Oil prices jumped to three-year highs on Monday in the latest sign of a global energy crunch.
Brent crude rallied 2.3pc to $79.80, its highest price since October 2018.
Analysts at Goldman Sachs said Brent, which is based on the North Sea industry, could rise to $90 per barrel by the end of the year.
Gas prices have rocketed to all-time highs in recent weeks due to weak global production, low exports from Russia, poor storage levels in the UK and elsewhere in Europe, and rising demand from economies emerging from lockdowns.
High gas prices increase demand for oil-burning to generate electricity.
The world’s biggest independent oil trader, the Vitol Group, said it expects global demand for crude to climb by 500,000 barrels a day this winter.
The Organization of the Petroleum Exporting Countries (OPEC) agrees there will be a surge in demand but expects that number to be slightly lower, at around 370,000 extra barrels a day.
The lifting of restrictions on UK and EU visitors to the US in November is also expected to drive up prices, as the resurrection of trans-atlantic travel lifts demand for jet fuel.
Meanwhile supply has been capped by the damage caused by Hurricane Ida, which crashed into the Gulf of Mexico in late August and forced Shell to pause production at offshore facilities near Houston, Texas.
“The world’s demand is not being met with enough supplies and this has pushed Brent towards $80,” Exinity analyst Hussein Sayed said.
That’s all from us today – here are some of our top stories:
Thanks for following along!
Evergrande hit with wealth management probe
The Shenzhen government is investigating a unit of Chinese developer Evergrande, the city’s financial regulator told investors on Monday, in the first sign of an official inquiry into the wealth management crisis at the real estate giant.
Reuters has the details:
Evergrande, the world’s most indebted property developer headquartered in Shenzhen, owes $305bn and has run short of cash, triggering concerns its problems could ripple through China’s financial system.
As its liquidity crisis deepened, the company’s wealth arm earlier this month missed a payment on wealth management products (WMPs), leading to protests by investors who fear they will never get their money back.
In a letter to investors seen by Reuters, the Shenzhen Financial Regulatory Bureau said “relevant departments of the Shenzhen government have gathered public opinions about Evergrande Wealth and are launching a thorough investigation into related issues of the company”.
It is also urging China Evergrande and Evergrande Wealth to work to repay investors, the letter said, which was sent following investor demands for an inquiry.
Qatar Airways falls to $4.1bn loss
Qatar Airways has swung to an annual loss of $4.1bn after writing down the value of its grounded Airbus A380 super jumbo fleet.
The state-owned airline attributed $2.3bn of the loss for the year to March 31 to impairment charges on the fleet of 10 A380s, as well as some smaller A330 models.
“It is not commercially or environmentally justifiable to operate such a large aircraft in the current market,” the company said.
It added that it didn’t expect international travel to return to pre-Covid levels until 2024.
Qatar Airways, which continued to operate its route network throughout the pandemic, added that it had received $3bn in equity funding from the government. It had previously disclosed $2bn of that amount.
Octopus Energy worth more than British Gas owner
Octopus Energy has been valued at more than the owner of British Gas after the challenger supplier won a $600m investment from a fund run by Al Gore, the former US vice-president.
Rachel Millard reports:
Generation Investment Management, the clean energy fund he set up in 2004 and still chairs, is taking a 13pc stake in Octopus to help it develop and supply more renewable power.
The investment means the private company is now valued at £3.3bn – £300m more than Centrica. Its stock market value has declined by almost three quarters in the six years since Octopus was founded by Greg Jackson, who remains chief executive.
Octopus is at the forefront of a band of challengers who have taken about a quarter of the energy market from suppliers such as Centrica and EDF. Its Kraken technology has also been licensed to growing numbers of rivals.
Octopus consolidated its position over the weekend when it picked up 580,000 customers from failed supplier Avro Energy – one of several smaller challengers struggling to survive due to soaring wholesale prices linked to a global crunch in supplies of natural gas.
Mr Jackson said the difficult state of the UK energy market highlighted the need for investment in renewable energy sources.
Read more: Octopus Energy worth more than British Gas owner after $600m investment
Aldi to open 100 new stores in £1.3bn UK expansion
Aldi has unveiled plans to open 100 new stores in the UK over the next two years as the German supermarket chain pushed ahead with expansion plans despite supply chain troubles.
The £1.3bn investment plan will create 2,000 new jobs, the company said. Aldi UK and Ireland has already created 7,000 jobs over the last two years.
The discount chain, which has enjoyed booming sales during the pandemic, has also proven resilient to wider supply chain woes hitting the retail sector. It said this was due to its smaller number of both product ranges and suppliers.
Aldi has also increased its pay for lorry drivers due to an ongoing HGV driver shortage, though chief executive Giles Hurley said the company had not been hit by the current fuel supply crisis.
James Bond set to shake up UK cinema
UK cinemas are poised to receive a much-needed boost thanks to the release of the latest James Bond film this week.
Advance ticket sales for No Time To Die, which will hit the big screen on Thursday, reached levels last seen in 2019, putting the blockbuster on track to be the biggest opening since the pandemic gripped the industry.
Odeon said it has sold more than 175,000 tickets for the latest instalment in the spy series, while Cineworld said it marked its highest pre-selling film since Marvel’s superhero movie Avengers: Endgame in 2019.
The film, which will be Daniel Craig’s last appearance as the eponymous spy, was postponed three times from its original release date in April 2020 after the outbreak of Covid-19 forced cinemas to close.
Craig has said he hopes the film’s release will give the cinema industry “some sort of boost”.
Novacyt swings to £15m loss amid Covid test dispute
Diagnostics company Novacyt made a £15m pre-tax loss in the first half of the year amid a bitter dispute with the Government over Covid testing contracts, reports my colleague Julia Bradshaw.
The Anglo-French company took a £35.8m hit as it wrote down the value of stocks of Covid tests that it had built up in expectation that the Department of Health and Social Care (DHSC) would purchase more of its products. The figure also includes the cost of tests and equipment that Novacyt supplied to the department – worth £49m – that were never paid for.
It announced earlier that year that it had taken legal advice and believes it has “strong grounds to assert its contractual rights”.
The dispute stems back to April last year, when Novacyt signed a £150m six-month contract with DHSC to supply 288,000 Covid tests a week for NHS staff. There was an option to extend the contract to supply more of the kits, which had been developed by Novacyt’s scientists in the UK, but Ministers decided to end the agreement instead.
Separately, Novacyt sealed a second contract with the Government in September 2020. As part of that agreement it delivered £49m worth of tests, for which it says it has not yet been paid.
Excluding the write-down, however, things are looking better. Novacyt’s sales actually rose by a fifth to £54m in the first half of its financial year, as the company benefited from a surge in demand for private Covid testing as international travel ramps up.
Warehouse shortages spark 30pc pay spike
UK warehouses are having to hike wages by up to 30pc due to a shortage of workers that has compounded supply chain issues in the run-up to Christmas.
Reuters has more details:
The warehouse trade group and a recruitment agency for the sector said they were struggling to replace the European staff who used to arrive for the festive period and work in warehouses and distribution centres.
Clare Bottle, chief executive of the UK Warehousing Association, said her members had reported having to increase pay by between 20pc and 30pc to secure workers for entry level jobs.
With around 200,000 people working in warehousing, she said: “The problem is big. I would say we’re tens of thousands short.”
Jordan Francis, commercial director of the Prodrive recruitment agency which supplies around 35 warehouse companies in southern England, said he already had around 100 vacancies he was struggling to fill.
He is offering a 25pc increase in pay for a standard warehouse operative role. While he can secure more workers at that rate, he said the higher pay meant workers were less willing to do overtime.
“We’ve never seen a market like this,” he said, adding that his former European workers had opted to go to France or Germany, where they do not need visas.
The shortages in Britain’s logistics network come on top of a spike in European natural gas prices and a post-Brexit and Covid shortage of truck drivers.
FTSE closes higher
The FTSE 100 has closed higher, with major banking and energy companies leading the gains.
The blue-chip index rose 0.2pc, with BP gaining 3.1pc after saying that nearly a third of its British petrol stations had run out of the two main grades of fuel.
HSBC, Barclays, Virgin Money UK and Standard Chartered all closed higher, tracking higher benchmark bond yields amid rising inflation concerns.
But the biggest winner was Rolls-Royce, which jumped more than 11pc after it secured a US Air Force contract to supply B-52 bombers and agreed to sell its Spanish unit ITP Aero for €1.7bn.
The domestically focused FTSE 250 rose 0.1pc, with travel and leisure stocks among top gainers.
Europe’s biggest chemical firm cuts output
Europe’s largest chemicals producer has slashed its output due to a surge in gas prices across the continent.
BASF today said it had reduced ammonia output at its plants in Antwerp, Belgium and Ludwigshafen, Germany.
The company said: “The economics for operating an ammonia plant in the region has become extremely challenging.” It added that it would review production plans once gas prices fell.
The crisis has sparked a spike in prices for nitrogen fertiliser, which is manufactured using ammonia. This could push up prices for farmers or force them to cut fertiliser use in spring, which in turn could fuel global food inflation.
The ammonia supply disruption could also have wider implications as the process creates carbon dioxide as a byproduct. Earlier this month the UK food industry, which uses CO2 for meat production and packaging, was thrown into chaos after two fertiliser plants shut down.
Bailey: Could Covid spark shift in UK wages?
Another interesting point in Andrew Bailey’s speech, where he muses on the long-term structural impacts of the pandemic on UK wages:
As I mentioned earlier, we are seeing currently a much greater dispersion of wage settlements. What if this is the beginning of a more far-reaching structural change in the economy which alters relative pay across occupations? To be clear, I am making no prediction here, but rather asking the question in the context of monetary policy.
The first thing to say is that such changes do happen. Since the 1980s, we have seen a structural increase in the pay gap between higher and lower earners. We have also seen more structural changes in retirement ages over a longer time.
So, structural changes can happen. It is not the job of monetary policy to prevent such changes, but rather to ensure that they do not have negative consequences for monetary stability, such as dislodging inflation expectations
Tech stocks weigh on Wall Street
Tech giants are the biggest drag on Wall Street this afternoon, with the tech-heavy Nasdaq down 0.6pc.
The decline is largely the result of a rise in Treasury bond yields – the indication of US government borrowing costs – in the wake of the Fed’s hawkish announcement last week on easing stimulus measures.
The benchmark 10-year Treasury note rose above 1.5pc for the first time since June, which added to concerns about lofty valuations in the tech sector.
Fawad Razaqzada, an analyst at ThinkMarkets, told Bloomberg: “Yields are rising sharply, reflecting investors’ expectations about monetary tightening amid surging inflationary pressures.
“If yields climb higher, this could weigh especially on the overstretched growth stocks in the technology sector, which have low dividend yields.”
Amazon and Netflix also took a hit from negative analyst comments about future growth, while Facebook shares fell after the social media firm said it was pausing work on Instagram Kids.
Bailey: Labour market is a “a big puzzle”
In the speech, Bailey goes on to describe the labour market as “a big puzzle” and a source of uncertainty.
He points to data that shows 1.7m remain on furlough while there are over 1m job vacancies and the numbers of inactive and unemployed was higher than pre-Covid levels.
There are a number of possible outcomes to this puzzle, which have different implications for the labour market. The first is that the furloughed workers will largely be re-absorbed into their old jobs, and so even with a further reduction in unemployment and inactivity, we are left with an excess of job vacancies.
If these excess vacancies are associated with shortages of workers in particular sectors, this may push up on wages. This could also happen if furloughed workers do not return to their old jobs, but are not suitable for those jobs and sectors where there are a high number of vacancies. In other words, there is a mismatch in the labour market. Such an outcome is likely to raise the rate of unemployment…
The second outcome is different. Vacancies may be temporarily higher, and above their steady state level in the short-run, if firms are anticipating that it will be harder to find workers in the future when unemployment falls. In that scenario, demand picks up, the impact of matching frictions in the labour market dissipate over time, and both vacancies and unemployment fall…
Another possible explanation is that the level of advertised vacancies is elevated due to employers overestimating the growth of demand to come just as the speed of the recovery falls off. In this case, some of the vacancies turn out not to be jobs as employers change their mind, or at least hiring is put back.
The implications of these labour market outcomes are quite different for growth, inflation, and thus monetary policy, which illustrates the uncertainty we face.
Andrew Bailey: UK recovery has slowed
The Bank of England has published the speech its Governor, Andrew Bailey, is expected to give at the Society of Professional Economists Annual Dinner tonight.
Bailey is expected to outline how he feels the economy’s recovery is progressing.
He’s expected to say:
The rate of recovery has slowed over recent months, and that slowing is continuing. Relative to the fourth quarter of 2019, on the latest data to July, the level of GDP was 3.5pc lower… It is inevitable in a bounce-back that the growth rate will slow as the recovery nears its end-point. It is not though inevitable – or desirable – that the previous level is not regained.
Recovery in some consumer-facing services appears to have been delayed. We had seen a recovery in activities such as eating in restaurants, but activity is levelling off… Consistent with the impact of supply bottlenecks and disruption, construction output fell in July, and manufacturing output stalled. Surveys and the reports of the Bank’s Agents, suggest the impact of these supply-chain issues is broadening out.
Pulling this together, the recovery has slowed and the economy has been buffeted by additional shocks. The switch of demand from goods to services, as Covid has faded in terms of its economic impact, has not taken place to date on the scale expected. Meanwhile, supply bottlenecks and labour shortages have weighed on output, and are continuing.
Indeed the number of high profile supply bottlenecks appears to be increasing. I must say that when I heard that we were suffering a shortage of wind to generate power, I was tempted to ask, “and when are the locusts due to arrive”.
Electric car maker Polestar valued at $20bn in Spac deal
An upmarket electric car company spun off from Volvo and backed by actor Leonardo DiCaprio has been valued at $20bn (£14.6bn) as it becomes the latest challenger carmaker to go public, reports James Titcomb.
Polestar, owned by Volvo’s Chinese parent Geely, will merge with Gores Guggenheim, a listed investment vehicle in a so-called Spac deal.
The deal will see Polestar raise slightly more than $1bn as it seeks to challenge the likes of Tesla in targeting the high end of the growing electric vehicle market.
Spacs, or special purpose acquisition companies, involve merging a publicly traded “blank cheque” firm with a private company, allowing it to float without a traditional public offering.
Read more about this story here.
Drivers turn to electric cars to beat petrol shortages
Motorists have turned to electric vehicles to try and beat the petrol shortage that is gripping the country, reports Will Kirkman.
The number of Google searches for electric cars rose by 1,600pc on Friday, compared to normal levels, according to analysis by website Car Guide.
Petrol stations across the country have run low on fuel, due to a lack of HGV drivers and panic buying among consumers. Motorists have looked to electric vehicles to avoid the tailbacks at petrol station forecourts.
There are other reasons to go green and switch to an electric car. But with concerns over range and convenience, motorists are often put off by the higher upfront cost.
Can an electric vehicle ever be cheaper than its petrol equivalent, and how long does it take the lower running costs to offset the difference? Telegraph Money takes you through the numbers here.
Expert reaction: Oil rally
Craig Erlam, senior market analyst at OANDA, comments:
Oil prices are continuing to surge, with Brent crude now closing in on $80 and WTI perhaps not too far behind it. The global energy crisis could see demand for crude rise if the northern hemisphere experiences a cold winter, with many countries not equipped to cope.
If momentum is sustained, pressure will grow on OPEC+ to speed up the pace that it increases output, after a historic production cut early in the pandemic. Plans to increase production by 400,000 barrels per day, each month, will see output return to normal by the end of next year but recent events may require the group to pick up the pace.
The last thing the global economy needs going into an uncertain winter period is a fuel crisis to top everything off. Producers may not rush into a decision though, with some potentially comfortable with prices at these levels and others wanting to see if further restrictions accompany Covid surges that weigh on demand.
Nasdaq falls more than 1pc
The Nasdaq index fell as much as 1pc on Monday before paring losses, as investors swapped technology heavyweights for stocks linked to economic growth amid increasing confidence in a recovery.
Big tech stocks Alphabet, Microsoft, Amazon, Facebook and Apple slipped between 1.2pc and 2.9pc.
The Nasdaq is currently down 0.5pc.
Chipmakers also fell 1.3pc as widening power shortages in China threatened to curb production.
Rate-sensitive banking stocks gained 2.2pc, while a jump in energy, and industrial shares pushed the blue-chip Dow up 0.7pc.
The S&P 500 traded flat, edging up only 0.01pc.
TikTok hits 1bn users
TikTok now has 1bn monthly active users after coronavirus lockdowns helped drive a huge surge in popularity for the video-sharing app, reports James Warrington.
The social media app said it passed the 1bn user milestone this summer, marking a 45pc increase since June 2020.
The US, Europe, Brazil and Southeast Asia are its biggest markets, the company added.
TikTok, which is owned by Chinese tech giant ByteDance, has shrugged off regulatory scrutiny over its use of data and links to Beijing to expand rapidly in recent years.
London-listed Hikma buys US injectables business
London-listed pharmaceutical company Hikma has paid $375m (£273m) for Californian injectables supplier Custopharm, buying the business from US healthcare investor Water Street Healthcare Partners.
The offer could increase by $50m (£36.5m) if certain commercial milestones are reached, the company added.
Hikma added that the acquisition complements its own injectable product portfolio by adding 13 approved products and enhances its R&D capabilities.
An extra $80m (£58m) in revenues is expected to be added each year.
Hikma rose 1.2pc in trading on Monday.
JD Sports expands into beauty industry
JD Sports is plotting a duel with The Hut Group after it bought a stake in an online beauty and hair brand, reports Laura Onita.
The FTSE 100 sportswear firm has made its first move into the beauty sector by acquiring a chunk of Hairburst, which sells hair vitamins, shampoos and styling products.
JD Sports – worth £11bn – plans to use its financial firepower to help the beauty start-up to buy a number of rivals and build a stable of brands as the industry heats up.
The move comes after The Hut Group pulled the trigger earlier this month on a separate listing for its beauty arm following a string of bolt-on acquisitions in recent years that are meant to help THG dominate the beauty arena.
The platform now owns websites such as Lookfantastic and Cult Beauty. It reported sales of £461m for the six months to the end of June, up from £296m in the same period a year ago.
Hairburst was founded in 2014 by James Hill, Henry Gwilliam and Matthew Cragg, who used £4,000 of savings to set up the firm. It now has 45 staff and its products are stocked in Boots, Sephora and Superdrug.
JD Sports’ investment comes as the retailer seeks to branch into other rapidly growing categories such as beauty.
Watchdog clears Facebook’s Kustomer takeover
Facebook has been given the green light for its takeover of US customer service software company Kustomer after securing approval from the competition watchdog, reports James Warrington.
The Competition and Markets Authority (CMA) examined factors such as whether the merger would expand Facebook’s data advantage in online display advertising.
But it concluded that the deal, worth a reported $1bn, did “not give rise to a realistic prospect of a substantial lessening of competition in any market in the UK”.
The deal will help bolster Facebook’s efforts to expand its messaging division by allowing businesses to interact with customers via chat apps.
The European Commission and US regulators are still looking into the merger over concerns it could allow Facebook to block rival customer service software providers’ access to its services such as Instagram or WhatsApp
Halfords: Jerry can sales surge 1,600pc
Halfords has said sales of jerry cans soared 1,656pc over the weekend as motorists rushed out to panic buy fuel, my colleague James Warrington reports
The retailer said ‘jerry can’ became the fourth most popular search term on its website amid an escalating crisis at forecourts up and down the country.
Sales of e-bikes also more than doubled as fears of fuel shortages prompted drivers to look for alternative modes of transport.
Separate data from Auto Trader showed surging interest for electric vehicles, with searches for used EVs jumping 60pc over the weekend.
More on Rolls-Royce’s US Air Force deal
Rolls-Royce has defeated American rivals to win a contract to supply engines for the US Air Force’s B-52 bombers in a deal worth up to $2.6bn (£1.9bn), reports James Warrington.
The engineering giant fended off competition from the incumbent Pratt & Whitney as well as General Electric to win the high-profile contract after a tender process that spanned several years.
The win sent shares up more than 9pc to their highest level since June 2020, making it the biggest riser on the FTSE 100, but remain below their pre-pandemic high.
The F130 engines, to be made at Rolls’ Indianapolis factory, were chosen to replace the bombers’ engines in an initial six-year deal worth $500m. This could rise to $2.6bn if all options are exercised.
Read more on this story here.
Downing Street clashes with Sadiq Khan over London cycle lanes
Tensions between Downing Street and Sadiq Khan’s Transport for London recently escalated over plans to grant councils money even after they ripped out cycle lanes, reports Oliver Gill.
Andrew Gilligan, the Prime Minister’s transport adviser, intervened in and vetoed TfL plans to distribute £100m for policies that encourage “active travel”, according to correspondence seen by The Telegraph.
Correspondence between Mr Gilligan, Boris Johnson’s cycling aide during his time as London mayor, and Will Norman, Mr Khan’s walking and cycling commissioner, reveals rising tensions between the two men.
Read the full story here.
US business equipment orders rise for sixth straight month
Orders placed with US manufacturers for business equipment strengthened in August, extending to six months a solid run of robust capital investment that’s helping fuel economic growth.
Bloomberg has the details:
The value of core capital goods orders, which exclude aircraft and military hardware and is seen as a barometer of business equipment investment, increased 0.5pc after an upwardly revised 0.3pc a month earlier, Commerce Department figures showed Monday.
Bookings for all durable goods – or items meant to last at least three years – rose 1.8pc from the prior month, reflecting a pickup in orders for commercial aircraft.
Bookings for commercial aircraft increased nearly 78pc. Boeing earlier reported 53 orders in August, up from 31 a month earlier. The government’s data aren’t always directly comparable on a month-to-month basis.
The median estimate in a Bloomberg survey of economists called for a 0.4pc increase in core capital goods orders and a 0.7pc gain in total durables.
Oil demand to peak earlier than forecast
Global oil demand will peak earlier than previously projected, before 2030, TotalEnergies forecast on Monday.
The French oil major said its business was now working on the assumption that global consumption would begin to decline before the end of the decade. It had previously forecast the peak would come around 2030.
Oil demand would drop to 40m or 64m barrels per day by 2050, depending on how strongly policies and habits change, TotalEnergies said in it annual energy outlook. In 2019, the world consumed 99.7m barrels every day.
TotalEnergies said that natural gas would continue to play a role as a transition fuel, accompanied by carbon capture and methane emissions control techniques.
Facebook pauses ‘Instagram for Kids’
Facebook said today it is pausing its controversial ‘Instagram for Kids’ project and will re-evaluate the idea “at a later date”.
The project’s suspension follows a Wall Street Journal report that suggested Facebook’s own research had discovered its Instagram app is harmful to teenagers, especially girls.
There were few public details about the ‘Instagram for Kids’ project but Facebook confirmed it would be a ‘parent-controlled’ version of its app for under 13s.
“While we believe building ‘Instagram Kids’ is the right thing to do, Instagram, and its parent company Facebook, will re-evaluate the project at a later date. In the interim Instagram will continue to focus on teen safety and expanding parental supervision features for teens,” Facebook said.
Central London shoppers rise as office workers return
The number of shoppers in central London rose 6.5pc last week compared to a week earlier, adding to evidence that office staff are returning to the workplace after the pandemic.
In areas of central London where there is a high number of offices compared to stores, footfall rose 8.8pc in the week to Saturday, retail intelligence company Springboard said today.
“High street footfall was undoubtedly supported by a shift back to the office, demonstrated by a greater uplift from the week before in central London and large city centres outside of the capital, than in smaller high streets and in outer London,” said Springboard’s insights director Diane Wehrle.
Billionaire Asda owners acquire 52 KFC restaurants
Billionaire Asda-owners the Issa brothers have acquired 52 KFC restaurants as they continue to expand their sprawling business empire, reports Julia Bradshaw.
The new franchise will bring the total number of KFC outlets in the UK operated by the Blackburn businessmen’s EG Group to 208, reflecting nearly a quarter of the country’s total.
It makes EG, which is also backed by private equity firm TDR Capital, the largest franchisee in western Europe for the KFC brand.
“We have seen a marked upward trend in the performance of our existing KFC network and this has given us confidence to consider and invest in more assets,” said Mohsin Issa.
It comes just weeks after rumours that EG Group, which is one of the world’s largest independent forecourt and convenience store chains, was up for sale with a price tag of $15bn (£10.8bn).
Last year EG bought 146 KFC restaurants in the UK and Ireland, followed by fast-food chain Leon in April for £100m. It is also aggressively pursuing cafe chain Caffe Nero by buying up its debt.
Chip supply won’t improve until 2022, says Goldman Sachs
Aldi shrugs off food shortages
Aldi has shrugged off concerns about food shortages in the run up to Christmas as it revealed plans for 100 new stores, writes my colleague Laura Onita.
Giles Hurley, the UK boss of the German discount chain said that although Aldi was not immune to the issues the sector has had to grapple with, such as the scarcity of HGV drivers and shipping containers, it was “business as usual” for the chain.
“There’s no doubt current circumstances are testing the industry,” he added.
He said that the majority of its lorry drivers are employed directly, while some of its rivals use agencies to deliver food, and so “our trucks are running as they should do”.
The supermarket chain had good product availability as it stocks fewer ranges than the larger supermarkets, which Mr Hurley said was easier to control.
“We are going to have our best Christmas range ever,” he said.
Sales grew by 10pc to £13.5bn for the year to the end of December, while pre-tax profits dropped by 2.5pc to £265m due to Covid costs and striving to keep prices lower than its rivals.
FTSE 100 loses earlier gains
The FTSE 100 has pared its gains from earlier and is now trading flat, around 7,050 points.
Strong gains made by Rolls Royce (up 10.6pc) are being outweighed by stocks including Halma (down 3.7pc), Croda (down 3.3pc), Ashstead (down 3.1pc) and Experian (down 3pc).
Customers of collapsed Green energy supplier moved to Shell
The number of Shell’s retail customers will grow by over a quarter in the UK, after the energy giant absorbs 255,000 customers from a rival supplier that defaulted during the recent surge in natural gas prices.
Shell Energy will take on approximately 255,000 domestic customers, and a small number of non-domestic customers from renewable energy supplier Green, British regulator OFGEM said .
Shell Energy, which currently has around 900,000 customers across Britain, said Green’s customers will move to Shell Energy with their credit balances protected and supply uninterrupted.
Rolls-Royce signs to sell Spanish aircraft engine business
Rolls-Royce has signed a €1.7bn (£1.4bn) agreement to sell 100pc of one of its largest subsidiaries, Spanish aircraft engine business ITP Aero.
The business will be sold to Bain Capital Private Equity, which is leading a consortium of Spanish and Basque companies.
The sale follows months of Bain searching for Spanish partners to try to secure government backing to buy the aircraft engine and turbine maker. Previous reports said the auction had narrowed to just Bain and London-based buyout rival Cinven.
Warren East, chief executive of Rolls-Royce, said: “Today’s announcement is a significant milestone for our disposal programme as we work to strengthen our balance sheet, in support of our medium-term ambition to return to an investment grade credit profile.”
Rolls-Royce’s shares are up nearly 10pc today.
Mixed morning for US futures
US stock futures are mixed this morning in New York, as traders braced for speeches by Federal Reserve policy makers.
Futures tied to the S&P 500 Index advanced less than 0.1pc, Dow Futures rose 0.3pc while Nasdaq 100 futures fell 0.2pc.
Gains are muted by the developing energy crisis that is threatening to crimp global growth further at a time markets are preparing for a tapering of Fed stimulus.
This week threatens volatility in the markets, as traders scrutinise central bankers’ speeches. On Tuesday, Chairman Jerome Powell is due to speak in front of the US Senate and then at the European Central Bank Forum on Wednesday.
Credit Suisse Greensill funds to pay back another $400m
Credit Suisse Group said it plans to return about $400m to investors in supply-chain finance funds that invested in Greensill Capital products, the fifth such disbursement since the bank was forced to freeze the money pools this year.
Bloomberg has the details:
The latest payment is expected to be made this week and would bring the total paid to investors in the funds to about $6.3bn, according to a statement on the bank’s website on Monday. The funds’ total cash position is about $7bn, or about 70pc of assets under management when they were suspended, it said.
The collapse of Greensill marked an early reversal in Chief Executive Officer Thomas Gottstein’s tenure, before the bank was hit by the even bigger meltdown of Archegos Capital. Credit Suisse is still conducting an investigation of what happened with the Greensill-linked funds and is due to announce its findings soon.
The bank marketed the popular supply-chain finance funds as among the safest investments it offered, because the loans they held were backed by invoices usually paid in a matter of weeks.
But as the funds grew into a $10bn strategy, they strayed from that pitch and much of the money was lent through Greensill against expected future invoices, for sales that were merely predicted.
The business quickly collapsed after Greensill’s loss of trade credit insurance on many of its notes to less credit-worthy borrowers.
Airport towns braced for jobless spike as furlough scheme ends
Airport hubs Crawley and Luton are facing a sharp jump in unemployment this week as Britain’s furlough capitals bear the brunt of an end to the Chancellor’s jobs support scheme, reports Tom Rees.
Experts warned the towns are the most vulnerable to a wave of job losses after new data revealed they have the most workers stuck on furlough as the travel industry struggles to recover.
The recent loosening of Britain’s travel rules came too late to save the sector’s crucial summer period. The furlough scheme wraps up after 18 months on Thursday.
Crawley, which is close to Gatwick airport, is most threatened by a surge in unemployment with one in 10 of its workforce still on the furlough scheme as of the end of July, according to Centre for Cities figures.
Read more about this story here.
Fuel crisis eating into driver earnings, says Uber
Taxi company Uber has blamed Britain’s fuel crisis for eating into driver’s earnings.
“More and more of the working day is taken up looking for fuel,” said James Farrar, general secretary of Britain’s App Drivers and Couriers’ Union.
Drivers aren’t compensated for this and they’re not able to raise prices themselves, so the gas shortage is eating into their earnings, he said.
The App Drivers and Couriers Union is planning a strike tomorrow that could involve “thousands” of drivers in London, Birmingham, Nottingham, Glasgow, Manchester, Bristol, Sheffield and Leeds.
Among its demand, the union is calling for “Uber to pay all working time including waiting time.”
Nickel and tin tumble as China’s power crisis deepens
Nickel and tin prices have tumbled in response to China’s power crisis, which is causing black outs, shutting off traffic lights and forcing businesses to cut back on production.
The crisis has been caused by tight coal supplies as well as provincial governments trying to meet environmental targets for this year, according to Bloomberg, with many factories forced to cut or halting their operations.
Economists at Nomura Holdings and China International Capital (CIC) have downgraded growth forecasts as the power crunch in the top metals consuming country causes supply losses at metal smelters, fabricators and steel mills in the past few months.
“Tin supply has been impacted by power control measures several times already this year,” the International Tin Association said. “What has been surprising in this round of restrictions is the effect on tin demand.”
In a note, CIC warned that power restrictions could tighten further in the fourth quarter.
Nickel fell as much as 2.9pc to $18,820 ton on the London Metal Exchange.
Tin dropped 4.2pc to $35,000 a ton, tumbling from a record high struck last week.
Amazon dives into UK insurance market
Amazon will soon offer insurance to small and medium-size British business customers, according to London-based insurance broker Superscript.
Members of Amazon’s Business Prime programme will be able to buy cover from Superscript, in the tech giant’s first foray into UK business insurance.
A Superscript spokesperson said the cover – which will include contents insurance, cyber insurance and personal indemnity insurance – would be underwritten by “major UK insurers”.
Here’s the latest stories from The Telegraph’s Money team:
Pound edges higher
Sterling inched 0.1pc higher this morning, as investors juggled expectations that the Bank of England could hike interest rates early next year with concerns about fuel shortages and unemployment.
Sterling jumped last week following the Bank of England’s hawkish tone on interest rates and its pandemic bond-buying scheme.
However analysts are flagging fuel shortages and the looming end of the furlough scheme to suggest those gains may have been overdone.
“The initial hawkish headlines last week were diluted into the weekend as the market reflected on the headwinds already facing households from the national insurance tax hikes and rising energy bills,” said Jane Foley, Head of FX Strategy at Rabobank.
The pound, which is currently trading at $1.3699, also gained some support on Monday as fears of widespread market contagion from indebted developer China Evergrande Group receded.
Tesla shareholders urged to reject re-election of Murdoch and Musk
Tesla shareholders should vote to reject the re-election of board members James Murdoch and Elon Musk’s brother, Kimbal Musk, according to proxy advisory firm Institutional Shareholder Services.
“Votes AGAINST directors James Murdoch and Kimbal Musk are warranted due to concerns regarding excessive compensation to named executive officers and to non-executive directors,” Institutional Shareholder Services wrote in a Friday report to clients.
Murdoch and Musk, both 48, sit on Tesla’s board of nine directors.
ISS said that directors have received “outlier levels of pay without a compelling rationale” and that there is no explanation as to why the magnitude of option awards is “so much larger than director compensation at peer companies.”
Tesla will hold its annual shareholder meeting virtually this year on October 7 from its new factory in Austin, Texas.
Behind the Rolls-Royce rise
Shares of Rolls Royce have jumped 7pc this morning and have almost doubled since this time last year.
The rise can be traced back to a number of factors.
While Morgan Stanley raised the price target on the stock, Rolls Royce also announced on Monday that it had been asked to provide engines for the United States Air Force B-52 Stratofortress bombers – a contract which could be worth up to $2.6bn.
Rolls Royce could also benefit from the possibility that the government could plough more cash into mini nuclear reactors in an attempt to prevent further energy crises as Britain transitions to net-zero carbon emissions.
Sources close to the government decision noted that Rolls-Royce – which already makes modular reactors – is ahead of the game in terms of tech,” and its status as a British company will also make it attractive to ministers.
However at 141.7p, the company’s stock remains significantly below pre-pandemic levels of 232.4p.
Petrofac shares surge after guilty plea
Shares of oilfield services company Petrofac have continued to surge this morning, following its Friday announcement that it would plead guilty to seven charges of bribery.
Petrofac said the charges relate to former employees “offering or making payments to agents in relation to projects awarded between 2012 and 2015 in Iraq, Kingdom of Saudi Arabia and the UAE.”
The company’s chairman René Medori said: “Petrofac has been living under the shadow of the past, but today it is a profoundly different business, in which stakeholders can be assured of our commitment to the highest standards of business ethics, wherever we operate.”
Workspace bets on office revival with new building
Office landlord Workspace said this morning it has acquired a 57,000 square ft building in East London, as the company bets on the revival of office life.
Workspace said the building, called The Old Dairy in London’s Shoreditch, is currently 80pc let.
Graham Clemett, chief executive, commented:
The acquisition of The Old Dairy further strengthens our presence and broadens our offering in Shoreditch, one of the most popular areas for our customers.
We see tremendous opportunity to generate long-term value by repositioning the property over time to our distinctive flexible model.
I am confident that, together with The Frames, The Old Dairy will be a hub for Shoreditch’s dynamic SME scene for years to come.
FTSE tech listings hit all-time high since dotcom bubble
London’s blue-chip market indices now host more technology companies than at any point since the aftermath of the dotcom bubble after a resurgence of listings, reports James Titcomb.
The FTSE 100 and FTSE 250 combined feature 26 technology and consumer internet firms, or 7pc of the total, according to figures from the London Stock Exchange.
This is the highest level since 2000, when the likes of Lastminute.com, Marconi and Logica were among Britain’s most valuable companies.
Technology firms in the FTSE 350 numbered 28 in 2000, but fell to 18 the year later and nine in 2002 as the internet bubble popped.
This year, six new companies have entered the group, including newly listed Darktrace, Trustpilot and Moonpig. It comes ahead of proposed listing reforms that could allow companies such as Deliveroo, The Hut Group and Wise to enter the premium segment of the stock exchange, a condition of entering the FTSE.
Read the full story here.
Markets react to German election
German shares have jumped 1pc to ten-day highs this morning, after the federal election outcome reduced the chances of a left-wing coalition gaining power.
Germany’s blue-chip DAX was leading gains among regional indexes, while the pan-European STOXX 600 index added 0.6pc in early trading.
Germany’s centre-left Social Democrats are expected to start trying to form a government after they narrowly won the biggest share of the vote after Sunday’s election.
The party – which has not won a general election since 2005 – said they would seek to form a coalition with the Greens and the liberal Free Democrats in what is dubbed as the “traffic light” coalition.
While coalition talks could drag on for weeks or months, investors expressed relief that the hard-left Linke party fell below the 5pc threshold needed to enter parliament.
Before the election, there had been some speculation that the anti-capitalist Left Party may win enough seats to feature in a coalition although that tail risk has not materialised,”said Steven Bell, chief economist at BMO Global Asset Management.
“The feasible coalitions would involve compromise on all sides and imply no major policy shift. The uncertainty is a mild negative for financial markets in the near term but we do not expect a significant reaction from financial markets.”
More on the German election result here.
Cryptocurrencies bounce back
The cryptocurrency market has bounced back from last week’s rout which was a reaction to China’s latest crackdown.
Bitcoin and Ether had recouped most of their losses by Monday, with Bitcoin rallying to around $44,000 overnight.
“Over the weekend sessions, Bitcoin has shown some resilience and has now recovered the majority of those losses,” said Jeffrey Halley, senior market analyst at Oanda, in a note Monday. “It may well be that China’s previously announced crackdowns had already been built into prices.”
Crypto markets were roiled on Friday when China issued its toughest restrictions yet on the industry, banning all cryptocurrency transactions
The announcement hit individual cryptocurrencies but also pulled down crypto related stocks around the world.
Software company MicroStrategy, which has significant Bitcoin holdings, declined as much as 6.7pc Friday in the US and British cryptocurrency miner, Argo Blockchain, has dropped more than 17pc in the past five days.
Energy stocks boost FTSE 100
Rolls Royce and energy stocks pushed the FTSE 100 blue-chip index higher this morning,
Rolls-Royce gained 4.1pc after Morgan Stanley raised the price target on the stock.
BP rose 2.4pc after it said nearly a third of its British petrol stations had run out of the two main grades of fuel, as panic buying forced the government to suspend competition laws and allow firms to work together to ease shortages.
Royal Dutch Shell also gained 2.4pc.
On the FTSE 250, cinema chain Cineworld led gains (up 7.4pc) while cybersecurity company Darktrace trailed (down 5.2pc).
Boohoo publishes factory list in transparency drive
Boohoo has published a list detailing the names and addresses of 1,100 factories it uses around the world, as part of the online fashion giant’s pledge to be more transparent.
The list – which also includes a breakdown of how many workers each factory has and their gender split – was published following scrutiny into its supply chain, after it was disclosed some factory workers in Leicester were being paid below the minimum wage.
It was one of the recommendations made by an independent review produced by Alison Levitt QC, who was brought in when the scandal first broke.
The list features factory in countries including Albania, Bangladesh, China and Morocco. There are also more than 90 UK factories listed, with the majority in Leicester.
Patisserie Valerie auditors fined £2.3m for missing red flags
The auditors of collapsed cake chain Patisserie Valerie missed red flags and showed a serious lack of competence, according to regulators.
After its investigation, the Financial Reporting Council (FRC) fined accounting giant Grant Thornton and auditor David Newstead £2.34m and £87,750 respectively.
Grant Thornton must now report annually to the regulator for three years to show what efforts it is making to improve its audits. Mr Newstead, who carried out the work for Grant Thornton, was also handed a three-year ban from carrying out audits or signing off audit reports.
Claudia Mortimore, deputy executive counsel to the FRC, said: “The audit of Patisserie Holdings’s revenue and cash in particular involved missed red flags, a failure to obtain sufficient audit evidence and a failure to stand back and question information provided by management.”
The company collapsed and was revealed to have been overstating its accounts for years.
A spokesperson for Grant Thornton said the company has invested significantly in audit practice since the scandal: “We have cooperated fully with the FRC and acknowledge the investigation’s findings relating to our audits in 2015-2017.
“We regret the quality of our work fell short of what was expected of us in this instance.”
Octopus becomes one of UK’s biggest energy suppliers
Octopus Energy is taking on the 580,000 customers of collapsed supplier Avro, as the wave of failures in the sector boosts the position of stronger businesses, reports Tim Wallace.
Industry regulator Ofgem chose the new supplier after running a competition between other energy businesses.
It takes the total number of Octopus customers to 3.1m, up from 2.5m before the award, making it a major player in the industry just six years after its establishment. It is the UK’s fifth biggest supplier, by number of customers.
Read Tim’s full story here.
Aldi UK sales jump
Aldi said its UK and Ireland sales jumped 10pc over the pandemic to £12.3bn, as the supermarket announced a £1.3bn investment drive which would include 2,000 new jobs and 100 new shops.
A new checkout-free store is also planned in Greenwich, London, it said.
No details on trading in the first nine months of 2021 were provided. Although other UK supermarkets give more regular updates on current trading, Aldi is not obliged to and is instead publishing last year’s results as it files its accounts with Companies House.
Giles Hurley, chief executive for Aldi UK and Ireland, said: “As well as delivering record sales, we continued to invest for growth, deploying over £600m in stores and distribution centres across the UK.
“This helped to create thousands of much-needed jobs and support for British farmers and manufacturers.
“Whilst the cost of responding to the pandemic dampened profits, our decision to return business rate relief was the right thing to do.”
Aldi – which is now Britain’s fifth largest supermarket – repaid the business rates saved from the Government’s scrapping of the tax during the pandemic, following similar moves by Tesco, Sainsbury’s, Morrisons, Asda and Lidl.
The company did not mention any supply chain issues or suggestions of price inflation.
FTSE 100 rises
The FTSE 100 has jumped 0.9pc on opening this morning, rising to 7,118.73.
The FTSE 250 has also added 0.4pc, jumping to 23,782.69.
Shapps’ plan to let truckers work longer hours falls flat
Only a fraction of British truck drivers have taken up the Government’s offer for them to work longer hours, new figures reveal, as the haulage crisis escalates, reports Louis Ashworth.
Transport Secretary Grant Shapps temporarily relaxed rules in July despite warnings it could pose a safety risk.
In the first month of the relaxation, just 517 of the UK’s roughly 300,000 active HGV drivers notified the Department for Transport that they intended to use the scheme, according to figures obtained by The Telegraph.
Of that number, 369 provided follow-up documentation saying how the relaxation had been used, with 97 saying they had not used the policy in the end, a freedom of information request showed.
Take-up was even lower in between Aug 8 and Sept 13, the latest date for which information was provided. During this period, only 191 operators stated their intention to use extended hours – about one in every 1,700 drivers.
Read more about this story here.
Some UK fuel stations 90pc dry, retailers association says
Petrol and diesel stations are running dry across Britain, with some big groups in English cities reporting 50pc to 90pc of pumps were dry, the Petrol Retailers Association said on Monday.
A dire shortage of truck drivers in Britain has triggered panic buying for fuel, with queues of cars snaking back
“Some of our members, large groups with a portfolio of sites, report 50pc are dry as of yesterday, some even report as many as 90pc are dry as of yesterday,” Brian Madderson, chairman of the Petrol Retailers Association told Sky.
The Petrol Retailers Association (PRA) represents independent fuel retailers who now account for 65pc of all UK forecourts.
“So you can see it is quite acute,” Madderson said. “Monday morning is going to start pretty dry.”
BP said on Sunday that nearly a third of its British petrol stations had run out of the two main grades of fuel as panic buying forced the government to suspend competition laws and allow firms to work together to ease shortages.
Oil prices surge close to three year highs
Oil prices have surged close to three year highs, inflaming inflation fears.
Brent has added 1.2pc today, as global output disruptions forced energy companies to pull large amounts of crude out of inventories, while a shortage of natural gas in Europe pushed costs up across the continent.
It is currently trading at $79, its highest price since October 2018.
“We forecast that this rally will continue, with our year-end Brent forecast of $90/bbl vs. $80/bbl previously,” wrote analysts at Goldman Sachs in a note.
“The current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above consensus forecast.”
Such an increase could stoke speculation that global inflation will prove longer-lasting than first hoped and hasten the end of super-cheap money, favouring reflation trades in bank and energy stocks while bruising bond prices.
Home workers boost United Utilities
United Utilities said it expects underlying operating profit for the first half of the year to be higher than the previous six months, as the water company benefits from high household consumption as many of its customers continue working form home.
Bosses said they are also expecting a modest net increase in revenue of around 4pc.
The company, which provides water and wastewater services to 7m customers in the North West, added it had suffered a hit from changes to tax rules.
It said: “The legislation to increase the headline rate of corporation tax to 25pc from 1 April 2023 was enacted in May 2021. As a result, we expect to incur a deferred tax charge through the income statement of around £380m in the first half of 2021/22.”
FTSE 100 to push higher
The FTSE 100 is set to leap 0.85pc to 7,085 points this morning, after a mixed overnight session in Asian stocks that saw Japan’s Nikkei give up early gains while China’s Hang Seng pushed higher.
Meanwhile the German election has ended in gridlock, after a better-than-expected performance by outgoing chancellor Angela Merkel’s CDU. The centre-left SPD party narrowly winning the most votes , meaning they are likely to try and lead a three-party coalition alongside the Greens and one other party.
“t would be unexpected if we did get a new government before Christmas, given the last one took until February 2018 to come into any kind of focus, which means that Angela Merkel may have to stay in place for a while longer yet until her successor is appointed,” said CMC Markets chief market analyst Michael Hewson.
“What this means for German politics is that nothing much is likely to change in the short term, with investor attention likely to remain on events in China, and Asia more broadly, as well as the various supply crunches taking place across the world.”
5 things to start your day
1) Shapps’ plan to let truckers work longer hours fall flat: HGV industry says policy has failed after just one in 1,700 drivers used the scheme last month
2) Octopus takes on 580,000 stranded Avro customers: The energy company now has 3.1m customers, making it a serious challenger to traditional energy companies
3) FTSE tech listings hit all-time high since dotcom bubble: The number of tech firms on the FTSE 350 has hit a 20-year high after crashing shortly after the millennium.
4) Airport hubs braced for jobless spike: Crawley and Luton among towns facing a sharp jump in unemployment this week as Britain’s furlough scheme comes to an end.
5) One in four workers want to quit their jobs: Survey finds nearly three in 10 workers are experiencing poor well-being at work.
What happened overnight
Asian shares crept higher on Monday as risk sentiment turned for the better, though a surge in oil prices to three-year highs could inflame inflation fears and aggravate the recent hawkish turn by some major central banks.
Oil stormed past its July peaks as global output disruptions forced energy companies to pull large amounts of crude out of inventories, while a shortage of natural gas in Europe pushed costs up across the continent.
Brent added another 98 cents on Monday to $79.07 a barrel, while US crude rose 97 cents to $74.95.
MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.5pc, though that followed three consecutive weeks of losses.
Japan’s Nikkei gained 0.4pc on hopes for further fiscal stimulus once a new prime minister is chosen. Nasdaq futures rose 0.4pc, and S&P 500 futures 0.5pc. Chinese blue chips gained 1.1oc as the country’s central bank pumped more money into the financial system and investors dared to hope Beijing would limit the fallout from the troubled China Evergrande Group.