Pound falls in ‘sausage war’ standoff

Wizz Air was one of the top performing mid-caps on Wednesday after its chief executive said the Hungarian budget carrier was on track to fly more this summer than before the pandemic, while travel-related stocks got a double shot of good news. “We are ramping up. We are seeing a less constrained environment going into peak summer and quite likely we’re going to be above our 2019 capacity in a month or two from now,” said Jozsef Varadi.

His comments struck a rare note of confidence in the coronavirus-hit travel industry. He said Wizz was already operating about 90pc of its pre-pandemic 2019 capacity, putting the airline ahead of many European rivals running at half their pre-pandemic capacity. Shares rose 152p to GBP48.10.

The airline was joined in the green by travel stocks after the EU gave the go-ahead to vaccine passports, and as the US eased travel restrictions for 61 countries, raising hopes this summer may provide some relief for the sector. British Airways’ owner IAG was the best-performing stock on the FTSE 100, finishing up 6.5p at 204.5p. On the FTSE 250, travel firm Tui took second slot just ahead of Wizz Air, rising 13.6p to 430p, while easyJet gained 19.2p to 986.2p.

The gains were not enough for the indexes to close in positive territory, knocked by inflation fears as Chinese factory gate figures came in higher than expected. The FTSE 100 ended down a slight 14.1 points at 7,081.0 and the FTSE 250 fell 136.5 points to close at 22,758.9. Mining stocks also acted as a drag on the back of weaker commodity prices. Thungela Resources flopped back to the bottom of the pile after soaring in the previous session, adding to a see-sawing first week of trading.

It ended down 13.9p at 130.2p and was joined in the red by fellow miners Evraz, Anglo American and Antofagasta. Helping to pare further losses was a steadily dropping pound caused by souring UK-EU relations. The index is full of companies that sell services in dollars, so it is often helped by a fall in the value of sterling, and equally harmed if the pound strengthens.

Sterling was trading down around 0.1pc against two major currencies close to the end of play in London. One pound would buy £1.4121 or EUR1.1588. Currency traders had one eye on the negotiations between the UK and the European Union.

Brussels has said it might take action if the UK Government does not stop breaking the section of the Brexit agreement the two sides struck over Northern Ireland. Elsewhere, shares of British pharmaceutical group Clinigen Group plummeted 221p to 615p, its lowest level since late last year. The drop follows a price target cut by RBC after the company forecast annual adjusted earnings within the range of GBP114m and GBP117m, lower than market expectations.

The group said business is suffering due to a worldwide reduction in cancer treatments, as hospitals continue to be distracted by coronavirus treatments.

Markets Hub embed test

6:08PM

Wrapping up

That is all from us today – here are some of our top stories:

Thank you, as ever for following along! See you again tomorrow

6:06PM

US stocks trade near record highs

Wall Street is trading near record highs and bonds are rallying as investors braced for a key inflation report that could provide clues on the direction of monetary policy. The S&P 500 is currently up 0.1pc, fluttering around its May 7 record closing level, with megacap tech and biotech stocks lifting the benchmark index.

Equities have been trading in a tight range and Treasury yields have been easing in recent weeks as investors who believe accelerating inflation will be short-lived clash with those those who bet it will prove persistent enough to warrant tightening. For now, the Fed’s dovish stance is calming the markets.

5:49PM

Bank of England reshuffles

The Bank of England’s chief operating officer Joanna Place – the only woman at the management level of deputy governor – will be “moving across from her current role” to lead the bank’s regional strategy, which includes a new hub in the North of England. The move, detailed in minutes of the BoE’s court meeting in April (published today) comes comes amid a wider reshuffle of the bank’s senior roles, just a year since Andrew Bailey took the helm.

Others include Bradley Fried, chair of the Court of Directors since 2018, will not seek a second term, and the process of replacing him will begin later this year, it said. The bank doesn’t intend for any current staff to have to relocate as a result of the regional strategy.

5:23PM

Recommendations to crackdown on Xinjiang slave labour in UK supply chain rejected

Xinjiang is known for its production of cotton, used by brands internationally

Ministers have rejected a raft of recommendations from MPs to crackdown on Xinjiang slave labour in UK supply chains.  My colleague Laura Onita reports:

The decision comes after the Business, Energy and Industrial Strategy (BEIS) Committee grilled several Western companies on their presence in the Xinjiang region, a key hub of Chinese cotton production.

MPs have said said that the Government refused to commit to clear timeframes and meaningful actions in response to several proposals meant to help firms avoid profiting, however unwittingly, front the misery of Xinjiang’s Muslim population.  The US government estimates as many as three million Uighurs have been detained in the concentration camps of Western China.  The Government said in its response to the proposals that UK policy on China, including Xinjiang, is agreed by the National Security Council and reviewed regularly. 

It stated that Dominic Raab, the Foreign Secretary, imposed new export controls in March designed to stop British firms using products sourced from Uighur slave labour camps, among other measures. It added there already was a working group established in August to determine how the UK responds to the situation in Xinjiang.  The decision was criticised by the BEIS Committee, calling the outcome “disappointing”. 

4:46PM

Google to build world’s longest internet cable between US and Latin America

Tech giant Google said today it was building an undersea cable called “Firmina”  which would connect the United States, Brazil, Uruguay and Argentina, bolstering connectivity between these regions.

“Firmina will be the longest cable in the world capable of running entirely from a single power source at one end of the cable if its other power source(s) become temporarily unavailable–a resilience boost at a time when reliable connectivity is more important than ever,” the company said. 

Today we’re announcing Firmina, the longest subsea cable in the world capable of running from a single power source at one end if necessary. Firmina will run from the US East Coast to Argentina to help improve access to Google services in South America. https://t.co/jZqtZoKYil

— Sundar Pichai (@sundarpichai) June 9, 2021
4:20PM

Pound falls in ‘sausage war’ standoff 

The pound fell against the dollar this afternoon, as Britain and the European Union exchanged threats in a standoff over the movement of chilled meats from Britain to Northern Ireland.  The currency had shrugged off the on-going dispute over trading arrangements. 

But sterling dropped after European Commission Vice President Maros Sefcovic said that the EU is considering advancing its legal challenge to Britain over UK action in Northern Ireland, which could result in a court case by autumn or the eventual imposition of tariffs and quotas. Sterling was down 0.3pc versus the dollar at £1.41165, having reached as high as £1.419 earlier in the session, before the EU’s comments. Versus the euro, it was down 0.4pc on the day at 86.34p per euro – its weakest in one week.

My colleague James Crisp has more on the sausage trade war here

4:07PM

Travel and vaccine stocks help FTSE pare back losses 

The FTSE is paring back losses from earlier in the day, pushed higher by travel and pharmaceutical stocks.  British Airways owner IAG was up more than 4pc this afternoon, after the US eased travel rules for 61 countries excluding the UK.  Vaccine makers AstraZeneca and GlaxoSmithKline were also both up more than 2pc. 

However mining stocks weighed heavy on the index with Anglo American (down 2.67pc), Evraz (down 3.73pc) and Anglo spin-off Thungela Resources (8.69pc) trailing. 

3:42PM

Lordstown Motors shares plunge 

Nasdaq-listed Lordstown Motors posted its biggest two-day decline since October after the electric carmaker warns it may run out of cash before selling its first vehicle.  Last year shares doubled as investors searched for a company that could replicate Tesla’s gains.  Lordstown’s market valuation was £5bn four months ago.

Today, it has plunged to GBP1.7bn.  “This is a valuable lesson for investors,” Bespoke Investment Group said in a note, adding those betting on such early stage companies “need to be aware that their positions could be effectively vaporware.” Lordstown shares fell 13pc to £9.63 today, below the debut level of the blank-check company it merged with in April 2019

Credit:Google3:25PM

Guardian leader to step down following reports of power struggle

Guardian Media Group (GMG) today announced that chief executive Annette Thomas, who joined the group in March 2020Credit:David Levene 

The Guardian Media Group (GMG) has announced today that chief executive, Annette Thomas, will be leaving the company at the end of June following reports of a power struggle between senior executives. 

GMG said Thomas has overseen a turnaround year at the business, growing annual revenue and reducing operating losses by 50pc. However last month, The Telegraph reported that relations between Thomas and editor-in-chief, Katharine Viner, had broken down to such an extent that senior staff believed one of them would have to go unless a peace deal could be brokered by the Scott Trust, the GBP1bn endowment which owns the Guardian. You can on that story here

Thomas said today: 

After a significant turnaround year, having put a new strategic plan and a high calibre team in place, substantially increasing our focus on journalism and digital recurring reader revenues, I have decided to step down from the role of chief executive, as the current governance and structures need more time to fully evolve to support the implementation of the reader-centric strategic plan.

3:13PM

Treasury yields drop below 1.5pc ahead of auction, inflation Data 

The 10-year Treasury yield fell below 1.5pc for the first time since May 7, suggesting that the Federal Reserve’s assurances that elevated inflation is probably temporary are gaining acceptance from investors. Bloomberg has more details: 

The note’s yield declined as much as 5 basis points to 1.482pc, which is below closing levels since March, and remains near that level, even as dealers prepared to underwrite an auction of £38bn of the notes Wednesday afternoon. The move comes a day before the release of U.S. consumer price data for May; the April increase was the biggest since 2009.

There was no clear catalyst for the latest move lower, suggesting a potential shift by the market’s large short base ahead of the US data and a European Central Bank meeting Thursday. Confidence in predictions of an inflationary economic recovery from the pandemic has waned, though, following two months of weaker-than-forecast U.S. job creation data. “There maybe some view in the marketplace that the Fed could be right in terms of transitory inflation,” said Larry Milstein, senior managing director and head of government debt trading at R.W.

Pressprich & Co. “More investors seem to be getting on that band wagon. We also still haven’t seen the labor picture improve as much as everybody was anticipating. That’s supporting the Treasury market.”

3:03PM

Shell ‘will go further’ to cut emissions following Dutch court ruling, boss says

Oil and gas giant Shell has said it will accelerate its plans to cut carbon emissions after a Dutch court ruling, even as it expects to appeal the landmark decision, reports Rachel Millard

Chief executive Ben van Beurden said the company would take “bold but measured steps” to cut emissions – although he was “disappointed” that Shell was being “singled out” by the ruling.  In a lengthy post on Linkedin published today, Mr van Beurden said:

The court has said its decision applies immediately and should not be suspended pending an appeal.  For Shell, this ruling does not mean a change, but rather an acceleration of our strategy.

We have a clear target to become a net-zero emissions business by 2050, in step with society’s progress towards achieving the goal of the Paris Agreement.  We have set rigorous, short-term reduction targets along the way to make sure we achieve net zero.  But now we will seek ways to reduce emissions even further in a way that remains purposeful and profitable.

That is likely to mean taking some bold but measured steps over the coming years.

Climate campaigners hailed a major victory last month when a Dutch court ordered Shell to cut absolute emissions to 45pc by 2030, following a lawsuit filed by seven groups including Greenpeace, and Friends of the Earth Netherlands.  It marked the first time a court has ordered a major polluter to cut its emissions, and raises the prospect of similar action against other companies. 

2:51PM

Meme stocks soar as Wall Street waits for signs of inflation

Reddit traders are continuing to send meme stocks soaring while Wall Street braces for a sharp rise in inflationCredit:REUTERS/Carlo Allegri

Over in the US, newly popular meme stocks have surged as markets were subdued while  awaiting key inflation indicators due out tomorrow. 

New social media favourite Clover Health leapt almost 15pc after the opening bell following a 21.4pc pre-market jump. It ended Tuesday at a record high after a retail investor-inspired 85pc surge.

Wish.com owner ContextLogic also soared 33pc after discussion of a potential short squeeze on Reddit’s WallStreetBets forum. Clover Health benefited from the armchair investors’ attention after they discovered short sellers were targeting the stock. 

But GameStop sank over 2pc ahead of first quarter results due out after markets close. Meanwhile AMC, the embattled cinema chain whose share price has soared with the support of Reddit traders, lost 11pc in early trading.

“It is going to be consistent and the participation is good, but there remains a risk of high speculation and market manipulation within these meme stocks,” said Rob Sechan, managing partner and co-founder of NewEdge Wealth.

The Nasdaq surged 0.49pc higher, well ahead of the S&P 500’s 0.18pc climb, while the Dow was roughly flat, posting a 0.09pc increase.

Wall Street traders are waiting for tomorrow’s US Consumer Price Index release for May, which economists expect to show a 4.7pc annual rise in inflation.

“I think we are going to remain in a grinding pattern for a bit with investors trying to figure out if inflation is to be more persistent or more transient,” NewEdge Wealth’s Sechan said.

2:21PM

France to ‘fight’ for digital tax to apply to Amazon

Amazon only had an overall profit margin of 6.3pc last yearCredit:DAVID BECKER /AFP

Emmanuel Macron hopes to ensure France ensnares Amazon in the global minimum tax proposal that G7 nations have backed, according to reports.

The proposed tax would allow countries to impose a 15pc on companies with profit margins above 10pc.

However, Amazon’s profit margin last year only hit 6.3pc, putting it firmly outside the cross-hairs despite having a market cap of over £1 trillion.

But French finance minister Bruno Le Maire told broadcaster RMC that France would seek to circumvent the potential loophole.

The tax reform “must apply to Amazon”, he said. “France will fight to make sure that it does.”

He said the tax reform had been negotiated at the Organisation for Economic Co-operation and Development with the specific aim of making all digital giants pay their fair share.

“The problem with Amazon is that some of its businesses don’t generate a profit margin of more than 10pc,” Le Maire said, singling out its deliveries branch.

At Amazon’s cloud-based services, meanwhile, margins are “very large”, he said.

He said France would seek to treat Amazon’s businesses separately for tax purposes “so that all the very profitable parts are certain to be subject to this digital taxation”.

Still, Le Maire acknowledged that China must back the planned tax if it is to apply globally. “Believe me, that’s going to be a very different ballgame,” he said.

2:06PM

Sterling drops 0.1pc

Sterling has fallen back from its push towards £1.42 this afternoon (see 10.14am), slipping to £1.4135  compared to £1.4146 at the previous close.

It had shrugged off post-Brexit trade issues over Northern Ireland to edge up against the US dollar earlier in an otherwise quiet day for currency markets as they look towards tomorrow’s  US CPI data and a European Central Bank meeting.

David Frost, the UK’s Brexit minister, David Frost, is meeting European Commission Vice President Maros Sefcovic in London today to try to resolve differences over the impact of the Northern Ireland protocol on trading arrangements.

Analysts believe that if talks over the protocol turn sour then sterling could suffer, especially given renewed confidence among markets about a eurozone recovery.

“If the relationship between the EU and the UK over this does worsen, it could be a significant headwind for sterling… but I think the market would rather ignore it,” said Jane Foley, senior FX strategist at Rabobank.

1:42PM

Wizz Air expects summer flying to beat pre-pandemic levels 

Jozsef Varadi, Chief Executive Officer of Wizz Air Credit:SIMON DAWSON/Reuters

Wizz Air is on track to fly more this summer than before the pandemic its chief executive said today, striking a rare note of confidence in the downbeat travel industry.   “We are ramping up. We are seeing a less constrained environment going into peak summer and quite likely we’re going to be above our 2019 capacity in a month or two from now,” Jozsef Varadi said today during an online event. 

He said Wizz was already operating about 90pc of its pre-pandemic 2019 capacity, putting the airline ahead of many other European airlines operating half their pre-pandemic capacity. 

1:22PM

US oil rallies near two and a half year high

A truck passes a Suncor Energy Inc. oil refinery near the Enbridge Line 5 pipeline in Sarnia, Ontario, CanadaCredit:Cole Burston /Bloomberg

Oil prices are surging today, carried by expectations of robust demand for crude as economies recover from the pandemic. The prospect of Iranian crude exports returning faded as the US Secretary of State Antony Blinken said even if the US reached a nuclear deal with Iran, hundreds of sanctions on Tehran would remain in place. U.S. crude futures closed above £70 per barrel for the first time since October 2018 yesterday and last stood at £70.26, up 0.3pc.

Brent futures rose 0.3pc to £72.46, after earlier touched their highest since May 2019.

1:07PM

World shares mixed as China data stokes inflation concerns 

World shares are mixed this afternoon after China reported a big jump in factory gate prices this morning.  Shares fell London, Frankfurt, Tokyo and Hong Kong but rose in Paris and Shanghai. US futures registered muted gains pushed up by tech stocks. 

Nasdaq-100 futures rose 0.2pc  as S&P 500 futures inched less than 0.1pc, near record highs.  The lack of movement in global markets signals an indecisiveness among traders who believe accelerating inflation is transitory and those who believe it will prove persistent enough to justify a tapering of Federal Reserve stimulus. 

12:39PM

Money round-up 

Here’s today’s best from The Telegraph’s Money team: 

Sign up here to the Money newsletter for the week’s most important personal finance news, analysis and expert advice – every Wednesday. 

12:21PM

British furlough fraud taskforce aims to salvage GBP1bn

Britain’s tax authority says it expects to recover about GBP1bn of fraudulently or mistakenly claimed furlough cash over the next two years. Authorities will also launch a small number of criminal investigations relating to serious furlough fraud, Janet Alexander, a tax official, told Bloomberg Radio today.

Tax authority chief Jim Harra said in September that the amount of fraudulent or mistaken furlough claims could amount to as high as GBP3.5bn.

Proportion of workforce on furlough leave12:01PM

New memestocks surge as retail traders hunt for short sellers 

A new cohort of memestocks are surging as retail traders on social media forum Reddit encourage each other to catch out short sellers.  The company behind retailer Wish, ContextLogic soared 32pc following discussion of a potential short squeeze on Reddit forum Wall Street Bets.  Insurer Clover Health rose 17pc this morning in New York, as retail traders realised that short sellers had been swelling their bets against the stock.

The original memestock GameStop is due to report first-quarter results after the day’s close which could push its shares to a new record. The stock has risen over 80pc in the past month and is now only 15pc below its January peak. 

11:45AM

Gap prepares to axe 19 UK stores with hundreds of jobs at risk

Credit:Geoff Pugh /Telegraph

Gap is set to permanently close 19 stores in the UK as it plans to retreat from Europe, putting hundreds of jobs at risk, reports Laura Onita.  The fashion chain, which less than 20 years ago had the same market share as thriving rival Primark, has decided not to extend some store leases at the end of July. 

The move comes after the US retailer revealed last year that it was considering shifting its operations to a franchise-only model in Europe.  Gap’s remaining 50 standalone sites in the UK are still under review, Drapers first reported. The locations where shops would shut have not been disclosed. 

The distribution centre in the Warwickshire market town of Rugby is also at risk.  In February, it emerged that the firm was putting increased pressure on landlords as it tried to exit lease contracts early. Its parent company closed all its Banana Republic branches in the UK three years ago. 

11:41AM

Senate bill turns China into ‘imaginary enemy’ says Beijing

China said the US is treating it like an “imaginary enemy” after the US Senate passed a £250bn bill to invest in manufacturing and technology in an effort to outcompete Beijing.

The legislation “distorts the facts, and slanders China’s development path and domestic and foreign policies,” Foreign Ministry spokesman Wang Wenbin said today. “How the US plans to develop itself and to enhance its competitiveness is a matter for the US itself,” he added. “However, it should not treat China as an imaginary enemy.”

The Senate approved the legislation by a majority of 68-32, showing the level of concern that the country is falling behind its biggest global competitor on the world stage. The legislation authorises £190bn in spending, much of it aimed at increased research and development at universities and other institutions. It also includes £52bn in emergency outlays to help domestic manufacturers of semiconductors expand production.

The Biden administration has signalled its support for the bill, but its fate in the House is uncertain.

11:23AM

Fastly blames software bug for yesterday’s outage

Fastly, the company at the centre of a major global website outage, said today the incident was caused by a bug in its software that was triggered when one of its customers changed their settings. The cloud computing service said the problem caused 85pc of its network suffered problems as a result and published an apology: 

Even though there were specific conditions that triggered this outage, we should have anticipated it. We provide mission critical services, and we treat any action that can cause service issues with the utmost sensitivity and priority.

We apologise to our customers and those who rely on them for the outage and sincerely thank the community for its support. 

My colleague Ben Woods writes about what exactly happened on the internet’s ‘day of chaos’ here

11:14AM

Zara owner’s sales surge 

Customers queue outside a Zara store on Oxford Street last summerCredit:Dan Kitwood /Getty Images Europe 

The owner of Zara has been buoyed by shopping sprees since shops reopened worldwide, with profits coming in ahead of expectations, reports Laura Onita.  Inditex, the world’s largest fashion retailer, said sales in May and June were twice as high compared to the same period last year thanks to pent-up demand.  “Week after week we are seeing store traffic recovering,” chairman Pablo Isla said. “We are seeing a progressive recovery.”

His remarks came after it reported sales of  EUR4.9bn (GBP3.4bn) for the first quarter to April, up 56pc from last year. However, that remains 16pc lower than in 2019. The group, which also owns the Bershka and Stradivarius brands, made a net profit of EUR421m during the period, which was better than expected, but still down on the previous quarter and lower than the EUR734m profit two years ago.

The majority of its stores are now open and sales so far are up 102pc ahead of 2020 and 5pc ahead of 2019. The shares were up 1.2pc in early morning trading.

11:02AM

Ryanair wins EU challenge to competitor Condor’s virus bailout

Credit:Alex Kraus /Bloomberg 

Ryanair has won a third victory in its campaign to reverse billion of euros of coronavirus bailouts to its competitors after judges faulted the EU’s approval of a EUR550m (GBP470m) German bailout to airline Condor.  The EU General Court said today the European Commission’s decision gave “an inadequate statement of reasons” for approving the measure.

However Condor will not have to repay the aid until after the case has been re-examined by the bloc’s antitrust authority.  Ryanair argues that aid for selected airlines gives them an unfair advantage and the budget airline has filed more than two dozen challenges to EU approvals for pandemic aid given to carriers including Deutsche Lufthansa AG and Air France-KLM.

10:52AM

Expert reaction: UK inflation concerns 

This morning, the Bank of England’s chief economist said the threat of inflation was very real, amid “punchy pressures on prices” across the UK economy.  Andy Haldane told LBC that the UK could overshoot its 2pc inflation target “for a bit longer than we currently plan.”

Higher inflation “would not be good news” for the cost of living, doing business in the UK, or the government, as the cost of borrowing would go up, he added. The debate about whether inflation is temporary or about to take off has been gripping economists and analysts for months.  Richard Dunbar, Head of Research at Aberdeen Standard Investments, adds some context to the arguments: 

Manufacturing had done much better last year than many had expected and that’s now accelerating further and the service sector is going from nothing to full speed ahead.

With leisure, tourism and hospitality, it’s all systems go. So, we’re seeing this massive readjustment of the UK economy from goods to services in the space of a few weeks. It’s sort of uncomfortable at the moment and the question is, will that discomfort persist, in terms of wages and lack of supply of labour?

Economists would suggest that the pick-up in prices or wages will be temporary and transitory, they see lots of spare capacity longer term in the economy and they also see central banks as having the firepower to control inflation in due course. But the counter argument is perhaps there isn’t spare capacity and this, allied with the huge stimulus we’ve seen, both in terms of low interest rates and the various forms of quantitative easing around the world, suggests a more inflationary environment. So, that’s a two-way pull at the moment and it’s a big debate.

10:34AM

Electric carmaker Lordstown Motors warns it may run out of cash before selling first vehicle

Lordstown Motors unveiled their new electric pickup truck Endurance in OctoberCredit:MEGAN JELINGER /AFP

An electric vehicle maker backed by General Motors has admitted that it does not have enough cash to stay afloat for the next twelve months, reports my colleague Io Dodds

She writes: 

Lordstown Motors, which went public via Spac last August and was worth more than £5bn (GBP3.5bn) as recently as February, warned in a filing to US regulators on Tuesday that it might not survive as a “going concern”. The Ohio based company had planned to launch its Endurance electric pick-up truck this autumn, but now says it does not have the funds to bring the vehicle to market. Shares crashed by 32pc following the news and in after-hours trading on Tuesday.

Read her full story here

10:14AM

FTSE down as pound lifts 

The FTSE 100 remains down 0.5pc this morning while the pound edged up against the dollar, shrugging off post-Brexit trade issues over Northern Ireland. 

At 10am, the pound was £1.4180 compared to £1.4146 at the previous close. 

9:58AM

UK pharma group Clinigen suffers from drop in cancer treatments 

Shares of British pharmaceutical group Clinigen Group plummeted 25pc today, eyeing their worst day on record.  The drop follows a price target cut by RBC after the company forecast annual adjusted earnings within the range of GBP114m and GBP117m, lower than market expectations. The group said this morning that business is suffering due to a worldwide reduction in cancer treatments, as hospitals continue to be distracted by coronavirus treatments.

Clinigen’s clinical trials have been delayed and demand for its advanced cancer drug Proleukin was also significantly weaker than expected in recent months.

9:39AM

Britons spend record GBP113bn online 

UK online shopping sales rose by 48pc to almost GBP113bn in 2020, as Britons spent more time online than Germans, French or Spaniards, according to Ofcom’s 2021 online nation report.  As the coronavirus shuttered many in-person stores, food and drinks retailers registered a 82pc bump in online sales compared to 2019, while the DIY boom prompted online household goods sales to also surge 76pc. Teenagers are also spending more of their digital pocket money or pre-paid debit cards online instead of offline.

In March 2021, teenagers spent 68pc of their cash in digital stores. 

While shops, gyms, and restaurants shut their doors, the UK public went on an online shopping spree, racking up a record bill of GBP110 billion. That’s an increase of 48% compared to before the lockdown.

2/5 pic.twitter.com/IAtRknC61l

— Ofcom (@Ofcom) June 9, 2021
9:21AM

Bitcoin climbs back towards £34,000

Bitcoin has reversed some of is losses from earlier this week, rising to £33,768 this morning.  However the cryptocurrency has lost roughly half its value from a mid-April record of almost £65,000, bruised by billionaire Elon Musk’s criticism of its environmental record and increased regulatory attention in China. 

However Bitcoin evangelists say these are temporary setbacks and the coin’s value will continue to rise. Earlier today El Salvador’s President Nayib Bukele said the nation has adopted Bitcoin as legal tender, a step he believes will create jobs and promote financial inclusion.

9:03AM

Ferrari appoints little-known tech leader as new boss 

Benedetto Vigna has been appointed as Ferrari’s new CEOCredit:REUTERS

Ferrari has appointed a little known tech executive to be the carmaker’s new CEO, signalling a new direction for the supercar brand as it embraces electric driving and new technologies.  Bloomberg reports: 

STMicroelectronics NV executive Benedetto Vigna is one of the most significant appointments yet from the tech industry at a prominent carmaker, signaling how the shifts in the industry are accelerating.

At STMicroelectronics, Vigna helped pioneer screen sensor technology in the iPhone 4 that’s now used in smartphones and vehicle navigation systems globally. Currently running STMicro’s analog sensor group, Vigna will in September replace Louis Camilleri, who abruptly resigned in December. At Ferrari, he’s taking over a company that’s been slow in committing to battery-operated automotive applications, a stance increasingly complicated by tightening regulations on emissions.

“The appointment is highly unexpected and, in our view, reflects the need to ‘reinvent’ Ferrari and the difficulty of securing candidates willing to take on the task,” Jefferies analyst Philippe Houchois said in a note.

8:47AM

FTSE risers and fallers 

On the FTSE 100 this morning, medical manufacturing company Smith & Nephew is leading for gains (up 4.38pc) after Credit Suisse upgraded the stock to “outperform” from “neutral”. British Airways owner IAG shrugged off news the airline was being investigated by the CMA over flight refunds during the pandemic (up 1.45pc) and hotel and restaurant company Whitbread was also on the ascent (up 1.29pc).  Trailing the blue-chips was Anglo American’s South African coal spin off Thungela Resources (down 5.58pc), as the stock continues its choppy first week on the FTSE 100.  

8:40AM

Watchdog investigates British Airways and Ryanair over flight refunds 

British Airways and Ryanair are being investigated over whether they broke UK consumer rules by failing to offer refunds to customers for flights they couldn’t take.

The Competition and Markets Authority (CMA) said it has opened enforcement cases against both airlines today, following backlash last year when customers were forced to cancel trips they could no longer legally take due to a ban on non-essential travel. It proved contentious from the start of the pandemic when cash-starved airlines steered passengers toward rebooking or accepting credits for future flights. about this story here

8:33AM

Upper Crust owner’s losses widen

Credit:HANNAH MCKAY /Reuters

Shares of Upper Crust owner SSP Group fell  3.21pc, after the company reported a GBP219.9m loss in the six months to March.

The business, which operates station and airport food stall operator, said revenues were 70pc lower compared to 2019 as the travel industry struggled to recover from the weight of the pandemic. However the group expects to have between 1,200 and 1,500 units open this summer, if the recovery in demand continues.  Simon Smith, chief executive, said:

Despite the challenging trading conditions SSP has continued to deliver strong operational and cash control.

Our teams have continued to give their utmost during this period, and I would like to thank them for their commitment and dedication.  The recovery in domestic and leisure travel has now begun in a number of our territories, and our teams are busy re-opening units in line with passenger demand.

8:08AM

FTSE opens down 

The FTSE 100 has opened 0.26 pc down at 7,076 points as investors continue to be cautious about the outlook for inflation. The FTSE 250 is also down 0.13pc. 

Global markets have essentially been in a holding position this month as traders try to determine the outlook for central banks’ policies in light of the surging economic recovery, with concerns that a spike in prices will force them to taper ultra-loose monetary programmes.  A European Central Bank meeting tomorrow will also be closely watched.  “The tight trading ranges seen so far this month reflect the cautious mood in the market ahead of the inflation numbers,” Fiona Cincotta of City Index told AFP.

“Whilst the Fed reassures that this spike in inflation is temporary, policy makers will need to be out in their droves to calm the market.”

8:05AM

China’s factory gate prices rise at fastest pace for 12 years

‘Factory gate’ prices for Chinese goods rose at the fastest rate since the financial crisis in May on the back of soaring commodity costs, reports Louis AshworthChina’s producer price index jumped to 9pc higher year-on-year last month, up from 6.8pc higher in April, according to the National Bureau of Statistics. Beijing has taken steps to curb the sharp rise in prices for raw materials that is driving the increase, expanding supply and utilising price controls to relieve pressure.

The PPI gains can be attributed in part to so-called base effects, with the gains sharper because the index was sub-zero for several months during the onset of the pandemic. Chinese consumers do not yet appear to be feeling the pressure from increasing factory costs. Consumer price climbed only 1.3pc from a year ago, falling short of economists’ estimates.

7:48AM

Yuan rises

A 9pc jump in factory prices in China will stoke fears that inflation is beginning to take off around the world. 

However fresh data this morning showed that consumer price rises in China were softer than expected, helping to mitigate concerns. While China’s central bank is slowly scaling back pandemic-driven stimulus, top leaders have vowed to avoid any sharp policy turns and keep borrowing costs low. The Chinese yuan, whose rally to a three-year high last week was propelled in part by speculation Beijing may want a stronger yuan to tame inflationary pressure, ticked up slightly to 6.3943 per dollar.

“While Chinese authorities have denied market speculation about the yuan, in the past the yuan did rise when import prices rose sharply,” said Naoto Saito, chief researcher at Daiwa Institute of Research.

7:36AM

Inflation fears

Good morning. Inflation data from China showed its producer price index jumped 9pc from a year earlier, the highest in over 12 years, on surging commodity prices.

Meanwhile the FTSE 100 is tipped to open flat.

5 things to start your day 

1) Sunak wants the City to be exempt from G7 tax raid: Chancellor is arguing Britain’s world-leading financial sector warrants a ‘carve out’ from the rules approved by the G7 finance ministers.

2) Bezos battles Branson and Musk as race for space heats up: Amazon founder’s 11-minute trip 62 miles above Earth will intensify the galactic tussle with the Tesla and Virgin billionaires.

3) How a tiny US firm caused world’s biggest websites to crash: Millions of internet users attempting to access news outlets, social media platforms and gov websites were confronted by “Error 503” messages.

4) Electric car maker warns it may run out of cash before selling first vehicle: GM-backed Lordstown Motors said it did not have enough money to reach commercial sales and might need to take on additional debt.

5) Summer staycation boom for seasides and West Country – but cities miss out: Enforced holidays at home are good for the economy as money stays in Britain, although not everyone is feeling the benefit.

What happened overnight 

Investors trod a cautious line in Asia, with focus firmly on the release of US inflation data later in the week, which could have a huge bearing on the Federal Reserve’s plans for monetary policy.

After a tepid lead from Wall Street, Asian markets fluctuated, with Tokyo, Hong Kong, Sydney, Singapore, Seoul and Taipei slipping, and Shanghai, Wellington, Manila and Jakarta edging up.

Coming up today

  • Corporate: SSP (Interim)
  • Economics: Inflation (China)