China's industrial profits lift markets; Uber wins London licence; pound rallies – as it happened

Graeme Wearden

from on 2020-09-28 16:01 (#58KPR)

Rolling coverage of the latest economic and financial news

Victory for Uber
Pound jumps on Brexit deal hopes
Intro: Chinese factory revival continues
China's industrial profits up 19% in August
FTSE 100 jumps 1%, led by HSBC
Diageo: Drinks sales are improving

5.01pm BST

Time for a recap

Stock markets have surged across the globe today after strong data from China lifted hopes for the global economy.

4.39pm BST

Boom! European stock markets have posted very strong gains, as a burst of optimism sends share up across the globe.

The Stoxx 600 index of European listed companies has closed 2.3% higher tonight, as it made a strong recovery from last week's losses.

After all, nothing has fundamentally changed so why not buy everything at slightly discounted prices again after the recent sell-off,' is a question the bulls will be asking themselves. Central bankers have made it crystal clear that interest rates will remain very low for a long time to come and will be there to provide further support should it be required.

The relatively low COVID-linked deaths mean investors are not showing too much concern towards rising virus cases. Instead, they remain optimistic over the potential approval of a vaccine soon, which together with ongoing central bank support will probably help accelerate the recovery.

3.57pm BST

More takeover news: The billionaire owners of the British petrol forecourts operator EG Group have taken pole position in the 6.5bn race for control of Asda after being named the preferred bidder by the supermarket's US owner.

Mohsin and Zuber Issa, who are working with the private-equity firm TDR Capital, have pushed out a rival offer from the private-equity firm Apollo Global Management (who are also in the race to buy William Hill...)

3.32pm BST

Britain's stock market is pushing higher, with bank shares getting a lift from today's burst of optimism.

HSBC is still sharply higher, up 8%, after China's Ping An expanded its stake in the lender. Other financial stocks are rallying too, with Natwest up 7.5%, Lloyds gaining 7% and Barclays up 6.9%.

3.02pm BST

The head of the European Central Bank, Christine Lagarde, has warned that the eurozone economy is weak - and needs fiscal support.

Testifying to the Committee on Economic and Monetary Affairs of the European Parliament, Lagarde warns that the recovery is highly dependent on the Covid-19 pandemic - so government packages to protect loans and jobs are vital.

The impact of the coronavirus (COVID-19) pandemic is still being felt across the euro area. Businesses are facing difficulties, people are losing their jobs, and prospects about the future remain uncertain.

While euro area economic activity rebounded in the third quarter, the recovery remains incomplete, uncertain and uneven. Consumer spending has resumed significantly, but consumers remain cautious owing to anxiety about their job and income prospects.

Introductory statement by President Christine @Lagarde at a hearing of the Committee on Economic and Monetary Affairs of the European Parliament https://t.co/QGXvsuIaMa

2.39pm BST

Shares in Uber have jumped 3% in early trading, to $35.54, after it persuaded a London court to grant it a new licence to operate in the capital.

2.36pm BST

The New York stock exchange has opened sharply higher, as investors try to put recent losses behind them.

The recovery in stocks likely comes down to hopes that a US stimulus deal isn't entirely dead after all. The market selloff has evidently put enough pressure on politicians to water down their demands, with the Democrats unveiling a new proposal of $2.4 trillion and keeping the door open for an even smaller package of $2.2 trillion.

2.30pm BST

While jobs are being created at Aldi, they're unfortunately also being lost at Pizza Hut.

The owner of Pizza Hut restaurants in the UK will go ahead with plans to shut 29 sites, putting 450 jobs at risk, after creditors voted through an agreement to try to save the pandemic-hit business.

1.43pm BST

Over in parliament, Boris Johnson's spokesman has told reporters there is still much to be done" before a trade deal can be agreed with Europe.

But while there are still significant gaps, a deal is still possible", he adds (via Reuters).

UK PM JOHNSON'S SPOKESMAN: WE HAVE CONSISTENTLY PUT FORWARD PROPOSALS ON FISHERIES AND SUBSIDIES THAT WE FEEL ARE STRAIGHTFORWARD.

UK PM JOHNSON'S SPOKESMAN: IF THERE IS TO BE A DEAL, WE NEED TO COME TOGETHER IN MID-OCT.

1.05pm BST

Brexit deal optimism has lifted the pound to a three-week high against the euro, up one euro cent at 1.105.

Some traders are hopeful that the crunch talks between UK and EU negotiators this week could lead to a breakthrough.

The Brexit talks are set to get more formal this week and starting tomorrow, with this round seen as a last dash effort if any agreement is to be made on Boris Johnson's timeline aiming for mid-October agreement.

Particular focus from the EU side will apparently be on how any trade deal will be enforced after the recently passed Brexit bill could walk back key portions of the Withdrawal Agreement, which effectively stipulated a customs border across the Irish Sea (separating Northern Ireland from the rest of the UK.)

There were some positive articles in the press about the prospects for Brexit.

The 9th week of negotiation begins today and there were articles indicating that both sides seem to be getting closer which will allow them to enter the tunnel' or final stage of talks for an agreement. I'll believe it when I see it but for now its helping the GBP.

12.32pm BST

Wall Street is on track to open strongly in two hours time, following the positive moves in Asia-Pacific markets, and in Europe.

Big tech shares are primed to jump - with Apple up 2.4% in pre-market trading and Amazon rising 1.8%.

FANG+ Constituents$AAPL 114.97 +2.39%$AMZN 3150.75 +1.8%$BABA 273.82 +1.03%$BIDU 123.6 -0.4%$FB 258.84 +1.7%$GOOG 1469.56 +1.73%$NFLX 489.09 +1.29%$NVDA 523.65 +1.72%$TSLA 426.83 +4.81%$TWTR 44.35 +1.21%$MSFT 210.68 +1.43%

12.01pm BST

BoE deputy governor Dave Ramsden also warned that Covid-19, Brexit and the presidential US election are all risks to the UK recovery.

Ramsden says the slump in UK growth during the lockdown was not as sharp as the Bank had feared, but it still expects unemployment to jump sharply in the next few months.

11.58am BST

Back in the markets, the pound is surging even higher.

Sterling is now up 1.7 cents against the US dollar today to $1.29, a new one-week high.

For me, I see the effective lower bound still at 0.1 which is where Bank Rate is at present.

We have been discussing our toolkit in recent months, including how effective negative rates might be in the current context.

The evidence has been encouraging."

11.45am BST

Uber's general manager for Northern and Eastern Europe, Jamie Heywood, has welcomed the court ruling, saying:

This decision is a recognition of Uber's commitment to safety and we will continue to work constructively with TfL (Transport for London)."

11.25am BST

Here's my colleague Gwyn Topham on Uber's London licence ruling:

Uber has been granted the right to a fresh licence in London after an appeal found it was a fit and proper" firm to run private hire car services.

Westminster magistrates court ruled in favour of Uber almost a year after Transport for London refused the ride-hailing firm a licence extension over safety concerns.

10.41am BST

You can read the Uber ruling online, here.

In it, senior district judge Tanweer Ikram says Uber has taken steps to improve its operations in London and reduce regulatory breaches, so deserves to have its London licence handed back.

ULL [Uber London Limited] does not have a perfect record but it has been an improving picture. The test as to whether ULL are a fit and proper person' does not require perfection. I am satisfied that they are doing what a reasonable business in their sector could be expected to do, perhaps even more.

Despite their historical failings, I find them, now, to be a fit and proper person to hold a London PHV operator's licence.

I do, however, wish to hear from the advocates on conditions and on my determination as to the length of a licence.

link to the judgment here: https://t.co/cBC62oEusE

10.34am BST

Shares in Uber have jumped over 6% in pre-market Wall Street trading, after it won its London licence back:

Now up 7% in pre-market - will be one to watch when main market opens at 1430 BST$UBER 36.715 +7.02% https://t.co/blBkTihhqR

10.31am BST

In his ruling, Tan Ikram, deputy senior district judge at the Westminster Magistrates Court, said that despite their historical failings" Uber was now a fit and proper" organisation to hold an operator's licence.

10.28am BST

Westminster Magistrates Court judge in Uber's London licence appeal says "despite their historical failings, I find them, now, to be a fit and proper person to hold a London operator's licence"

10.20am BST

Taxi app operator Uber is celebrating this morning, after winning back its licence to operate in London.

Uber has won a legal bid to restore its London operating licence, a judge decided on Monday after the city's transport regulator stripped it from the taxi app over safety concerns.

Transport for London refused to grant the Silicon Valley-based company a new licence in 2019 due to what it called a pattern of failures" and Uber argued it has since assuaged concerns over insurance verification and driver identification.

10.02am BST

The pound is adding to its earlier gains, amid hopes that the UK and EU can agree a free trade deal in the coming weeks.

Sterling it now up nearly a cent against the US dollar at $1.283, its highest level in almost a week.

Brexit talks resume this week and despite all the noise, both sides want a deal. Whilst the UK threw a spanner in the works with the internal market bill, the real substance of the trade deal is what matters. On that front the EU and UK are about 90% there. The problem is the remaining elements and without these sorted there is no deal.

Nevertheless there is hope that they will enter the tunnel': the period of closed, detailed talks that would lead to a deal. If there is white smoke this week then sterling will rally strongly, but I would expect this to drag on for a while longer, for deadlines to be missed and for GBP crosses to remain exposed to negative headline risk.

9.38am BST

The race to take over UK betting group William Hill has moved forwards this morning.

The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect. William Hill's sports betting expertise will complement Caesars' current offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.

9.23am BST

Budget supermarket chain Aldi is bucking the trend of rising job losses in the UK, by unveiling plans to create thousands more positions across the country.

My colleague Julia Kollewe explains:

Aldi is to create another 4,000 jobs and open 100 new stores as part of a 1.3bn investment drive in the UK.

The new jobs are on top of 3,000 permanent roles the discount supermarket chain has created this year after grocery sales surged during the coronavirus pandemic, while many other businesses have laid off staff.

8.47am BST

The jump in Chinese factory profits has helped all the major European markets bounce back this morning.

The Europe-wide Stoxx 600 index has jumped by 1.5%, after hitting a three-month low on Friday night after its worst week since June.

8.46am BST

Sterling has risen against other major currencies this morning, as a crucial week of Brexit deal talks begins.

The pound has hit its highest level against the euro in over a week, at 1.1003, and is also up 0.5% against the US dollar at $1.28.

The last scheduled talks between the UK and Europe start this week and if there is to be an agreement by 15^th October, then positive breakthrough should happen before end of the week.

We are hopeful that a last minute deal would be reached, but the negotiations have become complicated following the recent UK Internal Markets bill, which is likely in breach of international law.

8.32am BST

Every sector on the FTSE 100 is up this morning, led by financials (+4%), real estate (+1.5), consumer-focused firms (+1.3%) and utilities (+1%).

8.14am BST

Drinks firm Diageo is also rallying, after reporting that its outlook has improved.

Our US business is performing strongly and ahead of our expectations, reflecting resilient consumer demand and the spirits category continuing to gain share within the total beverage alcohol market. Increased retailer confidence is resulting in some re-stocking in the off-trade channel. The on-trade channel is now open in all states, with some capacity restrictions.

In Europe, off-trade demand remains robust and the on-trade channel has largely re-opened with the easing of lockdown measures in most countries, although the risk of additional restrictions remains where infection rates are worsening. In China, the on-trade channel continues to recover, although larger banqueting occasions are returning more slowly.

8.10am BST

Britain's FTSE 100 has opened 1.3% higher, gaining 78 points to 5921.

HSBC is the top risers, surging by 10% at the open after Chinese insurance group Ping An increased its stake in the banking giant. HSBC's shares hit a 25-year low last week, amid worries that US-China relations were worsening.

8.02am BST

Here's Reuters' take on China's factory profits:

China's recovery has been gaining momentum as pent-up demand, government stimulus and surprisingly resilient exports propel a rebound.

Industrial firm profits grew 19.1% year-on-year in August to 612.81 billion yuan ($89.8 billion), the statistics bureau said.

7.52am BST

This chart shows how China's factory profits have been recovering steadily since cratering at the start of the pandemic.

The profits of #China's #industrial #enterprises above designated size rose to 19.1% YoY, keeping the steady #growth trend. Accumulated profit were decreased by 4.4% YoY during Jan. to Aug., narrowing for 6 consecutive months, citing #Wind. #investing #ANALYSIS pic.twitter.com/K5hCV7kXJo

7.39am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There's an autumnal chill in the air this morning, but investors are warming to equities again after an encouraging jump in Chinese factory earnings.

China industrial enterprises total profits (y-o-y), chart @BloombergTV https://t.co/YOyJSve2UM pic.twitter.com/yCMK04eRck

Profits of China's major industrial firms remained on the steady path to recovery in August. Indeed robust earnings in China's colossal production and operations engines provided further evidence of a strong economic comeback.

The data augers well for the China growth story and the outlook for commodity prices.

Strong tone being set by futures for the European open in just under an hour.

Eurostoxx 50 Up 1.7%
Dax Up 1.7%
FTSE Up 1.3%
IBEX Up 1.4%

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