Pound seesaws, briefly rising above $1.35
US added just 245,000 jobs last month
FTSE rises as European equities climb
Construction activity accelerates
Garry White: Trump delivers parting blow to Chinese companies
That's all from us - a day featuring the pound on a rollercoaster and Brexit talks.
Here are some of our top stories:
Thanks for joining! Louis will be back with you on Monday morning. Have a great weekend.
Europe should extend ban on bank dividends by six months: Sibley
Europe should extend its de-facto ban on bank dividends by six months, according to a top official at the European Central Bank’s supervisory arm interviewed by Bloomberg. The comments cast a shadow over investors’ hopes for a return to payouts early next year.
The news agency has more:
Big banks across Europe are facing fraught times, with regulators at the ECB and the BoE preparing to decide in coming weeks whether and how to lift their recommendations on payouts.
Shareholder dividends were effectively frozen in March in a trade-off for unprecedented regulatory relief and government loan guarantees, yet bankers have subsequently slammed them as doing more harm than good.
Ed Sibley, a member of the ECB’s supervisory board, said continued uncertainty, a need to preserve capital for lending and reputational issues for banks all speak in favor of extending the regulator’s existing recommendation.
The question is how to implement it in practice, because the ECB doesn’t have the powers to enforce a blanket ban over mounting objection by lenders.
“Overall, we would be better if we were to hold off for another six months,” said Sibley, who is also a deputy governor at the Central Bank of Ireland. “Whether we can practically do that is a real challenge.”
Boeing to cut airliner production rates again
Boeing is cutting airliner production rates again as demand for flights collapses because of the pandemic.
My colleague Alan Tovey reports:
The US aerospace giant said build rates of its 787 Dreamliner will be trimmed by one aircraft to five per month by mid-2021. Output of all Boeing jets is down by more than a third on pre-pandemic levels.
The company is looking to tackle the $61bn debt mountain it has piled up because of coronavirus and the grounding of its 737 Max airliner following two crashes.
Greg Smith, chief financial officer, told an aerospace conference that an equity sale is one way Boeing could ease the pressure on its stretched balance sheet.
"When it comes to capital deployment, it will be all about paying down that debt," Mr Smith said. "We'll look at every opportunity to do that in the most efficient way, including equity."
Aston Martin to "always" produce cars with petrol engines
Aston Martin will “always” produce cars with petrol engines according to billionaire Lawrence Stroll, the luxury marque’s boss and largest shareholder.
My colleague Alan Tovey reports:
Despite tightening environmental restrictions and the move to electric vehicles, Mr Stroll forecast that 5pc of the company’s cars will be powered by internal combustion engines to cater to die-hard enthusiasts.
Speaking at an FT automotive summit, he also said self-driving Astons were not in the company’s foreseeable future. “I want to drive my own car,” Mr Stroll said. “Autonomy is a minimum of a decade away.”
Demand for the company’s cars is “phenomenal” at the moment, with sales driven by a rebounding Chinese market, followed by the US. He forecast that the launch of the company’s first SUV, the DBX, will take total annual sales to between 12,000 and 15,000 vehicles a year, at least doubling what he described as a “historic” level of between 4,000 and 6,000.
The DBX is ultimately expected to deliver between 5,000 and 8,000 sales annually.
Mr Stroll took control of Aston last year, leading a consortium of investors after the company’s disastrous 2018 float that initially valued the business at £4bn. Aston shares collapsed from their £19 debut to about 200p before he stepped in, injecting about £500m into the business.
EU business urge avoiding a no-deal Brexit 'disaster'
All eyes and ears are on Brexit talks today, though the outcome remains uncertain.
Business groups on the Continent are warning trade will be hit even if talks yield a basic deal between the UK and the EU.
ICYMI: my colleagues Justin Huggler, Senay Boztas and Henry Samuel have written about how German and Dutch firms have called on British and European negotiators to reach a last-minute Brexit deal, warning that failure to do would be a "disaster".
FTSE hits a nine-month high
The FTSE 100 has hit its highest level since March, rising 0.9pc to 6,548.19. It has risen over 3pc this week.
Gains were thanks to a solid performance in pharma, mining and energy stocks, said David Madden, market analyst at CMC Markets UK.
"These sectors have been gaining ground lately and they are connected to the optimism brought about by the positive vaccine news", he said.
"The UK is the first country in the world to authorise a vaccine for Covid-19 and there is a view that others will follow suit in the months ahead, and that has been a factor in the upward move in underlying commodities – metals and energies."
The benchmark has far outperformed its European counterparts this week:
Sterling, meanwhile, pulled slightly back from gains earlier in the day which saw it move above the $1.35 mark - its highest level since May 2018. It is currently trading up 0.2pc at $1.3477.
Management buyout bid submitted to Peacocks
A management buy out bid has been submitted to the administrators of high street fashion chain Peacocks.
My colleague Hannah Uttley reports:
Josh Lowes, a senior ecommerce manager at the retailer, has submitted a bid backed by a private investor after Peacock's parent firm Edinburgh Woollen Group collapsed into administration.
The financial details of the offer have not been disclosed but the proposal includes intentions to buy the full company and retain its 4,908 staff and 470 stores.
Administrators FRP Advisory and Edinburgh Woollen Mill Group declined to comment.
It is understood that a number of interested parties have approached Peacocks and the bid process is likely to be completed within the next couple of weeks.
Read our coverage about its collapse here
Citi worried about long-term WFH productivity
Citi's chief executive, Michael Corbat, is worried about potential long-term negative effects of working from home, he said in a televised interview for a Bloomberg Invest Talks event.
The news agency has more:
“People talk about the productivity that comes with working remotely,” Corbat said. “Well, if I worked seven days a week, 15 to 16 hours a day and I don’t take any holidays, at least for a period of time I’m going to be more productive.”
Corbat is hesitant to declare a widespread shift toward remote working. In May - unlike some competitors - he said he wasn’t considering letting his around 200,000 workers globally stay at home permanently after the pandemic.
The New York-based bank wants to see how productivity changes over longer stretches of time and whether creativity suffers before deciding how much working from home to allow, Corbat said.
“I don’t want to wake up as an industry and have hollowed out our skill sets,” Corbat said. “We’ll absolutely continue to accelerate the move toward digital and, where appropriate, more remote. But I certainly wouldn’t want to see us move too quickly.”
Time for me to hand over to my colleague Louise Moon, who will steer the blog onwards. thanks for following along today!
Ann Summers launches CVA to help ride out pandemic
Lingerie retailer Ann Summers has launched proposals to move around a quarter of its 91 stores to turnover-based rental agreements to help it weather the pandemic.
My colleague Hannah Uttley reports:
The family-owned retailer, which is headed up by Jacqueline Gold, said it has agreed revised terms with landlords on more than two-thirds of its stores, but has been unable to strike deals on 25 sites.
It now plans to launch a company voluntary arrangement for these shops, an insolvency procedure which will enable it to renegotiate rents with landlords.
In return for landlords’ approval of the CVA, the Gold family has committed to provide Ann Summers with £10m of additional funding to support its turnaround and future growth.
The company insisted no store closures are planned and that the proposals will not affect Ann Summers’ online and party plan business.
City Intelligence: Airbnb’s stock market float comes with a health warning
Our chief City commentator Ben Marlow has been writing about Airbnb’s $35bn IPO valuation:
On paper the model looks great: Airbnb doesn’t have to own any of the properties it rents out, enabling it to grow quickly; and it charges hosts a 3pc commission, while guests pay a 6-12pc service fee. Easy money.
But in keeping with the times, investors should heed a multitude of health warnings. Despite its obvious popularity, the company is heavily loss-making. That’s not unusual for Silicon Valley but costs keep rising. In 2019, it forked out $5.3bn to create $4.8bn of turnover, and it has to spend heavily on sales and marketing – the bill was $1.6bn last year.
There are plenty of other red flags too. Airbnb does not intend to pay a dividend in the foreseeable future; its owners will maintain a grip on things through multiple classes of stock; and it is facing hardened regulation in 70pc of the 200 largest cities in which it operates.
Don’t pin it all on Brexit
Optimism over the chance of a trade deal seems to have help the pound somewhat this week, but today’s two-year high for the pound is much more a product of dollar weakness than anything happening on the UK side.
The greenback has sharply weakened over recent months, partially as a result of the general risk-on shift across global markets.
Here’s how the pound has shifted in recent years – including the sharp plunge after the Brexit vote and the 35-year low it touched back in March.
Pound surges to two-year high as trade talks continue
Sterling has surpassed the high it recorded in December last year after the general election and is now at its highest level since May 2018 at $1.35.
Glasenberg to step down at Glencore
Ivan Glasenberg has announced he will step down as chief executive of Glencore after almost two decades in charge.
Quite the moment, with Ivan Glasenberg to step down at Glencore. Shares at 233p, less than half what they floated at in 2011, while the company is dogged by investigations into its deals https://t.co/mlC8ebLGjK
— Jon Yeomans (@JonLYeomans) December 4, 2020
Wall Street opens higher
US stocks jumped at the open despite employment growth slowing in November.
BoE’s Saunders: We could make sub-zero interest rates work
UK interest rates can be cut below zero if needed to ward off the scars of Covid-19 or an economic hit from a no-deal Brexit, the Bank of England’s Michael Saunders has said.
My colleague Russell Lynch reports:
Rates are currently at a record low of 0.1pc but the Bank has embarked on an review of negative rates in the event the Monetary Policy Committee decides to go further still.
MPC member Michael Saunders said his own view was that the lower bound for interest rates was “probably a little below zero” and that rate-setters should be ready to act quickly if threats to the economy mount.
He said: “Positive news on vaccines has reduced some downside risks facing the economy. But we are not out of the woods yet, and there are some headwinds that could leave the economy stuck with persistently high unemployment and below-target inflation.“If those downside risks develop, risk management considerations argue for a relatively prompt monetary policy response in my view.”
Overall payrolls still at 2015 levels
With the pace of gains slowing, total US non-farm payrolls stand at 142.6m – a level last seen in 2015.
US unemployment rate falls to 6.7pc
Although the numbers were disappointing, November’s payroll gains mean unemployment in the US continued to edge lower, down to 6.7pc. The pace of recovery is slowing, however, with the gauge of joblessness having hit 14.7pc earlier this year.
US added just 245,000 jobs last month
Just in: the US added just 245,000 jobs last month, falling well short of the 460,000 expected by economists. The severe shortfall is a sign of the long-lasting damage the pandemic is dealing to America’s labour market.
October’s change was revised down from 638,000 to 610,000.
Glencore pledges to be net zero by 2050
Swiss-headquartered mining giant Glencore has announced plans to become a net-zero company by 2050, with an aim to cut emissions 40pc by 2035.
But the group plans to maintain its coal mines, saying its could act as a “responsible” operator for the pollutant-producing sites.
Chief executive Ivan Glasenberg said:
Under all credible scenarios, fossil fuels (oil, gas and coal) will continue to be an important part of the global energy mix for many years to come. We do not believe that selling our coal mines would help reduce the associated emissions.
Responsible stewardship of our coal assets and responsible reduction of our coal portfolio, while maintaining a focus on our high-quality coal assets in Australia, supports our ambition to reduce our total emissions to achieve net zero by 2050.
Lidl joins other retailers in handing back rates relief
German discounter Lidl has added its name to the list of retailers repaying business rates relief.
My colleague Simon Foy reports:
The German discount grocer confirmed it will refund more than £100m in rates relief received during pandemic as store footfall continued to grow and said it was “well placed” to manage any further virus-induced changes to its business.
Christian Härtnagel, Lidl's UK chief executive, said: “We’ve been considering this for some time, and we are now in a position to confirm that we will be refunding this money as we believe it is the right thing to do. We feel confident that the business is well positioned to navigate and adapt to any further challenges brought by Covid.”
Number 10 spokesperson: Talks are ‘at difficult point’
Just in: Boris Johnson’s acting deputy spokesperson, Shaun Jepson, has said trade talks with the EU are at a “very difficult point”, adding “time is in very short supply”.
We are committed to working hard to try and reach an agreement with the EU. Intensive talks are ongoing. Our negotiating team is working extremely hard to bridge the gaps that remain… We will not be able to agree a deal that does not respect our fundamental principles on sovereignty.
Mr Jepson said the Government plans to reintroduce controversial clauses in its internal markets bill when it returns to Parliament on Monday. That’s likely to cause some consternation both here and in the EU.
It’s worth looking at the pound’s twists and turn this morning in a slightly longer view: looking back over the past three days, sterling hasn’t left the range it traded in yesterday.
SSE sells 10pc stake in Dogger bank wind farm
Energy provider SSE has agreed to sell a 10pc stake in Dogger Bank wind farm to Eni for £202.5m in equity.
Eni will also purchase a 10pc stake in Dogger bank A&B from Equinor, SSE’s partner on the project. The site is SSE Renewables’ biggest project currently under construction.
The deal is expected to be completed in early 2021, SSE said. The FTSE 100 group plans to use the proceeds to deliver its low carbon growth plans.
Gregor Alexander, SSE’s finance director, said:
The sale of a stake in Dogger Bank Wind Farm to Eni is another successful example of SSE's approach to partnering to create and secure value for shareholders. This transaction will enable us to fund further low carbon growth opportunities, helping to deliver governments’ net zero ambitions and our own target to treble our renewable output by 2030.
Killick & Co’s Mark Nelson said the sale “crystallises some value” for SSE.
Car sales dropped 27.4pc in November amid closures
Car sales in November went into reverse as the second lockdown meant dealers closing their doors, with a 27.4pc drop in new vehicle registrations.
My colleague Alan Tovey reports:
Motorists received the keys to 42,840 new cars last month, more than a quarter down on the same period a year ago.
Dealers were able to sell cars online having worked out the processes required during the previous lockdown, meaning the decline was not as severe as seen when restrictions were first brought in the spring, with April recording a 97pc plunge.
In the year to date, 1.498m new cars have hit the UK’s roads, compared with 2.162m at the same point last year. The 30.7pc drop has been caused by coronavirus limiting sales, as well as wider worries about the economic and the potential impact of a no-deal Brexit.
Data collated by the Society of Motor Manufacturers and Traders did contain good news for the environment, especially in light of the Government’s announcement on Thursday that by 2030 the UK will aim to cut carbon emissions by at least 68pc compared with levels in 1990.
— SMMT (@SMMT) December 4, 2020
With just over three hours of trading passed, the FTSE 100 is leading European risers. The rest of the continent’s looking more tepid, with Germany’s Dax particularly tepid despite those solid industrial order numbers (see 7:53am post).
Primark expects £430m sales hit from autumn lockdowns
The owner of Primark said the sales hit from the autumn lockdown was worse than expected but added that trading had been “phenomenal” since stores reopened in recent weeks.
My colleague Simon Foy reports:
Associated British Foods revealed that Primark took a £430m hit from the closure of its stores during lockdowns in the UK and elsewhere in Europe, worse than the £375m slump it forecast at the beginning of November.
Primark was hit particularly hard by a second lockdown as it does not have an online business to allow it to trade during shutdowns. However, operating costs from the closures were reduced by a quarter during the period.
ABF reported strong trading at Primark following the opening of its stores in England, Ireland and France in recent weeks.
Pound rises to day’s high as Reuters reports deal ‘imminent’
The news service says an agreement on a trade deal could be ‘imminent’, which in this instance means the end of the weekend,
— Global Markets Forum (@ReutersGMF) December 4, 2020
The pound has risen to its highest level of the day on that news:
Berkeley shares fall as analysts warn on price
Berkeley Group is among the biggest fallers on the FTSE 100 today, after analysts warned its valuation looked high despite robust results.
The housebuilder posted a pretax profit of £230.8m for the six months to the end of October, down 16.6pc on the same period last year.
It sold 1,104 homes across the period, compared to 1,389 in 2019, albeit with a higher average selling price of £799,000. Revenue slipped slightly, down 3.8pc to £895.9m.
It forward sales have risen to £1.94bn, which Berkeley said supported its “long-term guidance”.
Chief executive Rob Perrins said the results:
[Are] in line with Berkeley’s guidance of achieving a 15[c pre-tax return on equity and maintaining our £280 million annual cash return to shareholders across the cycle.
Morgan Stanley analyst Christopher Fremantle said the company’s trading had been resilient, but added that its valuation looked “rich”, favouring rivals with lower price to earnings ratios but strong cash positions.
Construction activity continues to pick up amid housebuilding boom
Construction activity across the UK continued to pick up pace last month, according to the latest purchasing managers’ index data.
Homebuilding remained the top-performing category amid a boom in house prices, while order volumes rose at the fastest pace in just over six years.
The gauge of sector activity rose to 54.7, where a score above 50 indicates an expansion:
But IHS Markit, which gathered the data, warned:
Employment trends remained relatively weak across the construction sector and stretched supply chains resulted in a sharp increase in average cost burdens.
All the broad categories of construction rose, albeit at different paces. Here are the individual readings:
House building: 59.2
Civil engineering: 52.3
Commercial work: 51.9
Here are some of the day’s top stories from the Telegraph Money team:
Christmas train tickets selling out leaving families stranded over festive period: Tickets for some of the country’s most popular train routes have nearly sold out, leaving Britons either stranded or forced to fork out more for other means of transport.
Half of pet owners plan to leave their four-legged friends cash in their will: Law firm Simpson Millar said 44pc of owners planned to leave money to their pets, with the average pooch or moggie receiving £3,642 – a third of the £11,000 average inheritance received each year in Britain.
US stocks more expensive than just before the Wall Street Crash – should you sell?: Memories of 1929 as the S&P 500’s Cape ratio hits 33.4 – one of its most expensive levels.
Pets at Home follows grocers by handing back business rates relief
Pets at Home has become the latest retailer to hand back its business rates relief worth £28.9m after enjoying bumper sales throughout the pandemic.
My colleague Simon Foy reports:
The company said it would make the payment despite spending an estimated £35m on Covid-related costs this year.
It comes after most major supermarkets this week agreed to hand back billions of pounds worth of Covid tax breaks, which were designed to help struggling companies weather the crisis. However, Waitrose said it would not repay its rates relief.
Pets at Home was deemed to be an “essential” business during the spring lockdown, which allowed its 451 stores to stay open, but it was also boosted by strong online sales.
Bill Grimsey, former chief executive of Wickes and Iceland, welcomed the decision in a tweet and urged more companies to do the same:
Woke this morning that Pets at Hime have joined the club to repay Biz Rates. That’s Tesco Morrison’s Sainsbury Asda Aldi B&M and Pets unless I’ve missed one. Now come on Waitrose Lidl and Iceland time to step up to the plate and do the right thing.
— Bill Grimsey (@BillGrimsey) December 4, 2020
Pound flat with Brexit talks hanging in the balance
The pound has been wobbling slightly this morning, but has stayed within a narrow range and is virtually flat currently. A few days ago, there had been whispers that Brexit talks might reach a conclusion today – instead, a deal seems as far away as ever.
FTSE rises as Europe makes mixed open
The FTSE 100 has risen at the open amid a mixed start for European equities.
McBride sees profit ahead of consensus
Engineering group McBride said its outlook for the current year has improved following favourable trading last month and this month.
The small-cap group’s current outlook is that profit before tax for the year ending June 30th 2021 will be at least 10pc ahead of consensus, which stands at £25.2m.
It said November and December “are now expected to trade very favourably ahead of last year”, adding that its improved revenue performance had been accompanied by better factory efficiencies, lower operating and input costs, and a more limited operational impact from the pandemic than had been feared.
McBride’s board said it “remains mindful of the continued economic uncertainty created by Brexit and Covid-19, together with expected increases in certain input costs in the second half”.
Germany factory orders rose 2.9pc in October
German factory orders rose an expectation-beating 2.9pc in October, as Europe’s biggest economy continued a manufacturing-driven recovery.
Total orders return to stand in line with pre-virus levels, completing a nearly-perfect V-shaped recovery.
Agenda: Brexit talks hit a roadblock
Good morning. The FTSE 100 is set to open higher despite Brexit talks “destabilising” (in the UK’s characterisation) at the last minute over French fishing.
The pound held steady at $1.345.
5 things to start your day
1) Value of Arcadia brands halves as fire sale begins: Rival retailers and private equity groups will be watching to see if they can bag a bargain as brands like Miss Selfridge and Wallis go on sale.
2) Find Britain’s ‘missing’£50bn, MPs demand: About three-quarters of of the £71bn of banknotes in circulation appear to be unaccounted for and parliamentarians want the BoE to investigate.
3) Facebook sued by US government over hiring foreign workers: The charges, a culmination of a two-year investigation into Facebook’s hiring practices, could have ramifications for Brits in Silicon Valley.
4) Department stores try to save Christmas after horror year: Lockdowns the world over have wrecked the fortunes of retailers who fear pandemic shopping habits will become entrenched.
5) PM vows to overhaul business tax to boost growth after Covid: Johnson said the Government would be looking at the “tax and regulatory environment”, to turbocharge the UK's economic recovery.
What happened overnight
Asian shares scaled a record high on Friday on growing prospects of a large U.S. economic stimulus package, while hopes that coronavirus vaccine rollouts will boost the global economy underpinned investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.78pc, surpassing its Nov. 25 peak, led by gains in the tech sector, while Japan's Nikkei dipped 0.22pc on profit-taking.
European stocks are seen mixed. Euro zone stock futures traded 0.14pc lower while Britain's FTSE futures were up 0.49pc.
In New York, the S&P 500 erased earlier gains after the Wall Street Journal reported that Pfizer had slashed the target for the rollout of its COVID-19 vaccine due to supply chain obstacles.
Yet, the damage did not last long, with S&P500 futures gaining 0.23% in early Friday trade.
Coming up today
Corporate: Berkeley (Interim results)
Economics: SMMT new car registrations, construction PMI (UK); new manufacturing orders (Germany); non-farm payrolls, unemployment, average earnings (US)