Tesla founder Elon Musk has singled out two of the world’s biggest electronic chip manufacturers for stymying the production of his brand’s electric-cars.
Musk said Tesla had been “operating under extreme supply chain limitations” amid a global chip shortage which has clattered car producers worldwide.
“Most problematic by far are Renesas & Bosch,” he said on Twitter.
05:18 PM
Wrapping up
That is all from us today – here are some of our top stories:
Thank you for following along!
05:14 PM
US benchmark hits record high
The S&P 500 inched to a record high today on data showing a steady jobs market recovery against a rise in producer prices. Healthcare and tech stocks were the best performing sectors.
Stocks including Alphabet, Tesla, Amazon, Nvidia, Microsoft, Moderna and Apple gave the biggest boost to the tech-heavy Nasdaq and the benchmark S&P 500.
Economy-linked energy, industrials and materials shares meanwhile declined, pulling the blue-chip Dow from record highs.
The reversal in the sentiment came after US producer prices posted their largest annual increase in more than a decade, contrasting Wednesday’s reading that showed growth in consumer prices appeared to be slowing.
04:52 PM
Pret permanently cuts pay, but reinstates pre-pandemic bonus
Pret A Manger workers are set to get bonuses at pre-pandemic levels. A temporary pay cut in not paying workers for breaks will, however, be made permanent, with trade remaining “significantly below” pre-Covid levels.
The sandwich chain stopped paying workers during their breaks last September in a effort to cut costs.
Pret said: “This is in no way a reflection of the hard work of our teams and we’re incredibly grateful for their dedication and commitment.”
The new service bonus is linked to a staff member’s performance as judged by a mystery shopper, and this was paid at a rate of £1 an hour before the pandemic.
In an effort to cut costs to survive, the bonus was scrapped and then reintroduced in April at the lower rate of 50p an hour. This will be brought back to £1 from the start of September.
04:27 PM
NYT puts newsletters behind paywall
The New York Times is putting 18 newsletters behind a paywall, in an effort to boost subscribers as it goes toe to toe with rival offerings from Twitter, Facebook and Substack.
The Times already produces about 50 newsletters that reach about 15 million people each week. Its subscriber-only emails will be a mix of new and existing newsletters by journalists and contributors in its news and opinion sections, across a range of topics.
Readers who open newsletters are “far more likely to pay and stay,” Alex Hardiman, the Times’ chief product officer, said in an interview with Bloomberg.
04:10 PM
US home prices rise most on record
US home prices rose the most on record in the second quarter as buyers battled for a scarcity of listings.
The median price of an existing single-family home jumped 23pc from a year earlier to an all-time high of $357,900, the National Association of Realtors said in a report Thursday. About 94pc of 183 metropolitan areas measured had double-digit gains, up from 89pc in the first quarter.
Low mortgage rates have stoked the hot US housing market for more than a year, with a shortage of inventory pushing prices ever higher.
Buyers are having a hard time finding properties they can afford, with sales of previously owned homes in the US falling for a fourth straight month in May.
03:58 PM
Adidas sells Reebok to Authentic Brands
German sportswear giant Adidas has agreed to sell its underperforming Reebok business to Authentic Brands for up to €2.1bn (£1.8bn), adding another big name to the buyer’s growing lineup of apparel brands.
The deal is expected to close in the first quarter of 2022. The majority of the share price will be paid in cash at closing, with the rest coming as deferred and contingent consideration.
Adidas formally began the process of selling Reebok early this year after trying to revive the brand’s performance for more than a decade.
Buyer Authentic Brands, which recently filed to list in America, has already acquired more than 30 brands, including bankrupt assets such as Barneys New York. Its portfolio companies include Brooks Brothers, Forever 21 and Sports Illustrated.
Adidas acquired Reebok for $3.8bn in 2006 and returned the division to profitability in 2018, eking out sales growth of 2pcAdid in 2019.
03:43 PM
Berlin startup raises €100m from LVMH-backed firm to buy more e-commerce brands
Berlin-based startup SellerX has raised €100m (£84.8m) in funding, led by LVMH-backed investment firm L Catterton, to buy brands sold via Amazon and Shopify.
Founded in 2020, SellerX has bought more than 30 e-commerce brands that mainly sell through the world’s largest ecommerce sites, and plans to use the new cash to double that number over the coming year.
Other investors in the round included Sofina and existing backers Cherry Ventures, Felix Capital and 83North.
SellerX has already raised around €250m of debt and equity. Co-founder Philipp Triebel said the new equity funding puts the company in a strong position to raise more debt in the future.
Rivals including Berlin Brands Group and Thrasio have raised billions of dollars from investors, who are betting that the rise of startups combining hundreds of direct-to-consumer brands will continue to grow.
“This isn’t just about rolling up great brands and great products, it goes beyond this. This is the very future of how consumer products are developed and brought to market,” said Christopher North, managing partner of L Catterton’s growth fund. “I expect they will continue to acquire at a blistering pace.”
03:25 PM
Expert reaction: US producer prices jump
Producer prices posted their largest annual increase in more than a decade as manufacurers and services providers passed on higher costs.
In the 12 months through July, the producer price index jumped 7.8pc, a record high since the measure was introduced in 2010, the US Labor Department said on Thursday.
The producer price index for final demand – which tracks what firms charge for their goods and services – increased 1pc last month, the same as June.
Joshua Mahony, Senior Market Analyst at IG, comments:
A second batch of US inflation data in as many days has provided a more cautious approach for US markets today. Yesterday saw a monthly core CPI [consumer price index] figure of 0.3pc, with the recent boom in used car prices apparently over.
However, today’s PPI [Producer Price Index] inflation report highlighted how factory prices continue to rise thanks largely to rising energy prices.
Undoubtedly, both CPI and PPI readings have highlighted the importance of energy prices, with Joe Biden’s call for OPEC to ramp up production seemingly falling on deaf ears.
For traders, the concern over rising inflation comes in relation to monetary policy, with the Fed likely to remain concerned that the prolonged period of elevated prices could necessitate a swift tapering strategy.
However, Biden and Yellen will also worry about the impact rising inflation will have upon the economic recovery, with the spending capability of an everyday consumer undoubtedly impacted by a 50pc rise in gasoline prices over the past year.
02:55 PM
More lithium found in Cornwall
A geothermal energy company plans to extract lithium alongside power plants in Cornwall after finding record concentrations of the metal, writes Rachel Millard.
Geothermal Engineering said tests had found concentrations of lithium higher than 250mg per litre in waters deep underneath the county – higher than in geothermal waters anywhere else in the world.
It already planned to use the waters to generate electricity and heat local homes from four planned power plants, and now also intends to install lithium extraction devices at the plants.
The company believes it could be able to produce 4,000 tonnes of lithium a year by 2026.
Read Rachel’s full story here.
02:35 PM
More on Stock Spirits takeover offer
Whilst Stock Spirits’s board recommended the takeover offer from private equity firm CVC, speculation is rife that another bidder will emerge, writes my colleague Hannah Boland.
Shore Capital analyst Greg Johnson said whilst the offer was at a premium to the company’s share price, the valuation against Stock Spirits’s earnings estimates was “modest when set against wider peer valuations and the conservative nature of our forecasts.”
“It remains to be seen if the bid flushes out counter offers from the industry,” he added.
CVC’s pounce on comes after Stock Spirits, which is behind brands including Vodka No. 1 and Stock Prestige, saw profits swell during the pandemic.
The company had refocused its business towards more premium spirits and had worked to target millennials by making less sweet and less alcoholic drinks.
Prior to the Thursday bounce, its share price had already risen by almost a fifth since March 2020.
CVC said it had been a long-standing investor in Central and Eastern Europe, home of Stock Spirits’s biggest markets.
Its funds are currently invested in businesses in the region which together generated around $4.2bn in annual sales.
Buckinghamshire-based Stock Spirits makes most of its sales in Poland, the Czech Republic and Italy, and it has production facilities in all three as well as in Germany. It predominantely sells via supermarkets.
In the long-term, it said demand for spirits was likely to continue to grow as there was an improvement in standards of living and disposable income.
02:25 PM
Tesla singles out chipmakers for ‘extreme supply chain limitations’
Tesla founder Elon Musk has singled out two of the world’s biggest electronic chip manufacturers for stymying the production of his brand’s electric-cars.
Musk said Tesla had been “operating under extreme supply chain limitations” amid a global chip shortage which has clattered car producers worldwide.
“Most problematic by far are Renesas & Bosch,” he said on Twitter.
Car producers are growing increasingly frustrated with the global shortage of electronic chips as they compete for supply with companies producing phones, computers and games consoles.
As interruptions to output drag on, the car industry is no longer content with blaming a global shortage but is instead looking for individual chip companies to shoulder the blame.
Earlier this year, Ford described a March fire at a Renasas factory in Japan as a major risk to its production schedules.
Volkswagen has also held talks with suppliers, including Germany’s Bosch, about the possibility of claiming damages related to the chip shortage.
In an earnings call in July, Musk said Tesla had been rewriting its vehicle’s software to support alternative chips.
However his comments on Thursday indicate the company’s attempt to sidestep the issue have not been successful.
Musk made the comments in response to a tweet from Ark Investment’s Cathie Wood, who was commenting on Tesla’s significant drop in local deliveries of China-built vehicles in July.
Neither Bosch nor Renesas immediately replied to requests for comment.
Tesla’s shares inched 0.5pc lower in early trading in New York.
However the company received a boost when long time Tesla critic, Muddy Waters Capital’s Carson Block, said he had under-estimated Musk’s ability to raise capital and captivate shareholders.
In a shareholder letter, Block said his firm’s multi-year bet against Tesla had been sent to “heaven”.
Although Block said he initially disliked Musk’s “narcissism”, he added “the market cap, the luster, the élan of Elon, is still there.”
02:07 PM
Reddit closes in on $10bn valuation
Reddit is raising a fresh funding round that will give it a $10bn (£7.8bn) valuation, up from a $6bn valuation in February.
The social network behind this year’s meme-stock craze will receive as much as $700m in a round led by Fidelity Management, which could bring its overall investment to $1bn this year alone.
It comes after the message board site hired its first chief financial officer back in March following a wave of interest after its WallStreetBets forum saw armchair traders take on professional fund managers who had shorted stocks such as GameStop and cinema chain AMC.
Reddit earned $100m in ad revenue in the second quarter, almost 200pc higher than the same period a year ago.
01:58 PM
Arqiva to sell remaining assets for £2.5bn – report
Television mast monopoly Arqiva is preparing to sell its remaining operations for around £2.5bn, it’s been reported.
Here are the details from Bloomberg:
The closely held UK group is working with an adviser to solicit bids, people familiar with the matter said, asking not to be identified discussing confidential information. Its portfolio now mostly consists of broadcasting towers, as well as a smart meter business, after it agreed to sell its UK telecom masts to Cellnex Telecom SA in 2019.
Indicative offers are expected next month and a sale could draw both private equity and strategic suitors, the people said. A representative for Arqiva declined to comment.
Arqiva owns about 1,150 television transmission sites that cover 98.5pc of the UK population with Freeview, and roughly 1,500 broadcast transmission sites, according to its annual report for the year through June 2020. It also provides networks for smart meters for customers of utilities including Thames Water and Anglian Water.
The company traces its history back to the 1920s. Its biggest shareholder is Canada Pension Plan Investment Board, which owns 48pc of the business, according to the annual report. Arqiva’s owners also include arms of Macquarie Group Ltd., IFM Investors Pty and other Australian funds.
01:49 PM
US stocks dip after inflation rise
Wall Street opened in the red this afternoon as inflation fears outweighed evidence of a robust recovery.
The Dow was flat shortly after the opening bell while the S&P 500 lost 0.12pc and the Nasdaq fell 0.34pc lower. Traders reacted to another drop in US jobless claims but also a higher than expected rise in producer prices for July. Prices jumped an annual 7.8pc, their highest in just over a decade since the inflation measure was introduced.
“The inflationary transitory camp is winning the debate and as the fear of inflation somewhat ebbs … equities have a certain tendency to outperform,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
However, the S&P and the Dow both notched up new record highs yesterday, and the former has gained around 2pc so far this month as investors dump growth stocks to buy shares in companies more closely linked to the fortunes of the economy.
“They’re mostly cyclical, are cheap, and therefore people feel more comfortable about holding value, particularly if they think that the business cycle is going to improve going forward, as evidenced by lower inflation and a better labor market,” Galy said.
01:33 PM
‘Oxfam’s wealth grab madness exposes the Left’s economic illiteracy’
It’s fair to say coronavirus laid bare, if not increased, the divide between the rich and poor, with millions losing their jobs during the pandemic.
That has led Oxfam to suggest a one-off 99pc tax on the super-rich’s pandemic gains to try and close the wealth gap – something City commentator Ben Marlow warns betrays a fundamental misunderstanding of economics.
He writes:
The only way to implement Oxfam’s eye-catching plan is through a gargantuan fire sale of assets with catastrophic conseqeuences for global markets, the economy, and literally hundreds of millions of savers and pensioners whose wealth is also tied up in stocks, including some of the very same shares that were being liquidated to finance this grand wealth distribution scheme.
01:16 PM
Good Energy urges shareholders to reject Ecotricity bid
AIM-listed energy supplier Good Energy has urged shareholders not to take up a hostile takeover bid from rival Ecotricity, reports Rachel Millard.
Chairman Will Whitehorn said a takeover would deprive investors of Good Energy’s future growth and would would “place the collective interests of our investors and customers in combatting the climate crisis into the hands of one individual”.
Led by founder Dale Vince, private company Ecotricity owns 25.1pc of Good Energy and is offering 340p per share for the rest of the company, valuing Good Energy at £56m.
Stroud-based Ecotricity has about 200,000 residential and business customers, compared to Chippenham-based Good Energy’s roughly 270,000. Both sell renewable electricity tariffs and own wind and solar farms.
Good Energy’s shares fell 0.76pc to 326p by 2pm.
01:00 PM
Beijing intensifies crackdown on Chinese business as part of five year plan
Beijing is expanding its crackdown on Chinese businesses with a five-year plan that includes tighter regulation of companies, writes Louis Ashworth.
A 10-point plan, unveiled to coincide with the 100th anniversary of the foundation of the Chinese communist party, described an “urgent need” to expand legislation covering the tech, science and culture sectors.
New rules will expand legislation covering key areas including national security and monopolies, although full details of officials’ plans were not revealed.
The announcement will increase pressure on investors who have already been burned this year by efforts by the Communist party to tighten its grip on Chinese industry.
Beijing has ramped up investigations against monopolies over recent months, slapping tech giant Alibaba with a £2bn fine in April over allegations it had abused a dominant market position, and telling Tencent to close music licensing deals that underpin its dominance of online music streaming in the world’s second-biggest economy.
The Nasdaq Golden Dragon China Index, which tracks the top US-listed Chinese companies, plunged almost 15pc in two days after Beijing launched an overhaul of China’s $120bn private tutoring sector, forcing companies that teach the regular curricula to become non-profits.
Food delivery apps have also come under scrutiny, with regulators introducing new rules that stipulate improved conditions and wages for workers.
The plan extends to 2025, suggesting recriminations against businesses that draw the ire of Beijing will continue.
Chinese stock markets fell on Thursday in response to the news, with the Shanghai/Shenzen benchmark CSI 300 falling 0.8pc. In Hong Kong, the Hang Seng index fell 0.5pc.
The plan also includes ambitions to “strengthen” China’s administrative system, its law enforcement and deepen authorities’ supervision of internet usage. It called for the completion of research into areas including cloud computing, big data and internet finance to underpin the development of new laws.
12:45 PM
US unemployment claims fall
The number of Americans filing claims for unemployment benefits fell last week, which is being read as a sign that the post-pandemic economy is continuing its recovery.
Initial claims for state unemployment benefits fell 12,000 to a seasonally adjusted 375,000 for the week ending August 7. Economists polled by Reuters had forecast 375,000 applications.
Unadjusted claims, which offer a better read of the labour market, decreased 5,198 to 320,517 last week.
Claims remain well above their pre-pandemic level of 256,000, though they have dropped from a record 6.149m in early April 2020.
12:44 PM
FTSE stays 0.2pc down
Time for a lunchtime check up on the FTSE 100. The index is still 0.2pc down, trading at around 7,204.09 points.
Top risers are Aviva (up 4pc), Hagreaves Lansdown (up 2.6pc) and industrial equipment rental company Ashtead Group (up 2.2pc).
Miners Rio Tinto and Evraz are still weighing down the index, down 6.3pc and 7pc respectively.
12:26 PM
Orsted profits hit by ‘extraordinarily poor’ wind speeds
Wind power giant Orsted has said 2021 profits are likely to be at the lower end of its DKr15bn (£1.7bn) -DKr16bn (£1.8bn) guidance, with the Danish company blaming “extraordinarily poor” wind speeds.
“Out of 88 quarters on record, it is an extraordinarily poor wind quarter,” chief executive Mads Nipper told the Financial Times. “It is very serious. It is like you’re a farmer and it doesn’t rain.”
Shares in Orsted are down 3pc today, after dropping 27.7pc so far this year.
12:12 PM
Spending on UK cards rises
Spending on credit and debit cards is now at 99pc of its pre-pandemic level, rising 4pc in the week to August 5, compared to the week before.
12:03 PM
Boss of shipyard nationalised by Nicola Sturgeon paid £2,500 a day
The boss of a Glasgow shipyard controversially nationalised by the SNP has been paid a day rate of more than £2,500 for almost two years, making him one of Britain’s highest-earning public servants, reports Oliver Gill.
He writes:
Tim Hair has invoiced fees of £1.3m at the taxpayer’s expense since being hired to turn around Ferguson Marine, according to figures published by Holyrood.
His pay since August 2019 surpasses the likes of Mark Thurston, the boss of HS2, the best-paid public official in Whitehall.
It also towers over the £160,000 salary paid to Nicola Sturgeon, Scotland’s first minister.
11:42 AM
Dow futures reach another new record
Futures tracking the Dow hit another new record high after edging 0.1pc higher this morning in New York, ahead of earnings reports from companies including Walt Disney and unemployment claims data expected to show a jobs market recovery was on track.
S&P 500 lifted less than 0.1pc. Nasdaq futures were mostly flat after EBay forecasted third-quarter revenue below analysts’ estimates, signalling that reopening economies could be muting the pandemic’s online shopping boom.
Shares of steelmaker Nucor Corp and equipment maker Caterpillar Inc inched higher in premarket trading, building on gains made yesterday following the passage of a large infrastructure bill.
Earnings report from Walt Disney Co, home rental firm Airbnb Inc and food-delivery firm DoorDash Inc are due later in the day.
11:25 AM
Money round-up
Here’s the daily round-up from The Telegraph’s Money team:
11:02 AM
Facebook, Giphy tie-up falls foul of UK regulator
Facebook’s takeover of GIF database Giphy will harm competition between social media platforms and remove a potential challenger in the display advertising market, Britain’s antitrust watchdog has provisionally found.
“If the Competition and Markets Authority’s (CMA) competition concerns are ultimately confirmed, it could require Facebook to unwind the deal and sell off Giphy in its entirety,” the CMA said today.
It has set a September 2 deadline for feedback on its provisional findings.
The $400m deal for Giphy, announced last year, raised concerns from UK regulators from the beginning. Back in March, the regulator warned that the deal could stop Giphy from supplying GIFs to rival social media firms to Facebook or could “do so on worse terms – for example, requiring rivals to provide more user data to the merged entity to access Giphy GIFs”.
Prior to the deal with Facebook, Giphy had suggested it would be investing in bulking up its digital advertising operations and the CMA said it could have less incentive to do so should the deal be given the green light.
“We disagree with the CMA’s preliminary findings, which we do not believe to be supported by the evidence,” a Facebook spokesperson said. “As we have demonstrated, this merger is in the best interest of people and businesses in the UK – and around the world.”
10:51 AM
IEA predicts oil demand to be hit by spreading delta
The International Energy Agency has cut its forecasts for global oil demand “sharply” for the rest of this year as the delta variant spreads, predicting a new surplus in 2022.
The outlook is sharp reversal for the agency, which was urging the OPEC+ alliance to increase production just last month.
The analysis also jars with Wednesday’s call from the US – the IEA’s most influential member – for OPEC and its allies to ramp production up faster.
The IEA said:
Global oil demand surged by 3.8 mb/d [barrels per day] month-on-month in June, led by increased mobility in North America and Europe.
However, demand growth abruptly reversed course in July and the outlook for the remainder of 2021 has been downgraded due to the worsening progression of the pandemic and revisions to historical data.
10:36 AM
OneWeb gets $300m investment
South Korean conglomerate Hanwa has taken a $300m (£216m) stake in Government-backed satellite operator OneWeb as the UK company scales up its efforts to launch a globe-spanning constellation, writes my colleague Matthew Field.
Hanwa, an explosives maker headquartered in Seoul, joins India’s Bharti Global, SoftBank and the UK government as shareholders in OneWeb, which was rescued from bankruptcy last year.
OneWeb is hoping to launch a fleet of 648 broadband satellites that will deliver internet connectivity across the globe. It is planning to challenge Elon Musk’s Starlink and has lined up deals with telecoms operators including BT to bring its space-based broadband to rural areas.
The UK company has so far launched 254 of its satellites into orbit, with another launch planned later this month.
The funding brings OneWeb’s total raised to $2.7bn since November and brings its valuation to $3.4bn. Hanwa, previously known as Korea Explosives, is expected to lend OneWeb its antenna technology expertise and links to the defence sector.
10:14 AM
Stock Spirits shares rocket 40pc after takeover offer
London-listed Stock Spirits has accepted a £767m takeover bid for the company by UK-based private equity firm CVC Advisers, sending its shares rocketing 44pc to 386p.
Under the proposals, shareholders will get 377p a share – a 41pc premium on the closing price on Wednesday evening of 268p. Stock Spirits bosses said they would be recommending the plans to shareholders.
Stock Spirits mainly trades in central and eastern Europe, where it sells its 1906, Stock Prestige and Vodka No 1 products. It has production lines in Poland, the Czech Republic, Germany and Italy – countries that account for 80pc of sales.
If investors vote in favour, the deal is expected to be completed between December and January.
Istvan Szoke, managing partner at CVC, said: “Stock Spirits is a high quality business with strong brands, established market positions and significant growth potential, and we are delighted that our proposal has been recommended by the Stock Spirits directors.”
10:05 AM
PwC boosts partner pay by a quarter
Average pay for partners at accountant PwC jumped by more than a quarter last year to a record £868,000 after a deal-making boom boosted demand for its advisory services, reports Simon Foy.
He writes:
The Big Four firm also paid out an unprecedented £128m in bonuses to its staff, and handed employees an extra week’s salary as well as an extra day off to “recognise their efforts” during the pandemic.
The pay bump came as PwC posted a 25pc increase in profits, which hit £1.2bn for the 12 months to June. Revenues rose by just 2pc to £4.45bn.
Kevin Ellis, chairman and senior partner at PwC UK, said a flurry of deals in the City kept its consultants busy. Revenues in the firm’s advisory arm jumped 9pc to £854m.
09:44 AM
Sunak promises ‘no return to austerity’
Rishi Sunak promised there would be no return to the austerity policies of last decade and that he is “united” with Prime Minister Boris Johnson over plans to rebuild the economy after the pandemic.
“What we’re going to see is absolutely no return to austerity,” Sunak told Sky News. “People are going to see very strong investment in public services.”
The chancellor of the exchequer is preparing up for a multiyear spending review in the autumn, where he’ll set spending budgets for the next three years for government departments. His comments come after reports of a rift with the prime minister over his approach to spending.
Sunak has stressed the need for fiscal restraint after the government spent some £350bn fighting Covid-19 and protecting businesses and workers from the impact of lockdowns. He’s already cut aid spending and frozen pay for some public sector workers, leading to speculation about further austerity measures.
However Sunak reiterated a previous promise that he’ll be raising annual public spending by £100bn per year over the course of the current five-year Parliament. He also stressed the government’s commitment to hire 50,000 new nurses, 20,000 new police officers and build 40 new hospitals.
09:34 AM
Expert reaction: FTSE flat
AJ Bell financial analyst Danni Hewson comments:
The FTSE 100 was modestly lower in early trading as weakness in the mining sector overshadowed some decent UK economic data.
However, the index remains above the 7,200 mark and is in touching distance of yesterday’s post-pandemic highs. Rio Tinto shares slumped heavily as they traded without entitlement to a pretty generous dividend.
For now there appear few big catalysts to shift the index in either direction amid a lull in major corporate and economic updates – however that’s often when something emerges from leftfield to upset the apple cart.”
09:18 AM
Aviva to return £4bn to investors
Aviva plans to return at least £4bn to investors using proceeds from the recent sale of non-core businesses, after years of lackluster returns.
The UK based insurer and asset manager will start with an immediate £750m share buyback, and the balance will be returned to investors by the end of the first half of 2022, Aviva said in today’s earnings statement.
“We are delivering on our commitment to make a substantial capital return to our shareholders,” chief executive Amanda Blanc said in the statement. The company will provide further details about the payout in March next year, she added.
Since joining Aviva just over a year ago, Blanc has focused the business on its UK, Ireland and Canada businesses while selling off eight units in other markets.
Shares have risen about 50pc since she took the reins in July 2020 as the firm steadily raised some £7.5bn from its divestment program. Aviva plans to use those proceeds to pay down debt.
Aviva posted a drop in first-half operating profit to £1.1bn versus £1.2bn a year earlier. Operating profit from continuing operations rose 17pc to £725m.
The firm’s investment unit saw net inflows of £829m, taking total assets under management to around £260bn.
09:05 AM
Delivery Hero refuses to rule out future Deliveroo approach
The chief executive of Delivery Hero has refused to rule out a future approach for Deliveroo after revealing a 5pc stake in the UK business this week, reports Matthew Field.
Niklas Oestberg, the boss of the €30bn (£25bn) Germany food delivery company, dismissed an imminent tilt at Deliveroo “at this point in time”, but did not rule out a future deal.
Speaking to analysts, Mr Oestberg said: “We always have some logic when we make these kinds of investments. There is some strategic rationale for any investment. This could be relationships for future partnerships, this could be to gain knowledge, this could be acquisition plans.
“Many of these bets are long-term considerations, we cannot always share what the specific rationale is for an investment.”
“I can share that I like Will and his team. I think they have done a great job. When we started buying the stock was at £2.30 per share. We thought this was highly undervalued.”
His comments came hours after Mr Oestberg appeared to pour cold water on the prospects of a takeover offer on Twitter.
Mr Oestberg said: “Tremendous respect for Will Shu and Deliveroo but at this point in time we have no intention or wish to acquire the company. Simply a happy shareholder.”
Deliveroo Hero has taken stakes in other food delivery companies, including Just Eat and India’s Zomato. It holds a portfolio of €2.3bn in rival firms.
A Delivery Hero spokesperson said: “We don’t speculate on any future investments.”
09:01 AM
GoPuff snaps up Dija to enter UK delivery market
In grocery delivery, Britain’s takeaway companies will have to contend with a new US rival, GoPuff, writes my colleague Matthew Field.
The Philadelphia-headquartered company, valued at $15bn (£10.8bn) confirmed today that it was snapping up UK start-up Dija to expand into Europe.
The deal will give it a presence in so-called “dark stores” in the UK, France and Spain. While Deliveroo offers convenience groceries from Waitrose or Coop, GoPuff runs its own delivery-only stores. The deal will give GoPuff 200 European staff in total. Dija had previously raised $20m.
GoPuff also said it had hired Steve Harman, formerly Revolut’s chief operating officer, to head up its European expansion.
The US company had already acquired UK start-up Fancy, signalling its intent to expand into Europe. It comes as established delivery players eye the “dark store” grocery market. Doordash is understood to be considering buying up a stake in German start-up Gorillas.
Deliveroo has warned off the idea of taking the plunge into the brutal dark store competition itself. Shares in the food delivery company recovered today after yesterday’s falls and were up 6pc
08:57 AM
Sterling shrugs off GDP data
The pound was flat in response to data showing Britain’s economy grew 4.8pc in the second quarter, in line with expectations.
That is because analysts expect the data will have little impact on the Bank of England’s monetary policy.
“The data is unlikely to move the needle on the BoE story and perhaps a widening trade deficit also prevents GBP from moving too much higher,” ING told their clients in a note
Stuart Cole, head macro economist at Equiti Capital in London said: “For sterling, while the economic landscape continues to provide solid support, it does suggest further topside progress will be slow,” he added.
Sterling was flat versus the dollar at $1.3866, after rising in the previous session.
Versus the euro, the pound traded just off 18-month highs reached on Tuesday and was flat on the day, at 84.62 pence.
08:45 AM
Boohoo to invest £500m in UK
British online fashion retailer Boohoo said today it plans to invest £500m in the UK over the next five years, creating 5,000 jobs.
Manchester-based Boohoo said global demand – half of its sales coming from overseas markets such as the United States and Australia – meant it needed more warehouse space and to invest in technology to increase efficiency.
“The investments we have planned will help us to continue our growth, increasing our customer base both at home and abroad, adding even more value as we do so,” Chief Executive John Lyttle said.
Responding to criticism that the brand’s clothes are unsustainable fast-fashion on BBC Radio 5 this morning, Lyttle said 20pc of Boohoo’s ranges plan to be sustainable this autumn, rising to 40pc next spring/summer.
“They’re not going to be fixed in six and 12 months… it’s the same 2030 timeframe as combustible engines,” he said.
Boohoo shares are up 2.2pc.
08:34 AM
JetBlue launches first London flight despite lingering pandemic
Airline JetBlue started transatlantic flights between London and New York yesterday, as it attempts to grab market share with low fares and drive a recovery on one of the world’s most lucrative international routes.
There are still restrictions in place for travel between the two countries. The UK opened to fully vaccinated US travellers earlier in August but there is still a ban on most travel in the other direction, from the UK to the US.
Despite that, New York-based JetBlue has pressed ahead with the launch of its daily John F. Kennedy Airport to Heathrow service with its new Airbus A321LR jets.
08:17 AM
TUI declares ‘business is coming back’
TUI has become the latest company to declare the pandemic travel recovery is underway.
The company said it currently had 4.2m bookings and reported strong demand from its biggest markets Britain, and Germany were allowed to restart.
“Germany and continental European markets show high demand. In England this will only be reflected in the fourth quarter (July-Sept). Business is coming back,” said Chief Executive Fritz Joussen.
Profitability will be “reasonably good in summer” he said. “We are adding bookings everyday”.
Hoewever the Hanover-based group also cut its summer capacity to 60pc of its 2019 programme, down from the 75pc it had planned in May, illustrating the impact of travel restrictions in Britain lasting longer than expected.
TUI has taken on loans of over €4bn ($4.7bn) and been bailed out multiple times by the German government after the pandemic forced it to stop running holidays last year.
Its London-listed shares, which have lost 19pc of their value over the last three months due to worries about how summer would pan out, rose 3pc to 343p in early deals.
For the period, its third quarter, TUI posted an adjusted loss before interest and tax of €670m on revenues of €650m.
07:57 AM
Cineworld considers US listing to boost liquidity
Cineworld said it is considering a listing or a partial listing of its movie chain Regal on Wall Street, in an effort to boost its liquidity at a time when it is burning through huge amounts of money every month.
“US equity capital markets are the largest and most liquid in the world and include a large number of publicly listed cinema companies including peer group companies,” the world’s second-largest cinema chain after AMC said in its first-half results statement.
The majority of FTSE 250-listed Cineworld’s revenue comes from the United States since its purchase of Regal in 2018.
Cineworld’s pretax losses for the first half ended June narrowed to $576.4m from $1.64bn last year. The company expects business to improve as vaccination programmes continue and restrictions ease further in the second half of 2021.
The company, saddled with a net debt of $8.44bn as of the end of June, had to close all its cinemas at one point last year, leaving thousands of people out of work, as it took drastic measures to preserve cash to get through the crisis. Almost all its cinemas were open as of June.
Julie Palmer, partner at Begbies Traynor, comments on the results:
Continued restrictions and a lack of willing on the part of cinemagoers means that cinemas are lagging behind in the economic recovery and will have to start thinking in a different way if they are to turnaround, or make up the lost ground of the past year or two.
Recently it has felt as if Cineworld, and others in the sector, were pinning their hopes too tightly to the release of summer blockbuster films. But these are not for everyone. The pandemic has stalled the pipeline of many lower-budget films creating a dearth of range…
Aside from this there is still opportunity on the horizon. Scarlett Johansson’s lawsuit against Disney should return the exclusivity that cinemas have over films, and the experience that Cineworld has for putting on a visual show should be used to capitalise on the potential for diversification.
Cineworld’s shares jumped in response to its listing plan, currently up 7.6pc from yesterday’s close.
07:44 AM
Entain profits surge as betting business joins rush for US market
Profits at Ladbrokes and Coral owner Entain surged in the six months to June as sporting events returned and it expanded rapidly in the US.
Globally, pre-tax profits soared 190pc from £45.1m to £130.6m in the first six months of the year compared with the same period a year earlier. Revenues were up 11pc to £1.77bn.
Growth was driven by online gambling, with rival high street bookies shuttered at the start of the year due to Covid restrictions, the company said this morning.
In the UK, the company’s online business grew 31pc during the year’s first half, as sport fixtures returned with the lifting of lockdown restrictions.
In the US, Entain’s partnership with MGM Resorts is now the second-largest operator in the country, with 22pc of the market, bosses said. US regulators have been easing restrictions in the country in recent years, with each state able to decide whether to allow more gambling.
Entain’s BetMGM now operates in 13 states, compared with three at the beginning of 2020, and expects to be in a total of 20 within the next 12 months. As a result, net gaming revenues in the country hit $357m (£257m).
However the company struggled in Germany, after altered tax rules and changes to tackle addictions in the industry. Entain said it has been acting in compliance with the new “Tolerance Policy” but accused rivals of not being compliant and creating an uneven market.
07:31 AM
Miners weigh on FTSE
London’s FTSE 100 eased on today as weakness in heavyweight energy stocks overshadowed strong corporate earnings and optimism about takeovers.
The blue-chip FTSE 100 fell 0.1pc lower with miners Evraz (down 6pc) and Rio Tinto (down 7.6pc) being the top drags.
Insurer Aviva rose 3.2pc and was the top gainer among the blue chips after it reported a 17pc rise in first-half operating profit and said it would return at least £4bn to shareholders.
The domestically focused mid-cap index was flat with Cineworld leading gains on its US listing plans, countering losses in financials.
07:19 AM
More expert reaction: GDP rises 1pc in June
Ian Stewart, chief economist at Deloitte, comments:
The pace of repair in the UK economy has been extraordinarily fast. It took five years for the economy to recover output lost in the financial crisis. The damage caused by the pandemic has been far worse and the recovery far quicker.
By the end of this year output is likely to be comfortably above the pre-pandemic peak, a two year recovery time. Massive government support has helped preserve capacity and speed up the rebound. This experience will strengthen the hands of those who believe that government – and public spending – should take a far more active role in countering conventional recessions.
07:01 AM
FTSE falls on opening
The FTSE 100 has edged 0.1pc lower on opening following the GDP figures. It is currently trading at 7,209.63.
The FTSE 250 also dipped 0.1pc to 23,724.90 points.
06:51 AM
How different sectors compared
June’s GDP growth was driven by sectors including health, advertising, restaurants and bars.
A pick up in GP visits contributed to growth in the health sector, as more people visited their local doctors, the ONS said.
The health sector was also boosted by coronavirus testing services as well as the vaccine roll out.
Advertising also had a strong month, bouncing back from the pandemic ‘ad crash’, with the sector growing by 14.7pc, suggesting companies are beginning to invest again in winning new business.
Food and drink services received a 10.1pc lift in June, the first full month indoor dining for restaurants, cafés and pubs were open since restrictions eased on 17 May 2021.
06:50 AM
Expert reaction: UK remains G7 straggler
Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, says despite Q2’s rebound, the UK remains the straggler economy among the G7.
He says:
The U.K. economy almost certainly was the hardest hit by Covid-19 in the G7 for a fifth consecutive quarter in Q2. Quarterly GDP still was 4.4pc below its Q4 2019 level, whereas it was 0.8pc above its pre-Covid peak in the US and only 3.3pc below in France, 3.6pc below in Germany and 3.8pc below in Italy.
Japan and Canada have not reported Q1 data yet, but both economies had fared much better than the UK in previous quarters.
The U.K.’s continued underperformance remains largely attributable to weakness in households’ spending, which was 7.0pc below its Q4 2019 level in Q2, despite a quarter-on-quarter increase of 7.3pc. By contrast, real government expenditure was 8.0pc above its Q4 2019 level, primarily due to Covid-related spending. Meanwhile, business investment rose by 2.4pc quarter-on-quarter but still was a hefty 15.3pc below its Q4 2019 level.
The volume of exports leapt by 3.0pc, but they still were 21.5% below their Q4 2019 level, reflecting a combination of Covid and Brexit impacts.
Meanwhile, nearly half of June’s 1.0pc month-to-month increase in GDP was driven by a 4.5pc jump in output in the health sector, reportedly due primarily to a surge in people visiting their GP.
A 10.1pc rise in output in the accommodation and food services sector, which sprang back to life after the Step Three unlocking on May 17, also contributed 0.34pp to growth in overall GDP.
Output across the rest of the economy, however, was essentially flat. Industrial production fell by 0.7pc, primarily due to sharp declines in output in the energy supply and mining and quarrying sectors, while construction output fell by 0.5pc.
06:41 AM
A chunky rise
The 4.8pc rise in output over the UK may feel somewhat swarved by the size of moves we saw last year, but by historic standards, it’s a pretty chunky rise, writes Louis Ashworth.
In fact, it’s about the fifth-best quarter ever (or at least since the early 20th century, when quarterly records began).
It may be harder to maintain momentum during the third quarter, but the UK is still expected to have one of the strongest overall rises this year across major economies.
06:33 AM
Restaurants and pubs ‘key to recovery’
Here’s some snap reaction from UKHospitality chief Kate Nicholls:
06:30 AM
Consumer services growth lagging
More from Louis Ashworth, who has dug into the data to find that consumer services is slowing:
Despite another jump for food and beverages activity, overall consumer-facing services activity – which also includes recreation, travel and entertainment, as well as retail trade – saw only a 1pc rise overall.
That leaves it the furthest away from pre-pandemic levels of any major sub-sector across all the three main categories, except mining and quarrying.
That leaves it the furthest away from pre-pandemic levels of any major sub-sector across all the three main categories, except mining and quarrying.
The ONS said: “Despite growth in consumer-facing services, it is travel, transport and other personal services that continue to be the main contributors to output remaining below pre-pandemic levels.”
06:26 AM
‘Recovery remains fragile’
Yael Selfin, chief economist at KPMG, warned that despite the robust second quarter rise, material and staff shortages have curbed the UK’s rate of recovery.
She said:
Second quarter GDP showed a strong 4.8% increase compared to the first quarter of this year and an eye-popping 22.2% growth compared to the second quarter of 2020, showing the extent of the economic recovery from the shock of the pandemic. June’s GDP was just 2.2pc below the level in February 2020.
However, there are signs that ongoing issues with supply chains and staff shortages are slowing the pace of recovery, causing momentum to halt prematurely before the economy reaches pre-Covid levels.
While we expect the pressure on supply chains and labour market to ease in coming weeks and into next year, there is a growing risk that a slowing pace of output growth could coincide with even higher levels of consumer demand in the short term, leading to an unwelcome burst of inflation.
06:17 AM
UK beats US and Germany estimates
Here’s more from our economics correspondent Louis Ashworth:
On an international scale, that 4.8pc rise over the second quarter puts Britain ahead of other top economies including the US and Germany that have also published estimates.
The ONS notes that, in part, these reflect the precise timing of when reopenings occurred – many of the UK’s key restrictions came down neatly within the April–June period.
It comes after the UK – alongside Spain – suffered one of the heaviest slumps in output during the first year of the pandemic. In part, this is because of how GDP is measured, with the UK using so-called ‘direct methods’ for health and education activity.
That difference means international comparisons are less directly valuable, but is why the UK’s tough fall may be followed by a comparatively strong rise.
06:12 AM
Food and drink fuels growth
Here’s more detail from my colleague Louis Ashworth:
A 1pc rise in GDP during June rounds out a 4.8pc overall rise for the second quarter. It marks a fifth consecutive month of output gains, that means overall GDP is now just 2.2pc below its pre-pandemic level.
The strongest expansion came from food and beverage activities, with saw another 10.1pc jump as Britons continued to become more relaxed about dining out as restrictions were eased.
Not every sector is flourishing, however. Production output fell amid temporary oil field closures that hit supply, as well as other delays in getting inputs. Construction also contracted for the third month on the trot, down 1.3pc to slip beneath its pre-pandemic level.
06:10 AM
GDP grows 4.8pc in second quarter
Good morning.
GDP grew at a better than expected 4.8pc in the second quarter as household spending fuelled the economy with the easing of most coronavirus restrictions.
The economy grew by 1pc in June, better than May’s 0.6pc rise but worse than April’s 2.2pc increase. GDP remains 4.4pc lower than its pre-pandemic level.
5 things to start your day
1) Gas boiler ban ‘risks increasing carbon emissions’: Push to heat millions of homes using hydrogen boilers risks increasing carbon emissions and speeding up global warming, warn academics.
2) PwC boosts partner pay by a quarter: Big Four accountant raises average payout to £868,000 and gives staff an extra week’s salary to reward them for pandemic efforts.
3) Northern party towns flourish in staycation boom as London struggles: Blackpool has benefitted from the biggest surge in nightlife footfall as revellers return but workers stay at home to dodge the commute.
4) Boss of shipyard nationalised by Nicola Sturgeon paid £2,500 a day: Tim Hair thought to be one of Britain’s highest-paid public servants after being hired to rescue Ferguson Marine.
5) More lithium found in Cornwall: A geothermal energy company plans to extract lithium alongside power plants in Cornwall after finding record concentrations of the metal.
What happened overnight
Asian shares were mixed on Thursday as caution set in among investors following another wobbly day of trading on Wall Street.
Japan’s benchmark Nikkei 225 gained 0.2pc in morning trading to 28,123.67. South Korea’s Kospi was little changed by slightly higher at 3,220.74 after jigsawing earlier in the day.
Australia’s S&P/ASX 200 lost earlier gains to be also little changed at 7,584.00. Hong Kong’s Hang Seng declined nearly 0.2pc to 26,619.24, while the Shanghai Composite slipped 0.1pc to 3,530.02.
Coming up today
-
Corporate: Entain, Cineworld, M&G, Aviva, Just Group, Mears, Coca-Cola (Interim); Tui, Card Factory (Trading update)
-
Economics: Trade balance, GDP (UK), industrial production (EU), producer price index, weekly unemployment claims (US)
