- Oops!Something went wrong.Please try again later.
FTSE 100 rises 0.5pc after dropping to its lowest level since April
Pound hits five month low against the dollar
Jeremy Warner: Boris squanders vaccine victory with 'freedom day' chaos
That is all from us today - here are some of our top stories:
Thank you for following along!
EU starts review of Sanofi/GSK vaccine
Europe's drug regulator has started a real-time review of the Covid vaccine developed by French drugmaker Sanofi and Britain's GlaxoSmithKline. It is the fifth shot currently under such a review.
The decision to start the "rolling review" of the vaccine, called Vidprevtyn, was based on preliminary results from lab studies and early stage clinical trials in adults, the European Medicines Agency (EMA) said. Late-stage global trials for the protein-based coronavirus vaccine candidate began in May.
Sanofi and GSK hope to get approvals by the end of 2021.
Other rolling reviews of its vaccine are also about to start in Britain, Canada and Singapore, as well as with the World Health Organisation.
Other vaccine candidates in EU's rolling review are those from CureVac, Novavax, Sinovac and Russia's Sputnik V.
AT&T in talks to sell Xandr to Indian firm
AT&T - the world's largest telecoms firm - is in talks to sell its Xandr advertising division to Indian advertising-tech firm InMobi, according to Bloomberg. It is part of a push to unload businesses that aren’t core to the carrier’s operations.
The discussions are still in early stages and may not lead to a sale, it said. Axios previously reported on the talks, saying that the business may change hands at a fire-sale price.
AT&T began seeking a buyer for Xandr after giving up on dreams of becoming a major player in online ads - an area where tech firms like Google and Facebook dominate. The potential sale is one of many in the works.
India's InMobi, founded in 2007, is backed by SoftBank Group among others, and is focused on the mobile-advertising market.
YouTube has launched a new way for video creators to earn money from fans through a feature called Super Thanks, as it tries to attract more content makers.
The feature is the fourth way for YouTubers to earn money from viewers, with fans now able to buy Super Thanks at four price points - from $2 to $50 - to support their favorite YouTube channels.
After a purchase, a highlighted comment will appear in the comment section and the creator can respond with a comment.
It comes as competing platforms like TikTok and Instagram are investing heavily to court creators filming viral videos.
Network Rail's profits surge on Gov help
Network Rail, which manages the UK's rail infrastructure, said pre-tax profits surged to £1.6bn in the year through March, up from £375m the previous year.
The surge comes despite the pandemic-induced hit to public transport. It said Government support to rail firms meant they could continue paying Network Rail, even as passenger numbers slumped.
Network Rail said it would re-invest profits to fund its railway investment programme. Revenues lifted to £9.6bn, from £8.1bn.
Chief financial officer Jeremy Westlake said: "The Government has supported our industry throughout the pandemic so that our direct customers, the passenger and freight operating companies, have continued to pay amounts owed to Network Rail as they fall due".
Chinese factories shunning Uyghur workers amid forced labour scrutiny - WSJ
Chinese factories that supply Apple and make other products sold in the US are shunning workers from Xinjiang province, according to a report by theWall Street Journal.
It comes as Western countries increase scrutiny of forced labour from the remote northwestern region where Beijing has been accused of committing genocide against local ethnic minorities. Reports alleging of forced labour have drawn negative attention to some companies.
The paper mentioned three companies in particular - Apple supplier Lens Technology, mask producer Hubei Haixin Protective Products and Nike sneaker maker Taekwang Industrial - who no longer employ Uyghur workers, or labourers more broadly from the region.
Western brands have previously come under fire when they decided to stop sourcing cotton from Xinjiang amid forced labour concerns, causing boycotts of brands like Burberry and H&M by Chinese consumers.
EU proposes ban on anonymous crypto transactions
The EU is proposing to prohibit anonymous cryptocurrency transactions as part of a broader plan to tackle money laundering and terrorism financing.
A number of proposals to boost the supervision of financial transactions include creating a new EU body of about 250 staff to supervise risky financial institutions, and prohibiting cash transactions higher than €10,000 (£8,647).
It would also ban anonymous crypto asset wallets, with the European Commission arguing that digital currency systems like Bitcoin's should be governed by the same rules as regular bank wire transfers.
The bloc's aim is to make the new anti-money laundering body operational starting in 2024, following the often lengthy process of approval by the European Parliament and the European Council.
EU financial services commissioner Mairead McGuinness said: “Money laundering poses a clear and present threat to citizens, democratic institutions, and the financial system.
“Today’s package significantly ramps up our efforts to stop dirty money being washed through the financial system.”
HMV to open 10 new stores, searching for new flagship
HMV is betting on the recovery of the UK high street, announcing today that it plans to open 10 new stores this year and also incorporate more live music as part of its investment into "the store experience".
The company, which currently operates more than 100 stores across the UK, said Ed Sheeran will perform a centenary concert at the HMV Empire site in Coventry to 700 customers in August.
Doug Putman, the Canadian retail boss who bought the business in 2019, said the move was not a "reversal" of HMV's decision to exit the music venue sector in 2012.
He told the PA news agency: "The music venue business didn't perform particularly well so we aren't doing the same thing again - this is more of a shop hybrid and won't be the same for every shop.
"We have a really enthusiastic core of customers and we know that they want to see investment in the store experience."
Mr Putman added that the company is "trying hard" to open a new flagship London site, having closed its Oxford Street store after falling into administration in 2019 before the rescue deal by the Canadian retail executive.
The company said it has seen "strong footfall" since reopening stores in April, following the easing of restrictions.
EU proposes ban on anonymous cyrptocurrency transactions
The EU is proposing a ban on anonymous cryptocurrency transactions as part of a broader plan to combat money laundering and terrorism financing.
The EU plan unveiled today includes a number of proposals to boost the supervision of financial transactions, including creating a new EU body with around 250 staff members to supervise risky financial institutions and prohibiting cash transactions higher than €10,000 euros.
In particular, the EU would ban anonymous crypto asset wallets, according to an EU fact sheet, with the European Commission saying that systems like Bitcoin should be governed by the same rules as regular bank wire transfers.
“We shouldn’t have different rules for the financial system. They should apply across digital currencies as well,” EU financial services commissioner Mairead McGuinness said at a news conference today.
The package would have to be approved by the European Parliament and the European Council, which can be a lengthy process. The EU said its aim is to make the new anti-money laundering body operational starting in 2024.
The world's most popular cryptocurrency Bitcoin has dropped 3.2pc today to $29,755, a six month low.
BHP considers oil and gas exit
BHP Group is considering getting out of oil and gas in a multibillion-dollar exit that would accelerate its retreat from fossil fuels, according to people familiar with the matter.
Bloomberg has the details:
The world’s biggest miner is reviewing its petroleum business and considering options including a trade sale, said the people, who asked not to be identified as the talks are private. The business, which is forecast to earn more than $2bn this year, could be worth an estimated $15bn or more, one of the people said.
BHP’s energy assets make it an outlier among the world’s biggest miners - rival Anglo American Plc has already exited thermal coal under investor pressure and BHP is trying to follow suit.
The company has long said the oil business was one of its strategic pillars and argued that it will make money for at least another decade. But as the world tries to shift away from fossil fuels, BHP wants to avoid getting stuck with assets that more become more difficult to sell, the people said.
The deliberations are still at an early stage and no final decision has been made, the people said. A spokesman for BHP declined to comment.
Berkeley Group Holdings surge
British property developer Berkeley Group Holdings is leading gains on the FTSE 100 this afternoon, up 3.26pc or 150p to £47.49.
M&G becomes latest company to back Acorn carbon capture project in North Sea
FTSE 100 fund manager M&G is taking a stake in the company behind a major carbon capture project in Scotland, in a further boost for the emerging technology, reports Rachel Millard.
M&G is investing in Storegga via its Catalyst division which backs innovative businesses, saying that "in time" it believed it would generate a steady income stream.
It becomes Storegga's fourth external shareholder alongside Australian bank Macquarie, Singapore's sovereign wealth fund GIC, and Japanese conglomerate Mitsui.
UK-based Storegga is developing the Acorn carbon capture project which will take carbon emitted by industries in Scotland and the north-east and stash it in depleted oil and gas fields in the North Sea.
The technology is not yet in place at scale in the UK but experts believe it will be essential to meeting the country's net zero by 2050 carbon emissions goal.
Alex Seddon, head of catalyst at M&G, said: "We believe that Storegga’s approach to carbon capture offers a responsible, pragmatic solution to help reduce carbon levels in the atmosphere and limit the damage to our planet from global warming, and in time will generate steady income streams to benefit our customers."
Nick Cooper, chief executive of Storegga, said: “As a new, independent company solely focused on permanent, verifiable carbon capture, removal and storage in the UK and globally, we are excited to have the support of four such world-class institutional investors."
Vet company CVS hikes profit forecasts after lockdown pet boom
Veterinary giant CVS has boosted profit forecasts and announced plans to hire more vets as the country’s Covid pet boom continues, reports my colleague Julia Bradshaw.
The number of households that have bought a puppy or kitten since the start of lockdown is 3.2m, which is much higher than in previous years and equates to an 8pc increase in the country’s pet population.
CVS, which is a publicly-listed company that runs more than 480 vet surgeries across the UK, Ireland and Holland, has upgraded its profit expectations for the second time in just three months as demand for its services continues to rise from new pet owners.
New client registrations increased by 17pc in the year to the end of June, which is significantly higher than average. Like-for-like sales, which exclude clinics that opened and closed in the period, were also up by 17pc.
The company's profit margins increased as well, from 16.6pc last year to 18.4pc this year, as CVS enjoyed the benefits that scale has on operational gearing, which means as sales increase profits rise at an even faster rate.
“The increase in the pet population from Covid is definitely a tailwind, no pun intended,” said Richard Fairman, chief executive of CVS.
Soaring demand means CVS now needs more vets and is recruiting. The vet vacancy rate was 8.3pc last year, compared with 6.9pc in the previous year.
Wall Street jumps back after sharp sell-off
US stocks climbed steeply after the opening bell today to recover part of their heavy losses from the delta variant panic that gripped markets yesterday.
The Dow lifted 0.81pc after a 2.1pc plunge yesterday, while the Nasdaq added 0.3pc and the S&P 500 rose 0.55pc. The gains so far come nowhere close to making up for yesterday's drops after investors ditched stocks in fear that rising delta variant infections could derail the global economic recovery.
However, those losses came after US stocks posted multiple record highs over the pandemic, helped by a surge in liquidity thanks to Federal Reserve cash injections.
"We have been in a straight line, almost straight up, and the market needs to shake it off once in a while. It (Delta variant) was an excuse to accelerate some selling yesterday," said Anthony Minopoli, chief investment officer at Knights of Columbus Asset Advisors.
"We're looking at the Delta variant as a short-term situation but really more focused on what's happening with employment, inflation and keeping an eye on if there's any change in tone coming from the Fed."
Bezos lands back on Earth after Blue Origin space flight
Amazon founder Jeff Bezos has successfully passed the Karman line on Blue Origin's maiden space flight this afternoon and he and his fellow crew have descended safely back to Earth.
The capsule carrying Jeff Bezos fell back down to earth with its parachutes falling to speeds of just around 15mph before slowing to 1mph prior to impact.
Mr Bezos and his brother, as well as 82-year-old engineer Wally Funk and a teenage student spent around three minutes experiencing weightlessness after passing the Karman line 100km above the ground.
The world's richest man told his mission command: "You have a very happy crew up here."
Frost to make statement on Northern Ireland protocol tomorrow
Britain's Brexit minister David Frost will make a statement to parliament on the Northern Ireland Protocol tomorrow, according to the Leader of the House of Commons.
The protocol was agreed by Britain and the European Union as part of a 2020 Brexit deal but has not been fully implemented yet.
Sources told Reuters on Monday that Britain would threaten this week to deviate from the Brexit deal unless the EU showed more flexibility over Northern Ireland.
Frost, whose statement will be read by Northern Ireland minister Brandon Lewis tomorrow, told lawmakers yesterday the protocol was not sustainable in its current form.
Read the Telegraph's view on the Northern Ireland protocol here: The Northern Ireland Protocol is undermining the Good Friday Agreement
Israel warns Ben & Jerry's owner of 'severe consequences' over boycott
Israel has threatened the owner of Ben & Jerry's with "severe consequences" after it stopped selling the ice cream brand in occupied Palestinian territories, reports my colleague Lucy Burton.
Naftali Bennett, the country's Prime Minister, said that the business had "decided to brand itself as the anti-Israel ice cream" and warned parent company Unilever that Tel Aviv would "take strong action against any boycott".
Long known for its activism on the environment, Ben & Jerry's sparked a row with Israel on Monday when it said "it is inconsistent with our values for Ben & Jerry's ice cream to be sold in the Occupied Palestinian Territory".
Mr Bennett warned Alan Jope, the Unilever chief executive, that "this is an action that has severe consequences, including legal".
Nasdaq to spin out trading platform for pre-IPO stocks
Nasdaq Inc said today it has partnered with major US banks including Goldman Sachs, Citigroup and Morgan Stanley to spin out its platform that allows investors to trade in stocks of private companies.
Reuters has more details:
As part of the deal, Nasdaq Private Market will become a standalone, independent company that will receive investments from SVB Financial Group, Citi, Goldman Sachs, and Morgan Stanley.
Financial terms of the venture were not disclosed.
The marketplace can be used by private companies, brokers and investors to access, connect, manage and execute their stock transactions, Nasdaq said.
It added that the platform will manage private company stock transactions such as tender offers, auctions and investor block trades, among others.
The Nasdaq Private Market, which was established in 2014, will retain its core operating teams, the company said, and will maintain its presence in New York and San Francisco.
Online wine sales stay strong for Virgin
Online wine seller Virgin Wines hiked its trading targets as it said revenue and earnings for the year to June 30 are now expected to have been "marginally higher than previous expectations".
The company, which launched on the stock market in March, said revenues for the year increased by around 30pc to £73.8m. It expects earnings to have increased by 45pc to £6.4m, compared with the same period a year earlier.
The direct-to-consumer retailer told shareholders that "positive sales momentum has continued into July" despite the easing of lockdown restrictions. Bosses at the business said they are confident that the trends driving growth in the online wine market "remain strong".
Shares in the company are currently 3.3pc higher.
Insolvencies to rises when government support ends, warns Begbies Traynor
Begbies Traynor has warned company insolvencies are set to rise in the second half of the year when the Government ends a host of pandemic supports, reports my colleague Simon Foy.
The insolvency specialist said it will be boosted by an “increase in market activity levels”, but added that it does not anticipate a “tsunami of insolvencies to suddenly appear” when ministers end emergency business support.
Executive chairman Ric Traynor said: “We’re not expecting a tidal wave of insolvencies to suddenly appear, but undoubtedly there will be an element of catchup among those businesses which didn’t go into formal process over the course of the last year.
“There will also be those businesses which entered the pandemic in an adequate financial position but are now carrying a lot of debt that they may not be able to deal with.”
The Aim-listed firm said the increased activity will occur over the next couple of years, with the highest number of insolvencies likely to take place in the retail, hospitality and construction sectors.
It came as the company posted a 35pc decline in pre-tax profits to £1.9m, despite revenues jumping nearly a fifth to £83.8m.
Its performance was driven by four acquisitions it completed since the beginning of the year and improved trading.
Earlier this year, Begbies Traynor bought independent insolvency practitioners CVR Global and David Rubin & Partners, “which has materially increased our scale in the key London market and brought our first offshore offices”, the company said.
The board declared a dividend of 3p per share, an increase of 7pc on last year. Shares fell 0.6pc to 129.4p, valuing the company at £196.4m.
One hour until Bezos flies to space
There is less than an hour until Jeff Bezos blasts off for an 11-minute ride on his company Blue Origin’s first flight with passengers aboard.
The New Shepard rocket, which has flown unmanned 15 times, is scheduled to launch from West Texas at about 2pm UK time.
At an altitude of 47 miles (76 km), a 10-foot-tall capsule will detach from the booster and ascend beyond the Karman line - the boundary between the Earth's atmosphere and outer space - 62 miles above the Earth.
An anonymous bidder offered $28m (£20.5m) to fly alongside Bezos, but what Blue Origin described as a timing conflict left an opening for Oliver Daemen, the 18-year-old son of a Dutch financier.
Also on board will be Bezos’s brother Mark, 53, and Wally Funk, 82, a former astronaut trainee. Funk will be the oldest person to travel to space and Daemen the youngest.
The suborbital journey is set to begin nine days after billionaire Richard Branson demonstrated his rival company’s capabilities by boarding a Virgin Galactic vessel and taking a similar flight to a lower altitude of 53.5 miles.
Branson’s flight earlier this month stole some thunder from Bezos’ launch and prompted social-media jousting. Blue Origin dissed the Virgin Galactic flight in a July 9 tweet, calling it a “high altitude airplane” with puny windows. Blue Origin says it has the biggest windows in space. On Monday, Virgin Galactic on Twitter wished the Blue Origin team a “successful and safe flight.”
US stock futures rebound after sell off
Futures tracking Wall Street's main indexes bounced this morning in New York, as economically sensitive stocks rebounded following a sharp sell off in the previous session.
Dow e-minis are up 200 points or 0.6pc, S&P 500 e-minis were up 21.50 points, or 0.51pc and Nasdaq 100 e-minis were up 67.7 points, or 0.5pc.
Shares of International Business Machines Corp (IBM) gained 4pc in premarket trading as brokerages raised their price targets on the stock following strong quarterly growth in the company's cloud and consulting businesses.
Focus is now on earnings reports from companies including Netflix Inc, Philip Morris and Chipotle Mexican Grill expected later in the day.
The second-quarter reporting season is underway, with 41 of the companies in the S&P 500 having reported. Of those, 90pc have beaten consensus estimates, according to Refinitiv data.
FTSE pares earlier gains
Time for a lunchtime check on the markets, where the FTSE 100 has pared back earlier gains and is now only 0.3pc up from yesterday's close at 6,865.12.
The stocks giving the index a much-needed boost are engine maker Rolls Royce (up 3.1pc) and property developer The Berkeley Group Holdings (up 3pc). Just Eat is still trailing the blue-chips (down 3.1pc)
The FTSE 250 has held onto its gains from this morning and is currently up 0.7pc at around 22,093 points.
Shell to appeal Dutch emissions ruling
British-Dutch oil giant Shell said on Tuesday it will appeal a Dutch ruling which ordered it to slash greenhouse gas emissions, saying a "judgement against a single company is not effective" to curb climate change.
The Hague District Court rule in late May that the fuel maker must reduce carbon emissions by 45pc by 2030 as it was contributing to the "dire" effects of climate change.
"We agree urgent action is needed and we will accelerate our transition to net zero," Shell chief executive Ben van Beurden said.
"But we will appeal because a court judgement, against a single company, is not effective," he said in a statement.
Shell said its "Powering Progress" strategy to become a net-zero emissions business by 2050 was published in April and therefore was not considered by the court because the hearings that led to the May ruling took place several months earlier.
Bitcoin drops to six month low
Bitcoin has dropped below $30,000 and is currently trading at its lowest price in six months at $29,604.
Narratives that had propelled Bitcoin to a mid-April record of almost $65,000 are now being questioned.
Some had argued the digital asset could act as a hedge against inflation due to its limited supply. But Bitcoin’s 2pc rise this year lags behind the US S&P 500 index’s 13pc advance.
Airlines’ legal win fails to turn off UK’s travel traffic light system
London judges ruled in favour of a legal challenge brought against the UK's travel rules by the owner of Stansted and Manchester airports and supported by a number of airlines.
The judges said that while ministers had failed to properly tie the quarantine requirements for travellers returning home with the UK's colour-coded system, they would not force the government to reveal its reasoning behind the categories.
It was enough, they said, that ministers continue to review the rules.
The challenge was supported by airlines Ryanair, British Airways’ parent IAG, Virgin Atlantic and EasyJet. The group said travellers need to understand how the government takes decisions on the traffic light system.
“The way decisions have been taken to date has not been transparent and has created huge confusion and uncertainty,” the group said in a joint statement after the ruling.
The group’s lawyers had asked to see the government’s data that informed the UK’s risk assessments for each country during the pandemic. They argued that the government’s “fundamental lack of transparency” means that the basis for categorising territories between the green or amber lists “appears arbitrary.”
Last week, the UK created a new “amber plus” category that makes it harder to travel to France, the only country with that designation.
Expert reaction: 'the volatile summer is upon us'
Julien Lafargue, chief market strategist at Barclays Private Bank comments on the pullback for equity markets yesterday:
The worsening of COVID-19 infections, vaccinations, hospitalisations, and fatalities – accompanied by the reintroduction of some restrictions and signs of further economic slowdown, weighed on sentiment. The narrative of “peak everything”, in terms of earnings, macroeconomic momentum and policy approach, seems to be becoming a reality.
This is happening at a time when the market’s ability to absorb setbacks looks limited as optimism is running high and valuations appear full. In addition, investors are struggling to see who will come to their rescue this time around. We already have vaccines, central banks and governments aren’t keen to increase stimulus, and corporate earnings are already expected to surprise positively.
The volatile summer is upon us, and the price action could remain choppy.
Yet, the current backdrop could not necessarily result in a significant or long-lasting correction. If anything, there appears to be a supportive feedback loop: higher COVID-19 cases could ultimately dampen consumption, reducing inflationary pressures, and therefore allowing central banks to remain accommodative for longer.
UBS boss says remote work ‘Here to Stay’
The boss of Switzerland's largest banks said its investment bankers will be able to work part time from home under a new, permanent hybrid working model.
UBS chief executive said some roles, such as traders, will find it easier to work from the office. But at least two-thirds of staff in the investment bank should be able to do some of their work from home.
In an interview with Bloomberg TV, Ralph Hamers said even the lender's clients have signalled they prefer holding some meetings online.
“Traders are clearly part of the 25pc to one-third of the roles for which it is really difficult to work from home,” Hamers said.
“But beyond that, there’s two-thirds to 75pc of our roles that can be performed in a mix of working from home and working in the office.”
He added: “Its a new way of working. It is here to stay.”
The move by UBS is in stark contrast with many of its US rivals, which are pressing ahead with beckoning employees back to the office even as they keep a wary eye on Covid-19 variants.
Space tourism could compete with long haul flights says UBS
Space tourism could be a $3bn a year industry by 2029 - but far larger if above the atmosphere voyages start challenging traditional long-haul flights, reports my colleague Alan Tovey.
The prediction comes from UBS which believes "planetary space flight" could start eating into the market for flights lasting over 10 hours in conventional aircraft.
Working on data from before the pandemic hammered air travel, the bank’s analysts calculate that if the vehicles are available, 5pc of the current 800 routes which are 10 hours or longer could be serviced by spacecraft.
These vehicles would escape the atmosphere, slashing journey times, before returning to earth.
UBS believes if space travel takes just one in 20 of existing passengers at $2,500 per trip, the market would be worth $20bn a year.
Research by the bank found that 10pc of travellers would be willing to take a space flight for a long-haul route.
However, UBS cautions there are hurdles in the way, not least perfecting safe and effective technology, regulation, getting costs down to an acceptable level and consumer adoption.
The bank added: “While planetary travel could occur during the 2040s, we see it as potentially a lifetime commitment.”
Fever-Tree profits hit by logistics problems
Tonic maker Fever-Tree said sales were ahead of expectations, up 36pc to £141.8m, even as the company comes under pressure from the rising costs of logistics.
Bosses said it is suffering from a rise in global shipping costs due to the pandemic, while a shortage of HGV drivers is causing delays and driving up costs across the entire grocery and delivery sector.
Growth was slowest in the UK, Fever-Tree's biggest market, up just 4pc to £50.4m. However this was offset by strong sales in Europe, which rose 102pc to £41.3m.
Bosses said that in the UK there has been "clear signs of pent-up demand as bars, restaurants and pubs reopened" but they admitted it was slightly tempered by continuing social distancing and capacity restrictions.
The company added: "We remain well-positioned as the On-Trade continues to re-open, with the remaining Covid restrictions lifted in the UK on the 19 July enabling larger events to restart, nightclubs to re-open, and the removal of social distancing."
However the company expects ongoing logistics issues to continue with transatlantic freight charges and US storage costs expected to rise 40pc on a year ago.
It said: "As is being seen in other sectors, growing challenges from Covid-related logistics disruption and associated costs is putting pressure on the group's (profit) margins."
The company added: "Whilst we anticipate some margin improvement next year, we believe logistic cost headwinds will continue alongside input cost increases on raw materials and product costs."
The company's shares fell 7pc today.
Here's the daily round-up from The Telegraph's Money team:
The most in demand property hotspots on the coast: Where sales have boomed most consistently since the housing market reopened
Millions would pay £2,000 more per year in tax relief overhaul: Millions of savers would see a collective £10bn knocked off their pension pots
NS&I's hidden rule change has left savers facing tax chaos: State-backed bank has failed its customers
More expert reaction: Stock markets find their footing
Chris Beauchamp, Chief Market Analyst at IG, comments:
Stock markets have managed to find their footing in early trading, although for how long is debateable. Selloffs, even the small ones this year, usually take more than one day to stop, and with the big events of the week still to come a risk-off atmosphere will continue to prevail. Dip buyers will probably be feeling an itch to hit the ‘buy’ button, but the picture today will remain unclear until US futures start trading in earnest.
Virus worries and the expectations of a hit to economic growth have combined to knock back stock markets, although for the US the selloff is still very modest compared to the gains of the past year. European markets have been harder hit, and have seen their progress to the upside stall in recent months, a reflection of the more muted outlook for earnings and growth.
Bargain hunters have jumped in across the board on the FTSE 100, with housebuilders a particular favourite. Updates from the sector have been rosy over the past few months, providing a positive backdrop to the shares, and with the sector down some 13pc from its peak in April it looks like the time is ripe to go shopping in the likes of Persimmon and Barratt Developments.
Expert reaction: FTSE rebounds 0.7pc
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says:
The FTSE 100 is clawing back some of its losses, up by around 1pc, but it’s an uphill struggle after around £54bn was wiped from the value of UK shares yesterday.
ITV led the bounce back pack, rising by 2.7pc after topping the fallers board yesterday, but the shares are still around 5pc below Friday’s closing price.
Although bargain hunters will be sniffing around, nervousness is still largely the sentiment rippling through the markets, as concerns are growing that higher infection rates will bring about a fresh economic slowdown.
It isn’t just the spread of new variants causing jitters, rising tensions between the US and China are also a worry, after the Biden administration accused Beijing of being behind the hack of Microsoft’s exchange email server software.
As China grows increasingly isolated, it’s sparked fresh worries that global trade will suffer as a consequence.
Bank stocks boost FTSE
Banks on the FTSE 100 have jumped today after top economist Catherine Mann, who will soon join the Bank of England's rate-setting committee, said cutting stimulus support too early was not the right option.
Mann, a former chief economist at the OECD, said a recent rise in inflation did not look like it would turn into a spiral of persistently stronger price growth.
“I don’t see it becoming a spiral. I am on the lookout for it, but I don’t see it becoming a spiral,” Mann said yesterday.
A recent jump in inflation above the BoE's 2pc target since May had raised worries over the central bank pulling back support sooner than expected.
Mann said lessons from the global financial crisis of 2008-09 showed that worries about rising inflation on the back of a jump in oil prices and about debt levels had led to a loss of economic output which hit younger and poorer workers.
“We don’t want to repeat that coming out of COVID. And so I think that bears on the need to not be premature in terms of tightening monetary policy,” she said.
Today Barclays is up 1.7pc, HSBC rose 1.2pc and Natwest lifted 0.9pc.
Pound slumps to five month low
While UK stocks are rebounding today, the pound has continued its slump to a new five-month low against the dollar and is trading close to a five-week low against the euro.
"Sterling is finally starting to show some under-performance and euro-sterling may well continue to spike - even to the 87.20 pence area," ING strategists said in a note.
"Driving the under-performance is the sense that the UK government will struggle to ride out the surging case numbers before resorting to fresh lockdowns."
Sterling is currently 1.2pc lower against the dollar at $1.3667 while it traded flat against the euro at 86.29 pence.
Just Eat shares drop 2pc
Takeaway app Just Eat has fallen 2.4pc this morning, after making gains yesterday as fears about a coronavirus resurgence lead to stocks that had benefitted from previous lockdowns to rise.
In March, Just Eat said 2020 had been an "exceptional" year for business, with revenue rising 54pc to €2.4bn.
However as stocks rebound today, optimism faded for the London-listed food delivery service.
The company's share price has fallen 30pc since January and is facing the possibility of having its shares downgraded €2.4bn from a “premium” listing in an annual review by the index.
Pandemic recovery to push emissions to new record says IEA
The global rebound from the pandemic is set to drive greenhouse gas emissions to all-time highs, the Paris-based International Energy Agency said in a report published today.
"We estimate that full and timely implementation of the economic recovery measures announced to date would result in CO2 emissions climbing to record levels in 2023, continuing to rise thereafter," it said.
Rough diamond production more than doubles at Anglo American
Miner Anglo American said its rough diamond production increased by 134pc in its second quarter, reflecting a recovery in consumer demand.
"Consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centres, despite the impact on capacity from the severe Covid-19 wave in India during April and May," the company said today.
Read more about how the pandemic affected the diamond industry here: Diamond industry regains its lustre after a dismal year.
EasyJet switches focus to EU routes
British airline easyJet is switching its focus from UK-centred journeys to routes within the EU, as the bloc opens up faster than Britain.
The airline said it will be "switching capacity from UK-touching to EU-touching for this summer, taking advantage of the considerable flexibility afforded by our destination base strategy to serve some of the stronger traffic flows we are seeing within Europe."
EasyJet plans to fly 60pc of its pre-pandemic capacity between July and September, a big jump from the 17pc in the previous quarter, as travel appetite builds and coronavirus restrictions lift.
But the company said it also expected bookings from the UK to improve in the coming period as quarantine is scrapped for fully vaccinated arrivals from some European countries.
The company said that it had improved its cash burn rate during the period to £34m per week, better than the £40m guidance it gave earlier in the year, and was well-placed financially with liquidity of £2.9bn.
But it said limited visibility meant it could not provide guidance for the rest of the year.
For the three months to June 30, when travel across most of Europe remained restricted and it flew just 17pc of its pre-pandemic capacity, easyJet posted a pretax loss of £318m.
FTSE 100 rises 1.1pc
Leading the rebound on the FTSE 100 this morning are stocks including the InterContinental Hotels Group (up 2.3pc), Pershing Square Holdings (up 2pc), British Airways owner IAG (up 1.9pc) and ITV (up 1.6pc).
Online grocery orders fall for first time ever
Grocery sales fell by 5.1pc over the 12 weeks to 11 July 2021 compared to a year earlier, but shoppers still spent £3bn more on groceries compared with the same period in 2019, according to data analytics company Kantar.
However Kantar also found year-on-year online grocery sales declined for the first time ever , as shoppers spread their spending between physical stores and restaurants as the economy reopened.
Fraser McKevitt, head of retail and consumer insight at Kantar, said:
The number of people choosing to buy groceries online fell by 81,000 in July compared with the same four weeks last year. As the nation returned to shops, workplaces and restaurants over the past month, digital baskets shrunk by 8pc to an average of £80 per shop, the lowest since February 2020. As a result, year-on-year sales growth for online groceries has dropped for the first time ever – falling by 2.6pc. The channel currently accounts for 13.3pc of the total market.
With online’s rapid rise starting to taper, Ocado’s growth has also slowed over the past 12 weeks to 3.0pc, though it remained the fastest growing retailer and increased its market share by 0.1 percentage points to 1.8pc.
The FTSE 100 has opened 0.7pc or 50 points to around 6,894 this morning as the index rebounds after yesterday's rout.
The FTSE 250 has also lifted 0.5pc or 100 points to around 22,041.
Brent attempts to recover yesterday's losses
Brent oil is clawing back some of yesterday's losses after tumbling to an eight-week low as a resurgence of Covid-19 raises concerns about short-term energy demand.
Futures in London rose back above $69 a barrel after plunging 6.8pc on Monday, the most since March. A stronger dollar has also weighed on crude, making raw materials priced in the US currency less attractive to investors.
“There is still potentially more downside pain ahead in the short-term, but in the bigger picture, the delta variant will only slow the global recovery and not bring it to a halt,” said Jeffrey Halley, an analyst at Oanda Asia Pacific.
Oil has run into stiff headwinds in July after rising in seven of the past eight months as the global economy rebounded from the pandemic. The salvaged OPEC+ deal has removed a layer of uncertainty for the market, but the latest Covid-19 resurgence is a reminder that the recovery will be bumpy.
Apollo enters talks with rival Fortress to buy Morrisons
Private equity firm Apollo Asset Management said it will no longer be making a solo offer for British supermarket group Morrisons and is instead in early discussions about joining a consortium lead by rival private equity firm Fortress to buy the grocer.
Fortress, which is owned by Softbank, is part of a consortium which made a £6.3bn offer for Morrisons earlier this month which was accepted by the board. The investment group also includes the Canada Pension Plan Investment Board and Koch Real Estate Investments, the vehicle of the US billionaire Charles Koch.
Apollo said the discussions "may result in funds managed or advised by Apollo forming part of the investment group led by Fortress for the purposes of the Fortress offer.
"As a consequence of these discussions, Apollo confirms that it does not intend to make an offer for Morrisons other than as part of the Fortress offer."
It added: "Apollo notes Fortress's intentions regarding the Morrisons business and all its stakeholders, as set out in the announcement of the Fortress offer... Should these discussions lead to any transaction, Apollo would be fully supportive of Fortress's stated intentions regarding Morrisons."
Markets hunt for rebound
Good morning. The FTSE 100 is tipped to open slightly higher after suffering its worst day since May, slumping 2.3pc on 'Freedom Day'.
5 things to start your day
1) Global markets slide as Delta fears mount: Blue chips lost £44bn in their worst day in months as global markets tumbled amid fears a surge in Delta cases could stifle global recovery.
2) Drivers face higher repair bills in EU car parts crackdown: Brussels rules could leave British motorists paying almost £100 extra a year to big manufacturers.
3) Pingdemic chaos brings British businesses to a halt: From bank branches to supermarkets, a sector by sector look at the problems caused by the NHS app.
4) Train firms defy Sturgeon and axe social distancing in Scotland: LNER, Avanti and CrossCountry will allow passengers to sit next to each other on both sides of the border.
5) GB News rolls the dice with Nigel Farage: The upstart channel is trying to arrest a stark decline in viewing figures with some divisive hires.
What happened overnight
Asian stocks were down early on Tuesday as growing fears the spreading delta variant would harm global economic recovery sent riskier assets, including oil, skidding sharply.
MSCI's gauge of Asia Pacific stocks outside Japan fell as much as 0.29pc, with Australia's S&P/ASX 200 down 0.39pc.
Japan's Nikkei 225 hit a six-month low in early trade and widened the losses to 1.05pc.
The Hang Seng Index opened 0.3pc lower and China's benchmark CSI300 Index slid 0.7pc at the start.
In Beijing, policymakers kept the benchmark lending rate for corporate and household loans unchanged at its July fixing on Tuesday, despite growing expectations for a cut after a surprise lowering of bank reserve requirements.
Stocks on Wall Street fell as much as 2pc on Monday, with the Dow posting its worst day in nine months as Covid deaths increased in the United States.
Coming up today
Corporate: Begbies Traynor (Full year); Audioboom, MusicMagpie, One Media (Interim); Alliance Pharma, Anglo American, CVS Group, easyJet, IntegraFin Holdings, Luceco (Trading update)
Economics: Producer price index (Ger)