US added 4.8m payrolls in June, beating expectations
Another 1.4m initial unemployment claims were made last week
Total US trade falls to lowest level since 2010
European shares rise on vaccine hopes
Mitchells & Butlers swings to £121m first-half loss
Meggitt expects revenues to drop 30pc in second quarter
High Court rejects Maduro attempt to reclaim $1bn of Venezuelan gold from UK
Eurozone unemployment remain broadly unchanged, but producer prices continue to fall
Robin Pagnamenta: Why Twitter could be the biggest loser from the Facebook ad boycott
Well that's all from us for today. Join us again in the morning.
As always, here's a quick recap...
Equities rose today as investors cheered encouraging news about progress towards a coronavirus vaccine and a solid recovery in US employment.
The US economy regained 4.8 million jobs in June as businesses began to reopen nationwide, while the unemployment rate fell more than two points to 11.1pc, the Labor Department reported.
Wall Street's main indices shot out of the gate at the opening bell, quickly racking up gains of over 1pc, with the tech-heavy Nasdaq Composite continuing to push into record territory.
European stocks added to gains, with both Frankfurt and Paris up by more than 2pc.
Sentiment had already been largely positive after hopes for a vaccine were given a boost when Germany's BioNTech and US pharmaceutical giant Pfizer late Wednesday reported positive preliminary results from a joint project.
What to look forward to tomorrow:
Full-year: Fuller Smith & Turner
Economics: Consumer confidence (UK), services PMI final reading (UK, eurozone), Caixin services PMI (China), US public holiday (Independence Day)
Covid sparks panic hoarding of banknotes
Panicked consumers hoarded banknotes at the fastest rate since fears over the Millennium Bug 20 years ago as lockdown hit, experts have found – despite predictions that the Covid-19 crisis would hasten the death of cash, my colleague Russell Lynch writes.
The amount of cash in circulation jumped by 2pc in May as fears surged over the health and economic fallout of the pandemic, according to research by former Bank of England policymaker Charles Goodhart and fellow economist Jonathan Ashworth.
The authors said this was the largest increase since a Y2K surge in December 1999 after the turn of the millennium prompted entirely misplaced alarm over the widespread failure of computer systems.
The surge in demand for notes came despite the limit on contactless spending transactions going up to £45 in a bid to prevent the virus spreading through physical cash. It was also unaffected by a a jump in online spending to some 30pc of all retail outlays due to the crisis.
Swoon says sorry after accusations of stealing designs
An online furniture shop, whose early backers include venture capitalist Robin Klein and serial entrepreneur Alex Chesterman, has apologised after it was accused of stealing designs from a freelance artist.
Swoon admitted that its “processes have fallen down” and “needed to be improved” in a post on Instagram.
The response came after Simone Brewster, a jewellery and furniture maker, shared her experience in a post on Twitter this week. The artist was first told to come up with ideas two years ago and she subsequently handed over her designs.
“This January I was shocked to see the pieces for sales on Swoons’ website,” she wrote on the social media platform.
“I felt angry and taken advantage of. The designs had gone into production without me ever receiving a word, or a penny.”
FTSE closes up
London's benchmark index closed 1.34pc higher at 6,240.36 while the FTSE 250 climbed 1.04pc to 17,367.86. Investors cheered encouraging news about progress towards a coronavirus vaccine and a solid recovery in US employment.
Travel stocks and banks were among the big gainers, with airline group IAG rallying 5.7pc
Risk Haven Assets update
Oil - WTI (undated) 4018 +0.95%
Gold 1778 +0.44%
USDJPY 107.54 +0.06%
VIX (Undated) 29.22 -3.5%
Bitcoin 9077.38 -1.78%
DOW 25960 +0.92%
Cafe Rouge owner to close 91 outlets
The company that owns restaurant chains including Café Rouge and Bella Italia will permanently close 91 outlets and has gone into administration, Chris Johnston writes.
Casual Dining Group said that given the "extreme operating environment" it was in the best interests of all stakeholders to enter administration to allow the company to conclude negotiations with landlords over its estate.
Most of the closures affect the Cafe Rouge and Bella Italia chains, although 11 Las Iguanas outlets, three Belgo restaurants and several sites at airports will also shut.
Stocks surge on record US jobs report
Markets in Europe are set to close in 2 minutes and we will take a closer look at how things ended up. Today strong US jobs report seemed to lift the already bullish mood.
David Madden of CMC Markets said:
Stocks were pushing higher this morning on the back of the news that Pfizer and BioNTech saw positive results from their drug trial that they are hoping will be a vaccine for Covid-19. The news encouraged traders to buy into the market, but the results have yet to be reviewed by a medical journal.
In June, the US added a record 4.8 million jobs, which smashed the 3 million consensus estimate. The May reading of 2.5 million was revised up to 2.69 million. The unemployment rate fell from 13.3pc to 11.1pc, while the consensus estimate was 12.3pc.
With only a few minutes of trading left, it’s time for me to hand over to my colleague LaToya Harding. As a reminder, US markets will be closed tomorrow for the first day of the Independence Day weekend. Thanks for following along today!
European shares are up solidly today: optimism over reopenings, vaccine hopes and better-than-expected economic data have put some wind in investors’ sails.
Nasdaq hits record high
Today’s Wall Street jump means the tech-heavy Nasdaq is pushing new record highs, global economic catastrophe or no global economic catastrophe.
M&S relaunches Sparks loyalty scheme
Marks & Spencer has revamped its Sparks loyalty scheme allowing seven million users to shop “for free” after the scheme was criticised for being too confusing.
My colleague Laura Onita reports:
The redesign comes two months ahead of its big switch to sell groceries and clothes online for the first time through Ocado.
Shoppers will now be able to get instant rewards and giveaways rather than accumulate points, previously tied to discounts for specific categories such as lingerie, beauty or niche vegetables.
The retailer has pledged that every week one customer in each store will get their shopping “for free”. It will give away “thousands of pounds” for customers to spend online and in store, plus smaller treats such as packs of Percy Pigs sweets and apothecary candles.
Trump takes aim at China as he welcomes jobs gains
Trump spent much of the press conference praising the “record” jobs figures.
He also took aim at China for not stopping the spread of coronavirus, saying: “They could’ve stopped it. They know it and I know it.”
And somewhat out of the blue, he said Boeing is “probably the greatest company in the world”.
Watch: Trump press conference
You can follow the US president's press conference here:
Wall Street jumps at the open
US stocks have soared at the open following the better-than-expected jobs data.
S&P 500: +1.5pc
Dow Jones: +1.7pc
Trump plans press conference
Donald Trump, calling today’s job numbers “great”, plans a press conference at half past. He did the same thing last month – it wasn’t hugely enlightening then, but I’ll flag if he says anything interesting.
Number of permanent job losses rise
Carrying on from my previous most, one potentially worrying part of today’s payroll numbers is rise in unemployed Americans who said they are not on temporary layoff. It seems like that number is going to push higher as the ongoing crisis pushes some companies to collapse.
More details on payrolls
Here are some more important stats from today’s payrolls data, via the Bureau of Labor Statistics:
Among the major worker groups, the unemployment rates declined in June for adult men (10.2 percent), adult women (11.2pc), teenagers (23.2pc), Whites (10.1 pc), Blacks (15.4pc), and Hispanics (14.5pc). The jobless rate for Asians (13.8pc) changed little over the month.
The number of unemployed persons who were on temporary layoff decreased by 4.8m in June to 10.6m, following a decline of 2.7m in May. The number of permanent job losers continued to rise, increasing by 588,000 to 2.9m in June. The number of unemployed reentrants to the labor force rose by 711,000 to 2.4m.
That’s a more equitable spread of unemployment rates falling – last month, at the height of the new wave of Black Lives Matter, a lack of change in the Black unemployment rate was particularly resonant.
US trade balance lowest since late 2018
The US trade balance – the difference between its exports and imports – dropped to its lowest level since late 2018 as coronavirus weighed on travel and demand.
Exports declined by 4.4pc to $144.5bn, while imports fell 0.9pc to $199.1bn. The combined value of the two was the lowest since April 2010.
Snap take: US labour market continues to bounce back – but cracks remain
America’s labour market continued its comeback in June, with a net 4.8m rise in non-farm payrolls testifying to widespread reopening efforts.
The climb, which brought the unemployment rate down to 11.1pc, beat economists’ expectations for a second consecutive month – building on May’s shock beat.
The figures were recorded in the middle of June, before a fresh waves in case numbers that has caused several US states to scale back their reopening plans.
But total payrolls remain well below their pre-Covid-19 levels, and initial unemployment claims continued to climb last month with another 1.4m Americans signing up for support.
Another 1.4m Americans make jobless claims
Behind those headline unemployment and payroll figures, there are signs of continuing problems in the US labour market.
Another 1.4m Americans made initial claims for unemployment benefit last week, with the rate appearing to be increasingly plateauing.
Meanwhile, continuing claims for unemployment benefit were virtually unchanged at 19m.
Taken together, that suggests there is still a huge employment tumult across the pond.
As an index...
Here’s how payrolls look as an index (note this Y-axis starts are 125m). It shows there’s still some way to go for the US to return to its pre-virus levels.
Unemployment rate falls to 11.1pc
After that expectation-busting jump in payrolls, the US unemployment rate also fell more tan expected, dropping to 11.1pc during June. That’s still very elevated– and higher than at any point during the financial crisis.
Breaking: US added 4.8m jobs in June
Just in: the US added 4.8m jobs in June as a labour market comeback continued.
FT: McLaren ends spats with bondholders
Supercar-maker McLaren has wrapped up a fight with its bondholders, avoiding a court battle, the FT reports.
The group went to the High Court after bondholders opposed its efforts to raise up to £275m in emergency funding to weather the Covid-19 crisis.
The FT reports:
The legal action has now been called off, McLaren confirmed on Thursday.
“McLaren has successfully secured additional funding, which does not require us to pledge any of the company’s assets as collateral,” McLaren said. “Having explored a variety of funding options we are very pleased with the outcome which is best for all stakeholders including our bondholders.”
Pret does dinner
Pret A Manger will start serving salad bowls, lasagne mac and cheese and fish pie for dinner for the first time this week.
My colleague Laura Onita reports:
The chain will begin the delivery trials from seven shops including Bristol, Cambridge and Nottingham as well as a new kitchen space in London. It will be available from 5pm featuring a range of new and exclusive dishes.
The sandwich chain, like many other cafes and food-on-the go businesses such as Greggs, have suffered from having to close branches temporarily.
Even after reopening, fewer customers have been coming in as most Pret sites are near offices in usually busy city centres. Many are still working from home, while others are worried about venturing outside. Pret’s dinner menu is aimed at those who at home all the time.
Coming up: US labour market data
At 1:30pm, we’ll get a torrent of data about the US labour market. As well as the typical Thursday salvo of jobless claims data, we’ll also get the big ones – non-farm payrolls, and unemployment.
May’s data provided a remarkable beat: defying all expectations, the US managed to add jobs, in a shift that has been widely attributed to firms rehiring as states ease lockdowns.
Today’s data is expected to show another rise: economists polled by Bloomberg anticipated 3.2m extra payrolls, taking the US’s unemployment rate down to 12.5pc from 13.3pc.
Data from the ADP research Institute yesterday appeared to support this thesis – the group’s own measurement of private payrolls found 2.3m jobs had been added.
While Donald Trump will likely welcome another month of gains, payrolls are still hugely down on a net basis since the Covid-19 crisis arrived in America. Add to that the risks of a second wave, and there’s plenty for the man in the White House to feel nervous about as November’s election draws nearer.
As my colleague Tom Rees reports:
Analysts were stunned by the jobs report for May. Economists had predicted that US unemployment would continue to rocket from April’s 15pc, a high last hit during the Great Depression, but the jobless rate inexplicably fell to 13pc.
It suggested that the reopening of states was fostering a much faster than anticipated rebound in the labour market. While economists expect a further improvement in June’s unemployment rate to 12pc in new data released on Thursday, hopes of a sustained recovery are quickly vanishing.
The second wave of infections striking multiple US states is being accompanied by signs of another surge in job losses. And the economic pain is hitting Trump right where it hurts ahead of November’s vote – the battleground states that will swing the election.
Politics live: Government sets out plans to reopen schools
Over in the House of Commons, education secretary Gavin Williamson is setting out plans for schools and colleges to reopen from September.
He told MPs the last three months had been “some of the most challenging” faced by schools, parents and children and paid tribute to those who have supported pupils throughout lockdown.
European equities are pushing steadily higher today, although the FTSE 100 is dragging its feet slightly – given no favours by a slightly weaker pound.
Maduro attempt to reclaim Venezuelan gold thwarted by High Court
The Government has “unequivocally recognised” opposition leader Juan Guaido as president of Venezuela, the High Court has ruled in a battle over $1bn (£800m) of gold bullion held in the vaults of the Bank of England.
My colleagues report:
Banco Central de Venezuela (BCV) took legal action to release the gold held on its behalf, which it wants to sell to help tackle the country's coronavirus crisis.
BCV says it has agreed to transfer the funds to the United Nations Development Programme to buy “healthcare equipment, medicines and basic foodstuffs”.
But the Bank of England said it is “caught in the middle” of rival claims to the gold, from the BCV board appointed by Nicolas Maduro and an “ad hoc” board appointed by Mr Guaido.
On Thursday, Mr Justice Teare said: “Her Majesty’s Government does recognise Mr Guaido in the capacity of the constitutional interim president of Venezuela and, it must follow, does not recognise Mr Maduro as the constitutional interim president of Venezuela.”
Copper near to erasing year’s losses as miner cut output
Copper is edging closer to erasing this year’s losses as demand picks up and producers reduce output.
Cerro Colorado, a copper mine in Chile, became the first to cut production after BHP Group announced on Thursday that it would “significantly” scale back its operations.
Fears over a resurgence in Covid-19 cases continue to cause concern across industrial metals markets, but copper has been buoyed in recent weeks by mounting supply risks, particularly in South America. Prices in London are on course for a seventh weekly gain, rallying 40pc from a low in March as the virus brought the global economy to a standstill.
Copper on the London Metal Exchange rose as high as $6,120 a ton on Thursday, less than 1% below where it started the year.
Cineworld pushes back reopening to July 31st
Cinema chain Cineworld has pushed back its reopening plans after the launches of two summer blockbusters were delayed.
The FTSE 250 group, which has seen its share price battered during the coronavirus crisis, said delays to the release dates of Mulan and Tenet had prompted it to review opening dates. It will now begin a phased reopening of its sites from July 31st, rather than July 10th.
A spokesperson for the group said:
From the moment we reopen, customers will be met with a host of quality classics including the 10th anniversary edition of Chris Nolan’s Inception and George Lucas’s Empire Strikes Back, as well as popular event cinema such as National Theatre Live’s critically acclaimed Fleabag. This line up will be complemented by the eagerly awaited launch of major new titles such as Tenet and Mulan, which are now due in mid-August.
Factory prices fall in eurozone
The other chunk of economic news from the eurozone this morning is less positive: producer prices fell more than expected in May, down 0.6pc on the month, and 5pc on the year.
A fall in the gauge – which measures prices ‘at the factory gate’ – suggests continued pressure on the currency bloc’s manufacturers. Economists had expected a fall of 4.5pc.
Eurozone unemployment rises less than expected
Unemployment across the eurozone rose to 7.4pc in May, a 0.1 percentage point increase on April. The reading is lower than the 7.7pc expected by economists, and suggests schemes to support workers’ wages may be propping up the continental labour market.
Here are some of the day’s top stories from the Telegraph Money team:
Taha Lokhandwala: What is the perfect number of stocks for your fantasy fund portfolio?
At least three dead after explosion at Glencore refinery in South Africa
At least three people have been killed following a fire and explosion at an oil refinery in South Africa owned by a unit of London-listed Swiss miner Glencore.
A number of people are in the hospital after the incident at the Cape Town facility, Richard Bosman, executive director for safety and security in the city, said on CapeTalk radio. Callers to the radio station described hearing a “massive explosion” that rattled windows and roofs. Others said they had seen damage caused to the plant.
The blast occurred at 4 a.m. on Thursday, Astron Energy Ltd. spokeswoman Suzanne Pullinger said in an emailed response to questions. The company declined to comment on whether there were any casualties.
Reuters poll: Pound to rise 4pc against dollar in coming year
Economists expect the pound to strengthen against the dollar towards the end of the year if the UK and EU can reach a trade deal, according to a Reuters poll.
The news agency found analysts expected sterling to strengthen about against the American currency in the coming 12 months.
Cable was hovering around $1.24 on Wednesday and the June 25–July 1 poll of almost 60 foreign exchange analysts said it would be at the same level in one and three months’ time.
It will then shift up a gear to $1.27 by end-December when Britain’s transition period after leaving the EU is due to expire. The pound will be around 4pc stronger than current levels at $1.29 in a year, the poll found.
Its report added: “against the euro the pound will not see much action for a year”.
One euro will be worth the 90 pence it was on Wednesday in six months. In a year it will fetch 88 pence, the poll found.
DS Smith drops after keeping dividend on pause
Packaging group DS Smith has dropped sharply today after reporting full-year results that missed analysts’ estimates and maintaining its dividend suspension.
The FTSE 100 group posted revenues of £6.04bn for the twelve months to the end of April – down 2pc on the previous year – with a profit before tax of £368m.
Its factories have remained open through the current crisis, with heightened e-commerce demand boosting a core pillar of its operations. The group said:
Whilst this pandemic has clearly had an impact on the momentum within the business it has provided an opportunity to demonstrate both the strength of our business and the resilience of our business model and drive longer-term opportunities.
But the group is likely to have disappointed investors by maintaining the suspension of its dividend. Mile Roberts, its chief executive, said:
With the current economic uncertainty, we continue to focus on our employees, our customers, our communities and on the efficiency and cash generation of our business and accordingly the board considers it premature to resume dividend payments at this stage.
Citi’s Paul Bradley said the decision not to declare a dividend was a surprise, adding:
Cash flow was robust, net debt/EBITDA slightly above guidance, liquidity seems strong and, although the outlook is challenging and loaded with uncertainty, the decision not to declare any dividend for the year looks to us to be an over-abundance of caution, rather than a real issue of affordability.
The group dropped as much as 13pc this morning, and is now trading down about 9pc:
Primark says trading has been ‘encouraging’ after reopenings
Associated British Foods said that trading in its Primark fashion stores that have reopened after coronavirus lockdown had been “reassuring and encouraging”.
My colleagues report:
All Primark stores were shuttered in March as the pandemic spread. As governments eased lockdown restrictions the stores reopened, including all 153 stores in England on June 15.
AB Foods said that since the reopening of the first stores on May 4, cumulative sales for the seven weeks period to June 20 were £322m and were 12pc lower than last year on a like-for-like basis.
Sales in the week ended June 20, with over 90pc of selling space reopened, were £133m and trading in England and Ireland was ahead of the same week last year.
However, ABF warned of a divergence between its regional stores and its city centre sites. “Most of our regional stores are performing well, especially in retail parks. Our stores in the centre of big cities are suffering from the current absence of tourism and much lower commuter footfall.”
Sales at the high street retailer plummeted by 75pc over the past quarter due to the coronavirus lockdown.
Read our developing report here: Primark sees ‘reassuring’ early trading after lockdown
Barclays’ Warren Ackerman called the update “impressive”, adding:
The fear of big discounting has not materialized with markdowns limited, boding well for margins. Primark has been able to sell its spring/summer ranges mostly at full price.
Europe has risen at the open, with the FTSE 100 slightly lagging its biggest continental peers.
Meggitt expects 30pc revenue hit in second quarter
Aerospace engineering group Meggitt has warned it expects organic revenue to be 30pc lower in the three months to the end of June, and down about 15pc over the whole first half.
The group – which recently dropped into the FTSE 250 – said the “substantial reduction in both passenger demand and air traffic” prompted by Covid-19 had a “material impact” on its civil aerospace operations. It added:
As a result, and in line with our internal scenario plan, we saw a significant decline in our civil aerospace activity in the second quarter. Overall, we expect civil revenue in the period to be c.50% lower on an organic basis
Its defence business held up “solidly”, while energy revenue is “expected to be somewhat softer”. The group is making cuts to its global workforce as part of efforts to reduce cash outflows by £400m to £450m this year.
It is cautious about the road ahead, saying:
In recent weeks, initial signs of a recovery in commercial aerospace have emerged, with commercial airlines bringing more of the fleet back into service and business jet activity increasing in the US.
Notwithstanding these early positive signals, and as we look ahead to the performance of the sector and our civil aerospace business in the second half, uncertainty and risk remain about the duration of the pandemic and its impact on the pace and shape of any recovery, including the potential for a second wave.
Jefferies’ Sandy Morris said the update was “reassuring”, adding the current crisis might prompt some fundamental changes in how Meggitt operates.
Mitchells & Butlers swings to £121m loss
Mitchells & Butlers – owner of All Bar One and O’Neill’s – swung to a heavy loss in the first half, with most of its branches closed.
The pub chain posted a pre-tax loss of £121m for the six months to the end of April, with its 1,700 locations closed due to lockdown restrictions from late March.
The group remained bullish on its prospects despite the loss, saying the reopening of its German business provided a “clear path”, saying it is “well-positioned to benefit from recovery on re-opening”.
Phil Urban, its chief executive, said:
The business was performing very well before the enforced closure in response to Covid-19, building on the strengths of our estate of mainly freehold properties, our diversified and well-loved brands and our team's industry leading operational skills.
These assets, coupled with our early experience of re-opening in Germany, give us a clear plan for re-opening and ensure that we are well placed to continue to bring people and communities together and to keep Mitchells & Butlers at the forefront of the eating and drinking-out market.
Around 90pc of the group’s staff where furloughed when lockdown began, with a “skeleton team” maintained to respond to emergency call-outs and break-ins.
With restriction set to ease in the coming weeks, the group said it is looking at “an early July date for English sites to re-open”, with Wales and Scotland following over the coming fortnight.
Stifel’s Mark Irvine-Fortescue said the results “lay bare” the initial impact of the lockdown. He said the crucial question is whether M&B chooses “to repair the balance sheet gradually via organic means, or to consider raising equity or selling assets”.
Agenda: Stocks set to climb
Good morning. European stocks are set to climb following positive vaccine developments in the US.
An early trial of an experimental jab from Pfizer and BioNtech showed it was safe, and prompted patients to produce antibodies.
Investors also await US unemployment data for June later today.
5 things to start your day
1) Trade will flourish without Brexit deal, says WTO candidate: The historic alliance of Britain and the bloc and their regulatory ties should allow goods and services to continue flowing across borders according to Hamid Mamdouh, a former WTO director of trade in services and investment who is Egypt's candidate to run the organisation.
2) Second wave of job losses threatens Trump's re-election bid: Analysts were stunned by the jobs report for May. Economists had predicted that US unemployment would continue to rocket from April’s 15pc, a high last hit during the Great Depression, but the jobless rate inexplicably fell to 13pc.
3) Quarantine on arrivals is harming the recovery, businesses warn: As ministers prepare to allow travel to and from some low-risk countries without quarantine via an ‘air bridge’ scheme, bosses warned that the proposals must go ahead without further delay.
4) John Allan, the chairman of Tesco, is to oversee a new Covid-19 economic recovery commission, which will be endorsed by the Chancellor when it is launched on Friday.The former CBI president will be tasked with generating policy ideas for resuscitating the UK economy after the pandemic.
5) Raab hits out at HSBC as first arrests made under Hong Kong security law: Mr Raab attacked the lender for throwing its weight behind the new rule, which criminalises anti-government movements in the former British colony and introduces life sentences or long term jail terms for vaguely defined national security crimes.
What happened overnight
Asian stocks tracked Wall Street higher on Thursday although sentiment was cautious ahead of US employment data while copper prices jumped to more than six-month highs on a better global outlook and supply fears in top producer Chile.
MSCI's broadest index of Asia Pacific shares outside of Japan rose 0.9pc with all major indexes trading higher on hopes of a vaccine for Covid-19.
Japan's Nikkei rose 0.4pc, China's blue-chip index added 0.6pc while Hong Kong's Hang Seng index climbed 1.7pc.
E-mini futures for the S&P 500 were flat.
Coming up today
Interim results: Costain
Full-year: DS Smith
Trading statement: Associated British Foods, Meggitt
Economics: PPI inflation (eurozone), unemployment (eurozone, US), non-farm payrolls, trade balance, jobless claims (US)