Subdued US core inflation cheers markets; Lego sales soar; Cathay Pacific's record loss – as it happened

Graeme Wearden

from on 2021-03-10 18:48 (#5F51E)

Rolling coverage of the latest economic and financial news

Latest: Roblox shares soar on debut
Dow hits record high after US core inflation dip
US inflation rose to 1.7%.... but no overheating

Earlier:

Lego posts double-digit growth as families play more
Royal Mail hikes profit forecasts as letters demand rises
Hong Kong's Cathay Pacific Airways reports 2bn loss for 2020.

6.44pm GMT

Time to recap

Stock markets in the US and Europe have rallied again as investors grip onto hopes of a strong economic recovery this year.

Today we celebrate @Roblox direct listing on the @NYSE virtual trading floor. Congrats to everyone! What an exciting day $RBLX pic.twitter.com/9OwvJgbLrX

6.42pm GMT

After four hours of price discovery, Roblox shares have begun trading on the New York stock market.

And they've opened at $64.50 per share, sharply above the $45 reference price set for today's direct listing, showing strong demand for the video gaming platform.

.@Roblox (NYSE: $RBLX) has officially opened on the New York Stock Exchange at $64.50 #RobloxListing

6.28pm GMT

Hundreds of email addresses for the UK's leading business bosses have been accidentally shared due to an apparent gaffe by the Department for Business, Energy and Industrial Strategy (BEIS), my colleague Rob Davies reports.

The error, which appears to put BEIS in breach of GDPR rules governing the use of private data, occurred while the department was gathering suggestions for the 2022 new year honours list.

6.13pm GMT

Video games retailer GameStop is having another remarkable session, which has seen its shares briefly halted.

First it surged over $300 per share, then slumped below $200, and is now back at $257 - up 4% on the day....

GameStop plunges 12%, erasing an earlier 40% gain https://t.co/pumOHQCi3M pic.twitter.com/QTyGWXMw2h

How it started
*GAMESTOP EXTENDS SURGE TO 41%; PASSES RECORD CLOSE OF $347.51

What happened next
*GAMESTOP PLUNGES, ERASING NEARLY ALL ITS GAIN; SHARES HALTED

How its going
*GAMESTOP ERASES SLUMP AS TRADING RESUMES, NOW UP 6.3%

5.54pm GMT

UK borrowers are being given the chance to lock their mortgage repayments at the same level for up to 40 years with the launch of the longest fixed-rate deal on the market.

The lender Habito plans to launch a range of mortgages for borrowers with a 10% deposit that offers fixed-rate terms of up to four decades. The rates are based on the size of the deposit and how long the borrower wants to repay their mortgage.

5.14pm GMT

The combination of traditional plastic toy bricks with digital games such as Super Mario helped the toymaker Lego achieve double-digit growth in sales, revenue and profit in 2020.

The Danish company said its tie-up with the games company Nintendo, which spawned the unlikely link between Lego and the moustachioed plumber Super Mario, was its most successful launch.

5.13pm GMT

The London stock market couldn't match the excitement on Wall Street today, with the main indices finishing the day roughly where they started.

The FTSE 100 has closed 4 points lower at 6725 points, while the mid-cap FTSE 250 gained 24 points to 21,406.

In a similar fashion to yesterday, the overall mood in European equity markets is positive but the FTSE 100 is underperforming in comparison with the major indices in mainland Europe.

The subdued activity in government bond yields is helping equities again. Mining stocks like BHP Group, Anglo American and Rio Tinto are weighing on the index. Financials like, Standard Chartered, Barclays, and Prudential are also hurting the UK market. The DAX 30 registered a record high, partially due to a well-received update from Adidas.

4.50pm GMT

Shares in UK broadcaster ITV have dropped 3.8% today, after Piers Morgan departed its breakfast show Good Morning Britain.

Morgan left the show last night after broadcasting regulator Ofcom received more than 41,000 complaints over his comments about the Duchess of Sussex's mental health.

Investors may be a little worried about the loss of ratings for GMB - it wasn't exactly doing that well before he joined and its primetime slot will have repercussions for ads. Love or loathe, Morgan boosted ratings. It could also be that investors are worried about an investigation over comments made by Morgan on air.

Shares were hit yesterday after it revealed the way in which lockdowns have hit ad revenues, but indicated things are picking up and Studios can drive new growth.

3.45pm GMT

Over in Ottawa, Ontario, the Bank of Canada has left interest rates on hold at their record lows of 0.25%, despite signs of economic recovery.

It also reiterated that it doesn't expect to raise them until the economy has recovered from the pandemic and economic slack has been absorbed - which it doesn't see happening until 2023.

Despite the stronger near-term outlook, there is still considerable economic slack and a great deal of uncertainty about the evolution of the virus and the path of economic growth.

The labour market is a long way from recovery, with employment still well below pre-COVID levels. Low-wage workers, young people and women have borne the brunt of the job losses. The spread of more transmissible variants of the virus poses the largest downside risk to activity, as localized outbreaks and restrictions could restrain growth and add choppiness to the recovery.

The Bank of Canada holds interest rates and leaves its bond-buying program unchanged in a stand-pat decision https://t.co/NRxajpkKXG

3.27pm GMT

If you've a hunger for fried chicken, there will soon be another purveyor in central London, this time one with an Asian twist.

We adapted our approach to appeal to a young British demographic which meant building a premium, inviting space with a touch of our distinctive Asian heritage.

The pandemic may have been a setback, but it will not deter us from pursuing our vision for Jollibee in the UK and the rest of Europe."

3.02pm GMT

Every sector of the S&P 500 index (a broader index than the Dow) is up so far this session.

Energy, financials and discretionary consumer firms are the top-performing sectors.

2.57pm GMT

The Dow has now hit a fresh intraday record high, and is currently up 320 points, or 1%, at 32,153 points.

Dow Jones Industrial Average hits a record high todayhttps://t.co/vNl4BZ2HlR @YunLi626 @cnbc

2.44pm GMT

Roblox have rung the opening bell.....and Wall Street has opened higher.

US inflation rose to its highest level in a year in February, up 0.3% from 1.4% to 1.7% annualised. That is good news for the economy but the rise in inflation won't stop here as we are now approaching a three-month run where decade-low monthly readings drop out of the rolling calculation. The real test will come in the second half of 2021 when rising inflation expectations and the release of pent-up demand contribute to a spike in the headline rate which we believe can hit 4%. We've reached that level, or come close to it, several times before, in the late 1980s, 2000, 2005, 2007 and 2011 and on each occasion, inflation reversed course quite precipitously, typically alongside a fall in equities.

To summarise, today's number is consistent with rising commodity prices and input cost inflation flagged in last week's PMI numbers. Jerome Powell has made it clear he wants higher inflation and is willing to run the economy hot to get there. We think he will but there is a real risk the Fed has backed itself into a corner and may need to reign-in stimulus faster and quicker than expected which increases the chance of a volatile market reaction later this year."

2.24pm GMT

Today's Wall Street opening bell is being rung by computer game platform Roblox.

Roblox is listing on the New York stock exchange today, in one should be one of the most anticipated offerings this year.

If you know a tween or teen, there's a good chance they're one of the many obsessed with Roblox, an MMO game platform that lets the users themselves program games that can be played by all Roblox users. The company originally launched in 2004 and saw its user base skyrocket as the pandemic and lockdowns bit last year. (It saw its share of controversy too.) The iOS version of the game alone went from $1 billion in player spending revenue in November 2019 to $2 billion by October 2020. Roblox is also available on Windows, macOS, Android, and Xbox One.

The company raised $29.5 billion in January, reports CNBC, which help set its stock price at $45 today. However, it's important to note that today's Roblox offering isn't an IPO. Rather it's a direct listing. That means no new shares in the company are being created and sold. Instead, existing shares of the company are being offered. This means there's no guarantee that new investors can get in at $45. By the time the bell rings this morning, the shares could be much higher-or lower.

We're excited for @Roblox to ring the Opening Bell in celebration of their Direct Listing pic.twitter.com/hx8xnS956C

2.12pm GMT

Neil Birrell, chief investment officer at Premier Miton Investors, says there's no sign of inflation pressures building...

US CPI was in line with expectations for February. Whilst markets are fretting about inflation that might lie ahead, there is no sign of it in the present.

The prices of vehicles, clothes and transport were all lower month on month, which suggests that core inflation is not on the move yet; these are key elements of the data."

The continued weakness of core prices is hard to square with the recent recovery in demand, as plummeting virus cases have allowed most states to begin easing restrictions. But with the high-frequency data showing that restaurant dining and air travel are now rebounding rapidly, it's surely only a matter of time before prices in those most-affected services sectors start to pick up.

More generally, with the imminent fiscal stimulus set to turbo-charge demand, at a time when many sectors are already facing severe supply constraints, and with a variety of survey indicators pointing to rising price pressures, we still think inflation will rebound rapidly over the coming months.

2.03pm GMT

US government bond prices strengthened after the inflation report hit the wires, pulling down Treasury yields.

That suggests that inflationary worries have indeed eased, following the dip in core inflation to 1.3% per year, from 1.4%.

#CPI boosts sentiment in #Treasuries.

Yet, it is not clear whether #foreign demand will support the 10-year Treasury Bond #auction today. In the previous 7y and 3y note sales, indirect bidders plunged. @saxobank @SaxoStrats pic.twitter.com/DwCN1Uv5eq

#CPI lifts $ES_H futures. And then? $SPX $NDX $IWM pic.twitter.com/c0TpJ4LGNP

The core CPI, on a YoY basis, is running at +1.3%, the six-month trend at a +1.2% annual rate and the three-month pace at a mere +0.7%. The price momentum is moving away from what the inflationists are penning in.

1.52pm GMT

Economists and investors say February's inflation report shows that the US economy isn't overheating.

Here's Greg Daco of Oxford Economics:

Nope, the economy isn't overheating#CPI +0.4% in Feb
- Energy +3.9% w/ gas +6.4%
- Food +0.2%
- Core prices +0.1% w/ shelter+0.2%
recreation, medical, auto insurance
air fares, used cars & apparel

Headline #inflation 1.7% y/y (0.3pt)
Core inflation 1.4% (0.1pt) pic.twitter.com/ByRsklhmRW

CPI increase in line with forecasts while core number a bit lower than expected. Inflation concerns to ease? Overall prices up 1.7% for past 12 months.

Core CPI a staggering 1.2% annualized in February, 0.7% annualized over the last three months, 1.2%% annualized over the last six months, and a terrifying 1.3% YoY. pic.twitter.com/rWpoLUvsjX

1.42pm GMT

Just in: inflation across the US rose to 1.7% per year in February, its highest level in a year.

That's in line with forecasts, with consumer prices rising by 0.4% in February alone, up from 0.3% in January.

UnitedStates Annual Inflation at 1.7% https://t.co/LjdvxZ14rQ pic.twitter.com/uu4HW95yjp

BREAKING! US headline #inflation rose to 1.7% in February, matching expectations. Core #CPI at 1.3%, which is below(!) expectations. pic.twitter.com/t8FxEIDoyx

The gasoline index continued to increase, rising 6.4 percent in February and accounting for over half of the seasonally adjusted increase in the all items index.

The electricity and natural gas indexes also increased, and the energy index rose 3.9 percent over the month.

1.24pm GMT

Mortgage applications in the US dropped by 1.3% last week, as rising interest rates weighed on demand.

The decline was driven by a fall in demand to refinance home loans (rather than for a new purchase), as CNBC explains:

Applications to refinance a home loan fell 5% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. They were also 43% lower compared with the same week one year ago.

That is the first year-over-year drop since March 8, 2019. Last year at this time mortgage rates fell dramatically as fears of the coronavirus hit financial markets. That caused a large spike in refinance demand, hence this year's comparison.

Mortgage applications in the United States fell 1.3 percent in the week ended March 5th, after a 0.5 percent increase in the previous week.#housingmarket pic.twitter.com/amspROjZrb

MBA: Mortgage Applications Decrease in Latest Weekly Survey https://t.co/g80eNTWHGD pic.twitter.com/JFr9ilgkRr

1.16pm GMT

European stock markets have pushed higher, as investors await the latest US inflation data in around 15 minutes.

The Stoxx 600, which hit a one-year high yesterday, is up another 0.2% so far today, led by property companies, healthcare firms and consumer companies.

Le STOXX 600 cloture a 420,82, juste 3% en dessous de son record du 19 fevrier 2020 de 433,90 points, semble que l'Europe s'en tire dans les deux cas de figure, rebond hier avec les actions cycliques de "valeur" et aujourd'hui sur le retour du Nasdaq. (via Reuters) pic.twitter.com/DlFCRN11xA

Joe Biden is expecting to finally see his $1.9 trillion stimulus package passed today, yet early European trade highlights ongoing concerns. With commodity prices on the slide, the FTSE 100 miners are providing a drag on the index.

The FTSE is treading water in early trade today, with mainland European market marginally outperforming thus far. Yesterday's decline in US Treasury yields caused a sharp reversal of fortunes for tech stocks, yet there is a good chance we could soon see another leg higher to the detriment of those same pumped-up growth names.

1.04pm GMT

We also have another sign that major City investors are focusing on the climate crisis.

Major pension funds that own assets worth 870bn, including those of the Church of England, Lloyds Banking Group and the National Grid, have committed to cutting the carbon emissions of their portfolios to net zero by 2050 or earlier.

12.26pm GMT

Back in the financial markets, Reuters has spotted that the UK has attracted record demand for an inflation-linked bond.

It indicates that investors are keen to protect themselves against rising price pressures as the global economy recovers from the pandemic.

British 10-year index-linked bonds attracted record demand at a government auction on Wednesday, adding to signs of concern that inflation might rise faster than expected.

Investors submitted 2.832 billion pounds ($3.93 billion) of bids for the 800 million pounds on offer of an index-linked bond maturing in August 2031.

12.01pm GMT

Royal Mail has just hiked its profit forecasts, after seeing stronger-than-expected letter volumes and revenue trends in recent weeks.

It told the City that Advertising, Business and Stamped Mail are all performing above its previous expectations, while parcels growth is strong but broadly in line with expectations.

The number of letters being sent via Royal Mail has soared so much during the recent lockdown restrictions, bosses now expect to make profits well above previous expectations, the company has said in a stock market announcement.https://t.co/ehFKjKL2ki

11.58am GMT

Here's Ruth Griffin, retail and leisure lawyer at law firm Gowling WLG, on Lego's double-digit sales growth last year:

To fly in the face of the downward trend for the toy retail market is a huge achievement and demonstrates Lego's ability to successfully split its operations and tirelessly innovate within every revenue stream.

While there are surprises around every corner in such a competitive, aggressive space, the steadfastness of Lego's innovation and investment in evolving their brand is a continuing guarantee against this."

11.44am GMT

Next has bought a 25% stake in the Reiss fashion brand for 33m.

11.22am GMT

Away fro m Lego, Legal & General has set aside a further 110m for future coronavirus mortality claims this year, saying new Covid-19 variants increased the risk of higher deaths.

The human cost of the pandemic has been high. It has impacted our own customers, including holders of life insurance policies and annuitants who have lost their lives prematurely. We continue to pay all valid claims and we have prioritised giving rapid but sensitive service to bereaved families."

The diversity of L&G's businesses meant that what it lost in heightened mortality claims, it recouped elsewhere leading to a robust overall performance."

11.07am GMT

Despite the excitement of digital, traditional stores are still a key part of Lego's strategy -- especially in China, where the toy company is growing fast:

CNBC has a good take:

While Lego has been part of the culture in other regions like the U.K. and the United States, parents in China did not grow up with the iconic colored blocks. And so, having places where kids can go and get their hands on the bricks and see the sets that can be built has been a boon to sales.

Kids get to see what Lego is and play with it," Christiansen said. It's a brand built on the physical."

Lego sales soared in 2020, but don't just credit stay-at-home trends, it's gaining fans in China https://t.co/RNdSPxJnd4

10.20am GMT

Here's a suitably-colourful breakdown of Lego's financial results last year:

10.17am GMT

Lego-focused Blocks Magazine are also covering the company's results:

#LEGO sales were up 20% in 2020 compared to 2019... so that's why we saw those dreaded words 'out of stock' so frequently!

#LEGO growth was double that of the toy industry as a whole, CEO says.

Best selling #LEGO themes in 2020 were City, Friends, Technic, #HarryPotter and #StarWars

#LEGO Super Mario starter set was the best selling product in 2020

10.11am GMT

Lego CEO Niels Christiansen has also told the FT that the toy company is hiring hundreds of new employees to work on digital projects, to continue to digitalisation push.

Here's their take:

Lego recorded its strongest growth rates in five years as sets that blend physical bricks with digital Super Mario games propelled the Danish toy company to record sales and profits in 2020.

The world's largest toymaker increased revenues by 13 per cent to DKr43.7bn ($7bn) in full-year results while operating profit jumped 19 per cent to DKr12.9bn.

9.51am GMT

Toy company Lego has reported a jump in sales last year, as the lockdown encouraged families to play together more.

We are very pleased with these results. They show the timeless relevance of the LEGO brick and learning through play. This performance is also a testament to the passion, creativity and resilience of our people. Despite the challenges of the pandemic, they worked tirelessly to keep the world playing."

In 2020, we began to see the benefits of these, especially in e-commerce and product innovation. We will further increase investments during the coming year with a continued focus on innovating play, our brand, digitalisation and developing an omnichannel retail network."

9.31am GMT

London estate agent Foxtons has reported a strong start to the year, as the rental market recovers from the pandemic.

The sales commission pipeline started 2021 more than 30% higher than prior year and has led to much improved revenue growth in the first two months of the year. Despite the significant increase in units sold to date, the value of the pipeline has remained stable over this period at levels last seen in early 2017.

Stock levels in lettings are also well ahead of 2020 and, although a relative excess supply of rental properties in London has driven down average rents by 12% versus prior year, we have so far been able to fully mitigate the impact on average commissions through greater volumes as tenants look to take advantage of more attractive prices.

9.20am GMT

With so many restaurants closed, takeaway service Just Eat is seeing strong demand this year.

Given recent trading and the investment programme, management expects to increase market share in the UK in 2021.

With people having been cooped up in their homes for the best part of the year, conditions have been perfect for delivery food services such as Just Eat Takeaway.

In 2020, the firm increased revenue 54%, active customers by 23% and the number of restaurants listed on its app by 42% in what was a hugely impressive year of growth.

8.55am GMT

The owner of the Frankie & Benny's and Wagamama chains is looking to raise 175m from shareholders as it continues to struggle with the impact of Covid-19....and also prepares for life after the pandemic.

The Restaurant Group, will use the proceeds from the cash call to increase its financial cushion in case of any resurgence of the pandemic, to allow it to expand its Japanese-inspired Wagamama chain and its Brunning & Price pubs business, and to help it reduce its debt.

The Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to restructure our business and preserve the maximum number of long-term roles for our colleagues. TRG is operationally a much stronger business than 12 months ago."

8.44am GMT

The crisis in the airline industry is also pushing the UK government towards cutting air passenger duty on domestic flights.

Such a move would be a boost to the sector, but doesn't exactly square with the ministers' commitment to a target of net-zero carbon by 2050.

Air passenger duty is set to be cut on domestic flights after the prime minister signalled his support for reform to bolster air links around the UK.

Lower rates for UK internal flights or an exemption for return legs will be considered.

8.18am GMT

The UK stock market has opened lower, with the blue-chip FTSE 100 down 31 points or 0.45% at 6700 points.

Mining stocks are pulling the index down from yesterday's three-week high, with Rio Tinto down 3.3% and BHP Group off 2.7%.

8.11am GMT

The BBC says 2020 was a bruising year' for the airline:

In October, Cathay Pacific announced it would close its subsidiary Cathay Dragon, a regional carrier flying mainly to mainland China and other Asian destinations.

Cathay Pacific and its budget carrier Hong Kong Express took over Cathay Dragon's routes.

When the coronavirus first emerged Hong Kong had fallen into recession and Cathay Pacific in the red as months of huge and disruptive democracy protests in 2019 led to a plunge in customers, especially from the lucrative mainland Chinese market.

The airline also found itself punished by authorities in Beijing because some of its employees joined or voiced support for the protests.

Only its air freight operations saved the company, one of the largest cargo airlines in the world, from recording even deeper losses, as prices soared due to the high demand for shipments and fewer planes flying during the pandemic.

In an internal memo detailing the financial results, CEO Augustus Tang Kin-wing urged all employees to get vaccinated, saying inoculation campaigns would help bring about the lifting of travel restrictions.

Executives would continue to receive a lower wage throughout this year, while a majority of local ground staff and overseas employees had opted to take a pay cut, the company said.

Cathay Pacific posts record losses of HK$21.6 billion for pandemic-hit 2020 https://t.co/8MPH35m8zz

7.45am GMT

The Covid-19 pandemic has dragged Hong Kong's flag carrier airline, Cathay Pacific, into a record annual loss.

Cathay Pacific gave a bleak illustration of the impact of the lockdowns, unveiling its worst ever financial results today.

Market conditions remain challenging and dynamic,"

All our cash preservation measures will continue unabated. Executive pay cuts will remain in place throughout 2021."

In December, Cathay's passenger numbers fell by 98.7% compared with a year earlier, though cargo carriage was down by a smaller 32.3%.

Nearly 60% of its 2020 revenue of HK$47.9 billion was from its cargo operations, up from around 20% in 2019.

Embattled Cathay Pacific posted a record annual loss of HK$21.65 billion the buffeting year of 2020 on Wednesday. During the period, #revenue plunged by 56.1% year on year to HK$46.93 billion. #HongKong #CDHK #CathayPacific pic.twitter.com/wgTvqcczpE

The #HK's flagship airline carried a total of 4.63 million passengers last year, with daily passenger numbers averaging just 1,265. Its second half losses clocked in at HK$11.8 billion, up from HK$9.9 billion in the first six months of the year when the pandemic first emerged.

6.57am GMT

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

BULLS MAKE A COMEBACK
Nasdaq rallies 464 points, best day since November
Tech stocks jump , tesla surges 19.6% , biggest one day gain since feb 2020
US bond yields fall to 1.54% after trading as high as 1.62% on Monday
SGX nifty up 61 points

BREAKING:

*U.S. STOCK INDEX FUTURES POINT TO QUIET OPEN AFTER NASDAQ HAS BEST DAY SINCE NOVEMBER https://t.co/c2YtNoxoA3 $DIA $SPY $QQQ $IWM $VIX pic.twitter.com/qL28BzXwAs

A reversal in bond yields and a subsequent surge in US tech stocks turned market sentiment decidedly bullish.

It was the big-tech names that really drove the market higher, with the rotation out of 2020's much-loved growth names, to stocks set to benefit from the uplift in global economic activity reversing on Wal Street - if only for the time being. The NYSE FANG+ Index added a remarkable 7 per cent, paced by a near 20 per cent surge in Tesla shares, with the likes of Apple, Amazon and Facebook all recording solid rallies in their own right.

European Opening Calls:#FTSE 6696 -0.52%#DAX 14414 -0.16%#CAC 5918 -0.13%#AEX 675 -0.02%#MIB 23788 -0.12%#IBEX 8474 -0.26%#OMX 2118 -0.34%#STOXX 3781 -0.13%#IGOpeningCall

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