Closing summary
Stock markets in Europe are a sea of red while the FTSE 100 index in London is holding on to a meagre gain of 0.2%, after two days of chunky rises for global stock markets.
On Wall Street, stocks haven opened slightly higher.
Here are our main stories:
Thank you for reading and commenting. We’ll be back tomorrow. Bye! - JK
JPMorgan Chase is incredibly bullish about next year.
The US investment bank is predicting that 2022 will mark the end of the coronavirus pandemic and see a full global economic recovery, Reuters reports.
The bank’s outlook report for next year said new vaccines and therapeutics would result in a “strong cyclical recovery, a return of global mobility, and a release of pent-up demand from consumers.”
"Our view is that 2022 will be the year of a full global recovery, an end of the pandemic, and a return to normal economic and market conditions we had prior to the COVID-19 outbreak"
— Abhinav Ramnarayan (@abhinavvr) December 8, 2021
Big call from JPM. @marcjonesrtrs https://t.co/ijeFWmA5n1
On the stock markets, the UK’s FTSE 100 index is up 0.2% at 7,354, a 14-point gain. Germany’s Dax and Spain’s Ibex are down 0.6%, France’s CAC has lost 0.3% and Italy’s FTSE MiB has shed 0.8%.
Dyson loses EU court battle over vacuum cleaner labelling
Sir James Dyson has lost a legal battle to secure tens of millions of pounds in damages from an EU court following a row about vacuum cleaner labelling, the Daily Telegraph reports.
In a long-running dispute, the billionaire’s company successfully overturned a Brussels regulation that allowed “old fashioned” vacuums to appear as energy efficient as newer, bagless models.
Dyson and other makers of bagless cleaners argued they had lost out on sales due to this lack of distinction and sought damages of €176m (£150m) from the European Commission. However, the General Court of the EU has rejected their claim and ordered them to pay the Commission’s legal costs. It said:
The court concludes that the Commission demonstrated conduct that could be expected from an administrative authority exercising ordinary care and diligence and, consequently, that the Commission did not manifestly and gravely disregard the limits on its discretion.
Clinigen taken private in £1.2bn deal
The cancer drug specialist Clinigen has agreed to a £1.2bn takeover deal from a London-based investment firm, becoming the latest big British company to be taken private.
Triton Investment Management has offered to pay 883p a share for the company, whose main product is the acquired cancer medicine Proleukin.
Clinigen, which is based in Burton-on-Trent, Staffordshire, said its board had recommended the offer to shareholders, which include the New York hedge fund Elliott Management, with a 7.6% stake.
The news sent Clinigen’s share price soaring by up to 15% in early trading, though they later settled at at 901p, up 10.2%.
Elliott declined to comment. It has been reportedly demanding a break-up of Clinigen, but never made its demands public – unlike the pressure it has applied to the drugmaker GSK and the energy firm SSE.
Stagecoach and the transport hub food specialist SSP have each reported a return of business to about two-thirds of pre-pandemic levels after a resurgence in commuting but warned of uncertainty ahead because of the rise of the Omicron variant, writes my colleague Mark Sweney.
The bus and rail operator and the owner of the Caffè Ritazza and Upper Crust chains have both benefited from the easing of coronavirus restrictions and a return to the office but that now looks at risk amid reports that the government could impose its coronavirus plan B to tackle rising cases.
SSP, which operates 2,800 outlets worldwide in airports and railway stations, said that in the first nine weeks of its new financial year it had 72% of its units open, providing two-thirds of 2019 level revenues.
However, the company, which reported a £411m pre-tax loss for the year to the end of September, warned of the impact of Omicron over the next few months.
Updated
Our visuals team has tracked one toy’s journey through the supply chain crisis: from Chinese factory to UK child’s stocking.
Not even elves and goblin warriors are immune from the global supply chain crisis. The table-top science fiction and fantasy-themed miniatures company Games Workshop said it was grappling with higher freight costs as well as adverse currency effects.
Games Workshop’s shares tumbled as much as 8.5% in London after the company, which makes the Warhammer series of games, said half-year profit before tax would be below last year’s figure. It expects to make a profit before tax of “not less than £86m,” compared with £91.6m a year earlier. Sales, projected to be £190m, will be higher than last year’s £186.8m, though.
This comes after a bumper year in 2020, when sales and profits surged during the pandemic.
The company is paying a further £2,500 cash bonus to each employee under the group profit share scheme in December (after being criticised for low pay).
The shares are down 18% this year, after an 83% surge last year.
Updated
The chief executive of a US mortgage company who fired 900 employees on a Zoom call has apologised for failing to show “respect and appreciation” for the staff he sacked, writes our global technology editor Dan Milmo.
The founder and chief executive of better.com, Vishal Garg, expressed contrition in a message (pdf) posted on his company’s website.
Garg said he was sorry for the way “I handled the layoffs last week” after staff uproar over the video call last Wednesday.
The 43-year-old added:
I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better. I own the decision to do the layoffs but in communicating it I blundered the execution.
Updated
Unite calls off planned Tesco strikes
The prospect of shoppers being faced with empty shelves at Tesco this Christmas has receded as members of the Unite union have been made an improved offer in the dispute over pay, and have suspended their planned strike.
Unite had announced earlier this week that its members employed at Tesco distribution centres in Antrim, Belfast, Didcot and Doncaster would be staging a series of strikes both before and after Christmas. But then fresh talks were held with the company, and workers have been offered a minimum of a 5.5% increase backdated to July 2021 (the anniversary date for annual pay increases) and an additional 0.5% from February 2022.
Unite general secretary Sharon Graham said:
Tesco’s improved offer shows what can be achieved by our members standing together. Given that the company has forecast profits for 2021 topping £2.5bn an improved offer is the least Tesco workers could expect.
However, members of the shopworkers union USDAW, employed at Tesco distribution centres have also voted for strike action. They are covered by separate negotiations, which it is understood will be held later this week.
In addition, Unite said it had secured an agreement with Tesco for a formal dialogue on revising the current system of legacy and new generation contracts. If agreed this would create a single pay scale for all the work being undertaken in the distribution centres.
Unite was also able to secure an increase in overtime at the Doncaster distribution centre and an increase in holiday entitlement (one bank holiday and one standard holiday) for the workers at Belfast.
Unite will now ballot its members on the deal and is recommending its acceptance.
If the deal is rejected by the members then fresh strike action will be announced but that is unlikely to be before January.
The negotiations held did not include the Unite members employed at the Livingstone distribution centre in Scotland who have also announced strike action. A further update about this dispute is expected in the coming days.
Updated
The FTSE 100 has edged 0.1% higher to 7,349, a 10-point gain, while European stock indices are in the red. Germany’s Dax is down 73 points at 15,740, a 0.46% fall, while France’s CAC is down 8 points, or 0.1%, to 7,055 and Italy’s FTSE MiB has dropped 181 points, or 0.67%, to 26,955.
Pfizer/BioNTech say three-shot course of vaccine works against Omicron
The FTSE 100 index briefly turned negative but is now flat, after earlier gains, as investors veered between positive vaccine news and concerns over tougher Covid-19 measures in the UK [see post below].
Germany’s BioNTech and the US drugmaker Pfizer said that a three-shot course of their Covid-19 vaccine neutralised the Omicron variant in an initial lab study.
Ugur Sahin, chief executive and co-Founder of BioNTech, said:
Our preliminary, first dataset indicate that a third dose could still offer a sufficient level of protection from disease of any severity caused by the Omicron variant. Broad vaccination and booster campaigns around the world could help us to better protect people everywhere and to get through the winter season.
We continue to work on an adapted vaccine which, we believe, will help to induce a high level of protection against Omicron-induced Covid-19 disease as well as a prolonged protection compared to the current vaccine.
Updated
Ministers are expected to sign off new rules to impose home working and vaccine certification across England in the face of rising Covid cases, the Guardian understands.
Downing Street said no final decisions had been made but ministers and officials convened on Wednesday to move to plan B and to begin imposing some restrictions as early as Wednesday night, report Jessica Elgot and Rowena Mason on our politics team.
Ministers are increasingly worried about the threat of the Omicron variant, which appears to be more transmissible than Delta and scientists believe could become dominant within the next few weeks.
They are concerned that it risks overwhelming the NHS in another Covid wave even if no more serious than Delta, because of the speed with which it appears to be spreading.
The move comes as the government is under intense pressure over the Christmas party and a leaving do held in No 10 during last year’s lockdown.
Here is our full story on Lord Tyrie’s damning comments on the PCR test market.
The Guardian’s Money editor Hilary Osborne says the “race for space” that became characteristic of the property market during the Covid pandemic could be starting to slow.
As people shunned city centre work and life during lockdowns, and the government introduced a stamp duty holiday, demand for country living – or at least a spare room – grew.
But in the latest snapshot of the housing market from Halifax yesterday, the mortgage lender said there were signs this trend could be fading. Growth in the price of flats was now outpacing growth in the price of detached houses, which were in high demand during lockdown.
In November, flats were changing hands for 10.8% more than at the same time last year, while detached houses were typically fetching 6.6% more.
The percentage difference does not tell the whole story: according to Halifax, the average price of a flat that it agreed a mortgage on in November was £118,771, up from £107,159 last year, while the average detached house costs £517,650, compared with £485,684 in 2020. So a much smaller cash-price rise comes through as a bigger percentage at the lower end of the market.
But there are reasons why demand may have tipped in favour of flats. For months the housing market boomed on the back of sales of larger properties, with commentators reporting that lifestyle changes prompted by the pandemic were fuelling demand for homes with gardens, studies and spare rooms as more people worked from home.
Meanwhile, Taylor Wimpey, another big UK housebuilder, has announced that its chief executive Pete Redfern will step down after more than 14 years at the helm.
Irene Dorner, the chairman, said:
Pete has made an invaluable contribution to the business during his almost 15 years as CEO, including having successfully led the company through a global financial crisis and the recent pandemic.
Pete has led a management team which has overseen the transformation of Taylor Wimpey into one of the largest housebuilders in the UK, with an industry leading landbank, a strong financial position and a clear and deliverable strategy for profitable growth. In addition, Pete will leave the business with a strong and differentiated culture he can be proud of creating.
Redfern said:
Last year, having significantly increased our landbuying to take advantage of land market opportunities, we have grown our landbank and set a clear path to deliver strong growth and returns over the coming years.
The FTSE 100 in London is still 19 points ahead at 7,359, a gain of 0.27%. Berkeley Group, the upmarket housebuilder that focuses on London and the south east, is the top riser, up more than 4% at £48.36, while fellow builder Persimmon is 1.8% ahead.
Berkeley has upped its full-year profit outlook after sales recovered to pre-pandemic levels, and expects 5% annual profit growth for the next three years. This follows recent house price figures from Nationwide and Halifax which showed the UK property market is still red hot.
Berkeley boosted profits by 26% to £290.7m in the six months to 31 October and built 1,828 homes, with another 395 through joint ventures. The group’s growing slate of developments in progress is expected to see volumes grow to 50% above pre-pandemic levels by 2024/25, and to yield a £625m profit that year.
Steve Clayton, manager of the Hargreaves Lansdown Select UK Growth Shares fund, which holds Berkeley shares, said:
Berkeley are sounding confident in these results and are allocating additional capital to their land buying efforts accordingly. The group’s ability to redevelop complex sites in and around the capital, taking land that others fear to touch and transforming it into premium properties is their key attraction for investors. Berkeley lock significant future margin into their development plans and so far, the cost pressures seen across the industry have not impacted upon the group. No surprise to see the shares reacting positively.
Here is our full story on Tui.
Adam Vettese, analyst at the investment platform eToro, says:
Tui is in a really tough spot now. It has announced a big rebound in its revenue versus the lows of the pandemic in Q4 2020. It has also cut its debt levels which investors should cheer.
But the firm has a real puzzle in front of it with the Omicron variant. In its results, the firm is warning of weakness in sales momentum thanks to the new strain of the virus. January and the early months of the year tend to be really important for travel firms in terms of bookings for the year ahead, so it couldn’t really have come at a much worse time. To add insult to injury, booking numbers are still way behind pre-pandemic levels.
Even if Omicron doesn’t prove to be a serious risk, the uncertainty caused by a lack of information could harm consumer confidence severely. Extra travel restrictions have already been imposed in the UK and some EU nations. Plus, countries such Austria, The Netherlands and Germany were already taking steps to introduce limited forms of lockdown even before Omicron became an issue.
All this together acts as a huge discouragement for consumers, unsure if their holiday bookings will be unceremoniously wiped out. This will certainly put a dampener on trading for the firm regardless of the actual outcomes with Omicron. TUI could find itself soon having another mountain to climb and investors won’t be supportive as it makes the attempt.
Despite its optimism for next summer, Tui is reviewing whether to cut the remainder of its winter programme in light of rising coronavirus cases and the spread of the Omicron variant, Mark Sweney reports.
Its chief executive Fritz Joussen said:
There will be flexibility in deciding whether to offer winter programme capacity at the lower end of the range depending on the so-called fourth corona wave and possible policy decisions with regard to the Omicron variant. Capacity plans are regularly reviewed and adjusted.
However, Easter is already running at about 90% of pre-pandemic levels “predominantly booked by the UK”.
For next summer, the company has so far received 2.2m bookings, an increase of 535,000 since its last update in early October, “reaffirming the intention to travel and continued appetite for a Tui summer holiday”.
Lord Tyrie calls PCR market 'rip-off jungle'
The former chairman of the UK competition regulator has called the market for PCR tests for travellers a “rip-off jungle,” reports my colleague Mark Sweney.
Lord Tyrie criticised the government for once again allowing the companies offering PCR tests to manipulate the system by making them available at unrealistic prices.
Speaking on BBC Radio 4’s Today programme, he said:
For this policy to get into a mess once might be seen as a misfortune but for it to resurface again after all the warnings over the summer would have to be described as carelessness. It was a scandal waiting to happen and it’s now happened and it needs very urgent action.
Last week, a slew of the cheapest deals on PCR tests were removed from the government website amid concerns travellers are being misled by companies advertising the coronavirus testing service for less than a £1.
Private companies offering day 2 tests for travellers are listed on a government website for consumers to search. However, most of the deals were found to not be suitable for most travellers as they were often in just one location, on limited dates and only available to those who could attend in person.
Tyrie, former head of the CMA and chairman of of the Treasury Select Committee, said:
It appears that some of the worst practices: misleading online advertisements, overpricing, unacceptably poor service among them, are still widespread. To allow this to continue over the peak Christmas period would be scandalous. Other countries seem to have done better, we’ve got to try harder.
Updated
Introduction: Tui expects travel to return to normal next summer
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The world’s biggest tour operator Tui said it expects travel to bounce back to pre-crisis levels next summer, as it posted a full-year loss of €2.4bn. However it said it was close to breaking even in the fourth quarter, and that it was almost fully booked for the winter quarter.
Tui chief executive Fritz Joussen said:
It is still too early to make a real forecast for the 2022 summer season. But we are optimistic that tourism will be able to recover to 2019 levels next summer. We want to, we can and we will find our way back to economic strength.
The programme of the first financial quarter of 2022 is already almost fully sold. This means that we are currently achieving 69% of the pre-crisis level. We expect summer 2022 to reach a largely normalised booking level.
He said that the pandemic has caused holidaymakers to book “much later and at shorter notice” but that next summer is looking “very encouraging in all Tui markets”.
Global stock markets rallied yesterday as concerns about the severity of the Omicron Covid variant and its impact on economies faded. There was also news that GSK’s antibody treatment works against the full combination of Omicron mutations; the US passed legislation to pave the way for a debt ceiling increase; and the US Federal Reserve’s hawkish tilt has been digested and priced in by now.
The Nasdaq jumped 3%, the biggest one-day gain since March, the S&P 500 rose 2% and the Dow Jones rose 1.4%. In Europe, the German French and Italian indices were all up more than 2% while the FTSE 100 index in London closed 1.49% higher. The UK index recouped all of its post-Thanksgiving Omicron losses and closed at its highest level since 15 November.
The optimistic mood has spread to Asia, where Japan’s Nikkei gained 1.4%, the Shanghai Composite Index is up 1.18% while Hong Kong’s Hang Seng is flat.
Trading in shares of embattled Chinese developer Kaisa Group Holdings has been suspended on the Hong Kong stock exchange, prompting fresh nerves about the financial stability of the country’s massive property sector. Evergrande, the biggest property developer, is teetering on the brink of collapse.
The suspension on Wednesday comes after Kaisa was reportedly unlikely to meet a dollar bond repayment of $400m (£301m) by the deadline of Tuesday night in the US, Reuters said, citing a source with direct knowledge of the matter.
The Chinese government sparked a crisis within the property industry when it launched a drive last year to curb excessive debt among real estate firms as well as rampant consumer speculation.
Is it too much optimism? asks Ipek Ozkardeskaya, senior analyst at the bank Swissquote.
The news is not all rosy, but the perception is very optimistic, and that supports the back-to-back strong gains. In theory, such strong gains are sign of instability and should be taken with caution, however the good news is that the volatility is easing, and the VIX index dropped 20% yesterday, meaning that the latest fears could slowly begin fading.
Yet, the US inflation data due Friday remains an important threat to the market mood, and could encourage some consolidation and perhaps some profit taking into the critical data.
Japan released figures that showed its economy shrank faster than initially reported between July and September, at an annualised rate of 3.6% rather than the previously estimated 3% contraction.
European stock markets have opened slightly lower after the strong gains seen in the last two days, with Germany’s Dax down 0.2%, France’s CAC down 0.1%, Italy down 0.2% and Spain’s Ibex 0.4% lower. Only the FTSE 100 index in London is 0.18% ahead at 7,352, a gain of 12 points.
Michael Hewson, chief market analyst at CMC Markets UK, says the “unbridled optimism” seen in the last two days after last week’s panic in the markets will fade as Europe is still battling increases in Delta infections, which is likely to hamper the recovery across Germany, Austria and the Netherlands where restrictions and lockdowns have been reimposed.
These concerns over Delta were acknowledged earlier this week by the IMF who warned that they might have to cut their GDP forecasts for the eurozone when they publish new estimates in January.
The Agenda
- 8.15am GMT: ECB President Christine Lagarde speaks
- 12pm GMT: US MBA Mortgage applications for week to 3 December
- 3pm GMT: Bank of Canada interest rate decision
Updated
