McDonald’s shares dropped in pre-market trading as the fast food giant was hit by inflation even after posting record sales.
The chain posted a 12.8pc rise in comparable sales last year – its strongest annual growth ever – thanks to the popularity of new products like the McRib.
But revenue in the final three months of the year was just shy of expectations at $6bn (£4.5bn) as Covid restrictions in Australia and China took their toll.
McDonald’s was also stung by higher prices and labour costs, which cut into profits. Shares fell 2.5pc before markets opened.
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Kim Kardashian’s underwear label Skims doubles valuation to $3.2bn
Staying in the fashion industry, Kim Kardashian’s underwear label Skims doubled its valuation to $3.2bn (£2.4bn) from nine months ago, as investors pour money into emerging brands expected to take market share.
The latest $240m financing round was led by hedge fund Lone Pine Capital and joined by investment firm D1 Capital Partners. Existing investors Imaginary Ventures, Alliance Consumer Growth and Thrive Capital also participated.
Kardashian and her business partner Grede retained a controlling stake in Skims following the deal.
Kardashian, who promotes the brand to her massive online following and helps with design and marketing, remained its largest individual shareholder.
LVMH posts record annual sales as pandemic makes rich customers even richer
LVMH has posted record annual sales as well-heeled customers snapped up items ranging from Christian Dior couture to Hennessy cognac, cementing the group’s rebound from the depths of the pandemic.
Revenue for 2021 came in at €64.2bn ($53.5bn), topping the previous record set in 2019 and analysts’ forecasts of €62.2bn.
The performance of the luxury giant, led by billionaire Bernard Arnault, exemplifies the V-shaped recovery experienced by much of the industry as wealthy customers rushed back to boutiques. The pace of the rebound was underpinned by recovering economies and soaring asset prices.
Selective Retailing, which includes Sephora and duty free unit DFS, as well as perfume and cosmetics, are the only two divisions that have yet to see sales match 2019 levels amid a subdued flow of Asian tourists to European capitals.
FTSE 100 closes in the green
The FTSE 100 has been lifted by strong results from spirits maker Diageo, with banks benefited from rising yields.
The blue-chip index was up 1.1pc to 7,554. Banks were among the top boosts to the index, tracking stronger yields after the US Federal Reserve signalled a March interest rate hike while investors priced in another increase by the Bank of England next week.
Diageo, which makes popular brands including Johnnie Walker whisky, Tanqueray gin and Guinness stout was among the top boosts to the FTSE, rising 2.5pc after it posted a large jump in half-year sales.
“The UK markets are well insulated right now due to no tech stock exposure, a sector which drops when interest rates rise, and while broader market sentiment is diminishing, UK will continue to outperform,” said Craig Erlam, a senior market analyst at Oanda.
UK workers lack skills for digital-first world, survey finds
Over three-quarters of the global workforce don’t feel ready to operate in a digital-first world, increasing to 80pc in the UK, according to a study by software group Salesforce.
Some 43pc Britain’s workers feel “overwhelmed” by the rate of technological change.
The survey, conducted on 23,500 respondents in 19 countries, said that 28pc of global workforce are actively involved in digital skills learning and training and there is a “major gap” emerging between everyday digital skills and those needed for work, especially among younger people.
Zahra Bahrololoumi at Salesforce said: “Reskilling is clearly a national priority and we all have a responsibility to help people navigate learning and equip them to seize the opportunities of a digital-first future.”
Nestle to pay cocoa farmers to send kids to school in sustainability push
Nestle said it will start paying cocoa farmers cash if they send their children to school rather than out to tend crops as part of a push to purchase all of its cocoa through a fully traceable, directly sourced supply chain by 2025.
Chocolate makers are coming under mounting pressure from investors, consumers and governments to make sure the cocoa beans they source are not produced using child labour or in illegal cocoa plantations in protected forests, both of which are common in West Africa.
The KitKat and Smarties maker plans to triple its current annual spending on sustainable cocoa to give a total investment of 1.3bn Swiss francs (£1bn) by 2030.
Mastercard warns of growth slowdown as omicron hits travel
Mastercard has warned it’s been seeing a slowdown in the growth of overseas spending on its cards in recent weeks as the highly contagious omicron variant disrupts travel and sparks fresh rounds of lockdowns.
While cross-border volume on the payments group’s network soared 53pc in the final three months of the year, trouncing the 49pc average of analyst estimates, the firm said growth in the first three weeks of this year slowed to 47pc.
Mastercard now believes net revenue for the first quarter will climb by a percentage in the “high teens,” while operating expenses will jump by a percentage in the “low teens,” the company said. Analysts were predicting revenue would rise 22pc and expected a 15pc jump in expenses.
That’s everything from me today – thanks for following! Giulia Bottaro will take things from here.
London retains global financial crown in new Brexit boost
London has retained its crown as the world’s top destination for financial and professional services in terms of its overall offering in another boost for the City, writes Simon Foy.
The Square Mile outperformed other major financial hubs, including New York, Singapore and Paris, as firms quickly adapted to Brexit, according to a new report by the City of London Corporation.
The study examined the global business offering of each city, taking into account 95 metrics including those in nascent fields such as green finance activity.
It found that the City had an “unmatched international financial reach”, while it also excelled as a hub for tech and innovation and its share of headquarters of Fortune Global 500 companies rose by a third over the past year.
It also remained Europe’s leading destination for investment in financial services and was the world’s leading foreign exchange trading centre.
Mishcon delays IPO plan again
Mishcon de Reya’s plans to become the UK’s largest listed law firm have been put on hold for the second time.
The London law firm, which was initially targeting a £750m float this month, has now pushed back the initial public offering to the second quarter at the earlier, Bloomberg reports.
It comes amid volatile trading on global markets that has forced several companies to shelve their IPO plans. WeTransfer pulled out of its planned float in Amsterdam earlier today.
Mishcon’s flat would make it the country’s largest listed law firm but it’s recently faced a raft of negative publicity after being hit with a record fine from its regulator over failings with anti-money laundering controls.
Goldman’s number two takes swing at Fed
While eyebrows have been raised about the Bank of England’s approach to monetary policy in recent months, it seems criticism of central banking is a little more direct over in the US.
John Waldron, second in command at Goldman Sachs, took a rare swipe at the Federal Reserve, saying its independence had been damaged in recent years and that it’s lost credibility in markets.
In a speech today he questioned the Fed’s strength to act as an “independent, monetary policy engine that is doing what it thinks is right and not what’s expedient”.
He added: “They have a chance here to do that, but I am a little worried about whether they’ll stand up and do it.”
The jab comes after Fed chair Jerome Powell last night hinted at a faster rise in interest rates in an effort to curb surging inflation.
British Insurer First Central mulls £600m sale
British car insurance firm First Central is said to be considering a sale that could value the business at around £600m.
First is working with investment bank Evercore as it sounds out interest from potential buyers, Bloomberg reports. A sale process could kick off as soon as the second quarter.
The company, which employs more than 1,000 people, underwrites car insurance under the Skyfire brand and owns insurance brokerage 1st Central.
Online casino firm Genesis slapped with £3.8m fine
The gambling regulator has slapped online casino operator Genesis Global with a £3.8m for failures relating to money laundering and social responsibility.
The Gambling Commission suspended the company’s licence for three months last year before lifting the ban following improvements by the firm.
Still, it’s decided that Genesis – which runs 14 websites including genesiscasino.com, casinoplanet.com and casinocruise.com – must pay a £3.8m fine. It must also undergo further extensive auditing to keep its licence.
The Gambling Commission said Genesis’s social responsibility failures included the business not producing any meaningful response to a customer who spent £245,000 in three months despite the business finding out after three days that it was an NHS nurse earning £30,000 a year.
Genesis was also found to have committed a number of money-laundering failures, including allowing a customer to deposit more than £1.3m and lose £600,000 before carrying out sufficient checks on source of funds.
Senior Tory MP tells Rishi Sunak to scrap National Insurance increase
One of the most senior Tory backbenchers has called on Rishi Sunak to postpone April’s rise in National Insurance to tackle mounting pressure on living standards.
Tim Wallace reports:
Mel Stride, chairman of the Treasury select committee, said “the stars have aligned” to give the Chancellor the financial breathing room needed to cancel the tax increase.
“This is an opportunity now to not go ahead with the National Insurance rises in April, principally because of the cost of living pressures that there are. Secondly, it is an inflationary measure in itself and that would have knock-on consequences for the servicing cost of the national debt, so it would have a negative fiscal impact in that sense,” he told BBC Radio 4’s The World At One.
Mr Stride said the economy had grown more quickly than expected in recent months, meaning the Chancellor has borrowed less than anticipated. As a result he could scrap the increase, which will add 1.25 percentage points to the National Insurance bills of both workers and employers.
Deutsche Telekom in talks over Vodafone tower merger
Deutsche Telekom is said to be considering a potential merger of its mobile masts business with those of rivals including Vodafone and Orange.
The German operator, which has a market value of €81bn (£67.5bn), has helped initial talks with both companies as part of a review into how to increase the value of its towers portfolio, Bloomberg reported.
Spanish infrastructure giant Cellnex is also said to be interested in a merger, while other potential options include a sale or listing of the assets.
Telecoms firm have increasingly looked to raise cash from their valuable mast assets as they splash out on network upgrades and competition in the market heats up.
Last year Vodafone raised around €2bn when it listed its Vantage Towers business in Frankfurt.
Shares in Vodafone rose 1.5pc following the report, while Vantage Towers slipped 0.3pc.
Expert reaction: US economy still driven by pandemic
Richard Flynn, managing director at Charles Schwab UK, warns the fourth-quarter figures exclude the recent surge in Covid cases, while inflation risks still loom.
Today’s GDP figures surpass expectations and suggest that the US economy is accelerating faster than anticipated.
There is a heightened risk that an overheating economy could push inflation even higher. With booming growth, the tight labour market is pushing up wages, and inflation has spiked to its highest level in decades. Real interest rates, adjusted for inflation, have been steeply negative for the past few years, contributing to very loose financial conditions.
Despite a strong performance in the fourth quarter, the unfortunate reality is that US economic performance continues to be driven by the pandemic. Today’s figures measure GDP up until the end of December 2021, excluding some of the recent surges in Covid-19 cases.
Indeed, there’s been weakness across US stock indices in the first weeks of 2022, as investors digest some of the risks facing the economy: receding monetary and fiscal liquidity, persistent effects from the pandemic, and a rise in inflationary pressures.
US economy grows 6.9pc in fourth quarter
The US economy grew 6.9pc in the fourth quarter, outstripping expectations despite the spread of the omicron variant.
The GDP growth was up from 6pc in the previous three-month period and takes full-year growth for 2021 to 5.7pc – the strongest rate since 1984.
The figures were fuelled by businesses rebuilding inventories and a pickup in consumer spending.
Separate data showed applications for jobless benefits dropped for the first time in four weeks. Applications had surged over the last month amid an uptick in Covid cases across the country.
Trade battle with Brussels looms over wind farm contracts
Brussels is gearing up for a legal battle with the UK in a row over access to lucrative wind farm contracts.
The Government has attracted scores of new offshore wind farm projects as part of its drive to develop more renewable energy.
As part of this push, developers must prove they will ensure more parts for wind turbines are made in the UK by 2030 to help boost British firms.
However, the EU has accused Britain of shutting out competition by favouring the domestic wind turbine industry for contracts worth billions of pounds.
The bloc argues the move is in breach of the post-Brexit trade deal and is set to launch a formal dispute with the World Trade Organisation as soon as today, the Sun reported.
Kwasi Kwarteng, the Business Secretary, has reportedly vowed to “vigorously contest” any legal challenge.
Brussels takes trade action against China
Here’s more on the EU-China trade troubles from earlier, courtesy of my colleague Tim Wallace:
Brussels is launching a case against China at the World Trade Organisation over its treatment of Lithuanian goods, amid reports that Germany fears the action will undermine its own trade links with the world’s second-largest economy.
China has restricted imports from the Baltic state in a row over the status of Taiwan.
Valdis Dombrovskis, the trade commissioner, said attempts to resolve the dispute directly have failed, leading to the WTO action.
“We see no other way forward than to request WTO dispute settlement consultations with China,” he said.
“The EU is determined to act as one and act fast against measures in breach of WTO rules, which threaten the integrity of our Single Market. We are in parallel pursuing our diplomatic efforts to deescalate the situation.”
US futures flat despite Fed comments
Wall Street futures are treading water despite hawkish comments from the Federal Reserve, with attention turning to economic data out this afternoon.
Interest rate expectations and tensions between Russia and Ukraine are causing concerns for investors.
However, GDP figures due shortly are expected to show growth accelerated in the fourth quarter as businesses replenished depleted inventories to meet strong demand for goods.
The S&P 500 and Dow Jones slipped a marginal 0.04pc and 0.08pc respectively, while the Nasdaq was flat.
Sterling hits one-month low as dollar races higher
Sterling has dropped to a one-month low against the dollar as the US currency gained ground on bets the Federal Reserve could roll out faster and bigger interest rate rises.
The dollar surged to its highest level since July 2020 against other major currencies after the Fed hinted it was ready to start lifting rates in March to contain inflation.
While markets were expecting rate rises, the hawkish tone from chair Jerome Powell still took investors by surprise.
The pound tumbled 0.7pc against the dollar to $1.3394 – its lowest in a month. There’s further pressure on sterling as traders keep an eye on the report into lockdown parties at Downing Street.
Goldman: UK won’t face 70s style wage-price spiral
A wage-price spiral reminiscent of the 1970s is unlikely to materialise in the UK, according to research by Goldman Sachs.
Analysts at the Wall Street bank said that while wages were set to grow sharply in 2022 – faster than the Bank of England is projecting – the “available evidence does not seem to suggest firms’ elevated expectations of selling price pressures are reflecting pressures from pay settlements”.
BoE Governor Andrew Bailey last week warned that mounting wage pressures raised the risk of a situation where pay and prices chase each other higher.
Goldman said its analysis supported the case for more interest rate rises this year. But with inflation hitting a 30-year high in December, the bank said policymakers should keep an eye on longer-term expectations of price and wage growth.
New year retail sales fail to impress
British retailers reported disappointed sales in January as the omicron variant and inflation concerns dented demand among shoppers.
A net balance of +28pc of retailers reported an increase in sales this month compared to January 2021, according to CBI figures. This was also up from +8pc in December.
But almost a third of companies said it was a poor showing for sales at that time of year, compared to fewer than 10pc who said sales were strong.
Ben Jones, lead economist at the CBI, said:
It was not surprising that retail sales dropped back below seasonal norms in January, given the spread of omicron, the reintroduction of restrictions late last year and increased consumer caution.
‘Dismal’ UK car production drops to 65-year low
ICYMI – Car production fell to the lowest level since 1956 last year as the computer chip shortage and the closure of Honda’s Swindon factory took their toll.
Here’s more from Howard Mustoe:
Britain made 859,575 vehicles, or 61,353 fewer than even pandemic-affected 2020, in what the Society of Motor Manufacturers and Traders called a “dismal” year.
Most of the 6.7pc decline was blamed on the shortage of computer chips, but about a quarter was due to the closure of the Honda plant that made the Civic. The Japanese company had been the UK’s fifth-biggest car maker before the closure.
With Jaguar planning to end mass production at its Castle Bromwich plant and Vauxhall opting to make vans rather than Astra cars at Ellesmere Port, there are concerns about the ability of UK car makers to reclaim lost ground.
British car production peaked in 1972, when 1.9m cars rolled off production lines. The record in the past decade came in 2016 when 1.7m cars were made, with numbers declining ever since.
WeTransfer scraps IPO plans amid tech rout
WeTransfer has abandoned plans for a stock market listing in Amsterdam as a sell-off in tech stocks hits investor appetite.
The file-sharing company said the float was being pulled due to volatile market conditions. Last week the firm said it was looking to raise €125m (£104m) from the IPO – knocking €20m off its original target.
The debut would have valued WeTransfer at as much as €716m.
It comes amid a sell-off in tech stocks as higher interest rates drive investors away from high-growth companies.
Broadband challenger Community Fibre doubles London target
London broadband startup Community Fibre has doubled the target for its rollout in the capital as it steps up the pressure on BT.
The company, which is backed by Deutsche Telekom and private equity firm Warburg Pincus, said it will make high-speed internet connections available to 2.2m London homes and businesses by the end of 2024.
That’s more than half the total 3.7m homes and is more than double its previous target of 1m by the end of 2023. So far, it’s reached 435,000 premises.
Lloyd Dorfman: Bosses must be tougher on return to work
Entrepreneur Sir Lloyd Dorman has urged bosses to be tougher on the return to the office to make sure they “don’t end up sleepwalking into basically paying for four-day weekends”.
Speaking to LBC this morning, the Travelex founder said it was “really important that employers do everything they can to encourage and get people back [working in the office]”.
He warned that work from home policies could result in workers slacking off and also harm career progression for staff.
He added: “Employees should be careful that out of sight, out of mind – if I want to progress my career… sitting at home in my bedroom ain’t going to help that.”
Mitie leads FTSE 250 after profit boost
Outsourcer Mitie is leading the FTSE 250 this morning after lifting its profit forecasts for the full year.
Shares jumped 5.6pc after the company said adjusted operating profit will come in between £160m and £165m – up from previous forecasts of £145m to £155m.
Mitie said the improved outlook came thanks to a higher-than-expected contribution of revenue from Covid-related contracts, which include managing test centres and providing security and cleaning services for quarantine hotels.
Renault and Nissan pledge $26bn for electric cars
Renault and Nissan have vowed to work together more closely to make electric cars as they vowed to invest $26bn (£19.4bn) into the transition over the next five years.
The carmaker alliance, which also includes Mitsubishi, said it would increase the number of common platforms for electric vehicles from four to five.
The companies said they’ll produce a line-up of 35 EVs by the end of the decade, adding that by 2026 four-fifths of their models would share common platforms, up from 60pc now.
It comes as the manufacturers try to strengthen ties in the wake of a scandal surrounding alliance founder and chairman Carlos Ghosn.
IAG poaches finance chief from Premier Inn owner
IAG has poached its new chief financial officer from Whitbread, the FTSE 100 group behind Premier Inn and Beefeater.
The owner of British Airways said Nicholas Cadbury will join on March 21. Whitbread separately named Hemant Patel as Mr Cadbury’s successor.
FTSE 100 reverses course
Well, it seems market volatility is the name of the game this week.
After dropping 1pc at the open, the FTSE 100 has now climbed 0.3pc higher, as a weaker pound and gains for banks offset worries over interest rate rises.
Hawkish comments from the Fed last night sent Asian markets into decline and initially hit UK stocks too.
But HSBC, Standard Chartered, Barclays and NatWest all gained ground on higher bond yields, helping to drive up the blue-chip index.
A weaker pound also boosted dollar-earning companies including British American Tobacco, Imperial Brands and Diageo, which also reported strong sales for the first half of the year.
… but shortages linger
There’s one point in the ONS figures that’s slightly less positive, though.
By mid-January, 13pc of companies were reporting a shortage of workers, with the accommodation and food services worst hit. In this sector, 60pc of firms said employees were working increased hours as a result.
The recent wave of infections appears to be the biggest driver of the shortfall, with 3pc of the workforce on sick leave or absent because of Covid. That’s the highest level since comparable estimates began in June 2020.
To make matter worse, more than a third of hospitality firms said they’d had difficulty getting hold of materials, goods or services from within the UK over the last month.
Activity picks up as Plan B rules scrapped
The latest indicators for economic activity in the UK have picked up in a sign that the scrapping of Plan B restrictions is already having an effect.
Figures from the ONS showed diner numbers rose five percentage points in the week to January 24 to 97pc of pre-Covid levels, while overall retail footfall rose to 80pc of 2019’s numbers.
By mid-January, 80pc of businesses were fully trading – up from 77pc at the beginning of the month – though food services and accommodation still lagged behind.
While a cost-of-living crisis looms, this doesn’t seem to have affected consumer spending just yet. Credit and credit card purchases were up 2 percentage points in the week ending January 20.
Deutsche Bank reels in biggest profit in a decade
Deutsche Bank has posted its best annual profit in a decade as it put a difficult period of restructuring behind it.
The German lender reported a €1.9bn (£1.6bn) net profit in 2021, up from just €100m the previous year at the height of the pandemic.
Chief executive Christian Sewing said Deutsche had put “almost all” of its transformation costs behind it following a strategy overhaul in 2019 that will see it slash thousands of jobs and refocus on Europe.
Deutsche marked the improved performance, which was driven by its flagship investment arm, by announcing a dividend for 2021 and a €300m share buyback.
Saga eyes return to profit as cruise demand picks up
Over-50s holiday group Saga is hoping to return to a profit next year as cruise demand picks up again.
The London-listed company said continued travel uncertainty meant its cruise business would post a pre-tax loss of between £45m and £50m in the current year ending this month.
But it struck an optimistic tone for the 2022/2023 financial year, pushing shares up 3.9pc.
Euan Sutherland, chief executive of Saga, said:
We approach the future with confidence, having demonstrated our ability to manage our way through recent challenges.
We remain confident that the strength of our brand, our management team and our strengthened financial position will now allow us to return the business to sustainable growth, creating long-term value for our stakeholders.
Fullers takes sales hit from Plan B
Fullers is the latest pub group to take a hit from the omicron variant, as Plan B measures kept punters at home.
The company said it had enjoyed steady growth throughout the year as restrictions eased over the summer and the Euros attracted more customers.
However, the rollout of tougher measures in December reversed this progress.
Fullers said: “The enhanced Covid restrictions introduced by the Government in response to omicron, including the guidance to work from home, impacted our trade during the important festive and new year period. Office Christmas parties were cancelled, and City workers stayed at home.”
Still, the pub chain said sales had improved in the new year, with further improvements expected as people return to work and tourist demand picks up.
AO World mulls sale of German business
AO World is mulling a sale of its operations in Germany as it becomes the latest retailer to struggle in the country.
The London-listed chain said online sales of electrical appliances had been hit by tough competition, digital marketing costs, a return to the high street and supply troubles.
It said these issues were likely to continue for the foreseeable future, prompting it to launch a review of its options. Shares dropped as much as 7.4pc.
AO Word is the latest retailer to struggle in Germany. B&M sold its Jawoll business in 2020 after failing to replicate its UK success, while Primark has struggled to win over consumers in the market.
Traders bet Bank of England will get more aggressive
Money markets are expecting a more aggressive path on interest rate rises from the Bank of England as speculation mounts that policymakers will have to act more decisively to curb inflations.
Traders ramped up their bets this morning, at one point fully pricing in a 25 basis point rise, which would bring rates to 0.5pc.
Bets for further increases were also brought forward, with traders betting rates will rise to 1pc in June, compared to August previously.
It comes after Federal Reserve chair Jerome Powell struck a hawkish tone last night, suggesting interest rates will begin to rise in March while also hinting at more frequent and potentially bigger increases than expected.
More on this story: Federal Reserve signals March interest rate rise to combat soaring inflation
Dr Martens investors stick the boot in
Perhaps the biggest surprise on the markets this morning is Dr Martens, which has crashed to the bottom of the FTSE 250 despite a seemingly positive update.
The bootmaker slumped 15.7pc even after it reported an 11pc rise in sales in its crucial Christmas quarter, with a positive outlook for its direct-to-consumer push.
The market reaction may reflect Dr Martens’ warning over quieter trading in February and March, though the company said it was still on track for the full year.
Fevertree loses its fizz after costs warning
Shares in Fevertree are down 6.9pc this morning after the tonic maker warned of rising costs in 2022.
The London-listed company said it had become clear that cost pressures would be more significant than expected, meaning margins would remain flat this year, with earnings coming in between £69m and £72m.
The warning took the shine off Fevertree’s 2021 figures, with revenue rising by almost a quarter thanks to the reopening of pubs and bars.
Meanwhile, fellow mixer maker Britvic ticked up 1.7pc after reporting a 16.5pc rise in sales in the first quarter.
While the Robinsons squash owner said inflationary pressures loomed, it was more confident on the outlook than its rival.
Tesla posts record profits as Musk hails ‘breakthrough year’
ICYMI – Tesla last night revealed a record annual profit following a surge in demand for electric cars that has made its chief executive Elon Musk the world’s richest man.
James Titcomb has the details:
Full-year profits were over seven times higher at $5.5bn (£4.1bn) and sales soared 71pc to $54bn, both shattering Tesla’s previous records and making 2021 a “breakthrough year”.
Deliveries climbed by 87pc, which the company said pushed its margins above other car manufacturers in a demonstration that electric vehicles can be more profitable than combustion engine vehicles.
Tesla sold a record 936,000 cars last year as its Model 3 became the second-most popular vehicle in the UK and the most popular electric car in Europe.
Shares dropped 3.4pcpc to $907 in after-hours trading, having closed 3.5pc in anticipation of the results. Wednesday’s closing price valued the US business at $930bn. The stock had retreated nearly 15pc in three prior sessions.
FTSE risers and fallers
The FTSE 100 is in the red this morning after the Federal Reserve’s hawkish comments signalled at interest rate rises.
The blue-chip index slumped 1pc at the open, though losses have eased off to a 0.3pc decline.
Miner Anglo American was among the biggest drags, tumbling 2.7pc after it updated on production. Oil major BP also declined, tracking a dip in oil prices.
One bright spot was Diageo, which rose 1.3pc after reported strong sales growth as punters flocked back to pubs and bars.
The domestically-focused FTSE 250 fell more than 1pc. Dr Martens was the biggest faller, tumbling almost 12pc even after it reported a rise in sales over Christmas.
Dr Martens stomps ahead despite supply troubles
Dr Martens has continued to gain ground, posting a rise in sales over the crucial Christmas period despite lingering supply chain issues.
The iconic bootmaker reported an 11pc rise in revenue to £307m in the third quarter, boosted by the reopening of retail in several markets.
It’s also benefited from its direct-to-consumer push, with sales through this division growing by a third over the quarter as it targeted potential customers on social media.
The upbeat results come despite supply worries and Covid-related disruption at factories. Dr Martens said the next few months will be quieter, but it’s still on track to hit expectations in its first year as a listed company.
TSB swings back to profit
TSB has revealed it swung back to a profit last year thanks to record mortgage lending and a rebound in the wider economy.
The high street bank posted a pre-tax profit of £157.5m in 2021, compared to losses of £204.6m the previous year.
TSB benefited from a booming house market, with mortgage lending surging 46pc to a record high of £9.2bn.
The bank’s results were also boosted as cash set aside for bad loans plunged to just £100,000, down from £164m at the height of the pandemic in 2020.
It comes less than two months after it announced the closure of 70 bank branches across the UK, taking its network down from 290 to 220 by the end of June 2022.
FTSE 100 drops at the open
The FTSE 100 has tumbled at the open, following Asian stocks into the red after the Fed hinted at interest rate rises.
The blue-chip index fell 1pc to 7,395 points.
Guinness owner Diageo toasts reopening
Guinness owner Diageo has posted strong sales growth in the first half of the year as it cashed in on the reopening of pubs and bars.
The drinks maker, which also owns Smirnoff and Johnnie Walker, said sales in the UK and Ireland rose 19pc.
Vodka sales were particularly strong – rising 21pc as punters got a taste for cocktails. Guinness was up 30pc thanks to pubs reopening in the second half of last year.
Net sales were up 15.8pc at £8bn, with growth partially offset by a £271m hit from negative foreign exchange impacts.
Analysts at Morgan Stanley said Diageo “ticks all boxes” with its latest figures and expects shares to rise when markets open.
Are artists getting a fair deal from streaming, regulator asks
After mounting pressure on record labels and streaming giants, the regulator has officially opened a market study into the economics of music streaming.
The Competition and Markets Authority said it will look at potential harm to consumers, examining whether innovation is being stifled and if any firms hold excessive power.
It will also assess whether any lack of competition between music companies could affect musicians, singers and songwriters.
The CMA said more than 80pc of music is now streamed in the UK, and it wants to examine the “complex” market.
EasyJet halves losses despite omicron hit
EasyJet slashed its losses in half in the final three months of last year – even as it suffered a dent in demand from the omicron variant.
The budget airline posted a pre-tax loss of £213m over the period, down from a £423m loss in the same period in 2020.
This was despite a Covid-induced slump in demand, with load factor – a measure of how well it fills its planes – dropping to 67pc in December after having surpassed 80pc in the previous two months.
Still, easyJet hailed a “step change” in bookings in the new year after the Government announced testing will be scrapped for fully vaccinated passengers.
Johan Lundgren, chief executive of easyJet, said:
We believe testing for travel across our network should soon become a thing of the past.
We see a strong summer ahead, with pent-up demand that will see easyJet returning to near-2019 levels of capacity with UK beach and leisure routes performing particularly well.
UK tries to drum up nuclear support
While £100m is only a drop in the ocean for the £20bn Sizewell C project, ministers are hoping it’ll be enough to get other investors on board.
My colleague Rachel Millard has more:
Ministers believe a new financing mechanism enabling investors to get a return while the plant is being built, rather than having to wait until it is up and running, will encourage interest in Sizewell C.
Kwasi Kwarteng, the Business Secretary, said the £100m will “further support the development of Sizewell C during this important phase of negotiations as we seek to maximise investor confidence in this nationally significant project.”
The Government said it would be repaid with interest if the project reaches a final investment decision, either in cash or through an equity stake in the project.
If it does not reach a final investment decision, the Government will ask for the site or shares in the Sizewell C company, and expects a refund plus interest if EDF cannot provide those assets.
Sizewell C gets £100m public boost
The Sizewell C nuclear power project has been given a boost today after the Government pledged £100m to help get things going.
French energy giant EDF is trying to attract investors to the £20bn project, so ministers hope the cash boost will drum up further support.
The planned power station forms a key part of the UK’s push towards green sources of energy.
However, some investors are nervous about nuclear power, while there’s controversy over the role of Chinese group CGN in the project.
5 things to start your day
1) Chip crisis sends car production to lowest level since 1956 UK manufacturing will not recover to pre-pandemic levels unless Honda is replaced, warns SMMT
2) Free bacon sandwiches and coffee to lure commuters back on the railways Commuter rewards website also offering free audiobooks and discounted theatre tickets part of government charm offensive
3) Why German car makers may be yet to clean up their act Volkswagen’s dismissal of a whistleblower raises the spectre of cover-up with echoes of the ‘dieselgate’ scandal
4) Federal Reserve signals March interest rate rise to combat soaring inflation US central bank plans first increase since 2018 as consumer prices rise at their fastest pace in 40 years
5) Rishi Sunak defends record on combating Covid loan fraud as Tories jockey for position Chancellor insists he is ‘not writing off’ losses after ex-minister blasts Treasury over ‘woeful’ handling of Covid support cash
What happened overnight
Asian stock markets tumbled by unusually wide margins on Thursday after the Federal Reserve indicated it plans to start raising interest rates soon to cool inflation. Market benchmarks in Tokyo and Hong Kong fell by more than 2pc, while Seoul and Sydney sank nearly 3pc.
Wall Street’s benchmark S&P 500 index lost 0.1pc on Wednesday after a Fed statement said the US central bank “expects it will soon be appropriate” to raise rates.
The Nikkei 225 in Tokyo fell 2.5pc to 216,339.53 and the Hang Seng in Hong Kong sank 2.2pc to 23,753.94. The Shanghai Composite Index lost 0.9pc to 3,423.60.
The Kospi in Seoul retreated 2.9pc to 2,630.65 and Sydney’s S&P 500 was off 2.6pc at 6,782.50.
New Zealand and Singapore declined while Jakarta and Bangkok advanced.
Coming up today
- Corporate: Diageo, IG, Rank Group, NCC Group (Interim results); 3i Group, Anglo American, Dr Martens, Euromoney Institutional Investor, Greencore, Intermediate Capital Group, Saga, St James’s Place, Mitie, Britvic, easyJet, Polymetal International (Trading update)
- Economics: GDP (US), initial jobless claims (US), durable goods orders (US), personal consumption expenditure prices (US), GfK consumer confidence (Ger)