Rolling coverage of the latest economic and financial news
- Latest: FTSE 100 falls almost 1% amid travel worries
- Spain, Portugal and Malta tighten entry requirements for UK visitors
- TUI also hit by summer washout worries
- Introduction: Rising infection rates in Asia-Pacific and Africa threaten recovery
- New restrictions imposed in several countries to combat latest wave
- Coronavirus – latest updates
- See all our coronavirus coverage
Time to wrap up.
Travel stocks have started the week with chunky falls, on concerns that the summer holiday season will be a washout as tighter restrictions are introduced by some European countries. UK tourists will need to show they are fully vaccinated when visiting Portugal, Malta, and Spain’s Mallorca, Ibiza and neighbouring islands.
Related: Burberry boss Marco Gobbetti to step down after five years at helm
Related: End of partnership that kept Burberry at the leading cultural edge
Related: Greensill: watchdog opens investigation into auditors including PwC
Related: Remote working v the office: four company bosses have their say
Related: Homebuyers rush to complete before stamp duty holiday deadline
Related: Farmers swap crops for energy as east of England solar farm proposals double
Related: Beware scaling back UK furlough scheme too soon, warns Resolution Foundation
Related: MPs criticise ministers’ failure to plan industrial policy
Related: Insurer Hiscox agrees settlement with action group over Covid losses
Pharmaceuticals group AstraZeneca finished as the FTSE 100’s top riser, up almost 2%.
AstraZeneca reported this morning that its Forxiga drug has been approved in the EU for the treatment of chronic kidney disease.
Alternating doses of the Oxford/AstraZeneca and Pfizer vaccines generate robust immune responses against COVID-19.
The NIHR-supported Com-COV study, led by the University of Oxford, has published a paper on the Lancet pre-print server.
Full story: https://t.co/rNbjq4DcmMpic.twitter.com/ETZvrwzfyQ
The data provides support for the decision of some European countries that have started offering alternatives to AstraZeneca as a second shot after the vaccine was linked to rare blood clots.
Matthew Snape, the Oxford professor behind the trial, said that the findings could be used to give flexibility to vaccine rollouts, but was not large enough to recommend a broader shift away from clinically approved schedules on its own.
Shares in European airlines also fell today, with Air France down 4%, Lufthansa losing 3.6% and Ryanair dropping 3%.
That comes alongside the falls in London where IAG fell 5.9%, EasyJet lost 5.8% and TUI shed 5.3%.
Having seen falls at the end of last week over disappointment over the limited government relaxation of travel restrictions, which saw the addition of Malta, Madeira and the Balearics to the green list. Airlines were also unhappy that the government wasn’t bolder in promising that it would look at dropping quarantine rules for fully vaccinated UK residents returning home from amber list countries.
While airlines and travel companies expressed disappointment over last week’s announcement criticising the government for its cautious approach, the reality is whatever countries the government puts on its green list now matters less than the restrictions being faced by UK passengers when they leave the UK for their destination country.
Related: Britons will need negative Covid test or both jabs to travel to Balearics
In Australia, the Sydney region has implemented a full two-week lockdown, due to rising cases of Delta. With so few of the population vaccinated it is highly probable this will get extended and unlikely that the borders will reopen quickly. Hong Kong also announced that it would also ban all UK travellers from Thursday this week in a bid to keep the Delta variant out.
This is ultimately where the longer-term problem lies for airlines in Europe, and it appears that markets are slowly waking up to this, with British Airways owner IAG shares falling to four-month lows, as the prospect of a return to its profitable Asia routes diminishes further. Air France-KLM shares are at their lowest levels this year while Lufthansa shares are at five-month lows.
UK baker Greggs had a good day, with shares closing 2.9% higher after it reported that its sales recovery was continuing.
This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year.
All Europe’s main stock indices finished the day lower, pulling the Stoxx 600 down by 0.6%.
Germany’s DAX dipped by 0.35%, while France’s CAC lost nearly 1% and Italy’s FTSE MIB fell 1.1%.
After a subdued session, Britain’s FTSE 100 index has closed down 63 points at 7073 points, down 0.9%.
Summer 2021 was supposed to bring salvation for the UK travel sector as lockdowns were lifted and arms were jabbed. Instead it has brought more confusion and a dawning realisation that a big money booking boost isn’t on the cards.
“Shares in airlines, hotel businesses and travel companies have taken a battering today as investors rush to price in another twist in this long-running saga. Despite a number of popular tourist spots now being on offer to British holiday makers thanks to the government’s updated green list, it is precarious and it won’t mean a great deal if Germany gets its way and UK tourists are banned entry to the whole EU because of a concern over the Delta variant.
“With changes to the furlough scheme just days away there will be nervousness within the sector. How far can airlines and travel companies stretch their meagre incomes, how long can they juggle costs, how much extra pressure will the new wage bill add? There are no easy answers and every day seems to bring more questions.”
South African hospitality, grocery retail and gym stocks sank on Monday alongside the rand currency after the government tightened COVID-19 restrictions following the surge in Covid-19 cases.
The travel and leisure index tumbled 7.53% to a one-month low and recorded its biggest daily decline in just over a year, with City Lodge, Tsogo Sun Gaming, Tsogo Sun Hotels and Sun International down between 6.70% and 9.83%.
“Sentiment is very low on these businesses. People get fearful when news flow is bad as it is at the moment,” said Varshan Maharaj, Portfolio Manager at Allan Gray.
Back in the US, Texas factory activity expanded at a faster pace in June, according to business executives surveyed by the Dallas Federal Reserve.
The Dallas Fed’s production index, which tracks manufacturing in the state, has risen by 14 points to 29.4 this month, a reading indicative of strong output growth. Other measures of manufacturing activity also pointed to accelerated growth this month.
Dallas Fed: "The raw materials prices index inched up to 80.8, an all-time high… The finished goods prices index also pushed to new heights... Similarly, the wages and benefits index set another record high…” https://t.co/qcIG4qKQd8
“Our sales would climb significantly if we could find workers. Our backlog is now six weeks; in January it was five days.” - Nonmetallic mineral product manufacturing industry respondent
“It’s impossible to hire when our competitor for workers is the federal government."
“We have raised all wages twice this year.” - Primary metal manufacturing industry respondent
“We should be at 1,200 employees but have 140 openings. We expect that number to drop to 100 openings within the next week to 10 days as more folks are applying to go back to work."
“...we traded in our 2018 and 2019 trucks and to our surprise received more in trade than what we actually paid for them new. Now we plan to wait for the 2022 models to come out before purchasing any new vehicles."
The number of new solar farms planned for the east of England has more than doubled in recent months as farmers decide to swap crops for clean energy.
New solar farm applications for sites across Hertfordshire, Cambridgeshire and Essex in the last five months have climbed to 840 megawatts, or the same as 2m household solar panels.
Related: Farmers swap crops for energy as east of England solar farm proposals double
The departure of Marco Gobbetti as chief executive of Burberry raises the key question of whether Riccardo Tisci, whom Gobbetti appointed creative director soon after he joined, will remain at the luxury fashion brand, my colleague Jess Cartner-Morley writes:
A desire to be closer to his family in Italy was given as the reason behind Gobbetti’s decision to quit Burberry, and Tisci too is thought to have found it difficult to be away from family in Italy for prolonged periods during the pandemic. The designer was a fashion student in London in his teens and has a deep affection for British culture and subculture, but the pull of his homeland remains strong.
Related: End of partnership that kept Burberry at the leading cultural edge
The oil price has dropped back today, after hitting its highest levels in over two and a half years.
Brent crude is down 1% at $75.24 per barrel, having briefly hit $76.60 in early trading - the highest since October 2018.
Crude oil trades steady near the highest since 2018 with market participants expecting OPEC+ will keep supplies tight enough to support current levels.
The group meets on Thursday to decide production levels from August and beyond, and the market is currently looking for an increase of 500,000 barrels per day which is less than the increases seen during the past three months. With virus uncertainties due to the highly contagious delta strain and questions about an Iran nuclear deal hanging over the market, the group may opt for caution, hence the current price strength.
Back in London, the FTSE 100 index has dropped further into the red.
It’s now down 55 points, or 0.75%, at 7081 points in afternoon trading.
Aerospace manufacturer Boeing are the top faller on the Dow Jones industrial average, down over 3% in early trading.
In a sternly worded letter dated May 13, which was reviewed by The Seattle Times, the FAA warned Boeing it may have to increase the number of test flights planned and that certification realistically is now more than two years out, probably in late 2023.
That could push the jet’s entry into commercial service into early 2024, four years later than originally planned.
America’s tech-focused Nasdaq composite index has hit a fresh record high at the start of trading in New York.
Technology stocks are leading the risers on Wall Street, where the broader S&P 500 index also nudged a new peak, before dipping back.
Markets open slightly higher https://t.co/vasc0bN8ILpic.twitter.com/LAQYuyah3t
S&P 500 and Nasdaq Composite register all-time highs early Monday https://t.co/DiLKm2H3GM
"I feel pretty good in the short-term ... boring markets tend to be positive markets," says @elerianm on the second-half set up. "So what's boring? People are very comfortable with the global growth story and every day we get reinforcement that global growth is picking up." pic.twitter.com/4IzPbgYOF8
“The good news is that vaccination has significantly weakened the link to hospitalizations and deaths. That’s why the economic implications of the Delta variant are not as worrisome as we’ve had in the past.
However, if you’re not vaccinated, then you’re facing higher risk because of delta.”
"We are seeing things that are worrisome and they have to do with the #deltavariant," says @elerianm. "The good news is that vaccination has significantly weakened the link to hospitalizations and deaths. That's why the economic implications are not as worrisome." pic.twitter.com/zbCT6SaXCS
UK shopper numbers dipped by 0.2% last week, as the less-than-summery weather weighed on retailers.
Research group Springboard reports that footfall in retail parks dropped by 2% in the week beginning Sunday 20th June, whilst in high streets and shopping centres it rose by +0.2% and +0.6%.
Related: Met Office warns of more heavy rain, with southern England to be worst hit
On the plus side, it seems that the appeal of larger city centres over smaller high streets rebounded last week, following shifts the other way in the previous two weeks.
The lack of uplift in footfall on a week on week basis means that the gap from 2019 widened for the third consecutive week, although footfall remained noticeably higher than in the same week in 2020 which was the second week of trading following the lifting of Lockdown 1.”
Coronavirus live news: Hong Kong to ban flights from ‘high risk’ UK; Portugal to quarantine unvaccinated Britons https://t.co/uImvIBjqYZ
Britain’s small businesses are calling on the government for more Covid-19 support, before a ‘flashpoint’ hits companies on Thursday.
The Federation of Small Businesses is concerned that financial support packages will diminish on July 1, when business rates exemptions for retailers and hospitality firms and VAT payment deferrals end.
“Last year the Government told us that it would do “whatever it takes” to help the 5.9 million sole traders and small businesses on which our recovery will depend.
“The Treasury committed to evolving support measures to ensure they were adequate in the face of what firms were up against.
Related: Beware scaling back UK furlough scheme too soon, warns Resolution Foundation
Britain’s accounting watchdog has opened investigations into PwC and a smaller rival over audits conducted for Greensill Capital UK and the bank owned by one of its largest borrowers, the metals magnate Sanjeev Gupta.
The Financial Reporting Council’s (FRC) investigations – launched on 15 June but only made public on Monday – add to a growing list of investigations linked to Greensill and its customers, after it fell into administration in March this year.
Related: Greensill: watchdog opens investigation into auditors including PwC
Shares in travel and hospitality firms have fallen in London, on fears of a summer “washout” as Spain, Portugal and Malta all tighten their entry requirements on UK tourists.
Anyone travelling to mainland Portugal by air, land or sea will have to prove they have had two doses of a COVID-19 vaccine at least two weeks ago, or have to isolate.
The new rules, introduced by the Portuguese government, come into effect on Monday and will last until at least 11 July.
The rules – which come into effect in 72 hours, – were announced two days before the Balearics are due to move on to the UK’s green list for quarantine-free travel, and amid growing concerns over what Sánchez called “the negative evolution” of the virus in the UK.
Spain had planned initially to let British visitors enter the country without the need for a negative PCR test, but pressure has been mounting on the central government following rising case numbers in the UK and clusters of cases in Spain that were traced back to an end-of-year school trip to Mallorca.
Related: Britons will need negative Covid test or both jabs to travel to Balearics
Germany seeks to ban British travellers from EU - The Times https://t.co/2tJrmTSIpfpic.twitter.com/bAknFxvVC7
Angela Merkel, the German chancellor, wants to designate Britain as a “country of concern” because the Delta variant is so widespread.
The plans will be discussed by senior European and national officials on the EU’s integrated political crisis response committee and will be resisted by Greece, Spain, Cyprus, Malta and Portugal. President Macron of France has backed mandatory quarantine for unvaccinated travellers.
Related: All UK arrivals in EU should be quarantined, says Angela Merkel
“Optimism on the horizon for the travel industry has once again been obscured by dark clouds, as, one by one, European countries bring back in tough quarantine rules.
EU leaders are preparing to meet this week and Germany’s Angela Merkel is hoping to gain approval for a consensus on quarantine to stop the spread of the delta variant. So, it’s looking increasingly likely this summer will be a wash out for the industry after all.
Already disappointment had been swirling around the industry after the UK government only extended the green list of travel countries with a handful of new destinations. Although a rush of bookings came with the inclusion of Malta, Madeira, Spain’s Balearic Islands and a number of Caribbean islands, Malta’s move to re-impose quarantine on unvaccinated arrivals was a blow.
The ever-changing rules and restrictions mean that trying to plan an overseas holiday has become like a game of snakes and ladders. A relaxation of the rules by one country, is swiftly followed by a tightening in another, leaving travellers at risk of being left isolated in a hotel overseas with only a TV remote control for company.
Over in Germany, import prices have jumped sharply - partly due to the recovery in oil prices and the jump in commodity prices.
Destatis reports that import prices rose by 1.7% on a monthly basis in May, up from 1.4% in April.
#Germany Economic Data: Int'l #Trade#Price Index, May
Import prices increased at the fastest pace since 1981
✦ Imports: ▲+1.7% m/m, ▲+11.8% y/y
✦ Exports: ▲+0.7% m/m, ▲+4.2% y/y pic.twitter.com/0DweTeiGDE
Compared to May 2020, iron ores (+83.6%), copper (+65.1%), non-ferrous metal ores (+46.6%), plastics in primary forms (+42.9%) and pig iron increased in price, Steel and ferro-alloys (+32.4%) significantly.
The main reason for the sharp rise in iron ore prices is likely to be the continued strong global demand.
#Imports:
#Intermediate goods: ▲15.4 y/y
#Capital goods: 0.6 y/y
#Crude oil: ▲135 y/y
#Agricultural goods: ▲7.5 y/y
Trading on the Hong Kong Stock Exchange was delayed today, after heavy rain forced the morning session to be washed out amid widespread disruption.
The Observatory issued the black rainstorm warning at 8.20am, later reporting that more than 200mm of rain had fallen on Lantau Island, Lamma Island and the western part of Hong Kong Island as of 12.30pm, with other areas sustaining at least 70mm of rainfall.
A landslide at about 8am on Lantau Island blocked two lanes of traffic, police said, while four other landslides and flooding were reported on Cheung Chau.
Torrential rain prompted Hong Kong authorities to issue a ‘black rainstorm’ warning and temporarily suspend its stock trading session, as floodwaters gushed over roads in Lantau Island pic.twitter.com/8ii3kvwjXf
In London, shares in luxury fashion company Burberry have fallen by 6% after it announced that CEO Marco Gobbetti is leaving unexpectedly.
“The board and I are naturally disappointed by Marco’s decision but we understand and fully respect his desire to return to Italy after nearly 20 years abroad.
With the execution of our strategy on track and our outlook unchanged, we are determined to build on Burberry’s strong foundations to accelerate growth and deliver further value for our shareholders.”
Related: Burberry boss Marco Gobbetti to step down after five years at helm
European stock markets have also dipped this morning, with the Stoxx 600 down 0.3%.
A gauge of Southeast Asian stocks fell to its lowest level since May 21 today and is almost 7% from a January high, Bloomberg says:
Nations from Malaysia to Thailand are struggling to contain the pandemic, clouding recoveries in their economies. Indonesia reported fresh records in daily cases while Thailand suspended dine-in services for a month at restaurants in Bangkok and nearby provinces.
“The tightening in restrictions in some parts of Southeast Asia to curb rising Covid-19 cases will hurt domestic demand and hold back economic recovery,” said Khoon Goh, head of Asian research in Singapore at Australia & New Zealand Banking Group Ltd.
Thailand’s stock index dropped to a one-month low today, after new restrictions in Bangkok, and five provinces, were announced.
The measures include a ban on restaurant dine-ins in the capital, 9pm closures of shopping malls, and a ban on gatherings over 20 people.
Further souring sentiment, the Bank of Thailand’s deputy governor said the economy was expected to return to pre-pandemic levels only in the first quarter of 2023, as the tourism sector has been slow to recover.
In Jakarta, the benchmark stock index has fallen 1.4% to its lowest closing level in a month, after Indonesia reported a new daily record for Covid-19 cases yesterday.
Indonesia set a new record for daily coronavirus cases on Sunday with more than 21,000, as hospitals are flooded with patients in Jakarta and other Covid-19 hotspots across Southeast Asia’s hardest-hit nation.
The figure brings the country’s tally for the pandemic to more than 2.1 million coronavirus cases with 57,138 deaths.
President Joko Widodo insists the existing restrictions on public mobility are still the best option so as not to harm the economy, as well as social and political activities.
Health experts have criticised the decision, urging the government to take radical action to save the nation and halt the spread of the virus.
Related: ‘I’ve seen too many bodies’: Jakarta gravediggers chart Indonesia’s Covid battle
Malaysia’s stock market has fallen to a seven month low, after Prime Minister Muhyiddin Yassin extended the country’s lockdown due to elevated Covid-19 infections.
The FTSE Bursa Malaysia KLCI Index has dropped by 1.2% today, to its lowest level since 10th November (when Pfizer’s Covid-19 vaccine successful trial results sparked a global rally):
Malaysia will extend its full lockdown until daily new Covid-19 cases drop below 4,000, and its targets on vaccination and intensive care unit (ICU) bed usage are met, Prime Minister Muhyiddin Yassin said on Sunday (June 27).
The lockdown was originally due to end on Monday, but Malaysia is still averaging above 5,000 cases a day nearly four weeks into the lockdown. It recorded 5,586 new cases and 60 deaths on Sunday.
South Africa’s rand has weakened today, following the two-week tightening of restrictions to try to combat the rise in Covid-19 cases.
The rand has dropped by around 0.7% to 14.24 to the US dollar following president Cyril Ramaphosa’s warning that South Africa faces a “massive resurgence of infections”.
President Cyril Ramaphosa will shortly address the nation on developments in the country’s response to the COVID-19 pandemic. #StaySafe
South Africa is seeing a massive resurgence of infections. The Africa Center for Disease Control and Prevention reports that a third wave of the disease is underway on the continent today’s the African Union member states reported over 5.2 million cases and over 138 000 deaths.
This scenario, although necessary, is likely to hamper an already faltering economy, and the rand is likely to remain under pressure, with any strength in the local unit likely to be met with fresh demand for US dollars.”
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global markets are subdued today amid a worrying rise in Covid-19 cases in the Asia-Pacific region and Africa.
Asian shares strike cautious tone as COVID-19 cases spike https://t.co/cBkzSKXHzYpic.twitter.com/p21ag1lbMc
“We have overcome two decisive waves but now we have a new hill to climb, a great challenge, a massive resurgence of infections … a devastating wave.”
Related: Coronavirus live news: South Africa tightens restrictions; Italy mask-free from today
Malaysia has extended is MCO national lockdown once again. Thailand has tightened restrictions in Bangkok. Jakarta, where I am based, is in a dark place, with cases surging, with that pattern being repeated across Java. In Australia, the Greater Sydney area lockdown was widened, and Darwin also entered a snap lockdown with the trans-Tasman air bubble suspended until the end of tomorrow. Milder restrictions in the Wellington area of New Zealand were all extended
Although much has been made about the vaccine progress in the US, the UK, and Europe, Covid-19 and its new delta variant remain a severe problem for much of the world. Nowhere more so than Asia, with Japan and Taiwan also dealing with persistent virus cases and Singapore subject to still-severe, domestic restrictions.
Related: Qld Covid restrictions: update to Brisbane and south-east Queensland coronavirus rules explained
I hope everyone had a good weekend! here's a quick review of the main stories from the weekend, from Matt Hancock's wandering hands, to what to expect from US Non-Farm Payrolls this week pic.twitter.com/WQaQh0jFRS
European Opening Calls:#FTSE 7139 +0.04%#DAX 15618 +0.06%#CAC 6630 +0.10%#AEX 733 -0.03%#MIB 25512 +0.01%#IBEX 9101 +0.06%#OMX 2273 +0.10%#STOXX 4121 +0.00%#IGOpeningCall
European markets head for cautious start to the week https://t.co/WbuqDWnxIM
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