Coal power stations fire up as wind fails to blow
Power prices wind coal energy – David Davies/PA Wire
What to do if your energy supplier goes bust
City regulator appeals for Bitcoin expertise as terrorists exploit cryptocurrencies
FTSE 100 rises 0.6pc; Pound hits fresh highs against the euro
Wall Street rises after Fed chair decision
Roger Bootle: Britain is doomed to either an inflation trap or a squeeze on incomes
Sign up here for our daily Business Briefing newsletter
Hourly power prices are set to surge on Tuesday evening as low wind levels mean more expensive coal-powered plants will need to be fired up.
Power for the peak hour between 5pm and 6pm rose to £1,067 a megawatt-hour during the day-ahead auction for Tuesday.
It’s the third time prices have jumped above £1,000 this month, with the latest peak seen last Monday.
With wind power accounting for just 10pc of demand for the peak hour, output will need to be ramped up at more expensive thermal goal and gas power stations.
That’s all from us for today. Thank you for following and we’ll be back again tomorrow! Here are some of our top stories:
Bulb effectively nationalised after energy supplier goes bust
Riots give EU a headache as fourth Covid wave hits eurozone recovery
John Lewis takes aim at ‘throwaway’ culture in retail sector
Games developer’s shares crash on weak Jurassic World sales
British Airways annoys customers with yet another IT issue
British Airways is grappling with yet another IT issue after its loyalty website was offline for well over a week.
My colleague Sam Hall has more:
The airline said earlier this month that its Executive Club website would be unavailable between 13 and 17 November to carry out “essential improvements”.
However, normal access via its website was still not available on Monday November 22, with BA customers told to use its mobile app instead.
Customers vented their frustration on Twitter, with Alan Coffey writing: “Come on BA – are you serious? Five days after the supposed ‘upgrade’ to your Executive Club and it’s still down. To rub it in you keep sending me emails with Executive Club deals to book! Nobody in your organisation knows what is going on and the lack of updates is deafening!”
Read the full story here.
Vaccine producers get boost from higher coronavirus rates in Europe
US-listed vaccine producers got a shot in the arm amid mounting concerns Europe is returning to be the pandemic’s epicentre.
Moderna and Novavax surged 7.4pc and 6.6pc respectively. Meanwhile, BioNTech jumped 8pc and Pfizer added 1pc after announcing that their jab was 100% effective in teens aged 12-15 with no serious safety concerns identified.
Europe’s higher infection rates have been blamed on slow vaccine uptake in some areas, the Delta variant and the colder weather moving people indoors again.
My colleagues Marcus Parekh and Verity Bowman reported some strong words from Germany’s acting health minister Jens Spahn:
“Probably by the end of this winter, as is sometimes cynically said, pretty much everyone in Germany will be vaccinated, cured or dead,” Mr Spahn said, blaming “the very contagious delta variant”.
“That is why we so urgently recommend vaccination,” he added.
Find more here.
Bain Capital and Hellman & Friedman to buy Athenahealth for $17bn
Bain Capital and Hellman & Friedman have agreed to buy Athenahealth in a $17bn (£12.6bn) deal.
The private equity firms will take control of the health information technology group from competitors Veritas Capital and Elliott Investment Management, who bought it for a third of the price in 2018.
Athenahealth provides an electronic health records service to keep track of patient visits and tests, while it also helps doctors and hospitals collect money from health insurers and the government.
The coronavirus pandemic has sped up the need for better IT systems in the healthcare sector. Hospitals and doctor surgeries have been prompted to turn their operations digital as well as improving efficiency to help make up for lost revenue.
On the business side of things, buyers are rushing to complete acquisitions while debt still looks cheap before central banks raise interest rates.
OPEC+ to review production plans in response to reserve releases
OPEC+ members may review plans to raise production next month, as the world’s four largest consuming countries are considering whether to release their strategic petroleum reserves.
India, the US, Japan and China may take this step to counteract the inflation threat arising from higher energy costs, Bloomberg reported.
However, it could also pit them against the OPEC+ coalition, which is led by Saudi Arabia and Russia, in controlling the global oil markets.
“I anticipate OPEC+ energy ministers will maintain their current plan of adding more supplies to the market gradually,” said Joseph McMonigle, secretary-general of the Riyadh-based International Energy Forum.
“However, certain unforeseen external factors such as a release of strategic reserves or new lockdowns in Europe may prompt a reassessment of market conditions.”
Brent crude was changing hands at $79.30 in mid-afternoon.
FTSE 100 closes higher
The FTSE 100 ended the trading day in the green, adding 31 points to 7,255.
Royal Mail was a strong riser in the index, up 3.5pc, as the market has high expectations from this week’s Black Friday and Cyber Monday promotions leading to the key Christmas period.
Vodafone and BT advanced 3pc and 2pc respectively. The sector got a boost by US private equity giant KKR offering €10.8bn (£9bn) for Italy’s former monopoly Telecom Italia.
Polymetal, instead, topped the fallers with a 4pc slide due to a drop in gold prices caused by Powell’s nomination for a second term as Fed chairman. “This continuity is important in that it keeps the prospect of an accelerated Fed taper very much on the table, thus pushing short term rates higher as well as a stronger US dollar,” commented Michael Hewson at CMC Markets.
That’s all from me today – thanks for following along! My colleague Giulia Bottaro will take the reins from here.
Expert reaction: FTSE 100 set for ‘relatively quiet year’
Russ Mould, investment director at AJ Bell, gives his view on the potential FTSE movements.
Next Tuesday’s indicative review of the FTSE indices could well show that Electrocomponents and Dechra Pharmaceuticals are both poised to enter the FTSE 100 for the first time and they look likely to do so at the expense of Johnson Matthey and Darktrace.
Nothing it set in stone, since the final review of market valuations will be released on 1 December and any changes will become effective on 20 December. But Electrocomponents and Dechra are currently ranked 87th and 88th by market cap, enough for automatic promotion, while Johnson Matthey and Darktrace rank 114th and 127th, positions that leave them in line for automatic relegation.
If these two changes come to pass, that would take the total to nine for 2021. That would make for a relatively quiet year. Since 2000, only 2004, 2010, 2012 and 2015 have seen a lower number – seven, on all four occasions – and the average of the past 21 years is between 12 and 13 changes a year.
FTSE 100 reshuffle: Who will be the movers and shakers?
With the next FTSE 100 reshuffle looming, here’s a look at the potential movers and shakers in London’s main indices.
Promotions: Dechra Pharmaceuticals, Electrocomponents
Vet specialist Dechra has cashed in on the lockdown pet boom and is trading close to an all-time high – it’s now on the brink of promotion to the FTSE 100 for the very first time.
Meanwhile, Electrocomponents has seen its shares jump 40pc in the year to date to a new record high, and rebounding demand for its electrical equipment as the economy reopens puts it on track for a potential promotion.
Relegations: Darktrace, Johnson Matthey
Darktrace may only have entered the blue-chip index in October, but a recent slump in its share price amid growth concerns means it’s now at risk of demotion.
Chemicals company Johnson Matthey was a founding member of the FTSE 100 back in 1984. But a profit warning this month, coupled with its decision to withdraw from the batteries market, means it’s facing its second relegation.
FTSE 100 reshuffle – AJ Bell
Carbon prices hit record high as Europe burns coal
European nations are increasingly relying on burning coal to keep the lights on this winter, driving carbon prices to a new record high.
Carbon prices have topped €70 (£59) for the first time ever as utilities companies turn to the fossil fuel. UK power stations are burning coal at the highest rate since the beginning of March amid a drop in wind levels and a looming cold snap.
The return to the dirtiest of fossil fuels – even as countries discuss the shift to green energy – comes amid a perfect storm of challenges facing the energy sector.
Rebounding demand after the pandemic has put a strain on supplies, while lower wind speeds have also driven gas, power and carbon prices to records highs. With natural gas shortages sparking a quadrupling of prices, there’s a greater reliance on burning coal this winter.
What’s more, the EU has outlined ambitions to cut emissions even faster this decade – a pledge that’ll mean carbon prices will have to increase more quickly.
Return of lockdowns dents eurozone confidence
Eurozone confidence dropped in November as a sharp rise in Covid cases and a fresh wave of lockdown measures took their toll on sentiment.
The European Commission’s gauge of confidence dropped to -6.8 this month from -4.8 in October. This was worse than the -5.5 reading predicted in a Reuters poll.
In the European Union as a whole, consumer sentiment fell by 2.1 points to -8.2.
The declining morale echoes a slide in the euro as a tightening of restrictions to battle surging Covid cases across Europe casts doubts over the recovery.
Austria was plunged into a new national lockdown on Monday, while Germany has warned it could follow suit after shutting Christmas markets, bars and theatres.
Paul Dacre back at the Daily Mail after editor ousted
Paul Dacre Daily Mail DMGT – Dan Kitwood/Getty Images
Away from power prices, there’s been a dramatic leadership U-turn over at the Daily Mail.
Lord Rothermere, chairman of parent company Daily Mail and General Trust (DMGT), has just announced that Paul Dacre will be returning as editor-in-chief of DMG Media.
While Mr Dacre will not be involved in day-to-day editing, he’ll take an active advisory role in the division that oversees the two Mail print titles, as well as Mail Online and Metro.
It comes just weeks after Mr Dacre stepped down from his senior role at the newspaper group. Prior to this, he served as editor of the Daily Mail for 26 years.
It also follows the ousting of Geordie Greig as editor of the title. The role has been taken up by Ted Verity – formerly editor of the Mail On Sunday – who will take charge of a seven-day operation.
Lord Rothermere is finalising an £850m plan to take the newspaper group private after nearly a century on the stock market.
What happens when the wind doesn’t blow?
The surge in power prices shows just how temperamental wind power can be – and therefore just how much prices can change.
But it also raises questions about the viability of the UK’s net zero targets, given the continued reliance on coal during calm weather.
Edward Malnick dug into the issue last month:
Modelling used to justify the “feasibility” of the net zero target assumed a dramatic fall in the number of days of calm weather, when many turbines stand still, according to new analysis.
Data obtained from the Climate Change Committee (CCC), the official advisory body, following a legal battle, shows that a series of assumptions underpinning its advice to ministers included a projection that in 2050 there would be just seven days on which wind turbines would produce less than 10 per cent of their potential electricity output. So far this year, there have already been 65 such days, and in 2016 there were as many as 78.
The disclosure prompted questions over the accuracy of the CCC’s claims in 2019 about the feasibility of meeting a target of reducing greenhouse gas emissions to net zero by 2050.
Ministers rely heavily on the CCC’s advice and modelling, and last week its chief executive, Chris Stark heralded Boris Johnson’s new Net Zero Strategy as “largely mirroring the CCC advice”.
Read Edward’s full story: Net Zero target relies on rise in windy days
Coal output ramps up ahead of big chill
Lower wind levels mean output from coal-driven power stations is being ramped up – with prices rising in turn.
Output from coal plants was already at its highest level since the beginning of the month, churning out almost two gigawatts of capacity. That’s compared to almost twice as much during the winter peak in January.
But demand for heating is likely to pick up, with temperatures in London and Manchester set to drop close to zero later this week.
Wall Street rises after Biden confirms Fed chairman
Wall Street has opened the week in positive territory after the White House confirmed Jerome Powell will continue as Federal Reserve chairman for another term.
The benchmark S&P 500 opened 0.4pc higher, as did the Dow Jones and the tech-heavy Nasdaq.
Mr Powell will continue in the central bank top job for another four-year term, while Lael Brainard has been promoted to vice chair.
British Gas to take on Neon Reef and Social Energy customers
In more energy crisis news, British Gas has been appointed to sweep up customers from collapsed energy suppliers Neon Reef and Social Energy.
The two companies ceased trading last week, leaving 35,500 domestic customers high and dry. The switchover is part of regulator Ofgem’s supplier of last resort process.
Chris O’Shea, chief executive of British Gas owner Centrica, said:
We welcome customers of Neon Reef and Social Energy to British Gas, and we’ll ensure the switchover is as smooth as possible.
We’re a brand trusted by millions and our new customers will benefit from the range of advantages that come with being a British Gas customer, including access to exclusive offers on services like boiler cover, Hive products and British Gas Rewards.
The actions we have taken over the past couple of years mean Centrica is in a robust financial position, and as a responsible energy supplier built on a sustainable model we are well hedged for the winter.
Afiniti appoints former Enron prosecutor to investigate assault claims
The embattled technology company Afiniti has appointed a former Enron prosecutor to investigate sexual assault claims against its former chief executive.
James Titcomb reports:
Afiniti said Leslie Caldwell, who led the US Justice Department’s task force on the energy company, would lead the investigation.
Last week Afiniti’s founder Zia Chishti resigned as chief executive and chairman after a former employee testified that he had sexually abused and harassed her during her 18 month tenure at Afiniti.
David Cameron, who was chairman of Afiniti’s advisory board, resigned a day earlier and the company had come under pressure from investors and customers.
Ms Caldwell, a partner at the law firm Latham & Watkins, made her name investigating Enron, which became one of the biggest financial scandals of all time when it went bankrupt in 2001. She later became the assistant US attorney general, in charge of the Justice Department’s criminal division.
Read more on this story: Dethroned Afiniti founder threatened with release of more alleged abuse photos
Jerome Powell tapped for second term as Fed chair
Jerome Powell with Lael Brainard Federal Reserve – REUTERS/Ann Saphir/File Photo
US President Joe Biden has selected Jerome Powell for a second four-year term as chairman of the Federal Reserve, while governor Lael Brainard has been promoted to vice chair.
The move, announced by the White House on Monday, ensures consistency at the central bank as it grapples with rising inflation and the continued impact of the pandemic.
Mr Powell – a 68-year-old Republican – has enjoyed bipartisan support, although some more progressive Democrats such as Elizabeth Warren had called for a change at the top.
Dr Brainard would replace Richard Clarida as vice chair and may face opposition from Republicans in the Senate for her confirmation.
In a statement President Biden said the US recovery so far was “testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery”.
He added: “I’m confident that Chair Powell and Dr. Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make our economy stronger than ever before.”
Government takes temporary control of Bulb
Bulb has said it’s going into special administration – the first time this government process for a major energy supplier collapse has been put to use.
But what does this mean? My colleague Rachel Millard explains:
Under the industry’s normal safety net procedure, the customers of a collapsed energy supplier are passed on to a new supplier by Ofgem, the regulator.
However, Bulb has so many customers that the customers may need to be divided between several suppliers or a buyer for the company found, so a special administration was needed.
The process allows the Government to fund the supply of gas and electricity to the failed supplier’s customers until a buyer is found or the customers transferred.
If the company cannot repay these costs, they can be recovered from the rest of the industry which usually adds it to consumers’ bills.
Read more: Bulb Energy goes bust with 1.7m customers affected
FTSE 100 slips into the red
Time for a lunchtime check-up on the FTSE 100, which has slipped into the red after starting the day on the front foot.
The blue-chip index is down 0.1pc at 7,213 points, weighed down by falls for oil majors BP and Shell, as well as AstraZeneca.
This offset gains for both BT and Vodafone, as telecoms stocks were lifted by heightened merger activity in the sector.
The domestically-focused FTSE 250 is down 0.4pc, led by a 35pc slump for miner Hochschild, which warned today that two of its mines in Peru could be forced to close.
JP Morgan grants Hong Kong staff $5,000 for quarantine
JP Morgan Hong Kong quarantine – REUTERS/Brendan McDermid/File Photo
JP Morgan is giving staff in Hong Kong up to $5,000 (£3,720) each if they want to visit their families abroad, in compensation for the city’s strict quarantine rules, writes Hannah Boland.
People flying into Hong Kong must quarantine in a hotel for up to three weeks upon arrival.
JP Morgan said in a memo to employees: “We recognise that the costly quarantine measures in place in Hong Kong associated with Covid-19 have impacted many of you with respect to visiting family and loved ones overseas.”
The memo, sent last week, was first reported by the South China Morning Post.
It comes after Jamie Dimon, JP Morgan chief executive, said the quarantine requirement in Hong Kong “does make it harder” to retain talent in the territory.
Business groups in the city have issued similar warnings, including Tara Joseph, president of the American Chamber of Commerce in Hong Kong, who recently cautioned that the restrictions had “a huge impact on the talent pipeline for Hong Kong which means its domination as Asia’s hub could lessen over time”.
Energy supplier Bulb enters administration
Bulb chief executive Hayden Wood – Julian Andrews
Energy supplier Bulb has entered into special administration amid a surge in wholesale prices that has led to a string of company failures.
Bulb, which is the UK’s seventh-largest supplier with around 1.7m customers, said it had made the “difficult decision” to enter administration to allow it to continue operating.
“This process is designed to protect Bulb members, ensuring there’s no change to your supply and your credit balance is protected,” it said in a statement.
Bulb has been exploring an emergency sale and held unsuccessful talks with the Government over a potential bailout.
It’s the first time special administration has been used in the UK and comes in the wake of roughly 20 energy supplier collapses since the start of August.
No special administrator has been appointed yet, but Bulb said it expects this to happen soon.
It follows Sky News reports that the Government is in talks with Sequoia Economic Infrastructure Income Fund about a £50m loan it paid to the company.
John Lewis launches £1m fund to target ‘throwaway’ culture
John Lewis throwaway circular fund – REUTERS/Russell Boyce/File Photo
John Lewis is launching a new £1m fund that aims to crack down on the high street’s “throwaway” culture.
The initiative, dubbed the Circular Future Fund, will award grants of between £150,000 and £300,000 over the next year to projects that support the drive to a more circular economy.
The John Lewis Partnership, which also owns Waitrose, said it’s looking to challenge the “make…use…throw away” model of modern retail.
Applications to the fund, which was raised through the sale of 10p plastic bags, opened on Monday and will run until 9 January.
Marija Rompani at the John Lewis Partnership said:
Climate change, biodiversity loss, waste and pollution are unquestionably among the biggest challenges we will face in our lifetime and tackling them will require a different kind of thinking.
By creating this fund, we’re hoping to unearth some of the world’s leading innovators, who have built their business models, products and services around the concept of circularity.
Wall Street set to rebound from last week’s losses
Wall Street is pointing to a higher open this afternoon as Covid-sensitive stocks stage a modest comeback from last week’s losses.
Futures tracking the Nasdaq rose 0.3pc to a record high as demand for tech stocks remains high. The S&P 500 is up 0.4pc, while the Dow Jones gained 0.3pc.
Tech has largely outperformed other sectors, helping the Nasdaq close over the 16,000 level for the first time as concerns over rising Covid cases in Europe drove up safe haven demand.
Bank, travel and energy stocks – which all suffered last week – are set to claw back some of their losses.
But investors also have a close eye on a slew of economic data due this week for more signs about the US recovery and potential tapering of stimulus measures by the Federal Reserve.
Oil prices drop as Europe begins to lock down again
Oil prices are trading down after four weeks of losses as fresh lockdown measures across Europe compound expectations of greater stockpile releases.
In New York, oil held above $76 a barrel after losing 6pc last week. US President Joe Biden has been talking about a potential release of reserves, while Japan and China have also indicated they could tap stockpiles.
Meanwhile, fresh restrictions in Europe suggest their could be a threat to global energy demand this winter amid a resurgence in the virus. Austria was plunged into another national lockdown on Monday, while other countries including Germany are beginning to tighten restrictions.
Energy supplier Bulb ‘close to collapse’
Energy supplier Bulb is said to be on the brink of collapse – raising the prospect of the biggest failure to date amid an escalating crisis in the sector.
Bulb is the UK’s seventh-largest supplier, boasting 1.7m customers.
Sky News reports that the Government is in talks with Bulb’s secured creditor over its £50m loan to the company.
Time to check in on the Telegraph’s Money team, who’ve got some great stories to kick off the week:
‘I think a neighbour has pinched a delivery left in a ‘safe space’ – who’s to blame?’ – Ask a Lawyer: a delivery company left a package in a safe space, and now it has disappeared.
New 40-year mortgage with no early repayment fee – But homeowners could end up spending more over the long-term, experts warn.
Developers building thousands of homes on land at risk of flooding – 5,283 homes in vulnerable areas granted planning permission.
British shares are the world’s cheapest, but profits are soaring: buy – Goldman Sachs and JP Morgan are bullish on the UK market.
Bundesbank warns German inflation could near 6pc
Away from the lockdown troubles, there’s a stark warning from Germany’s central bank over inflation in Europe’s largest economy.
The Bundesbank warned inflation could rise even more than previously forecast this month to spike at just under 6pc.
It said around 1.5pc percentage points of this would reflect a temporary cut in VAT and very low prices for travel-related services in 2020.
German inflation surged to a three-decade high of 4.6pc in October, but the country is braced for even higher price rises this month. The latest data is due out next Monday, a day before the hotly-anticipated consumer price index for the eurozone.
Inflation – largely driven by surging energy prices – has become a contentious issue in Germany, which is nearing a deal for the formation of a new coalition government under the leadership of Social Democrat Olaf Scholz.
The Bundesbank has argued that inflation will ease in the coming months, but warned it “could remain well above 3pc for a longer period of time”.
West End footfall picks up ahead of Black Friday
Footfall in the West End has picked up further in the run-up to Black Friday as shoppers head back to London’s key retail district ahead of the festive rush.
New West End Company, which represents businesses in the area, reported an 11pc rise in shopper numbers last week compared to the previous seven days.
This was 287pc higher than during the same period in 2020, when the UK was in lockdown, though it was still down by a fifth compared to pre-pandemic levels.
Jace Tyrrell, chief executive of New West End Company, said:
As footfall continues to grow, we are expecting our domestic customers to take full advantage of the numerous discounts on offer this year, which are already being promoted by many retailers across the district.
Retail businesses are clearly keen to make the most of the festive period in order to make up for lost custom and revenue.
Boris Johnson’s Peppa Pig panic
Boris Johnson CBI Peppa Pig – Owen Humphreys/PA Wire
Boris Johnson’s CBI speech was briefly thrown into disarray when he appeared to lose his place in his notes, but the Prime Minister was saved by an unusual topic – Peppa Pig.
Mr Johnson’s speech came to a halt as he began frantically searching through his notes, sighing and repeatedly saying “forgive me”.
He soon recovered, though, and returned to talking about tech unicorns before regaling the audience with an account of his trip to Peppa Pig World, a theme park based on the children’s TV show.
“Yesterday I went, as we all must, to Peppa Pig World,” the Prime Minister told business executives. “I love it. Peppa Pig World is very much my kind of place: it has very safe streets, discipline in schools.”
“Who would have believed that a pig that looks like a hairdryer or possibly a Picasso-like hairdryer, a pig that was rejected by the BBC, would now be exported to 180 countries with theme parks both in America and China?”
European lockdowns spark stimulus jitters
A fresh wave of lockdowns on the continent has raised questions over the European Central Bank’s approach to scaling back stimulus, as my colleague Tom Rees explains:
Chris Turner, analyst at ING, warned the euro will be vulnerable this week as the gap between the ECB and other central banks’ policy widens.
“Renewed lockdowns and pressure on the service sector in Europe now provide the ECB with many more reasons to go slow – and perhaps even extend the pandemic emergency purchase programme (PEPP) bond-buying scheme after March, if the pandemic is continuing,” he said.
The ECB is expected to withdraw Covid stimulus by raising interest rates from negative territory far slower than the Bank of England and US Federal Reserve. It is expected to announce the tapering of its bond purchases at a meeting next month, but a deteriorating Covid backdrop could persuade the rate-setters to delay the move.
Lee Hardman, currency analyst at MUFG, said fears of fresh lockdowns have “prompted market participants to scale back expectations for earlier ECB rate hikes”.
He added that “the widening divergence between ECB and Fed policy expectations should help to keep downward pressure” on the euro versus the dollar.
Boris Johnson forecasts return to the office
Boris Johnson has said he expects a mass return to the office, shrugging off forecasts that the pandemic has sparked a permanent shift to home working.
Speaking at the CBI’s annual conference, the Prime Minister said: “I don’t want to be dogmatic about this bit I have my doubts about this and it’s not just young people need to be in the office to learn and compete and to pick up social capital.”
Mr Johnson was also upbeat about the prospects for the UK’s economic recovery after Covid.
Coffee lovers strained as prices perk up
coffee beans prices – ILLY/ REUTERS/Alessandro Bianchi/File Photo
Coffee shops relieved by returning demand from office workers face a new challenge as fears of a poor harvest in Brazil, the world’s top producer, drives the price of beans to its highest level in a decade.
Louis Ashworth has the details:
Market rates for arabica beans, used by companies including Starbucks and Pret a Manger, reached as high as $2.39 per pound on Friday, the highest since the food crisis in 2012.
Arabica prices have risen about 80pc this year, outstripping jumps across other “soft” commodities including cotton, sugar and palm oil.
The rise is likely to filter through to the price of a cup of coffee, warned Charles Sargeant, a commodity broker at Britannia Global Markets.
“The higher prices are not going away [and] that will translate into higher consumer prices,” he said.
British Airways owner says transatlantic bookings close to 2019 levels
British Airways IAG transatlantic – Chris Ratcliffe/Bloomberg
British Airways owner IAG has said its transatlantic bookings have already reached almost 100pc of 2019 levels after the US dropped travel restrictions earlier this month.
Luis Gallego, chief executive of IAG, said the group was recovering and forecast a return to pre-pandemic flying levels by 2023.
He told the Airlines UK conference “Now as the world opens up, we are growing our capacity. Transatlantic bookings have already reached almost 100pc of 2019 levels.
“I expect North Atlantic routes to reach full capacity by next summer.”
But Mr Gallego warned Heathrow’s decision to hike charges could hurt the recovery, noting that 40pc of passengers who use the airport to transit on to different final destinations could use alternative hubs.
“If the rise in landing charges goes ahead, I know IAG would not be alone in reconsidering our airlines’ use of Heathrow as a port,” he said.
“Right now, aviation is trying to emerge from its worst crisis ever. UK operators need to be able to compete.”
Hochschild crashes as it warns on Peru mine closures
Another major faller this morning is miner Hochschild, which has crashed as much as 57pc after it warned of an attempt to close two of its silver mines in Peru.
The company said it had learned through media reports that a government commission has been formed to negotiate the timetable and terms for the closure of the mines following alleged environmental complaints.
Hochschild said it had not received any instruction to close its mines and would be keeping them open in the short term, adding that it would defend itself against the shutdown efforts.
Chief executive Ignacio Bustamante said:
Hochschild is surprised by this unilateral announcement by the Head of Cabinet. Our goal is to continue investing in Peru, growing our resources and extending mine lives, in accordance with the Peruvian legal framework.
We are prepared to enter into a dialogue with the government in order to resolve any misunderstandings with respect to our mining operations. However, given the illegal nature of the proposed action, the company will vigorously defend its rights to operate these mines using all available legal avenues.
BP goes on hydrogen hiring spree
BP has kicked off a hiring spree as it looks to fill jobs in its fledgling hydrogen business.
The oil major is one of a number of energy companies betting on hydrogen amid the shift to a low-carbon economy. It’s initially planning to fill around 100 roles to work on projects from Spain to Australia.
Matthew Williamson at BP told Bloomberg: “The ambition is to get folk in as soon as possible, so they can start super-charging what is already a growing business.” He said there’ll also be “future waves of recruitment.”
BP is ramping up its investment in hydrogen as it scales back fossil fuel production.
It already makes grey hydrogen — the dirtiest form of the gas that releases CO2 into the atmosphere – but has projects to produce blue hydrogen (where the CO2 is captured) and green hydrogen, which is made from water and renewable energy.
Video game maker suffers record fall on Jurassic World woes
Frontier Developments Jurassic World – Universal Studios and Amblin Entertainment Inc
Dinosaurs aren’t quite what they used to be – at least that’s what the latest figures from one British video game maker suggest.
Frontier Developments slashed its revenue forecasts for the full year, sending its shares crashing more than 38pc in their biggest one-day fall ever.
It came after the firm said sales of its latest title Jurassic World Evolution 2 had been lower than expected, despite a positive reception from critics. It also warned of “more muted” sales of its space-themed Elite Dangerous: Odyssey game.
Analysts at Citigroup described it as a “disappointing update”, saying they expected it to be poorly received.
LV steps up defence of Bain takeover
Bosses at mutual insurer LV have stepped up their defence of the company’s decision to accept a takeover offer from US private equity firm Bain Capital.
LV, formerly known as Liverpool Victoria, is facing heavy criticism over the deal. But on Monday it said the takeover was the only way to keep the business running and outlined its workings.
LV said a strategic review of the company in 2020 had found it needed hefty investment to stay afloat and that members would have to stump up the cash themselves if no external support were provided.
It said Bain would invest £212m and hand £533m to members through a one-off payment, as well as retaining offices in Bournemouth, Hitchin and Exeter. LV said this would not be possible under other takeover proposals.
It comes after rival Royal London last week attempted to disrupt the deal with its own takeover, but LV said this offer would see the business split up and result in redundancies.
Pound dips against dollar on interest rate uncertainty
The pound has pared some of its gains this morning after comments from the Bank of England raised questions over the certainty of an interest rates rise.
Sterling dipped 0.2pc against the dollar to $1.3428 after Governor Andrew Bailey said risks to the economy were “two-sided”.
Against the euro the pound dipped marginally, though it’s still close to 20-month highs after fresh lockdown restrictions sent jitters across the continent.
Analysts at ING said the UK appeared “slightly more resilient” to the fresh wave of Covid cases at the moment.
British Airways owner’s Air Europa takeover faces watchdog probe
Air Europa IAG British Airways takeover – REUTERS/Susana Vera/File Photo
British Airways owner IAG is facing scrutiny from the competition watchdog over its planned takeover of Air Europe.
The Competition and Markets Authority (CMA) said it is considering whether the £420m deal could lead to a substantial reduction of competition in the UK.
IAG first tabled a €1bn (£840m) offer for the Spanish airline back in 2019, but the price was slashed after the outbreak of Covid wreaked havoc across the sector.
The company has already offered concessions to European regulators over the deal, though the details have not been made public. IAG already owns Spain’s flag-carrier airline Iberia.
BHP gives green light for £9bn Australia project
FTSE miner BHP and Woodside Petroleum have given their final approval to a $12bn (£8.9bn) Australian gas project, while also confirming details of a merger to combine their energy assets.
In August BHP agreed to merge its oil and gas business with Woodside to create a top 10 global energy producer. The deal, which is expected create cost savings of over $400m, is set to complete in the second quarter of 2022, the companies said today.
Woodside, which is Australia’s biggest natural gas exporter, also said final approval had been given for the development of the Scarborough gas field off the coast of western Australia.
Shares in BHP ticked up following the announcement.
BHP chief executive Mike Henry said:
Merging our petroleum business with Woodside creates a large, more resilient company, better able to navigate the energy transition and grow value while doing so.
Through the merger we will provide value and choice for BHP shareholders, and unlock synergies in how these assets are managed.
FTSE risers and fallers
The FTSE 100 has started the week on the front foot, spurred on by telecoms stocks amid heightened dealmaking in the sector.
BT rose as much as 2.8pc to the top of the blue-chip index, while Vodafone gained 2.1pc. It comes amid a broader rally in the sector after private equity group KKR tabled a takeover bid for Telecom Italia.
The FTSE 100 is now up 0.4pc, with miner BHP also gaining after announcing a merger with Woodside Petroleum.
The domestically-focused FTSE 250 is up 0.3pc, with Diploma gaining 3.8pc after reporting a sharp rise in profit.
Marks & Spencer rises on potential private equity bid
Shares in Marks & Spencer have pushed higher this morning following a report that private equity group Apollo Global Management has been mulling a takeover bid.
Apollo began sizing up M&S after concluding it was undervalued due to the pandemic, the Sunday Times reported over the weekend. It’s unclear whether a recent rally in the firm’s shares has dampened this interest, though.
Marks & Spencer rose as much as 3.5pc as markets opened, after climbing more than 30pc over the last month.
In a bullish announcement earlier this month, the retailer raises its profit forecast for the second time, raising hopes that its long-awaited recovery could finally be taking effect.
Apollo’s reported interest in M&S comes amid a flurry of private equity activity in the sector, following deals for both Asda and Morrisons.
FTSE 100 rises at the open
The FTSE 100 has pushed into positive territory to start the week.
The blue-chip index is up 0.3pc at 7,243 points.
Final Crossrail test runs begin
Crossrail Elizabeth Line – Peter Summers/Getty Images
While the CBI bemoans rail links in the North, there’s been some movement on London’s troubled Crossrail project.
Final test runs have begun on the heavily-delayed and over-budget train service – which will be known as the Elizabeth Line – with a full opening slated for early next year.
The new line, which is Europe’s largest infrastructure project, was originally due to be completed by the end of 2018.
The initial opening will involve only the central portion of the line, with the outer sections to Reading in the west and Shenfield in the east initially running as separate services before being connected to the central link no later than May 2023.
Northern businesses ‘bruised’ by blow to rail investment, warns CBI chief
Northern businesses are “upset” and “bruised” at the Government’s move to scrap HS2’s Eastern leg and cut back the much-vaunted Northern Powerhouse project, the head of the CBI has said.
My colleague Russell Lynch has the details:
Tony Danker, the director general, also called on ministers to extend an olive branch to areas such as Bradford most affected by the diminished integrated rail plan unveiled last week, dealing a blow to the Government’s levelling up ambitions.
Mr Danker said: “Talking to members of that part of the world in the last 24 hours, they are very upset. And I think that the issue speaking to them was less about connectivity to London. It’s more about connectivity across the North, and multiplying the amount of places in the North that can participate in economic activity.
“I just hope the Government will go and talk to those communities and business communities about how to move on from here, because I think they’re feeling a bit bruised today.”
He added: “The Government needs to respond properly to those sort of cross-North capacity issues. And I think that if that has been inadequately addressed… they need to get around the table with these folks pretty soon.”
Ericsson to buy cloud firm Vonage in £4.6bn deal
Ericsson Vonage $6.2bn cloud – JONATHAN NACKSTRAND/AFP
It’s a fairly slow morning to kick off the week, but there’s a big deal in the telecoms world.
Swedish giant Ericsson has inked a deal to buy cloud provider Vonage for $6.2bn (£4.6bn) as it looks to build up its position in the rapidly-growing cloud market.
The company will pay $21 per share for US-based Vonage, it said this morning. The offer represents an equity value of about $5.3bn based on around 252m shares outstanding.
It comes as Ericsson grapples with a strain on profits due to lost business in China and chip shortages caused by global supply chain disruptions.
Vonage’s cloud services, which account for 80pc of its $1.4bn in annual revenues, enable developers to embed functions such as messaging or video into their products.
Chief executive Borje Ekholm said:
“Vonage gives us a platform to help our customers monetise the investment in the network, benefiting developers and businesses.”
EV chargers for all new homes
There’s a major step forward in plans to phase out petrol and diesel cars, with new laws requiring all new homes to install electric vehicle charges coming into effect from next year.
The Government says the measures form a key part of the transition to EVs and are designed to address criticism that the UK lacks the critical infrastructure needed to support the shift.
But the plans aren’t free from criticism. Labour has argued that the move does nothing to address the “appalling” geographical divide in available charging points.
The party said: “London and the South East have more public car charging points than the rest of England and Wales combined. Yet there is nothing here to help address this.”
5 things to start your day
1) City regulator appeals for Bitcoin expertise as terrorists exploit cryptocurrencies: FCA tenders £500,000 contract over fears crypto is now a hotbed for financial crime.
2) State expansion intensifying labour crisis, says Bailey: Economists warn that 250,000 new public sector jobs ‘seen as a bit cushy’ are drawing staff from hospitality.
3) Add costs of heat pumps to mortgages, suggests green tsar: Plus, the struggle to insulate Britons’ finances against the costs of going carbon-free.
4) The fight to save Argentina’s freefalling economy: Rise of an ‘anarcho-capitalist’ shows voters want fresh answers over how to end cycle of despair.
5) Electric aviation hunts the Tesla of the skies: Daunting challenges delay innovation take-off, despite Rolls-Royce speed record.
What happened overnight
Stocks were mixed in Asia on Monday after ending the week mostly lower on Wall Street, despite the Nasdaq’s first close above 16,000.
A resurgence of coronavirus outbreaks in the US, Europe and other regions is weighing on investor sentiment. Comments by advisers to the Chinese central bank about risks of “stagflation” have reinforced concerns about inflationary pressures.
The Shanghai Composite index gained 0.7pc to 3,583.37, while the Hang Seng in Hong Kong lost 0.4pc to 24,962.11.
Tokyo’s Nikkei 225 edged 0.1pc lower to 29,717.58. In Australia, the S&P/ASX 500 gave up 0.4pc to 7,368.00.
Shares fell in India but rose in Taiwan.
Attention has turned to the People’s Bank of China as Beijing strives to curb risks from excessive borrowing by property developers but still keep the economy growing.
Coming up today
Corporate: Diploma, Cerillion (Full-year results); Big Yellow, Augmentum Fintech (Interims)
Economics: Existing home sales (US); consumer confidence (EU)