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European stocks head for worst week since June

Germany - Alex Kraus/Bloomberg
Germany - Alex Kraus/Bloomberg
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03:06 PM

Market wrap

That's a wrap for today, folks. 

With just under 30 minutes until European markets close, the FTSE is up a modest 0.1pc after a tough week for investors, while Wall Street is edging higher.

Thanks for following and have a good weekend!


02:50 PM

Full Report: William Hill bidding war erupts

William Hill

My colleague Oliver Gill reports:

A £3bn bidding war has erupted for William Hill after US suitors filed competing bids for the British bookmaker.

Apollo Management, one of the world’s biggest buyout funds, and Las Vegas casino operator Caesars Entertainment have lodged cash offers, the FTSE 250 company said.

The Wall Street fund made an initial proposal at the end of August. It followed that with further offers in the following weeks alongside a rival bid by Caesars.

“Discussions between William Hill and the respective parties are ongoing,” the gambling operator said. “There can be no certainty that any offer for William Hill will be made, nor as to the terms on which any offer might be made.”

Suitors have until Oct 23 to make a firm offer under strict takeover rules.

The betting giant has been linked to a swoop for more than a year. Its shares were hit hard by the Government’s crackdown on fixed-odds betting terminals. Sales also sank 57pc over lockdown.

Led by Roger Devlin and Ulrik Bengtsson, chairman and chief executive respectively, William Hill has championed its position in the US, where a decades-long ban on sports gambling is being relaxed on a state-by-state basis.


02:26 PM

Coronavirus threatens flights’ ‘precious role’ in society, warns Airbus chief

Grounded planes 

Air travel’s “precious role” in modern life is at risk because of coronavirus, according to Airbus’s boss.

My colleague Alan Tovey reports:

Guillaume Faury, chief executive of the pan-European plane-maker, warned that the longer borders remain closed and flights grounded, the greater the danger of long-term damage to society, the global economy - and even peace. 

“Aviation connects and unites people, cultures and businesses, providing the lifeline of international trade, supporting development, education and global economies,” he said in an open letter.

“Air travel does not only broaden our intellectual horizons, it eases tensions by bringing us together to learn from and understand each other, helping us find answers to our shared problems. 

“Aviation safeguards global peace and stability. It underpins the multilateralism, diplomacy and conflict resolution that many have taken for granted in the latter part of the 20th century. 

“A more connected world is a more prosperous world, a prosperity that provides the foundation for innovation at scale and lasting transformation.”

Coronavirus has led to international travel bans to curb the spread of the virus that have wreaked havoc on the airline industry.


02:00 PM

Deutsche Bank revamps work from home rule in permanent shift

Deutsche 

Deutsche Bank is revising its work from home policies in an effort to permanently reduce office space, adding to a growing number of lenders that are using lessons learned from the pandemic to lower costs.

Bloomberg has the details:

The bank’s leadership is working on a new “hybrid model” for how staff can split work between the office and their homes, Chief Executive Officer Christian Sewing said at a conference on Thursday.

The new policies will eventually allow employees to have binding agreements on how many days per week they want to work away from the office, a person familiar with the matter said. The lender has developed estimates of how big a share will work from home, according to the person, who asked not to be identified discussing internal planning.

Deutsche Bank is joining lenders such as Mizuho Financial Group Inc. and Fifth Third Bancorp in cutting office costs after the coronavirus pandemic forced a large number of employees to work from home. Its top executives have repeatedly said they’ve been positively surprised by how little the shift has affected productivity, an assessment not all Wall Street companies are sharing.


01:38 PM

Wall Street opens mixed

US stocks have opened mixed amid an uncertain outlook for a new stimulus package.

A last-ditch attempt by Democrats and the White House to restart negotiations on new stimulus drew scepticism in Congress that a deal could be reached and written into law by the November election. 

US market data - Bloomberg

01:02 PM

Handover

Time to hand over to my colleague Simon Foy, who will steer the blog into the evening. Thanks for following along today!


12:58 PM

Wall Street set for mixed open

US stocks are set to make a mixed open in just over half an hour: futures trading indicates the benchmark S&P 500 will fall about 0.3pc, while the tech-heavy Nasdaq should open flat.


12:51 PM

Brussels appeals court ruling to reversed €13bn Apple tax bill

Margrethe Vestager - REUTERS/Yves Herman

The European Commission has launched an appeal against a decision to overturn an order for Apple to pay back €13bn (£11.8bn) in alleged state aid to Ireland.

My colleague Michael Cogley reports:

In July, Europe’s second highest court ruled that it was wrong to declare that Apple had received a “selective economic advantage” in a sweetheart tax deal with the Irish government. 

Margrethe Vestager, the commission’s vice-president of competition policy, had led a six-year long investigation into the tech giant’s operations in Ireland and alleged that the iPhone-maker had effectively paid less than 1pc in corporate taxes.

The General Court’s decision earlier in the year was a hammer blow to Ms Vestager who has taken a hard line against Big Tech. The case will now appear before the European Court of Justice, with a decision expected no earlier than 2021.

12:34 PM

Full report: Tesco and Waitrose imposes limits on key products

My colleague Chris Johnston has more on supermarkets’ efforts to prevent panic-buying. He writes:

“We have good availability, with plenty of stock to go round, and we would encourage our customers to shop as normal,” a Tesco spokeswoman said.

“To ensure that everyone can keep buying what they need, we have introduced bulk-buy limits on a small number of products.”

Waitrose is also imposing limits on some items in all stores on Friday, a spokeswoman said.

On Thursday, Morrisons became the first UK supermarket to put fresh restrictions on sales of goods including disinfectant and toilet roll.
  • Read more: Tesco imposes limits to curb panic-buying

12:12 PM

William Hill confirms cash proposals from Apollo and Caesars

William Hill just confirmed that it has received a cash proposal from buyout firm Apollo (see 12:33pm update), as well as one from its US partner Caesars.

It said:

Following an initial written proposal from Apollo on 27 August 2020, William Hill received a further proposal from Apollo and proposals from Caesars.

Discussions between William Hill and the respective parties are ongoing. There can be no certainty that any offer for William Hill will be made, nor as to the terms on which any offer might be made.

In accordance with the takeover code, the companies have until 5pm on the 23rd October to announce a firm intention to make an offer.

Its shares are up 31pc following that announcement.


11:56 AM

ITV’s Brand: Cardiff and Swansea to go into local lockdown

ITV’s political correspondent tweets:


11:51 AM

Market moves

After a few positive flashes earlier in the session, European equities are gradually falling deeper into the red – although the FTSE 100 is outperforming after a poor session yesterday:


11:33 AM

Buyout firm Apollo eyeing William Hill takeover – Bloomberg

William Hill - Alan Crowhurst/PA Wire

Big news breaking over the wires: US buyout group Apollo Global management is exploring a potential takeover of gambling group William Hill, Bloomberg reports.

Citing sources, it says:

The buyout firm has approached William Hill to discuss a potential deal, the people said, asking not to be identified because the information is private. Shares of the bookmaker have risen 19pc in London trading this year, giving the company a market value of about £2.4bn.

Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, the people said. A representative for Apollo declined to comment. A spokesperson for William Hill couldn’t immediately comment.

11:23 AM

Vodafone victorious in India tax dispute

Vodafone has won a major victory in a long-running tax dispute with the Indian government, in a decision that could save the telecoms group nearly $3bn.

Bloomberg has more details:

An international arbitration tribunal ruled Friday that India’s efforts to claim 200 billion rupees ($2.7bn) in past taxes were in breach of fair treatment under the bilateral investment protection pact between the south Asian nation and the Netherlands, according to a lawyer representing the company in the case. The tribunal has also asked India to halt its efforts to claim the tax dues. India can appeal.

11:02 AM

European banks stocks hit all-time low

Stock indices across the continent are slowly sinking into the red, dragging the Stoxx 600 Banks Price index to its lowest-ever level. 


10:42 AM

London on national Covid-19 ‘watch list’ – Evening Standard

London has been placed on the UK’s Covid-19 “watch list” following a jump in cases across the capital, the Evening Standard reports.

The paper says:

Thirty-five more patients with Covid were admitted to the capital in the last 24-hour period, taking the total to 212, of which 40 are on ventilators.A formal confirmation is due this afternoon from Public Health England but the announcement was made this morning by London Councils, which represents the 33 boroughs.

10:39 AM

Full report: Borrowing continues to soar

Chancellor Rishi Sunak - John Sibley/PA Wire

 My colleague Russell Lynch has a full report on this morning’s borrowing figures. He writes:

The huge sum for the April to August period already exceeds the £158bn Britain borrowed after the financial crisis in the whole of 2009/10 as the Treasury’s coffers creak under the cost of emergency measures to fight Covid-19.

August borrowing alone hit £35.9bn – the third biggest month on record - while the UK’s debt pile climbed to £2.02trln – £249.5bn higher than a year earlier.

10:12 AM

UK and US to announce AI partnership – Axios

The Trump administration is set to announce a new agreement on AI research between the US and UK, according to news website Axios.

It reports:

The partnership will include the two countries working together on research and development of AI, including on issues of explainability and fairness, an administration official told Axios.

09:48 AM

Revolution Bars launching restructuring

Revolution  - Handout

Revolution Bars is preparing to launch a radical restructuring as fears mount over the fallout of fresh restrictions on the hospitality sector.

My colleague Oliver Gill reports:

The operator has hired financial adviser Alix Partners to explore a number of options, The Telegraph has learnt. These are understood include a company voluntary arrangement - a form of insolvency that allows companies to restructure their debts.No final decision has been made by chief executive Rob Pitcher, sources said.Revolution Bars ranks among the hardest hit within the hospitality sector by new restrictions forcing pubs and restaurants to close at 10pm with many of its locations usually operating later into the night.

09:30 AM

Tesco re-introduces some item limits

In tweets, Tesco says it has introduced certain buying restrictions in response to customer panic buying:


09:23 AM

European stocks head for worst week since June

With a moderately poor performance today, Europe’s benchmark Stoxx 600 is set for its worst weekly fall since June, roughly 3.4pc down over five sessions:


09:00 AM

Shaftesbury sees ‘gradual recovery’ in footfall

West End landlord Shaftesbury’s shares have risen slightly this morning, after it reported a “gradual recovery” in footfall.

The FTSE 250 group scrapped its final dividend “in view of current conditions and uncertain near-term outlook”, but said it intends to resume payouts “as soon as it considers prudent”.

In total, 41pc of its rents due for the six months to the end of September have been collected. Of the remainder, 10pc “are expected to be subject to deferred collection arrangements”, 23pc are being waived and 26pc remained outstanding as of September 11th.

Chief executive Brian Bickell said:

The course of the pandemic in the short and medium term will continue to dictate the extent of restrictions imposed by the UK and other governments to contain the spread of the Covid-19 virus, with implications for the global economy and the pace of recovery. As an international destination, local trading conditions in the West End will inevitably be affected by these macro uncertainties.

Longer term, the exceptional qualities and features of London and the West End provide firm foundations for recovery as pandemic disruption recedes.

08:30 AM

Pound rises

The pound has pushed a little higher against the dollar today, climbing slightly more than 0.3pc against the US currency at one point:

Risk sentiment is boosting sterling on new (possibly misplaced) hopes that the US will be able to push through new fiscal stimulus, as well as reports EU and UK negotiators are pushing ahead with efforts to strike a deal despite recent tensions.


08:17 AM

Next boss warns City centres need to adapt

The boss of Next has warned that city centres must adapt to lower footfall and many retail jobs will be lost as consumers shift more permanently online in the wake of the pandemic.

My colleague Simon Foy reports:

Lord Simon Wolfson said that while many retail jobs were likely to be lost, Next “won’t draw very much” on the Government's Jobs Support Scheme, which was announced by Chancellor Rishi Sunak on Thursday. 

When asked if there will be a lot of “unviable” jobs in the retail industry on BBC Radio 4’s Today programme, he said: “I think that is right. I wouldn’t want to underestimate the difficulty that it is going to cause a lot of people who work in retail. It is going to be very uncomfortable for a lot of people.

“We will inevitably, and have already, reduced the number of people working in our shops, and I expect that to continue over the coming five or six years as demand for retail goes down.”

08:02 AM

Jim Ratcliffe becomes Monaco resident – Bloomberg

Jim Ratcliffe - AP Photo/Matt Dunham

 Jim Ratcliffe, the UK’s richest person, has become a resident of tax haven Monaco.

Bloomberg reports:

The 67-year-old is listed as living in the principality on the French Riviera, where residents typically don’t pay income or capital-gains taxes, according to a filing this week from a UK company he helps manage.

Ratcliffe is worth $22.5bn through his major stake in closely held Ineos, the London-based chemicals manufacturer he’s helped build since the 1990s. Details of his relocation have circulated since 2018, and last year the Sunday Times reported that tax planning around Ratcliffe and other senior Ineos executives caused tension with the company’s auditor, PwC. The accounting firm later resigned as Ineos’s auditor.

07:55 AM

Money round-up

Here are some of the day’s top stories from the Telegraph Money team:


07:36 AM

Full Boohoo report published: Allegations ‘substantially true’

Boohoo has now published Alison Levitt’s full review into its supply chains.

The QC said it was time for the group to “come of age”. Her key findings include that the original allegations made in a Sunday Times article were “not merely well-founded but substantially true”.

She summarised her findings as follows:

  1. There is no evidence that the company itself or its officers have committed any criminal offences
  2. I am satisfied that the allegations about poor working conditions and low rates of pay in many Leicester factories are not merely well-founded but substantially true;
  3. Boohoo’s monitoring of its Leicester supply chain was inadequate and this was attributable to weak corporate governance;
  4. From (at the very latest) December 2019, senior Boohoo Directors knew for a fact that there were very serious issues about the treatment of factory workers in Leicester and whilst it put in place a programme intended to remedy this, it did not move quickly enough; 
  5. Boohoo ought to have appreciated the serious risks created by ‘lockdown’ in relation to potential exploitation of the workforce of the Leicester factories. It capitalised on the commercial opportunities offered by lockdown and believed that it was supporting Leicester factories by not cancelling orders, but took no responsibility for the consequences for those who made the clothes they sold. However, I received no evidence that the company’s purchasing practices are responsible for an increased COVID-19 rate in Leicester.

07:32 AM

Pennon on track for ‘resilient’ results

Water group Pennon says it is “on track to deliver resilient financial results in line with management expectations”.

In a trading update, the FTSE 100 company said the impact of Covid-19 had been broadly in line with its expectations, anticipating a revenue impact of around £10m.

It said its sale of waste-management arm Viridor completed on July 8th, with net cash proceeds of £3.7bn, adding:

Following the completion of the sale of Viridor in July, Pennon's debt restructuring programme is progressing well, with around two thirds repaid to date of the up to £900 million the Group announced it would seek to retire. With shorter term deposit rates remaining low, the swift repayment of debt has significantly reduced the Group's cost of carry. Alongside this, a contribution of £36 million has also been made into the Group pension schemes.

Pennon said it remains in a “strong financial position”, with expected cash and committed facilities in excess of £3bn.


07:16 AM

Markets moves

As opening slightly higher, European market have quickly lost momentum and are slightly in the red. The FTSE 100 is almost totally flat. 

Bloomberg TV - Bloomberg TV

07:09 AM

Boohoo shares soar after update

Shares in Boohoo have soared 18pc at the open after it revealed details of an independent review into its supply chain (see 7:49am update).

As my colleague Simon Foy reports 

The independent review, conducted by Alison Levitt QC, has recommended a raft of improvements to Boohoo’s corporate governance, compliance and monitoring processes.The company said Ms Levitt's review found that Boohoo could have been a force for good if it had been “willing to take a different approach to how it both views and interacts with the Leicester supply chain”.

07:00 AM

Wizz Air will operate at 50pc capacity next month

Wizz Air  - REUTERS/Andrew Boyers/File Photo

Budget carrier Wizz Air expects to operate at 50pc capacity in October compared to last year, and doesn’t expect to top that level through winter if restrictions remain in place

The group said:

The protection of its solid balance sheet and excellent liquidity position as well as minimising cost across all areas of the business remain Wizz Air’s top priority. The Company has strongly improved its strategic position and its ability to respond to opportunities in its markets during the past six months.

While conditions continue to be challenging, the relentless focus on creating a competitive advantage and strong liquidity will allow Wizz Air to emerge from this crisis as a structural winner.

06:55 AM

Public sector borrowing reaction: surge is likely to fade

UK borrowing with “decline sharply” as fiscal support fades over the coming months, says Samuel Tombs from Pantheon Macroeconomics. He adds:

Looking ahead, monthly borrowing will decline sharply, despite the further measures announced by the Chancellor yesterday. The new Job Support Scheme, which will see the state cover one-third of the wages of the regular hours that employees do not work if employers cover another third, is markedly less generous than the previous Job Retention Scheme, which even in its diminished form in October will see the state paying 60pc of the wages of furloughed staff.

We also expect take-up of the Job Support Scheme by employers to be modest, as they are financially better off employing a few staff members full-time than keeping on a larger number of staff part-time. 
Pantheon Macroeconomics - Pantheon Macroeconomics

 Andrew Wishart from Capital Economics adds:

[After] an impressive rebound in Q3, we think the resurgence of the virus and new restrictions will cause GDP to stagnate for the rest of this year, hurting tax revenues…But with the recovery stuttering and no sign of concern in the gilt market, the government is right to have refocussed on supporting the economy rather than raising taxes.

06:49 AM

Boohoo says review found ‘unacceptable’ supply chain issues

Boohoo 

An independent review of Boohoo’s supply chain found “significant and clearly unacceptable issues”, the fast fashion company said.

Alison Levitt QC was appointed to review after allegations the group was paying factory workers in Leicester less than the minimum wage and forcing people to work during the pandemic without protection.

In a statement this morning, Boohoo said the review “identified many failings in the Leicester supply chain and recommended improvements to boohoo's related corporate governance, compliance and monitoring processes”. It added:

It goes on to state that there is ample evidence that the steps which Boohoo is now taking in relation to remedying problems in its Leicester supply chain had been implemented nearly a year ago. They were a product of processes it had itself put in place and not just a reaction to the negative publicity in July and August 2020. Nevertheless, with the benefit of hindsight we regret that these processes did not advance quickly enough.

Ms Levitt is satisfied that Boohoo did not deliberately allow poor conditions and low pay to exist within its supply chain, it did not intentionally profit from them and its business model is not founded on exploiting workers in Leicester.

The company set out a series of steps to act on Ms Levitt’s recommendations, which include

  • Appointing someone to oversee its “change agenda”
  • Strengthening its sourcing team
  • Consolidating its approved supplier list

It said:

We are confident that we can successfully embed all of the Independent Review's recommendations into our business model, without impacting lead times or financial expectations.

John Lyttle, its chief executive, said:

Today we publish Ms Levitt’s Independent Review in full. This has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance.

As a result, the Group is implementing necessary enhancements to its supplier audit and compliance procedures, and the Board’s oversight of these matters will increase significantly.

06:36 AM

Tax revenues remain under pressure

The UK’s revenues remained under pressure in August – at £51bn, they were 14pc lower than during the same month in 2019.  Tax revenues made up £37.3bn of that figures, £7.5bn less than in August 2019.

The cumulative figure is lagging behind 2019/20 (£269.9bn vs £306.7bn), after repeated year-on-year falls.

The ONS notes:

These figures are always subject to some uncertainty, as many taxes such as VAT, Corporation Tax and Pay As You Earn (PAYE) Income Tax contain some forecast cash receipts data and are liable to revision when actual cash receipts data are received. There is a greater degree of uncertainty at present because the full impact of the coronavirus pandemic is unknown.

06:22 AM

Debt ratio highest since 1961

The UK’s debt ratio – debt expressed as a percentage of GDP – was £2,023.9bn, or 101.9pc of GDP. That’s the highest level since the end of the 1960/61 financial year.


06:14 AM

Bumper year

And here’s how borrowing has compared to 2019 on a monthly and cumulative basis:


06:11 AM

How borrowing is rising

As this graph shows, borrowing is rapidly increasing, but remains beneath the Office for Budget responsibility’s estimates:


06:07 AM

Borrowing this year at £174bn

With a another massive month of borrowing (August was the third-biggest single month on record), the UK’s total borrowing for the first five months of this financial year is estimated at £173.3bn – which the ONS says is “£146.9bn more than in the same period last year and the highest borrowing in any April to August period since records began in 1993”.


06:01 AM

PSNB ex-bank at £35.9bn

Public sector net borrowing excluding banks for August came in at £35.9bn, slightly lower than expected but still hugely high by historic standards.

July’s figures were substantially revised, down to £15.4bn from a first reading of £26.7bn.

More follows…


05:56 AM

PSNB: What experts expect

As ever, the most closely-watched figure in today’s data is public sector net borrowing excluding banks. Economists polled by Bloomberg expect a monthly increase of £38bn – higher than in June and July, but lower than the record highs set in April and May.


05:52 AM

Agenda: Borrowing surge set to continue

Good morning. We’ll get the latest data on Britain’s public finances today, which is set to show August was another month of huge borrowing to fund Chancellor Rishi Sunak’s stimulus measures.

European markets are set to open higher after small gains in the US, but have failed to claw back Monday’s losses.

On the corporate front, it is set to be dead quiet, with water group Pennon the only major scheduled reporter.

5 things to start your day 

1) Pub and restaurant owners predict mass job lossesUKHospitality boss says Chancellor's measures are a stay of execution but will not save tens of thousands of positions. 

2) 'I'm left with more questions than answers': Four small business owners give their verdict on Rishi Sunak's latest financial rescue package .

3) JP Morgan tells some UK staff to keep coming into office: US bank asks workers to stick to established working pattern despite new government guidance. 

4) EU tries to curb reliance on City of London after Brexit: Brussels fears that London could pose a threat to its ability to set financial rules and regulations. 

5) Rolls-Royce on track to test 300mph electric plane: Embattled engineer completes ground testing for what it hopes will be the world's fastest electric plane. 

What happened overnight 

Asian shares advanced on Friday, cheered by a modest rally on Wall Street and rising hopes for fresh stimulus for the US economy.

Japan's benchmark Nikkei 225 edged up 0.6pc to 23,219.41. Australia's S&P/ASS 200 gained 1.3pc to 5,954.00, while South Korea’s Kospi was up 0.5pc at 2,283.47. Hong Kong’s Hang Seng gained 0.4pc to 23,394.24, and the Shanghai Composite edged less than 0.1pc higher to 3,224.84.

Coming up today

  • Trading statement: Pennon
  • Economics: GfK consumer confidence, public sector net borrowing (UK); M3 money supply (eurozone); durable goods orders (US).