US is weighing up new tariffs on European exports
Whiskies, dairy products, clothing, tools and machinery all among UK products under consideration for charges
European shares stumble
World faces $12 trillion Covid-19 bill, IMF warns
Persimmon poaches National Express boss
Wetherspoons to reopen pubs from July 4th
That's all from us for today, join us again tomorrow, where Louis Ashworth will be back bright and early.
Here's a quick recap of today's market events...
European and US stock markets sank as investors worried over rising coronavirus infections in several countries .
Fresh trade tensions between the European Union and the United States was also cause for concern
Updated IMF economic forecasts also hit at sentiment as the institution sees the global economy contracting by 4.9pc this year due to the shutdown of transport and production meant to halt the transmission of the virus.
It sees the United States, the world's top economy, facing an 8-percent drop in GDP this year and the euro area's GDP plunging 10.2pc.
The US said it is considering new taxes on $3.1bn in European imports amid a dispute over subsidies to planemaker Airbus.
What to look forward to tomorrow:
Full-year results: Auto Trader, Fuller Smith & Turner, Mitie, Royal Mail
Trading statement: Serco
Economics: CBI distributive trades survey (UK), all-industry activity index (Japan), Q1 GDP final reading, durable goods orders, jobless claims (US)
Thanks for following along.
Unite Group to raise £300m
Student landlord Unite Group is raising £300m in a share placing to help expand its portfolio.
The FTSE 250 Group has three sites under offer which will cost £250m to develop.
The company is confident international students will come back to campus in the coming academic year, despite the coronavirus pandemic.
Chief executive Richard Smith said: “This placing will enable us to continue to invest in our market-leading platform and accelerate growth opportunities."
It announced the placing just before 5pm. During the day, Unite's shares fell 3.41pc to 902.19p.
John Lewis names new department stores chief
High street heavyweight John Lewis Partnership has appointed a senior executive from the Co-op Group to run its department stores, my colleague Simon Foy writes.
The firm is bringing in Co-op deputy chief executive Pippa Wicks in August to oversee trading, merchandising and marketing at its John Lewis sites as retailers adapt to the "new normal" of socially distanced post-pandemic shopping.
She will succeed Paula Nickolds, who left in January with a near-£1m payout following weak sales over Christmas.
Ms Nickolds worked at the partnership for 25 years, becoming the first female managing director in the department chain's 152-year history in 2016.
Oil - WTI (AUG) 3761 -6.86%
Oil - WTI (SEP) 3782 -6.68%
Oil - Brent (AUG) 3988 -6.54%
Oil - Brent (SEP) 4014 -6.15%
Gasoline 12033 -7.47%
London Gas Oil 346 -4.89%
US market update
Here's how things are looking across the pond:
DOW 25359.5 -3.05%
SPX 3040.24 -2.91%
NDX 9969.00 -2.36%
RTY 1378.75 -4.21%
VIX 36.8 +17.31%
Europe to close lower
Markets in Europe are set to close in the red today as health concerns are weighing on sentiment. We will take a closer look at how things end up very shortly.
David Madden of CMC Markets says: Yesterday’s update from Dr Anthony Fauci, a health advisor to the US government, spooked traders as he described the increase in Covid-19 cases in some US states as ’disturbing’.
The statement comes as certain US states, such as California, have seen an increase in the infection rate, which is a result of loosening lockdown restrictions. The medical expert wasn’t extremely pessimistic as he added there might not be a need for a total lockdown.
As of 4 July, the UK will relax its social distancing policy from 2 metres to 1 metre, in addition to that, there some lockdown restrictions will be eased too. This should provide assistance to the UK economy, but there are worries we will see an increase in the infection rate in the months ahead.
With European markets skidding towards a pretty gloomy close, it’s time for me to hand over to my colleague LaToya Harding, who will steer the blog into the evening. Thanks for following along today!
US crude prices fall as inventories hit a record high
Over in New York, the price of West Texas Intermediate crude – the key gauge of American oil prices – has dropped after new data showed inventories have hit a record high.
A report by the Energy Information Administration showed inventories rose to more than 540m barrels last week, as demand remains low.
Hiscox customers to intervene in insurance suit
Hundreds of small businesses are demanding representation in a landmark lawsuit against insurers which could force them to pay out on business interruption insurance following the coronavirus lockdown.
My colleague Michael O’Dwyer reports:
The firms are seeking to join legal action by the Financial Conduct Authority watchdog (FCA) as it tries to clarify whether the pandemic could trigger payments under ambiguously worded policies. Swathes of embattled companies could be thrown a lifeline if judges rule the money is due.
A total of 369 businesses are already demanding £47m from business interruption policies sold by Hiscox which they believe cover losses caused by the shutdown.
They now want to be represented by lawyers when the FCA faces off against eight insurers, including Bermuda-based Hiscox, in the High Court next month.
Some policyholders are worried their views will not be properly heard because the watchdog will be up against several different firms and arguing over about 17 different contract wordings.
DMO: No reason to expect fail bond auctions
Over at the Treasury Select Committee hearing (see 2:13pm update), UK Debt management Office boss Sir Robert Stheeman said the UK is unlikely to struggle to sell bonds at future gilt auctions.
“We’ve had over 500 auctions since the last uncovered auction in 2009, and it’s not obvious to me that we should expect another one any time soon,” Stheeman said at a parliament hearing.
If a bond auction did fail to attract sufficient bids to sell the full amount on offer, that should be viewed as a technical market problem, rather than raising a question mark over the government’s creditworthiness, he added.
Full report: Naked Wines sales jump
My colleague Hannah Uttley has a full report on this morning’s update from Naked Wines. She writes:
The online wine retailer said there has been a major shift in how consumers choose to buy wine – particularly in the US, where online sales now account for more than 20pc of the total market compared with 5pc before the crisis struck.
It was forced to halt orders from new customers in the UK last month following a surge in stockpiling as the closure of pubs and restaurants hit hard.
Equities have dropped pretty sharply today amid a risk-off mood across the markets. Here’s how they have shifted:
Wall Street slides at the open
US stocks are in the red as the Trump administration considers fresh tariffs on European goods.
Covid-19 could cost world $12 trillion, IMF warns
The Covid-19 crisis could cost the global economy a staggering $12 trillion (£9.5 trillion), making it the biggest hit to growth since the Great Depression, the International Monetary Fund has warned.
My colleague Russell Lynch reports:
The IMF’s latest World Economic Outlook slashed already bleak forecasts of a 3pc fall in global growth to an even deeper 4.9pc slide as it said the pandemic and resulting lockdowns across the world had damaged activity far more deeply than expected in April.
The international body’s chief economist Gita Gopinath also warned that economic scarring from failed businesses and health fears would drag on recovery in the second half of the year.
Ms Gopinath said: “The downgrade reflects worse than anticipated outcomes in the first half of this year, an expectation of more persistent social distancing into the second half of this year, and damage to supply potential.”
Although the world economy is forecast to bounce back by 5.4pc in 2021, the trajectory remains some 6.5 percentage points below its last pre-Covid forecasts in January.
“These projections imply a cumulative loss to the global economy over two years (2020–21) of over $12 trillion from this crisis,” she warned.
Debt Management Office to appear before Treasury Select Committee
Executives from the Debt Management Office will appear before the Treasury Select Committee at 2 30pm.
You can follow the proceedings via the link in the tweet below:
Swissport to cut 4,500 jobs
Thousands of jobs are set to be lost at airport ground handling giant Swissport following the collapse in air travel caused by the coronavirus crisis.
The company told staff on Wednesday that up to 4,556 jobs could be cut – more than half its UK workforce – because revenue was likely to be half that of last year.
Chief executive Jason Holt said the company had to reduce the size of its workforce to secure funding from lenders and investors.
“It’s true that we've seen tough times before – volcanic cloud, 9/11, the financial crisis – and we’ve weathered these. But this time it’s different. We have never seen anything like Covid-19 in our lifetimes,” he said in a message to staff.
Read more: Swissport to cut 4,500 jobs
Sky: McLaren in talks with Bahrain bank over loan
Supercar-maker McLaren group is in talks with the National Bank of Bahrain to secure a loan worth more than £150m, Sky News reports.
The company, which has been forced to lay off more than a quarter of its workforce since the pandemic struck, has been exploring a range of options to raise funds in recent months, including mortgaging its valuable heritage car collection and spectacular Surrey headquarters.
Sources said that an agreement between McLaren and the Bahraini lender remained far from certain.
The NBB is partially owned by Bahrain’s sovereign wealth fund, which is McLaren’s top shareholder.
Lloyd’s of London plans to reopen underwriting room in September
Insurance market Lloyd’s of London plans to reopen its underwriting room from September 1st under new plans laid out today.
The group shut its trading floors for the first time in history in March as the virus spread.
It will instigate a number of safety changes to make the space compliant with restrictions. These include:
Lloyd’s said it is also looking to up its digital capabilities to manage capacity and improve its operations,
Your regular reminder to check out our other live blogs:
Politics latest news: Industry hits back over ‘ludicrous’ lockdown changes – watch PMQs live
Coronavirus latest news: Swimming pools and gyms could reopen mid-July
Travel news: EU could ban American tourists this summer
Reopening your business on July 4th? Talk to us
If you’re a small business owner, we want to hear from you about your plans for when lockdowns are eased in early July 4th.
Fill in our form here: Will your small business be reopening on July 4? We want to hear from you
IATA backs airlines’ legal challenge against quarantine
The International Air Transport Association says it will provide evidence to support British airlines in their legal case against the UK’s two-week quarantine rule for inbound travellers.
The IATA – the trade association for airlines worldwide – said its planned intervention is consistent with previous statements in which it called the quarantine unnecessary and misguided. It said the restrictions are a “huge impediment” to air traffic numbers.
Read more: Airports demand end to blanket quarantine
It added that the UK would take a £45bn GDP hit from the aviation shutdown caused by Covid-19, and said 730,000 jobs are at risk.
Wall Street futures point to drop
Things are fairly quiet at the moment, with European shares still stuck pretty deep in the red. With Wall Street set to open in just over two hours, futures data is currently pointing towards fall on the top US indices:
S&P 500: –0.7pc
Restaurant booking remain low
Data check-in: with lockdown restrictions meaning seated dining in UK restaurant is still prohibited, the UK (and Ireland) are increasingly looking like outliers in OpenTable’s data on diner numbers. Here’s how the data compares (you can hover over/select countries in the legend to highlight/exclude them):
It seems likely those numbers will pick up substantially when restrictions are eased on July 4th. As my colleague Hannah Uttley reported yesterday:
Hotels and restaurants were flooded with customer bookings after ministers gave vast swathes of the hospitality industry permission to reopen on July 4, raising hopes of a rapid summer recovery for thousands of ailing businesses.
Pent-up demand from consumers eager to dine out and holiday in Britain led to a surge in reservations following Boris Johnson’s announcement, forcing some businesses to take down their websites as they worked through the backlog.
Tata Steel rescue hopes grow
Hopes are rising that Britain’s biggest steel maker Tata Steel will secure a £500m Government bailout.
My colleague Alan Tovey reports:
The company has been in talks with officials for more than two months about support for the business, which is an offshoot of the Indian conglomerate.
A deal could come within days that would safeguard Tata Steel’s 8,000 staff in the UK, the FT reported.
About 2,500 employees – mainly in support roles – are currently on furlough at the company, which runs the giant Port Talbot steelworks.
Support for Tata Steel is understood to be being discussed as the first bailout through ‘Project Birch’, the Government’s bespoke rescue scheme for businesses that are seen as critical to the economy.
Read more: Hopes grow of £500m rescue for Tata Steel
Here are some of the day’s top stories from the Telegraph Money team:
Markets extend losses
Losses on Europe’s stocks markets have extended following new of the US’s new tariff plans, with the FTSE 100 now down almost 2.5pc – despite some likely relief from a weaker pound.
Only five stocks are in the green on the FTSE 100. The biggest riser is gold miner Polymetal – a sign of the flight to safety occuring across markets today.
Full report: Auditor face investigation over London Capital & Finance accounts
My colleague Simon Foy has a full report on the FRC’s newly-announced investigations into London Capital and Finance’s auditors. He writes:
EY and PwC each audited a set of annual results in 2016 and 2017, while Oliver Clive, a small London-based firm, audited the company for a month in April 2015.
The probes will be conducted by the FRC's enforcement division, it said. The regulator has the powers to fine audit companies and ban auditors.
Wide range of UK products hit
Looking through the Office of the US Trade Representative’s proposals, there are a wide range of UK products that would be hit:
Aeroplanes (at 15pc)
Some dairy and meat products (at 25pc)
Pears and pear juice (at 25pc)
Sweet biscuits, wafers (at 25pc)
Printed material (at 25pc)
Tools and machinery (at 25pc)
Liquers, cordials and whiskies (at 25pc)
A wide variety of clothing, bed linens and blankets (at 25pc)
US weighing up new tariffs to hit Europe
Just in: the US is reportedly weighing up a swathe of new tariffs that would hit $3.1bn of exports from France, Germany, Spain and the UK, as trade tensions rise again.
Bloomberg has the details:
The US Trade Representative wants to impose new tariffs on European exports like olives, beer, gin and trucks, while increasing duties on products including aircrafts, cheese and yogurt, according to a notice published late Tuesday evening. The statement lays out a month-long public comment period ending July 26.
If the US follows through with its plan, it could hammer European luxury brands like Givenchy and Hermes -- which produce leather goods -- and Remy Cointreau and Pernod Ricard, which make cognac and champagne. LVMH Moet Hennessy Louis Vuitton would be particularly vulnerable because it produces a wide array of these products.
The move is related to Europe and America’s 15-year-old World Trade Organization aircraft subsidy fight. A couple of years ago the Geneva-based trade arbiter said both the US and the EU were guilty of illegally supporting their respective aircraft industries.
The full notice can be read here
Stocks have taken a further downwards turn following that report.
AG Barr falls after losing Rockstar contract
Shares in soft drinks-maker AG Barr have taken a knock today after the company announced after the close yesterday that it has lost its sales and distribution contract with Rockstar energy drinks.
The contract will terminate on August 23rd, but AG Barr – which makes Irn-Bru – expects to continue manufacturing and selling the drinks up to the start of November. It will receive a one-off compensation payment for the termination of the contract.
Shore Capital’s Clive Black said the news was “disappointing”, but added AG Barr maintains a “very strong portfolio of products”.
Jefferies’ Elsa Hannar said the end of the contract presents an opportunity for rival Britvic, which doesn’t currently have a “hard” energy drink brand in Britain. She added:
We believe Rockstar would likely require some investment to improve its trajectory from brand owner Pepsi, and it would benefit from Britvic's wider distribution reach and portfolio.
Markets extend losses
Things are going from poor to quite bad on the stock markets, with Europe’s top indices extending their losses.
French business confidence picks up
French business confidence jumped higher in June, but remains well below its long-term average, as the country’s economy begins to open up again.
Statistics agency Insee’s business confidence gauge jumped 18 points – the most ever – to 78.
The rise follows PMI data yesterday that suggested France’s private sector has returned to growth after several months of plunging activity.
Premier Food rises as lockdown boosts sales
Shares in Premier Foods – the maker of Mr Kipling cakes and Sharwood’s curry pastes – have risen this morning after the group reported a rise in sales under lockdown.
In preliminary results for the year ended March 28th, the group said it revenue had increased 2.8pc to £847.1m as it swung from a loss last year to a £53.6m profit.
Alex Whitehouse, its chief executive, said:
During the outbreak of COVID-19, food has been identified by the Government as a key industry and we feel privileged to play our part in keeping the nation fed. One of the most prevalent trends we have seen during the lockdown is that Britain has got cooking again, with particularly high levels of demand for items relating to meal preparation, including cooking sauces, gravy and baking ingredients.
It reported high demand since the lockdown began, with revenues for the first quarter iof the year about 20pc ahead of expectations currently. Mr Whitehouse added:
[We] expect to exceed current expectations for FY20/21 Revenue and Trading profit despite incurring some additional operating costs in our supply chain.
Peel Hunt analysts praised the results, saying:
All of this accelerates the virtuous circle of improving profits driving stronger cash flow, investment in marketing and debt reduction.
Pound falls against dollar
The pound has snapped three days of gains against the dollar, falling slightly today as the mood on markets shifts to risk-off.
German business confidence rises
Business confidence in Germany has continued to to rise according to the latest findings from the Ifo Institute – but survey respondents in Europe’s biggest economy remain pretty pessimistic about current conditions. The results were slightly ahead of expectations.
Crest Nicholson swings to £51m loss
Housebuilder Crest Nicholson blamed politics and the pandemic after slumping to a £51.2m loss for the six months to the end of April.
The group’s revenues were cut in half over the period as it fell into the red, reversing a £64.4m profit before tax for the same period last year.
The FTSE 250 group said:
The combined impact of the political uncertainty, and the sales deferrals associated with Covid-19, significantly reduced profitability in the first half.
It added that profit in the second half of the year should be “significantly higher” as lockdown measures continue to unwind, anticipating an annual profit before tax of £35m–£45m. It added:
The group remains focused on improving its margins and increasing its cash reserves and is committed to returning to a sustainable dividend policy as soon as it is appropriate to do so.
Naked Wines climbs after full-year results
Shares in Naked Wines have popped higher after the group reported expectation-beating full-year results this morning.
The retailer said its performance for the twelve months to the end of March were “marginally ahead of expectations”, with revenue up 14pc year-on-year to £203m, driven by particularly strong US growth.
The group made a loss before tax of £5.4m, down 46pc from the prior year.
Naked Wines said it had seen an encouraging start to the new financial year, with revenue growth at 81pc during April and May. It held back from providing full financial guidance due to ongoing uncertainty over trading conditions.
Nick Devlin, its chief executive, said:
We are ending the year with great momentum behind our growth plans and a simplified, well-capitalised online pureplay model that is ideally suited to the current climate.
GVC: Business is picking back up
Ladbrokes Coral-owner GVC Holdings says it has continued to trade well during lockdown and has seen signs of recovery in its high street footfall as branches reopen.
In a statement ahead of its annual general meeting today, GVC chairman Barry Gibson said the group took “swift” action to shore up its cash position as sports events were cancelled and retail sites closed in mid-March. he added:
Throughout the period our online gaming businesses continued to trade strongly, and as we see the resumption of sporting events across our business our sport volumes are returning in-line with expectations.
Our retail outlets in England have now been open for a little over a week, albeit with extensive social distancing measures in place, and we are encouraged by the early signs as customers return to the high street. As a result, GVC is well positioned to emerge from this period in a position of financial and operational strength.
He also praised the group’s recent index promotion, saying:
GVC’s recent elevation to the FTSE 100 is a key landmark in the Company's extraordinary success story, the main drivers of which have been a combination of its industry-leading proprietary technology platform as well as its outstanding products, brands, marketing capabilities and people.
European shares fall
Stocks are falling across the continent following the worrying news on US case numbers, wiping off much of yesterday’s gains.
Watchdog to probe three auditors over London Capital & Finance
Britain’s accountancy watchdog will investigate three audit firms over their work for London Capital & Finance.
The Financial Reported Council will examine audits conducted by Oliver Clive & Co., and two of the ‘Big Four’ auditors – PwC and EY.
LCF went bust in January 2019 with £267m raised from more than 11,600 savers. Its collapse triggered the biggest City savings scandal since the collapse of Barlow-Clowes in 1988.
A report by the group’s administrators found LCF customers had their cash used for “highly suspicious transactions” that ended up in bosses' pockets.
Petrofac: Covid-19 has ‘materially impacted’ performance
Oilfield services group Petrofac says Covid-19 has “materially impacted” its performance during recent months.
Its order backlog has fallen to $6.4bn, down $1bn since the end of December, with the biggest hit expected to emerge from its engineering and construction division.
Ayman Asfari, its chief executive, said:
...despite all of our efforts, the Covid-19 pandemic and sharp fall in oil prices have materially impacted financial performance and new orders in the first half of the year.
The FTSE 250 group’s net debt at the end of May was $139m, compared to $15m net cash at the end of 2019. It said the shift reflects “the anticipated reversal of temporary favourable working capital movements at the end of 2019, disposal proceeds, the suspension of the 2019 final dividend and a reduction in capital expenditure”.
The group said it sees around $48bn of opportunities scheduled for award by the end of 2021 – but Jefferies’ Mark Wilson called that “a large number hard to visualise in [the] current market”.
Persimmon poaches National Express boss
Housebuilder Persimmon has named Dean Finch as its new group chief executive, expected to take the top job at the end of the year.
Mr Finch joins from transport operator National Express, where he has been chief executive since 2010.
At Persimmon – which has been criticised in the past for its high levels of executive remuneration – he will receive an annual base salary of £725,000 with a pension allownce of up to 9pc of his salary. From the beginning of 2021, he will be able to participate in the FTSE 100 group’s bonus plan for up to 200pc of salary, and its performance share plan, also up to 200pc of salary.
The company said: “a significant proportion of Dean's remuneration will be based on non-financial metrics including customer care and quality”.
Roger Devlin, Persimmon’s chair, said:
The board believes that Dean is a great fit for Persimmon and is well qualified to lead the business into the next phase as we continue to drive a programme of change to become the leading volume builder of good value, quality family homes throughout the UK.
Wetherspoons to reopen doors from July 4th
Following the Government’s announcement of loosening lockdown restrictions yesterday, pub chain J D Wetherspoon has announced it will reopen its locations at the earliest possible opportunity – July 4th.
The FTSE 250 group said it has created a ‘secure operating plan’ to ensure safe operations once trading resumes.
Reacting to the restriction changes yesterday, Stifel’s Mark Irvine-Fortescue said it is unlikely pubs will see an immediate comeback:
Consumer demand remains difficult to gauge at this stage, but recent polling for UKHospitality shows the industry expects a slow recovery, with trade at just over 50pc of normal after three months.
Agenda: Europe set to slide
Good morning. European stocks are set to slide as investors weigh their appetite for risk against a significant spike in virus cases in the US.
Infections are surging in hot spots including California, Florida, Texas and Arizona – threatening to derail plans to ramp up reopenings.
5 things to start your day
1) Surge in restaurant and hotel bookings as lockdown lifted: Pent-up demand from consumers eager to dine out and holiday in Britain led to a surge in reservations following Boris Johnson’s announcement, forcing some businesses to take down their websites as they worked through the backlog.
2) Boots continues to withhold rent as landlords brace for dismal collection day: Bosses said trading had been hit hard by a footfall slump during lockdown and it has yet to pay some landlords while talks continue.
3) How the economics of inequality is holding back the UK: Systemic racism, gender inequality and LGBT discrimination have a clear economic cost as well as a human one, leading economists have warned, as protests raged across America and statues were toppled in the UK.
4) JD Sports has bought back its Go Outdoors chain for £56.5m after the adventure equipment retailer was put into administration. The so-called pre-pack deal comes just four years after JD Sports bought the company for £100m and puts 2,400 jobs at risk.
5) End of the road for Segway as production halted after 19 years: Its American manufacturer announced the end of production, citing “over-saturation of the market” because the vehicles lasted for a decade or more and tended not to break down.
What happened overnight
Asian shares were mostly higher on Wednesday with another mood boost from Wall Street, but fears persist over the surge in coronavirus cases in parts of the world.
Japan's benchmark Nikkei 225 edged 0.1pc higher to 22,576.63. Australia's S&P/ASX 200 also picked up 0.1pc to 5,958.40. South Korea's Kospi added 1.5pc to 2,162.46. Hong Kong's Hang Seng slipped 0.1pc to 24,854.72, while the Shanghai Composite added 0.2pc to 2,976.39.
Coming up today
Interim results: Crest Nicholson
Full-year: Premier Foods
Trading statement: Petrofac
Economics: Ifo business climate index (Germany), manufacturing confidence (France), Reserve Bank of New Zealand decision