Russia’s state gas company Gazprom may have to buy natural gas from European trading hubs this winter to meet contractual supply obligations amid lower pipeline flows, according to Goldman Sachs analysts.
The analysts, including Samantha Dart, wrote in a note: “This could potentially create a squeeze at the physical hub, further exacerbating the upside to gas prices well above” the bank’s $32 per million British thermal unit soft-ceiling scenario.
Futures based on the Dutch Title Transfer Facility hub surged to a record, hitting €100 a megawatt-hour on Friday, or $33.90 per MMbtu, as concerns mount of the possibility that Russian shipments to northwest Europe will disappoint just as winter starts, Goldman said.
Gazprom has been overwhelmed with demand both at home, where it needs to fill storage sites for winter and in its key export market Europe, where inventories are the lowest in more than a decade for the time of year.
03:26 PM
Tesco expected to post positive results amid HGV driver shortage
Analysts have suggested that the grocery giant is likely to avoid the disruption seen at some of its competitors when it updates the City next week with its half-year results.
Revenues at half-year results a year ago were £26.7bn with pre-tax profits of £551m. Analysts at Barclays suggest sales could hit £30.4bn.
Last year’s profits were dented by Tesco’s decision to repay its £249m business rates bill.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Tesco expects retail operating profits to recover to pre-pandemic levels this year.
“That comes after the enormous extra costs associated with getting the business through the pandemic, including hiring an army of extra staff, dented operating profit. We’ll find out next week if the group’s still on track for this target.
02:59 PM
British Steel hikes prices in wake of ‘exorbitant’ energy costs
Builders and carmakers have been hit with emergency surcharges by British Steel to compensate for “exorbitant” energy and transport costs in the latest signal that the UK is caught in an inflationary spiral, reports Alan Tovey.
He writes:
The Scunthorpe-based company said customers will be hit with a temporary surcharge of £25 a ton on steel to cover rocketing power prices and £5 a ton for transport costs.
Steel production is an energy-intensive operation and the company said it is facing average wholesale electricity power prices 300pc higher than at the start of the year and 400pc higher for gas.
British Steel is a major producer of for customers including railways, the construction industry, and sectors such as automotive and consumer goods.
Steel “sections”, commonly used in construction, sell for about £600 a ton.
02:53 PM
Sterling pares losses
Sterling pared deep weekly losses on Friday after an afternoon rebound as improving sentiment lifted risk currencies and encouraged investors to pull out from the dollar safe haven.
The pound is currently up 0.6pc versus the dollar at $1.3544.
The British pound was one of the strongest G10 currencies earlier this year as investors bet the British economy would re-emerge faster from the pandemic thanks to Britain’s speedy vaccination programme.
But that narrative has crumbled since, with sterling erasing all of its strong 2021 gains and heading for a yearly loss.
The pound fell to its lowest levels of the year earlier this week, weakened by Britain’s shortage of truck drivers and a surge in energy prices while a hawkish-sounding Federal Reserve and worries about Chinese growth boosted the greenback.
“It’s been another grim week for the pound, which remained highly sensitive to swings in sentiment and still struggled to cash in on the recent hawkish repricing of Bank of England rate expectations,” said Francesco Pesole, a strategist at ING.
02:38 PM
US consumer optimism remains depressed
US consumer sentiment also edged higher in late September, exceeding economists’ expectations but remaining near decade lows.
The University of Michigan’s final sentiment index rose to 72.8 from the preliminary reading of 71, data released Friday showed.
However the figure lingered near August’s almost ten year low of 70.3.
“Consumer sentiment edged upward in late September,” Richard Curtin, director of the survey, said.
“Although the overall gain still meant the continuation of depressed optimism, initially sparked by the delta variant and supported by a surge in inflation and unfavourable long-term prospects for the national economy.”
02:27 PM
US factory activity unexpectedly rises
US manufacturing expanded in September at the fastest pace in four months, bolstered by robust demand for factory goods and burgeoning inventory.
The Institute for Supply Management’s gauge of factory activity rose to 61.1 from August’s 59.9, according to data released Friday. Economists had expected a slight decline to 59.5.
Readings above 50 indicate expansion.
The data suggest manufacturers are making some headway working through still-elevated order backlogs, even as persistent shipping challenges continue to elongate delivery times.
ISM PMI gained 1.2 points to 61.1, a solid reading. New orders, employment, order backlogs and production all growing as are prices amid supply constraints. Supplier deliveries slowing at faster fate but inventories are growing. A very good report in #manufacturing. pic.twitter.com/tnrw8jyIUL
— Dr Thomas Kevin Swift (@DrTKSwift) October 1, 2021
02:15 PM
Sadiq Khan says all travel restrictions must end to boost City
Sadiq Khan is leading calls from London businesses to scrap all UK border restrictions in a softening of his previously tough stance on Covid restrictions, reports Oliver Gill.
He writes:
The London mayor fears the capital will continue to fall further behind its EU rivals unless the Government allows “no restrictions, no tests, and no passenger locator form” for arrivals from low-risk countries.
Mr Khan has repeatedly clashed with Boris Johnson over the Government’s approach to the pandemic.
At the start of the crisis he called for compulsory face masks despite ministers struggling to secure supplies of PPE.
When the Government made wearing face coverings a personal choice on public transport in July this year, the London mayor continued to make them compulsory on the Tube, bus and railways in the capital.
In January he urged the Prime Minister to “get a grip” and impose tighter restrictions on people entering the UK.
Read Oliver’s full story here.
02:02 PM
Tesla is top selling car in Norway
Electric cars represented a record 77.5pc share of all new car sales in Norway in September, as Tesla dominated the market.
According to the country’s Road Traffic Information Council, Tesla Model Y, a compact sports utility vehicle, was the top selling vehicle in the country last month with 19.8pc of the car market. It was followed by the company’s Model 3 sedan with 12.3pc.
Skoda’s Enyaq was a distant third at 4.4pc.
The country is aiming to become the first to end the sale of petrol and diesel engines by 2025.
Last year, electric car sales were made up 61.5pc of the market.
01:39 PM
Bargain hunters push up Wall Street
Wall Street’s main indexes opened higher on Friday as steep September losses drew the attention of bargain hunters.
The Dow Jones Industrial Average rose 86.78 points or 0.3pc. The S&P 500 opened 0.2pc higher while the Nasdaq Composite gained 0.3pc.
Merck shares rose 11.6pc after a study found that an experimental pill created by the US pharmaceutical company with Ridgeback Biotherapeutics slashed the risk of hospitalisation or death from Covid-19 by 50pc.
“We couldn’t be more thrilled with the results,” Merck chief executive Rob Davis told Bloomberg.
“You don’t have to go to the hospital, you don’t have to go to a center to have it infused. It’s a pill you can take at home.”
The companies now plan to seek an emergency-use authorisation from the FDA for the drug – called molnupiravir – as quickly as possible, Davis said.
While there are several drugs available to treat Covid-19, they can be either cumbersome to give to patients, or intended for use in only the most seriously ill.
01:15 PM
Brent slides
Oil is falling today as investors prepare for potential supply increases after Monday’s OPEC+ meeting.
The international benchmark Brent declined 0.9pc while WTI also fell.
OPEC is due to meet on Monday, with a planned production hike of more than 400,000 barrels a day seen as under consideration, RBC Capital Markets analyst Helima Croft wrote in a note.
Investor focus also continues to be on crude demand after China ordered its state-owned companies to secure energy supplies for winter at all costs as the country struggles with a deepening power crisis.
The order from Beijing is likely to add more upward pressure to already elevated coal and liquefied natural gas prices, as well as oil products including fuel oil, diesel and propane, which can be used for electricity generation or to power small generators.
01:06 PM
JPMorgan says BoE rate hike likely this year if supply issues drag
A Bank of England rate hike is likely this year if Britain’s supply problems don’t ease and inflation pressures aren’t tempered by the end of government job support, a JPMorgan analyst said in a note.
Economist Allan Monks wrote to clients to say that the Monetary Policy Committee would prefer to delay a rate increase until 2022 so that it can avoid an impression of panic, “potentially longer-lasting negative shocks to labour supply from both the pandemic and Brexit” may force it to act earlier.
The BOE opened the door to an interest rate rise as soon as November in the minutes of its September meeting. It said any future tightening should start with a rate hike, even if that “became appropriate” before its bond-buying program finishes around the end of the year.
However clear data on how the furlough scheme affects the unemployment rate won’t be available until at least December, creating uncertainty among economists over what evidence the Committee will consider necessary to justify a hike.
JP Morgan’s Monks said that news on wages, the speed of labour market tightening and inflation expectations will have a big sway.
If the end of the furlough scheme does not alleviate pressures in the labour market, Monks said, “a 4Q21 tightening would look more likely” than a hike inthe first quarter of 2022.
12:49 PM
US inflation rises
US prices rose 4.3pc compared to a year earlier, the largest annual increase since 1991.
The personal consumption expenditures price gauge, which the Federal Reserve uses for its inflation target, rose 0.4pc from a month earlier.
More #inflation news, this time out of the US.#PCE, the #Fed‘s favorite inflation measure, did not come down. Instead, it edged up and, at 4.3%, was slightly higher than consensus expectations.
Core came in at 3.6%.
MoM prices increases were 0.4% and 0.3%, respectively.#economy— Mohamed A. El-Erian (@elerianm) October 1, 2021
12:40 PM
Early Darktrace investors sell 25m shares
Three early investors in British cybersecurity company Darktrace have sold around 25m shares in the business, following the stock’s strong surge in value since its IPO in April.
Private equity firms KKR, Balderton Capital and Summit all sold shares at a placing of 750p each, representing a 9pc discount of the firm’s value at the end of the day yesterday.
The investors have witnessed the firm’s stock triple in value since its listing at 250p per share. The sale generated total proceeds of £187.5m, meaning they made a profit of around £125m.
In response, Darktrace shares slumped as much as 8.3pc today. However they have recovered some of the day’s earlier losses and are now trading at 797.5p – 2.7pc lower compared to yesterday’s closing price.
12:20 PM
More than a quarter of independent fuel forecourts still dry
More than a quarter of fuel forecourts still have no fuel, the Petrol Retail Association (PRA) said today.
According to a survey of the groups members – independent fuel retailers – the PRA added that less than half (47pc) have both petrol and diesel.
“Whilst the situation is similar to recent days, there are signs it is improving but far too slowly,” said Gordon Balmer, executive director of the group.
“Independents, which total 65pc of the entire network, are not receiving enough deliveries of fuel compared with other sectors such as supermarkets”.
12:01 PM
Bitcoin jumps suddenly
The world’s largest cryptocurrency has jumped today, making its biggest daily gain since July in just minutes.
Bitcoin leapt 10pc to $47,428 just after 11am UK time.
It’s unclear what’s behind the sudden surge. Some are pointing to comments made by Fed Chair Jerome Powell in a Congressional hearing yesterday.
Powell said he had “no intention” on banning cryptocurrencies. He did, however, add that stablecoins might be appropriate for regulation.
Despite falling in September, Bitcoin posted a 25pc gain in the third quarter. That compared with a drop of 41pc in the prior three months.
11:50 AM
Banking tech boss resigns in wake of bullying probe
The boss of the unit set up to deliver a tech revolution in British banking has resigned after an independent investigation found that he “allowed a culture of bullying and intimidation to prevail” at the organisation, reports Simon Foy.
He writes:
Imran Gulamhuseinwala, trustee of the Open Banking Implementation Entity (OBIE), has stepped down with immediate effect and will be replaced by Charlotte Crosswell, the competition regulator said.
The Competition and Markets Authority also said that the independent investigation found that there was “a failure properly to manage conflicts of interest at the organisation”.
It comes after The Telegraph revealed last month that the watchdog was examining dozens of allegations against the leadership at OBIE, including bullying, intimidation, cronyism and conflicts of interest.
11:47 AM
Coal crisis also brewing in India
Coal is running out in India, with 12pc of the country’s coal fired power plants reporting they had no stocks left.
As of Wednesday, 16 of India’s 135 coal-fired power plants had zero coal stocks, the Central Electricity Authority (CEA) told Reuters.
Over half of the plants had stocks that would last fewer than three days, while over 80pc had less than a week’s stock left.
India is a country which relies on coal for more than 70pc of its electricity.
But pressure on domestic producers is rising as the economy roars back to life after the pandemic, while a widening price gap between lower domestic prices and record global coal prices has led buyers to shun imports.
State-run Coal India, which produces over 80pc of India’s coal said this week an increase in global coal prices and freight costs meant that power plants using imported coal had to curb their production
11:28 AM
German power plant runs out of coal
The global energy crunch has forced a German electricity producer to halt a power plant after it ran out of coal.
Steag GmbH closed its Bergkamen-A plant in the western part of the country this week due to shortages of hard coal, it told Bloomberg.
“We are short of hard coal,” said Daniel Muhlenfeld, a Steag spokesperson.
“There is a strong demand for coal per se and secondly, there is a strong demand for transport by barge. And since Bergkamen has no rail connection, there are no logistical alternatives available here.”
European utilities had already turned to coal due to shortages of natural gas, recently stepping in to the spot market to secure cargoes and asking Russia for more supplies.
China’s move to secure more supplies is likely to make matters worse, with Europe set to scramble to secure fuel this winter.
Coal is trading at sky-high levels and is on track to break the previous record of $192.50 set in July 2008.
11:12 AM
Sunak faces £13bn debt shock from soaring inflation
The Chancellor faces a £13bn debt shock this year as inflation soars to almost double official forecasts and reduces his room to manoeuvre despite a stronger recovery, experts warn.
Russell Lynch reports:
Economists at BNP Paribas expect the Retail Prices Index, which sets the interest bill for almost a quarter of the UK’s £2 trillion debt pile, to average almost double the Office for Budget Responsibility’s 2.6pc estimate for the year to March. The fiscal watchdog’s forecast was issued six months ago.
The warning comes on the eve of a difficult Conservative party conference in Manchester as the cost of living crunch intensifies on millions of households due to rises in Ofgem’s energy price cap.
Supply chain chaos as fuel courts run dry and the end of the furlough scheme also threatens to slow Brtiain’s post-Covid recovery and increase stagflation risks.
Read Russell’s full story here.
10:58 AM
Futures fall on Wall Street
US stock futures have fallen in pre-market trading in New York, with economically sensitive sectors leading declines ahead of new data on inflation and industrial activity.
Oil firms including Exxon Mobil and Chevron slipped about 0.9pc, while big banks Morgan Stanley, JPMorgan Chase & Co, Citigroup, Bank of America and Goldman Sachs Group also dropped 1pc each.
Stocks that would benefit most from government spending on infrastructure – Caterpillar, Deere & Co and Nucor – also came under pressure after Democratic leaders of the US House of Representatives delayed a planned vote on a $1 trillion bipartisan infrastructure bill on Thursday.
Wall Street ended sharply lower on yesterday and the S&P 500 posted its worst month since the onset of the global health crisis, following a tumultuous month and quarter wrecked by concerns over COVID-19, inflation fears and budget wrangling in Washington.
All eyes are now on consumer spending, inflation and factory activity data later in the day for signs of economic health and clues regarding the Federal Reserve’s timeline for tapering its asset purchases and hiking key interest rates.
Futures tied to the Dow are down 0.5pc, S&P 500 futures fell 0.4pc and Nasdaq 100 futures dropped 0.33pc.
10:42 AM
Gas price surge equivalent to $190 Oil Shock
The deepening global energy crunch has pushed natural gas in Europe and Asia to the equivalent of about $190 a barrel, something the oil market has never seen.
Bloomberg has the details:
Both regions saw fresh records in the heating and power-generation fuel this week as utilities rush to restock lower-than-average inventories ahead of winter in the northern hemisphere, while alternatives – like coal – are also in short supply.
Dutch front-month gas hit 100 euros a megawatt-hour early Friday, its highest ever, before retreating later. That’s about $190 per barrel of oil equivalent, more than double the value of the energy in a barrel of Brent crude oil the same day. The benchmark oil contract had its record of $147.50 a barrel in July 2008.
On Thursday, the Japan-Korea Marker, North Asia’s benchmark for spot liquefied natural gas shipments, surged to $34.47 per million British thermal units, the highest on records going back to 2009, according to price reporting agency S&P Global Platts. Converting that into oil units, also gives a price of about $190 per barrel of oil equivalent.
10:27 AM
Petrol stations should raise prices even more
Consumers point to those filling jerrycans as the problem – but the low cost encourages such actions, says Ryan Bourne in his latest column.
He writes:
When panics such as the fuel frenzy set in, any prospect of a rational discussion on how market pricing might improve resource allocation becomes more hopeless still. Yet if this week hasn’t shown us the limitations of suppressing market-clearing price signals in favour of government messaging, what will?
In response to petrol station queues as HGV driver shortages created public uncertainty about fuel supplies, ministers decided that shouting “There is no fuel shortage!” on social media was the correct way of stemming the run. The public was sympathetic, widely denouncing “idiots” filling up “when they don’t need to”.
Yet the behaviour of the buyers was rational and the Government rhetoric was not.
10:05 AM
Expert reaction: Euro area consumer prices rise 3.4pc
Jack Allen-Reynolds, senior Europe economist at Capital Economics, comments:
Euro-zone inflation looks set to continue on its upward trend and we think it will soon hit 4pc.
That makes it more likely that the ECB will scale back its asset purchases substantially in March.
But we still expect headline and core inflation to fall sharply in 2022 and to settle well below 2pc in 2023.
10:01 AM
Euro area inflation accelerates to 13-year high
Inflation in the euro area accelerated more than expected, to its highest level in 13 years, according to figures released by the EU’s statistics office Eurostat today.
Consumer prices in rose 3.4pc in September, compared with an estimate for a 3.3pc gain.
A measure stripping out volatile components such as food and energy climbed to 1.9pc, a rate not seen since 2008.
Eurostat said: “Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in September (17.4pc, compared with 15.4pc in August), followed by non-energy industrial goods (2.1pc, compared with 2.6pc in August), food, alcohol & tobacco (2.1pc, compared with 2.0pc in August) and services (1.7pc, compared with 1.1pc in August).”
?? Euro area flash HICP inflation rose to 3.4% in September, pointing to upside risks to ECB staff projections. Core inflation up to 1.9%, highest in 13 years, on reopening effects.
Transitory, but higher for longer inflation will create some communication problems for the ECB. pic.twitter.com/cwhhrVVsE4— Frederik Ducrozet (@fwred) October 1, 2021
09:50 AM
Energy bills rise as price cap lifts
Energy prices for millions are rising from today in line with an increase to the cap on the most widely used tariffs after wholesale gas prices surged.
The price cap, which sets upper limits on how much firms can charge customers on standard variable tariffs, was increased by £139 to £1,277.
“Today, the latest price cap, which we announced back in August, is set at £1,277. This is the amount that an average household will pay for both gas and electricity,” Ofgem’s deputy director for retail, Anna Rossington, said in a video posted on Twitter.
The cap on electricity and gas bills came into effect in January 2019 and was aimed at ending what former British Prime Minister Theresa May called “rip-off” prices charged by energy companies.
The latest increase reflected the rise in energy costs seen earlier this year, and the ongoing “unprecedented” increase in global gas prices in recent weeks has put financial strain on suppliers, Rossington said.
Read more about the price cap here:
“Today the price cap is set at £1,277. This is the amount the average household will pay for both gas and electricity.”
Our Deputy Director, Retail on the cap applying to default tariffs from today and help for those who need it most this winter. ? pic.twitter.com/04DpriJrCd
— ofgem (@ofgem) October 1, 2021
09:38 AM
Fuel forecasts will ‘take weeks to return to normal’, says industry group
Fuel forecourts across the UK will take weeks to return to normal, according to industry group, the UK Petrol Retailers Association.
Around London on Friday, many service stations were still closed, while those that did have supplies were surrounded by long lines of cars waiting to fill up.
“It will take a number of weeks to get it back to more normal running levels” with no lines or shortages at service stations, Gordon Balmer, executive director of the PRA, said in an interview with Bloomberg Radio on Friday.
More than a quarter of the nation’s service stations have no fuel, and another 20pc have only one grade in stock, the PRA said yesterday.
09:25 AM
Can the world’s longest power cable keep Britain’s lights on this winter?
After 5,880 days of work at sea, the 450-mile long electricity cable connecting Blyth, Northumberland, with Kvilldal, near Stavanger in Norway, starts life today, reports Rachel Millard.
She writes:
The €1.6bn North Sea link draws power from Norway’s hydropower electricity system to provide power for up to 1.4m British homes.
It is the fifth cable linking Britain’s power market with neighbours and will be able to both import and export power, helping balance out intermittent supplies from wind turbines.
“North Sea Link is a truly remarkable feat of engineering,” said Cordi O’Hara, president of National Grid Ventures. “We had to go through mountains, fjords and across the North Sea to make this happen.”
The new connection is one of the many fresh power sources being developed to help Britain cope with the huge increase in demand for low-carbon electricity – needed in the race to slashing carbon emissions to net zero.
09:05 AM
Money round-up
Here’s the daily round-up from The Telegraph’s Money team:
08:54 AM
FTSE 250 at two-month lows
British mid-cap stocks tumbled to two-month lows on Friday, with shares in pub operator Wetherspoon and electrical goods retailer AO World slumping after they warned of a hit to earnings from supply chain disruptions and a staffing crunch.
The index fell to lows of 22,718.7 in early trading.
It is currently down 0.7pc at 22,856.6 points and is heading for its worst week since October last year.
08:49 AM
Despite slowdown, manufacturing PMIs beat estimate
?? UK final manufacturing #PMI for September beats flash estimate at 57.1 (flash: 56.3).
BUT delays in deliveries were hugely prominent. Freight delays, staff shortages, lack of delivery drivers among the main problems driven by combination of #COVID19 and #Brexit.
— Julianna Tatelbaum (@CNBCJulianna) October 1, 2021
08:44 AM
UK manufacturers’ ‘sluggish production times’
Duncan Brock, group director at the Chartered Institute of Procurement and Supply, added:
Manufacturing activity in September was crammed with obstacles to succeed as supply disruptions continued to dampen growth for a fourth month in a row.
Smaller businesses were impacted the most as reduced resources in supplies and drivers, made trade more unmanageable as we move towards the last quarter of the year.
New orders growth slowed again compared to May’s high from both domestic and overseas customers as the Brexit and covid-related long delivery times and accelerating costs contributed to a reduced eagerness to commit.
Customers were becoming impatient with sluggish production times from UK businesses, opting to source for more efficiency elsewhere.
[…] The sector is feeling the strain of an ongoing onslaught of snags and hitches at every stage of the supply chain from sourcing raw materials through to component shortages and delivery disruptions.Like a whack a mole game where once one difficulty is resolved, another appears soon after, the sector may be challenged but remains stoically convinced that things can only get better in 2022 once the next few gruelling months are at an end.
08:38 AM
PMIs: Companies face ‘growing list of headwinds’
Rob Dobson, IHS Markit director, commented on the latest manufacturing PMIs falling to 57.1 in September from 60.3 in August:
The September PMI highlights the risk of the UK descending towards a bout of ‘stagflation’, as growth of manufacturing output and new orders eased sharply while input costs and selling prices continued to surge higher.
Companies are facing a growing list of headwinds, which includes declining new export orders, component shortages, delays to air, land and sea freight, staff shortages exacerbated by COVID-19 illnesses, Brexit disruptions, sharply rising costs and now fuel shortages.
Production growth is severely impacted by the ongoing strain across supply chains and, with demand far exceeding supply, the inevitable result has been higher prices, which will ultimately hurt the pockets of consumers.
The jobs market is also experiencing slower growth, as firms experience labour shortages and difficulties recruiting required skills.
With little sign of resolution to these issues, manufacturers, especially smaller firms with lower market power or capacity flexibility, will continue to be buffeted by these headwinds for the foreseeable future, hinting at a tough autumn and winter ahead for many firms.
08:34 AM
PMIs: Supply chain issues constrain UK manufacturing
Supply chain delays, slower new order growth and rising material and labour shortages all constrained growth in the UK manufacturing sector in September, a new survey showed.
Although manufacturing production increased for the sixteenth consecutive month, the rate of expansion eased to its weakest since February – a seven month low.
The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) fell to 57.1 in September from 60.3 in August.
?? The UK manufacturing PMI fell to 57.1 in September (Aug: 60.3) amid softer output and new order growth. Labour shortages and supply-chain strain persisted, contributing to sharp inflationary pressures. Read more: https://t.co/thNxN3Tj9P pic.twitter.com/VzJTilcjg3
— IHS Markit PMI™ (@IHSMarkitPMI) October 1, 2021
08:20 AM
FTSE 100 back above 7,000
Gains from education company Pearson, insurer Admiral and chemicals firm Croda have helped the FTSE 100 pare some of its earlier losses.
After falling to a low of 6,993 in early trading, the blue-chip index has now lifted back above 7,000.
However it is currently still trading down 0.9pc.
08:14 AM
Silicon prices surge 300pc in two months
The price of a metal used in glass, car parts and computer chips has more than tripled in two months, after a production cut in the world’s biggest producer China.
For most of this century, the price of silicon has ranged between about 8,000 and 17,000 yuan (£891- $1,932) a ton.
But in September, producers in Yunnan province – which account for 20pc of China’s silicon output – were ordered to cut production by 90pc in response to electricity curbs spurred by low hydropower resources and energy efficiency goals.
Since then prices have since shot up as high as 67,300 yuan (£7,758).
“If you have silicon supply constraints, then you’ve got a problem,” Keith Wildie, head of trading at aluminum alloy-maker Romco Metals, told Bloomberg.
“There is still some supply out there, but it’s trading at a clearing price that is obviously very high.”
Read more on this story here: China’s energy crisis will rock the whole world.
07:53 AM
Energy cable Norway and power-starved UK launches
Renewable electricity will start to flow through a new 447-mile cable that stretches from Norway to the UK this morning, providing some relief to Britain as it grapples with an energy crisis.
National Grid’s €1.6bn (£1.4bn) cable, which connects Blyth in Northumberland with the Norwegian village of Kvilldal, near Stavanger, will start with a maximum capacity of 700 megawatts (MW) and gradually increase to the link’s full capacity of 1400MW over a three-month period.
A global energy shortage triggered record power prices in the UK last month, pushing 10 small suppliers out of business.
The UK’s shortage has been sparked by low wind speeds , among other factors.
Although construction on the cable has been on-going for the past six years, National Grid hinted that it could alleviate some of the problems Britain is facing today.
“When demand is high in Britain and there is low wind generation, hydro power can be imported from Norway, helping to ensure secure, affordable and sustainable electricity supplies for UK consumers,” it said.
07:36 AM
More on AO World’s 20pc plunge
Shares of online washing machine and fridge retailer AO World plummeted 20pc this morning, after the company said growth impacted by the nationwide shortage of delivery drivers.
In a trading update, bosses said:
In the UK, revenues over the period increased c.6pc, with growth impacted by the nationwide shortage of delivery drivers and ongoing disruption in the global supply chain.
In Germany, revenues in local currency rose c.3pc despite the competitive online market.
The challenging market dynamics in both the UK and Germany resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter.
AO World said it will report interim results for the half year on November 23.
07:31 AM
FTSE 100 down 1.1pc
Only three stocks in the FTSE 100 have made gains this morning – Unilever (up 0.2pc), Pershing Square Holdings (up 0.2pc) and Polymetal (up 0.04pc).
The rest of the index is in the red. Losses were led by JD Sports (down 3.7pc), Melrose Industries (down 3.1pc) and BA owner IAG (down 2.9pc).
BP and Royal Dutch Shell also lost 1.7pc and 0.9pc, tracking oil prices lower.
On the FTSE 250, online electricals retailer AO World fell lost a dramatic 20pc after reporting its revenue in the first half was hit by a shortage of delivery drivers.
Competitor Curry’s also fell 6.4pc.
JD Wetherspoon shed more than 5pc after sinking to its biggest ever loss.
07:22 AM
Sainsbury’s to hire 22,000 staff for Christmas rush
Sainsbury’s is creating 22,000 new temporary jobs to help it meet higher demand over the festive period.
The supermarket chain, which also owns Argos, said it will be hiring store staff, delivery drivers and logistics workers as part of its “biggest ever Christmas recruitment drive”.
Roles will be available across the UK from Friday, four weeks earlier than last year, as the firm seeks to get ahead with its preparations for a busy Christmas period.
07:13 AM
Another new record for European gas prices
European gas prices have climbed this morning to €100 per MWh for the first time ever, as the global energy crunch deepens.
Futures traded in the Netherlands gained 2.3pc on Friday after China’s central government officials ordered the country’s top state-owned energy companies – from coal to electricity and oil – to secure supplies for this winter at all costs.
Energy prices are rising from the US to Europe and Asia as the economy recovers from the global pandemic.
“Gas can go now as high as it needs to knock demand out,” said Andreas Gandolfo, leader of the European power team at BloombergNEF. “Demand is now driving the gas price.”
GAS MARKET: We do love round numbers: front-month European natural gas (Dutch TTF) has just hit a record high of €100 per MWh for the first time. A year ago, the same contract traded at less than €15 per MWh | #CommodityInflation #EuropeanEnergyCrunch
— Javier Blas (@JavierBlas) October 1, 2021
GAS MARKET: European gas prices are (and had been for several weeks already) in full demand-destruction mode. The market is trying to force industrial consumption off to preserve gas for the rest of the (largely price inelastic) economy | #EuropeanEnergyCrunch
— Javier Blas (@JavierBlas) October 1, 2021
07:02 AM
FTSE 100 plummets on opening
The FTSE 100 has plunged more than 1pc on opening to 7,007.7, following Wall Street’s losses and factory data from Asia that underscored concern about slowing economic growth.
The FTSE 250 is also down 0.96pc at 22,810.1.
06:46 AM
In Asia, manufacturing activity stagnates
Asia’s manufacturing activity stagnated in September, after factories were shut in response to the new waves of coronavirus and signs of slowing Chinese growth weighed on the region’s economies.
Surveys released today showed countries where large outbreaks of the Delta variant receded saw an improvement in activity, such as Indonesia and India.
But factory activity in September shrank in Malaysia and Vietnam.
In Japan, activity grew at the slowest rate in seven months, as chip shortages and supply disruptions weighed on the region.
China’s waning economic momentum also dealt a fresh blow to the region’s growth prospects, with the official Purchasing Manager’s Index (PMI) on Thursday showing the country’s factory activity unexpectedly shrank in September due to wider curbs on electricity use.
06:30 AM
Wetherspoon sinks to biggest ever loss
Wetherspoon sunk to its biggest ever loss last year, as the pub chain said it was struggling to hire enough staff in “staycation” holiday hotspots.
Pre-tax losses snowballed from £34.1m to £154.7m in the 12 months to July 25, compared with a year earlier.
Sales also fell from £1.26bn to £773m, following lockdown restrictions which shuttered the pub chain for 19 weeks.
However chairman Tim Martin emphasised there were signs of recovery.
He said sales in the past nine weeks were only 8.7pc lower than the same period before the pandemic and have continued to improve in the past four weeks.
However, sales in Wetherspoon’s airport branches were yet to bounceback and were still down 47.3pc on pre-pandemic levels.
He also noted a shortage of staff, especially in areas of the country that were attracting more holiday-makers than usual.
“Some areas of the country, especially “staycation” areas in the West Country and elsewhere, have found it hard to attract staff,” he said.
06:19 AM
IoD Confidence Index ‘fell off a cliff’ in September.
Kitty Ussher, chief economist at the Institute of Directors, commented on the plunge in confidence.
She said:
The business environment has deteriorated dramatically in recent weeks.
Following a period of optimism in the early summer, people running small and medium sized businesses across the UK are now far less certain about the overall economic situation and the IoD Directors’ Economic Confidence Index fell off a cliff in September.
A higher proportion of our members expect costs to rise in the next year than expect revenues to rise.
This is not helped by the government’s recent decision to raise employers’ national insurance contributions, which acts as a disincentive to hire just when the furlough scheme is ending.
06:17 AM
Confidence in UK economy falls to seven-month low
Good morning. British bosses’ confidence in the economy “fell off a cliff” in September as concerns over the UK’s recovery from the pandemic mounted, according to the Institute of Directors’ (IoD).
The IoD’s Economic Confidence Index, which measures the net positive level of optimism in the UK economy amongst directors, recorded a value of just under zero (-1pc) last month.
This was down from highs of +22pc in July 2021 and marks the lowest level since early February, at the height of the third lockdown.
Three-quarters of IoD members expected their costs to be higher in the next year compared to the last 12 months.
Meanwhile, 57pc expected their revenues to be higher.
5 things to start your day
1) Poorest must not bear brunt of green energy switch costs: The poorest households are at risk of suffering the most if Britain hikes gas bills to fund its switch to green power, a government infrastructure tsar has warned, as energy prices surge to record highs.
2) Inflation surge set to trigger three rate rises next year: Markets are bracing for as many as three Bank of England interest rate rises next year to stop inflation running out of control after the economy bounced back faster than expected in the second quarter.
3) Inside woke media company Ozy: Hit with claims of impersonations and inflated viewing figures, Ozy Media is struggling to stay afloat
4) Jeff Bezos’s rocket company Blue Origin accused of ‘toxic’ culture: Jeff Bezos’s Blue Origin rocket company has been accused of fostering a “toxic” culture in which senior executives are alleged to have sexually harassed staff and in one instance “physically groping” a female employee.
5) Oxford Nanopore boss worth £60m as shares soar on London debut: Chief executive Gordon Sanghera has held onto his stake in the gene sequencing specialist, which raised £350m. Shares in the business jumped from their initial listing price of 425p to more than 600p, valuing Oxford Nanopore at £4.6bn
What happened overnight
Asian markets tumbled on Friday on the tail of Wall Street’s worst monthly loss since the beginning of the pandemic.
Tokyo skidded 2pc and Australia’s benchmark sank 2.3pc. Markets in Shanghai and Hong Kong were closed for holidays.
The S&P 500 ended September down 4.8pc, its first monthly drop since January and the biggest since March 2020.
Tokyo’s Nikkei 225 lost 590.83 points to 28,861.83, while the S&P/ASX 200 declined 2.3pc to 7,165.10. The Kospi in Seoul lost 1.4pc to 3,026.87. Shares also fell in Taiwan and Southeast Asia.
Coming up today
Corporate: JD Wetherspoon (Full-year results)
Economics: Manufacturing PMI (UK, US, EU); personal consumption expenditure index (US)
