Thank you for following along - join Louis again in the morning.
What to expect (among more):
Updates on: Wetherspoon, ContourGlobal, Sanne, Investec
Numbers from: Public sector net borrowing, GfK consumer confidence (UK); producer prices (Germany)
05:55 PM
Any rescue of Gupta's steel empire faces Greensill obstacles
Gupta
My colleague Alan Tovey reports:
Any attempt to rescue Sanjeev Gupta's UK steel empire faces hurdles because of its complex financial relationship with its parent company and collapsed lender Greensill, which was the tycoon's main source of funding.
Business Secretary Kwasi Kwarteng has hinted that the Government could step in to bail out Liberty Steel if it buckled under financial pressure.
Oil has had its biggest intraday drop since October in New York amid short-term demand concerns and a rising dollar.
West Texas Intermediate (WTI) fell as much as 6.2pc and is on track to extend its stretch of daily losses to the longest in over a year. Brent slid more than 5pc.
Technical indicators show crude oil was due for a correction, following an earlier rally which pushed it above its upper Bollinger band - an indicator level that shows the price is high on a relative basis. Following today's drop, it has retreated below the middle of the band and towards the lower end.
Meanwhile its 14-day relative strength index - which shows how popular a stock is - has dropped from around 60 on Wednesday to a current 48, demonstrating how much investors are pulling out. A reading above 70 means it is overbought, and below 30 means it is oversold.
The retreat could be short-lived if supply is tight and demand returns as economies open up again. But the near-term outlook is uncertain amid uneven vaccine rollouts globally and the market for physical barrels in Asia cools.
05:09 PM
Heavy losses for National Express
National Express
Coach and bus operator National Express fell to a loss of £445m last year - compared to a pre-tax profit of £187m in 2019 - as travel restrictions caused passenger numbers to fall by 80pc.
Revenues for the FTSE 250-listed Birmingham-based group declined by 29pc to just under £2bn.
Chief executive José Ignacio Garat said, however, that the final three months of 2020 were the strongest of the entire year and that revenues so far this year have improved amid strong vaccine rollouts.
“When travel restrictions have been lifted, we have seen a rapid recovery in demand,” he said. “Across the business we have reduced costs, exited certain contracts and accessed government support schemes, to ensure that when we emerge from the pandemic the group will be leaner, fitter and financially stronger.”
Mr Garat added: “The timing of full recovery remains uncertain as we are still subject to lockdowns and related restrictions in every market we operate in”.
Shares fell almost 1pc to 311p.
04:46 PM
BA owner IAG to raise £855m with bond sale
BA
British Airways' parent is planning to raise €1bn (£855m) via a bond sale, to help it withstand the complete curtail in travel over the past year and set it up for the eventual recovery in air travel.
IAG - which also owns Iberia and Aer Lingus - said it will sell two sets of bonds, each raising around €500m, to strengthen its balance sheer and increase overall liquidity. The sale will only be available to professional investors and will be traded on the Dublin exchange.
The money will also be used to help IAG "withstand a more prolonged downturn in air travel", and give it "the operational and strategic flexibility to take advantage of a recovery in demand for air travel".
The first lot of bonds will mature in March 2025, and the second batch four years later. The interest rate is yet to be decided.
04:32 PM
Breaking: AstraZeneca vaccine declared safe by EMA
European's Medicine Agency (EMA) has concluded the AstraZeneca vaccine is a 'safe and effective vaccine'.
Emer Cooke, chief of the EMA, said the Oxford/AstraZeneca vaccine is not associated "with an increase in the overall risk of thromboembolic events and blood clots."
Tech stocks are under heavy pressure today, with the Nasdaq index down about 1.3pc currently.
03:46 PM
Petrofac rises after Iraq contract extension
Shares in oilfield services group Petrofac have bounced back strongly today after the group said it had secured a one-year contracted extension worth around $80m with an unspecified client in Iraq.
The FTSE 250 group said the facility which it will continue to manage is one of the largest in the Gulf and handles about 55pc of the country’s crude exports.
The news comes as a small relief after the company was dealt a heavy blow earlier this week, when it was banned from bidding for contracts with the United Arab Emirates’ stae oil company following a bribery scandal.
03:21 PM
Market moves
Having barely moved today, European stocks are heading for a flattish close. Wall Street is still somewhat in the red, while Germany’s Dax is outperfoming.
02:51 PM
National Grid bets on electric future with £7.8bn deal
Electricity pole
National Grid has placed a multibillion-pound bet on the electric car revolution and the fight against climate change by buying Britain's biggest electricity distributor.
My colleague Rachel Millard reports:
The FTSE 100 company also revealed plans to offload its gas network in a decisive shift away from fossil fuel power.
National Grid will pay £7.8bn for WPD from its US owner PPL, and sell to PPL its US electricity business Narragansett Electric Company for $3.8bn (£2.7bn).
It also plans to sell a majority stake in National Grid Gas, which owns the UK's national gas transmission network. The deals will increase the proportion of electricity assets in the company's portfolio from 60pc to 70pc.
National Grid currently owns the core high voltage electricity transmission networks, but branching out into the local distribution networks owned by WPD is a significant step.
02:20 PM
The Gym Group insists members will be eager to return
The Gym Group
The Gym Group has insisted members will be eager to return to the gym after lockdown ends as it revealed it swung to a loss last year.
My colleague Hannah Uttley reports:
The fitness chain reported a £47.2m loss for 2020, compared with a £6.2m profit in 2019 as coronavirus restrictions hit the company and forced its venues to close for large swathes of the year.
Revenues tumbled 47pc in 2020 to £80m.
However, the company expressed confidence over its future pointing to a survey carried out among its members which showed 97pc expect to return to the gym as soon as possible, with 75pc saying fitness will be more important to them than before the pandemic.
The Gym Group is also planning to open more sites, with three new gyms set to open in April and one in May. Six leases have also been signed for new sites, with more in the pipeline.
01:48 PM
BoE’s Haldane: UK likely to experience ‘rapid-fire’ recovery
Bank of England chief economist Andy Haldane has said the UK economy is likely in for a quick recovery as restrictions ease.
Speaking at the Women in Finance Awards shortly after the BoE’s decision at midday, he said:
I do think, more likely than not, we are in for a rapid-fire recovery, that’s coming and I think it’s coming soon.
He warned “some scarring of lives and likelihoods” would be “inevitable” – adding that the most vulnerable would be particularly affected.
01:39 PM
Tech stocks lag at US open
Tech stocks are lagging as US stocks make a weak open:
Bloomberg TV - Bloomberg TV
01:29 PM
Full report: Bank of England holds steady
My colleague Tim Wallace has a full report on today’s Bank of England decision. He writes:
Neither Mr Bailey nor his US counterpart Jerome Powell appear worried about rising interest rates in the bond markets.
The Bank of England puts rising borrowing costs down to increased market optimism that the recovery is taking hold.
“The upward movement in yields appeared to have been driven by positive news on global economic growth, including on some vaccination programmes and vaccine effectiveness, as well as the size of the US fiscal support package,” the MPC said, adding that financial markets no longer expect the Bank to cut interest rates into negative territory.
Miliband calls for nationalisation if Gupta steel folds
The Government must be ready to nationalise embattled Liberty Steel to save “crucial jobs” in the industrial sector, according to Shadow Business Secretary Ed Miliband.
My colleague Alan Tovey reports:
Fears are growing about the business and its owner GFG Alliance after Greensill, its main lender, collapsed into administration leaving it racing to find fresh financial support.
Liberty is part of entrepreneur Sanjeev Gupta’s sprawling network of industrial businesses that employ 35,000 staff worldwide, with 5,000 in the UK.
Mr Miliband urged the Government to be ready to prop up Liberty, describing steel is a “key part of our strategic infrastructure”.
My colleague Tom Rees has a full report on today’s shift in bond yields. He writes:
The benchmark 10-year Treasury yield climbed past 1.70pc for the first time since January 2020, with global government bonds also taking their cue from the Fed’s meeting on Wednesday evening.
The US central bank upgraded its growth forecasts for the world’s largest economy but its policymakers insisted that an interest rate hike was not on the cards until 2024.
However, US borrowing costs have rocketed in recent months, with bond yields boosted by growing expectations that the Fed will have to lift rates from a record low to stop the economy overheating. There are fears that Joe Biden’s $1.9 trillion (£1.4 trillion) stimulus package could stoke inflation in the US.
US weekly jobless claims rose last week, hitting 770,000 – the highest level since early February. The four-week run-rate continues to very gently decline, but it’s clear that underlying churn in the American labour market is huge by pre-pandemic standards.
12:29 PM
MPC members split over spare capacity
One of the debates currently dividing the MPC is over the degree of spare capacity that exists within the economy at present – which could be a key factor in how quickly activities bounces back as restrictions are eased. The minutes say:
There was a range of views across MPC members on the degree of spare capacity in the economy currently, whether demand would outstrip supply during the recovery from the pandemic, and how the assessment of supply should take into account the unique nature of the economic shock from the pandemic. Further discussion of these issues would be an important part of the Committee’s forecast process ahead of the May Report.
This applies particularly to areas such as savings: UK households have paid down debts substantially during the pandemic, but the increased savings seen have mainly been concentrated in the hands of richer and older people, who are less likely to spend it post-lockdowns.
12:21 PM
Trade expected to recover in February
The MPC’s minutes note the plunge in UK trade in goods volumes during January, including a massive 44pc drop in exports to the EU. It said:
A number of factors were likely to be driving these developments, including stockpiling around the end of the UK-EU transition period, some disruption as new trading arrangements had been introduced, and the impact of renewed Covid-related restrictions on trade flows and particularly the demand for imports.
The January data on UK exports to the European Union were more uncertain than usual, owing to a shift to a new reporting system. Trade was expected to have recovered somewhat in February, as inventories built up before the end of the transition period were used up.
12:15 PM
No mention of negative rates
Worth noting that negative rates went unmentioned in today’s report. The BoE has asked bank to ensure they would be capable of handling sub-zero rates, but has stressed they are not about to implement the controversial measure.
12:13 PM
Key points: Keeping it steady
Here are the key points from today’s decision:
The Bank of England kept interest rates at a record low of 0.1pc, saying financial conditions are “broadly unchanged” since its last report
It maintained its asset purchase target of £895bn, buying about £4.4bn of bonds each week
Policy will remain on hold until the economy recovers further and inflation is nearer target levels
MPC members were divided on the potential risks to the economy in both directions
12:10 PM
Sterling barely shifts
The pound is vanishingly lower than it was pre-announcement. No surprises from the MPC, and that’s reflected in the shrugging reaction from UK assets.
12:09 PM
Recent economic activity ‘positive’
The MPC said economic news had been “positive” since its last meeting, but noted the impact that will have on the medium-term outlook is unclear – with members disagreeing on the “balance of risks”:
12:06 PM
Inflation expected to return to target level in spring
The MPC has reiterated its prediction that near-term inflation will return to around its 2pc target during the spring as the effect of oil price falls disappear from the stats. It said:
These developments should have few direct implications for inflation over the medium term, however. Inflation expectations remain well anchored.
12:03 PM
No tightening until ‘significant’ progress made
The MPC’s minutes minutes warn that there is a “material degree” of spare capacity in the UK economy currently. Here’s the crucial section of its decision (my bolding):
There is judged to be a material degree of spare capacity at present. The outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remains unusually uncertain. It continues to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.
The MPC will continue to monitor the situation closely. If the outlook for inflation weakens, the Committee stands ready to take whatever additional action is necessary to achieve its remit. The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2pc inflation target sustainably.
12:00 PM
Bank holds rates and QE target
As expected, no change to interest rates, which stay at 0.1pc.
The asset purchase target is also unchanged.
11:59 AM
Pound check!
With less than a minute until the MPC decision, the pound is flat against the dollar:
11:53 AM
Decision shortly
Just a few minutes until the Bank of England’s latest decision.
Audi will not invest in any new internal combustion engines as the prestige German car maker goes electric.
My colleague Alan Tovey reports:
The marque – part of the Volkswagen Group – will continue to “optimise” existing petrol and diesel engines, said chief executive Markus Duesmann at the company’s annual press day.
In a signal that full electric vehicles are the future for the bran, he added: “For us, the plug-in hybrid is purely a bridging technology and mainly for Europe.”
In a first for Audi, Mr Duesmann said Audi would this year launch more electrified models than cars with internal combustion engines.
The future of the marques TT and R8 sports cars is also in question, with no decisions on whether they will get successors as electrification requires a bigger rethink for such vehicles.
11:32 AM
Coming up: Bank of England decision
At 12pm, we’ll get the latest monetary policy decision and report from the Bank of England.
The Monetary Policy Committee is expected to leave its policy stance unchanged, with a nod to both positive (successful vaccine rollout) and negative (new rise in cases) potential changes to its forecasts.
Speaking to BBC Radio 4 on Monday, Governor Andrew Bailey essentially forward-ran today’s meeting (possibly breaking purdah rules in the process). As my colleagues Russell Lynch and Lucy Burton reported then:
Unemployment is likely to peak at a lower level thanks to the “helpful” extension of the furlough scheme, but some job losses will still be inevitable, the Bank of England Governor Andrew Bailey said on Monday.
Mr Bailey, who reiterated that the Bank expected the economy to recover the ground lost to Covid by the end of the year, told BBC Radio 4’s Today programme that the Chancellor’s decision to extend furlough until September would limit the effect of the pandemic on jobs.
The bigger underlying story is the fight between the MPC’s hawks and doves, with a chance that the BoE will signal that rising bond yields indicate rising strength in the underlying economy.
The more prominent voice in the former camp is chief economist Andy Haldane, who has been a bullish voice on the UK’s recovery prospects and has warned central banks could risk falling behind the curve.
Bloomberg - Bloomberg
Taking such a stance could but the BoE out of step with the US Federal Reserve, which last night indicated a long-term commitment to low rates.
But the MPC is likely to echo the Fed for now, avoiding language that would push rate expectations higher. That means today’s report is likely to highlight the potential negatives, make the case for continued low-rates and emphasise the flexibility of Threadneedle Street’s asset purchasing efforts.
11:03 AM
BP picks Teesside site for UK’s biggest hydrogen factory
Teeside - Ian Forsyth/Getty Images
BP is planning to build a vast hydrogen factory in Teesside to provide energy for local industry and homes.
My colleague Rachel Millard reports:
Its H2Teesside could be producing hydrogen from natural gas – so-called ‘blue’ hydrogen – by 2027 or earlier with a target of generating 1GW of hydrogen by 2030.
The Government wants to develop 5GW of hydrogen production by 2030 as part of its effort to cut carbon emissions.
Hydrogen does not emit carbon when burned although making it from natural gas as opposed to via electrolysis (dubbed 'green' hydrogen) does produce vast amounts of carbon dioxide.
Midway through the morning, the FTSE 100 is only slightly higher. Europe’s broadly flat, although gains in Germany have been enough to push the Stoxx 50 index of top blue-chips across the continent to its highest level since 2008.
10:33 AM
Uber offers drivers cash to cover lost holiday pay
Uber is planning to contact both current and former drivers to offer them cash payments in place of back-dated holiday pay, without the need to go through an employment tribunal.
My colleague Morgan Meaker reports:
Earlier this week, the ride-hailing company said it would reclassify its 70,000 UK drivers as workers who were entitled to the minimum wage, holiday pay and pensions.
The U-turn arrived after a landmark decision from the Supreme Court in February ruled that two former drivers for the app were entitled to worker benefits. The decision was expected to encourage many more Uber drivers to come forward demanding the same.
Car industry leads backlash as Government cuts EV subsidies
The car industry has attacked a surprise move by the Government to cut subsidies on electric cars by £500 and end them completely for more expensive models.
My colleague Alan Tovey reports:
From today the plug-in car grant available to people buying emissions-free vehicles will be reduced to £2,500 and will only be available on cars costing less than £35,000, down from the previous limit of £50,000.
This means that Britain’s best-selling electric car, Tesla’s Model 3, will not longer be eligible because the cheapest version starts at just over £40,000.
Car industry voices said the decision was the “wrong move at the wrong time”.
Government said the changes would allow funding for the scheme to “go further and help more people switch to an electric vehicle”. It has banned the sale of internal combustion engine vehicles from 2030 and wants to encourage the transition to electric cars.
UK online job ads have risen to the highest level in a year, according to Adzuna data included in the latest set of economic indicators released by the Office for National Statistics – but spending by Britons has fallen.
The stats body said:
09:27 AM
Tullow’s Suriname well hits dust
Tullow Oil has abandoned its final frontier exploration site, the Goliathberg-Voltzberg North well, after finding only “minor oil shows”.
The deepwater well off the coast of Suriname will be plugged and abandoned following the dud findings, the FTSE 250 group said.
Its findings are another blow for a once-storied oil explorer. Under its new chief executive Rahul Dhir, it is refocusing on paying down debts and boosting production at its West African sites. Tullow is not scheduled to conduct any other drilling activity this year.
The Suriname well, in which Tullow held a 50pc stake, was always a higher-risk drill, so the poor result was not entirely unexpected.
After a sharp drop at the open, Tullow shares have steadily risen today – a sign that investors may have confidence in a future for the company beyond exploration.
09:02 AM
Pound fluctuates
The pound is wobbling slightly ahead of 12pm’s Bank of England rates decision. The dollar is broadly stronger against global peers amid continued market nerves.
09:00 AM
Vantage Towers rises slightly after float
Today marks the first day of trading for Vantage Towers, Vodafone’s masts business – which has been floated in floated.
Shares rose as much as 3.7pc after beginning trading at €24 apiece, towards the lower end of the initially-advertised range.
Vantage sold 95.8m shares in the offering, which included and over-allotment that raised around €2.3bn. It gives the company a market cap of about €12bn.
It’s the second-biggest European IPO this year, bringing the total raised $20.2bn. On Polish parcel company InPost has raised more, during a €3.2bn float in January.
The proceeds of Vantage’s IPO will go straight to Vodafone, which plans to use the proceeds to pay down its debt pile.
08:26 AM
How US yield have shifted
Here’s how the yield on US 10-year Treasuries has steadily risen to a fourteen-month high, amid a bond sell-off driven by fears of a resurgence in inflation as the global economy recovers from Covid-19.
As my colleague Tim Wallace reported yesterday:
Inflation has replaced Covid as the top worry for international investors for the first time since February 2020, as the vaccine rollout raises hopes the worst of the pandemic has passed.
Financiers are instead increasingly concerned about inflation, with fears that the post-lockdown recovery could overheat in a dangerous boom.
Inflation was cited as the top worry by 37pc in a BofA Global Research survey of 225 investment professionals managing $645bn (£463.5bn) in assets.
The FTSE 100 has opened flat, amid a renewed bond sell-off that has taken the yields on US 10-year Treasuries (a cornerstone of global financial markets) to the highest since January last year.
Bloomberg TV - Bloomberg TV
08:12 AM
888 Holdings rises after beating profit estimates
Online gambling operator 888 Holdings has risen at the open after saying it had entered the current year with strong trading momentum.
The FTSE 250 group’s profit before tax beat investor expectations, despite plunging 41.1pc to $26.7m. Total revenues soared during the year amid increased interest in its games from stuck-at-home punters, soaring 52pc to $849.7m.
888 said it had been a “transformational year”, adding that at had seen continued strength so far in 2021, and that it expects to deliver continued revenue growth.
Chief executive Itai Pazner said:
We enter 2021 with strong momentum, with a record level of customers, and with a positive reaction to our suite of new products and innovations. As a result, as well as the Group's strengths as a product-centric, responsible, and diversified operator, the board believes that 888 has an outstanding platform to deliver continued strategic progress during 2021 and beyond.
07:59 AM
Ocado sales jump 40pc in first quarter
Ocado - PAUL ELLIS/AFP via Getty Images
Ocado posted a 40pc jump in first quarter retail sales, as the group was boosted by a “dramatic and permanent shift” to online grocery shopping during lockdown.
My colleague Simon Foy reports:
The FTSE 100 company said revenues at its retail arm, a joint venture with M&S, jumped to £599m during the 13 weeks to Feb 28 compared to £429m during the same period last year.
It added that the average order size rose to £147 from £110, which was “a result of seasonal strength over the festive period and a temporary reversal of the trend towards normalised shopping behaviour in response to further national lockdown measures in the UK”.
Average orders per week came in at 329,000, higher than the previous year but below the 360,000 orders it received weekly in the fourth quarter of 2020.
Chief executive Tim Steiner said: “Over the last twelve months, there has been a dramatic and permanent shift towards online grocery shopping around the world. Millions of customers have experienced online grocery shopping through the pandemic and many of them will not be going back to bricks and mortar.”
The retailer expects to open two more warehouses this year, each of which will be able to fulfil 150,000 orders a week.
07:51 AM
Ofcom rules out fibre wholesale price caps only 2031
Ofcom hopes to jump-start the nation's broadband upgrade by allowing BT to charge higher prices for full-fibre connectivity for the next decade.
My colleague Ben Woods reports:
The communications regulator has told broadband builders that wholesale prices on full fibre will not be capped until 2031 at the earliest, handing the industry more certainty to invest.
The move is part of a plan to wean the country off older, more unreliable, copper broadband network by keeping prices on those services flat ahead of shutting it down entirely.
The new regulations also aim to stamp out signs of anti-competitive behaviour from BT's Openreach when offering wholesale products to rivals.
Read more: Ofcom rules no wholesale price caps on fibre broadband for a decade
07:04 AM
Agenda: FTSE set to rise
Good morning. The FTSE 100 is set to open higher after the Federal Reserve committed to maintaining a dovish monetary policy.
Attention will turn to the Bank of England, which is expected to act similarly and keeps interest rates on hold.
5 things to start your day
1) Kwarteng warned audit rules threaten UK recovery: Kwasi Kwarteng has published detailed proposals he claimed will make the directors of big companies more accountable for accounting failures
Asian shares and U.S. stock futures rose on Thursday after the Federal Reserve committed to maintaining accommodative monetary policy and projected a rapid jump in US economic growth this year as the COVID-19 crisis eases.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.87pc, while stocks in China rose 0.74pc. Australia's market bucked the trend and fell 0.73pc.
E-mini futures for the S&P 500 edged up by 0.7pc.
Euro Stoxx 50 futures were up 0.52pc, German DAX futures rose 0.75pc, and FTSE futures were up 0.4pc, pointing to a bright start to European trading.
While inflation is expected to reach 2.4pc this year, above the central bank's 2% target, Fed Chair Jerome Powell called it a temporary surge that will not change the Fed's pledge to keep its benchmark overnight interest rate near zero.
Coming up today
Corporate: 888 Holdings, Fevertree, The Gym Group, National Express, OSB, Premier Oil (Full year); Ocado (Trading statement)
Economics: Bank of England monetary policy decision (UK); inflation (Japan); jobless claims (US)
