Well, I think that's all from us for today, be sure to join us again in the morning.
Here's a summary of the Fed decision by my colleague Tom Rees:
The Federal Reserve warned the US recovery is tied to stemming the escalating health crisis as rocketing Covid-19 infections force states to reverse reopenings.
The central bank promised to keep interest rates at rock-bottom levels until confident that the world’s largest economy “has weathered recent events”.
Fed chair Jerome Powell vowed to do “what we can for as long as it takes to provide some relief and stability”.
Mr Powell added that a full economic recovery is unlikely until people are “confident that it is safe to re-engage in a broad range of activities”.
The policymakers voted unanimously to hold rates steady between a range of 0pc and 0.25pc and reiterated their pledge to use their “full range of tools to support the US economy”.
What to look forward to tomorrow:
Interim results: 3i, Anglo American, AstraZeneca, BAE Systems, Equiniti, Inchcape, KAZ Minerals, Lloyds Banking Group, Man Group, Rentokil, Robert Walters, Shell, RSA, Schroders, Standard Chartered
Trading statement: Compass, Evraz
Economics: Unemployment (eurozone, Germany, Italy); GDP (Germany and US)
06:48 PM
Dollar index extends losses
#Dollar Index DXY extends losses as after Fed’s decision to extend its temporary USD swap lines through to March 31, 2021 (were originally set to expire in Sep). Fed remains willing to be global lender of dollars in periods of econ stress & ensure that there is no Dollar shortage pic.twitter.com/yMeq8uAeRD
— Holger Zschaepitz (@Schuldensuehner) July 29, 2020
06:42 PM
Fed press conference
The press conference has begun, here's a list of key things mentioned so far:
Household spending has recovered about half of drop
Rise in virus cases weighing on economy
Sharp increase in Covid-19 cases means US has entered a new phase
Recovery depends on government relief
06:35 PM
More reaction pouring in
Ranko Berich of Monex Europe says:
FX markets are already months ahead of the FOMC and have spent the past weeks aggressively selling the US dollar.
This is a reflection of the uniquely bad COVID-19 outbreak in the US and shows markets are anticipating a lower, flatter, US yield curve for longer - even if the FOMC is unwilling to confirm this will be the case just yet.
Meanwhile Melissa Davies, chief economist at Redburn says:
The Fed statement this evening shows the central bank's clear concerns over the resurgence of COVID-19 and its potential impact on the nascent recovery.
They remain willing to pull the now traditional levers of QE and repos to keep markets liquid and government borrowing costs low but need the cooperation of government to support economic activity.
Extension of enhanced labour market support will be critical in cushioning demand as we move into the Autumn.
06:28 PM
Stocks little moved
US stocks are still in positive territory and are little moved by the decision as the unchanged rates were expected.
The press conference will begin at 7.30pm.
06:20 PM
REACTION: No immediate fix for Fed to kickstart economy as US elections loom
Hinesh Patel, portfolio manager at Quilter Investors, said:
What is crucial to watch for from the Federal Reserve in the coming months is the forward guidance, and when we can expect further easing in response to what is a deteriorating picture in the US.
Whilst many of the traditional economic indicators, for example employment rates and retail activity, have improvement recently, more real-time estimates have plateaued or are trending downwards. This is no coincidence with the stalling of the reopening of the US economy and in some areas the return to lockdown.
While the Fed may appear primed to act, there is no immediate fix and could take some time to play out.
The response to the global financial crisis is one blueprint that could provide a template for how to react. Firstly, how long does the Fed expect this loose monetary policy to last. Next what path will be taken as the unemployment picture becomes clearer, and finally what tools are left in the arsenal to ensure all this extra cash trickles its way through the real economy.
With this backdrop, and the spectre of a presidential election on the horizon and the ramifications that emerge from it, the Fed could have a tricky balancing act to play to kickstart the economy back into life.
06:14 PM
More updates...
The Fed announced no new policies in its statement. The central bank said it will also continue to buy about $120 billion in Treasury and mortgage bonds each month, which are intended to inject cash into financial markets and spur borrowing and spending.
06:09 PM
Federal Reserve FOMC statement
Here's a link to view the full statement online:
Fed Committed To Using Full Range Of Tools To Support US Economy - Path Of Economy Will Depend Significantly On Course Of Coronavirus Outbreakhttps://t.co/v19l6uDOuT
"Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year," US central bank policymakers said in a statement issued at the end of their latest two-day meeting, which was held by videoconference.
All members of the Fed's policy-setting committee voted to leave the target range for short-term interest rates at between 0pc and 0.25pc, where it has been since March 15 when the novel coronavirus was beginning to hit the nation.
06:01 PM
Fed discount rate unchanged
The US Federal Reserve keeps the benchmark interest rate at 0pc - 25pc.
It says US economic recovery depends on stopping the coronavirus.
05:52 PM
Fed decision pending
We have just a few minutes left until the US Fed decision.
The Dow Jones and the S&P 500 are both around half a percent higher while the tech-heavy Nasdaq is up just over 1pc.
05:41 PM
Woodford investors to find out how much they will receive next month
Investors in Neil Woodford’s flagship fund will find out next month how much they will receive from a third distribution of capital as the fund is wound up, my colleague Michael O'Dwyer writes.
Supervisor Link Fund Solutions said the Equity Income Fund held £58m in cash at 22 July.
This is expected to increase as the fund receives payments for the portfolio of shares healthcare companies sold for £224m to Acacia Research last month.
Most of the fund’s assets have now been sold with only a small proportion of hard-to-sell investments remaining.
05:28 PM
Universal Studios films to go online 17 days after cinema release
A scene from Universal's Trolls World Tour
AMC, the world's biggest cinema operator and the owner of the Odeon, has struck a potentially revolutionary deal with Universal Studios to cut the delay between movies making their debuts in US cinemas and becoming available online.
The agreement will reduce the previously sacrosanct "theatrical window" from as much as 90 days to just 17 and puts pressure on other studios and cinema chains to follow suit. It only applies to the US at this stage.
The pact also resolves a bitter dispute between the two companies that followed Universal's decision to release Trolls World Tour for online rental in April while cinemas were closed due to the pandemic.
AMC retaliated by vowing not to exhibit any Universal titles until it reached a new agreement with the Comcast-owned studio. Regal and Cinemark, the second and third-largest US cinema chains, also backed their bigger rival.
Shoppers have been slow to return to the two Westfield shopping centres in Stratford and Shepherds’ Bush, London, despite lockdown restrictions easing, my colleague Rachel Millard writes.
Parent company Unibail Rodamco Westfield (URW) said footfall was still 50pc lower than last year - compared to 10pc-20pc lower at its European sites.
Twenty-one of URW’s UK tenants, such as Victoria’s Secret and Debenhams, have gone into insolvency or restructuring.
URW owns shopping centres and airports in the US and Europe. Turnover across its portfolio fell 14.2pc to £1bn during the half year, and 34.1pc to £50m in the UK.
Chief executive Chris Cuvillier said: “The first half of 2020 marked an unprecedented time that has impacted URW, as it has everyone.
“URW was forced to substantially close most of its shopping centres starting in March for, on average, 67 days."
04:49 PM
Q2 earnings fail to revive European bank stocks
Holger Zschäpitz of Welt says that second quarter earnings have so far failed to revive European banks stocks as lenders post okay but not great earnings and face doubts over sustainability of their rev streams.
Q2 earnings have so far failed to revive European banks stocks as lenders post ok but not great earnings and face doubts over sustainability of their rev streams. Stoxx 600 Banks drops 1%, -34.3% ytd. Deutsche Bank among 6 stocks in Stoxx Banks that shown pos performance this yr. pic.twitter.com/yx6mWcrK5A
— Holger Zschaepitz (@Schuldensuehner) July 29, 2020
04:30 PM
MI6 names Richard Moore as new chief
Via Bloomberg:
Britain’s MI6 Secret Intelligence Service, which counters terrorist threats from overseas, announced Richard Moore, a former ambassador to Turkey, as its new chief on Wednesday.
The 57-year-old will be known as ‘C’, a role made famous by the James Bond movies. He is due to take up the position in the fall.
Moore, who was a senior official at the Foreign Office, studied at Oxford and Harvard Universities. He lists his interests as golf, hiking, scuba-diving, Turkish carpets and porcelain and visiting historical sites. He was born in Libya and speaks fluent Turkish.
04:12 PM
Sir Chris Hohn's foundation must pay £277m to ex-wife's charity
Sir Chris Hohn
A charity set up by one of Britain’s richest men has been ordered by the Supreme Court to pay $360m (£277m) to his former wife’s philanthropic organisation.
The UK’s highest court ruled that the Children’s Investment Fund Foundation (CIFF) cannot block the payment to a new charity set up by Jamie Cooper, the former wife of financier Sir Chris Hohn.
The pair agreed to transfer the money to Big Win Philanthropy, a charity set up by Ms Cooper after their record-breaking divorce, in return for her resigning as a trustee of CIFF.
Ms Cooper, an American, received £337m as part of the divorce.
They agreed not to participate in a vote on the transfer even though they were board members of CIFF, leaving the decision to the only other board member, Marko Lehtimaki, who is a friend of Sir Chris.
Mr Lehtimaki previously said he would not allow the friendship to affect his decision.
03:59 PM
Rathbone Brothers and PIGIT update...
Assets under management dipped at Rathbone Brothers, falling 2pc to £49.4bn since in the first half of the year, my colleague Michael O'Dwyer writes.
The firm enjoyed inflows of £1.3bn and reported pre-tax profits of £27m, up from £20m in the first half of 2019.
Meanwhile, Perpetual Income and Growth Investment Trust (PIGIT) announced it has found a new investment manager after firing Mark Barnett in April.
Invesco and Mr Barnett, the former protégé of fallen stock picker Neil Woodford, were dismissed after a run of poor performance.
PIGIT announced that it will merge with Murray Income Trust to create an investment trust with more than £1bn under management.
The combined entity will be managed by Charles Luke at Aberdeen Standard Investments, who is Murray Income Trust’s current manager.
03:46 PM
FTSE ends flat
The major equity benchmarks in Europe finished flat today as traders await the update from the Federal Reserve.
The US central bank will announce its interest rate decision at 7pm (UK time) with the press conference beginning at 7.30pm. Rates are expected to remain on hold.
The FTSE 100 closed just 0.04pc higher while the FTSE 250 slipped 0.18pc.
On the upcoming Fed decision David Madden of CMC Markets said:
The US central bank is expected to maintain an extremely loose monetary policy in an effort to assist the economic recovery, anything less than that in terms of promises, could spark a bearish move.
The pandemic hasn’t been forgotten about, but for now the Fed is in focus. Fears of another wave of Covid-19 are doing the rounds.
European stocks close out a quiet, mixed day ahead of tonight’s FOMC - Stoxx 600 up 0.12%, FTSE 100 flat, DAX flat, CAC up 0.8%, IBEX down 0.4%
Spending on Shopify, a Canadian e-commerce company, surpassed eBay for the first time as consumers chose to shop online amid the coronavirus pandemic.
The New York listed shopping saw revenues surge 97pc to $713m (£550m), beating the Wall Street’s consensus forecasts of $500m.
In results on Wednesday, Shopify said its gross merchandise volume, the amount of products it ships, increased to more than $30bn, up 119pc, in the last three months compared to last year.
On Tuesday, rival eBay reported a lower gross merchandise volume of $27.1bn.
The Ottowa-based company also secured a profit of $36m, against a loss in the previous year. Shares in Shopify rose 10pc in early trading in New York. They are up 165pc so far this year, meaning Shopify’s market capitalisation is $126bn, three times larger than eBay. Shares in eBay fell 2pc.
Eastman Kodak shares have soared today after President Donald Trump announced a deal to work with the photography pioneer to produce ingredients in generic drugs in response to the pandemic.
Shares skyrocketed as much as 570pc and trading was halted more than 10 times in morning trading due to volatility.
With only a few minutes left until European markets close, my colleague LaToya Harding is taking over here. Thanks for following along today!
02:55 PM
Boeing to end 747 production
Boeing has officially announced it is killing off its long-haul 747 jumbo jet after plunging to a bigger than expected second quarter loss.
My colleague Alan Tovey reports:
The last of the 184-tonne jets will roll off the firm's production line in 2022, bringing the curtain down on 54 years of manufacturing. Demand has long been falling as firms opt for newer and more efficient aircraft that are cheaper to maintain.
Bosses unveiled a $3bn (£2.3bn) operating loss for the second quarter of 2020, while revenues slumped 25pc from a year earlier to $11.8bn as carriers around the world rushed to cancel orders following a plunge in air travel.
British Airways, the last major operator of the passenger version of the 747, announced earlier this month that it was retiring its fleet with immediate effect because of the steep fall in demand for passenger flights.
Here’s Hastings’ statement, confirming is has been approached by Sampo:
The Company confirms that it has been approached by Sampo Oyj (“Sampo”) and Rand Merchant Investment Holdings Limited (“RMI”) (the “Consortium”) regarding a possible cash offer for the issued and to be issued share capital of Hastings not already owned or controlled by the Consortium. Following this approach, Hastings has established an independent committee of the Board (the “Independent Committee”), comprising the full Board of Hastings excluding Herman Bosman, the RMI representative to consider this approach and possible cash offer. The Company is in discussions with the Consortium.
There can be no certainty that any firm offer will be made for the Company, nor as to the terms on which any offer might be made.
Under the terms of the Takeover Code, Sampo and RMI now have 28 days to confirm an offer for Hastings.
Finnish insurance group Sampo Oyj is exploring a takeover of British insurer Hastings, Bloomberg reports.
The news service reports:
Sampo has held talks with Hastings about a possible deal for the London-listed company, which has a market value of about £1.1bn, according to the people. Discussions are at an early stage, and there’s no certainty they will result in a transaction, the people said, asking not to be identified because the information is private.
Hastings’s biggest shareholder, Rand Merchant Investment Holdings, is open to a potential sale and would be key to any transaction, said the people. RMI, a South African firm that invests in insurance companies, acquired almost 30pc of Hastings in 2017.
02:13 PM
Santander sinks to first loss in 160 years on €12bn Covid hit
Santander
Santander has swung €10.8bn (£9.7bn) into the red, posting its first loss since it was founded in 1857 after absorbing the biggest coronavirus hit yet taken by a bank.
My colleague Lucy Burton reports:
The Spanish lender, which has a heavy presence on UK high streets, said it took a €12.6bn hit from the pandemic in the second quarter following a sharp decline in the value of businesses it had bought over the years.
Some €6bn came from writedowns on UK purchases such as Abbey National, which established Santander's UK retail business in 2004. The bank insisted that the impairments "do not change the strategic importance of any of the group's markets or businesses".
Santander UK remained in the black despite a 74pc fall in pre-tax profits to £147m compared with the same period last year.
Shareholders have also been told that the board would restore the dividend "as soon as market conditions normalise".
Santander last year backtracked on its high-profile hire of former UBS banker Andrea Orcel as its chief executive after deciding he was too expensive, raising eyebrows across the finance industry as banks frequently have to buy new hires out of their long-term compensation schemes. It now faces a €100m lawsuit from Mr Orcel over the U-turn.
US stocks have opened higher on speculation the Fed will signal continued economic stimulus and hold rates steady.
US market data
01:26 PM
What to expect when tech’s tycoons come to Washington
Ahead of Big Tech's unprecedented joint hearing in Washington later today, read our explainer on what might happen at it.
Today the CEOs of Google, Apple, Amazon and Facebook face an unprecedented joint hearing in Washington as their firms face growing concerns about their size and power…
— Telegraph Technology Intelligence (@TelegraphTech) July 29, 2020
01:03 PM
Investors pull £2bn from Jupiter
Investors pulled a total of £2bn from money manager Jupiter in the first half of the year as a slump in the value of its assets hit fee income.
My colleague Michael O’Dwyer reports:
First half pre-tax profits were halved to £41m and management fees dropped to £161m, nearly 12pc lower than the same period last year.
Andrew Formica, Jupiter’s chief executive, said the past six months had been tough for the whole industry.
He said: “Although we suffered a significant fall in AUM due to both outflows and markets in the first quarter of the year, the second quarter has seen a return to moderate inflows and a partial recovery in asset prices.”
Jupiter now has £39.2bn of assets under management compared to £45.9bn a year ago.
The figures do not include Merian Global Investors, which became part of Jupiter on 1 July following a £390m swoop. Merian, which has been plagued by outflows, lost a further £4.3bn of net business in the six months to June. A loss of £1.4bn on the value of its investments took assets under management to £16.7bn.
12:38 PM
Looking ahead: Fed expected to hold steady at rates meeting
At 7pm London time, we’ll get the latest monetary policy decision from the Federal Reserve.
The US central bank is expected to hold steady, with no change to its rates or the size of its asset-purchasing schemes anticipated by economists.
Here are some key points from Bank of America analysts:
With little change likely to the statement, the focus will be on Powell's presser, which should elaborate on the toolkit.
The Fed is pivoting from “stabilization” to “accommodation”. Officials agree to "enhance" fwd guidance but not the specifics.
Muted market impact expected; Focus will be on stage setting for future easing, which risks lower real rates and weaker USD
Student landlord Unite is braced for a fall in income of up to 20pc as students stay away from university during the pandemic.
My colleague Rachel Millard reports:
The purpose-built student accommodation giant currently has about 84pc of its rooms reserved for the upcoming academic year, but hopes to get that figure to 90pc.
It made a pre-tax loss of £73.9m during the first half of the year, mainly due to swings in the value of its property portfolio. Unite allowed students off rent when they needed to go home during the pandemic.
The company said: “We know through our own research that students are keen to start or get back to University as soon as it is safe to do so.
“The number of students with a deferred start date was down 1pc compared to 2019/20 as of June 18, reflecting the clear desire of young people to attend University, weaker employment prospects and fewer gap year opportunities for school leavers.”
11:40 AM
Rolls-Royce plans £1.5bn share issue – Reuters
Rolls-Royce - Chris Ratcliffe/Bloomberg
Rolls-Royce plans to raise up to £1.5bn through a share issue as it tries to plug a hole in its finances caused by Covid-19, Reuters reports.
The British aerospace engineer is expected to pursue a rights issue with new shares offered to existing investors at a discount to the market price, they said.
The Derby-based business, whose shares have tanked nearly 60pc since early March, is in talks with BNP Paribas, Morgan Stanley and Jefferies about the share sale, which could take place in September, two of the sources said.
Rolls-Royce told Reuters it was still reviewing options to strengthen its balance sheet but no decisions had been taken. “Our current financial position and liquidity remain strong,” a spokesman said.
Jefferies, BNP Paribas and Morgan Stanley declined to comment.
Rolls-Royce, which makes engines for the Boeing 787 and Airbus 350, said it would burn through 3 billion pounds in the first half of the year as hours flown by its engines halved due to the COVID-19 pandemic.
11:22 AM
Pound at four-month high against dollar
The pound has pushed to a new four-month high against the dollar today, as the US currency continues to weaken. The dollar has been put under pressure amid a continued rally for risky assets across global markets, and the country’s continued inability to contain its Covid-19 cases.
Pharma giant GlaxoSmithKline missed analysts’ estimates for earnings per share for the latest quarter, despite profits more than doubling.
The FTSE 100 group’s profit before tax jumped to £2.6bn for the quarter, up from £1.2bn during the same period last year. Its turnover dipped slightly, from £7.8bn to £7.6bn.
For the first half, profit before tax rose to £4.4bn, from £2.5bn in the first half of 2019.
Emma Walmsley, its chief executive, said:
The fundamentals of GSK's business remain strong and we are maintaining good momentum on our strategic priorities…
As expected, our performance this quarter was disrupted by COVID-19, particularly in our Vaccines business, as visits to healthcare professionals were limited due to lockdown measures. Overall, we are seeing good underlying demand for our major products and are confident this will be reflected in future performance when the impact of COVID measures eases.
Earnings per share – a measure closely watched by analysts – came in at 19.2p, versus expectations of 19.9p. That’s likely to to put some pressure on the group’s shares today. It maintained an estimates that its earnings per share would fall 1–4pc this year.
10:42 AM
Smith & Nephew swings to loss
Smith & Nephew - REUTERS/Michael Buholzer/File Photo
Hip and knee replacement firm Smith & Nephew swung to a $34m loss during the first half of the year as the pandemic led to the cancellation of elective surgeries worldwide.
My colleague Hannah Uttley reports:
The FTSE 100 firm said it will pay investors an interim dividend of 14.4 cents (11p) per share despite tumbling to a loss from a $383m profit a year earlier.
Sales fell 29pc to $901m but Smith & Nephew noted an improvement in performance during the second quarter, with revenues in China returning to growth. Group sales improved from a decline of 47pc in April to a fall of 12pc in June, it said.
The firm said elective surgeries have now resumed in the US and in most European companies.
Despite an improvement in trading, Smith & Nephew said its financial guidance for the year remained withdrawn due to continued uncertainty surrounding the crisis.
Adam Barker, an analyst at Shore Capital, warned that even as elective surgeries resume, many people may be reluctant to visit a hospital due to fears of the virus’s spread.
He said: “There remains a huge degree of uncertainty on how the Covid-19 situation will evolve and given S&N’s exposure to elective procedures and developed markets, its ability to get back on track will depend to a large degree on what further restrictions are needed to control the outbreak.”
The group’s share price has dipped slightly this morning:
10:18 AM
Game sells esports venues to US startup – FT
Game Digital, the video games retailer owned by Sports Direct boss Mike Ashley, is selling it competitive gaming venues to a US startup, the FT reports.
New York-based Vindex will buy Belong Gaming in a deal with the UK retailer that values the network of gaming sites at about $50m, according to people close to the transaction.
They said the US business, which raised $80m when it launched last October, had secured another $300m in funding to allow it to expand Belong over the next five years.
The acquisition underlines the rapid expansion of esports, which has continued its surge in popularity as viewers turned to streaming platforms such as Google’s YouTube and Amazon’s Twitch to watch competitive gamers’ exploits during lockdown.
Mike Ashley’s Game Digital will sell its competitive gaming venues to US start-up Vindex for $50m https://t.co/zE5wq1lAnp
Heathrow has sunk to a record half-year loss after the pandemic sent passenger numbers plunging at Britain's biggest airport.
My colleague Simon Foy reports:
The near-global aviation standstill in recent months resulted in a £1.06bn pre-tax loss for the six months to June in the wake of a 96pc decline in passenger numbers in the last quarter.
The dire figures prompted chief executive John Holland-Kaye to push for a virus testing regime at airports that could reduce the time of the 14-day quarantine.
“Today’s results should serve as a clarion call for the Government – the UK needs a passenger testing regime and fast. Without it, Britain is just playing a game of quarantine roulette,” he said.
Mr Holland-Kaye drew comparisons with European countries that are already conducting Covid-19 tests at airports, which he said could be rolled out in the UK within two weeks.
The book chain, which declined to say the number of jobs at risk, said it was currently in consultation with those affected.
Waterstones also confirmed it had also not reopened a number of its stores following lockdown where “circumstances made this impractical”. The firm said these were mainly its campus branches and one at Leadenhall Market in London. Its Covent Garden store, which reopened when lockdown measures eased, closed again after a week’s trading, owing to the lack of footfall in central London.
09:47 AM
Smurfit Kappa rises after unveiling interim dividend
Packaging group Smurfit Kappa is just behind Next as the FTSE 100’s second-biggest riser today, after its board decided to pay an interim dividend that replaces its scrapped April payout.
The group will pay out 80.9p per share, having scrapped previous payment plans due to the pandemic.
Its revenues fell 9pc in the first half of the year, down to €4.2bn compared to €4.6bn for the same period last year, pushing its profit before tax down 16pc to €383m.
Tony Smurfit, its chief executive, said:
The strength and scale of our integrated system and our supply chain expertise meant we were able to ensure the continuity of supply of essential products for everyday life across multiple sectors.
We are again proving that our business model, geographic diversity and our commitment to innovation and sustainability continue to deliver.
09:24 AM
Aveva revenues dip
Revenues at Aveva dipped slightly during the past quarter, according a a trading statement this morning.
The FTSE 100 industrial software specialist said its organic revenues fell 3.5pc over the period, despite a 30pc rise in subscription sales. It said:
This reduction was partly due to Aveva’s ongoing transition to a subscription business model and partly due to disruption caused by Covid-19.
It said demand for software remained robust despite the pandemic, with contract wins in the power generation, marine, water, food & life sciences, and oil & gas sectors. It added Covid-19 is expected to accelerate a shift to digitalisation, saying its order pipeline remains solid.
09:15 AM
Openreach pledges to expand rural fibre networks
Openreach
Openreach, BT’s infrastructure division, has pledged to improve internet accesss in rural Britain by extending its fibre service to 3.2 million “hard to reach” homes by 2025.
My colleague Matthew Field reports:
The connections for the “final third” of homes in far flung areas come as part of BT’s £12bn plan to connect 20 million premises to fibre optic cables over the next decade.
The agreement to build in these areas, which comes at a greater cost than in urban areas, comes as Ofcom is expected to remove a pricing cap on parts of Openreach’s copper network.
The removal will allow Openreach to increase its prices in line with inflation when it sells wholesale access to its network to operators, including Sky or TalkTalk.
The expansion of Openreach’s network would see its fibre optic wires cover roughly a third of homes considered to be the most challenging to reach in Britain.
Consumer credit borrowing was far lower than expected during June, with Britons paying back £0.1bn net over the month.
The drop reflected a £248m repayment of credit card debt, offset by a £162m rise in additional other borrowing. Economists polled by Bloomberg had expected £2bn to be paid back.
The BoE said:
Household’s consumer credit borrowing recovered a little in June, following three particularly weak months. But it remains significantly weaker than pre-Covid. On net, people repaid £86 million of consumer credit in June following repayments totalling £15.6 billion over the previous three months. The small net repayment contrasts with an average of £1.1 billion of additional borrowing per month in the 18 months to February 2020. The weakness in consumer credit net flows in recent months meant that the annual growth rate was –3.6pc, the weakest since the series began in 1994.
The smaller net repayment compared to May reflected an increase in gross borrowing. Gross borrowing was £17.7 billion, up from £13.6 billion in May, but this was still below the average £25.5 billion a month in the six months to February 2020. Repayments on consumer borrowing were broadly stable in June, at £18.1 billion, below their pre-Covid February level of £24.6 billion.
08:33 AM
Mortgage approvals rebound
UK mortgage approvals bounced back during June, according to the latest data from Bank of England.
The total number of home loans jumped to 40,000 last month, up from a record low of 9,300 in May. The bounceback was stronger than economists had expected – polling by Bloomberg pointed to a rise to 35,000 approvals.
The BoE’s data points to a resurgence in loans for home purchases as a key driver of the rise:
BoE - BoE
08:27 AM
FCA creates new guidance to protect vulnerable customers
The Financial Conduct Authority – Britain’s financial watchdog – has set out new guidance for companies to better protect vulnerable customers.
Recognising vulnerability and understanding customers’ needs
The value of sympathy
The importance of empowered and knowledgeable staff
Meeting vulnerable consumers’ communication needs
Christopher Woolard, the FCA’s interim chief exeuctive, said:
Today’s guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly. We know many more customers will be struggling with their finances as a result of the impact of coronavirus. Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance.
— Financial Conduct Authority (@TheFCA) July 29, 2020
08:16 AM
Taylor Wimpey shares drop
Taylor Wimpey - REUTERS/Eddie Keogh/File Photo
Taylor Wimpey is leading fallers on the FTSE 100, after the housebuilder swung to a nearly-£40m loss for the first half of the year.
The group swung int the red from a nearly £300m profit for the same period last year after 2,771 building completions were disrupted by stie closure prompted by Covid-19. The group said the pandemic had a “significant impact” on its operations, with a “material impact” on performance.
Pete Redfern, its chief executive, said:
Our performance for the first half of 2020 has been impacted by the closing of our sites and sales centres but we have now reopened all sites successfully and safely and have returned to a sustainable level of sales and build. We are delighted that our NHS and care workers discount scheme has been taken up by over 1,200 households to date.
Looking ahead, balance sheet strength, a long order book and our high quality and growing landbank gives us confidence in our ability to navigate the challenges and emerge stronger from the pandemic. While uncertainties remain, we are confident in the underlying fundamentals of the housing market.
08:04 AM
Hotter Shoes bailed out
Landlords have bailed out Britain’s biggest shoemaker, Hotter Shoes, under a rescue deal which will see one in four of the company’s 1,000 staff lose their jobs.
My colleague Russell Lynch reports:
The company, which is owned by private equity firm Electra, is closing all but 15 of its 61 stores under a creditors voluntary arrangement to cut its rental bill.
Hotter chief executive Ian Watson said 99.5pc of landlords by rental value had agreed the deal, which will see them swaller losses of almost 75pc. Around 250 jobs will be lost.
The retailer, founded in 1959, has been hard hit by the Covid-19 pandemic which has kept its older customers away from the high street.
The outbreak has forced it to speed up plans to move online after warning it could run out of cash by November without a restructuring.
Mr Watson said: “The past five months of Covid related lockdown and restrictions have been extremely challenging for our management team and employees. In common with other retail businesses we have had to adapt to survive, and this has necessitated significant structural change and regrettable job losses.”
08:00 AM
FTSE pushes up
After a lukewarm start, European equities have pushed higher following this morning’s company reports, with the FTSE 100 up about 0.4pc currently.
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07:51 AM
Money round-up
Here are some of the day’s top stories from the Telegraph Money team:
Losses at Aston Martin Lagonda widened during the first half as the group prepared for the launch of its make-or-break debut sports utility vehicle, the DBX.
The FTSE 250 group posted a statutory loss of £227.4m for the six months to the end of June, increasing from an £80m loss for the same period last year. Revenue fell 64pc to £146m.
It was an eventful period for the company, with Canadian billionaire Lawrence Stroll installed as executive chairman in April after leading a rescue bid.
Mr Stroll said it had been a “very intense and challenging six months”, adding:
Obviously, it has been a challenging period with our dealers and factories closed due to Covid-19, in addition to aligning our sales with inventory with the associated impact on financial performance as we reposition for future success. However, I have been most impressed that through this most challenging of times we have been able to reduce our dealers' sports car inventory by 869 units.
He said the launch of the DBX is “critical” to the group’s future, with production restarted and initial deliveries underway following virus-driven delays. The group said early signs from China – a key target market for the DBX – were positive, with dealership sales in the country up 11pc year-on-year during June.
07:13 AM
Europe makes mixed open
A pretty flat and uninspiring open for European equities: the FTSE 100 is trading flat, with Germany’s DAX putting in a similar showing. France’s CAC has risen slightly.
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07:11 AM
Next raises sights as sales beat expectations
Next - Yui Mok/PA Wire
Next expects to finish the year in the black, even in a worst-case scenario, after reporting a lower-than-expected slump in sales in the second quarter.
My colleague Simon Foy reports:
The retailer upgraded its annual profit guidance after sales were “more robust than anticipated” and came in “significantly ahead” of its internal plan.
Based on its new “central” scenario, annual pre-tax profit was now estimated at £195m.
The high street bellwether said its “upside” sales scenario would produce a £330m annual profit, while it would still make a £15m pre-tax profit in its worst case scenario.
The upgrade came after full-price sales fell 28pc for the three months to July 25.
Rio Tinto raises dividend despite revenue pressure
Mining giant Rio Tinto has boosted its dividend, despite taking a 4pc hit to its reported underlying earnings during the first half.
Strengthening iron ore prices helped offset the impact of the virus on Rio’s copper and aluminium production.
The FTSE 100 group will pay out $2.5bn in ordinary interim dividends to investors, a 3pc increase on last year’s payout.
The group’s underlying earnings – one of its preferred performance measures – fell 4pc during the six months to the end of June, from $4.9bn to $4.75bn.
It total revenue fell from $20.7bn to $19.3bn, but profit before tax rose from $5.1bn to $5.3bn.
Its chief executive, Jean-Sébastien Jacques, said:
We have been agile and adapted our way of working, to deliver another resilient performance while navigating the new and ongoing challenges of dealing with COVID-19...
Our world-class portfolio of high-quality assets and our strong balance sheet consistently serve us well in all market conditions and particularly in turbulent times.
06:56 AM
Barclays sets aside £1.6bn more for bad loans
Barclays - Simon Dawson/Bloomberg
Barclays has put aside another £1.6bn to cover for loans and mortgages that customers may struggle to repay as it braces for a contraction in the UK economy as high as 51pc.
My colleague Lucy Burton reports:
The higher than expected provision for soured loans takes the amount the bank has put aside for credit losses to £3.7bn for the first half of this year, dragging its profit down from £3bn a year ago to £1.3bn.
Without the charge, however, its profits shot up to £5bn for the half-year following another bumper quarter in its trading business that will boost chief executive Jes Staley in his battle against activist investor Ed Bramson, who has called for cuts in its prized investment bank. Revenues in its fixed income, currencies and commodities arm shot up 83pc.
The Financial reporting Council, Britain’s audit watchdog, has imposed sanctions against audit firm BDO and David Roberts, one of its partners.
The sanctions relate to the audit of AmTrust Europe Limited for the 2014 and 2015 financial years.
The watchdog said:
The breaches of relevant requirements in this case related to an area of audit work which was fundamental for the audits: the approach of AEL’s management to setting its technical provision for outstanding claims.
It issued a £200,000 fine against BDO, which was discounted to £160,000 due to the company’s early admission. It said the fine level reflects that BDO “had already adopted a number of appropriate measures designed to address the shortcomings evident in the audit work in question”.
Good morning. European equities are set to open in the red as investors await the Federal Reserve’s latest rate decision.
The central bank extended most of its emergency lending programmes by three months, through the remainder of 2020 and is set to announce its rate decision later today, with the market anticipating a dovish statement.
5 things to start your day
1) Banks could be free to restart dividend payments within months: Lenders were forced to halt shareholder pay-outs following heavy pressure from the Bank of England after the pandemic struck - but Threadneedle Street has said it will consider plans to dole out cash from January onwards as an economic recovery begins.
3) John Lewis has appointed a new HR boss as fears grow over a wave of job cuts. Nikki Humphrey will preside over the partnership’s 80,000 staff when she takes the role in October after standing down as chief people officer at airline Virgin Atlantic.
4) Why the City of London has turned into a ghost town: Work-related travel is down 58pc in Greater London, according to data from Google. This is likely to be even more significant for office-based workers. Longer term, analysts at Shore Capital are predicting that a quarter of time previously spent in the office will now be spent at home.
Asian shares were mixed on Wednesday as reports of dismal company earnings add to pessimism over the widespread economic fallout from the coronavirus pandemic.
Tokyo's Nikkei 225 index lost 0.9pc after Fitch Ratings downgraded its outlook for Japan to "negative" from "stable".
Earnings reports overnight also discouraged investors, pulling shares lower on Wall Street. Market players are awaiting the outcome of a US Federal Reserve policy meeting that began on Tuesday. Gold prices moderated their steep climb, adding 0.3pc to 1,949.70 by midday Asia time.
The Nikkei 225 gave up 218.83 points to 22,438.55 while South Korea's Kospi added 0.3pc to 2,263.35. Australia's S&P/ASX 200 slipped 0.3pc to 6,001.90. Hong Kong's Hang Seng was little changed at 24,773.44, while the Shanghai Composite jumped 1.1pc to 3,261.76.
Coming up today
Interim result: Aston Martin Lagonda, Barclays, Drax, FDM, GSK, Jupiter Fund Management, Rathbone Brothers, Rio Tinto, Smith & Nephew, Taylor Wimpey, Unite, Weir
Trading statement: Aveva, Hyve, Next, Premier Foods, Tullow Oil
American Airlines and Southwest Airlines both lost money in the first quarter, and Southwest said Thursday that it will limit hiring and close operations at four airports. Airlines are dealing with higher labor costs and delays in getting new planes from Boeing, which is limiting their ability to add more flights at a time of high demand for travel. American said it lost $312 million as labor costs rose 18%, or nearly $600 million.
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