U.S. Markets close in 3 hrs 52 mins
  • S&P 500

    4,395.64
    +41.45 (+0.95%)
     
  • Dow 30

    34,258.32
    +338.48 (+1.00%)
     
  • Nasdaq

    14,896.85
    +150.45 (+1.02%)
     
  • Russell 2000

    2,218.56
    +32.38 (+1.48%)
     
  • Crude Oil

    70.51
    -0.05 (-0.07%)
     
  • Gold

    1,768.40
    -9.80 (-0.55%)
     
  • Silver

    23.03
    +0.46 (+2.05%)
     
  • EUR/USD

    1.1696
    -0.0034 (-0.2924%)
     
  • 10-Yr Bond

    1.3360
    +0.0120 (+0.91%)
     
  • Vix

    20.87
    -3.49 (-14.33%)
     
  • GBP/USD

    1.3619
    -0.0045 (-0.3282%)
     
  • USD/JPY

    109.7800
    +0.5600 (+0.5127%)
     
  • BTC-USD

    43,802.55
    +630.74 (+1.46%)
     
  • CMC Crypto 200

    1,089.55
    +49.07 (+4.72%)
     
  • FTSE 100

    7,083.37
    +102.39 (+1.47%)
     
  • Nikkei 225

    29,639.40
    -200.31 (-0.67%)
     

Pound struggles as Covid cases rise - live updates

·33 min read
A person walks past a sign informing about a vaccination centre in Greenwich park, London - BERESFORD HODGE /Reuters
A person walks past a sign informing about a vaccination centre in Greenwich park, London - BERESFORD HODGE /Reuters

04:20 PM

GM recalls EVs over fire risk...again

On the subject of electric vehicles...General Motors is issuing a new recall for nearly 69,000 Chevrolet Bolt electric vehicles (EVs) worldwide for fire risks. It comes after reports of two fires. GM will replace defective battery modules as needed.

At least one of the new fires was in a vehicle that had already had the software update released as part of a recall in November, that happened over fire risks.

The latest recall comes after GM and America's National Highway Traffic Safety Administration (NHTSA) regulators last week urged Bolt owners to park their vehicles outside and away from homes after charging.

The largest US carmaker said "experts from GM and (battery maker) LG have identified the simultaneous presence of two rare manufacturing defects in the same battery cell as the root cause of battery fires in certain Chevrolet Bolt EVs."

03:58 PM

Tesla seeks lower taxes on imports of EVs in India

Tesla has sought lower taxes on import of electric vehicles in India, reported Bloomberg, as it looks to commence operations in Asia’s third-largest economy.

The news agency has more:

The California-based maker of electric vehicles has written to the transport and industry ministries for reducing import duty on electric cars to 40pc from the current range of 60pc-100pc for vehicles depending on their import value.

Earlier, Reuters reported that Tesla has pitched to Indian ministries to reduce federal taxes on imports of fully assembled electric cars.

The high import levy will deter sales, the company said in the letter dated July 5 and seen by Bloomberg News. Any reduction will boost the development of the Indian EV ecosystem, Tesla said.

Tesla is seeking to enter India, one of the world’s biggest emerging car markets, where electric vehicles account for less than 1% of new passenger vehicles and two-wheeler sales compared with 5pc in China.

Even though the government has committed support in form of subsidies to promote EVs in the country, sparse charging infrastructure and high cost has meant low acceptance unlike China.

03:25 PM

The week ahead

Visitors look at Apple iPhones and iPads on display in Seoul, South Korea - SeongJoon Cho /Bloomberg
Visitors look at Apple iPhones and iPads on display in Seoul, South Korea - SeongJoon Cho /Bloomberg

Chris Beauchamp, chief market analyst at IG, says prepare for a busy week ahead:

Next week is one of these really busy weeks that will leave investors and traders struggling to find a quiet moment.

Big-name US stocks like Apple will report figures, while in the UK first-half numbers from the banks and big pharma will enliven the FTSE 100.

Finally the Fed will publish its last decision, and while no change is expected, it is widely-forecast that the meeting could set up a further discussion of policy adjustment at the August Jackson Hole symposium.​

The Nasdaq 100 has topped 15,000 this afternoon, a firm sign of the revival in risk appetite, but it will be hard work to maintain this optimism throughout such an action-packed few days.

03:08 PM

Nasdaq hits record highs

The tech-heavy US Nasdaq has reached a new record high, pointing to a revival of investors' risk appetite.

The index is currently trading at an all time high of 14,753, up 0.5pc since yesterday's close and a 2.7pc rise on the month.

02:55 PM

Expert reaction: US PMI

Neil Birrell, chief investment officer and manager of Premier Miton diversified growth fund, comments:

Concerns over US growth surfaced again in the service sector PMI number, which came in at a 5 month low.

This could be a reflection on supply chain issues and labour shortages, but nonetheless it is disappointing. However, at 59.8 it is still indicating plenty of expansion.

Meanwhile the manufacturing PMI rose even further this month to 63.1.

It can’t be expected that every number will be a positive signal and markets will continue to fret over these mixed signals.

02:42 PM

Supply constraints weigh on US business activity

A measure of activity at US service providers fell to a five-month low in July, reflecting how businesses’ are struggling to fill vacancies and stock shelves.

The IHS Markit flash index of purchasing managers in the service sector slipped to 59.8 from 64.6 a month earlier, the group reported Friday. While the gauge has softened since soaring to a record in May, it remains historically elevated. Readings above 50 indicate growth.

At the same time, the IHS Markit U.S. manufacturing purchasing managers’ index advanced to a fresh record of 63.1 from 62.1 a month earlier. The group’s price measures also climbed to the highest readings in data back to 2007.

However order backlogs at US manufacturers were the second-highest on record, according to the group’s measure.

“While the second quarter may therefore represent a peaking in the pace of economic growth according to the PMI, the third quarter is still looking encouragingly strong,” said Chris Williamson, chief business economist at IHS Markit.

“Short-term capacity issues remain a concern, constraining output in many manufacturing and service sector companies while simultaneously pushing prices higher as demand exceeds supply."

02:27 PM

Nike, Adidas Output Snarled as Covid Wave Shuts Asian Factories

Shoppers queue for the Nike store in London as it reopens after lockdown in April - Dan Kitwood /Getty Images Europe 
Shoppers queue for the Nike store in London as it reopens after lockdown in April - Dan Kitwood /Getty Images Europe

Production at factories belonging to some of the world’s biggest clothing companies is struggling to continue as the epicentre of the coronavirus pandemic shifts to southeast Asia.

A number of firms that churn out products for global giants like Nike and Adidas have reported plant suspensions in Vietnam over the past few weeks as authorities impose restrictions to stop the virus.

Phan Thi Thanh Xuan, vice chairwoman of Vietnam’s Leather Footwear and Handbag Association, said Friday that more than 90pc of the group’s 800 members among shoe manufacturers and exporters in the country’s south have temporarily halted operations.

“Most of the factories that supply Nike and Adidas in Vietnam have suspended output,” Xuan said.

Nike said: “The health and safety of our teammates, as well as that of our suppliers, remains our top priority."

Adidas declined to comment, citing a “quiet period” companies take before reporting earnings, which it will do on August 5th.

“It’s going to be worse before it gets better,” with shutdowns and staff disruptions increasing in Asia, said Deborah Elms, executive director of the Singapore-based Asian Trade Centre.

“Places like Vietnam that largely avoided locking down cannot maintain an open posture. With vaccinations painfully slow, I assume more shutdowns in factories, with the ripple effects felt elsewhere.”

01:51 PM

Tech boosts US stocks

Wall Street's main indexes opened higher on Friday, helped by megacap technology stocks and strong earnings from social media companies Twitter and Snap.

Twitter Inc gained 4.9pc in premarket trading after it reported upbeat revenue growth, as the social media platform rolled out ad-targeting improvements to help brands reach potential customers.

Snapchat-owner Snap Inc jumped 17.2pc after it beat Wall Street estimates for users and revenue in the second quarter, notching the highest growth rates since late-2017.

The Dow Jones Industrial Average rose 31.8 points, or 0.09pc at the open to 34855.11.

The S&P 500 rose 13.7 points or 0.31pc at the open to 4381.2​, while the Nasdaq Composite rose 68.5 points, or 0.47pc, to 14753.058 at the opening bell.

01:25 PM

FTSE faring better

Of course, Wall Street fared a lot better than the FTSE did yesterday, with all three markets closing near new record highs on Thursday, meaning they will set new records for umpteenth time during the pandemic if they hold onto their pre-market trading levels.

Still, it has been a volatile week for traders, with stocks surging over the last couple of days after Monday's plunge due to fears that rising delta variant infections will derail the global recovery.

The FTSE was the odd one out in Europe yesterday, slipping while Germany and France bounced back. Today it is faring better, up 0.75pc compared to the Daxs 0.96pc and Cac's 1.13pc.

"It's been quite the tumultuous week," noted Russ Mould, investment director at AJ Bell.

"Investors who panicked when global markets took a dive on Monday may now be regretting their decisions to dump holdings."

01:21 PM

Wall Street set for 'megacap' boost

Twitter reported upbeat revenue growth to jump in pre-market trading - Chris Ratcliffe/Bloomberg 
Twitter reported upbeat revenue growth to jump in pre-market trading - Chris Ratcliffe/Bloomberg

US stocks are braced to bounce back at this afternoon's opening bell, following gains among so-called megacap stocks.

Strong earnings from Twitter and Snap were set to push markets higher to end a turbulent week in positive territory, with the Nasdaq due to open 0.31pc higher, the S&P 500 0.42pc higher and the Dow 0.53pc higher.

Twitter reported upbeat revenue growth projections to rise 5pc in pre-market trading while Snap recorded its best quarterly growth since 2017 to surge 17.2pc, smashing Wall Street estimates for users and revenue.

The positive earnings lifted Facebook too, which reports its results next week.

"Earnings are expected to be much better for the value side than for growth, but with interest rates being as low as they are, investors will be sticking to growth because that way the near-term momentum is on their side," said Sam Stovall, chief investment strategist at CFRA Research in New York.

12:32 PM

Why Rolls-Royce is shutting down for a fortnight

An employee works on a Trent 700 aircraft engine on the production line at the Rolls-Royce Holdings Plc factory in Derby - Bloomberg News /Chris Ratcliffe 
An employee works on a Trent 700 aircraft engine on the production line at the Rolls-Royce Holdings Plc factory in Derby - Bloomberg News /Chris Ratcliffe

The FTSE 100 engineer has asked 19,000 staff to take unpaid leave in a bid to save cash following a battering from the collapse in air travel, reports Alan Tovey.

He writes:

Much of Derby’s industry has fallen silent as Rolls-Royce’s civil aerospace business begins a two-week shutdown.

The break, the first the company has had since at least the 1980s, is hoped to stem heavy losses faced by the aerospace giant since the start of the pandemic.

Coronavirus has caused a collapse in air travel, with long-haul routes serviced by the wide-body airliners hit the hardest.

On Friday, 10,000 UK staff – mostly in Derby, but also at plants in Bristol, Washington and Inchinnan – downed tools to take a fortnight’s unpaid leave.

Read Alan's full story here.

12:16 PM

NatWest agrees to take stake in Irish bank PTSB

NatWest Group is set to take a minority stake in Permanent TSB Group as part of a potential deal to offload €7.6bn ($8.9bn) of assets to the Irish lender.

Bloomberg has the details:

The two banks signed a non-binding memorandum of understanding to work together on an agreement that would see Permanent TSB take over much of NatWest’s Ulster Bank Ireland unit including some performing mortgages and micro-SME loans as well as its Lombard Asset Finance business and 25 Ulster Bank branches, according to a statement Friday.

“As part of the consideration for the perimeter transferring to Permanent TSB, NatWest will become a shareholder with up to 20pc of the enlarged share capital” of Permanent TSB, the Irish firm said in a statement. Permanent TSB will also pay “an additional cash consideration.”

That means the U.K. government, which currently holds a majority stake in NatWest, will in effect become an indirect shareholder in the Irish lender which itself is 75pc owned by the Irish state.

“We see this as a once in a generation opportunity to fast-track the growth” of Permanent TSB, Chief Executive Officer Eamonn Crowley said.

11:46 AM

Oil set to recover week's losses

Brent crude has dropped 0.2pc to $73.63 a barrel, after jumping 2.2pc on Thursday.

However oil is still set to end the week roughly where it started, having recouped most of a rout on Monday with three days of gains driven by signs of recovering demand.

Crude plunged on Monday as fears over the delta coronavirus variant’s spread triggered a selloff across financial assets. But prices have since rebounded on expectations that the oil demand recovery hasn’t been derailed and will soon strain global inventories.

It’s a “benign end to a volatile week,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The supply situation remains tight.”

11:16 AM

KPMG banking audits are not good enough, warns watchdog

The accounting watchdog has singled out KPMG for an “unacceptable” failure to meet required standards in its banking audits for a third consecutive year, reports Simon Foy.

He writes:

The Financial Reporting Council criticised the Big Four firm in a damning report that found nearly a third of audits of British companies last year needed improvement or significant improvement.

The watchdog said KPMG, which audits Barclays, needs to “urgently and comprehensively address the continuing deficiencies” in the quality of its audit work on lenders and similar financial companies.

It said: “Given the systemic importance of banks to the UK economy, the FRC will be closely monitoring KPMG’s actions to ensure findings are addressed in a timely manner."

Read Simon's full story here.

11:00 AM

US stocks also bounce back

Major stock indexes in the US are also on track for a weekly gain, with futures for the S&P 500 climbing 0.5pc.

Despite the steep drop on Monday, the S&P 500 had posted a 0.9pc weekly gain by the end of yesterday's close, after analysts noted investors were keen to "buy the dip".

Futures tied to both the Dow and the Nasdaq were also up 0.5pc on Friday morning in New York.

Global stocks are on course for a modest weekly advance, bolstered by robust corporate profits and stimulus support.

10:45 AM

FTSE 100 holds onto gains

The FTSE 100 has pushed higher since this morning, shrugging off a slowdown in growth for UK services and manufacturing.

The blue-chip index is currently up 0.8pc, buoyed by Vodafone (up 2.7pc) and Natwest (2.6pc).

The FTSE 100 is eyeing a 0.2pc weekly rise despite Monday's sharp sell off.

10:27 AM

Money round-up

Here's the daily round-up from The Telegraph's Money team:

10:06 AM

Gatwick criticises UK plan to leave winter airport slots vacant

A traveler arrives at the North Terminal at Gatwick Airport - Hollie Adams /Getty Images Europe 
A traveler arrives at the North Terminal at Gatwick Airport - Hollie Adams /Getty Images Europe

London Gatwick airport has criticised a UK plan to shield airlines from surrendering unused takeoff and landing slots over the winter =, warning the proposed rules will delay a travel industry rebound.

The draft legislation would allow carriers to temporarily return any operating slots they don’t need this winter and reclaim them again the following year. They would be required to use only 50pc of those that remain.

Such a plan would enable incumbent carriers “to retain substantial slot portfolios at airports, blocking them from competitors, without having to operate any of them,” Jonathan Pollard, chief commercial officer at Gatwick, said in a letter to Transport Secretary Grant Shapps.

Normally, airlines are required to use 80pc of their airport capacity or have the slots taken away. Since the start of the coronavirus pandemic, regulators have granted seasonal waivers to protect the industry.

With international travel starting to return, there is pressure from airports and airlines like Ryanair Holdings Plc and Wizz Air Holdings Plc to revert back to the usual rules, or at least minimize the exemptions.

They argue that this would free up slots for stronger players. Incumbents like EasyJet and British Airways welcome the flexibility provided by the government’s plan.

A further suspension of “use it or lose it” rules “will lead to fewer flights, reduced connectivity and higher fares for consumers,” Ireland’s Ryanair told Bloomberg.

09:52 AM

Eurozone business confidence falls to five-month low

A waiter serves food at a restaurant terrace in Versailles, west of Paris - Michel Euler /AP
A waiter serves food at a restaurant terrace in Versailles, west of Paris - Michel Euler /AP

Business confidence across the Eurozone plunged to a five-month low as fears grow over the spread of the Delta variant, reports Louis Ashworth.

Expectations for output fell as concerns about the virus wave spread across the continent, with France – where cases are soaring – taking the hardest hit.

The drop put a dampener on soaring activity, with the bloc-wide purchasing managers’ index reading hitting a 21-year high amid reopenings.

Services sector activity saw the fastest rise in 15 years, but supply-chain disruptions slowed growth in the manufacturing sector.

Chris Williamson, chief business economist at IHS Markit, which gathered the data, said “further covid waves around the world could lead to further global supply chain delays and hence ever-higher prices”

Prices for goods and services rose at a near-record pace, outstripped only by June’s rise. Companies blamed continued problems getting hold of goods that were leaving them unable to fulfil orders. Delivery times, already near a record high, continued to rise.

The flash headline composite PMI reading – in which a reading above 50 indicates growth compared with the prior month – came in at 60.6, the strongest since June 2000.

Bert Colijn, senior economist at ING, said: “The PMIs once again confirm significant pipeline inflation pressures, especially for goods. Of course, the ECB will consider this transitory as it has said before but expect the debate to become more heated in the months ahead when a decision needs to be made about the end of the PEPP programme.”

09:45 AM

More expert reaction: PMI data

Hugh Gimber, global market strategist at J.P. Morgan Asset Management, comments:

The UK economy remains on the road to recovery, but the path ahead is becoming bumpier.

Supply bottlenecks are the limiting factor on activity, and appear largely to blame for today’s PMI data failing to meet expectations. While activity remains strong, businesses are struggling to fill job vacancies and shortages of raw materials are starting to bite.

The result is clear, with average business costs rising at the fastest pace on record. We expect many of these price increases to be passed onto consumers in the coming months, putting upward pressure on inflation in the near term.

In recent weeks it has become evident that there is some disagreement within the Bank of England on the future path of policy.

For those members of the Monetary Policy Committee who were yet to make up their minds ahead of next month’s meeting, today’s print may well serve to highlight the downside risks to growth. Even with inflation set to rise in the coming months, we expect the Bank will be wary of tightening policy too quickly given the risk that this could put the brakes on a still nascent recovery.

09:38 AM

'Encouraging start' to the year for Premier Foods

Tubs of Bisto gravy granules, produced by Premier Foods Plc - Chris Ratcliffe /Bloomberg News 
Tubs of Bisto gravy granules, produced by Premier Foods Plc - Chris Ratcliffe /Bloomberg News

Mr Kipling maker Premier Foods has hailed a "very encouraging" start to the financial year as the retailer said it was buoyed by progress with healthier ranges as customers "adopted good healthier eating habits during the pandemic".

Its Ambrosia, Bisto, Oxo, Sharwood's and Paxo brands all reported double-digit growth against 2019's levels while the group's sweet treats business saw branded sales jump 3.2pc against last year.

However the group reported a 13.2pc decline for the quarter to July 3 against the same period last year, with a 6.3pc rise compared with the period in 2019 before its pandemic-fuelled jump.

“For a business which thrived during the pandemic, it was always going to be tough beating year-on-year comparative figures," said Russ Mould.

“Strategically, Premier Foods has come a long way since its days as a zombie company where all the cash it made was gobbled up on debt repayments, leaving nothing to put back into the business. Now that situation has been resolved, it is reinvesting fast in product innovation and marketing, and you can see that it is working.

09:11 AM

Snap analysis from economics editor Russell Lynch

If you wished for an example of the havoc the "pingdemic" is playing with British business, look no further than today’s purchasing managers’ index from IHS Markit, writes The Telegraph's economics editor Russell Lynch.

After a month in the doldrums this should have been a time for companies to fill their boots as restrictions are lifted but the impact of more than 600,000 self-isolating staff has taken its toll on growth, exacerbating existing shortages of staff and materials.

The disruption to businesses also meant slowing orders growth and leaves IHS Markit’s activity index, where a score over 50 signals growth, at 57.7 - the weakest since we were all locked down in March.

Most worrying of all, business optimism has fallen to a nine-month low - just at the point when we should have been celebrating ‘Freedom Day’.

Hence the Bank of England is likely to be cautious next month despite inflation running above target.

09:03 AM

Pound slides after economy shows signs of slowing

Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester - PHIL NOBLE /Reuters 
Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester - PHIL NOBLE /Reuters

The pound has dropped 0.3pc against the dollar after Britain's economy showed signs of slowing in July, as staff and materials shortages weighed on the private sector.

An index based on a survey of purchasing managers fell unexpectedly to its lowest since March, when most stores and restaurants were still shut, IHS Markit and CIPS said on Friday.

Duncan Brock, Group Director at CIPS, said: "Acute material and staff shortages in certain sectors interrupted the rhythm of recovery in private sector business as signs of malaise crept in affecting output, new orders and business optimism."

The pound is currently trading at $1.3729 against the dollar. Against the euro, it is up 0.3pc at 0.8576p.

08:50 AM

Boost from economic reopening 'petering out'

Willem Sels, chief investment officer of private banking and wealth management at HSBC comments:

Markets were expecting a small drop in the UK manufacturing and services PMIs, in line with a global trend, which shows that the speed of the improvement in economic activity probably peaked in May.

But they will be disappointed by the larger than expected drop, especially in the services PMI, but also in manufacturing. The earlier boost from the loosening of restrictions had already been petering out, and rising case numbers seem to have impacted this month’s business surveys. Some businesses are facing difficulties with finding employees, while some manufacturing firms are still facing shortages of key components.

It is important to note that both surveys are still well above the 50-level indicating expansion. Looking ahead, the growth trend should remain positive due to the latest ‘unlocking’ from 19 July. Trading in the pub and restaurant business has been picking up quickly and should improve further following England’s “Freedom Day”. Rising Covid case numbers remain a key risk, but we think the return-to-office effect will help offset the possible impact on spending.

08:43 AM

Business activity growth 'at lowest since pandemic began'

Chris Williamson, Chief Business Economist at IHS Markit, said:

July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.

Although business activity continued to grow, aided by the easing of lockdown restrictions to the lowest since the pandemic began, the rate of expansion slowed sharply to the weakest since March.

Transport, hospitality and other consumer-facing services companies were the hardest hit, though manufacturing also saw growth weaken markedly during the month.

Although the July flash survey only covered three days of the full easing of covid restrictions, any imminent re-acceleration of growth in August looks unlikely due to a steep slowing in overall new order growth recorded during July.

Concerns over the Delta variant have meanwhile overshadowed the passing of “freedom day”, and were a key factor alongside Brexit and rising costs behind a sharp slide in business expectations for the year ahead, which slumped to the lowest since last October.

08:37 AM

Surprise slowdown in UK private sector growth

There has been a surprise sharp slowdown in business activity growth in UK services and manufacturing, according to an index based on a survey of purchasing managers (PMI)..

IHS Markit, which compiles the survey data, said:

The speed of recovery was the weakest since March, with survey respondents widely reporting staff and raw material shortages due to the pandemic.

Concerns about the loss of momentum contributed to the lowest degree of optimism towards the business outlook for nine months.

At 57.7 in July, the headline seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index registered above the 50.0 no change value for the fifth consecutive month.

However, the latest reading was down from 62.2 in June and the lowest since the easing of lockdown restrictions began during March.

08:24 AM

Centrica drops as UK energy bill price cap to be extended

Shares of Centrica, the UK’s biggest energy supplier, fell to a seven-month low after the government announced plans to extend its price cap on the most expensive energy tariffs beyond 2023.

The government wants to stimulate competition in the energy retail market while keeping bills low, according to a strategy published today.

It also wants to trial automatic switching for when a tariff runs out, which could effectively ban expensive default rates.

The price cap was introduced in 2019 to protect the 15m British households on default tariffs, and is estimated to save households up to £100 a year for those who get their electricity and gas from the same provider.

“We anticipate that the energy transition over this decade and beyond will drive a greater uptake of electric vehicles, smart systems, and smart appliances, which will increase the average consumer’s engagement with their energy use and the energy retail market,” the government said in an open letter.

“It is important that structures are in place to enable and support consumer engagement with the market.”

Centrica shares fell as much as 2.8pc to 47.94p a share in London, their lowest since January 5th.

08:08 AM

FTSE 100 up 0.7pc

The FTSE 100 index has risen this morning, led by engine maker Rolls Royce and bank NatWest, with Vodafone also among the top risers after it reported strong earnings.

The blue-chip index gained 0.7pc with miners Rio Tinto, Anglo American, Glencore and BHP Group lifting between 0.8pc and 1.4pc.

Mobile operator Vodafone is up 2pc after it reported a better-than-expected 3.3pc rise in first-quarter service revenue.

The domestically focused mid-cap index rose 0.8pc buoyed by Ultra Electronics and insurer Beazley which rose 4.3pc after it swung to a profit for the first half of the year from a loss in the year-ago period.

07:58 AM

Analysts weigh in on the Ultra offer

Henry Carver, at Peel Hunt, tells my colleague Alan Tovey: “The tune has quickly changed from this being opportunistic to something reasonable.

“It looks like a proper strategic move to put Cobham with another UK asset to create real value.”

He added that Advent may have learnt from the public hammering it took when buying Cobham.

“This seems much more carefully thought out, and Ultra’s ownership is different in that there’s not a founding family holding a stake.

“It also highlights that US investors are looking into the UK defence space and realising there are some very good but jumbled-up businesses that they can come in and streamline. It shows there’s value in the UK defence sector.”

Mr Carver said that other British defence businesses could increasingly be on the radar of US investors, with companies such as QinetiQ and Chemring having operations that could be attractive to transatlantic buyers.

Read Alan's full story on the Ultra takeover here.

07:44 AM

Ultra shares surge 33pc after takeover offer

Shares of British defence contractor Ultra Electronics are surging 33pc, showing the market is pretty confident US-owned Cobham’s offer will make it over the line, reports my colleague Alan Tovey.

While they haven’t hit the £35 proposed price, it’s a strong signal that investors think a deal is less likely to face the same hurdles as Advent’s controversial takeover of Cobham two years back.

Then, the US private equity firm took a battering from Cobham’s founding family and critics warned about the risks to UK national security of the deal.

This time it looks like Ultra’s board have used Advent’s bruising experience from Cobham as leverage, rebuffing a number of offers before landing on a high price that shareholders are likely to support before any blow-by-blow public battle.

Regardless of the range of opinions on the role private equity plays, it also means Advent is less likely to be exposed to headlines labelling it as an example of “vulture capitalism”.

Read more on this story here: US private equity raider targets £2.6bn Ultra takeover

07:37 AM

Food shoppers help retail sales rise

07:29 AM

Vodafone shares rise with revenues

Vodafone has returned to growth in Europe and Africa as its mobile payments business M-Pesa picked up speed and roaming restarted, writes Matthew Field.

Revenues improved 5.7pc in the three months to June compared to the same period last year, pulling in €11.1bn (£9.5bn), Vodafone said in a trading update.

Nick Read, Vodafone chief executive, said: "In Europe, the operating and retail environment has not yet returned to normal conditions, but we are delivering a good service revenue performance."

Roaming numbers improved 56pc year-on-year, but remains down 54pc on pre-pandemic levels with tourism and business travel still limited by border restrictions and lockdowns.

Vodafone reported its mobile money transfer service M-Pesa now had just under 50m users and volumes had increased 45pc year-on-year.

The M-Pesa business, launched in Kenya in 2007, lets users make micropayments between "dumb" phones, but Mr Read said it was increasingly being used on smartphones and Vodafone planned to develop new M-Pesa apps.

He said the focus remained on growing the business organically, rather than through takeovers. He added there were no plans to sell a stake in the business, but it had added commercial partnerships such as with AliPay, with a plan to launch in South Africa.

"We want ownership of our own platform," Mr Read said.

He said M-Pesa had moved from peer-to-peer only, to services and fintech tools such as bill payments and savings.

He added Vodafone was planning to separate M-Pesa out to its own business group and report its revenues independently.

Vodafone shares were up 2pc in early trading.

07:03 AM

FTSE edges higher

The FTSE 100 has opened at 7,000.47, up 32.17 points or 0.5pc.

The FTSE 250 has also inched 0.5pc higher to 22,796.84 points.

07:01 AM

Is the current spending rise temporary?

Samuel Tombs, chief UK economist at Pantheon Macroeconomics expects retail sales to fall back over the coming months, even though some barometers show consumer confidence has recently increased .

He says:

But the temporary boost to food spending from Euro 2020 will fade, while higher confidence does not appear to be translating to higher levels of economic activity, due to the recent rise in Covid-19 cases.

Indeed, footfall at retail locations has trended down recently and last week was 75pc of its level two years ago, down from the peak of 86pc in the first week of June, according to Springboard.

Similarly, credit and debit card payments settled through the CHAPS system were 4.2pc below their February 2020 level in the first 15 days of July, worse than the 2.3pc shortfall seen in the first 15 days of June.

Meanwhile, the combination of a further rise in CPI inflation, a decline in the value of Universal Credit payments at the end of September and a fall in employment in Q4 after the furlough scheme has been wound down will weigh on confidence and real disposable incomes.

06:48 AM

'Post-pandemic retail recovery will likely remain fragile'

Lisa Hooker, consumer markets leader at PwC, adds:

British consumers have continued to drive strong retail demand in June, with a 1.4pc increase in sales excluding fuel vs. May, and a 12.1pc increase compared with the last normal month before the pandemic - last February.

The first full month of reopening for indoor hospitality was always going to be make or break for the retail sector, and we’ve seen both increased footfall for the high street, with online sales at their lowest level (26.7pc) since the start of the pandemic, and, perhaps surprisingly, a boom in demand for grocery.

[...] However, headline growth masks declines in other non-food categories, with household goods sales suffering their first non-lockdown driven decline since the start of the pandemic, as people started to spend more time out of the home; and sales in the hardest-hit clothing category again slipping below pre-pandemic levels.

So the post-pandemic retail recovery will likely remain fragile for the rest of the summer, as government support schemes begin to wind down, and the booming grocery sector sees operational and supply challenges from the current ‘pingdemic’.

And while the summer heatwave may still be on the mind of consumers, retailers will already be well into their planning for the rest of the year, including the critical Christmas peak. They will be hoping the initial post-lockdown momentum and pent-up demand continues for the rest of 2021.

06:37 AM

Expert reaction: Retail sales rise

A customer looks at the products at the UK's first Amazon Fresh supermarket - HENRY NICHOLLS /REUTERS 
A customer looks at the products at the UK's first Amazon Fresh supermarket - HENRY NICHOLLS /REUTERS

Aled Patchett, head of retail and consumer goods at Lloyds Bank, m:

Retailers will be hoping June marked the start of the turnaround they have been hoping for. Despite a delay in the gradual unlocking of the UK, Euro 2020 proved a boon to the hospitality sector and those selling beer, BBQs and burgers were best-placed to reap the rewards, something welcomed by bricks-and-mortar stores and pubs alike.

All eyes now are on the impact of the gradual unlocking of society across the UK. On the surface the easing of restrictions and commuters returning back to city centre offices should be good news for the sector, but workers having to self-isolate means many businesses are reporting a shortage of staff just as demand looks likely to peak.

This combined with the prospect of rising inflation could dampen what should mark an increase in sales in line with high levels of consumer demand just as the sector eyed up a long hot summer of recovery.

06:19 AM

Retail sales inch up 0.5pc

Good morning. Retail sales inched 0.5pc higher in June compared to May, as a Euro 2020-inspired jump in food sales helped offset a decline in clothes and household goods shopping. Food sales leaped 4.2pc, but non-food store sales sank 1.7pc month on month, driven by a drop in demand for furniture and fashion.

Fuel sales rose 2.3pc as the reopening gathered pace, but remained 2.1pc lower than their pre-pandemic level. Overall UK retail sales were 9.5pc higher than in February 2020, though the proportion of online shopping retreated as physical stores reopened, slipping from 28.4pc in May to 26.7pc in June.

5 things to start your day

1) Mike Lynch can be extradited to US, judge rules: Autonomy founder loses bid to block extradition to America on fraud charges relating to its £7bn sale to Hewlett-Packard.

2) Morrisons bidder's review plan as deal triggers £300m fees bonanza: Fortress consortium to examine operations and structure of supermarket including property holdings within six months if it wins control.

3) 'We're not woke', says Unilever boss: Alan Jope seeks to distance consumer goods giant from Ben & Jerry's decision to stop selling ice cream in occupied Palestinian territories.

4) Delta threatens EU recovery as Lagarde's stimulus defies Berlin: Rampant delta variant could scupper EU’s recovery, Christine Lagarde warned as she defied Berlin with lower-for-longer stimulus plans.

5) How Japan's Olympics turned into an economic disaster: The cost has more than doubled to around £11.3bn, while experts say that Japan is unlikely to benefit much economically in the future.

What happened overnight

  • Asian markets wobbled on Friday morning as investors struggled to maintain a global rally into a third day despite another batch of healthy corporate earnings, with the Delta variant continuing to cast a shadow across trading floors. Hong Kong, Shanghai, Wellington, Manila and Jakarta were all in the red, while Sydney, Singapore, Seoul and Taipei edged up. Tokyo was closed for a holiday.

  • Twitter on Thursday night posted better-than-expected results for the last quarter with gains in revenue, profit and a spike in users, sparking a rally in shares. Net profit was $66 million on revenue that surged to $1.19 billion, beating Wall Street expectations. That compared to a loss of $1.38 billion in the same quarter a year earlier. Jack Dorsey, Twitter's chief executive, also said that Bitcoin will be "a big part of our future" and suggested that cryptocurrency will eventually be used to pay for services on the platform.

Coming up today

  • Corporate: Beazley, Brewin Dolphin, Get Busy, Premier Foods, Vodafone (Trading update)

  • Economics: June retail sales, consumer confidence (UK); flash PMIs (UK, EU, US)