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Lagarde steadies markets as ECB prepares stimulus

Louis Ashworth
·30 min read
Lagarde - Chris Ratcliffe/Bloomberg
Lagarde - Chris Ratcliffe/Bloomberg
Markets Hub embed test
Markets Hub embed test

04:40 PM

Wrap-up

Time to wrap up. These were some of the day’s top stories:

Thanks for following along today! We’ll be back tomorrow, when NatWest will round out earnings season for UK lenders, and we’ll get the latest GDP figures for the eurozone.

04:29 PM

Market moves

After a shaky start, markets went for a bit of a ride today, before Christine Lagarde eventually gave them a much-needed boost. A things stand, the close looks to be pretty flat – marking a possible end to several poor days of trading.

04:05 PM

PizzaExpress cutting cutting 1,300 jobs – PA

Just in from PA:

Pizza Express has said it is cutting around 1,300 jobs across its UK restaurants after recent trading worsened in the face of tightened restrictions.

03:52 PM

ExxonMobil plans job cuts after Covid-19 slump

Oil giant ExxonMobil has announced it will cut 1,900 jobs in the US, and reduces its global workforce of staff and contractor by 15pc as part of cost-cutting efforts partially spurred by the pandemic.

In a brief statement, the group said:

The workforce reductions are the result of ongoing reorganizations and work-process changes that have been made over the past several years to improve efficiency and reduce costs.

These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions.

The impact of Covid-19 on the demand for ExxonMobil’s products has increased the urgency of the ongoing efficiency work.

03:45 PM

ECB reaction: As dovish as a hold can be

Florian Hense from Berenberg says today’s ECB announcement and press conference was “as dobish as a hold can get”, adding:

Lagarde explicitly confirmed in the press conference that, “if we have to meet at short notice, we will do so.” But as the meeting will be drawing closer during November and bond markets are not showing signs of significant stress, the ECB would probably make an emergency move only if a worsening financial situation were to seriously impair the transmission of its monetary policy to the real economy.

Lauri Hälikkä from SEB said that although Ms Lagarde held back from explicitly saying it, eurozone GDP growth in the forth quarter will undershoot estimates:

While not stating that the ECB expects another quarter of falling GDP, she said that it could be worse than the ECB expected in its latest forecast in September. The main scenario in September staff projection was pointing to around 3% q/q growth in Q4, which in our view needs to be revised lower considerably.

03:18 PM

Channel 4 chairman shrugs off sale talk as advertising rebounds

GBBO
GBBO

The chairman of Channel 4 said the broadcaster had emerged stronger from the “biggest crisis” in TV advertising history as he rebutted criticism from ministers over its business model. 

My colleague Ben Woods writes:

Charles Gurassa brushed aside comments by media minister John Whittingdale that its advertising model was under “considerable strain” and may not be sustainable in the future. 

Mr Whittingdale’s claims earlier this month were followed by revelations in The Telegraph that ministers were weighing plans to bring in a “deep-pocketed” investor as part of a review that could see part or all of Channel 4 sold off. 

The broadcaster, which is funded by advertising but government owned, was forced to slash its production budget by £150m, find £95m in savings and use loans following the pandemic-induced advertising downturn. 

However, Mr Gurassa said Mr Whittingdale's comments did not take into account Channel 4's 2020 performance, which is poised to record a “significant financial surplus”.

02:35 PM

IMF tells UK to keep spending

Just in: the IMF has praised Britain’s fiscal response to the pandemic, encouraging Chancellor Rishi Sunak to keep spending as restrictions build.

Bloomberg has more details:

 Facing a resurgence in the virus, the nation needs to keep job and company aid programs running until the crisis subsides. It should even consider an additional fiscal push to boost public investment and improve the UK’s safety net, IMF Managing Director Kristalina Georgieva said.

The comments come a week after Sunak announced a significant increase in UK support for businesses and workers, even as the bill for his initial salvo against the crisis climbs to eye-watering levels. That’s wrought havoc with the public finances – pushing debt above 2 trillion pounds for the first time on record – and left Sunak saying he has a “sacred responsibility” to balance the books.

Still, the IMF suggested he has plenty of time to achieve that aim, and it shouldn’t override the need to secure the recovery. While it’s essential for governments to begin to reduce public debt ratios, consolidation should only happen once “the private sector has durably picked up steam,” Georgieva said.

02:33 PM

Q&A

Final question:

Q: Has the ECB discussed what effect the US election may have?

Ms Lagarde says it isn’t right to have a political view, but says the US election is one of the largest geopolitical risks alongside Brexit, and that the ECB is clearly paying attention. She doesn’t go into further detail, and closes by expressing sympathy for people suffering from Covid-19.

02:30 PM

Markets recover

The pan-continental Stoxx 600 has returned to positive territory in recent minutes, with Christine Lagarde very clear suggestion that further stimulus is coming in December.

02:26 PM

Airbus warns recovery slower than expected

Airbus - FABRICE COFFRINI/AFP via Getty Images
Airbus - FABRICE COFFRINI/AFP via Getty Images

 Airbus is not planning further redundancies and has managed to stem its cash outflows as the plane manufacturer reported better than expected results.

My colleague Alan Tovey reports:

However, as chief executive Guillaume Faury posted third-quarter numbers he warned the global air travel recovery had been slower than anticipated, with no return to 2019 levels for at least three years. “Airlines are realising demand is lower for longer… this crisis is far from over.”Mr Faury said radical cost-cutting actions announced earlier this year, such as shedding about 15,000 jobs or 15pc of the workforce and reducing production by a third, was helping Airbus weather the storm.

About 1,700 redundancies are expected at its plants at Broughton, north Wales and Filton near Bristol. 

02:22 PM

Q&A

Q: Philip Lane (deputy governor) said the ECB is happy to interact with the economy directly (i.e. not through banks). Has this been discussed by the GovCo?

Ms Lagarde disputes the premise of the question, saying the ECB would not seek to “shortcut” the banks.

Q: Is more stimulus needed (at a government/EU level)?

On stimulus, the ECB president says she has been encouraged to see fiscal and monetary policy working together. Ms Lagarde says the two stimulus types are working “hand in hand”, which she says compares favourably to the more disconnected response during the financial crisis. She says she wouldn’t be surprised to see more support “at the national levels”.

02:16 PM

ECB Q&A, cont.

More from Christine Lagarde’s Q&A:

Q: Under what circumstances would you not increase stimulus next month?

Ms Lagarde reiterates that the the Governing Council was in agreement that recalibration will be needed, saying what happens will depend on how much the pandemic has spread, what new fiscal responses are announced and what new restrictions are introduced. She says the GovCo has “little doubt” that circumstances will warrant a recalibrated package.

Q: Are you concerned the eurozone may already be in a deflationary trap?

Ms Lagarde says there are “specific, one-off factors” that have been causing recent deflationary pressures, pointing to travel discounts and Italian garment sales. She says these factors won’t last forever, and says that the latter part of 2021 will see a resurgence in demand, particularly if there is continued fiscal and monetary policy.

02:07 PM

US pending home sales dip unexpectedly

US pending home sales fell 2.2pc last month, missing expectations for growth of  2.9pc (per Bloomberg polling).

The fall marks a pause in the housing demand surge, and follows a decline in mortgage applications over recent weeks.

Lawrence Yun, chief economist at the National Association of Realtors, which gathered the data, said:

The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019. With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in   the near future.

02:02 PM

Markets tumble on Lagarde comments

European stocks markets have extended their losses following Ms Lagarde’s opening statement, which appears to confirm investors worst fears: that the eurozone’s economic recovery is rapidly losing pace. 

01:59 PM

Q&A

Q: Is the ECB concerned low confidence could create deflationary pressures?

Ms Lagarde repeats that inflation is likely to remain in negative territory until early next year, pinning recent price drops on sales and VAT cuts. She says the numbers should improve thereafter.

01:56 PM

Q&A

Q: Do you stand by the estimate for 3.1pc quarterly growth in Q4? Could we see a ‘double dip’?

Christine Lagarde says she thinks tomorrow’s third quarter GDP reading might surprise to the “upside”, but that the fourth quarter will be to the “downside”, particularly if November proves to be grim for the bloc’s economies (as appears likely given the restrictions announced this week). She says reduced momentum has been present since September, but says she can’t predict the extent to which December will offset November.

Q: How contingent is the recovery on a vaccine?

Ms Lagarde says that in an outlook that is “fairly dark”, the prospect of a vaccine would hopefully “have an impact”. Pretty vague language, but her underlying point is clear enough.

01:52 PM

Q&A

Q: What instruments might the ECB use to increase increase stimulus next month?

Ms Lagarde, unsurprisingly, says the ECB will look at all its options and consider how different tools can intersect with each other.

Q: Will the ECB allow inflation to overshoot?

The ECB president says this question is a “bit early”, saying more clarification will arrive later.

01:47 PM

Lagarde: Stimulus is key

Ms Lagarde has called for the EU’s stimulus efforts to become effective as soon as possible, saying they can both help makes amends for long-standing disparities in the block, and also accelerate the transition to green and digital business. 

Question time.

01:42 PM

Fourth quarter set to show ‘significant softening‘

Ms Lagarde is running through the major developments since we last heard from her, warning that headline inflation is likely to remain negative until “early 2021”, with a “significant softening” of the bloc’s economic recovery during the fourth quarter. She says the services sector is struggling, echoing the findings of the latest set of purchasing managers’ index surveys.

01:34 PM

Lagarde: Economy is losing momentum faster than expected

The ECB President says the eurozone economy is losing momentum faster than expected, but said the ECB’s monetary policy is providing “crucial support” to underpin economic activity.

She adds risks are “clearly tilted to the downside”, saying the Governing Council will closely examine factors such as progress on a vaccine when it next meets, and will “recalibrate its instruments as appropriate”.

01:27 PM

Coming up: Lagarde press conference

Christine Lagarde will begin her post-ECB decision press conference in a few minutes. You can watch live via the ECB’s stream below:

01:16 PM

US GDP reaction: ‘When your best is simply not enough’

Today’s strong GDP reading “gives a false impression of the economy’s true health”, says Gregory Daco from Oxford Economics. He adds:

Following a 10.1[c peak-to-trough contraction in H1 – the 3rd largest contraction of the past century – the economy has now recouped two thirds of the Global Coronavirus Recession output loss. Still, with real GDP 3.5pc below its 2019Q4 level, we anticipate a much slower second phase of the recovery with output not reclaiming its pre-Covid level until late 2021.

Paul Ashworth from Capital Economics adds:

Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated. But, with coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower. We expect fourth-quarter GDP growth to be only 4.5pc.

Market sentiment has picked up slightly after the mildly-expectation-beating reading (the S&P 500 is now head for a 0.1pc gain), but Seema Shah from Principal Global Investors notes this rebound was broadly priced in:

US GDP may have surprised to the upside in Q3, but markets are already focusing on Q4 and beyond. Indeed, Q3 was almost certainly the sweet spot for 2020. Not only was the US economy enjoying the immediate bounce as a result of economic re-openings, but it was basking in significant fiscal stimulus support schemes.

Now, the path forward will inevitably be an uphill struggle. With virus cases on the rise and a new fiscal package yet to be seen, economic concerns are once again brimming to the surface. If the US follows Europe’s path of reintroducing national lockdowns, the popular reflation narrative will be severely tested.

01:08 PM

Brent crude oil drops to five-month low

Amid wide economic and market nerves, the spot price of Brent crude oil has dropped below $37 a barrel to hit its lowest level since May. 

01:03 PM

EY restructuring partner leaves for Alix

EY - HAYOUNG JEON/EPA-EFE/Shutterstock
EY - HAYOUNG JEON/EPA-EFE/Shutterstock

Another top insolvency partner has quit EY to join AlixPartners, an independent rival, as the Big Four struggle to retain talent because of conflicts of interest with their audit practices. 

My colleague Michael O’Dwyer reports:

Joe O'Connor is the third senior EY restructuring partner to jump ship this year as the war for talent intensifies ahead of an expected wave of work for advisers as distressed companies battle the effect of the pandemic on their finances.  

Partners at the Big Four – EY, Deloitte, KPMG and PwC – are increasingly prevented from taking on work due to the potential for conflicts of interest with the firms’ audit practices. 

The firms are being forced to ringfence their audit practices after failing to raise red flags over accounting scandals at a string of audit clients. 

12:52 PM

ECB: December forecasts will allow recalibration of stimulus

Here’s the ECB’s key statement on monetary policy, framed as ever in its unique flavour of English (key points bolded):

In the current environment of risks clearly tilted to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate.

The new round of Eurosystem staff macroeconomic projections in December will allow a thorough reassessment of the economic outlook and the balance of risks. On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path.

This will foster the convergence of inflation towards its aim in a sustained manner, in line with its commitment to symmetry.

12:47 PM

ECB leaves rates and bond-buying scheme unchanged

As expected, the ECB has left its key rates unchanged, and maintained its bond-buying envelope at €1.35 trillion. No surprises there.

12:43 PM

US jobless claims dip

US claims for unemployment benefit claims continued to fall last week, with 751k initial claims made: 

Continuing claims fell to 7.76m: 

12:39 PM

Economy recovered to 2018 size

On a strict value basis, that recovery takes output back to 2018 levels. In very rough terms, that means the US lost four years of growth in the second quarter, and experienced three years of growth in the third.

12:36 PM

Quarterly growth at 7.4pc

On a quarter-by-quarter, non-annualised basis, the US economy grew by 7.4pc according to today’s figures. That left the economy 2.9pc smaller at the end of September than it was a year before.

12:32 PM

US economy grew 33.1pc annualised in third quarter

Just in: the US economy grew at an annualised rate of 33.1pc in the third quarter, narrowly beating expectations.

12:26 PM

Wall Street set for flat open

Ahead of today’s GDP reading, US futures are pointing toward a mixed, flattish open for Wall street. trading suggests the benchmark S&P 500 is set to open slightly down, while the Dow will drop 0.4pc and the Nasdaq will rise 0.3pc.

12:14 PM

Coming up: US GDP and ECB decision

There’s a big one–two punch of economic news in the coming hour.

1) First of all, at 12:30pm, there’ll be first reading of the US’s GDP change during the third quarter. Following the huge plunge in the second quarter, the figures are likely to show a record resurgence.

Economists polled by Bloomberg are expected growth at an blockbuster annualised rate of 32pc as the world’s biggest economy ‘rubber bands’ back. That would be enough to basically show a V-shaped recovery in output that president Donald Trump will seize upon ahead of next week’s election. In the longer term, however, growth pressures may remain, especially given underlying pressures to the US labour market.

2) Then, at 12:45pm, we’ll get the latest monetary policy decision from the European Central Bank. Economists polled by Bloomberg are expecting no change in policy, but investors will be keeping a close eye on President Christine Lagarde’s post-decision commentary.

PLUS if those two aren’t enough, we also have the latest US jobless claims figures at 12:30pm. Expectations are for a continued decline, albeit at a slow pace.

11:23 AM

Telegraph Tech Hot 100: the list revealed

The 2020 edition of the Telegraph’s Tech 100 list has been released this morning. Powered by data partners Beauhurst, the Telegraph reveals Britain's 100 richest start-up founders, including the country’s first fintech billionaire.

  • Read it in full here

10:59 AM

Market moves

European equities have been wobbling this morning, with no sign of the clear dead cat bounce that might be expected following a series of falls. Currently, all the continent’s top indices are notching up minor gains. 

10:30 AM

Coronavirus: Latest ONS indicators

The Office for National Statistics has released its latest set of Covid-linked indicators.

Highlights include a continued dip in the proportion of furlough workers, which dropped to 7.5pc, and survey data that showed 47pc of businesses reported their turnover was below levels typically expected for this time of year.

Here are some highlights, with time series:

10:19 AM

LVMH agrees Tiffany takeover at reduced price

Tiffany - REUTERS/Gonzalo Fuentes
Tiffany - REUTERS/Gonzalo Fuentes

LVMH has agreed to buy US jeweller Tiffany at a slightly reduced price of almost $16bn (£12.3bn), ending a bitter legal dispute over the purchase.

My colleague Simon Foy reports:

The owner of brands including Louis Vuitton handbags and Hennessy whiskey will pay $131.50 a share, down from the original price of $135, they companies said. 

The new price means a discount of $425m for LVMH, but other key terms of the deal agreed last November remain unchanged.

LVMH, which is run by Europe's richest man Bernard Arnault, previously said it would abandon the purchase, blaming French political intervention and Tiffany’s “dismal” performance during the pandemic for its withdrawal.

Bernard Arnault | From property to a life in luxury
Bernard Arnault | From property to a life in luxury

10:06 AM

Eurozone economic confidence unchanged

Overall economic confidence across the eurozone was unchanged during polling earlier this month, according to data released by the European Commission.

Although the headline figure didn’t budge, sub-gauges show industry confidence improved while consumer and services confidence fell.

10:01 AM

Money round-up

 Here are some of the day’s top stories from the Telegraph Money team:

Investor newsletter REFERRAL (article)
Investor newsletter REFERRAL (article)

09:46 AM

Consumer credit growth lowest on record

British households paid down debt during September as a second virus wave loomed.

Consumer credit dropped with net repayments of £0.6bn, driven mainly by credit card repayments. The Bank of England said:

Although the repayment in September was small in comparison to the £3.9 billion monthly average seen between March and June, this contrasts with an average of £1.1 billion of additional borrowing per month in the 18 months to February 2020.

The weakness in consumer credit net flows pushed the annual growth rate down further in September to -4.6pc, a new series low since it began in 1994.

09:36 AM

Mortgage approvals hit 13-year high

UK mortgage approvals rose to 91.5k last month, beating expectations to hit their highest level since 2007.

The mortgage market strengthened further during the month, the Bank of England said, with households borrowing £4.8bn secured against their homes compared to August’s £3bn. It added:

This was the highest number of approvals since September 2007, and is 24% higher than approvals in February 2020. Approvals in September were around 10 times higher than the trough of 9,300 approvals in May.

09:19 AM

WPP sees sales decline as advertising pressure continues

Mark Read - REUTERS/Toby Melville/File Photo
Mark Read - REUTERS/Toby Melville/File Photo

WPP has warned it expected sales levels to drop over the full year as the pandemic batters the ad industry.

The FTSE 100 company said it expected like-for-like revenues for the full year, less pass-through-costs, to be “within the range of analyst expectations”, indicating a fall of 8.5pc to 10.7pc.

Its revenues were down 9.8pc in the third quarter, or 5.5pc on a like-for-like basis. The strongest declines were in China and India, with comparatively mild drops in the US and UK.

Chief executive Mark Read said:

Given the tightening of Covid restrictions around the world and uncertainty in the global economic outlook, we remain cautious about the pace of recovery. It is important that we maintain our strong financial position and we are on track to achieve cost savings towards the upper end of our £700-800 million target.

Shore Capital’s Roddy Davidson said WPP’s update showed “a improving trend” compared to the second quarter, but noted management’s outlook remained cautious.

08:56 AM

BT shares jump after raising outlook

BT  - GLYN KIRK/AFP via Getty Images
BT - GLYN KIRK/AFP via Getty Images

BT shares have popped higher after the group raised its earnings outlook for the full year following strong customer demand.

The telecoms giant raised the lower end of its estimate for adjusted 2020/21 underlying profit (EBITDA) to £7.3bn, despite the measure slipping to £3.7bn during the half year to the end of September.

It narrowly missed expectations for second-quarter revenues, making sales of £5.36bn across its operations in the three months to the end of September. Analysts had expected revenues of £5.41bn.

Chief executive Philip Jansen said:

BT delivered financial results in-line with expectations for the first half of the year, thanks to strong operational performance during exceptional circumstances…

This performance has given us confidence to raise the lower end of our EBITDA outlook range for this year and publish an EBITDA expectation of at least £7.9bn for 2022/23, with sustainable growth from this level forward.

This growth will be driven by the continued recovery from Covid-19, enhanced by sales of our converged and growth products, and by significant savings from our modernisation and cost saving programme

Jefferies’ Jerry Dellis said the update showed a “more confident tone” from the FTSE 100 group.

08:30 AM

Lockdown boredom helps Hornby

Hornby  - Paul Grover for the Telegraph
Hornby - Paul Grover for the Telegraph

Lockdown boredom has accelerated Hornby’s turnaround with the company famed for its model trains, Airfix aeroplanes and Scalectrix racing cars returning to profit.

My colleague Alan Tovey reports:

In an interim results update pulled forward from November, the company posted sales a third higher at £21.1m and a return to the black with an operating profit of  £200,000  after almost a decade of losses.

At a statutory level, the Margate-based company made pre-tax profit of £17,000 in the six months to the end of September, against a £2.5m loss last time. The period is traditionally the quieter half of the year for Hornby as it does not cover the crucial Christmas period. 

Chief executive Lyndon Davies took control of Hornby three years ago after previous management endured a series of boardroom bust-ups and rows with investors.

  • Read more: Lockdown boredom helps Hornby return to profit

08:23 AM

European shares make mixed open

After opening narrowly higher, European markets have turned mixed. The FTSE 100 is leading fallers at 0.25pc down.

Bloomberg TV - Bloomberg TV
Bloomberg TV - Bloomberg TV

08:22 AM

Merkel says Germany in ‘dramatic situation’

Merkel  -  FILIP SINGER/POOL/EPA-EFE/Shutterstock
Merkel - FILIP SINGER/POOL/EPA-EFE/Shutterstock

Chancellor Angela Merkel has said Germany is in a “dramatic situation”, warning the virus is stretching the country’s hospital capacity to its limit.

Bloomberg has more details:

Health-care authorities are no longer able to track infections back to their source and that leads to an exponential growth in infections, Merkel told lawmakers in German parliament on Thursday.

“We are in a dramatic situation at the beginning of the cold season,” Merkel said in a speech interrupted by opposition lawmakers in a sign of the tension over reviving strict curbs on movement. “I very much understand the frustration, and yes the despair, in these areas.”

Coronavirus Germany Spotlight Chart - cases default
Coronavirus Germany Spotlight Chart - cases default

08:15 AM

Standard Chartered results draw mixed reception

Standard Chartered - REUTERS/Olivia Harris
Standard Chartered - REUTERS/Olivia Harris

Standard Chartered’s third-quarter results have drawn a muted reception from markets, despite beating expectations on profit and dangling the prospect of a resumed dividend.

The emerging markets-focused lender posted an underlying profit before tax of $745m for the third quarter – down 40pc year-on-year, but higher than predicted.

The FTSE 100 group said it “will consider” resuming shareholder returns at its full-year results in February, saying its “strong capital position” allows it to do so.

Charges on bad loans came in at $358m for the period – well below consensus ($614m) and significantly lower than in the second quarter ($611m).

Chief executive Bill Winters said:

Our transformation is allowing us to weather the macroeconomic storm in good shape. Our Wealth Management and Financial Markets businesses have good momentum, we are controlling costs to fund innovation, and we believe we are well provided against credit impairment.

Lower interest rates continue to impact income but we remain well-positioned to meet our financial targets, albeit with some delay. We are further streamlining our organisation to sharpen focus on our retail business, more effectively leverage our unique network, and drive efficiencies.

The group’s shares have dipped slightly at the open, with Citi’s Ronit Ghose highlighting StanChart’s warning that fourth-quarter revenues are usually weaker.

07:50 AM

Lloyds profits surge on mortgage boom

Lloyds - ISABEL INFANTES/AFP via Getty Images
Lloyds - ISABEL INFANTES/AFP via Getty Images

Lloyds Banking Group has returned to profit after demand for mortgages rocketed to its highest level since 2008. 

My colleague Lucy Burton reports:

Britain's biggest high-street bank said pre-tax profits reached £1bn for the three months to September, almost double  City estimates of £588m, following a boom in home lending and a much smaller than expected provision for soured loans. 

It said mortgage lending was up by £3.5bn over the period, marking the highest period for mortgage applications from both first-time buyers and home movers since 2008…

Like its rivals, Lloyds is putting money aside to cover the cost of loans and mortgages that might not be paid back. 

In the third quarter it put aside another £301m over the quarter to cover the cost of soured loans to families and businesses – significantly below last quarter and down on analyst forecasts of £700m.

07:45 AM

Shell boosts dividend as profits fall

Shell - Chris Ratcliffe/Bloomberg News
Shell - Chris Ratcliffe/Bloomberg News

Shell’s adjusted profits plunged in the third quarter to $955m (£734m) but beat analyst estimates as the oil major raised its dividend slightly. 

My colleague Simon Foy reports:

After slashing its payout for the first time since the Second World War in April, the oil major increased its third quarter payout to 16.65 US cents – still two-thirds lower than this time last year. 

Europe's largest oil company blamed the fall in profits on lower oil prices and production margins compared to last year, but outperformed the average analyst estimate of a $146m profit. 

The hit was partly offset by lower operating expenses, well write-offs, depreciation and strong marketing margins, Shell said.

Chief executive Ben van Beurden said: “Our sector-leading cash flows will enable us to grow our businesses of the future while increasing shareholder distributions, making us a compelling investment case.”

06:57 AM

Agenda: European stocks set for slight recovery

Good morning. European stocks are set to recover slightly after slumping to a five-month low on Wednesday.

The rout came as two of Europe's biggest economies, Germany and France, announced new national lockdowns to slow the spread of Covid-19. 

5 things to start your day 

1) Markets tumble in another day of Covid turmoil: Panicking traders wiped almost £40bn off the value of Britain's blue chip companies as a second Covid wave sent Europe back towards lockdown.

2)  Pandemic leaves poorer families £170 a month worse off: Steep falls in income this year for Britain's poorest families far outstrips any savings from cuts to spending on going out or commuting.

3) Whitehall scrambles private sector to avoid disaster: Ministers are desperately scrambling to hire consultants as emergency help to their central Covid-19 Task Force, leaked documents show.

4)  Revolut boss named as UK's first tech start-up billionaire: Nikolay Storonsky, co-founder and chief executive of the banking start-up Revolut, has a net worth of just over £1bn.

5) UK's top black entrepreneurs on how to be successful: Stop seeing it as a lifestyle and start seeing it as hard work in order to create a successful business, say Britain's top black entrepreneurs.

What happened overnight 

Asian stock markets fell on Thursday but not as sharply as Wall Street's rout overnight, while oil bounced off lows and US futures jumped, as Asia's brighter economic outlook offset investor worries about fresh Covid lockdowns in Europe.

MSCI's broadest index of Asia-Pacific shares outside Japan fell one per cent. Japan's Nikkei fell 0.8pc and drops in Hong Kong, Sydney, Shanghai and Seoul were smaller than 1.5pc.

That is heavy but much less than the S&P 500 index's 3.5pc drop or the 4.2pc fall by Germany's DAX which led European shares to their lowest level since late May.

S&P 500 futures and Dow futures rebounded one per cent, which traders attributed to heightened volatility and to the less gloomy mood around Asia as China's economy builds up steam.

Central bank meetings and economic data are the main focus later on Thursday, with gathering uncertainty about the US November 3 election also keeping investors on edge.

The Bank of Japan is set to maintain its massive stimulus programme and vows to take further action if the virus' economic fallout threatens a return to deflation.

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Corporate: BT, Helios Tower, Indivior, Royal Dutch Shell (Interim); Evraz, Foxtons, Hilton Food, Lloyds, Smith & Nephew, Standard Chartered, WPP (Trading statements)

Economics: Mortgage approvals, consumer credit (UK), Bank of Japanese announcement, unemployment (Japan), European Central Bank announcement, confidence (eurozone), GDP third quarter (US)