Pound hits three-month low against euro

Pound
Pound
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04:46 PM

Blog wrap

Well that’s all from us for today, join us again the the mo.

Here’s a quick summary of what happened today.

  • Stock markets on both sides of the Atlantic rebounded today as optimism over easing lockdowns won out over fear of surging coronavirus infections.

  • Most of the session was tepid “with the positive implications of easing lockdown measures weighed up against surging Covid-19 cases throughout the US,” said Joshua Mahony, senior market analyst at online trading firm IG.

  • European key markets were more than 1pc higher, helped by steady gains on Wall Street

  • London also received a boost from investors welcoming Boris Johnson saying the coronavirus crisis needed the type of massive economic response US president Franklin D. Roosevelt mobilised to tackle the Great Depression.

  • Travel stocks climbed during the session, with both TUI and EasyJet surging higher.

  • BP’s share price jumped after it announced the sale of its petrochemical business to privately-owned rival Ineos.

What to look forward to tomorrow:

Interim results: On The Beach

Full-year: SIG

Economics: Q1 GDP final reading (UK and Spain), business investment (UK), inflation (eurozone), consumer confidence (US)

04:35 PM

Airbus production to be 40pc lower for at least the next two years

Airbus does not plan to close any of its aircraft assembly lines across Europe and in China and the US despite having slashed the rate at which it builds jets by a third because of Covid-19.

Guillaume Faury, chief executive of the plane-maker, said in a German media interview that he “won’t stop” any of the plants, but production would be 40pc lower than pre-coroanvirus rates for at least the next to years.

However, he warned of “huge” job cuts among Airbus’s 90,000 staff working on airliners, with announcement of the losses before the end of July.

04:14 PM

Pandemic is speeding up says WHO

04:03 PM

Coty pays $200m for slice of Kim Kardashian’s beauty business

Kim Kardashian
Kim Kardashian

Cosmetics business Coty will pay $200m (£162m) for a fifth of Kim Kardashian West’s beauty brand. 

KKW already sells anything from lipsticks to mascara and concealers. The cash injection and Coty’s global reach will allow it to branch into skincare, haircare, personal care and nail products, they said. 

Meanwhile, the reality TV star will use her 300 million followers across her personal brand and social media to promote her products. 

Coty chief executive Peter Harf described Kardashian West as a “true modern day global icon”.

Read Laura Onita’s full article here

03:46 PM

Bulls shrug off health woes

Equity markets finished the session on a high note even though the coronavirus crisis is still a serious issue. The FTSE 100 rose 1.08pc to 6,225.77 while the FTSE 250 climbed 0.50pc to 17,198.66.

In the eurozone the Frankfurt DAX and Paris CAC finished 1.18pc and 0.73pc higher.

David Madden of CMC Markets said:  Florida set a new record for the number of new daily cases on Saturday, but the reading eased a little on Sunday. It is evident that the reopening of economies can bring about a surge in cases, but given the reaction by traders on both sides of the Atlantic, they don’t seem to care that much for now.

Florida and Texas have rowed back a little on certain aspects of reopening their economies, but the moves are relatively minor, so that hasn’t spooked the markets. Traders will be keeping an eye on the situation to see if the new measures help contain the virus.   

03:32 PM

Tata Steel losses widen as demand slides

Tata Steel has plunged deeper into the red as coronavirus cuts demand for its products, with tough lockdown conditions in India further threatening production in the company’s home nation, my colleague Alan Tovey writes.

In the quarter to the end of March, the business reported revenues down by a fifth to 337.7bn rupees (£3.6bn), taking it to a 15bn rupee pre-tax loss – three times the size of the loss for the previous quarter.

Over the full year, sales fell 11pc to 1.4 trillion rupees, resulting in a 2.3bn rupee loss, compared with a 159bn rupee profit the year before.

The company’s dive into the red was bigger than analysts had been expecting and came as Tata Steel reeled from the harsh lockdown in its home nation, which limited travel conditions on the country’s 1.3bn population and which is only slowly being eased.

03:25 PM

Handover

It’s time for me to hand over to my colleague LaToya Harding, who will steer the blog into the evening. Thanks for following along today!

03:22 PM

Market moves

As we head towards the close, European equities have gained some momentum, with the continent’s top indices all solidly in the green – and performing in line with Wall Street. 

02:46 PM

The Restaurant Group gets green light for closures

Frankie & Benny’s - Handout
Frankie & Benny’s – Handout

Frankie & Benny’s owner The Restaurant Group has been given the green light to push ahead with plans to close 125 sites within its struggling leisure arm.

My colleague Hannah Uttley reports:

At a meeting today 82pc of landlords voted in favour of the company’s plans to carry out a company voluntary arrangement, while 65pc of other creditors backed the proposals.

It will pave the way for TRG to implement a major overhaul of its operations and shut 125 restaurants, while obtaining rental reductions and revised lease terms on 85 others. The restructuring deal is expected to leave the group’s leisure business with around 160 sites, most of which will be Frankie & Benny’s.

Creditors have 28 days to file a challenge to the CVA in court.

02:23 PM

Full report: Ineos buys BP’s petrochemicals division

My colleagues Ed Clowes and Simon Foy have a full report on BP’s $5bn sale of its petrochemical division to Ineos. They write:

Chief executive Bernard Looney said the disposal was a significant step in the company’s reinvention and meant it would meet its divestment targets a year ahead of schedule while strengthening its balance sheet.

The division includes two main businesses, aromatics and acetyls, across 14 plants in Asia, Europe and the US that produced almost 10m tonnes of petrochemicals last year.

The deal is expected to be completed by the end of the year, subject to regulatory and other approvals.

02:09 PM

US pending home sales jump

Pending home sales in the US jumped last month, returning almost to their pre-pandemic levels. Sales jumped 44.2pc month-on-month, leaving them still down 10.4pc on the year, according figures from national Association of Realtors.

 Lawrence Yun, the NAR’s chief economist, said:

This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership. This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.

01:39 PM

Wall Street opens in the green

The Dow Jones and S&P 500 have opened in positive territory after last week’s rout.

US market data
US market data

01:15 PM

Roland and Korg fined £5.5m for price-fixing 

Roland and Korg
Roland and Korg

Synthesizer makers Roland and Korg have been fined £5.5m by the competition watchdog for price fixing. 

My colleague Laura Onita reports:

The penalty follows an earlier Competition and Markets Authority fine for two other instrument makes, Casio and Fender, for rigging the market to make it more difficult for shoppers to find deals online. 

All four companies have been accused of fixing prices illegally by preventing online discounts on their products. 

They demanded a minimum sales price from vendors, known as resale price maintenance, which meant customers were less able to shop around for a better deal, according to the watchdog. 

The latest fine in the sector brings the total imposed by the CMA to £13.7m. 

Michael Grenfell of the CMA said more shoppers had been buying a musical instrument in lockdown, with 40pc of sales made online even before the pandemic struck. 

“It’s important that manufacturers and retailers do not illegally work together to keep prices high,” he said. 

12:57 PM

Pound hits three-month low against euro

Sterling is also falling against the euro today, dropping below €1.10 to touch its lowest level in three months as investors prepare for Britain’s infrastructure spending plans to be unveiled. 

Rabobank’s Jane Foley told Reuters:

The pound earlier today, certainly in Asian hours, looked as it had a little bit of a boost on the back of the perception that we will have potentially strong growth on the back of that (infrastructure spending), but I think that back in European hours, the market is now a little bit more concerned about funding.

12:43 PM

Barratt targets net zero by 2040

Barratt Developments, one of the UK’s biggest housebuilders, has announced a string of new enviromental targets, including an ambition to hit net zero emissions by 2040.

In a statement, the group said:

By 2040 Barratt will become a net zero emissions business covering all of its direct operations. Earlier this year it became the first national housebuilder to publish science-based targets for reducing carbon emissions, and the new net zero goal extends this sustainability roadmap further as it works across the industry to combat climate change.

Identifying and implementing what is needed to achieve these reductions will be an ongoing process across the entire Barratt business. For instance, reducing diesel use will involve new technology such as solar assisted generators, whilst driving down plant emissions on site and improving the energy credentials of its buildings will all help Barratt to achieve the 2040 net zero target.

Its main targets are:

  • Net zero greenhouse gas emissions by 2040

  • 100pc of own electricity to be renewable by 2025

  • New home design to be net zero carbon from 2030

12:23 PM

Byron races to find buyer

Byron - Carl Court/Getty Images
Byron – Carl Court/Getty Images

Burger chain Byron is set to fall into administration as it seeks a buyer to stave off a collapse.

My colleague Hannah Uttley reports:

The company has filed a notice of intention to file administrators in a bid to prevent it from being pursued by creditors while it holds talks with potential buyers, Sky News reported.

Byron, which employs 1,200 staff, is the latest casual dining chain to fall on hard times during the coronavirus pandemic after struggling to obtain financial support through the Treasury’s emergency loan support.

Chains including Carluccio’s and Chiquito have already gone bust, while others such as Prezzo, Wahaca and Wasabi have hired advisers to explore ways of propping up their businesses.

12:13 PM

German inflation picks up more than expected

Inflation in Germany jumped more than expected in June, with higher prices for services providers driving up costs for consumers.

EU-harmonised prices climbed 0.7pc month-on-month, putting them 0.8pc high month-on-month, with state-level data showing increasing costs at hairdressers and beauty salons, as well as in the restaurants and cafes.

11:52 AM

Britvic pulls Facebook and Instagram advertising

Drinks-maker Britvic says it “will be pausing all paid and organic advertising on Facebook and Instagram for the month of July” to support the #StopHateForProfit campaign, which is calling for Facebook Inc. to take stronger actions against disinformation and harmful content.

It follows similar moves by giants such as Unilever, Starbucks and Coca-Cola.

11:45 AM

Non-Standard Finance granted reprieve to find funding

Embattled doorstep lender Non-Standard Finance has been given more time by a major lender to find fresh funding. 

My colleague Michael O’Dwyer reports:

The company claimed it does not need new money to survive but said it had held positive talks with its major shareholders over an equity fundraising to allow it to grow its business. 

NSF’s boss was forced last week to deny that his company was on the brink of collapse when it revealed that the pandemic had triggered material uncertainty about whether it could continue as a going concern. 

The company, which lends money at high interest rates to more than 100,000 consumers with poor credit ratings, suffered a major hit after it was forced to halt lending for about two months during lockdown and grant automatic payment holidays to customers who asked. 

NSF was facing the possibility of private equity firm Ares withdrawing a £200m funding line on Monday if it failed to come up with new funds to remedy a breach of the terms of the finance deal. 

It confirmed on Monday that Ares had extended a waiver to allow it to find a longer term solution to its financial woes. 

11:20 AM

Market moves

European shares are broadly pointing upwards, but it’s been a pretty uninspiring performance so far today. Broadly speaking, that continue a pattern of mixed movements we’ve seen over recent sessions. Have we entered the long period of nerves some analysts predicted?

11:05 AM

Government dashes hopes for scrappage scheme

Hopes of a scrappage scheme to jumpstart Britain’s car industry have been dashed by the Government.

My colleague Alan Tovey reports:

Prime Minister Boris Johnson is understood to have considered an initiative which would have offered motorists incentives of up to £6,000 to swap their old petrol or diesel cars for electric vehicles as part of a scheme to boost the economy.

However, such a scheme to help the automotive sector weather the impact of coronavirus has been ruled out, with the Government saying it has “no current plans” for scrappage payments.

In a statement to Auto Express, the Government said: “We have no current plans to change the existing incentives or to introduce a scrappage scheme. We are committed to building a greener transport system and reducing carbon emissions to reach our goal of net zero by 2050.”

France, Germany and Spain have all revealed multi-billion support packages for their car industries, and which include payments to motorists who trade in their vehicles for new, less polluting models.

City Intelligence newsletter (SUBSCRIBER) Article
City Intelligence newsletter (SUBSCRIBER) Article

10:40 AM

Full report: Households hoard records amounts

My colleague Russell Lynch has a full report on this morning’s household borrowing figures. He writes:

Deposits held by households jumped by a record £25.6bn in May, adding to a large pile built up by consumers in the previous two months, Bank of England data revealed. 

Mortgage approvals hit record lows and consumers continued to cut their debts, paying off credit cards and overall lending for a third consecutive month.

Repayments on consumer credit eased slightly to £4.6bn in May, down from £7.4bn the previous month but still unprecedented compared with recent years.

10:19 AM

Lookers takes £19m hit over accounting errors

Embattled car dealer Lookers will take a £19m hit to cover inaccuracies identified by an investigation into potential fraud. 

My colleague Alan Tovey reports:

The announcement is the latest development in a long-running saga for the company, which is cutting 1,500 staff – almost a fifth of its workforce – and closing 12 dealerships as sales crash due to coronavirus.

At the start of the month, Lookers again delayed its results that were originally due in March because of the investigation into alleged fraud at the business. Auditor Deloitte said it would be resigning and the company warned its shares would be suspended from July 1 until final numbers were confirmed.

Consultancy Grant Thornton was appointed to examine Lookers’ books in March after it said it had “identified potentially fraudulent transactions in one of its operating divisions”.

On Monday Lookers said Grant Thornton’s draft report found £19m of non-cash adjustments needed to correct overstatements of profits over several years.  

10:00 AM

Pound gives up gains against dollar

Sterling is trading pretty flat against the dollar currently after a morning of minor gains faded out. The pound looked set to break a four-day string of losses when it rose earlier today, but has lost some energy in the wake of this morning’s disappointing mortgage figures.

09:35 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)

09:14 AM

Eurozone consumer confidence rises

The  European Commission’s economic confidence gauge for the eurozone rose slightly this month, continuing a comeback from April’s nadir. The reading of 75.7 showed a bigger improvement than during May, but was below economists’ expectations for 80.

09:00 AM

BP sells petrochemicals business to Ineos for $5bn

Bernard Looney - REUTERS/Toby Melville
Bernard Looney – REUTERS/Toby Melville

Energy giant BP has agreed to sell its petrochemicals business to chemicals group Ineos, owned by Sir Jim Ratcliffe, for $5bn.

The FTSE 100 group said the move is the “next strategic step in focusing portfolio as part of reinventing BP”. It said the sale would strengthen its balance sheets and deliver on its $15bn divestment target a year ahead of schedule.

Bernard Looney, BP’s chief executive – who has set out a series of environemental goals for the group – said:

I am very grateful to our petrochemicals team for what they have achieved over the years and their commitment to BP. I recognise this decision will come as a surprise and we will do our best to minimise uncertainty. I am confident however that the businesses will thrive as part of Ineos, a global leader in petrochemicals.

08:51 AM

UK households save money and pay down debt amid crisis

British households added a record £25.6bn to their accounts during May, lifting the three-month total above £56.6bn. Meanwhile, £4.6bn was paid back on credit cards and other unsecured loans.

The Bank of England said:

The extremely weak net flows of consumer credit meant that the annual growth rate was -3.0%, the weakest since the series began in 1994.

Bank of England - Bank of England
Bank of England – Bank of England

08:39 AM

UK mortgage approvals hit new record low in May

Just in: UK mortgage approvals plunged further to 9,273 in May – defying expected that they would bounce but from April’s 15.9k. The drop shows the near-total shutdown of the UK’s real estate sector was even more severe than feared.

08:21 AM

Markets slip down again

Clearly, it’s a shaky start to the week for equity investors – and we’re seeing stocks slip again now, touching session lows. There’s a lack of big corporate or economic drivers for the data currently, which may be why we’ve seen such a volatile open (admittedly within a narrow range).

Bloomberg TV - Bloomberg TV
Bloomberg TV – Bloomberg TV

08:06 AM

Kier jumps as Government hints at spending plans

Shares in construction group Kier have popped higher this morning as Boris Johnson prepares to lay out plans for large-scale infrastructure spending once Covid-19 has passed.

The FTSE 250 group’s shares jumped as much as 13pc, while some peers also grabbed gains. The UK’s top blue-chip housebuilders are also gaining ground today.

The PM is expected to lay out plans in more detail tomorrow, but told the Mail on Sunday the Government plans to build hospitals, schools and roads.

07:52 AM

UK plans record bond sales

The UK’s Debt Management Office plans record-breaking bond sales to tackle the fallout from Covid-19.

The DMO has announced plans to sell another £50bn of gilts, which will raise its total April–August issuance to a stunning £275bn. A poll by Bloomberg suggests expectations are for a full-year total of £412bn.

07:31 AM

Markets flip positive

 With half an hour of trading gone, European markets have now flipped into the green again.

Bloomberg TV - Bloomberg TV
Bloomberg TV – Bloomberg TV

07:23 AM

Indivior appoints new chief executive

Small-cap drugmaker Indivior says it appointed Mark Crossley as it new chief executive. He will replace Shaun Thaxter, who has stepped down in mutual agreement with the board.

Mr Crossley has been the group’s chief financial and operations officer since February 2017, and helped lead the group’s demerger from Reckitt Benckiser. Before joining Indivior in 2014, he worked at Proctor & Gamble.

Daniel Tassé, the group’s interim chair, said:

Mark is a proven leader with a broad strategic and financial skillset and a deep understanding of the company’s guiding principles.

07:06 AM

Stocks fall

European shares have dropped slightly at the open. 

Bloomberg TV - Bloomberg TV
Bloomberg TV – Bloomberg TV

07:04 AM

Pakistan stock exchange attacked

In some sightly more dramatic stock exchange news than usual, security officials in Pakistan have said they killed four gunman in Karachi who were attempting to enter the country’s stock exchange. 

Bloomberg reports:

The attackers were not able to enter the main compound, said Farrukh Khan, chief executive officer by phone. The situation is under control now, said Khan. The KSE 100 index, which dropped after news of the attack, gained 0.1pc at 11:40 a.m. in Karachi. No group has claimed responsibility for the attack yet.

At least one security guard was killed, Khan said.

“There was very heavy firing,” said Abid Ali Habib, chief executive officer at Aba Ali Habib Securities Pvt. who was in his office on the fourth floor. “We decided to close our office doors with no movement inside or out.”

06:54 AM

Resolution Foundation: Britain faces looming employment crisis

In a new report on Britain’s labour market, titled ‘The Full Monty’, researchers at think tank the Resolution Foundation have warned the UK is labour market faces a “severe impact” from Covid-19. urging politicians to take action to prevent job losses.

Here are some key points from the report:

The report points to a looming wave of job losses, that it says are being concealed because they are showing up as inactivity currently:

Resolution Foundation - Resolution Foundation
Resolution Foundation – Resolution Foundation

They said:

As the lockdown is eased and more people start to actively look for work, we expect much of this group to move into the ‘unemployed’ category. 

06:30 AM

Agenda: Stocks set to slide 

Good morning. European markets are set to start the week in the red as Covid-19 cases continue to rise in certain hotspots worldwide.

In Florida on Sunday, infections rose by 6.4pc, while new cases in Arizona topped the weekly average for a fourth day – highlighting the risk of reopening economies too soon.

The total number of reported cases worldwide has now surpassed 10 million. 

5 things to start your day 

1) Britain is heading for Brexit ‘customs chaos’ The head of the Government’s own expert customs panel has warned of looming chaos at ports due to the “amateurish” handling of a new IT system.

2) Coronavirus has unleashed a process of “creative destruction” – but who are the winners and losers?

3) City bosses are calling on the government to slash red tape  to try and boost the economy. It comes as life insurers and pensions companies are also campaigning for a cut in the level of capital they have to hold on their balance sheets, to release cash to invest infrastructure. 

4) Retirement housebuilder McCarthy & Stone’s boss John Tonkiss on how criticism over poor resale values of the company’s properties is being addressed 

5) ‘Biased’ code used by UK banks could be making decisions that change your life.

What happened overnight 

Asian stocks fell as the accelerating spread of the coronavirus in a number of locations outweighed some signs of economic improvement.

Stocks fell more than 1pc in Japan, Australia and Hong Kong. They had a more modest drop in China, where markets reopened after a two-day holiday. South Korean shares slumped 2pc after the country’s finance minister ruled out another budget for this year.

Meanwhile, China’s central bank said it will implement new monetary tools to make sure liquidity reaches the real economy. The People’s Bank of China said it will increase the proportion of smaller company, credit and manufacturing loans, and continue to lower lending rates.

Coming up today

Full-year

Draper Esprit, Wood Group

Economics

Mortgage approvals and lending, consumer credit (UK), business and consumer confidence (eurozone), pending home sales (US)

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