The pound is becalmed this morning, at the start of a crunch week of Brexit trade deal talks.
Sterling is down 0.15% against the euro at €1.112, and pretty much flat against the US dollar at $1.318.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says traders are ‘in limbo’ as they look for any progress between the negotiation teams ahead of Thursday’s meeting of EU leaders.
It’s looking increasingly likely that it will be just another deadline that will just loom and pass, and instead talks will go down to the wire.’’
Ireland’s foreign minister, Simon Coveney, has warned that there’s still deadlock over fishing rights – one of the key areas to resolve.
“We really are in the last week to 10 days of this, if there is not a major breakthrough over the next week to 10 days then I think we really are in trouble and the focus will shift to preparing for a no-trade deal and all the disruption that that bring.”
Here’s the full story:
The Covid-19 pandemic has driven a boom in online shopping…and a surge in complaints about parcel deliveries.
Citizens Advice reports that complaints about home deliveries have trebled since coronavirus hit, often due to items arriving late or damaged, or not arriving at all.
My colleague Miles Brignall has the details:
Ahead of the busiest period of the year for home deliveries, the charity is reminding consumers that it is the seller’s responsibility to deliver the items to the buyer’s door, and consumers are entitled to a refund if its service fails….
Its report chimes with the Guardian’s own postbag which has similarly recorded a big jump in complaints about parcels being delivered to the wrong address, and the stores wrongly refusing to refund the customer.
One woman who got in touch with the charity for help said that she has had “nothing but trouble with couriers”.
Japan’s forecast-beating growth figures and the RCEP trade deal have helped European markets to post steady gains this morning, says AJ Bell investment director Russ Mould:
“Solid and steady gains are arguably just what investors need after a very volatile period. The catalyst for the latest move for equities is more positive noises on vaccines, the formation of a new trading bloc involving the likes of China, Japan, South Korea, Australia and New Zealand, and better-than-expected Japanese GDP figures.
“These factors helped Asian markets sprint ahead before passing the baton on to European markets with the FTSE 100 up 0.7% early on.
Mobile phone giant Vodafone’s revenues have taken a hit from the slump in international travel in the pandemic.
Group revenues dropped by 2.3% for the first half of the financial year, including a 0.8% drop in services revenue due to weak roaming income.
Vodafone says its “good underlying momentum” was offset by lower revenue from roaming and visitor revenue, due to Covid-19. Handset sales were also lower.
However, its fixed broadband service kept adding customers, with the lockdown increasing demand for high-speed home internet.
CEO Nick Read says the pandemic is ‘obscuring’ Vodafone’s progress (services revenue was UP, if you exclude roaming).
“Today’s results underline increased confidence in our full year outlook. We are reporting a resilient first half performance and we continue to see good commercial momentum across the Group. The results demonstrate the success of our strategic priorities to date, namely increasing customer loyalty, growing our fixed broadband base, driving digitisation to simplify the company and capture significant cost savings, and deliver 5G efficiently through network sharing.
COVID-19 and the reduction in roaming revenues, through the significant reduction in international travel, is currently obscuring our underlying commercial progress, with Q2 service revenue growing by 1.5% excluding roaming.
Despite the drop in revenues, the company posted a profit of €1.bn for the six months to September 30th, compared with a loss of €1.89bn a year ago.
Shares in Vodafone have jumped 3.8% this morning to 124p, the highest since 24th July.
European stock markets have opened higher, lifting the Stoxx 600 index by around 0.6% – back towards last week’s eight-month highs.
Fiona Cincotta of Gain Capital reports that Covid vaccine optimism and encouraging data from China and Japan are lifting shares.
Retail sales in China rose at the fastest rate of the year in October, a strong sign that improving consumer demand is contributing to the economy’s solid economic recovery from the covid pandemic. Sales rose an impressive 4.3% MoM, well ahead of the 3.3% increase recorded in September. Retail sales returned to growth in August after 7 consecutive months of decline.
Adding to the upbeat mood data revealed that Japan’s economy rebounded sharply in Q3 with the economy growing by 5% QoQ, ahead of the 4.4% forecast, boosting the world’s third largest economy out of recession.
The FTSE 250 index of mid-sized companies, has also opened higher – with some pandemic-battered firms among the risers.
Cineworld, which was forced to shut its UK and US screens last month, are up 8.5%, while cruise operator Carnival has gained 5.5% and easyJet is up 4%.
That shows that the ‘rotation trade’, out of companies who profited from the pandemic and into those who suffered badly, is still in play:
FTSE 100 opens higher
In the City, shares in travel and hospitality companies, miners and banks are rising – as traders continue to price in a vaccine-led recovery in 2021.
Airline group IAG is the top riser on the FTSE 100, up 5%, while hotel chain Whitbread has gained 3.5% (helped by an upgrade to ‘buy’ from ‘sell’ from Goldman Sachs).
Hopes of a pick-up in travel have also lifted engineering firm Rolls-Royce (which manufacturers and services jet engines) by 3.5%.
Mining firms Glencore (3%) is also being lifted by economic recovery hopes.
Standard Chartered, the Asia-Pacific focused bank, are up 3.6% following the RCEP trade deal and Japan’s faster-than-expected recovery.
The broader FTSE 100 is up 35 points or 0.5%, at 6350, close to last week’s five-month highs.
RCEP trade deal cheers markets
Markets have also been lifted by the news that 15 Asia-Pacific countries have signed a historic free trade deal.
The Regional Comprehensive Economic Partnership (RCEP) is one of the largest free trade deals in history, covering 2.2 billion people and 30% of the world’s economic output.
China, Australia, Japan, New Zealand and South Korea all signed the deal, alongside members of the 10-nation Association of Southeast Asian Nations (Asean), including Indonesia, Malaysia, the Philippines and Thailand.
It bundles together a patchwork of previous smaller agreements into a single pact, boosting economic integration and giving manufacturers a common rules of origin framework to work with. All good for growth, analysts say.
My colleague Jasper Jolly explains:
The deal sets the terms of trade in goods and services, cross-border investment and new rules for increasingly important areas such as electronic commerce and intellectual property. The effect on the trade of finished goods between Asian nations will be particularly marked, analysts have said.
In a joint statement, the leaders of the countries said the trade deal would form a crucial part of their plans to recover from the pandemic, which has forced countries around the world to lock down their economies.
Stock markets across the Asia-Pacific region rose sharply today, lifted by vaccine optimism and the news that Japan’s economy grew faster than expected last quarter.
Japan’s Nikkei jumped 2% to fresh 29-year peak, extending its recent gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.1% to hit its highest since its launch in 1987, Reuters reports.
However, traders in Australia were left on the sidelines. The Sydney stock market had to suspend trading for the day after its stock market suffered technical problems.
Jeffrey Halley, senior market analyst at OANDA, says:
With vaccine hopes on the rise, and central banks signalling globally that monetary policy will remain ultra-easy even if a vaccine does arrive, equity markets will remain either a straight to go, or a buy on the dip.
BBC: Japan leads economic ‘Zoom boom’ out of recession
The BBC says Japan’s return to growth is is part of a wider global economic recovery across Asia’s economics that has been dubbed a “Zoom boom”:
The global economy as a whole is expected to contract by 4.4% this year, while the US will shrink by 4.3%, according to the International Monetary Fund.
However, Asian economies are leading the way when it comes to showing signs of recovery. China remains on track to grow by about 2% this year, the most of any major economy.
“We call it the Zoom boom,” said Rory Green, an economist at research firm TS Lombard.
Also on Monday, China released new economic data that showed its factory output grew 6.9% in October, compared to the same month last year.
The Financial Times, though, points out that the 5% growth recorded in July-September certainly hasn’t repaired all the damage caused by Covid-19:
The partial rebound suggests a full recovery from the pandemic will prove protracted and difficult, especially if a recent rise in coronavirus cases develops into a larger wave. Japan recorded 1,722 new cases of Covid-19 on Saturday, the most recent day for which data was available, compared with 868 a fortnight earlier.
“The economy has come back steadily but the recovery is a work in progress,” said Yasutoshi Nishimura, Japan’s economy minister. “People are still in a defensive mindset.”
Japan returns to growth after Covid-19 slump
Japan has cheered global investors today by returning to growth, after the pandemic dragged its economy into an unprecedented recession.
Japanese GDP grew by 5% in the third quarter of the year — faster than expected, and the best quarterly growth on record after three quarters of contraction.
That follows a record downturn of around 8.2% in April-June, and means that Japan’s economy is still almost 6% smaller than it was a year ago.
Growth was driven by household spending, and a pick-up in net trade, as Japan benefited from rising demand at home and abroad.
However, business expenditure continued to fall (-3.4%), suggesting that firms are still understandably cautious given the health crisis.
Tokyo’s government warned that the economic situation was still tough, saying:
“The Japanese economy for July-September 2020 is still in a severe situation due to the COVID-19, but it is showing movements of picking up later in the quarter.”
Introduction: Vaccine hopes lift markets
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After its best week since April, the UK stock market is beginning the new week on the front foot.
European equities have opened higher at the start of trading, as investors continue to grasp onto hopes of successful Covid-19 vaccine rollouts.
Chris Weston, head of research at Pepperstone, says investors are increasingly confident:
There is certainly elevated chatter that potential shutdowns in the US will weigh more in the near-term and maybe so, but investor sentiment is the most elevated since 2017 – two standard deviations of the mean of past 10 years [according to AAII].
Over the weekend, one of the scientists behind the BioNTech/Pfizer coronavirus vaccine predicted it would result in a “dramatic reduction in cases
Uğur Şahin, the chief executive of BioNTech, expressed confidence that the vaccine could halve transmission of the virus, telling the BBC’s Andrew Marr show that:
“I’m very confident that transmission between people will be reduced by such a highly effective vaccine – maybe not 90% but maybe 50% – but we should not forget that even that could result in a dramatic reduction of the pandemic spread.”
Professor Şahin cautioned that the full impact of the vaccine would not be felt until next summer, but that life could be “back to normal” by next winter.
Another vaccine trial is beginning in the UK today, which will see around 6,000 British volunteers injected with a vaccine developed by a subsidiary of Johnson & Johnson.
It is the third Covid vaccine to enter large-scale clinical trials in the UK, after Oxford Covid vaccine, and one being developed by the US biotech company Novavax.
Jim Reid of Deutsche Bank says:
Markets will be on high alert for any further vaccine news, especially efficacy data from Moderna and AstraZeneca even if we don’t know the exact timings.
We could also hear that the Pfizer/BioNTech vaccine will get FDA emergency use approval later in the week.
The rally comes despite ever more alarming Covid-19 data out of the US, where a record total of 184,000 new cases were reported on Friday.
- 1pm BST: ECB president Christine Lagarde speaks at the World Economic Forum’s Pioneers of Change Summit
- From 1pm BST: Bloomberg’s New Economy Forum