Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Arcadia is on the brink of becoming the biggest corporate casualty of Britain’s Covid-19 crisis. Sir Philip Green’s retail group is expected to filed for administration as soon as today, having failed to agree a rescue deal to keep the company afloat.
The move would put 13,000 staff at risk at Arcadia’s 500 stores, at its Topshop, Burton and Dorothy Perkins chains, and probably end of Green’s career as a retail magnate.
Covid-19 has been a severe blow for Arcadia. Having failed to seize the opportunity of online shipping, it was already struggling to match faster-growing and more nimble rivals like Asos and Boohoo.com.
The pandemic, which has forced its stores to lock down twice this year, has deepened its plight.
As one insider put it to the BBC:
This is obviously a sad day, we tried to save it a year ago when £200m was put into the business and the pension fund, but it’s impossible to operate now.
“You don’t know when you’ll be open, you don’t know what stock to buy.”
Arcadia’s current and former staff also face uncertainty now – as there’s a black hole up to £350m in its pension fund. Add in the bills owed to suppliers, and Arcadia’s collapse could cause serious damage to the wider UK retail sector.
Markets round off record month
Arcadia’s plight is the climax to a particularly dramatic November. There’s been plenty of bad news this month, with Covid-19 deaths approaching 1.5 million, and cases surging at a record rate in America.
In Europe, the second set of lockdowns are threatening to push the eurozone and the UK towards double-dip recessions.
But November has also brought uplifting news – encouraging vaccine trial results, and the prospect that president-elect Biden will attempt to tackle the pandemic while also pushing through a new stimulus package.
And for those reasons, this has been a staggeringly successful month for share prices.
MSCI’s All Country index of stocks has surged by over 13% this month, hitting fresh all-time highs, and on track for its best month since it was created in 1990.
ACEMAXX ANALYTICS
(@acemaxx)(global equities) MSCI all-country Index is on track for the biggest monthly gain since 1990 inception, chart @BloombergTV https://t.co/hUImQCXNSm pic.twitter.com/t3q0FnVXDL
The UK’s FTSE 100 has also had a stellar month, having underperformed for most of the year. With one day to go, it’s gained over 14% during November, close to the record month – January 1989, when it jumped 14.4%.
Chris Weston of Pepperstone says November has been “a breathtaking month for equities, and a poor month for the US dollar and gold”.
Why? Because investors are anticipating a return to normality in 2021 as vaccines are rolled out, and – crucially – as central banks continue to provide unprecedented support (through record low interest rates, quantitative easing, and cheap credit).
European markets are expected to dip back this morning, though.
IGSquawk
(@IGSquawk)European Opening Calls:#FTSE 6330 -0.60%#DAX 13251 -0.64%#CAC 5567 -0.56%#AEX 608 -0.62%#MIB 22230 -0.55%#IBEX 8144 -0.57%#OMX 1921 -0.84%#STOXX 3502 -0.73%#IGOpeningCall
The agenda
- 9.30am GMT: UK mortgage approvals figures for October
- 1pm GMT: German inflation figures for November
- 2.30pm GMT: Bank of England policymaker Silvana Tenreyro speaks at a Resolution Foundation event
- 3pm GMT: US pending home sales figures for October