Sterling rose to its highest level since March 18 against the US dollar as traders await a data-heavy week that is expected to show the UK’s economy is rebounding from the pandemic.
The pound rose 1pc to $1.39 against the US dollar, ahead of this week’s PMI surveys, as well as figures on the labour market, inflation and retail sales. It was also reaping the benefits of currency traders in the US selling off the US dollar over inflation fears.
“The pound went on a tear, using a quiet session to indulge in some economic optimism following the first weekend under the latest set of eased restrictions in the UK,” said Connor Campbell, financial analyst at Spreadex.
“Sterling was especially strong against the dollar – but then again, what wasn’t this afternoon. The greenback is having a minor tantrum over the Federal Reserve’s insistence that rising inflation will only be temporary, and therefore that the central bank won’t be taking any action to combat it.”
The British currency also rose as much as 0.7pc against the euro to touch 85.89 pence – the highest in almost two weeks – amid confidence in the UK’s roadmap out of lockdown.
“Real time data is clearly showing that UK citizens have loved nothing more than hitting the shops, or a beer garden for a taste of normality,” said Jeremy Thomson-Cook, chief economist at Equals Money.
“Similarly, road traffic, the number of people travelling to workplaces and job posting suggests that the combination of stronger spending and the vaccine effort should support sterling in the coming weeks. It is how long this bounce lasts that is crucial for sterling but, in the meantime, this little impulse of pound strength is coming just as we get some negativity from both the US and eurozone.”
A stronger pound knocked the benchmark FTSE 100 from its post-pandemic high reached on Friday, though it still managed to just about remain above the 7,000 level. It closed down 19.45 points at 7000.08. The mid-cap FTSE 250 shed a similarly slight 31.32 points to 22,490.86.
Weaker oil prices also acted as a heavyweight, after a surge in infections in India and other countries sparked concern about demand.
Engineer Melrose, down 8.3p at 170.6p, was the worst performer on the benchmark after deciding to sell its air management unit, while gas and exploration company Energean suffered the worst drop on the FTSE 250, falling 44p to 813p after its operating loss widened in 2020.
Topping the benchmark was a host of retailers, as an easing of lockdown restrictions helped markets.
Sainsbury led the charge, rising 6p to 254.7p, followed by Ocado which gained 45p to £22.26 and B&M up 10p to 568.6p. B&Q owner Kingfisher, Primark parent Associated British Foods and Tesco were all among the top 10 risers. M&S added 5.6p to 162.1p.
That's all from us today - here are some of our top stories:
Thank you for following along, as always. See you back here in the morning!
Rapid Covid-19 test start-up raises $50m
The British start-up behind what looks set to be the world's most accurate rapid Covid-19 test has raised $50m (£35.7m) in fresh cash as it prepares to help cope with a third wave of the virus.
My colleague Hannah Boland reports:
Cambridge-based Sense Biodetection said it had raised the cash to accelerate the launch of its tests, which is expected to come before the autumn.
The disposable nasal swabs claim to combine the ease of the rapid lateral flow tests, which give Covid-19 test results within minutes, with the accuracy of the PCR tests, which are sent away to labs for verification.
Sense boss Harry Lamble said the company had a "six-year head start on others that have jumped on a Covid bandwagon". It comes amid concerns over the accuracy of lateral flow tests, with The Guardian last week publishing leaked emails between officials which suggested there had been a high rate of false positives.
M&S creates 300 jobs with second warehouse
Marks & Spencer is pressing ahead with expansion of its online business as it prepares to open a second warehouse which will create 300 jobs.
My colleague Sam Hall reports:
The retailer said it will open a new automated warehouse in its existing distribution centre in Castle Donington, which currently delivers food and clothing to M&S stores. It hopes to have up and running in time for Christmas, and it is set to create 300 roles as product is picked off the automated system.
Around 35,000 items will be delivered from the new warehouse each day, with plans for the site to eventually support around 20pc of all online orders.
Stephen Langford, director of M&S.com, said the new warehouse was part of the retailer’s push to make its clothing business “more relevant”.
The move is part of M&S’s ‘never the same again’ turnaround strategy as it tries to revive its fortunes by cutting costs, shutting stores and investing more in its online business.
Transatlantic competition heats up for BA
British Airways is facing a new threat when its lucrative Transatlantic services restart with the launch of US budget carrier JetBlue.
My colleague Oliver Gill reports:
The UK’s Civil Aviation Authority has today given JetBlue regulatory approval. It is the first permit issued to a foreign carrier since the UK formally exited from the EU.
The move means JetBlue has the green light to start operating services between London, New York and Boston. Led by former BA executive Robin Hayes, it has long harboured an ambition to begin flights to the UK. It has previously focused on flying across North America.
Flights to North America have been hit hard by the pandemic with restrictions on both sides of the Atlantic Ocean preventing passengers from travelling.
Services to the US and Canada have traditionally been the most profitable for BA and its fierce rival Virgin Atlantic.
JetBlue's entrance follows the exit of Norwegian, which has been forced to focus on short-haul destinations in order to survive.
Sterling rises to $1.39
Sterling has risen more than 1pc against the US dollar to hit $1.39, its highest level since March 18.
It comes at the start of a data-heavy week that is expected to show the UK's economy is rebounding. The data includes PMI surveys, as well as figures on the labour market, inflation and retail sales.
The pound is also around 0.7pc higher against the euro, at 85.89 pence - the highest in almost two weeks.
"The pound went on a tear [today], using a quiet session to indulge in some economic optimism following the first weekend under the latest set of eased restrictions in the UK," said Connor Campbell, financial analyst at Spreadex.
"Sterling was especially strong against the dollar – but then again, what wasn’t this afternoon. The greenback is having a minor tantrum over the Federal Reserve’s insistence that rising inflation will only be temporary, and therefore that the central bank won’t be taking any action to combat it."
Goldman pours £50m into Starling
Goldman Sachs has poured £50m into online challenger bank Starling months after there was speculation that its arch-rival JP Morgan wanted to buy it.
My colleague Lucy Burton reports:
The online bank, founded by former computer scientist Anne Boden in 2014 after she spent 30 years working for “boring big banks”, said the investment by Goldman is an extension of its £272m funding round announced last month, which valued the business at £1.1bn.
Ms Boden said the Wall Street bank will help bring "valuable insight as we continue with the expansion of lending in the UK, as well as our European expansion and anticipated M&A".
She told The Telegraph late last year that she "didn't do this to sell out to a big bank" and indicated that she has her eye on a stock market listing. Months later America's biggest bank by assets JP Morgan, which plans to launch a consumer bank in the UK, was said to be considering a bid.
Coronavirus has accelerated the shift away from branches and towards online banking and big banks have found it difficult to mimic the success of nimbler start-ups such as Starling, Revolut and Monzo. NatWest closed its Monzo-rival, Bó, six months after launching it.
However banking industry newcomers have struggled to seriously challenge the major banks, with Starling only making its first monthly profit at the end of last year.
Peloton suffers after safety warnings
Shares in Peloton fell 8pc after consumers with pets or children were warned against using one of its treadmill machines following the death of a child.
My colleague Claudia Rowan reports:
US safety regulators said on Saturday that Peloton’s Tread+ exercise machine, which costs $4,295 (£3,103), posed “serious risks” to children, following 39 accidents and one death involving the treadmill.
The Consumer Product Safety Commission (CPSC) said owners of the machine who have small pets and children should stop using it immediately if they are present. The warning follows reports of children becoming “entrapped, pinned, and pulled under" the machine.
John Foley, Peloton's co-founder and chief executive, emailed Tread+ customers last month to inform them of a child’s death involving the product. The US regulator is continuing to investigate known injuries or deaths involving the device.
Peloton claimed the Commission’s statement was “inaccurate and misleading”, with Mr Foley saying the company had no intention of stopping the sale of the treadmill.
In a letter to customers, he insisted that Peloton has "fully cooperated” with the regulator, except with a request from the agency asking for "personally identifiable information of certain members".
Mr Foley said: "At no time was Peloton trying to impede CPSC's investigation.
"We were simply standing behind our members' right to maintain their privacy, and we remain committed to providing this type of information only with a member's consent or pursuant to a subpoena."
European Super League hands ‘Big Six’ owners chance to sell clubs at higher price
The European Super League will allow the foreign owners of “Big Six” English football clubs to sell them at a higher price as the proposed new competition would guarantee income that is currently dependent on qualifying for the Champions League.
My colleague Oliver Gill reports:
Shareholders of the clubs will be able to safeguard income streams in the years to come, significantly boosting what their stakes are worth, according to sports business experts at accountancy firm Deloitte.
Lucrative TV and other media rights will spike as the new league corners the demand to see the world’s best players.
Analysts from Italian bank Intesa Sanpaolo estimated that the European Super League would generate more in TV rights than the €2bn (£1.7bn) made by the European Champions League each year.
Tim Bridge, from Deloitte’s Sports Business Group, said that the “driving factor” behind Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham joining the European Super League was to protect what the clubs were worth to the owners.
Barclays pulls out of Alabama prison deal after backlash
Barclays has pulled out of a deal to help fund two new jails in Alabama following a backlash from activists and investors.
My colleague Lucy Burton reports:
The bank has bowed to pressure after they demanded to know why it had decided to underwrite a deal by private prison operator CoreCivic just two years after it swore off America’s for-profit prison sector.
Although Barclays was not lending directly to CoreCivic, its decision to underwrite the deal led to accusations that it was looking for loopholes to still get involved in the controversial private prison sector after vowing to stop financing the industry.
Business advocacy groups the American Sustainable Business Council and Social Venture Circle terminated the bank's corporate memberships and returned $15,000 in fees paid by the bank. They argued that by participating in the deal Barclays was "profiting from the injustice of the US prison system".
Wall Street retreats from record highs
US stocks have opened in the red, retreating from record highs, ahead of a busy week for corporate earnings.
Man Utd shares soar on Super League deal
Shares in Manchester United, which is listed in New York, have jumped by nearly a tenth at the open after the club announced it will be one of the founding members of the controversial European Super League.
If the plan materialises, the new tournament would effectively end the UEFA Champions League’s decades-long reign as the world’s premier club contest, and revolutionise the sport’s structure.
The 12 football clubs that have signed a binding agreement to launch the tournament have been guaranteed a “welcome bonus” worth €200m-€300m each, the FT reported.
The stock rose 9pc to $17.60 in early trading.
Treasury outlines plans for LCF compensation scheme
The Government has said it will pay out around £120m to about 8,800 bondholders in collapsed London Capital & Finance (LCF).
City minister John Glen announced a scheme which would help the investors in LCF who did not qualify for help from the Financial Services Compensation Scheme.
Investors will be given back 80pc of the money that they lost when LCF went into administration, capped at £68,000. The amount they are allowed to take will be reduced if they have been given interest payouts from LCF or money from the company's administrators.
UK intervenes in Nvidia-Arm deal on national security grounds
The Government has intervened in US chip giant Nvidia’s acquisition of British tech firm Arm on security grounds.
Digital Secretary Oliver Dowden has announced a public interest intervention into Nvidia’s proposed $40bn purchase of the company from Japanese investment fund SoftBank, which bought it back in 2016 for $31.4bn.
The notice confirms Mr Dowden has intervened “on national security grounds” and stated: “In reaching this decision, he considered advice received from officials across the investment security community.”
The Competition and Markets Authority will now examine the competition and national security issues of the deal, submitting a report to the minister by July 30.
The transaction - one of the technology sector’s biggest ever and the largest on record of a British tech company - already faced regulatory hurdles.
America’s Federal Trade Commission (FTC) and Britain’s CMA have already opened investigations, while authorities in the EU, China and potentially Korea are also expected to scrutinise the deal.
Google, Microsoft and Qualcomm have also voiced concerns about the deal.
Arm’s independence thus far has meant any company can buy its designs for chips and put them into production for a variety of devices. But it has also given Arm insights into its customers’ own businesses.
My colleague Hannah Boland has the story here.
Wall Street to pull back from record highs
US stock markets look set to retreat from recent record highs when trading opens this afternoon.
The Dow is set to fall 0.2pc to 34,018 points and the S&P 500 looks like it will open 0.25pc down, at 4,166 points. The tech-heavy Nasdaq will take a deeper hit, falling 0.42pc to 13,967 points, as Wall Street loses momentum.
Both the Dow and S&P finished at new peaks on Friday and also posted their fourth consecutive weekly gains, following on the heels of strong data for American housing starts, employment and retail sales.
Investors are banking on accelerated US pandemic containment efforts marking a step toward economic normalcy, with half of all adults in the country now having had at least one vaccine dose.
"The S&P 500 has reached new highs while volatility has sharply declined. Low volatility has outweighed low correlations among stocks, driving return dispersion back below the long-term average," David Kostin, Goldman Sachs chief U.S. equity strategist, said in a note seen by Yahoo on Monday.
"As the US moves beyond key macro events such as the 2020 election, the $1.9 trillion fiscal stimulus package, and peak economic activity, we expect three defining themes for markets will be tax reform, infrastructure, and pricing power."
Home workers less likely to get promotions or bonuses, official study finds
Staff who work from home instead of going into the office are less likely to be promoted, get a bonus or receive training than those who commute, according to a landmark study of the jobs market.
My colleague Tim Wallace reports:
Between 2013 and 2020, those who mainly worked from home were less than half as likely to be promoted as other workers and were 38pc less likely to receive a bonus than those who never worked from home. They were also about 40pc less likely to get training or education at work.
Josh Martin of the ONS said: "It is evidence that people working mainly from home may be out of sight, out of mind."
Those in the office benefitted from so-called visibility bias that increased their chances of promotion, the study found.
Workers who spend most of their time at home may also be less productive, the ONS said. However, they may receive non-monetary benefits not captured by the analysis, such as flexibility and less time spent commuting.
The findings will fuel fears that unless the pandemic has caused a fundamental shift in the way staff are treated, it means those who keep working from home after Covid risk losing out on career opportunities.
April footfall a quarter lower than 2019 levels
UK footfall was down about a quarter in April compared to the the same period in 2019, according to new data from retail analysis company Springboard.
My colleague Ben Gartside reports:
UK high streets have been the worst hit, according to the data, with a drop of 34pc compared to April 2019. Meanwhile, retail parks remain a popular destination for shoppers due to open air surroundings, as footfall was only down 2pc on the same period in 2019.
Shopping centres also continue to struggle, with footfall down 28pc compared to the same period in April 2019. Central London suffered as well, as 60pc less people were in the capital compared to 2019.
The numbers come as almost one in four workers hope never to set foot in the office again, with 7.5m people keen to permanently work from home every day of the week, according to a new survey by Deloitte.
At the same time, 28pc are desperate to get back and hope never to have to turn their kitchen or spare bedroom into a home office.
Chancellor Rishi Sunak told The Telegraph in March that workers may quit if they are not given the opportunity to return to the office.
Throwing his support behind physical workplaces, Mr Sunak said: “You can’t beat the spontaneity, the team building, the culture that you create in a firm or an organisation from people actually spending physical time together.”
Oil drops after Covid cases spike in India
A surge in coronavirus infections in India and other countries is weighing on oil prices amid concerns about demand.
My colleague Rachel Millard reports:
Brent Crude was down 0.1pc to $66.70 per barrel by mid-morning, while WTI slipped 0.06pc to $63.14.
"Resurging case numbers have reversed the recovery in the emerging countries," such as India and Brazil, ANZ Research said in a report, reported by Reuters.
India reported a record rise in coronavirus infections of 273,810 on Monday. Hong Kong is suspending flights from India, Pakistan and the Philippines.
GameStop boss to exit by end of July
GameStop's chief executive George Sherman will leave the company before the end of July, ending a tenure marked by a persistent slump and failed performance targets.
GameStop has become a favorite of Reddit-reading day traders this year, sending the stock soaring several-fold. But the video-game store chain has struggled to pull out of a slump.
GameStop missed both sales and profit estimates in its most recently reported quarter, despite getting a bump from new gaming consoles. Activist investor Ryan Cohen, recently named the company’s next chairman, is spearheading a turnaround at the retailer that will prioritize online commerce over physical retail. [via Bloomberg]
Pound nears $1.39
The pound has jumped 0.4pc this morning and is nearing $1.39 as the economy kicks back into gear.
Jeremy Thomson-Cook, chief economist at Equals Money, says:
With UK shops and restaurants open for a week, real time data is clearly showing that UK citizens have loved nothing more than hitting the shops, or a beer garden for a taste of normality.
Similarly, road traffic, the number of people travelling to workplaces and job posting suggests that the combination of stronger spending and the vaccine effort should support sterling in the coming weeks.
It is how long this bounce lasts that is crucial for sterling but, in the meantime, this little impulse of pound strength is coming just as we get some negativity from both the US and Eurozone.
Juventas shares soar on Super League deal
Shares in Juventus Football Club jumped by more than a tenth after the Italian club joined a group of the game’s wealthiest teams in announcing plans for a new “super league” that could transform revenue streams at the top level of the sport.
Bloomberg has the details:
Juventus stock rose as much as 12pc to 85 euro cents in early Milan trading, with Juve Chairman Andrea Agnelli set to be a vice chair of the breakaway group.
Other members include Manchester United Plc, whose shares rose 3.9pc in early US premarket trading on thin volume.
Establishing a new elite tournament in Europe would effectively end the UEFA Champions League’s decades-long reign as the world’s premier club contest, and revolutionise the sport’s structure.
Under the plan, 15 founding teams would share an upfront payment of €3.5bn ($4.2 billion).
“The financial incentive for the clubs is plain to see, with a multi-billion dollar package at the heart of the scheme, albeit it would forever break the integrity of the club game,” Neil Wilson, chief market analyst at Markets.com, said in emailed comments.
Johnson cancels trip to India
Boris Johnson’s cancelled trip to India could end up having big implications for the Government ambitions for ‘Global Britain’.
My colleague Louis Ashworth reports:
The timing of the scrapped trip was crucial. Set to occur just weeks before India and EU negotiators meet in Lisbon, it would have let the PM get in ahead of counterparts on the bloc – an advantage that Number 10 is said to have considered hugely important.
A virtual summit between Mr Johnson and Mr Modi is likely to be accompanied by some announcement of spending that companies would have been planning anyway.
More importantly, it will cement the creation of an “enhanced” economic partnership between the two countries, setting the stage for future trade negotiations.
What will be missing – and hard to quantify – is what the loss of the truly personal element will be, as well as the less impressive optics of a trade delegation being downgraded to a glorified Zoom meeting.
The potential prizes of a trade deal with India are great: in particular, potential access to a market of some 1.4bn people, as well as an opportunity to cut tariffs on some key exports.
The Government will be hoping this cancellation doesn’t set those plans back too far.
Wagamama chief steps down
The boss of noodle chain Wagamama has revealed plans to leave after nearly three years in the role and hand over the reins to an internal successor.
Emma Woods will step down on June 1 – following the Government's planned reopening of restaurants across the UK on May 17 – to focus on her career as a non-executive director on company boards.
Ms Woods will be replaced by Wagamama's chief experience officer, Thomas Heier, but she will stay on as an adviser as the inaugural member of the group's new brand board.
Ms Woods said: "It has been an honour to lead the Wagamama business through the last tumultuous years but, as the business emerges from the pandemic and starts an exciting new chapter, it feels the right time to hand on the chopsticks to someone I know loves the brand as much as I do."
Mr Heier has been with the company since 2017, first as people director before heading up the US arm in 2018 and then being promoted to his current role last year, heading up marketing, insight and customer experience operations.
Treasury and Bank of England launch digital currency taskforce
Chancellor Rishi Sunak has announced this morning that the Treasury and the Bank of England has launched a digital currency taskforce.
Mr Sunak said:
Our vision is for a more open, greener, and more technologically advanced financial services sector. The UK is already known for being at the forefront of innovation, but we need to go further. The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.
'Sunny weather gives hospitality businesses boost over the weekend'
Commenting on this morning's market moves, Russ Mould, AJ Bell investment director and Telegraph columnist, says:
The FTSE 100 consolidated its position as investors balanced reopening optimism with a need to take stock after the index closed above 7,000 for the first time post-Covid.
Sunny weather should have given retailers and hospitality businesses in England a boost over the weekend and this helps explain why the more domestic-facing FTSE 250 outperformed its large-cap counterpart and is marking new record levels.
All eyes will now be on whether the FTSE 100 itself can push yet higher and challenge its own all-time high of nearly 7,900 as the economy continues its recovery from the pandemic.
On a day when the headlines are all about a breakaway super league shaking up the football world, it’s worth remembering that the performance of the FTSE 100 has been anything but ‘super’ when comparing global stock market league tables.
The future direction of oil prices and the market’s current preference for value stocks are likely to be key to any new record for the FTSE 100 as these factors have been a big reason behind the index’s advance so far in 2021.
ABN Amro agrees €480m anti-money laundering settlement
ABN Amro Bank has agreed to pay €480m to end a Dutch investigation that found “serious shortcomings” in the lender’s processes to combat money laundering.
The amount will be booked in the first quarter and the lender expects a “modest” loss as a result, according to a statement on Monday.
As part of the settlement, ABN Amro will pay a fine of €300m and a disgorgement of €180m, with the latter reflecting costs the lender had saved, according to the Dutch public prosecutor.
”This settlement marks the end of a painful and disappointing episode for ABN Amro,” Chief Executive Officer Robert Swaak said in the statement.
Mr Swaak, a former PwC Netherlands chairman, was appointed to the role last year to help the lender move past the probe as well as a tax scandal. He is retreating from large parts of the investment banking business as he focuses on cost cutting and digitization. [via Bloomberg]
England's 'big six' face expulsion from Premier League
The big story overnight, which will dominate today's news agenda, is the creation of a €10bn breakaway "European Super League".
England's Man Utd, Man City, Liverpool, Chelsea, Arsenal and Spurs have announced they are joining clubs in Spain and Italy to form new tournament which would effectively replace the Champions League.
The plans are highly controversial as the new tournament would be highly selective and largely closed to competition outside the founding members.
Prime Minister Boris Johnson has urged the football authorities to take action over the “very damaging plans”, while the Premier League has written directly to its 20 clubs to urge them to walk away “before irreparable damage is done”.
FTSE opens higher
The FTSE 100 has started the week in positive territory and held on to 7,000 points as global economies continue to recover from the pandemic.
Melrose Industries has agreed to sell ventilation arm Nortek for more than £2.6bn, it announced this morning.
US-based Madison Industries will buy Nortek Air Management from Melrose, the British firm said.
Melrose said it would use some of the proceeds to pay down its debt and would put around £100m into the pension scheme of its subsidiary GKN UK.
FTSE targets above 7,000
Good morning. Traders are waiting to see whether the FTSE 100 will hold on to 7,000 points having broken the threshold on Friday.
5 things to start your day
1) Almost one in four want to work from home forever: Deloitte survey finds 7.5m employees never want to go back to the office, but slightly more are desperate to get back to their workplaces.
2) Leon bought by billionaire Issa brothers for £100m: Takeover of healthy fast food chain by EG Group follows the £6.8bn swoop on Asda and attempt to win control of Caffe Nero.
3) Producers fear Ofcom meddling could scupper streaming deals: The regulator’s decision to review the sector’s trading terms could chase money away from British companies, industry bosses have warned.
4) Biden warned corporate tax plan could backfire: The rise of consumers in China and India will shift tax revenue away from the US and West, tax experts warned.
5) Staff get ‘sensitivity’ training before calling in Covid debts: Hundreds of workers at banks including HSBC, NatWest and Metro Bank are understood to be receiving training.
What happened overnight
Asian shares were mixed on Monday amid cautious optimism about a global rebound from the coronavirus pandemic.
Japan's benchmark quickly lost early gains and fell 0.1pc to 29,642.79, the first market reaction after a summit by Prime Minister Yoshihide Suga with President Joe Biden over the weekend.
Australia's S&P/ASX 200 gained 0.4pc to 7,093.20, while South Korea's Kospi added 0.4pc to 3,212.41. Hong Kong's Hang Seng lost 0.4pc to 28,856.21. The Shanghai Composite inched down 0.1pc to 3,421.96.
Coming up today
Economics: Rightmove monthly house price index (UK), construction output (EU), current account (EU)