European equities stumble after strong gains on Monday
Wall Street falls slightly after flat open
UK mortgage approvals hit a 13-year high
US goods trade deficit at a record
Russell Lynch: Fix test and trace to avoid economic catastrophe
Time to wrap up, with the FTSE 100 closing slightly down. These were some of the day’s top stories:
Property market surge pushes mortgage lending to record high: Lending data from the Bank of England shows how much the nation's financial habits changed.
Greggs warns of job cuts ahead as furlough winds up: The bakery said it had launched consultations with unions and staff over a potential cut in hours as it seeks to prevent redundancies.
BT’s 5G deal with Nokia hastens Huawei's demise: The telecoms giant, which owns mobile operator EE, will use Nokia kit for more than 11,000 masts nationally, extending a deal covering London and the Midlands.
Surging B&M Bargains to open 45 new stores: Knockdown prices and spacious stores helped to drive customer traffic during lockdown, as the discount retailer's shops remained open due to their "essential" status.
AA extends bid deadline for second time: TowerBrook and Warberg Pincus, which have joined forces and are the last remaining bidder, have until Oct 27 to make an offer.
Thanks for following along today! We’ll be back bright and early tomorrow morning, for the ONS’s second estimate of just how big a hit the UK economy took during the second quarter.
JPMorgan pays $920m over ‘spoofing’
US banking giant JPMorgan has admitted wrongdoing and agreed to pay out $920m to settle allegations that it manipulated markets in relation to trading of metals futures and Treasuries – in a practice known as ‘spoofing’.
The New York-based lender will pay the biggest monetary penalty ever imposed by the CFTC, including a $436.4 million fine, $311.7 million in restitution and more than $172 million in disgorgement, according to a statement from the Commodity Futures Trading Commission.
The CFTC said its order will recognize and offset restitution and disgorgement payments made to the Department of Justice and Securities and Exchange Commission.
The accord ends a criminal investigation of the bank that has led to a half dozen employees being charged for allegedly rigging the price of gold and silver futures for more than eight years. Two have entered guilty pleas, and four others are awaiting trial.
Spoofing, the news service adds, “typically involves flooding derivatives markets with orders that traders don’t intend to execute to trick others into moving prices in a desired direction”.
After a mixed start, Wall Street stocks have followed Europe into the red, despite some expectation-beating economic figures:
Bank of England Governor Andrew Bailey has been speaking at an event hosted by Queen’s University, Belfast’s Chief Executives’ club. No revelations from the Guv’nor, but here are a few key lines:
The UK’s third-quarter performance was probably a bit better than the MPC expected
Economic caution will continue
The BoE hasn’t reached a judgement on whether to employ negative rates
The economic impact of the new Covid-19 restrictions will be different to those in the second quarter
US consumer confidence jumps most in more than 17 years
Consumer confidence in the US rose sharply this month, hitting 101.8 in a result that blew out expectations for a reading of 90.
Sentiment improved the most month-on-month since April 2003, the Conference Board said, although it remains below pre-virus levels.
Measures of current conditions and the short-term outlook also rose.
Britain imposes sanctions on Belarus’s president – Reuters
"There is a vanishing window to influence what is playing out in Belarus and we believe the time to take action is now," Raab told Reuters.
— Guy Faulconbridge (@GuyReuters) September 29, 2020
Shareholders squash Amigo founder’s attempted return
Shareholders of Amigo Loans have rejected attempts by the founder of the embattled lender to force a return to its board and oust key personnel in a closely contested shareholder vote.
My colleague Michael O’Dwyer reports:
Just over 57pc of investors sided with management by opposing James Benamor’s attempt to reclaim control of the firm he founded in 2005 and floated with a £1.3bn valuation in 2018.
Shareholders also voted down proposals to oust Roger Lovering, the lender’s interim chairman, and finance boss Nayan Kisnadwala by a similar margin.
The result ends Mr Benamor’s second attempt this year to overthrow the existing management and reclaim control of the ailing lender. Mr Benamor believes Amigo failed to adapt to tougher regulation resulting in a nine-figure customer compensation bill.
There is no one I would have trusted to run Amigo better than Glen and I. But Gary has been voted in by a (slim) majority of shareholders today.
We should give him the benefit of the doubt and allow him to show us what he can do.
— James Benamor (@JamesBenamor) September 29, 2020
Wall Street opens flat
A sleepy open for US stocks!
Tiffany escalates war of words with LVMH
Tiffany & Co. has launched a new verbal assault on LVMH, saying the French luxury giant’s justification for backing away from a $16bn (£12.2bn) takeover is baseless and misleading.
The riposte came after LVMH countersued Tiffany on Monday, weeks after moving to end its purchase of the New York- based luxury jeweller.
The owner of Louis Vuitton said the decision was driven by the French government’s request to delay the deal’s closing and Tiffany’s mismanagement during the pandemic -- a claim the jeweler dismissed as nonsense.
“LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany,” said chairman Roger Farah.
LVMH contends Tiffany’s business was devastated by the coronavirus outbreak, according to its filing in Delaware Chancery Court.
Japan dials up record takeover deal
Japan's biggest mobile network NTT Docomo will be taken over by its government-backed parent company in a £30bn deal.
NTT, which owns two thirds of NTT Docomo's shares, is offering 3,900 yen (£28) a share to buy out the whole subsidiary.
That represents a 40pc premium on Monday's closing price and values the purchase at about 4.2 trillion yen - a record amount for a takeover bid in Japan, according to reports.
Japan's new prime minister Yoshihide Suga has repeatedly said the country's mobile prices should fall as they are relatively high compared to other countries. The deal may allow NTT to cut prices quickly and force competitors to follow suit.
Questions for Alok Sharma
Darren Jones, chair of the BEIS Select Committee, tweets:
The Government has confirmed that it will re-write the UK's Industrial Strategy. But the Secretary of State couldn't tell me today how businesses and other stakeholders will help shape it. We need more than just one-off roundtables. We'll be playing our part on @CommonsBEIS. pic.twitter.com/HQQOiBB4Pb
— Darren Jones MP (@darrenpjones) September 29, 2020
US goods trade deficit at record size
America’s goods trade balance (the difference between its good exports and imports) widened to a record deficit of $82.9bn last month, according to the US Census Bureau.
That’s broadly in line with expectations, with imports up 3.1pc and exports up 2.8pc.
It seems unlikely to be a deciding factor given everything else going on, but a widening deficit is a poor look for Donald Trump ahead of November’s election, given the President’s ‘America First’ manufacturing pledge.
IATA: International travel down 88pc in August
The International Air Transport Association – a trade body for airlines worldwide – has released a new set of grim figures for the aviation industry. The group says:
An upturn in air travel has stalled, with traffic down 75pc year-on-year in August
Travel was down 50pc on domestic routes
International travel fell 88pc
IATA chief economist Brian Pearce said: “the improvement that we saw in the summer months has more or less stopped”.
This is a sign of just how much airlines have been hit by the pandemic.
International air travel was down 88% last month on the year before, says the global aviation organisation IATA.
Domestic journeys were down by 50%
— Rob Young (@robyounguk) September 29, 2020
Amazon-rival Allegro raises $2.3bn in Warsaw listing
E-commerce site Allegro has raised 9.2bn zloty (£1.7bn) on the Warsaw stock exchange in Poland's biggest float.
My colleague Michael Cogley reports:
Strong demand for tech stocks in Europe helped the eBay and Amazon rival sell 213m shares at 43 zloty each.The company raised 1bn zloty by selling 23.3m new shares with the remainder coming from its private equity owners Cinven, Permira and Mid Europa Partners. The stock is set to start trading on Oct 12.The listing is expected to improve the profile of Polish tech stocks as well as boost Warsaw’s stock exchange, which has long been dominated by state-controlled companies and has seen turnover decline in recent years.
German inflation sinks further below zero
Consumer price inflation in Germany sunk deeper into deflationary territory this month, with prices falling 0.2pc month-on-month, and 0.4pc year-on-year.
The drop in Europe’s biggest economy puts pressure on the European Central Bank to inject more stimulus, and marks the sharpest downturn in prices since January 2015.
Lower consumption and sales tax cuts both contributed to the fall.
Past halfway through the session, European stocks have come off the day’s lows, but remain in the red across the board. France’s CAC is outperforming its major peers, if only slightly.
PM outlines training plan
Boris Johnson has been outlining his plans for re-training people who lose their jobs due to the pandemic.
As my colleague Cat Neilan reports:
The Prime Minister announced free A-level courses to any adult who does not have an A-level or similar qualification as part of a drive to “build back better” after the pandemic.He set out a ‘Lifetime Skills Guarantee’ in a speech in the South-West, pledging digital ‘boot camps’ will also be provided for workers to catch up on the latest technology.
Follow live via our politics blog: Politics latest news: Boris Johnson pledges free training for Covid jobless
Mondi climbs after naming new CFO
Paper and packaging group Mondi has risen solidly today, after naming Mike Powell as its incoming chief financial officer.
Mr Powell will take up the role from November 1st, succeeding Andrew King, who is moving to the CEO role. He is currently CFO at Ferguson.
Mr King said:
We are confident that Mike’s clear operational focus, strong leadership experience and knowledge of operating in large industrial groups across a variety of geographies will be instrumental in driving forward Mondi’s strategy.
FTSE 100: Who’s moving?
It’s comparatively quiet for London’s blue-chips after Monday’s market surge. Ferguson and B&M are leading risers, while HSBC is cooling off following a chunky gain yesterday.
Elsewhere, it’s the usual suspects losing ground – airline group IAG, engine-maker Rolls-Royce and property developers/landlords British Land and Land Securities are all falling.
AA extends bid deadline – again
The AA has given suitors an extra month to complete a take-private swoop, the breakdown firm said on Tuesday.
My colleague Oliver Gill reports:
TowerBrook and Warberg Pincus, which have joined forces and are the last remaining bidder, have until Oct 27 to make an offer.The extension follows a flurry of activity last week as suitors dropped out of the running.The AA effectively put itself up for sale last month after receiving three approaches from private equity firms. Apollo, the Wall Street buyout giant, is understood to remain interested in refinancing some of the former FTSE 250 firm’s roughly £2.6bn of debt.
Read more: AA extends bid deadline for second time
B&M climbs after reporting ‘strong’ revenue growth
Retailer B&M is the FTSE 100’s second-biggest riser behind Ferguson today, after saying sales had remained strong between the end of March and late September.
The group, which recently earned promotion into the blue-chip index, said in a trading statement that its out-of-town locations and discount goods had remained attractive to customers during lockdown.
Revenues grew 25.3pc over the period, with earnings before interest, taxation, depreciation and amortisation for the first half expected to be £285m, up from the previously-guided range of £250m to £270m.
Chief executive Simon Arora said:
Our business model is proving well-attuned to the evolving needs of customers, given our combination of everyday value across a broad range of product categories being sold at convenient out-of-town locations.
Citi’s Adam Cochrane said the update looked “very strong”.
Eurozone economic confidence edges higher
Economic confidence in the eurozone rose moderately this month, rising from a reading of 87.7 to 91.1 according to the European Commission’s gauge.
That’s slightly higher than the reading of 89 that economist had expected (per Bloomberg), but remains well below pre-pandemic levels.
Here are some of the day’s top stories from the Telegraph Money team:
Record number of students targeted by scammers to become ‘money mules’: More students than ever before have been recruited by fraudsters to launder money with the number of so-called “money mules” under the age of 21 more than tripling in three years.
How the junior London stock market has beaten the FTSE in 2020: Investors in the Alternative Investment Market have made money this year despite the plight of British companies, but should investors buy into London's junior market?
Buyers paying over the odds in mad dash for properties, report finds: Nearly one in every seven properties is selling for more than the asking price as buyers scramble to purchase homes in Britain’s frenzied property market.
Reaction: ‘Darkening clouds on the economic horizon’
Reacting to those money and credit figures from the Bank of England, Thomas Pugh from Capital Economics says appetite for borrowing among UK households is “waning already. He added:
These figures suggest that the recovery was already starting to slow in August, before the latest restrictions were announced.
Those restrictions and rising unemployment will put a further dampener on consumers ability to spend. And the prospect of a no deal Brexit is having a chilling effect on business investment. Overall, we doubt that the economy will grow by much, if anything, over the next few months.
Meanwhile, Samuel Tombs from Pantheon Macroeconomics has highlighted the potential dangers of low remortgaging rates:
While it's good to see house purchase mortgage approvals rocketing, continued low levels of remortgaging are a worry. This might be a sign that some borrowers are struggling to refinance and are lapsing onto lenders' uncompetitive SVR rates pic.twitter.com/LBLoe9jbfI
— Samuel Tombs (@samueltombs) September 29, 2020
Consumer credit growth weakest on record
Net UK consumer credit borrowing remained narrowly positive at £0.3bn in August, the Bank of England said.
The annual growth rate was minus 3.9pc – the weakest on record – with Britons cutting down on both borrowing and repayments, which were both around 16pc below pre-Covid levels.
Mortgage approvals hit a 13-year high
UK mortgage approvals hit their highest level since 2007 last month, as the housing markets experienced a post-lockdown boom.
Loans approvals for house purchases hit 84.7k, up from 66.3k in July, the Bank of England said. It added:
This was the highest number of approvals since October 2007 but it only partially offsets weakness seen between March and June. In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.
Nokia extends 5G pact with BT
Finnish telecoms giant Nokia says is has extended a “long-term strategic relationship” with BT to supply the UK group with gear for its next-generation 5G network.
Under the agreement, Nokia will provide equipment and services at BT sites across the UK. At present, BT’s 4G network setup is around a third Nokia, and two-thirds Chinese vendor Huawei.
Earlier this year, the UK set out rules banning Huawei from supplying British phone companies with gear. All carriers have been told to strip Huawei equipment out of their networks by 2027.
BT is buying gear for its sensitive network ‘core’ from Ericsson, Nokia’s Swedish rival.
Pound extends gains
The pound is continuing to rise against the dollar amid optimism over the chances of Brexit deal, and a broader return of return appetite to global markets. The shift has seen most major currencies gain ground against the US currency:
Ferguson shares jumps as it resumes dividend
Plumbing group Ferguson is leading risers on the FTSE 100 this morning, rising as much as 7.2pc, after proposing a reinstated dividend and slightly beating expectations for full-year sales.
The group’s revenues dipped 0.9pc to $21.8bn over the year to the end of July, while its profit before tax dipped 4.8pc to $1.26bn.
Ferguson said it had maintained “good gross margin and cost cost control” across the period, proposing restoring its ordinary dividend at the 2018/19 level of 208.2 cents per share.
Chief executive Kevin Murphy said:
It is impossible to predict the future progress of the virus, or its economic impact and we expect the current levels of uncertainty to continue for the foreseeable future. However, the fundamental aspects of our business model remain attractive and since the start of the new financial year Ferguson has generated low single digit revenue growth in the US in flat markets overall.
While we remain cautious on the outlook for the year as a whole, the business is in good shape and well prepared to address any further market related disruption.
In response to the pandemic, Ferguson froze hiring and made a string of job cuts, reducing its headcount by around 2,100 across the US, Canada and UK while closing 94 branches.
It offered no guidance for 2021.
Royal Bank of Canada’s Andrew Brooke said Ferguson “should emerge strongly from a competitive standpoint”.
FCA and insurers prepare to ‘leapfrog’ court of appeals
The Financial Conduct Authority and a group of UK insurers including RSA have applied for permission to ‘leapfrog’ the decision over a recent business interruption test case to the Supreme Court if talks fail.
The watchdog said it had made the application on a precautionary basis, if talks between all parties involved cannot result in an agreement by the end of Wednesday.
As my colleague Michael O’Dwyer reported a fortnight ago:
The City regulator claimed a partial victory for small businesses in its groundbreaking legal action against insurers over their refusal to pay out on claims by businesses decimated by the coronavirus pandemic.
The High Court ruling will bring hope to up to 370,000 businesses starved of cash during the economic crisis triggered by the pandemic.
Thousands of firms are expected to benefit from the ruling, but many are likely to be disappointed as judges found insurers were not liable under some of the most disputed contracts.
The Financial Conduct Authority (FCA) brought the case against insurers on behalf of businesses that believed they should have received payouts under business interruption policies after the pandemic decimated trading.
The FCA said it:
…continues to work closely and at speed with the eight insurers and two intervenors that participated in the test case to reach an agreement in principle on a range of issues whereby an appeal process would not be required, and payments would be made on eligible claims as soon as possible. Positive discussions continue with all parties.
It added: “The FCA believes that clarity was provided in the initial judgment handed down on 15 September.”
Seven insurance groups have made similar applications, the watchdog added – with FTSE 100 group RSA confirming it is one of them via a regulatory filing this morning.
The mood among investor evidently soured in the run-up to the European open, and indices across the continent have opened in the red – taking the edge off yesterday’s strong gains.
Greggs looks to cut staff hours as sales remain reduced
Sales at Greggs remained below pre-virus levels, despite a slightly improvement over the summer.
The pastry-maker said like-for-like sales averaged 71.2pc of 2019 levels during the 12 weeks to September 26th, rising to 76.1pc over the last four weeks of the period.
It said this had been despite “a number of headwinds”, including its ineligibility for the Government’s Eat Out to Help Out food voucher scheme, and warm weather in August.
The FTSE 250 group said it has launched a consultation over reduced employment costs. It intends to cut hours to “minimise the risk of job losses”.
Greggs warned the trading outlook “remains uncertain”, but said its digital sales channels – including a click-and-collect service, and a delivery offer launched with Just Eat – is “developing quickly”.
Shore Capital’s Clive Black said “challenges still outweigh opportunities” for Greggs, adding"
We continue to openly wonder how many Greggs stores will remain open when the firm is through the current crisis
Hotel Chocolat swings to a loss
Hotel Chocolat dropped to a full-year loss after retail sales tumbled as a result of the pandemic.
Closures over the crucial Easter period meant revenues fell 14pc during the second half of the year, despite rising 3pc overall to £136.3m.
It made a pre=tax loss of £6.5m, compared to a £10.9m profit last year.
Chief executive Angus Thirlwell said:
Whilst uncertainty will continue for all of us in the coming year, our pipeline of potential growth opportunities has never been stronger. We are working hard to anticipate potential trading scenarios for the year ahead and are planning prudently to be ready to adapt quickly and effectively as the situation evolves.
The chocolatier raised £22m in new equity in early March, to help it weather the pandemic. It paused its dividend at the time to conserve cash, but said payments would be reinstated “when conditions permit”.
It said good progress had been made on the roll-out of its retail locations in Japan and the US, with “dramatic acceleration of online growth in both markets” despite delayed openings.
Markets on edge
Good morning. The FTSE 100 is expected to edge higher at the open, following a cautious overnight performance from stock markets.
5 things to start your day
1) Tax rises or more austerity 'only ways' to pay for cost of Covid Chancellor Rishi Sunak faces a stark choice as coronavirus measures threaten to consume his planned boost to departmental budgets.
2) Pubs and bars slam 10pm curfew Business owners left furious after it emerges the curfew was imposed without Government scientists modelling its effect on infections.
3) The black bankers fighting for a place at the top table Rising stars at the Black Business Awards give their verdict on how far the sector has come on diversity - and how far it still has to go.
4) Here's what negative rates could do to your pension The Bank of England could take interest rates below zero to help the ailing economy - but at what cost?
5) Petrol station kings take pole position in Asda race Blackburn billionaires are set to buy the supermarket from Walmart, meaning a private equity giant will lose out.
What happened overnight
Asian stocks were mixed on Tuesday after Wall Street recovered some of this month's losses as investors looked ahead to a debate between President Donald Trump and his challenger in the November election, former vice president Joe Biden.
Shanghai and Seoul advanced while Tokyo and Hong Kong declined. Sydney was little-changed.
The Shanghai Composite Index gained 0.5pc to 3,231.89 while the Nikkei 225 in Tokyo lost 0.3pc to 23,433.82, pulled lower by reports that telecoms giant NTT Corp. plans to take its mobile carrier DoCoMo private, enabling it to cut rates in line with government policy.
The Hang Seng in Hong Kong shed 0.3pc to 23,414.78.
The Kospi in Seoul advanced 0.8pc to 2,325.33 and Sydney's S&P-ASX 200 was off less than 0.1pc at 5,949.80. New Zealand declined while Singapore and Jakarta gained.
Coming up today
Interim results: AA, Cairn Energy, Card Factory, IHS Markit
Full-year: Ferguson, Hotel Chocolat
Trading statement: Grainger, Greggs
Economics: Mortgage approvals and lending, consumer credit (UK), business and consumer confidence (eurozone), goods trade balance (US)