Coal-fired power demand is poised to surge to a record high just weeks after China and India frustrated efforts to cut fossil fuel use at the Cop26 climate summit.
The International Energy Agency (IEA) said global power generation from coal was expected to reach 10,350 terawatt-hours in 2021 — a 9pc increase — driven by a rapid economic recovery that has “pushed up electricity demand much faster than low-carbon supplies can keep up”.
IEA boss Fatih Birol said the increase was “a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero.”
The energy body pointed the finger at China and India, who together account for two-thirds of global coal consumption. The two countries made a last-minute intervention at the UN climate summit last month, watering down commitments on reducing fossil fuel emissions.
Peloton pulls Mr Big ads after sex assault claims against Chris Noth
Peloton has axed its advertising campaign starring the actor who played Mr Big in Sex And The City following accusations of sexual assault.
Chris Noth has said claims made against him by two women more than a decade apart were “categorically false”.
His character was killed off in the debut episode of the Sex And The City spin-off series And Just Like That … after completing a Peloton spinning class.
Noth, 67, teamed up with the exercise company following his character’s controversial death, appearing in an advert for the fitness brand narrated and produced by actor Ryan Reynolds.
However, just days after its release, Peloton removed its campaign from social media in the wake of the allegations.
“Every single sexual assault accusation must be taken seriously. We were unaware of these allegations when we featured Chris Noth in our response to HBO’s reboot,” a spokesman said.
“As we seek to learn more, we have stopped promoting this video and archived related social posts.”
West End footfall drops during Christmas rush
After those bullish retail sales figures for November, there’s the first sign of what a gloomy outlook it is for the high street.
Footfall in the central London shopping district fell 7pc on Thursday from the previous week. It’s a grim reading for what is traditionally one of the busiest shopping days of the year.
Compared to pre-pandemic levels, footfall is still down by almost a third, according to the New West End Company.
Jace Tyrrell, chief executive of New West End Company, said:
With rising Covid cases dampening consumer confidence and a planned Tube strike looming on Saturday, we’re anticipating a muted final weekend of Christmas trading at a time when West End businesses should be enjoying a much needed boost.
The Government must act quickly to provide temporary financial support to leisure businesses across the UK, otherwise we run the risk of further viable businesses closing their doors in the coming months.
These businesses have made significant investments into their Christmas plans, and the Treasury must offer support to mitigate cash flow loss at this crucial time to ensure that businesses can bounce back strongly in 2022.
Oil slides as omicron muddies demand outlook
Oil prices have dropped for the first time in three days as the rapid spread of the omicron variant clouds the outlook for energy demand.
West Texas Intermediate dropped 1.4pc to below $72 a barrel after rising 2.3pc over the last two sessions. Brent crude fell 1.5pc.
Traders are taking stock of signs that the new Covid variant and fresh travel restrictions will dent demand, as well as the Bank of England’s decision to raise interest rates amid surging inflation.
German business confidence takes omicron hit
With UK consumer confidence slipping this month, it’s a similar story for businesses over in Germany.
A resurgence in Covid cases and fresh restrictions drove down confidence for German companies, with the Ifo institute’s latest index slipping to 92.6 — the six straight month of declines.
That’s a bigger fall than forecast, while current conditions were also considered weaker than in November.
Ifo president Clemens Fuerst told Bloomberg: “The difficulty is that we don’t really know how bad omicron will be. Manufacturing will get through it better but for services, for retail, this is a big problem.”
It comes after the Bundesbank lowered its outlook for economic growth in Germany next year and upped its inflation forecast, as supply chain bottlenecks and the pandemic put Europe’s biggest economy under pressure.
Gas prices plunge as Russia steps up supply
Staying on energy, there’s been a sharp reversal of the rally for gas prices this morning.
European prices have plunged as much as 16pc after Russia made a last-minute decision to top up fuel to the continent.
Supply fears have also eased as weather forecasts indicate that a cold snap from next week won’t last as long as expected.
Benchmark Dutch prices fell as low as €120.60 a megawatt-hour, while the UK equivalent dropped 11pc.
However, the market is still headed for its longest run of weekly gains since July as storage levels are at their lowest ever for this time of year, promising a tough winter with plenty of more volatility to come.
Traders remain unsure of what Russia’s supply strategy will be given increasing political tensions with the west over Ukraine.
Ineos to test turning plastic waste into food packaging
Chemicals giant Ineos will carry out a trial to recycle plastic into packaging that can be used for chocolate bars, snacks and pet food.
The company, led by Sir Jim Ratcliffe, has teamed up with Plastic Energy, developer of synthetic oil made from waste plastic, for processing at the Grangemouth refinery outside Edinburgh.
The initiative could result in the country’s first plant to use the product, known as pyrolysis oil, for plastics recycling.
Ineos is the latest company to look at the technology to reduce waste and cut emissions, following similar ventures by firms including Shell.
IEA: Energy security is at risk
The IEA’s report also contains a rather downbeat verdict on the green energy transition.
It warns of a “widening gap between political ambitions and targets on the one side and the realities of the current energy system on the other”.
It adds that “climate targets are getting further out of reach and energy security is at risk”.
Coal power generation set to hit record high
Coal-fired power demand could surge to a record high this year due to rising consumption in China, India and the US, according to a damning new report from the International Energy Agency (IEA).
The IEA said global power generation from coal was expected to reach 10,350 terawatt-hours in 2021 — a 9pc increase — driven by a rapid economic recovery that has “pushed up electricity demand much faster than low-carbon supplies can keep up”.
Overall coal demand, including for industries such as cement and steel, is expected to grow 6pc this year. Though it will not exceed the record consumption levels of 2013 and 2014, it could hit a new all-time high next year, the energy body said.
The stark figures highlight the challenges in global efforts to cut carbon emissions. China, which is responsible for more than half the world’s coal power generation, is set to see a 9pc increase this year. Generation in India is forecast to grow 12pc.
IEA boss Fatih Birol said the increase was “a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero.”
Consumer confidence falls as omicron dents festive cheer
Consumer confidence dropped in December as the rapid spread of omicron put a dent in festive cheer.
GfK’s closely-watched index fell 1 point to -15 this month, with Brits growing less inclined to make major purchases amid growing uncertainty over the Covid situation.
Joe Staton at GfK said:
News about the Omicron variant could not have arrived at a worse time for festive celebrations. As thoughts began turning to Christmas and the New Year, Omicron jumped out of nowhere and threatened to bring Santa’s sleigh crashing to a halt.
While the holiday season has not yet been hijacked, December’s headline score has slipped one point to -15 and the lack of Yuletide cheer is evident […]
We end 2021 on a slightly depressed note and it looks like it will be a bleak midwinter for UK consumer confidence possibly with new Covid curbs and little likelihood of any real uplift in the first months of 2022.
FTSE risers and fallers
The FTSE 100 has made a strong start to the day, extending gains to 0.3pc following upbeat retail data.
Miners Polymetal International, Fresnillo and BHP are helping to drive gains on the blue-chip index.
A dearth of corporate news is keeping things quiet elsewhere, while traders are still digesting the Bank of England’s surprise decision to raise interest rates on Thursday.
The FTSE 250 has gained 0.1pc, led by Cineworld, which is up 4pc as it recoups some losses after a £700m court ruling left it reeling.
Halifax: House price boom to end in 2022
After a seemingly unstoppable rise in house prices in 2021, the boom is set to come to an end next year.
That’s according to Halifax, which reckons prices will rise just 1pc in 2022 — the slowest rate of growth in a decade.
In its outlook for 2022, the lender says:
- The housing market once again proved surprisingly robust during 2021, as government policy support combined with pandemic-driven shifts in housing preferences to keep transaction demand elevated.
- House prices are expected to maintain their current strong levels, but growth to be much flatter in 2022, at around 1pc. However, forecast uncertainty remains very high.
- The pandemic has further worsened inequality across different demographics, including income and age, increasing the need to improve the availability of good quality, affordable housing.
Johnson Matthey sells health unit for £325m
Chemicals group Johnson Matthey has agreed to sell its health business to investment firm Altaris Capital in a £325m deal.
The company said it will receive £150m in cash on completion and will retain a 30pc stake in the division.
It comes after Johnson Matthey said it would exit its electric battery business, sparking a sell-off that has led to it being booted out of the FTSE 100.
Robert MacLeod, chief executive of Johnson Matthey, said:
As the world transitions to more sustainable technologies, we are focusing our portfolio on the most attractive growth areas, specifically businesses driving growth from climate change solutions – circularity solutions, hydrogen technologies and decarbonisation of chemicals and fuels. The sale of health is a further step towards simplifying our portfolio.
While health has good long-term prospects, near term trading has been challenging, and the business requires significant capital investment.
FTSE ticks up
The FTSE 100 has nudged higher at the open after retail sales for November outstripped expectations.
The blue-chip index rose 0.1pc to 7,270 points.
HSBC fined £64m over anti-money laundering failings
The City watchdog has slapped HSBC with a fine of almost £64m for failings in its anti-money laundering processes.
The Financial Conduct Authority (FCA) said it had found “serious weaknesses” with the bank’s automated systems that monitor hundreds of millions of transactions a month to identify possible criminal activity.
It said the raft of failings – which were found over the eight years from March 2010 to March 2018 – included failures to consider whether the scenarios it used until 2014 to identify money laundering covered relevant risks.
Mark Steward at the FCA, said:
HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions.
These failings are unacceptable and exposed the bank and community to avoidable risks, especially as the remediation took such a long time.
More expert reaction: A month is a long time in retail
Lisa Hooker at PwC warns that “a month is a long time in retail”.
The worst that high streets had to contend with in November was the aftermath of Storm Arwen. By the beginning of December, the effects of the omicron variant had begun to impact across the UK, and footfall has already begun to drop in city centres as shoppers heed advice to work from home and reduce household mixing.
Fortunately for retailers, this year’s trend towards shopping earlier for Christmas will have reduced the impact on all important festive sales, and multichannel and online retailers may even benefit in the run up to Christmas itself.
But the lingering uncertainty of how the variant will play out, the possibility of further restrictions, and the ongoing challenges of supply chain, staff shortages and cost headwinds, mean that the New Year may not bring the respite that the retail industry so badly needs.
Expert reaction: Trading boost may prove short-lived
Bethany Beckett, UK economist at Capital Economics, is also downbeat about the outlook for retailers:
The strong 1.4pc month on month rise in retail sales volumes in November was mainly due to a stronger-than-usual boost from Black Friday and people starting their Christmas shopping early. That means it was unlikely to last, even before the Omicron outbreak further dampened sales volumes in December […]
November’s decent rise chimes with other data that suggest the economy regained a bit of momentum last month. But that strength may prove little more than a brief reprieve for retailers for two reasons.
First, earlier Christmas shopping probably means that some spending has just been shifted forward from December into November. Second, omicron appears to be reducing economic activity.
While the latter is likely to hit retailers by less than other parts of the economy (as people may shift back to online goods purchases), it is hard to see the risk of tighter restrictions and lower overall activity as a positive for the sector.
Expert reaction: Omicron is major concern for retailers
Aled Patchett, head of retail and consumer goods at Lloyds, says:
British consumers looked to wrap up Christmas early this year, with November’s further increase in sales driven in part by fears of product shortages and the risk, as we are now seeing, of a new Covid variant emerging.
Omicron has fast become the major concern for retailers – particularly those with physical stores in towns and city centres that have seen footfall drop this week as commuting customers have been asked to work from home.
With inflation showing little sign of easing and household budgets likely to tighten in the New Year, the sector will need to strike a balance between offering discounts to lure customers and trying to protect already slim margins as the January – or even December – sale season kicks into top gear.
Online shopping falls to pandemic low
Online shopping dropped to its lowest level as a proportion of total sales since the start of the pandemic in November as shoppers flocked back to the high street.
The proportion of retail sales online fell to 26.9pc — its lowest since March 2020 and a continuation of a falling trend since its peak of 36.8pc in February 2021.
The ONS data also showed:
Non-food stores sales volumes rose by 2pc, driven by growth in clothing, computer, toy and jewellery stores.
Clothing stores sales volumes in November were above pre-Covid levels for the first time.
Fuel sales volumes rose by 3.7pc following some disruption to supplies in the previous two months.
Food store sales volumes fell by 0.2pc, but were still 3.2pc above levels in February 2020.
Festive cheer for retailers
We kick off with some positive numbers for retailers, as sales in November outstripped expectations.
Retail sales grew 1.4pc last month — well ahead of the 0.8pc growth forecast. This was driven by a shift to earlier Christmas shopping, as well as Black Friday deals.
But the outlook is less rosy for brick-and-mortar retailers, with the spread of the new Covid variant threatening to keep shoppers away over the next few months.
5 things to start your day
1) Just Eat joins fast grocery race with Asda deal Takeaway group plays catch-up with rivals Deliveroo and Uber Eats in deal with fourth-largest supermarket
2) Mobile masts takeover ‘threatens higher bills’ Competition and Markets Authority probes Cellnex’s proposed £9bn acquisition of 24,000 sites from Three owner CK Hutchison
3) Nicola Sturgeon’s government may have offered illegal subsidies to steel plant Scottish ministers accused of ‘amateur hour’ over deal with Sanjeev Gupta, whose businesses face inquiry
4) Brace for more restrictions, warns cinema chief Vue chief Tim Richards says further measures to tackle omicron will come ‘sooner rather than later’
5) Harrods Boxing Day sale to start 10 days early as omicron bites Coronavirus variant is hammering footfall in London’s West End
What happened overnight
Asian equities mostly fell on Friday, pulling back from the previous day’s rally. Tokyo, Singapore, Wellington, Manila and Jakarta all dropped into the red while Sydney, Seoul and Taipei edged up.
Coming up today
- Corporate: No scheduled FTSE 350 reporters
- Economics: GfK consumer confidence (UK), retail sales (UK), services PMI (UK), consumer price index (EU), Ifo business confidence (Ger)