The FTSE 100 suffered its worst day since October as global jitters over a sell-off in bonds hit London, with traders fearful of a spike in inflation.
The blue-chip index snapped three straight weeks of gains as it fell 2.5pc yesterday, or 170 points, to below 6,500 for the first time since the start of the month. It tracked falls in Asia and Europe, faring worse than its counterparts on the Continent. The benchmark fell 2.1pc on the week, losing momentum after a record start to the year.
Andy Haldane, chief economist for the Bank of England, said central banks must keep a close eye on inflation or risk letting prices surge as economies burst out of London.
A “resurgent demand” could pressure Covid-hit economies’ shrunken capacity, forcing up inflation, he said. Mr Haldane called inflation a “tiger [that] has been stirred by the extraordinary events and policy actions of the past 12 months”.
US 10-year Treasuries reached a one-year high earlier this week.
Michael Hewson, chief analyst at CMC Markets UK, said: “While bond yields have retreated from their highs for the week, there is still a fair degree of uncertainty about their overall future direction, in light of the rapid speed of the moves seen in the past week or so".
06:07 PM
Wrapping up
That is all from us! Thank you, as ever, for following along.
Have a great weekend, and join Louis back on Monday's live blog.
05:46 PM
Lloyd’s of London plans partial office return from mid-May
Lloyd's of London
Lloyd’s of London expects to have a few hundred people back in its underwriting room from mid-May as the vaccine roll-out begins to inject some life back into the deserted Square Mile.
My colleague Simon Foy reports:
Lloyd's will reopen its underwriting room from May 17, allowing brokers and underwriters to negotiate in person for the first time this year. It is among the first big City employers to lay out plans to get workers meeting face-to-face again after the roadmap for reopening the economy was announced on Monday.
It is thought the market will allow 30pc of its usual capacity back into the building, meaning a maximum of 2000 people returning. However, it only expects a few hundred people to return initially while most still work remotely.
It will also open its corporation offices from April 12 to employees “who need to be in for their wellbeing” and on a limited rota basis for those who wish to come in from May 17.
“To manage capacity and ensure we are Covid-secure, we will once again apply a class of business rota during the week and we will confirm further details closer to the time,” a spokesman for Lloyd’s said.
Before the pandemic struck, its underwriting room could hold up to 7,000 a day. In September, Lloyd’s chief executive John Neal said he wanted to get as many as 3,000 staff back on-site by the end of October before the second Covid wave laid waste to the plan.
Lloyd’s added that from June 21 it hopes to adopt a hybrid working model for its staff.
A spokesman said: “If all goes to plan, we will relax this further from 21 June when we will also begin to fully adopt flexible working.”
05:22 PM
Bank of America and JPMorgan give staff time off for Covid jab
Vaccine
Investment banks JPMorgan Chase and Bank of America will offer staff paid time off when they become eligible to get the Covid-19 vaccine, reported Bloomberg.
The news agency has more:
Employees at JPMorgan who are eligible for the shots will get eight hours to accommodate the appointments, the bank said in an emailed statement Friday. JPMorgan has about 255,000 workers.
Staff at Bank of America will have the option to use two half days, for up to four hours each, for vaccination appointments this year, the bank said Friday in a staff memo seen by Bloomberg. The policy is designed to accommodate the two-dose regimen current vaccines require.
Bank of America’s time-off benefit is part of an effort “to help address the impacts of the coronavirus and to support the physical, emotional and financial well-being of our teammates,” the lender, which has roughly 212,500 employees, said in the memo. A bank spokeswoman confirmed the contents of the memo.
04:57 PM
Ex-Credit Suisse chief raises $30m for SPAC
Tidjane Thiam
Tidjane Thiam, the former chief executive of Credit Suisse, has raised $300m for his blank cheque company after boosting the size of the deal.
The special purpose acquisition company - Freedom Acquisition I - which is targeting deals in the financial services industry - sold 30m units at $10 apiece in its US initial public offering, it said in a statement. It was earlier targeting to raise $250m.
The SPAC, backed by Pacific Investment Management, starts trading today under the ticker FACT.U.
Mr Thiam is executive chairman of the blank cheque firm and it will be run by former investment banker Adam Gishen, who was Credit Suisse’s head of investor relations and communications during Thiam’s time. Abhishek Bhatia, previously a senior executive at Asian insurer FWD Group, is also one of the founders.
Drinking at the bar could restart in June, says Greene King
Nick Mackenzie
Drinking at the bar could be allowed at Greene King’s pubs from as early as June under plans to get the company’s watering holes back to trading normally after the pandemic.
My colleague Hannah Uttley reports:
Nick Mackenzie, chief executive of Greene King, said he expected protective screens at tills and bar areas to be the first Covid-secure measures to disappear when pubs are allowed to trade without restrictions.
Mr Mackenzie said a ban on propping up the bar would likely be lifted at this point in line with the removal of protective screens and social distancing measures.
He said: “We have to get back to that normality, that is what a pub is all about; it’s not about separation, it’s not about screens, it’s about that personal connection and that’s hard to have when you’re sat at a table on your own.”
Mr Mackenzie said he expected some of the measures which have been introduced during the pandemic to remain longer-term, such as stringent hygiene procedures and hand sanitisation. Technology, which has played a larger role during the crisis through online booking and ordering food and drink, would also become a permanent fixture, he said.
He added that the Government should also provide businesses with guidance around Covid vaccines and whether staff should be compelled to take the jab.
Mr Mackenzie said: “Based on what I know right now I wouldn’t require every staff member to have a vaccine before they come to work, it is very difficult to see how that would work.
“The Government needs to lead on it, it shouldn’t be up to businesses.”
03:54 PM
FTSE sell-off intensifies
Today’s FTSe 100 sell-off has intensified, with London’s blue-chips down about 2.5pc and further underperforming Europe’s other top indices. As of 15 minutes ago, only three companies – IAG, Reckitt Benckiser and Kingfisher – were up.
03:22 PM
Interactive Investor boss hits out at proposed stock market shake-up
The boss of Britain’s second biggest investment platform has hit out at a proposed shake-up of stock market rules to encourage more tech firms to list their shares in the UK.
My colleague Michael O’Dwyer reports:
Richard Wilson, chief executive of Interactive Investor, said he had serious reservations about changes to the UK’s listing regime recommended in a review by former Worldpay chief Ron Kalifa, which he fears will disadvantage ordinary investors.
Mr Kalifa’s recommendations include permitting companies with a premium listing to use dual-class share structures, which allow founders to maintain control of their companies even after selling off part of their stakes during a stock market flotation.
Mr Wilson said: “Dual-class structures, as mooted in this review, with differential voting rights, would erode shareholder rights further, and distorted rights distort governance and accountability.
“Founders of companies must not be allowed to have their cake and eat it.”
US stocks clawed back some of this week's heavy losses to open in positive territory.
US market daat - Bloomberg
02:28 PM
Government finally offloads the remainder of Bradford & Bingley
Bradford & Bingley
The UK has sold the remainder of Bradford & Bingley and Northern Rock, shedding the failed lenders from public ownership 13 years after they were nationalised due to the financial crisis.
We report:
The share capital and loan portfolios of both companies have been sold to a consortium of US buyers for £5bn following a bidding process.
Their loan books will be snapped up by Wall Street giant Citi, while the companies themselves will go to Davidson Kempner, a New York-based asset manager.
The Treasury said clients of B&B and Northern Rock – now NRAM – do not need to take any action, saying would-be buyers agreed to a “robust package” of customer protections.
John Glen, economic secretary to the Treasury, said the sale was a “major achievement”.
Both banks – which can trace their heritage back to mid-19th century building societies – were nationalised after collapsing during the financial crisis, with their retail operations and branches split from their mortgage, investment and loan arms.
02:16 PM
South African bourse operator targets Asia for listings
JSE
The operator of South Africa’s main stock exchange is seeing opportunities for growth in Asia as it seeks to address market concentration on the bourse and a dwindling number of listed companies.
Bloomberg has the details:
“The idea is to attract trading from those countries back into our market and also to attract dual listings,” Leila Fourie, chief executive officer of Johannesburg stock exchange operator JSE.
Hong Kong, Japan, Singapore and China are among the markets the JSE is exploring to arrest a trend that saw 20 companies delist last year. The aggregate market capitalization of all listed companies on the exchange, among the 20 largest in the world, increased by 2pc, it said in a statement on Thursday as it reported full-year results.
More listings may also help reduce market concentration on the exchange, where giant global tech investor Naspers accounts for 18pc of the benchmark index.
01:39 PM
How the pound has shifted in recent years
Today’s drop may prove to be little more than a stumbling block, as sterling heads towards its highest level since Brexit referendum in 2016. Here’s a reminder of ow the currency has shifted:
01:12 PM
Norwegian posts record €2.2bn loss
Norwegian - Simon Dawson/Bloomberg
Norwegian Air sunk to a record annual loss due to massive writedowns and Covid-related disruption to air travel.
My colleague Simon Foy reports:
The Oslo-based carrier, which is under bankruptcy protection in both Ireland and Norway, posted a net loss of €2.2bn (£1.9bn) - far worse than the €150m loss for 2019 - after carrying 81pc fewer passengers at 6.87m.
In the fourth quarter, the airline also booked charges of €1.2bn on a planned fleet reduction.
Norwegian aims to cut the number of planes from 140 to 53 and is negotiating terms with lessors. The fleet stood at 131 aircraft at the end of 2020.
After an early recovery, the FTSE 100 has plunged downards again, and is currently off about 1.5pc – feeling increase pressure as the pound claws back some of its earlier losses to sit around $1.396.
12:40 PM
Barclays victorious in legal battle with Amanda Staveley
Amanda Staveley
Amanda Staveley, who sued Barclays for hundreds of millions of pounds about the behaviour of bosses when negotiating investment deals during the 2008 financial crisis, has lost a High Court fight.
My colleagues report:
Despite dismissing her case, Judge David Waksman found that the bank seriously deceived her about the terms of the 2008 investment at the centre of the case.
The decision means Barclays will not have to pay the £660m Ms Staveley had sought because the judge found that even if the bank had been honest, her firm PCP Partners would not have been able to raise enough money to finance the deal.
“I can understand why this outcome will be a serious disappointment to PCP, especially after I have found Barclays to be guilty of serious deceit,” Mr Waksman said in the ruling.
The case hearkened back to the chaos of the financial crisis when Barclays officials fought to stave off a government bailout.
Sky News has learnt that Kier is in detailed talks about an equity-raising that could generate close to its existing market capitalisation of £150m.
Sources said the discussions were not yet finalised, but that a deal was expected to be announced alongside the group's financial results, which are expected to be published in April.
Kier shares have dropped sharply following that report (nb, prices on this chart are delayed by 15 minutes):
11:46 AM
Britain and EU near agreement on forum for financial market discussions – Bloomberg
The UK and EU are close to reaching an agreement on how they will cooperate over financial market rules, Bloomberg reports.
The news service says:
The two sides are proposing a joint forum for discussing regulations and sharing information, though this accord won’t require them to open markets through so-called equivalence decisions, according to a draft memorandum of understanding seen by Bloomberg News.
The forum would lead to “informal consultations concerning decisions to adopt, suspend or withdraw equivalence,” according to the draft. Each side will keep the power to make and change their own rules.
BoE’s Haldane: There is a risk of inflation rising more than expected
Bank of England chief economist Andy Haldane has warned inflation could accelerate more than expected, cautioning over central bank “complacency” over the speed of consumer price changes.
In a speech, just published on the BoE website, the Monetary Policy Committee member said:
Inflation is the tiger whose tail central banks control. This tiger has been stirred by the extraordinary events and policy actions of the past 12 months. It is possible that, as vaccinations are rolled out and some degree of normality returns, inflation will return to a stable state of rest. Indeed, if risks from the virus or elsewhere prove more persistent than expected, disinflationary forces could return.
But, for me, there is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets. People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely. But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.
It is a pretty hawkish statement from Mr Haldane, who has been the most optimistic member of the rate-setting committee over the UK’s recovery hopes.
We perceive the recent moves in risk markets to be a bout of indigestion rather than a meaningful new change of direction for risk markets. “The equity and bond markets had become misaligned in the early weeks of this year with stock prices being buoyed by a fiscal-fuelled recovery, yet government bonds taking little notice. Perhaps bond investors placed too much faith in the willingness of central banks to intervene and keep yields low. Now the bond market is catching up with what is essentially an improved economic outlook. “So long as confidence in the economic recovery and earnings expectation continue to rise, then global stock markets should be able to absorb higher bond yields.
11:07 AM
JP Morgan: Market falls are ‘a bout of indigestion’
Some interesting comments on the recent market ructions from Karen Ward, a chief market strategist at JP Morgan Asset Management, who says the current stock market pressure should be short-lived:
We perceive the recent moves in risk markets to be a bout of indigestion rather than a meaningful new change of direction for risk markets.
The equity and bond markets had become misaligned in the early weeks of this year with stock prices being buoyed by a fiscal-fuelled recovery, yet government bonds taking little notice. Perhaps bond investors placed too much faith in the willingness of central banks to intervene and keep yields low. Now the bond market is catching up with what is essentially an improved economic outlook.
So long as confidence in the economic recovery and earnings expectation continue to rise, then global stock markets should be able to absorb higher bond yields.
10:59 AM
Bitcoin on track for worst week in a year
Bitcoin is on track to record its worst week in almost a year after tech mogul Bill Gates voiced further scepticism over the cryptocurrency overnight.
My colleague Hannah Boland reports:
The price of Bitcoin slumped by as much as 21pc over the week, and is down more than 10pc over the past day. The weekly slide is expected to be the largest since last March.
It follows comments from the Microsoft founder Bill Gates overnight on social media app Clubhouse in which he said he preferred to invest in businesses “that make products”.
Follow this and other live tech updates here: Bitcoin heads for worst week in a year
10:18 AM
Money round-up
Here are some of the day’s top stories from the Telegraph Money team:
Profits at insurer RSA held steady, in what may be its final set of results as a publicly-listed company as it prepares for a takeover.
A drop in non-Covid-19 claims – prompted by people staying indoors and avoid risky activity – offset lower investment income and claims related to the pandemic.
Profit before tax for 2020 came in at £483m, little changed from 2019’s £492m.
Chief executive Stephen Hester said:
We are pleased to report excellent results for RSA in 2020. Underwriting profits are sharply up to new record levels and return on tangible equity has risen above our target range.
The group’s shareholders have approved a £7.2bn joint takeover from Tryg and Intact, which is due to complete in the coming months.
Due to the takeover, the group did not announce a final dividend.
09:24 AM
Central banks move to calm nerves amid reflation fears
Central banks have shifted pretty quickly to calm signs of panic on markets following the surge in US Treasury yields and tech-stock sell-off of the past couple of days.
Bloomberg reports:
The Reserve Bank of Australia waded in with more than $2bn of unscheduled purchases, while Korea announced buying plans for the next few months. European Central Bank Executive Board member Isabel Schnabel said her institution may need to add more stimulus if the surge in yields hurts growth.
While the response appeared to calm bond investors, it’s unlikely to bridge a deepening divide between traders and central banks over the pace of the economic recovery. Policy makers fear the so-called reflation trade, already rippling through all markets, could seep into economies that have yet to rebound from the coronavirus shock.
In Japan, where the central bank has not yet acted, finance minister Taro Aso has said it is important yields don’t “suddenly jump up and down”.
Intriguingly, European yields have also risen, which is surprising because Europe’s recovery is expected to be slower than the US’s given comparatively low levels of stimulus and problems with the vaccine rollout. Rattled investors are likely not acting completely rationally, which frankly is a good catch-all reasons for a lot of what we have seen over recent weeks.
09:14 AM
Pets at Home make another profit upgrade
Pets at Home - Alex Lawson
Pets At Home has issued its fourth profit upgrade since September, as the pandemic boom in pet ownership shows no signs of slowing down.
My colleague Simon Foy reports:
The company now expects to post underlying pre-tax profits of £85m, up from previous guidance of £77m.
It comes after trading in recent months beat expectations, with sales boosted during the current lockdown as Britons continue to work from home. Pets At Home is classed as an "essential" retailer so its stores have remained open throughout the pandemic.
The company said: “Notwithstanding this challenging external environment, our performance over the last eight weeks has been ahead of expectations, with continued strong and broad-based growth across all channels and categories.”
Greg Lawless, an analyst at Shore Capital, said: “In our view, there is no doubt that Pets At Home has been a Covid winner, benefiting from remaining opening, together with increased levels of pet ownership in the UK with more consumers working from home under lockdown restrictions.”
08:49 AM
FTSE pares back some losses
As a sharp drop as the open, the FTSE 100 has regained some ground, moving upwards alongside a broader paring of European losses. Across the pound, futures trading is pointing towards gains for the S&P 500 and Nasdaq. It’s probably too soon for traders to get that Friday feeling, however.
08:48 AM
Jupiter rises after beating profit estimates
Jupiter Fund Management is leading mid-cap risers after beating estimates for its full-year profits following performance fees.
The FTSE 250 group posted an pre-tax profit for 2020 of £179m, solidly clearing the £145.1m City consensus and 10pc higher than 2019’s results.
Chief executive Andrew Formica said:
This is a year where we made significant progress against our strategic objectives and laid strong foundations for future growth, despite the disruptive impact on financial markets and businesses brought by Covid-19.
Net outflows fell from £4.5bn to £4bn, with Mr Formica saying market volatility had weighed on investor sentiment.
Jefferies’ Tom Mills said the results “look sound” overall.
08:30 AM
Rightmove narrowly beats estimates as revenues slump
Property portal Rightmove narrowly beat estimates for its full-year results, despite sales and profits both slumping.
In preliminary results for 2020, the FTSE 100 group reported revenues of £205.7m, down 29pc from 2019, while operating profit plunged 37pc to £135.1m. Analysts had expected revenues of £202.2m, and an operating profit of £131.2m.
The group said the revenue slump reflected discounts extended to estate agents during the early months of the crisis.
It announced a final dividend of 4.5p per share, having scrapped its 2019 payout due to the pandemic.
Membership numbers drop 3pc over the year to 19,197, with the group expecting levels to remain steady through 2020.
In its results statement, Rightmove said:
The UK housing market has, for the most part, shaken off pandemic-related challenges to forge an optimistic start to 2021. In the absence of further economic shocks, we think it is likely that the current shortage of new listings will correct once the immediate lockdown is lifted and will have no lasting impact on estate agency branch numbers.
08:11 AM
Pound drops below $1.40
The pound has dropped back below $1.40 this morning, as the risk-off mood across global markets sends investors towards safer assets such as the dollar, which has strengthened today.
08:04 AM
FTSE slumps at open
The FTSE 100 has dropped 1.2pc at the open, as fears of rate rises spill across the ATlantic following a nasty session in the US.
Bloomberg TV - Bloomberg TV
07:52 AM
British Airways owner IAG posts €7.8bn loss
British Airways - ADRIAN DENNIS/AFP via Getty Images
British Airways parent IAG slumped to a €7.8bn (£6.8bn) pre-tax loss last year as the airline group called for the introduction of vaccine passports.
My colleague Simon Foy reports:
The loss compared to a €2.3bn profit in 2019. Early fleet retirements, fuel and currency hedges and restructuring costs all contributed to the mammoth loss, the group said, while passenger revenues fell 7pc to €5.5bn.
IAG, which also operates Aer Lingus and Iberia, expects passenger capacity in the first quarter of the year to be around a fifth of 2019 levels as travel restrictions continue to choke demand, but the situation remains uncertain and this is subject to review.
Due to the uncertainty surrounding the pandemic’s timeline, the group did not provide any profit guidance for 2021, highlighting the challenges ahead for new boss Luis Gallego.
Asian stocks skidded to one-month lows on Friday as a rout in global bond markets sent yields flying and spooked investors amid fears the heavy losses suffered could trigger distressed selling in other assets.
The scale of the selloff prompted Australia's central bank to launch a surprise bond buying operation to try and staunch the bleeding, helping yields there come off early peaks.
Yields on the 10-year Treasury note eased back to 1.494pc from a one-year high of 1.614pc, but were still up a startling 40 basis points for the month in the biggest move since 2016.
Markets were hedging the risk of an earlier rate hike from the Federal Reserve, even though officials this week vowed any move was long in the future.
Fed fund futures are now almost fully priced for a rise to 0.25% by January 2023, while Eurodollars have it discounted for June 2022.
Even the thought of an eventual end to super-cheap money sent shivers through global stock markets which have been regularly hitting record highs and stretching valuations.
MSCI's broadest index of Asia-Pacific shares outside Japan slid 2.4pc to a one-month low, while Japan's Nikkei shed 2.5pc. Chinese blue chips joined the retreat with a drop of 2.5pc.
Coming up today
Corporate: Rightmove, RSA Insurance (Full year)
Economics: Nationwide house price index (UK); personal spending (US)
