Market rally cut short as England, Scotland plunged into fresh lockdowns – business live
England and Scotland #EnglandandScotland
3.46am EST 03:46
Meanwhile, Morrisons is planning to give up parking spaces for the UK’s vaccination programme, according to PA Media’s business editor:
3.40am EST 03:40
ITV’s business and economics editor Joel Hills details why Next’s performance and projections are so surprising given their high street footprint:
3.30am EST 03:30
High street clothing retailer Next is helping lift the FTSE 100, with shares rising 8% despite fresh lockdown measures.
That’s because investors are focusing on its strong Christmas trading figures instead. My colleague Zoe Wood explains:
Next has emerged as a winner from a tough Christmas period as sales transferred from shuttered stores to its website but the fashion chain warned new lockdown measures would wipe out the extra profit it had made.
Next is one of the biggest risers on the FTSE 100 this morning. Photograph: Yui Mok/PA
The retailer’s chief executive Simon Wolfson said profit from better than expected sales in November and December would be almost entirely offset by this month’s new lockdown restrictions which would force its stores to close, as well as costs stemming from the disruption to its important traditional Boxing Day sale.
The retailer said the pandemic was also delaying the arrival of container traffic from the far east. Wolfson said many of its deliveries were running two to three weeks late with its stock levels 10% lower than two years ago. Wolfson expected stock levels to “return to more normal levels by the end of March”.
Sales in the nine weeks to 26 December were just 1.1% lower than in 2019 – a far better outcome than the drop of 8% pencilled in by the company. While UK store sales tumbled 43% its online sales were up 36%.
Updated at 3.33am EST
3.22am EST 03:22
UK equities have managed to return to positive territory.
We’re nowhere near yesterday’s gains but the FTSE 100 is holding comfortably above 6,500 and is up 0.5% so far this morning.
The FTSE 100 is trading higher by around 0.5% on Tuesday morning. Photograph: Tail1/Refinitiv
Even the domestically-focused FTSE 250 is up 0.25%. Elsewhere, the German DAX is down 0.2% and the CAC 40 is down 0.1%.
Correction: The FTSE 250 was up 0.25%, not 0.5%
Updated at 3.30am EST
3.15am EST 03:15
But supermarkets are upbeat as they report their Christmas trading figures.
Strong demand for luxury Christmas favourites helped to drive an 8.5% rise in sales at Morrisons over the festive period, as the chain kicked off reporting on what is expected to be a bumper trading period for supermarkets, Sarah Butler reports.
Morrisons said online sales had tripled and growth was boosted by strong demand for festive favourites such as champagne and salmon as families made the most of the quieter festivities.
Sales in Morrisons established stores rose 7.3% in the nine weeks to 3 January but that was boosted by a 1.2% rise in wholesale sales via the retailer’s deal with Amazon and to supply convenience stores.
David Potts, the chief executive, said:
The pandemic has had a severe effect on people and communities around Britain for nine months now but it has been especially hard at Christmas time.
I’m very pleased with the way the Morrisons team has helped our customers across the nation enjoy their Christmas in the best way they could.
Morrisons shares are up 0.9% this morning.
3.11am EST 03:11
British Airways owner IAG is one of the biggest fallers on the FTSE 100, dropping 1.7% at the open.
It comes amid further uncertainty about when international travel and tourism will return to some kind of normal.
We’re expecting to hear more about rules on international amid England’s new lockdown later today, according to cabinet office minister Michael Gove (who has been making the media rounds this morning).
The other biggest losers on the FTSE 100 include property developers, retailers (including Primark owner AB foods), and UK bank Barclays:
3.03am EST 03:03
European equities open lower amid tougher Covid lockdowns
The first rally of 2021 has indeed been cut short. Here are the first prints from major indexes across Europe:
The pan-European Stoxx 600 is down 0.3%.
2.55am EST 02:55
Gove: Chancellor to announce further business support today
CBI director general Tony Danker also told the BBC that he expects that the Treasury, and the business department “will come out in the next few days” with support for businesses.
But it looks like today may be the day.
Cabinet minister Michael Gover just told BBC Breakfast that Chancellor Rishi Sunak will make an announcement later on Tuesday. Stay tuned.
2.50am EST 02:50
CBI boss: Government must offer more business support before March budget
The head of the CBI business lobby group, Tony Danker, says the government cannot wait until the March budget to roll out extra support for businesses impacted by fresh Covid restrictions:
We’ve seen lockdowns before, we know the impact they have, and so I’m afraid more comprehensive restrictions do require a more comprehensive economic response.
Tony Danker took over from Dame Carolyn Fairbairn as Director General of the CBI on November 30, 2020. Photograph: Stefan Rousseau/PA
Speaking to the BBC’s Today programme, Danker said there were three urgent issues that the government needed to address in its emergency response for businesses.
The first is restricted cash flow, which could be helped with further VAT deferrals, tax relief, and more generous government grants.
The second is probably plugging the gaps that are now further exposed again learning lessons from last year. The thing we learnt, most of all, in terms of gaps was probably the role of supply chains. You close hospitality, you also have a big knock on effect on food and drink manufacturers. You close airports and aviation, and tens of thousands of of people in the supply chain [are] affected.
And I think the third thing is underwriting support for the duration, so that firms stay the course rather than acting precipitously.
I don’t think we can wait until the budget in March to review support. Business will take a view sooner, and so I think we need to respond very soon, and not wait for the budget.
2.28am EST 02:28
Introduction: England, Scotland plunged into fresh lockdowns
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Monday’s market rally, which lifted major European indexes and sent the FTSE 100 up nearly 3% in the first trading session of 2021, has been cut short.
A surge in Covid cases and concerns that health services could be overwhelmed have prompted fresh national lockdown measures in Scotland and England. While England’s measures will become legally binding on Wednesday, the prime minister Boris Johnson has asked people to start following the restrictions from Tuesday night onwards.
It means most businesses will close their doors, including all non-essential retailers, hair and nail salons, gyms and leisure centres. Pubs will also no longer be allowed to offer takeaway alcohol.
UK business lobby groups are now calling for more government support, including further tax relief, VAT deferral, cash grants and an extension of the low-interest bounce back loan programme for small businesses.
Cabinet Office minister Michael Gove said this morning that the government will review the restrictions on 15 February, with hopes of progressively lifting restrictions after that.
In the meantime, futures for major European indexes including the FTSE 100 are pointing to a negative start for equity markets on Tuesday morning:
US equities also tumbled overnight amid concerns over a surge in Covid cases and uncertainty over the outcome of a dual senate race in Georgia that will determine whether Republicans or Democrats control the upper house. The S&P 500 plunged nearly 1.5% while the Dow fell 1.2%. The Nasdaq also dropped 1.5%.
Asian trading has been mixed, with China’s Shanghai Composite up 0.7%, Hong Kong’s Heng Seng up 0.6% and Japan’s Nikkei down 0.3%.
The agenda