Rolling coverage of the latest economic and financial news
- GSK shares jump as hedge fund Elliott builds stake
- Mid-cap FTSE 250 index hits peak
- City vacancies jump 70% this quarter
- Online job vacancies up; UK restaurant reservations jumped on Monday
- Deliveroo: Orders surged 114%..but ‘prudent’ on guidance
Back on Wall Street, the Dow has traded over 34,000 points for the first time, as the rally continues:
A year ago the world was collapsing. And now, fortune again favors the bold…
DOW – 34,000
Gold – $1765/oz
BTC – $63,000
NASDAQ – 14,000
Copper – $4.13/lb
So, do you like “Stuff”?
The metals empire owned by Sanjeev Gupta has said it followed the law when it made a series of applications for emergency coronavirus loans backed by the government.
Various GFG Alliance companies applied to the coronavirus large business interruption loan scheme (CLBILS), a government programme that guarantees lending to companies struggling because of the pandemic.
Trade between Britain and the Republic of Ireland has slumped in the first two months of this year, new data shows.
Ireland’s Central Statistics Office has reported that the value of goods imported from Britain fell by 57% in January and February combined, a drop of nearly €1.6bn.
Latest trade statistics from Ireland (Jan-Feb 2021 vs Jan-Feb 2020):
GB exports to Ireland ⬇️57%
Ireland exports to GB ⬇️12%
Imports from GB were 10% of Ireland’s total.
In New York, stocks have hit fresh record highs in early trading.
The Dow Jones industrial average has jumped 237 points, or 0.7%, to 33,968 points for the first time.
#DOW +208 and SP500 +30 open at record highs following a blast of strong econ news on unemployment claims, retail sales, and manufacturing. Bank earnings also getting an assist. $COIN +5% after a 31% IPO pop.
Bank of America has lifted the mood too, by reporting that net income more than doubled in the first quarter of this year thanks to strong investment banking and trading results.
BofA is also releasing some loan-loss reserves as fewer consumers are expected to default on debts as previously feared, and announcing a $25bn share buyback programe.
“While low interest rates continued to challenge revenue, credit costs improved and we believe that progress in the health crisis and the economy point to an accelerating recovery.
Bank of America earnings top estimates on strong investment banking, release of loan-loss reserves https://t.co/jVJftayVAE
US industrial production rose by less than expected last month, though.
Industrial output increased by 1.4% in March, below the 2.8% growth which economists expected after a contraction in February.
Industrial production rebounded but not quite as sharply as expected in March, up 1.4 percent versus a downward revised 2.6 percent decline in February. pic.twitter.com/E1cV3llnyV
March industrial production softer than expected at +1.4% vs. +2.5% est. & -2.6% in prior month; factory production +2.7% vs. -3.7% prior; utilities -11.4% vs. +9.2% prior & mining +5.7% vs. -5.6% prior…overall IP level still trying to move up toward pre-pandemic area pic.twitter.com/K2DhFc3C9W
A huge beat on retail sales and a miss from consensus on industrial production.
Supply can’t keep pace with demand, folks. https://t.co/7uDbGYSO5T
US industrial production for wood products up 2.4% MoM and and 5.1% YoY in March. Better, but needs to improve further.
Mills still constrained to add shifts with labor disruptions from the pandemic. We are not operating at full potential capacity in many regions pic.twitter.com/Ik2fKPcI0Y
It’s important to remember that millions of Americans are still out of work following the pandemic, even though the number of new jobless claims has dropped sharply.
Almost 17m are receiving unemployment support from the various support programs:
U.S. jobless claims fell sharply today showing that fewer people are losing their jobs. But the number was still high. Plus, there are still over 16.9 million people collecting unemployment across all benefits programs in the United States.
That maps to…https://t.co/OjDCFOKG8x
Barrage of eco data out today shows that the U.S. recovery is gathering steam again after a weak winter. But important to remember that lots of progress is needed — millions are still out of work and UI claims extremely elevated.https://t.co/ciWdOh0R0e
72% of all claims in week ending 3/27 are in programs (PUA and PEUC) extended thru 9/6 by American Rescue Plan Act https://t.co/MhhFZTiJ78
“This week’s new jobless claims came in much lower than expected. This data has been volatile recently and it’s good to see an impressive mark. Similarly retail sales blew estimates away and the Philadelphia Fed business outlook number was way ahead of expectations.
We know the US is on an upward path and this set of data provides real evidence of that. Investors and the Fed alike will take notice of this and look for more of the same.”
On US data:
A beat on retail sales with a growth of 9.8% compared to consensus expectation of 4.8%.
The 8.2% growth in sales ex autos and gas was almost 2 percentage points above consensus expectation.
Initial jobless claims also came in better than expected at 576,000.#economy pic.twitter.com/SH4QVpXPn0
The near-10% surge in retail sales in March reflects not only the boost from $1,400 stimulus cheques but also the effects of loosening restrictions, with spending in bars and restaurants now back within 5% of its pre-pandemic level. Assuming spending on other services did not rebound as rapidly last month, that’s consistent with real consumption growth of close to 3% in March, and 10% annualised in the first quarter overall.
Motor vehicle sales up by 15.1%, electronics stores sales increasing by 10.5%, though furniture sales were up by “just” 5.9%. But what caught our eye was the 13.4% surge in spending on food and drink services, while clothing store sales were up by 18.1%.
In another boost, the number of Americans filing new unemployment claims has hit its lowest level since the pandemic began.
The weekly jobless claims total (seasonally adjusted) has plunged to 576,000 last week, a decrease of 193,000 from the previous week’s revised level.
WASHINGTON (AP) — US jobless claims sink to 576,000, a post-COVID low, as layoffs ease with economy improving.https://t.co/O66tw8iCDG
UI claims fell dramatically last week to 745K (613K UI initial claims NSA + 132K PUA claims), the lowest since March.
Now it is moving! For months I have been talking about the Initial (unemployment) Claims report being stuck in this 700k to 900K range. This time it made a solid break of the 700k level coming in at 576K. Still double pre-pandemic level but getting closer. #Unemployment pic.twitter.com/RprSnB4fKo
UI Claims: week ending 4/10:
actual initial claims: 745 m (reg + PUA)
reg state: actual 613k
seasonally adj reg 576k
4-wk avg (SA): 683k
yr-ago 4-wk avg: 4.982m
Just in: US retail spending soared almost 10% last month, in another sign that the American economy is recovering strongly from the pandemic.
Retail sales surged by 9.8% in March compared with February, and much stronger than the 6% rise which was expected.
Retail sales explode in March as consumers use stimulus checks to spend heavily. Retail sales rose 9.8% for the month, the Commerce Department reported Thursday. That compared to the Dow Jones estimate of a 6.1% gain and a decline of 2.7% in February. https://t.co/0ogQmzyd0r pic.twitter.com/DxCznfuhbL
JUST IN: U.S. retail sales accelerated in March by the most in 10 months as business reopenings, increased hiring and a fresh round of stimulus checks emboldened shoppers https://t.co/QTMgyT1TVI
*U.S. RETAIL SALES INCREASED 9.8% IN MARCH; EST. 5.8%
*U.S. MARCH RETAIL SALES EX-AUTOS, GAS RISE 8.2% M/M; EST. 6.4%https://t.co/Kq613faAOV
Retail & food services seasonally adjusted sales were $619.1b in March 2021, up 9.8% from February 2021 and up 27.7% from March 2020. https://t.co/kx4PEcY4yc #CensusEconData #RetailSales pic.twitter.com/GcD1wW4wWC
Retail sales grew 9.8% in March, crushing expectations. The recovery appears to be unfolding rapidly (although remember, 85% of Americans got a stimulus check!) pic.twitter.com/bzXJIKcB1N
Elliott’s Management’s interest in GlaxoSmithKline comes after the UK drugs firm took a backseat role in the race for a Covid-19 vaccine, points out Reuters:
Britain’s GSK warned in February of a bigger than expected fall in 2021 earnings as the COVID-19 pandemic continues to disrupt other healthcare treatments and it invests in new medicines ahead of a split from its consumer products business next year.
Rather than developing its own COVID-19 shot, GSK has so far focused on supplying its vaccine booster to other drugmakers. But a project with Sanofi has been delayed, and China’s Clover has ended its deal with the British drugmaker.
Here’s Chris Bailey of Financial Orbit on the jump in GSK’s shares:
Glaxo share currently up over 5%…yes, when I bought this one early this year, I thought changes upcoming
Shares in UK pharmaceuticals firm GlaxoSmithKline have jumped over 7%, to the top of the FTSE 100 risers.
It follows a Financial Times report that activist hedge fund Elliott has built a “multibillion-pound stake” in GSK, amid concern among some leading shareholders about the company’s performance.
Activist hedge fund Elliott Management has built a multibillion-pound stake in UK drugmaker GSK, setting up a potential battle over the company’s future after it underperformed peers and lagged in the race to develop a Covid-19 vaccine.
The stake taken by Elliott, the $42bn fund known for its campaigns at BHP, SoftBank and Whitbread, was confirmed by people with knowledge of the investment and is a “significant” position, according to one of them.
Europe stock markets have hit a fresh record high today, with the pan-European Stoxx 600 up 0.4% at 438 points.
Sophie Griffiths, Market Analyst for UK & EMEA at OANDA, says strong earnings results from the US are lifting stocks (yesterday, Goldman Sachs and JP Morgan unveiled soaring profits for the start of 2021).
European stocks are charging higher after the US earning season kicked off on the right foot. US banks are often considered a proxy for the broader economy. As a result, their earnings are strong drivers of sentiment.
The upbeat numbers served to reinforce expectations of a strong US economic recovery. If the world’s largest economy is performing well, this is good news for the global economy and risk sentiment.
The UK’s blue-chip FTSE 100 index has hit its highest level in over a year.
The FTSE 100 is up 35 points or 0.5% at 6975, eyeing the 7,000 points mark for the first time since February 2020.
Hospitality firms are hiring staff as they prepare for an end to the lockdown, says Jo Ferreday, managing director of the UK-wide hospitality and events company, Sheer Edge:
“We have seen a marked shift in the number of companies seeking to book and organise events in recent weeks.
“The economy is starting to open up and many hospitality businesses are beginning to hire staff so that they can hit the ground running when things hopefully return to normal in the not too distant future.
This chart from the ONS shows how UK online job adverts have risen to their highest level since the start of the pandemic:
Optimism over the economic recovery from the pandemic has driven Britain’s index of medium-sized companies to a new record high.
The FTSE 250 index extended its recent gains this morning, as investors continue to anticipate a post-lockdown rebound.
“The Group has enjoyed an encouraging start to the year with robust like-for-like sales growth across our businesses, underpinned by strong demand in the RMI market.
The Merchanting business has maintained the momentum seen in the second half of last year while Toolstation continues to outperform, driven by its convenient and trade focused proposition.
The mid cap FTSE 250 index continues to set new record highs… thanks to a mixture of builders’ merchants, housebuilders and airlines.
Investors are buying these sectors to play the reopening trade and a general recovery in interest for UK stocks after a long period of being in the doldrums.
Job openings in London’s finance industry have jumped 70% so far this year, in a sign that the City is more optimistic about the economic recovery from the pandemic.
Data from recruitment firm Morgan McKinley shows that London’s financial services industry returned to hiring growth in the first quarter of 2021.
As the vaccine rollout continues apace and the road out of lockdown clears, we are seeing the sector recover at a faster rate than anticipated. We expect this recovery and confidence to continue as the country unlocks and normal working life resumes.
“The 70% increase in job creation this quarter is encouraging and suggests that the crisis has turned a corner, with confidence growing, which in turn is fuelling hiring activity and momentum.
Job openings in London’s finance industry grew 70% in the three months through March compared to the previous quarter https://t.co/P1yEuYzZsk
UK restaurant reservations surged back on Monday as England eased its lockdown restrictions.
On Monday 12 April 2021, estimates for UK seated diner reservations were at 79% of the level seen on the equivalent Monday of 2019, the first time their level has exceeded 2% since before the announcement of the latest lockdown in England on 4 January 2021.
This coincides with the easing of lockdown restrictions in England on this day, allowing restaurants to open for outdoor dining. The equivalent figures for London and Manchester were 47% and 153%, respectively.
Deliveroo doubled order numbers during the first three months of the year as coronavirus lockdowns helped it in its debut results following a stock market float beset by concerns over its treatment of workers.
The takeaway delivery company received 71m orders during the quarter, a 114% year-on-year increase, according to results published on Thursday.
Online electricals retailer AO World is upbeat about its prospects this year, after a surge in customers since the pandemic began pushed sales and earnings up.
“I am delighted to report a year of outstanding financial, operational and strategic progress. The last 12 months have been like no other and we have been very proud to rise to the challenges for our customers – keeping their lives powering on with essential electrical and technology products. Serving customers in The AO Way and treating every customer like our own gran, irrespective of cost, has enabled us to impress millions of customers with a better way to shop electricals.
“We were brave and bold in our capacity and infrastructure investments early in the year and now look forward to building on that scale advantage.
Online electricals retailer AO World gained over 2 million new customers during the pandemic, and its chief executive predicts further growth even as competitors reopen shops from lockdown. https://t.co/fOFvMqT0uk
European budget airline Wizz Air has cautioned that demand for flights may only recover gradually this summer.
Wizz Air said it expects to make a net less of up to €590m for the last financial year (to the end of March), after lockdown restrictions forced many jets to be grounded.
The start of F22 (the year ending 31st March 2022) continues to be marked by travel restrictions across our region and we expect only a gradual traffic recovery into late summer 2021, following what is expected to be a period of good progress of national vaccination plans across key markets.
In the short term, the Company continues to actively adjust capacity to travel conditions with a focus on cash contribution positive flying, and as a result we continue to review aircraft allocation on a market-by-market basis as opportunities arise.
The chief executive of Deliveroo has said the company had a lot of work to do to prove itself to the market after its shares fell sharply when it listed last month.
Reuters has the details:
“We have a lot of work ahead of us to both grow the business over the long term, and to prove ourselves to the markets,” Will Shu said in an interview after the company’s first trading update on Thursday. “It is day one of doing that.”
Asked about the debate about the self-employed status of the firm’s riders, Shu said: “I’m not wedded to any particular model however I am wedded to the model that riders want.”
Shares in Deliveroo are down 1.5% this morning at 266p, around 30% below their flotation price of 390p.
Entain, the owner of Ladbrokes bookmakers, has also seen strong online sales amid the pandemic.
Online net gaming revenue grew 33% in the first quarter of 2021, the company reports, which is the 21st consecutive quarter of double digit growth.
With some easing of Covid restrictions, we are delighted to be welcoming customers back into our shops. While it has only been a handful of days since the re-opening in parts of the UK on the 12 April, we look forward to returning to more normal trading across our whole business.
In line with our expectations, the momentum from the end of 2020 has carried into 2021. Although Covid creates some near-term uncertainty, by maintaining our focus on the customer, providing them with great products and services, we remain confident and excited in our long-term prospects.”
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
A flurry of corporate winners from the coronavirus pandemic are reporting results this morning.
“We are delighted with the Deliveroo Q1 results. Demand has been strong in both the UK&I and International markets driven by record new consumer growth and sustained engagement from our existing consumers. This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of COVID-19 restrictions.
So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance.”
♂️First 3 months of the year at Deliveroo
Amount spent on its platform globally more than doubled to £1.65bn, number of customers now 7.1m
34m orders (15m year before)
average spend £25.20 (£23)
10% of that was on groceries
growth expected to slow pic.twitter.com/BP7UGen9jA
Whilst in some ways 2021 is as difficult to predict as 2020, I believe we have seen an enduring shift of demand online across multiple categories.
Ultimately whilst COVID has driven the trial of many online models, the long-term winners will be the businesses that offer customers a genuinely differentiated offer: I firmly believe Naked will be one of those long-term winners.