The FTSE 100 has slumped 1.7pc while the pound dropped to its lowest level in a year amid rising fears the UK could be plunged back into lockdown to curb the rapid spread of omicron cases.
The Telegraph reported that Boris Johnson is considering three options, including a plea to limit household mixing over Christmas, tougher restrictions including a curfew or a full lockdown.
The move risks a backlash from businesses, who warned Chancellor Rishi Sunak he has 24 hours to provide support for hospitality companies or risk the closure of 10,000 pubs and restaurants.
The FTSE 100 has dropped 1.7pc to 7.143 points. The pound fell 0.5pc against the dollar to its worst since December 2020.
Supreme Court allows Venezuela’s Juan Guaido to assert control of $1bn gold
The Supreme Court has ruled in favour Venezuela’s opposition leader Juan Guaido, paving the way for him to take control of $1bn (£760m) of gold locked up in the Bank of England’s vaults.
Judges accepted the UK’s “clear and unequivocal recognition” of Guaido as president. However, they said a lower court will still need to consider whether Venezuelan court decisions should also be taken into account in deciding who ultimately controls the gold.
The long-running case has been heard by multiple courts since Venezuela’s central bank sued the Bank of England for access to the gold, saying it was urgently needed in a joint effort with the United Nations Development Fund to fight the Covid-19 pandemic.
The opposition has said that if it gets control of the bullion, it plans to safeguard the gold for the time being, as part of Guaido’s efforts to secure Venezuela’s financial assets abroad.
Facebook poaches top lawyer from competition watchdog
The revolving doors are in full swing in the metaverse, it seems, as Facebook has poached a top lawyer from the competition watchdog.
The Competition and Markets Authority (CMA) said it’s hired a new senior legal director after Jenny Coombes — who it appointed in July — joined the social media giant last month.
Geert Goeteyn, a former partner at Reed Smith in Brussels, will take over the role.
It comes as the CMA looks to clamp down on major tech firms including Facebook after gaining extra powers over global markets following Brexit.
It’s not the first time a high-profile appointment at the Silicon Valley firm has stirred controversy. Nick Clegg, former deputy prime minister, joined Facebook as its head of global affairs back in 2018.
Rio Tinto picks new chairman after Australian mine scandal
Rio Tinto has turned to a Canadian ambassador and veteran management consultant to lead its board as the company tries to put a scandal in Australia behind it.
The FTSE 100 mining giant said Dominic Barton will join the board in April and be appointed as its chairman at its annual shareholder meeting a month later.
The appointment follows a turbulent time for Rio Tinto after the business destroyed a historic site in Australia which was of large cultural importance to the indigenous population.
In the ensuing scandal Rio’s chief executive Jean-Sebastien Jacques stood down from his role, and chairman Simon Thompson announced he would also leave the firm.
Mr Barton said: “It is a great honour to succeed Simon as Chair of Rio Tinto. Returning to the private sector, I am excited to join a company with world-class people and assets as it navigates a shifting competitive landscape and seeks to emerge as a leader in the climate transition.”
Germany picks Joachim Nagel as new Bundesbank chief
The new German government has picked career central banker Joachim Nagel as the next head of the Bundesbank.
Mr Nagel, a former Bundesbank board member, will take over on 1 January from Jens Weidmann, who quit five years early after a decade of fruitless opposition to the ECB’s aggressive stimulus policy of sub-zero interest rates and massive purchases of government bonds.
The 55-year old economist will take charge of the eurozone’s biggest national central bank at a tense moment. Inflation is more than twice the ECB 2pc target, and opposing camps within the ECB’s Governing Council have distinctly different views on its likely evolution.
Finance minister Christian Lindner said: “In view of inflation risks, the importance of a stability-oriented monetary policy is growing. Nagel is an experienced person, who ensures continuity at the Bundesbank.”
The Hut Group jumps as shorts back down
On a fairly grim morning for markets, The Hut Group is proving a rare bright spot.
The troubled ecommerce group jumped as much as 16pc — the most since Oct 18 — on signs short-sellers could scale back their bets.
The Sunday Times reported that research firm The Analyst stopped recommending clients short THG’s stock, saying it was difficult to see further downside and that the company’s core beauty and nutrition businesses “appeared sound”.
It’s a much needed uplift for THG after a tumultuous few months, though its shares are still down 72pc in the year to date.
Elon Musk: I’ll pay over $11bn in taxes this year
Elon Musk has announced to the world that he’ll pay more than $11bn (£8.3bn) in taxes this year in what could be a record payment to the US Internal Revenue Service.
Earlier this week, Democrat Elizabeth Warren took to Twitter to say that Mr Musk should pay taxes and stop “freeloading off everyone else” after Time magazine named him its “person of the year”.
The Tesla boss responded by saying that he “will pay more taxes than any American in history this year”.
Mr Musk is the world’s richest person and his company Tesla is worth about $1 trillion. Over the last few weeks, he’s sold nearly $14bn worth of Tesla shares after polling his Twitter followers on the matter.
Businesses struggle to meet demands as vacancies surge
There’s some fresh data out from the ONS this morning that highlights just how much the skills shortage is hitting businesses.
With a record 1.2m job vacancies in the three months to November, more than half of companies that reported a worker shortage said they were unable to meet demands.
The figures showed the number of unemployed people per vacancy fell to a record low of 1.2 between August and October after reaching a pandemic peak in the three months to June 2020.
Sage snaps up retail tech firm Brightpearl for £225m
Sage has bought retail management system firm Brightpearl in a £225m deal.
The FTSE 100 group, which already held a 17pc stake in Brightpearl, said the acquisition will be funding by its existing cash reserves.
Bristol-based Brightpearl runs a retail operating system allowing retailers and wholesalers to automate their back office to reduce costs and improve efficiency.
Sage said the deal accelerates its growth strategy, expands its digital capability and increases its appeal for medium-sized businesses.
Brightpearl is expected to generate revenues of £20m for the year, representing growth of around 50pc from last year, and to achieve operating profit around the breakeven level.
Steve Hare, chief executive of Sage, said:
Sage’s purpose is to knock down barriers so everyone can thrive. Together, Sage and Brightpearl will remove the barriers that hold back retailers and wholesalers, streamlining their systems and enabling them to focus on growth.
I’m delighted to welcome Brightpearl, its management team and colleagues to Sage, and look forward to executing on our strategic priorities together and delivering accelerated growth.
Pound wipes out interest rate gains
Sterling has dropped to a three-day low, wiping out all its gains from the Bank of England’s surprise decision to raise interest rates last week.
The pound fell 0.3pc against the dollar to $1.3205. Against the euro, it’s down 0.4pc at 85.24p.
Markets have slumped this morning as the continued spread of the omicron variant sparks fears of tougher restrictions, or even a fresh lockdown.
The pound is coming under further pressure on renewed Brexit worries. Brexit minister David Frost resigned over the weekend in protest at tax rises and the Government’s Covid response. He’s been replaced by foreign secretary Liz Truss.
Rolls-Royce falls on Qatari nuclear funding
Rolls-Royce has dropped this morning after it confirmed it’s getting Qatari backing for its small nuclear reactors business.
The engineering giant said Qatar’s sovereign wealth fund will invest £85m in its SMR unit. Shares dropped 4.2pc.
It’s the latest tie-up with the oil-rich nation after Rolls agreed a deal with the Qatar Foundation to invest in green technology as part of a plan to create up to 10,000 jobs and ultimately create up to five new billion-dollar businesses.
The move, which confirms a Telegraph report, means the venture is now fully funded. Rolls-Royce previously secured £490m in investment from the Government and commercial backers including French oil dynasty the Perrodo family.
FTSE risers and fallers
Christmas may be approaching, but the sentiment is far from festive on the FTSE this morning.
The blue-chip index has slumped 1.9pc to 7,131 points as investors worry about mounting omicron cases and the risk of another lockdown.
Oil majors BP and Shell have fallen 3.5pc and 2.5pc respectively, tracking lower oil prices amid fears about energy demand, while miners dropped on weaker copper prices.
Events group Informa is the biggest faller, losing 5.5pc amid lockdown fears. Standard Chartered fell 1.5pc after it was hit by a £46.5m fine.
The domestically-focused FTSE 250 is also down 1.7pc, led by a 5.6pc fall for Cineworld.
Shoppers shun high street ahead of Christmas
Even before any new restrictions have been announced, the spread of omicron is already hurting businesses.
The latest footfall data showed shoppers were avoiding high streets up and down the country this weekend — usually a key pre-Christmas retail rush.
The number of people on high streets fell by 5.9pc on Sunday but rose 4.8pc at retail parks, according to data from Springboard.
Diane Wehrle at Springboard said consumers were “clearly cautious” about venturing out to the shops.
Skanska to build £53m London data centre
In some more positive news this morning, construction giant Skanska has announced it’s building a major new data centre in London.
The Swedish company said the contract was worth £53m and would be added to its fourth-quarter order bookings for Europe.
The London11 data centre will include six new data halls, external steelwork plant gantries as well as plant rooms for mechanical and electrical and public health services.
Construction work will begin in December 2021 and the project will be completed during Spring 2023.
Oil tumbles as omicron hits travel demand
It’s not just the FTSE that’s falling this morning — oil prices have also gone into reverse.
A surge in omicron Covid infections across Europe and the US has sparked tougher travel restrictions and fresh lockdown, which in turn is worrying traders about weaker energy demand.
There are also signs of overdemand in the market, while thinner trading volumes during the Christmas period have raised the risks of price swings.
Benchmark Brent crude has fallen just over 3pc, while West Texas Intermediate is down 3.4pc.
GSK taps ex-Tesco chief Sir Dave Lewis to chair consumer spin-off
GlaxoSmithKline has appointed former Tesco chief Sir Dave Lewis to chair the consumer healthcare business it plans to spin off next year.
GSK said Lewis, who left the supermarket chain in September last year, will join as non-executive chair designate from 1 January 2022.
He will lead the pharmaceutical giant’s consumer healthcare division, which owns brands including Sensodyne toothpaste and is set to demerge from the wider group.
GSK said the demerger was expected to take place in mid-2022, with the consumer business listing on the London Stock Exchange.
Brian McNamara has been appointed chief executive designate of the new company.
Sir Jonathan Symonds, chair of GSK, said:
I am delighted to welcome Dave as Chair Designate of the new consumer healthcare company.
He brings outstanding global consumer and retail sector experience that will be of valuable support to Brian and the management team as they deliver the full potential of this new world-leading Consumer Healthcare company.
PRA: StanChart fell ‘significantly’ below standards
Sam Woods, chief executive of the PRA, said:
We expect firms to notify us promptly of any material issues with their regulatory reporting, which Standard Chartered failed to do in this case.
Standard Chartered’s systems, controls and oversight fell significantly below the standards we expect of a systemically important bank, and this is reflected in the size of the fine in this case.
Standard Chartered said it accepted the PRA’s findings.
Standard Chartered has cooperated proactively and fully with the PRA’s investigation and has made significant improvements to and substantial investment in its liquidity and regulatory reporting processes and controls and remains committed to accurate regulatory reporting.
PRA takes aim at reporting failures
Here’s some more detail on what Standard Chartered did wrong in the eyes of the PRA:
In October 2017, the watchdog imposed a temporary additional liquidity expectation on StanChart in response to concerns about heightened risk of USD liquidity outflows.
While the bank’s overall liquidity position remained in surplus to its core liquidity requirements, between March 2018 and May 2019, it made five errors reporting the liquidity metric which meant the PRA did not have a reliable overview of its USD liquidity position.
In relation to one of the misreporting errors, StanChart only notified the PRA of the error after a four-month internal investigation into the issue.
Standard Chartered agreed to pay a fine, meaning it was eligible for a 30pc reduction on the penalty. Without this, it would have been £66.5m.
StanChart slapped with huge fine
It’s a bad start to the Christmas week for Standard Chartered, which has been hit with a record fine for failings in its regulatory disclosures.
The Prudential Regulatory Authority (PRA) has fined the bank £46.55m for reporting errors relating to its US liquidity position.
The financial watchdog said StanChart failed to promptly report one of the errors and then was uncooperative during the process.
5 things to start your day
1) ‘Brexodus’ fears prove unfounded as bankers fail to take flight to EU London likely to remain Europe’s financial hub as banks begin to look beyond Brexit
2) Investment bankers who hired George Osborne split £30m pandemic profits Robey Warshaw dealmakers score big in Covid year, but ex-Chancellor joined too late for a cut of the profits
3) Former Tesco boss to lead £40bn consumer arm spun-out of GSK Sir Dave Lewis to be appointed non-executive chairman of business behind Panadol painkillers
4) Household savings to balloon as cost of living crisis bites Rampant inflation and omicron threat will push people to curb 2022 spending, survey finds
5) Another lockdown ‘very tough to survive’, warns Vue boss Tim Richards open to floating his cinema chain – if it can get through another winter of Covid
What happened overnight
Asian stock markets followed Wall Street lower on Monday amid concern about the coronavirus’s latest variant and tighter Federal Reserve policy.
Shanghai, Tokyo, Hong Kong and Sydney retreated at the start of a trading week that ends with many closing early for Christmas.
The Shanghai Composite Index fell 0.8pc to 3,605.21 and the Nikkei 225 in Tokyo tumbled 2.1pc to 27,942.84. The Hang Seng in Hong Kong sank 1.5pc to 22,837.64.
Coming up today
Corporate: Scottish Investment Trust (Full-year results); Nike (Interim results)
Economics: Rightmove house price index (UK); interest rate decision (China); CBI Monthly Industrial Trends Survey (UK)