Bitcoin has recorded its worst start to a year since at least 2012
Ozan KOSE / AFP
US technology stocks tumbled into correction territory on Monday amid growing fears that the Federal Reserve will significantly increase interest rates.
The tech-heavy Nasdaq index dropped by 4.8pc on Monday before recovering some losses to trade down 3.6pc.
It leaves the index down more than 12pc from November’s peaks, reversing all of the gains of the past six months, as enthusiasm for some of the big financial winners of the pandemic ebbs with the prospect of higher borrowing costs. Anything bigger than a 10pc drop is considered a correction.
Shares in success stories of recent years including Netflix, Amazon and Google-owner Alphabet have all tumbled as the world eyes the end of Covid, and of the ultra-cheap money which supported economies through the pandemic.
The biggest losers in Monday’s trading included the microchip maker ASML, fitness bike maker Peloton and gymwear brand Lululemon.
The International Monetary Fund (IMF) warned of the risk that higher inflation in the US could force the Fed to raise interest rates more rapidly than currently expected.
It said: “Broad-based US wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation.
“Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally.”
London listings to drop after hitting 14-year high
A darkening economic outlook may hit the number of London listings this year, new research has warned. My colleague Simon Foy writes:
Supply chain chaos, inflation and the energy crisis are likely to lead to lower consumer spending that could in turn hit the pipeline of flotations on the London Stock Exchange, according to EY.
A total of 121 companies floated on the LSE last year, the most since 2007, raising £16.3bn, it found.
However, Scott McCubbin of EY warned: “The outlook for 2022 is much less certain, with a number of prevailing headwinds, including inflationary pressures, which are likely to lead to interest rate rises and a move towards bond markets with more attractive yields.”
He added: “Supply chain issues and weaker consumer spending due to energy price rises also threatens market strength and may lead to a weaker equity market later in the year.”
The strong performance comes after years of subdued listing activity in London. In 2020, only 40 companies floated on the LSE.
Apple’s App Store developers generate $60bn in yearly revenue
Apple said that developers have made more than $260bn (£191.6bn) in revenue since the App Store launched in 2008, up about $60bn from the figure it reported a year ago.
The iPhone maker said the App Store generated a “new yearly record for App Store developer earnings last year”.
The tech behemoth said that it’s not possible to extrapolate the company’s cut of that revenue. Its App Store commissions have grown increasingly controversial and were an issue in its legal battle with Fortnite maker Epic Games .
Apple charges either 15pc or 30pc to developers, depending on how much revenue is being generated or if the app is a subscription used for more than a year.
Apple’s App Store revenue:
2021: $85 billion
2020: $72 billion
2019: $56 billion
2018: $47 billion
2017: $39 billion
2016: $29 billion
2015: $20 billion
2014: $15 billion
2013: $10 billion
2012: $5 billion
2011: $3 billion
2010: $2 billion
source: Sensor Tower, Apple
— Jon Erlichman (@JonErlichman) January 5, 2022
Government borrowing costs surge amid interest rates rise speculation
The Government’s borrowing costs have risen as markets bet on the Bank of England hiking interest rates four more times this year. Russell Lynch reports:
The state’s cost of borrowing for five years rose above 1pc for the first time since 2019, while the pound pushed towards two-year highs against the euro amid speculation that Threadneedle Street’s rate-setters will tighten monetary policy again within weeks.
The rise in five-year debt costs came as financial markets priced in an 80pc chance of a rate rise in February and signalled that Bank rate could be as high as 1.25pc by the end of the year – levels not seen since 2009.
In December the Bank became the first major central bank to raise rates since the pandemic struck, despite the emergence of omicron, lifting official rates from 0.1pc to 0.25pc in response to inflation hitting a decade-high of 5.1pc.
Airbus remains world’s largest commercial airplane supplier after 2021 figures
Airbus kept its crown as the world’s largest commercial airplane supplier for the third year running as it outstripped Boeing by delivering 611 jets in 2021, company data has shown.
Boeing only handed over 302 jets in the first 11 months.
Airbus also sold 771 airplanes during the year, giving a net sales total of 507 after adjusting for cancellations, though it was not yet clear whether that would be enough to pip its US rival.
Comparing the underlying performance of the two plane giants has been blurred by recent changes in accounting rules and sharp swings in airline fortunes during the COVID-19 crisis.
Boeing sold 829 planes between January and November. This fell to a net total of 400 after cancellations agreed during the period, but bounced back to 457 after the partial reversal of earlier accounting adjustments driven by an industry crisis.
Travel finance firm Fly Now Pay Later raises £55m to fund US expansion
A start-up that allows travellers to pay for trips in instalments has raised $75m (£55m) for an American expansion. My colleague Ben Woods has more:
Fly Now Pay Later has secured a debt funding package from Atalaya Capital Management for a transatlantic push despite the pandemic’s pressure on the tourism industry.
It follows the £45m secured in its previous two equity funding rounds, bringing the total amount raised for its global expansion to $150m.
Jasper Dykes, the founder and chief executive, said the company broke into the US market two years ago as part of a “resilience plan” to counter the blow to European domestic travel from Covid.
FTSE 100 closes lower as housebuilders hit by cladding bill
The FTSE 100 ended 0.5pc lower today as housebuilders were hit by £5bn in costs to remove cladding from buildings, while the weaker pound lifted large dollar earners such as Diageo, Unilever, British American Tobacco and Reckitt Benckiser.
Berkeley Group, Barratt Developments, Persimmon and Taylor Wimpey all dropped around 3pc after Westminster ordered the sector to pay billions as the government steps up safety efforts following the Grenfell Tower fire in 2017.
Housing minister Michael Gove set an early-March deadline for the industry to agree to a fully funded plan of action.
“The housebuilders have benefited from generous incentives, such as Help to Buy and the mortgage guarantee scheme, in recent years. However, state support is not a one-way street and the sector needs to do its bit to look after its customers,” said Russ Mould, investment director at AJ Bell.
Private hospital provider Spire to support NHS amid omicron surge
The NHS has drafted in extra support from private hospital provider Spire Healthcare as the omicron variant of coronavirus surges through the UK.
The two organisations have yet to hammer out the final details, but they expect the contract will be largely similar to the help that Spire provided between January and March last year, when the delta variant was spreading.
Spire started providing services to NHS patients today and will continue until the end of March. The firm said it will perform elective treatments on NHS patients and take over some urgent cancer work, while continuing to cater for its private patients.
Yoga pants maker Lululemon warns of omicron hit
Sportswear brand Lululemon has been a lockdown winner
Yoga pants maker Lululemon tumbled after warning that financial results will come at the low end of previous guidance, as the omicron coronavirus variant hits activity.
Sales for the fiscal fourth quarter, which ends Jan. 31, are trending toward the bottom of its range at $2.1bn (£1.6bn).
“We started the holiday season in a strong position but have since experienced several consequences of the omicron variant, including increased capacity constraints, more limited staff availability and reduced operating hours in certain locations,” boss Calvin McDonald said in a statement.
The fashion froup had benefited recently from sustained demand for comfy clothes during the pandemic. That had helped it counter the impact of industrywide logistical issues such as port congestion and labor shortages.
Virgin Atlantic challenges BA with new direct route to Austin
Virgin Atlantic will offer its first-ever flights to Austin, Texas, expanding its US network in a challenge to British Airways.
Virgin will serve the state capital four times weekly starting May 25 with its fleet. It’s the company’s first new route to the US since 2015.
Airlines are boosting their timetables in a bet that the coronavirus pandemic that’s hammered global travel will finally begin to wane in 2022.
Virgin has never previously flown London-Austin, a route pioneered by IAG-owned BA in 2017 and reopened in October after a 17-month gap.
That’s all from me – thanks for following! Handing over to Giulia Bottaro now.
Barclays wins £97m legal battle against NMC founder
Bavaguthu Raghuram Shetty
Barclays has emerged victorious in a legal battle to enforce a payment of around $131m (£97m) from the founder of scandal-hit NMC Health.
The bank turned to a London court after a Dubai judge ordered Bavaguthu Raghuram Shetty to pay the money after his foreign exchange business failed to meet a transaction agreement with Barclays in 2020.
Mr Shetty’s lawyers said at a December hearing in the UK that he is “financially paralysed” and asked for the suit to be adjourned so he could get proper legal representation. A London judge rejected that application on Monday, Bloomberg reports.
Mr Shetty, 79, is facing a number of freezing orders, including in India where he is currently stranded, his lawyers said. As part of this case, Barclays obtained a worldwide freezing order against the NMC founder, including against a London property.
A lawyer for Shetty said he will be appealing the judgment.
KPMG misled watchdog over Carillion audits, boss admits
KPMG’s chief executive has admitted that the big four accounting firm misled the accounting watchdog over its audits of Carillion in the years before it collapsed.
Simon Foy has more:
Jon Holt said: “It is clear to me that misconduct has occurred and that our regulator was misled.”
Carillion was one of the Government’s biggest contractors before it imploded in early 2018 under a £7bn debt pile. Some have questioned whether the company should have been given a clean bill of financial health by its auditor.
The admission comes on the first day of a disciplinary tribunal in which the Financial Reporting Council (FRC) has accused KPMG of duping the regulator after its staff gave “false and misleading” information about the state of finances at Carillion and another outsourcer.
Mr Holt, who has spent much of his time fighting fires since becoming chief executive last April, said: “The misconduct that this tribunal will hear about over the coming weeks is disturbing and upsetting for me and for my colleagues.
“This misconduct is a violation of our processes and clearly against our values. It is unacceptable, we do not tolerate or condone it in any way, and I am very sorry that it occurred in our firm.”
Read Simon’s full story here
Deutsche Bank names ex-UBS banker as UK wealth boss
Deutsche Bank has tapped a former senior UBS banker as the head of its UK wealth management business as it looks to expand its offerings to the ultra-rich.
James Whittaker, a former head of UBS’s UK coverage who joined the bank in October 2020, will head the division in the coming months, according to an internal memo seen by Bloomberg.
He will replace Michael Morley, a former Coutts chief executive who has held the top role in the UK since 2017 and is stepping down after more than four decades in the City.
Deutsche Bank is increasingly focusing on the lucrative business of managing rich people’s money. It has hired a number of wealth bankers from UBS and Goldman Sachs as it builds up its team.
Tech stocks lead losses as Wall Street slumps
Wall Street has dropped at the open, with tech stocks leading the losses amid worries over the Federal Reserve’s more hawkish policy.
Stocks lost ground last week after the Fed hinted at tighter monetary policy, while traders are turning their attention to key inflation data and corporate earnings later in the week.
The yield on the 10-year US Treasury note – a proxy for Fed interest rates – moved higher towards 2pc.
The tech-heavy Nasdaq led losses, dropping 2.6pc. The S&P 500 fell 1.6pc, while the Dow Jones lost 1.2pc.
Nvidia blasts critics who ‘romanticise’ Arm’s past
US tech giant Nvidia has hit back at critics of its £30bn takeover of Arm, arguing the British chip company isn’t as powerful as it’s made out to be.
In documents published today by both firms, they argued opponents to the deal “romanticise” Arm’s past, adding that if the company had control over markets “it would have sizeable revenue growth and would be enormously profitable”.
The companies also insisted that a decision to block the deal would not boost competition and could dampen investment in British companies.
Culture Secretary Nadine Dorries has ordered the competition watchdog to carry out a review of the merger, looking at competition as well as national security concerns.
The findings are due on 2 May, though an eight-week extension could be granted.
Grand Theft Auto and FarmVille united in $13bn video games deal
FarmVille owner Zynga has been snapped up for $13bn
The video games publisher behind Grand Theft Auto has struck a $13bn (£9.6bn) deal for FarmVille owner Zynga in a huge bet on the future of mobile gaming.
Ben Woods has more on the deal:
Take-Two has paved the way for smartphone spin-offs of its biggest console hits by creating one of the industry’s largest mobile game publishers with sales of just over $6bn.
The move marries titles from Take-Two’s most popular console and PC series, including GTA, Red Dead Redemption and Civilisation, with Zynga’s mobile games spanning Empires & Puzzles, Golf Rival and Harry Potter: Puzzles & Spells.
The cash-and-shares deal is a 64pc premium of Zynga’s closing price on Friday.
Strauss Zelnick, chief executive of Take-Two, said the deal significantly diversified the company and would give it leadership in one of the fastest-growing gaming arenas.
Read Ben’s full story here
Oil slips as supply issues ease
Oil prices slipped as supply return in nations that had suffered outages while traders turn their attention to new Covid outbreaks in China.
Benchmark Brent crude fell 0.3pc to around $81 a barrel, while West Texas Intermediate was also down 0.3pc.
Libya increased its production to 900,000 barrels a day after pipeline maintenance was completed, although some of its ports could be closed for the next week due to bad weather. Some output was also restored in Kazakhstan following widespread unrest last week.
Traders are also focused on China, which is continuing to battle Covid-19 outbreaks. The world’s largest oil importer ignited a mass testing blitz in the northern port city of Tianjin as the country strives to maintain its zero-tolerance approach to the virus amid more transmissible variants.
Food importers face more pain from Brexit charges
Despite Make UK’s upbeat poll, there are signs some companies are still struggling with Brexit, as my colleague Tom Rees reports:
Importers are set to face hundreds of pounds of extra charges when the next wave of post-Brexit checks affecting food products are introduced this summer, port bosses have warned.
Industry leaders are braced for bigger disruptions in July when physical inspections on certain products are introduced, with costly charges expected to be passed onto consumers already feeling the pinch.
From July, animal and plant products such as food being imported from the EU will need export health certificates and could be stopped for costly inspections by border authorities.
Richard Ballantyne, chief executive of the British Ports Association, warned the charges from the routine physical checks, such as paying for vets and cleaning, could be hundreds of pounds.
“If your goods are inspected, there is a cost… that obviously is then passed on to the importer and ultimately, that is passed on to manufacturers and consumers.”
Read Tom’s full story here
Poll: Manufacturers optimistic despite Brexit risks
Manufacturers are optimistic about their prospects for 2022, though renewed fallout from Brexit is clouding the outlook.
That’s according to a new survey from industry body Make UK, which found manufacturers were “more positive about the growth outlook as they enter 2022, with greater confidence in the prospects for their own companies than either the global or UK economies”.
Almost three-quarters of respondents “expect conditions in manufacturing to improve” this year despite the omicron variant affecting some output.
Two-thirds insisted the UK remained a “competitive location” for manufacturing, but the same proportion also stated leaving the EU had hurt their business. Just over half of firms believed more Brexit woes will materialise this year.
Make UK chief executive Stephen Phipson said:
It’s testament to the strength of manufacturers that they have emerged from the turbulence of the last couple of years in such a relatively strong position.
While clouds remain on the horizon in the form of rapidly escalating costs and access to key skills, the outlook is more positive for those that remain adaptable, agile and innovative.
Ferrari gives chief more powers in electric push
Ferrari chief executive Benedetto Vigna and team principal Mattia Binotto
Ferrari is overhauling its management structure and hiring more executives with tech backgrounds as the iconic car maker looks to steer towards electrification.
Several divisions including product development, digital and data and compliance will now report directly to chief executive Benedetto Vigna.
While there were some internal promotions, Ferrari also hired two executives from Mr Vigna’s former employer STMicroelectronics, suggesting the chief executive is turning to trusted allies to aid his turnaround.
Ferrari has been slow to embrace the shift to electric vehicles, with its first fully electric model not expected to hit the road until 2025.
Mr Vigna is now looking to accelerate that process after joining the luxury car brand in September.
MPs call for ‘swift’ conclusion to Woodford probe
MPs have called for a “swift” conclusion of the investigation into the collapse of the fund run by former star stockpicker Neil Woodford.
The Treasury Committee said all of the key evidence had been gathered in the probe, which is being carried out by the Financial Conduct Authority.
Committee chair Mel Stride said: “The FCA’s investigation is set to move into anew phase, and I have today written to the FCA to urge them to allocated the resources required to enable as swift a conclusion to their investigation as possible.”
The City watchdog opened its investigation in 2019 after Mr Woodford’s flagship fund collapsed, trapping 300,000 investors and £3.7bn.
US futures retreat amid Fed focus
US futures fell back this morning as investors braced for volatility in the bond market and the winding down of pandemic stimulus measures.
The prospect of more aggressive Fed policy is unsettling markets at the start of the year, while US inflation data due later this week will be closely watched for signs of how the economy is faring.
Goldman Sachs now expects the Fed to raise rates four times this year and start its balance sheet runoff process in July, if not earlier.
Further pressure is coming from the spread of the omicron variant, which has already ripped through Europe and is posing a fresh threat to the recovery.
Futures tracking the S&P 500 fell 0.2pc, while the tech-heavy Nasdaq lost 0.4pc. The Dow Jones was little changed.
Truck makers face damages of up to £13bn in price-fixing lawsuit
A British law firm is applying to lodge a class action suit worth up to £13bn against Europe’s biggest truck makers after they were accused of price fixing.
Howard Mustoe has more:
Buyers of trucks made by Volvo, Daimler, Iveco, MAN and DAF could have been ripped off to the tune of £20,000, its lawyers argue.
While councils and fire services have lodged their own suits, this is the first attempt to gather claims together and include smaller operators, with 90pc of truck operating licences held by businesses with 10 trucks or fewer, law firm Weightmans estimates.
It said that 650,000 trucks were sold during the time the cartel existed, meaning the claim could be as large as £13bn. It could be even higher if the court agrees that pricing could still have been skewed after the cartel formally disbanded.
Read Howard’s full story here
Atom Bank boss ‘utterly committed’ to four-day week
The boss of Atom Bank has said he’s “utterly committed” to the company’s new four-day working week after the move sparked a 500pc surge in job applications.
Chief executive Mark Mullen said that while it was “too early to declare victory”, results of the trial had so far been encouraging.
The British bank saw the jump in people applying for vacancies shortly after it announced all employees could work 34 hours over four days instead of the usual 37.5 hours over five days – with no pay cut.
Atom said an internal survey had also showed that staff were feeling less stressed.
Mr Mullen told PA that while the firm was only two months into the new regime, there were “really good reasons to be optimistic and cheerful”.
Boris Johnson: Isolation could be slashed amid staff shortages
Boris Johnson has said the Government is looking at cutting the Covid isolation period from seven days to five as staff shortages continue to bite.
The Prime Minister told reporters: “We are looking at it and will act according to the science.” He added that free lateral flow tests will continue to be provided “as long as they’re very important”.
It comes after former vaccines minister Nadhim Zahawi backed a reduction in the isolation time, saying it would be “more helpful” if the UK Health Security Agency finds it safe to do so.
Wilko to close 15 stores in blow to high street
Homewares chain Wilko is planning to close 15 stores this year, marking a further blow to the British high street.
The retailer said the stores will shut as leases end and favourable terms can’t be agreed, adding it will not affect its new openings or stores relocation programme.
Planned closures include Shipley, Bournemouth and Stockton next month, Scunthorpe in March, Grantham and Redditch in May, Rotherham, Skegness and Sutton Coldfield in June, Llanelli in August, Merthyr Tydfil in September and Cleethorpes in October.
The GMB union described the move as “another nail in the high street’s coffin”, warning that hundreds of jobs could be lost.
Credit Suisse rises on Italian merger report
Shares in Credit Suisse rose as much as 2pc this morning following reports boss Antonio Horta-Osorio may be seeking a sale or merger with an Italian bank.
Zurich financial news site Inside Paradeplatz reported that UniCredit would be among possible merger candidates, while French bank BNP Paribas could also be interested.
Credit Suisse has declined to comment on the report.
Pound hits pandemic high against euro
After a subdued start to the day, sterling has now rallied to its highest level against the euro since just before the pandemic hit.
The pound was 0.2pc higher at 83.38p after hitting its highest level since February 2020.
Growing expectations of a Bank of England interest rate rise and easing fears about the impact of omicron have both helped sterling to gain ground in recent weeks.
Against the euro, it’s largely flat at $1.3583.
Time to check in on the Telegraph’s Money team – here are some of their top stories to kick off the week:
House sellers pocketed £95k each last year – House price growth meant vendors made an average profit of 46pc on what they originally paid for their home
‘I’ve unexpectedly received money in my bank account – am I legally allowed to keep it?’ – Ask a Lawyer: a mystery deposit arrived in the account – but was it a mistake?
‘EasyJet refused to help my elderly friend find his Covid travel documents, so he missed his flight’ – The airline would not allow an elderly passenger to board after he struggled to bring up a QR code on his mobile phone
For sale: a £5m Lake District home inspired by picnics with Beatrix Potter – Property of the week: this 14-bedroom property sits close to Lake Windermere
Rolls-Royce posts record sales as it gears up for electric push
Rolls-Royce has posted its best ever year for car sales, driven by demand for its Ghost model.
The luxury carmaker said it delivered 5,586 cars last year – up 49pc on 2020. The company said there was “high demand for all models”, particularly the Ghost and Cullinan. Bespoke commissions were also at record levels.
It comes as Rolls-Royce prepares for the launch of Spectre, its first fully electric car, which is due to be released in the final three months of 2023.
Chief executive Torsten Muller-Otvos described 2021 as “a phenomenal year” for the comany.
He said: “We delivered more cars than at any time in the marque’s 117-year history with unprecedented demand for all products in every global market.”
Wise tumbles as Citi cuts stock on ‘excessive’ growth expectations
Shares in Wise dropped as much as 7.3pc to a record low this morning after the fintech firm was downgraded from neutral to sell at Citi.
Analysts said the stock now priced in “excessive long-term revenue growth expectations”, adding that the digital payments sector wasn’t a “winner takes all” market and there’s strong competition from rivals such as Western Union.
Citi said Wise’s shares were pricing in an estimated revenue compound annual growth rate of around 20pc to 2030, compared to an estimated rate of 14pc for the wider market.
It marks a further blow for Wise, which has seen its shares drop 28pc since its initial public offering in July.
Eurozone unemployment eases in November
The unemployment rate in the eurozone eased to 7.2pc in November in a sign the labour market was improving despite the spread of the omicron variant.
The unemployment rate was down from 7.3pc the previous month and was in line with expectations.
For the EU, unemployment stood at 6.5pc in November.
IMF: Developing countries at risk as Fed prepares to raise rates
Emerging economies could be facing rough times ahead as the Federal Reserve prepares to raise interest rates and economic growth slows due to the omicron variant, the IMF has warned.
The financial body said the global economic recovery from the pandemic should continue this year and next. But it warned “risks to growth remain elevated by the stubbornly resurgent pandemic”.
While omicron appears to be milder than previous strains, the reintroduction of tougher measures in many countries is threatening the fragile recovery.
It comes as the Fed prepares to raise interest rates to tackle surging inflation, meaning financing costs for some emerging economies with dollar-denominated debt will rise.
The IMF said: “Given the risk that this [omicron] could coincide with faster Fed tightening, emerging economies should prepare for potential bouts of economic turbulence.”
Pound steadies just shy of record highs
Sterling is holding steady this morning, just shy of its recent record highs against the dollar and euro amid expectations of an interest rate rise and easing worries about omicron.
The pound has strengthened since mid-December as the Government’s decision not to bring in tighter Covid restrictions helped to boost sentiment.
Meanwhile, investors are ramping up their bets that the Bank of England will raise interest rates as soon as next month after a surprise hike in December.
The pound ticked up marginally against the dollar at $1.3591, close to the highest level since November 2021 it reached last week. Against the euro it was 0.2pc higher at 83.41p, not far from its highest since February 2020.
Audioboom shares rise as it turns first profit
Audioboom is backed by property tycoon Nick Candy
Shares in Audioboom jumped after the Nick Candy-backed podcast firm said it had turned its first ever annual profit.
The London-listed company posted full-year revenue of around $60m (£44m), up 125pc on the previous year. The firm posted its maiden net profit of $1.4m – compared to a loss of $3.3m in 2020.
Audioboom, which distributes podcasts from stars including Sue Perkins, said it had enjoyed a sharp rise in monthly downloads, while ad tech-related revenue grew sharply in the fourth quarter.
Stuart Last, chief executive of Audioboom, said:
2021 was a phenomenal year for Audioboom. In my second year leading the business we have delivered an incredible set of results, the culmination of our focus on content expansion and platform development.
Achieving profitability on both an adjusted earnings before interest, tax, depreciation and amortisation and net basis is transformative, establishing a self- sustaining business funded for continued growth, and reshaping shareholder value.
Gas prices fall as imports hit two-year high
Natural gas prices have dropped for the second day as a wave of cargo ship deliveries helps to ease winter supply worries.
Flows from liquefied natural gas import terminals in northwest Europe are at the highest levels since December 2019, according to Bloomberg data.
The recent surge in prices has prompted many gas suppliers to divert their ships away from Asia and towards Europe. This is helping to offset limited supplies from Russia, though geopolitical tensions over Ukraine are still lingering.
Benchmark European prices fell 6.4pc this morning after surging by a quarter last week. The UK equivalent fell 3.9pc.
Tortilla shares sizzle as it wraps up strong year
Shares in Tortilla pushed higher this morning after the restaurant chain said strong fourth-quarter trading had pushed full-year revenue and profit ahead of expectations.
Revenue hit £48.1m in 2021 – up 79pc on the previous year and a third higher than pre-Covid levels in 2019.
The Mexican chain said trading was stronger in the final three months of the year despite the spread of the omicron variant. Growth was also boosted by the opening of seven new sites, taking its total estate to 64 restaurants.
Tortilla, which floated on London’s Aim market in October, said it was confident trading would meet expectations in 2022 despite the ongoing threat from Covid and said it was on track to hit its target of opening 45 new sites over the next five years.
Richard Morris, chief executive of Tortilla, said:
We are delighted to have maintained the very strong trading momentum, outlined at the time of our IPO, to achieve an excellent full year performance. This was supported by the growing appeal of our proposition and the continued expansion of the Tortilla brand. Once again, the adaptability of Tortilla’s offer supported us through the latter stages of the year to achieve a strong performance across both delivery and take away.
In addition to delivering this very strong financial growth, we were pleased to achieve progress against a number of strategic objectives, including the launch and development of various partnerships, and growing our estate of delivery kitchens and traditional bricks and mortar locations, to meet the increasing customer preference for delivery of high-quality Californian-inspired Mexican cuisine.
FTSE risers and fallers
The FTSE 100 is treading water this morning, with a rally in bank stocks offsetting losses for housebuilders.
Shares in Persimmon, Barratt Developments, Berkeley and Taylor Wimpey all dropped between 2pc and 2.5pc after the Government said developers will have to stump up £4bn to cover the cost of removing cladding.
But losses were capped by gains for HSBC amid mounting expectations of interest rate rises. BP also rose more than 1pc as it kicked off a $500m share buyback.
The domestically-focused FTSE 250 fell 0.3pc, dragged down by continued concerns over the impact of omicron on trading. Plus500 bucked the trend, rising 2.8pc after upgrading its full-year forecasts.
Plus500 lifts forecasts despite trading slowdown
Online trading platform Plus500 has lifted its expectations for the full year, even as weaker customer activity dented growth in the fourth quarter.
The company posted annual revenue of $718m (£529m), with fourth-quarter revenue down almost a quarter compared to the previous three months. It now expects to report a core profit of $387m for the year.
Plus500 said it would continue to invest in future growth by actively targeting acquisitions. The board will also consider a new share buyback programme.
Shares rose 2.9pc following the upbeat announcement.
Developers face £4bn bill to remove cladding
Developers have been ordered to foot a £4bn bill to cover the cost of removing cladding from buildings in the wake of the Grenfell Tower fire.
The Government is already committing around £5bn for repairs so far, and last year imposed a levy on housebuilders to raise £2bn towards the cost over the next decade.
The measures have so far targeted high-rise buildings, but the latest announcement is designed to remove cladding on buildings between 11 and 18 metres high where tenants had been facing bills of tens of thousands of pounds to remove cladding.
Ministers are understood to be issuing an ultimatum to housebuilders, saying they’ll be excluded from schemes such as Help to Buy if they fail to comply. They’re also considering a new levy on profits.
Read more on this story: Developers ‘must foot £4bn cladding bill or face exclusion from government schemes’
FTSE 100 opens flat
The FTSE 100 has started the week on a muted note.
The blue-chip index is barely changed at the open, trading at 7,484 points.
Hospitality firms call for ‘urgent’ support
The stark figures on restaurant finances come as bosses mount a plea for further government support. This could include further cuts to VAT for restaurant businesses to help stimulate consumer spending, for which firms are currently lobbying.
Matt Oliver continues:
Kate Nicholls, the boss of industry group UKHospitality, said support was urgently needed after advice for white collar staff to work from home wiped out up to 80pc of revenues for some hospitality businesses.
“Plan B may seem insignificant to some, but it is livelihoods for many,” she tweeted.
She called on the Government to deliver financial support to businesses “now”.
Ministers on Friday made £700m more in grant funding available through local authorities, but firms have to apply for it and meet certain criteria.
Kwasi Kwarteng, the Business Secretary, said: “All through the pandemic we have stood by the side of business to ensure they are supported at every stage. The spread of the omicron variant is presenting new challenges, particularly for the hospitality and leisure sectors, so it’s only right that we are stepping up with an urgent support package.”
Fears over future of restaurants as losses double
Fears of a wave of new restaurant group collapses are mounting after losses at the top 100 firms more than doubled last year, writes Matt Oliver.
Losses at the largest businesses rose by 174pc to £673m in the year to September, according to research by UHY Hacker Young.
The bleak figures do not cover the Christmas period, which was also difficult for hospitality businesses for the second year due to pandemic restrictions.
With household spending due to be squeezed in the spring when energy bills and taxes shoot up, it means a fresh wave of restaurant firm collapses are now more likely as many face rising costs, UHY’s Peter Kubik warned.
The figures come just days after celebrity chef Gino D’Acampo’s My Pasta Bar chain collapsed into administration.
Aldi hails ‘best ever’ Christmas as trading rebounds
DANIEL LEAL-OLIVAS/AFP via Getty Images
Aldi has hailed its “best ever” Christmas sales as trading rebounded in the crucial month of December.
The German discounter said sales increased 0.4pc on the same month last year, when supermarkets were boosted by the closures of hospitality venues due to lockdown measures.
Aldi cited figures from Kantar showing it was the “only major supermarket” to grow sales in December.
Giles Hurley, chief executive of Aldi UK, said:
There’s no doubt that 2021 was a long and difficult year for lots of people, but our amazing colleagues stopped at nothing as they came together to deliver the Christmas that our customers deserved.
As we look ahead, the top priority for most families this year will be managing their household budgets in the face of rising living costs.
BHP bets on EV push
FTSE 100 miner BHP has announced a major investment in a Tanzanian nickel project, highlighting the surging demand for raw materials needed for the green energy shift.
The company will invest $100m in Kabanga Nickel, a private British company, which is said to be the largest development-ready nickel sulphide deposit in the world.
BHP is aiming for first production in 2025 and is targeting a minimum annual nickel output of 65,000 tonnes, with the mine expected to have a lifespan of at least 30 years.
It marks a major bet on surging demand for electric vehicles, with nickel playing a key role in the development of EV batteries.
5 things to start your day
1) Food importers face more pain from Brexit charges Costs from physical checks being introduced in July are expected to be passed onto consumers, industry leaders warn
2) Windfall tax would hit energy security and green investment, industry warns Oil and Gas UK says “opportunistic” calls to launch a further raid on an already heavily taxed sector is counterproductive
3) Let more Indian workers into Britain, says CBI’s Bilimoria CBI president calls for looser visa rules between India and the UK as Anne-Marie Trevelyan begins formal trade talks begin this week
4) Planning reform needed to help solve housing crisis, peers warn New report finds the Government will fall short of its target to have 300,000 homes built a year unless it pushes through reforms
5) Elon Musk accused of dancing to Beijing’s tune to build Tesla Entrepreneur’s tricky balancing act between the US and China is likely to become increasingly difficult
What happened overnight
Asian markets fluctuated on Monday after another negative performance on Wall Street as US data showed fewer new jobs than expected were created last month but that wages saw a strong gain. Singapore continued its bright start to the year with another healthy gain while there were also advances in Taipei, Manila and Jakarta, though Sydney, Seoul and Wellington dipped.
Coming up today
Corporate: Aldi (trading update)
Economics: Unemployment rate (EU)