine Dorries Channel 4 - Kirsty O'Connor/PA Wire

Nadine Dorries has accused Channel 4 of breaking a promise to government not to attack privatisation plans and rejected claims her department unfairly meddled in the broadcaster’s annual report.

Ben Woods has more:

The Culture Minister said her officials asked Channel 4 to make changes to its report only because the broadcaster had agreed to stop publicly attacking privatisation.

In a letter seen by The Telegraph, the Culture Secretary told MPs that language in the report was "at odds" with the station's promise to rein in any public commentary about the Government's plans to offload the station into private hands.

Writing to Julian Knight, the Culture Committee chairman, Ms Dorries said ministers were within their right to oppose the narrative in Channel 4’s annual report and make their views clear to chief executive Alex Mahon and its board.

​Read Ben's full story here

03:25 PM

US inflation expectations drop to one-year low

There's a bit of much-needed relief across the pound as US consumer expectations of long-term inflation dropped to its lowest in a year.

Americans now expect prices to rise at an annual rate of 2.8pc over the next five to 10 years. That's down from the 3.1pc recording taken last month and the lowest since July last year.

Over the next year, they see costs rising 5.2pc, compared to last months' 5.3pc, according to University of Michigan data.

The easing of inflation expectations comes even after this week's consumer price index came in at a hotter-than-expected 9.1pc.

Combined with upbeat retail sales earlier this afternoon, it's a welcome sign that the Federal Reserve may not have to raise interest rates as aggressively as feared at its next meeting.

03:15 PM

Ex-Lloyds chief takes first job since leaving Credit Suisse for Covid breaches

António Horta-Osório Lloyds Credit Suisse - Jason Alden/Bloomberg
António Horta-Osório Lloyds Credit Suisse - Jason Alden/Bloomberg

Former Lloyds chief Sir António Horta-Osório has taken his first job since resigning as chairman of Credit Suisse for breaching Covid rules.

Patrick Mulholland reports:

Mr Horta-Osório has been hired as an adviser to an Italian investment bank Mediobanca. He will advise executives on expanding the bank’s corporate and investment banking units.

It is the Portuguese banker’s first appointment since leaving Credit Suisse in January.

He resigned less than a year after joining the Swiss bank as chairman following revelation about his attendance at numerous sporting events in violation of Covid restrictions.

One outing in particular – Horta-Osório’s use of a private jet to complete a round trip flight from Switzerland to London for the Wimbledon tennis finals – rankled stakeholders.

Credit Suisse insiders told the press that Horta-Osório had “lost moral authority” at a time when he was drafted into the bank to reform its culture and encourage managers to take more personal responsibility for their actions.

02:58 PM

BT shares drop as Virgin Media O2 circles TalkTalk

BT shares dropped sharply after The Telegraph reported that Virgin Media O2 was in discussions to buy TalkTalk.

Bankers at LionTree working on behalf of Virgin Media O2 and owner Liberty Global have sounded out TalkTalk after its owners hoisted a for sale over the company.

A deal would catapult Virgin Media O2 above Sky to become the UK's second biggest internet business, and also bolster its ambitions to take on BT.

Shares in the former telecoms monopoly fell as much as 7.3pc.

Read more: Virgin Media O2 in early talks to buy TalkTalk

02:42 PM

Tesco 'considering next steps' after court ruling

Tesco has said it's weighing up its options after it won a court battle over fire and rehire tactics.

A spokesman said:

We are considering our next steps following today's ruling, and will continue to work constructively with the small number of colleagues affected to agree a way forward.

The Union of Shop, Distributive and Allied Workers (Usdaw), which represented the workers, said it will seek permission to appeal the ruling at the Supreme Court.

Joanne McGuinness, national officer at Usdaw, said:

Today's ruling overturning that injunction will not deter us. It is simply not right that very clear commitments to loyal workers can be simply set aside on a whim as it is no longer convenient for the company.

02:39 PM

Wall Street gets boost from retail sales

Wall Street's three main indices have opened on the front foot as upbeat retail sales data calmed some investor fears about a looming recession.

Citigroup pushed higher after its quarterly figures beat expectations, while Wells Fargo dipped after it put aside more cash to cover potential loan losses.

The S&P 500 rose 0.7pc and the Dow Jones was up 0.5pc. The Nasdaq gained 1.1pc.

02:24 PM

Virgin Media O2 considers TalkTalk takeover

Virgin Media O2 has explored a deal for broadband rival TalkTalk that would strengthen its challenge to the dominance of BT.

Ben Woods has the scoop:

Bankers at LionTree working on behalf of Virgin Media O2 and Liberty Global have sounded out TalkTalk after its owners hoisted a for sale over the company, sources have said.

Liberty Global-owned Virgin Media O2 is understood to have held talks with the cut-price internet provider, as the industry braces for a wave of consolidation.

Such a sale could prove to be the first of many deals in the telecoms industry, with the likes of Vodafone, BT and Virgin Media O2 urging regulators to let companies merge in order to make better returns.

Sir Charles Dunstone, TalkTalk's founder, struck a deal with Martin Hughes' Toscafund to de-list the business in March 2021.

​Read more from Ben here

02:16 PM

Ukraine pushing to clinch grain deal next week

Ukraine Russia grain deal -  SERGEI ILNITSKY/EPA-EFE/Shutterstock
Ukraine Russia grain deal - SERGEI ILNITSKY/EPA-EFE/Shutterstock

Ukraine is hurrying to clinch a deal with Russia, Turkey and the United Nations next week to export grain via its Black Sea ports, a senior Ukrainian official told Reuters.

Asked if it was realistic for the deal to be signed next week, the source said: "We really hope so. We're hurrying as fast as we can."

Russia earlier said its proposals on how to resume Ukrainian grain exports were "largely supported" by negotiators at talks this week in Istanbul and an agreement is close.

The deal is aimed at resuming Black Sea grain exports from Ukraine, which have been severely hampered by the war there.

Russia's invasion has stalled exports from Ukraine's ports, leaving dozens of ships stranded and some 20m tonnes of grain stuck in silos at Odesa.

02:08 PM

NFT auction house lays off one in five employees as digital art market collapses

A digital art auction house that had surged in popularity as cryptocurrency prices soared is slashing 20pc of its staff as confidence in the market collapses, writes Matthew Field.

OpenSea led the trade in so-called “non-fungible tokens”, or NFTs, digital collectibles that have been gobbled up by cryptocurrency enthusiasts to the tune of billions of pounds.

NFT sales rocketed to $25bn last year, according to a wealth report by Knight Frank, representing almost a third of the global art market.

But trade in the tokens has fallen from around $100m per day at the start of the year to around $30-40m per day. This has accompanied a rout in the price of Bitcoin and other cryptocurrencies.

Devin Finzer, OpenSea’s chief executive, said the company was preparing for a “prolonged downturn” in cryptocurrency.

“The changes we are making today put us in a position to maintain multiple years of runway under various crypto winter scenarios (five years at the current volume),” he said.

​Read Matt's full story here

01:39 PM

US retail sales jump 1pc

US retail sales outstripped forecasts last month in a sign consumer spending is holding up despite rampant recession and the growing threat of recession.

Retail sales rose 1pc in June, a reversal from the previous month's 0.1pc decline and well ahead of forecasts.

While the figures aren’t adjusted for prices, the better-than-expected figures indicate that consumer demand is still resilient despite Federal Reserve policy aimed at slowing the economy down.

Fed officials are watching the retail sales numbers alongside other data to determine whether to raise interest rates by 75 basis points at their meeting later this month, or consider a larger, 100 basis-point hike.

01:24 PM

German oil company profits 'could be foul play', says regulator

Germany's competition watchdog is examining evidence that increased profit margins at oil companies in the country could be the result of foul play.

"With regard to the fuel markets, initial data sets from the German Federal Cartel Office show that the gaps between crude oil and refinery selling prices have increased significantly," the economy ministry wrote in a letter seen by Der Spiegel magazine.

However, the ministry said it was also possible that structural competition problems – and not competition rule violations – had led to the price increases.

01:14 PM

Wells Fargo and Citigroup post crash in profits

We've got another round of lacklustre banking results from Wall Street just in.

Wells Fargo posted a bigger-than-expected 48pc drop in quarterly profit as it set aside more funds to cover potential loan losses, while its mortgage lending business came under pressure from higher interest rates.

The company bolstered its loan loss reserves by setting aside $580m (£490m) in the second quarter, compared to a release of $1.3bn a year earlier.

Soaring interest rates further dampened demand for mortgages, causing home loans to fall 53pc from a year ago.

Meanwhile, Citigroup posted a 27pc decline in profit for the second quarter as it also set aside reserves for loan losses and its investment banking business took a hit from a slowdown in corporate dealmaking.

Profit fell to $4.5bn in the three months to the end of June from $6.2bn a year earlier.

01:00 PM

Lord Cruddas threatens to cut off donations to Tory party

Lord Cruddas Tory donor -  Heathcliff O'Malley
Lord Cruddas Tory donor - Heathcliff O'Malley

Tory donor Lord Cruddas has threatened to cut off the party's funding if the leadership contest becomes a parliamentary coronation.

Lucy Burton has the story:

The billionaire City financier, who has given more than £3.5m to the Conservatives and £1.5m to the Vote Leave campaign, told The Telegraph that he is considering closing his wallet to the party for the first time since he began donating in 2010.

Lord Cruddas said: “I will wait and see before I decide about donating to the party in future.

“If the membership are not given the chance to select the new leader and it is solely decided by the Parliamentary Party then I will not support the party going forwards.”

The current system will see Conservative MPs whittle down the number of potential candidates to a final two before party members vote on the remaining pair.

Lord Cruddas, who was last year forced to defend donating £500,000 to the party just three days after he was admitted to the House of Lords, said he wanted Boris Johnson to stay on as Prime Minister.

​Read Lucy's full story here

12:02 PM

Gazprom exports fall for fourth month amid Nord Stream issues

Gazprom's daily gas flows to its key markets fell for a fourth straight month amid issues over the key Nord Stream pipeline.

The Kremlin-controlled gas giant exported an average of 200m cubic metres a day to countries outside the former Soviet Union between July 1 and July 15.

That's down 24pc from June and the marks the longest run of declines since 2014.

Europe's energy market is in turmoil amid fears Putin will cut off gas supplies to Europe. The Nord Stream pipeline is closed for planned maintenance, but there are concerns flows won't fully resume once the work is complete.

Earlier this week Germany started to withdraw gas from storage it was supposed to be stockpiling for winter, while Hungary declared an "energy state of emergency".

11:49 AM

US futures waver as dollar surge stalls

US futures are wavering and the dollar's surge stalled at the end of a tumultuous week for markets.

Wall Street's three main indices are all set to open marginally higher as investors dial back their bets on how aggressively the Federal Reserve will raise interest rates.

Traders are looking ahead to results from Citigroup and Wells Fargo this afternoon after disappointing numbers yesterday from JP Morgan and Morgan Stanley.

Futures tracking the S&P 500 edged up 0.2pc, while the Dow Jones was up 0.3pc. The tech-heavy Nasdaq rose 0.1pc.

11:34 AM

Britain unveils £2.4bn radar upgrade for Eurofighter Typhoon

Eurofighter Typhoon Royal International Air Tattoo - Christopher Furlong/Getty Images
Eurofighter Typhoon Royal International Air Tattoo - Christopher Furlong/Getty Images

The Government has announced a £2.35bn upgrade for the Eurofighter Typhoon combat jet that includes a new radar and enhanced electronic warfare capability,

The radar – known as ECRS Mk2 – will be installed by the end of the decade, initially on the third tranche of Typhoon.

The move was unveiled by defence procurement minister Jeremy Quin said at the Royal International Air Tattoo in Gloucestershire, the world's largest military airshow.

11:08 AM

Leeds United boss seeks £500m in streaming service sale

Andrea Radrizzani Leeds Eleven Group Dazn - Mike Egerton/PA Wire
Andrea Radrizzani Leeds Eleven Group Dazn - Mike Egerton/PA Wire

The boss of Leeds United is hoping to secure a valuation of about £500m if he sells his sports streaming service to larger rival Dazn.

Andrea Radrizzani is in discussions with Dazn about a potential cash and stock takeover deal for Eleven Group. He's also negotiating to join the board of the sports streaming giant as part of any transaction, Bloomberg reports.

Eleven, which was founded by the Leeds United owner, has a mix of sports rights including Formula One in Poland and the Champions League and next three Premier League seasons in Portugal.

It also owns documentary maker Neo Studios and last year bought digital marketing firm Team Whistle, giving it access to content from sports influencers such as F2 Freestylers.

A deal would mark efforts by Dazn, which is controlled by Britain's richest man Len Blavatnik, to beef up its package of sports rights after its failed effort to buy BT Sport earlier this year.

10:49 AM

Amazon's UK workforce overtakes the British Army

ICYMI – Amazon is to employ more people in the UK than the British Army as the tech giant creates another 4,000 new jobs.

Here's more from Oliver Gill:

The hiring spree will take Amazon’s UK workforce to 75,000 people, eclipsing the planned number of soldiers in the army by 2025.

The new jobs will be spread across large warehouses in Wakefield and Knowsley, near Liverpool as well as across head office and Amazon Web Services.

Positions will also be available across 19 “Just Walk Out” stores that automatically bill shoppers, avoiding the need for paying at tills.

Amazon has not been put off from investing in the UK by the Brexit vote. Jeff Bezos’ company has hired 40,000 people in the last three years alone.

The expansion contrasts with that of the army, which scrapped a target of 82,000 personnel last year, replacing it with plans to reduce its headcount to 72,000 by 2025.

John Boumphrey, Amazon UK country manager said: “We’re continuing to invest in talent right across the UK, from apprentices in Swansea to data scientists in Edinburgh.”

​Read Ollie's full story here

10:32 AM

Tory grandees turn on leadership rivals over 'paper' Thatcherism

Margaret Thatcher Tory leadership - Mirrorpix
Margaret Thatcher Tory leadership - Mirrorpix

Tory leadership contenders have come under fire from party grandees for misrepresenting Margaret Thatcher's legacy with their tax cut claims.

David Willetts – a peer who worked in Thatcher's policy unit before serving as science and Treasury minister, is the latest to openly attack the candidates for their lousy understanding of history.

In a piece for Conservative Home, he wrote: "I am shocked at how tax cuts have come to be seen as the authentically Thatcherite solution to any economic problem. Thatcher thought tax cuts had to be earned by fiscal discipline."

Tax has become a key talking point for the contenders, despite warnings about the outlook for public finances and questions over how cuts would be funded.

Mr Willett's comments echo those of former Chancellors Philip Hammond and Norman Lamont, as well as former party leader William Hague.

10:16 AM

Heatwave pushes French nuclear cuts into next week

Output cuts at some nuclear power stations in France are expected to stretch into next weekend amid a heatwave sweeping across Europe.

EDF warned that two plants on the Rhone river will produce less electricity in the next few days. Earlier this week, it warned hot temperature on the Garonne river would curb output at two other sights.

Under French rules, EDF must reduce or halt nuclear output when river temperatures reach certain heights to ensure that water used to cool the stations won't harm the environment when returned to the river.

The latest curbs put even more pressure on Europe's power system amid an energy crisis fuelled by Russia's war in Ukraine, and threaten to push up prices even higher.

10:02 AM

Copper slumps below $7,000 for first time since 2020

Copper has tumbled to its lowest level in 20 months as fears of a worldwide recession.

The metal, a bellwether of the global economy, dropped below $7,000 a tonne for the first time since November 2020, capping a 35pc decline from its all-time high just four months ago.

Copper, which is used in everything from cars to iPhones, soared earlier in the year amid supply worries sparked by Russia's war in Ukraine.

But prices have now gone into reverse amid fears about the economic outlook for China – which accounts for half the world's consumption – as well as soaring energy bills and wider inflation.

Copper traded on the London Metal Exchange is down more than 25pc this year and is on track for its biggest annual decline since the height of the financial crisis in 2008.

09:46 AM

Sunak's push for green tax on petrol blocked by Cabinet

Rishi Sunak petrol green levy - Eddie Mulholland
Rishi Sunak petrol green levy - Eddie Mulholland

Rishi Sunak is said to have privately lobbied to impose a green levy on petrol and diesel when he was Chancellor – a plan critics said would have driven up prices at the pump.

In Cabinet discussions a year ago – before petrol prices began their rapid ascent – Mr Sunak proposed a Fossil Fuels Emissions Trading Scheme to tax road transport, as well as shipping, building heating and diesel trains.

Together these make up more than 40pc of UK carbon emissions.

The plans were drawn up by the Treasury but rejected by Boris Johnson after opposition from other Cabinet members, Bloomberg reports.

The revelations (conveniently) raise pressure on Sunak as he looks to win the support of his Tory colleagues to make him the next prime minister.

09:29 AM

Pound stumbles ahead of Tory leader debate

Sterling is hovering near a two-year low against the dollar this morning ahead of a TV debate between the Tory leadership candidates this evening.

The five remaining candidates will go head-to-head in a televised debate at 7.30pm on Channel 4. Traders will have an eye on the action for signs of who's emerging as the frontrunner.

Meanwhile, the US currency is still getting support from investors flocking to safe-haven assets amid fears of an economic slowdown.

The pound was little changed against the dollar at $1.1820. Against the euro it was also stable at 84.76p.

09:12 AM

Aston Martin shares jump on Saudi funding

Shares in Aston Martin have jumped as much as 14pc after the luxury car maker secured new funding from Saudi Arabia.

The company said it's raised £653m from investors including Saudi Arabia's sovereign wealth fund. That came after it shunned a proposed £1.3bn package backed by Chinese car giant Geely.

Analysts at Oddo said the capital raise was bigger than previously announced and could "put to bed" the financing question for at least a few years.

08:55 AM

Cartier owner Richemont boosts sales despite China hit

Cartier owner Richemont luxury  - Qilai Shen/Bloomberg
Cartier owner Richemont luxury - Qilai Shen/Bloomberg

After Burberry's sales slump, it's better news for Cartier owner Richemont.

The Swiss luxury group reported a 12pc increase in quarterly sales as rebounding demand in Europe and the US outweighed a downturn in China.

Sales rose to €5.3bn (£4.5bn) in the three months to the end of June from €4.4bn last year.

That was driven by rebounding appetite for luxury goods in the US, Japan and Europe even in the face of surging inflation and an economic downturn.

Sales in mainland China plunged 37pc as stores were shut and lockdowns rolled out in cities such as China.

08:44 AM

FTSE risers and fallers

The FTSE 100 has started on the front foot this morning as investors shrugged off woeful economic data from China.

The blue-chip index rose 0.6pc in early trading, but is still on track for a weekly loss amid rising inflation and recession fears.

Oil giants and staple stocks such as British American Tobacco and AstraZeneca provided the biggest support for the index.

Burberry bucked the positive trend, sliding as much as 5pc after it said lockdowns in China dented sales in the first quarter.

Rio Tinto slipped 1.7pc it warned that labour shortages and soaring inflation would impact its earnings in the second half. This dragged down other miners.

The domestically-focused FTSE 250 rose 0.6pc. Britvic was down 5pc following rival Fevertree's profit warning as glass costs surge.

08:23 AM

Burberry sales hit by China lockdowns

Burberry China  - Anthony Kwan/Bloomberg
Burberry China - Anthony Kwan/Bloomberg

It's not just China's economy feeling the impact of zero-Covid – Burberry is also a victim.

The luxury fashion brand said sales slumped 35pc in China in the first quarter due to ongoing Covid restrictions.

It's a key market for the company, with Chinese buyers accounting for around a third of the global luxury industry before the pandemic, both at home and as tourists abroad.

Stripping out China, Burberry's sales grew 16pc over the quarter, with trading in Europe, the Middle East, India and Africa surging 47pc compared to the lockdown-hit first quarter of last year.

This was largely thanks to a rebound in sales to American tourists in the region.

Overall, though, sales were up just 1pc.

Jonathan Akeroyd, chief executive of Burberry, said:

Our performance in the quarter continued to be impacted by lockdowns in mainland China but I was pleased to see our more localised approach drive recovery in EMEIA, where spending by local clients was above pre-pandemic levels.

Our focus categories, leather goods and outerwear continued to perform well outside of mainland China and our programme of brand activations boosted customer engagement.

While the current macroeconomic environment creates some near-term uncertainty, we are confident we can build on our platform for growth.

08:13 AM

Fevertree shares slump as spiralling glass prices hit profits

Fevertree glass inflation  - REUTERS/Neil Hall/File Photo
Fevertree glass inflation - REUTERS/Neil Hall/File Photo

Shares in Fevertree have plummeted 25pc in early trading after the tonic maker issued a profit warning amid rocketing glass prices.

The London-listed company said profits for the full year were now expected between £37.5m and £45m – a huge reduction from previous estimates of between £63m and £66m.

Fevertree blamed glass shortages and higher costs amid soaring inflation, which is also denting consumer demand.

It also pointed to labour shortages in the US, which it is building up its east coast production facility. This meant it had to ship more products from the UK, pushing up its freight rates by 50pc on key routes since the start of the year.

08:07 AM

EU car sales slump to worst since 1996

As Aston Martin turns to Saudi funding, supply chain troubles and sky-high inflation continue to batter the car industry.

Car manufacturers across the EU registered the fewest new vehicles in June since 1996.

New car sales fell 17pc to just over 1m last month. Volkswagen was the hardest hit, with registrations plunging 24pc from a year ago.

While brands have said semiconductor shortages are beginning to ease, it'll take time for any boost in production to feed through to showrooms. Manufacturers are also grappling with higher raw material and energy costs.

08:01 AM

FTSE 100 opens higher

The FTSE 100 has pushed higher at the open despite data showing a slowdown in China's economy.

The blue-chip index rose 0.3pc to 7,059 points.

07:57 AM

Aston Martin rejects Chinese rescue to take Saudi cash

Aston Martin Geely China Saudi Arabia
Aston Martin Geely China Saudi Arabia

Elsewhere, Aston Martin has revealed it rejected a £1.3bn investment proposal from a group of backers including Chinese car giant Geely.

The luxury car maker said the approach from Geely and European group Investindutrial "markedly overestimated" its new funding requirements, would have heavily diluted existing shareholders and been difficult to execute.

Geely holds a stake in Volvo and manufactures electric vehicles through brands including Polestar.

It came as Aston confirmed plans to raise £653m from investors including Saudi Arabia's sovereign wealth fund.

The Public Investment Fund will take a 17pc stake in the company. Other funding comes from chairman Lawrence Stroll's Yew Tree Consortium and Mercedes-Benz.

Read more: Saudi Arabia gets board seat at Aston Martin as it injects £200m

07:49 AM

China's recovery still in doubt

While the official data showed an expansion in GDP, several high-frequency indicators suggest activity actually shrank in the quarter.

Travel data showed passenger trips taken on China’s roads were mostly below last year’s levels into July, while car purchases, which make up about a tenth of monthly retail sales, fell more than 10pc.

In one positive sign, however, activity began improving in June after Shanghai emerged from its crippling lockdown:

  • Industrial output rose 3.9pc in June, up from May’s increase of 0.7pc.

  • Retail sales grew 3.1pc after a contraction of 6.7pc in May.

  • The unemployment rate eased to 5.5pc from May’s 5.9pc (although for those aged 16-24, the jobless rate reached a new record of 19.3pc).

  • Home prices fell 0.1pc in June, a slightly smaller contraction than in May

Still, uncertainty remains over the outlook as China struggles to get the virus under control and continues to resort to lockdowns. Beijing will likely need to roll out more stimulus to help stabilise the economy.

07:42 AM

Shanghai and Beijing bear the brunt of zero-Covid

Shanghai GDP zero-Covid - ALEX PLAVEVSKI/EPA-EFE/Shutterstock
Shanghai GDP zero-Covid - ALEX PLAVEVSKI/EPA-EFE/Shutterstock

The economies of both Shanghai and Beijing contracted in the second quarter as they took the biggest hit from Beijing's zero-Covid strategy.

Five of the country's 31 provinces, regions and municipalities shrank over the period, compared to a tepid 0.4pc growth at a national level.

Shanghai's economy crashed 13.7pc following city-wide lockdowns throughout April and May. With most businesses shut, its urban jobless rate rose to 12.5pc.

Meanwhile, the economy of capital Beijing dropped 2.9pc as gyms, restaurants and part of the public transport were closed due to an outbreak of the omicron variant.

07:34 AM

China pays the price for zero-Covid

Good morning.

China is paying the price for its zero-Covid strategy as economic growth slowed to a crawl in the second quarter.

GDP rose just 0.4pc over the period, falling well short of forecasts and marking the slowest pace of growth since the first wave of the pandemic in early 2020.

Beijing's brutal approach to halting new waves of the virus led to a slump of almost 14pc in Shanghai, which was subjected to some of the harshest lockdowns. A property crisis across the country is adding to the woes.

The data will compound investor fears about a global economic slowdown amid soaring inflation.

5 things to start your day

1) Eurozone rocked as Italy’s technocrats lose their grip on power  Mario Draghi's potential departure marks a dangerous moment for Italy and its economy

2) Amazon to employ more people in the UK than the army  Shopping giant targets 75,000 employees in Britain

3) Saudi Arabia gets board seat at Aston Martin as it injects £200m  Gulf nation’s Sovereign Wealth Fund plans to take a 20pc stake in the luxury car brand

4) Solar panel owners paid just a fraction of what their power is worth  A three-bedroom household with solar panels should be able to make more than £400 a year

5) Train drivers announce fresh rail strike for July 30  Train driver union Aslef to strike 48 hours after RMT industrial action

What happened overnight

Hong Kong stocks plummeted more than 1pc this morning, with the Hang Seng Index down 1.1pc.

The Shanghai Composite Index dropped 0.6pc, while the Shenzhen Composite Index on China's second exchange dipped 0.3pc.

Tokyo stocks opened higher, with the benchmark Nikkei 225 index up 0.4pc.

Coming up today

  • Corporate: Burberry, Ninety One (trading update)

  • Economics: GDP (China), retail sales (US, China), industrial production (China), Michigan consumer sentiment index (US), trade balance (EU)