Rolling coverage of the latest economic and financial news, as high street chain M&S announces streamlining programme, and hefty job cuts
- Latest: S&P 500 hits new intra-day record
- Summary: M&S struggles; Walmart shines
- Full story: M&S cuts 7k jobs in next three months
- Breaking: 7,000 jobs to go at M&S
- Jobs at risk in UK stores, central support and regional management
And finally… the London stock market had closed at its lowest point in over a week.
The FTSE 100 index has ended the day down 50 points, or 0.8%, at 6,076 points.
In a reversal of yesterday’s move, the FTSE 100 is being hurt by the strength of the pound. Sentiment in Europe is weak, but the positive move in sterling, has caused the British equity benchmark to underperform. In terms of index points, some of the biggest fallers are GlaxoSmithKline, AstraZeneca, British American Tobacco and Unilever – they all earn a large chunk of their revenue overseas, so the upward move in the pound works against them.
Tensions between the US and China have heightened again as President Trump has tightened restrictions on Huawei. The US leader wants to limit the Chinese company’s access to US-produced chips. The firm was already under scrutiny from the US government, but the heat has been turned up again.
Related: Marks & Spencer to cut 7,000 jobs over three months
Related: UK coronavirus job losses: the latest data on redundancies and furloughs
Related: Eat out to help out: Britons claim 35m discounted meals
Related: Norway’s wealth fund loses £16bn in first half of 2020 after Covid panic
Related: Supermarket sales in Great Britain slowed after face-covering rule
Figures released earlier today have shown that the US housing market continued to recover last month.
Housing starts increased by 22.6% — far more than expected — to a seasonally adjusted annual rate of 1.496 million units last month, the Commerce Department said on Tuesday. That suggests that the home construction sector is strengthening, after slowing sharply during the lockdown.
New residential construction soared 22.6% in July, extending the 11.1% and 17.5% increases seen in May and June, respectively, with housing starts rising from 1,220,000 units at the annual rate in June to 1,496,000 units in July, a five-month high. pic.twitter.com/isR1QzhJiB
Candice Bangsund of asset manager Fiera Capital also credits central banks and politicians for the stunning market rally since late March:
“Global stock markets have made an unprecedented rebound from the depths of the pandemic-induced bear market earlier this year, as investors thrived on the abundance of monetary and fiscal stimulus at hand. Indeed, the timely and assertive response from both central banks and governments proved to be instrumental in alleviating the damage to both the economy and financial markets, and allowed investors to look through the virus-related destruction.
At the same time, policymakers’ unrelenting pledges to guide the economy back to health have been a critical source of support as major economies fire up their engines and as activity resumes, which has emboldened risk appetite and global equity markets alike.”
Frasers Group, the firm behind Sports Direct, has told the City that chairman David Daly accidentally breached the rules by purchasing shares in the company during its ‘closed period’.
Top City executives aren’t allowed to trade equities in their own firms shortly before financial results are due.
Frasers Group was informed on 17th August that David Daly (a Non-Executive Director) of the Company had purchased 3,912 ordinary shares in the Company.
The shares were purchased in error during a closed period. The Company has robust procedures in place before PDMRs can trade in shares which were accidentally not followed in this instance.
You can’t make this up. The non-executive chairman of Mike Ashley’s Frasers Group bought shares “in error” three days before its full year results. The 3,912 shares were sold within 15 mins and David Daly has donated his profits
BUT REALLY WHAT https://t.co/qO6YpvjlVI
Frasers’ chairman David Daly forgot about the rules for buying shares
He bought some during a closed period and then sold them 15 minutes later when realising the mistakehttps://t.co/cLCWcv52jr
The most obvious threat to the rally is the risk of a second wave of Covid-19 cases this winter.
That would put strain on health services, potentially forcing new lockdowns that would hurt businesses (but save lives).
US stocks have made a remarkable recovery since the big sell-off in mid-March and are continuing to rise despite the unprecedented hit to the global economy.
“There is no doubt that the enormous stimulus packages from the Federal Reserve and the Trump administration have had a major role to play in this and has given investors confidence to stay invested in equities rather than moving into the perceived safety of cash or bonds.
The S&P 500’s record high comes as global investors express more optimism about the prospects for the market.
A closely watched survey of fund managers from Bank of America shows that investors are “most bullish” on financial markets since February.
World stocks have bounced back by a whopping 51%, adding $24 trillion in value, in five months as investors bet that economic activity would rebound rapidly after record plunges.
Of the 181 survey participants, who manage half-a-trillion dollars in assets, a net 79% expect a stronger economy, the strongest reading since December 2009.
Lots of good stuff in this month’s FMS by BofA. E.g. the bears giving up as more say it’s a bull market than it’s a bear market rally pic.twitter.com/i5PgB237Ge
Also, an increasing perception that the #recession is over, this is now early cycle: pic.twitter.com/6ZQTuCqWYm
Interestingly, this optimism is (IMHO) somewhat in conflict with the perception that the recovery will be W-shaped, as the W implies another dip: pic.twitter.com/KcEIdRPg4j
A report issued this morning suggests that the imposition of face coverings in UK supermarkets hit sales, if only temporarily.
My colleague Joanna Partridge has the details:
Supermarket sales have begun to slow in Great Britain since the easing of lockdown restrictions, as the introduction of compulsory face coverings in stores in England and Scotland initially deterred some shoppers.
Take-home grocery sales slowed by 14.4% year-on-year in the three months to 9 August, as more shops and hospitality venues reopened, making consumers less reliant on food retailers, according to the data analysis firm Kantar, which examined shopping trends in England, Scotland and Wales.
Related: Supermarket sales in Great Britain slowed after face-covering rule
Traders have predicting for weeks that the S&P 500 would hit a new peak soon.
And having finally done it, the index has now subsided. It’s currently down 6 points today at 3,375 points (having scaled the previous peak of 3,393).
Enterprise software maker Oracle is the top riser on the S&P 500, up 3.5%, following reports that it has joined the crowded race to buy China’s TikTok (not an obvious fit, frankly….).
Amazon has gained 3%, with CRM software-maker Salesforce.com up 2.3%.
Stocks may be rallying, but the US dollar is not!
The greenback is continuing to slide on the FX markets, driving the pound up to $1.323 for the first time since the start of January.
After taking a couple weeks off the dollar continues it’s decline, but S&P hits an all time high? Any coincidence?
U.S. Dollar Index (DXY) vs S&P 500 YTD
Source: Bloomberg Data pic.twitter.com/l7Olx7GUo3
Here’s another handy chart – showing how the US stock market is increasingly dominated by its biggest members:
Big continues to get bigger: the 10-largest stocks in the S&P 500 comprise nearly 28% of capitalization–the “most top-heavy index” since the ’60s, says Howard Silverblatt of S&P Dow Jones via reporting by Barry Ritholtz/Bloomberg: https://t.co/QPxLXzR6Dw pic.twitter.com/C4DVgvu6xm
The rally in US shares since March is particularly remarkable, given the surge in Covid-19 cases and deaths, and the sharp rise in unemployment.
The rally is, in large parts, down to the central banks, who have convinced investors that they won’t allow asset prices to slump.
One of the primary reasons behind the rally in US markets has been the surge in FAANG stocks, which are perceived to have been one of the winners from the lockdown, and which are up more than 70% from the March lows.
Here’s CNBC on the remarkable stock market rally over the last few months:
Since hitting an intraday low on March 23, the S&P 500 has skyrocketed more than 54%. Those gains have been largely driven by sharp advances in Big Tech shares.
Facebook, Amazon, Apple, Netflix and Microsoft are all up at least 27% year to date. Google-parent Alphabet has jumped more than 14% in that time period.
BREAKING: S&P 500 hits new all-time high.https://t.co/t7fJrqt9WI pic.twitter.com/1dJr2W9r1x
Newsflash: America’s S&P 500 share index has just hit a new all-time high.
This means the index has now recovered all the losses since the Covid-10 pandemic began.
S&P 500’s forward P/E ratio now sits at highest since mid-2000 pic.twitter.com/R3kCQD4q1J
The US stock market has opened, and the Nasdaq index of tech stocks has hit a fresh record high.
The Nasdaq has gained 49 points, or 0.44%, in early trading, pushing it to 11,179 for the first time. That means the index is up 25% this year, driven by the surge of money into technology giants.
The euro’s rally against the US dollar to a two-year high today may cause alarm at the European Central Bank.
While a strong currency sounds good in theory, in practice the ECB rather likes a weaker euro as it pushed up inflation (which fell to just 0.3% in June, well below target).
Clear $EUR wants a crack at 1.20 even though the rally of late has been misaligned to fundamentals (relative US/EZ cyclical outlook). Without a clear narrative in FX markets, hard to fight this momentum. Fate of $EUR rally is in the hands of ECB & whether they jawbone it lower pic.twitter.com/bXE70kMk20
Back in the markets, the US dollar is weakening against other major currencies.
This has driven the pound up nearly a cent, to $1.3194 — its highest level since early March.
The floodgates appearing to reopen for $USD as the $DXY plunges below 92.50 for the first since May 2018 $AUDUSD and $EURUSD simultaneously bursting to fresh yearly highs on the back of relentless #USDollar selling pic.twitter.com/oJ5taim91M
The dollar continues to fall with investors expecting the Fed to maintain its expansionary monetary policy for a long time, owing to concerns the persistence of Covid-19 will weigh on economic recovery.
The greenback is also suppressed because of the lack of haven demand for the reserve currency, with investors evidently favouring foreign currencies, gold and bitcoin instead
A quick recap
Back in the UK, the government has announced that at least 35 million discounted meals have been devoured during the Eat Out to Help Out scheme’s first fortnight.
Rishi Sunak’s attempt to protect jobs in the hospitality sector, by offering a discount of up to £10 per head on food and soft drink, is proving rather popular.
“Today’s figures show that Britain is eating out to help out – with at least 35 million meals served up in the first two weeks alone, that is equivalent to over half of the UK taking part and supporting local jobs in the hospitality sector.
“To build back better we must protect as many jobs as possible, that is why I am urging all registered businesses to make the most of this by claiming back today – it’s free, simple and pays out within 5 working days.
Shares in Walmart have rallied sharply in premarket trading, up more than 5% to record levels, as investors cheer its forecast-beating results.
Here’s CNBC’s take:
Walmart said Tuesday second-quarter earnings got a boost as shoppers rushed in to spend their stimulus checks, while its online business continued to surge during the pandemic.
Walmart’s e-commerce sales in the US shot up by 97% as customers had packages shipped their homes and used kerbside pick-up. The retailer’s US same-store sales grew by 9.3% in the second quarter, fuelled by purchases of food and general merchandise.
The US retail giant Walmart has also smashed forecasts, as it rode out the pandemic.
Walmart grew its sales by 9.3% in the last quarter, led by “strength in general merchandise and food”. Its eCommerce sales surged by 97%, as more consumers ordered online.
The company’s net sales and operating results were significantly affected by a continuation of the global health crisis. Increased demand for products across multiple categories led to strong top-line and gross margin results.
(Earnings) Walmart( $WMT ) Actual.EPS=1.56 vs Est.EPS=1.25, Actual.Rev=137.7B vs Est.Rev=135.29B pic.twitter.com/e6fUFxeTAh
Sticking with the US, retailer Home Depot has posted a surge in sales during the lockdown.
Like-for-like sales surged by 23.4% in the May-July quarter, as Americans turned to DIY tasks, snapping up new paint and tools. That’s more than double analyst estimates.
M&S’s struggles are a sharp contrast to the huge success of Amazon, which is hiring more people, in the US.
The Wall Street Journal has the details:
Amazon.com is expanding its physical offices in six US cities and adding thousands of corporate jobs in those areas, an indication the tech giant is making long-term plans around office work even as other companies embrace lasting remote employment.
Amazon is preparing to add 3,500 corporate jobs across hubs in New York, Phoenix, San Diego, Denver, Detroit and Dallas, the company said Tuesday. The plans include 2,000 jobs at the historic building in Manhattan that once housed the Lord & Taylor flagship department store.
Sophie Walker, CEO of the Young Women’s Trust, points out that women will be disproportionately hit by M&S’s job cuts, as they make up 70% of the workforce (details here).
Massive job losses at Marks and Spencer means thousands of job losses for women, who make up so much of the retail sector. As the furlough scheme ends it is vital firms record redundancy by sex so we can clearly see the impact of Covid on women, who have already been hit so hard.
This data should then also be broken down via race, ethnicity and disability so we can see the particular impact of this tsunami of unemployment on minoritised women across all backgrounds. This pandemic is deepening already entrenched inequalities. Govt needs to see that and act
Unions are also urging the government to act to protect high street jobs.
The Union of Shop, Distributive and Allied Workers (Usdaw), the UK’s fifth-largest trades union, has called for urgent talks between the company, the government and unions.
This job loss announcement is yet another devastating blow for M&S staff and yet another bombshell for our high streets. The government has a clear choice; do they want to see the high street go to the wall, or do they want to help save it?
What the retail sector needs now is a tripartite approach of the government, unions and employers working together to develop a much-needed retail recovery plan. We have long called for an industrial strategy for retail to help a sector that was already struggling before the coronavirus emergency. Now the situation is much worse.
#MarksAndSpencer staff shocked by 7,000 more job losses – #Usdaw calls for urgent talks and the Government to help save the high street #SaveOurShops https://t.co/fw3UavVwiz
The Labour party has blamed government ‘incompetence’ for the job cuts at M&S and other retailers.
Lucy Powell MP, Labour’s shadow minister for business and consumers, says the restructuring shows the need for targeted support for sectors worst hit by the pandemic:
These job losses are devastating for the workers involved yet they also tell a much bigger story about the threat to our high streets. The scale of job losses was not inevitable but the incompetence of this government means we’re now seeing wave after wave of redundancies, and store closures.
Labour has called for a Hospitality and High Streets Fightback Fund to support businesses in distress and to save jobs now. Ministers must change course.
Employees at other high street retailers will be watching events at M&S nervously.
Although every chain is different, they all face the consequences of the accelerated move towards online shopping and away from store visits – especially during the ongoing pandemic.
“Consumer shopping habits have transformed during the pandemic. As a result, many bricks and mortar retailers have been forced to take drastic action to rightsize their business models by stripping away superfluous layers of management and back office support services.
Coming on top of 950 job losses announced last month by the retailer, this development is a significant step that may well encourage others to bring forward radical restructuring plans in the next few months.”
It’s been a choppy morning’s trading in the City of London.
The FTSE 100 index of blue-chip shares fell initially, but has now recovered its losses to sit unchanged at 6126 points. The French, German, Spanish and Italian markets are all slightly higher, though.
COVID-19 impact has come in a pivotal year for Capita when we expected to see revenue growth.
Profit has been significantly affected and the delay in the return to growth means we will not generate sustainable cash flow for 1-2 years
Marks & Spencer’s future prospects depend heavily on the success of its new tie-up with Ocado.
That partnership starts next month, and will let people order M&S food for home delivery through Ocado (supplanting Waitrose).
Related: Stand and deliver: Waitrose and M&S fight for Ocado customers
“The company should thank its lucky stars that it has a successful food arm, as that has helped to prop up trading during a very difficult time. Its clothing and home interests have struggled in the face of serious headwinds as demand fell off a cliff for office dressing and formal wear.
“The next big test for Marks & Spencer will be the imminent launch of its supply deal with Ocado for UK online food orders. A lot is riding on this joint venture being a success and further accelerating growth in Marks & Spencer’s food sales.
Speaking of Australia…. the country’s wine industry is facing the threat of new tariffs on sales to the fast-growing Chinese market.
Related: China opens door to tariffs on Australian wine imports as trade tensions spiral
In the mining sector, BHP Billiton has pledged to sell its thermal coalmines within two years.
It’s part of the global mining giant’s push for a low-carbon future, following heavy pressure from investors to clean up its business.
Announcing a full-year profit of US$7.95bn on Tuesday, BHP chief executive Mike Henry also left the door open to supporting a resolution from activist shareholders that would require BHP to stop mining that would destroy Aboriginal cultural heritage sites in Australia until laws are changed to strengthen their protection.
Henry said BHP agreed with the intent of the resolution, which was to prevent “another Juukan Gorge” – a reference to rival miner Rio Tinto’s decision to blow up 46,000-year-old-caves in the Pilbara to get access to higher quality iron ore.
Related: BHP commits to selling its thermal coalmines within two years
While retailers struggle, housebuilders are hopeful that conditions in their sector are improving.
Persimmon, the UK’s biggest home builder, restored its dividend this morning after reporting that business has picked up strongly this summer.
The Group has had an excellent start to the second half with a c. 49% year on year increase in average weekly private sales rates per site since the start of July and a current forward order book of c. £2.5bn, a 21% increase on last year.
Shares in Marks & Spencer have fallen by almost 4% in morning trading, down 4.4p to 109.2p.
That suggests investors are underwhelmed by M&S’s latest attempt to transform the business.
Julie Palmer, partner and restructuring expert at Begbies Traynor, says M&S’s job cuts highlight the ‘huge structural change’ in UK spending habits.
With more people shopping online – retailers need fewer people in the stores, and more people shipping goods to customers’ homes.
“This is a huge transformation for the brand.
And one that is needed because consumers have become used to the convenience of shopping during lockdown. The movement of shop floor jobs to warehouse jobs, stronger emphasis on logistics and a greater wealth of talent that can support the online offering will be where the jobs in retail start to appear. The increase in technology in the workplace to streamline organisations will also become more commonplace as retail moves towards its future structure.
Clothing has been the weak side of M&S’s business for many years, with food sales consistently stronger.
Covid-19 appears to have accelerated that trend, leading to this morning’s job cuts.
“Today’s announcement, while difficult for the staff involved at M&S, has been a long time in the making. The company’s fall from established FTSE 100 constituent to mid-cap has reflected past strategic errors; but, more recently, the business had been going through significant changes even prior to the Covid-19 pandemic.
Indeed, the measures taken today underline the degree to which the economic impact of the virus has super-accelerated many of the trends that were already sweeping through retail and other sectors. The hope will be that M&S, one of the UK’s most iconic brands, emerges from this process a stronger, more future-proof business on the other side – but the next few months will be tough for the company and its staff.”
Retail analyst Nick Bubb says:
M&S Food sales are doing quite well, but M&S Clothing & Home sales are very weak and so it is no surprise to see the business set out big cost-cutting plans, dressed up as “streamlining”…
M&S’s job cuts look to be the most severe announced by a UK company since the pandemic drove the economy into its worst recession in decades.
But many other retailers have also made sweeping redundancies and store closures.
Related: Marks & Spencer says it will cut 7,000 jobs over three months
If you’re just tuning in, here’s the details of M&S’s major job cuts plan, announced at 7am.
Marks & Spencer is to cut around 7,000 jobs over the next three months, in the latest round of redundancies at the retailer as it cuts costs and changes the business following the pandemic.
The job cuts will be in its central support centre, regional management, and its UK stores, adding to the swathe of job cuts announced by UK companies during the Covid-19 crisis.
Marks & Spencer is ‘desperately’ trying to adjust to the new Covid-19 world by slashing 7,000 jobs across its business, says Richard Lim, CEO of Retail Economics.
He also fears many more jobs will go, as the government’s furlough scheme winds up this autumn:
“This is a massive reduction in their workforce and the retailer is desperately attempting to reposition the business towards a new normal emerging in the sector. This painful readjustment period will see a significant reduction in labour costs, cutting back on store numbers and pivoting the business model to become nimbler and more digitally focused.
“Retailers were already battling with the pace of structural change facing the sector but the impact of the pandemic has been a step-change for the industry. Retailers remain in survival mode, preserving cash and hanging on for more sustainable levels of demand to return. But the way we shop has changed on a permanent basis for many parts of the sector almost overnight.
Major blow as Marks & Spencer announces around 7,000 job losses – far worse than feared. Cuts, to hit in next three months, will be in central support centre, regional management, and stores.
What was once the darling of the UK high street – Marks & Spencer – says it plans to cut 7,000 jobs over the next 3 months. It’s streamlining its business for a “post COVID-19
sales mix.” More change and restructuring…will it work?
The scale of the slump in M&S’s clothing and homeware business is quite stunning — down almost 30% since stores reopened in mid-June.
Over the last eight weeks, in-stores sales are down 47.9% compared with a year ago.
The performance of store sales has varied widely across the estate with some of the newer out of town stores trading close to last year’s level of sales overall in recent weeks but legacy town centre stores and some shopping centres still heavily impacted by social distancing and reduced footfall.
Furthermore, with the closure of many workplaces and lack of social gatherings, the clothing sales mix has seen a substantial shift from office dressing and formal wear into casual clothing and leisure wear.
Marks & Spencer’s CEO Steve Rowe is blaming the ‘uncertain outlook’ for today’s huge job cuts.
In this morning’s statement, he tells shareholders:
“In May we outlined our plans to learn from the crisis, accelerate our transformation and deliver a stronger, more agile business in a world in which some customer habits were changed forever. Three months on and our Never the Same Again programme is progressing; albeit the outlook is uncertain and we remain cautious. As part of our Never The Same Again programme to embed the positive changes in ways of working through the crisis, we are today announcing proposals to further streamline store operations and management structures.
These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs and we are committed to supporting colleagues through this time.”
M&S says it’s also planning to create some new jobs as part of this streamlining plan, but there’s no details of how many.
It says:
Concurrently we expect to create a number of new jobs as we invest in online fulfilment and the new ambient food warehouse and reshape our store portfolio over the course of the year.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Some grim breaking news to start the morning – Marks & Spencer is preparing to cut almost 7,000 jobs.
As previously outlined Clothing & Home trading in the stores remains well below last year, with online and home delivery strong. It is clear that there has been a material shift in trade and whilst it is too early to predict with precision where a new post Covid sales mix will settle, we must act now to reflect this change.
We have also learnt that we can work more flexibly and productively with more colleagues multi-tasking and transitioning between Food and Clothing & Home. The deployment of our leading store technology package developed in partnership with Microsoft has also enabled us to reduce layers of management and overheads in the support office.
In line with our longstanding value of treating our people well, we will now begin an extensive programme of communication with colleagues.
Continue reading…Rolling coverage of the latest economic and financial news, as high street chain M&S announces streamlining programme, and hefty job cutsLatest: S&P 500 hits new intra-day recordSummary: M&S struggles; Walmart shinesFull story: M&S cuts 7k jobs in next three monthsBreaking: 7,000 jobs to go at M&SJobs at risk in UK stores, central support and regional management 5.34pm BSTAnd finally… the London stock market had closed at its lowest point in over a week.The FTSE 100 index has ended the day down 50 points, or 0.8%, at 6,076 points.In a reversal of yesterday’s move, the FTSE 100 is being hurt by the strength of the pound. Sentiment in Europe is weak, but the positive move in sterling, has caused the British equity benchmark to underperform. In terms of index points, some of the biggest fallers are GlaxoSmithKline, AstraZeneca, British American Tobacco and Unilever – they all earn a large chunk of their revenue overseas, so the upward move in the pound works against them.Tensions between the US and China have heightened again as President Trump has tightened restrictions on Huawei. The US leader wants to limit the Chinese company’s access to US-produced chips. The firm was already under scrutiny from the US government, but the heat has been turned up again. Related: Marks & Spencer to cut 7,000 jobs over three months Related: UK coronavirus job losses: the latest data on redundancies and furloughs Related: Eat out to help out: Britons claim 35m discounted meals Related: Norway’s wealth fund loses £16bn in first half of 2020 after Covid panic Related: Supermarket sales in Great Britain slowed after face-covering rule 5.22pm BSTFigures released earlier today have shown that the US housing market continued to recover last month.Housing starts increased by 22.6% — far more than expected — to a seasonally adjusted annual rate of 1.496 million units last month, the Commerce Department said on Tuesday. That suggests that the home construction sector is strengthening, after slowing sharply during the lockdown.New residential construction soared 22.6% in July, extending the 11.1% and 17.5% increases seen in May and June, respectively, with housing starts rising from 1,220,000 units at the annual rate in June to 1,496,000 units in July, a five-month high. pic.twitter.com/isR1QzhJiB 5.10pm BSTCandice Bangsund of asset manager Fiera Capital also credits central banks and politicians for the stunning market rally since late March:“Global stock markets have made an unprecedented rebound from the depths of the pandemic-induced bear market earlier this year, as investors thrived on the abundance of monetary and fiscal stimulus at hand. Indeed, the timely and assertive response from both central banks and governments proved to be instrumental in alleviating the damage to both the economy and financial markets, and allowed investors to look through the virus-related destruction.At the same time, policymakers’ unrelenting pledges to guide the economy back to health have been a critical source of support as major economies fire up their engines and as activity resumes, which has emboldened risk appetite and global equity markets alike.” 4.45pm BSTFrasers Group, the firm behind Sports Direct, has told the City that chairman David Daly accidentally breached the rules by purchasing shares in the company during its ‘closed period’.Top City executives aren’t allowed to trade equities in their own firms shortly before financial results are due. Frasers Group was informed on 17th August that David Daly (a Non-Executive Director) of the Company had purchased 3,912 ordinary shares in the Company.The shares were purchased in error during a closed period. The Company has robust procedures in place before PDMRs can trade in shares which were accidentally not followed in this instance.You can’t make this up. The non-executive chairman of Mike Ashley’s Frasers Group bought shares “in error” three days before its full year results. The 3,912 shares were sold within 15 mins and David Daly has donated his profitsBUT REALLY WHAT https://t.co/qO6YpvjlVIFrasers’ chairman David Daly forgot about the rules for buying sharesHe bought some during a closed period and then sold them 15 minutes later when realising the mistakehttps://t.co/cLCWcv52jr 4.21pm BSTThe most obvious threat to the rally is the risk of a second wave of Covid-19 cases this winter.That would put strain on health services, potentially forcing new lockdowns that would hurt businesses (but save lives).US stocks have made a remarkable recovery since the big sell-off in mid-March and are continuing to rise despite the unprecedented hit to the global economy.“There is no doubt that the enormous stimulus packages from the Federal Reserve and the Trump administration have had a major role to play in this and has given investors confidence to stay invested in equities rather than moving into the perceived safety of cash or bonds. 4.16pm BSTThe S&P 500’s record high comes as global investors express more optimism about the prospects for the market.A closely watched survey of fund managers from Bank of America shows that investors are “most bullish” on financial markets since February.World stocks have bounced back by a whopping 51%, adding $24 trillion in value, in five months as investors bet that economic activity would rebound rapidly after record plunges.Of the 181 survey participants, who manage half-a-trillion dollars in assets, a net 79% expect a stronger economy, the strongest reading since December 2009.Lots of good stuff in this month’s FMS by BofA. E.g. the bears giving up as more say it’s a bull market than it’s a bear market rally pic.twitter.com/i5PgB237GeAlso, an increasing perception that the #recession is over, this is now early cycle: pic.twitter.com/6ZQTuCqWYmInterestingly, this optimism is (IMHO) somewhat in conflict with the perception that the recovery will be W-shaped, as the W implies another dip: pic.twitter.com/KcEIdRPg4j 4.02pm BSTA report issued this morning suggests that the imposition of face coverings in UK supermarkets hit sales, if only temporarily.My colleague Joanna Partridge has the details:Supermarket sales have begun to slow in Great Britain since the easing of lockdown restrictions, as the introduction of compulsory face coverings in stores in England and Scotland initially deterred some shoppers.Take-home grocery sales slowed by 14.4% year-on-year in the three months to 9 August, as more shops and hospitality venues reopened, making consumers less reliant on food retailers, according to the data analysis firm Kantar, which examined shopping trends in England, Scotland and Wales. Related: Supermarket sales in Great Britain slowed after face-covering rule 3.48pm BSTTraders have predicting for weeks that the S&P 500 would hit a new peak soon.And having finally done it, the index has now subsided. It’s currently down 6 points today at 3,375 points (having scaled the previous peak of 3,393). 3.30pm BSTEnterprise software maker Oracle is the top riser on the S&P 500, up 3.5%, following reports that it has joined the crowded race to buy China’s TikTok (not an obvious fit, frankly….).Amazon has gained 3%, with CRM software-maker Salesforce.com up 2.3%. 3.18pm BSTStocks may be rallying, but the US dollar is not!The greenback is continuing to slide on the FX markets, driving the pound up to $1.323 for the first time since the start of January.After taking a couple weeks off the dollar continues it’s decline, but S&P hits an all time high? Any coincidence?U.S. Dollar Index (DXY) vs S&P 500 YTD Source: Bloomberg Data pic.twitter.com/l7Olx7GUo3 3.13pm BSTHere’s another handy chart – showing how the US stock market is increasingly dominated by its biggest members:Big continues to get bigger: the 10-largest stocks in the S&P 500 comprise nearly 28% of capitalization–the “most top-heavy index” since the ’60s, says Howard Silverblatt of S&P Dow Jones via reporting by Barry Ritholtz/Bloomberg: https://t.co/QPxLXzR6Dw pic.twitter.com/C4DVgvu6xm 3.12pm BSTThe rally in US shares since March is particularly remarkable, given the surge in Covid-19 cases and deaths, and the sharp rise in unemployment.The rally is, in large parts, down to the central banks, who have convinced investors that they won’t allow asset prices to slump.One of the primary reasons behind the rally in US markets has been the surge in FAANG stocks, which are perceived to have been one of the winners from the lockdown, and which are up more than 70% from the March lows. 2.57pm BSTHere’s CNBC on the remarkable stock market rally over the last few months: Since hitting an intraday low on March 23, the S&P 500 has skyrocketed more than 54%. Those gains have been largely driven by sharp advances in Big Tech shares.Facebook, Amazon, Apple, Netflix and Microsoft are all up at least 27% year to date. Google-parent Alphabet has jumped more than 14% in that time period. BREAKING: S&P 500 hits new all-time high.https://t.co/t7fJrqt9WI pic.twitter.com/1dJr2W9r1x 2.49pm BSTNewsflash: America’s S&P 500 share index has just hit a new all-time high.This means the index has now recovered all the losses since the Covid-10 pandemic began.S&P 500’s forward P/E ratio now sits at highest since mid-2000 pic.twitter.com/R3kCQD4q1J 2.36pm BSTThe US stock market has opened, and the Nasdaq index of tech stocks has hit a fresh record high.The Nasdaq has gained 49 points, or 0.44%, in early trading, pushing it to 11,179 for the first time. That means the index is up 25% this year, driven by the surge of money into technology giants. 2.18pm BSTThe euro’s rally against the US dollar to a two-year high today may cause alarm at the European Central Bank.While a strong currency sounds good in theory, in practice the ECB rather likes a weaker euro as it pushed up inflation (which fell to just 0.3% in June, well below target). Clear $EUR wants a crack at 1.20 even though the rally of late has been misaligned to fundamentals (relative US/EZ cyclical outlook). Without a clear narrative in FX markets, hard to fight this momentum. Fate of $EUR rally is in the hands of ECB & whether they jawbone it lower pic.twitter.com/bXE70kMk20 1.40pm BSTBack in the markets, the US dollar is weakening against other major currencies.This has driven the pound up nearly a cent, to $1.3194 — its highest level since early March.The floodgates appearing to reopen for $USD as the $DXY plunges below 92.50 for the first since May 2018 $AUDUSD and $EURUSD simultaneously bursting to fresh yearly highs on the back of relentless #USDollar selling pic.twitter.com/oJ5taim91MThe dollar continues to fall with investors expecting the Fed to maintain its expansionary monetary policy for a long time, owing to concerns the persistence of Covid-19 will weigh on economic recovery. The greenback is also suppressed because of the lack of haven demand for the reserve currency, with investors evidently favouring foreign currencies, gold and bitcoin instead 1.19pm BSTA quick recap 12.42pm BSTBack in the UK, the government has announced that at least 35 million discounted meals have been devoured during the Eat Out to Help Out scheme’s first fortnight.Rishi Sunak’s attempt to protect jobs in the hospitality sector, by offering a discount of up to £10 per head on food and soft drink, is proving rather popular.“Today’s figures show that Britain is eating out to help out – with at least 35 million meals served up in the first two weeks alone, that is equivalent to over half of the UK taking part and supporting local jobs in the hospitality sector.“To build back better we must protect as many jobs as possible, that is why I am urging all registered businesses to make the most of this by claiming back today – it’s free, simple and pays out within 5 working days. 12.17pm BSTShares in Walmart have rallied sharply in premarket trading, up more than 5% to record levels, as investors cheer its forecast-beating results.Here’s CNBC’s take:Walmart said Tuesday second-quarter earnings got a boost as shoppers rushed in to spend their stimulus checks, while its online business continued to surge during the pandemic.Walmart’s e-commerce sales in the US shot up by 97% as customers had packages shipped their homes and used kerbside pick-up. The retailer’s US same-store sales grew by 9.3% in the second quarter, fuelled by purchases of food and general merchandise. 12.12pm BSTThe US retail giant Walmart has also smashed forecasts, as it rode out the pandemic.Walmart grew its sales by 9.3% in the last quarter, led by “strength in general merchandise and food”. Its eCommerce sales surged by 97%, as more consumers ordered online.The company’s net sales and operating results were significantly affected by a continuation of the global health crisis. Increased demand for products across multiple categories led to strong top-line and gross margin results. (Earnings) Walmart( $WMT ) Actual.EPS=1.56 vs Est.EPS=1.25, Actual.Rev=137.7B vs Est.Rev=135.29B pic.twitter.com/e6fUFxeTAh 12.03pm BSTSticking with the US, retailer Home Depot has posted a surge in sales during the lockdown.Like-for-like sales surged by 23.4% in the May-July quarter, as Americans turned to DIY tasks, snapping up new paint and tools. That’s more than double analyst estimates. 11.43am BSTM&S’s struggles are a sharp contrast to the huge success of Amazon, which is hiring more people, in the US.The Wall Street Journal has the details:Amazon.com is expanding its physical offices in six US cities and adding thousands of corporate jobs in those areas, an indication the tech giant is making long-term plans around office work even as other companies embrace lasting remote employment.Amazon is preparing to add 3,500 corporate jobs across hubs in New York, Phoenix, San Diego, Denver, Detroit and Dallas, the company said Tuesday. The plans include 2,000 jobs at the historic building in Manhattan that once housed the Lord & Taylor flagship department store. 11.08am BSTSophie Walker, CEO of the Young Women’s Trust, points out that women will be disproportionately hit by M&S’s job cuts, as they make up 70% of the workforce (details here).Massive job losses at Marks and Spencer means thousands of job losses for women, who make up so much of the retail sector. As the furlough scheme ends it is vital firms record redundancy by sex so we can clearly see the impact of Covid on women, who have already been hit so hard.This data should then also be broken down via race, ethnicity and disability so we can see the particular impact of this tsunami of unemployment on minoritised women across all backgrounds. This pandemic is deepening already entrenched inequalities. Govt needs to see that and act 11.03am BSTUnions are also urging the government to act to protect high street jobs.The Union of Shop, Distributive and Allied Workers (Usdaw), the UK’s fifth-largest trades union, has called for urgent talks between the company, the government and unions.This job loss announcement is yet another devastating blow for M&S staff and yet another bombshell for our high streets. The government has a clear choice; do they want to see the high street go to the wall, or do they want to help save it?What the retail sector needs now is a tripartite approach of the government, unions and employers working together to develop a much-needed retail recovery plan. We have long called for an industrial strategy for retail to help a sector that was already struggling before the coronavirus emergency. Now the situation is much worse. #MarksAndSpencer staff shocked by 7,000 more job losses – #Usdaw calls for urgent talks and the Government to help save the high street #SaveOurShops https://t.co/fw3UavVwiz 10.37am BSTThe Labour party has blamed government ‘incompetence’ for the job cuts at M&S and other retailers.Lucy Powell MP, Labour’s shadow minister for business and consumers, says the restructuring shows the need for targeted support for sectors worst hit by the pandemic:These job losses are devastating for the workers involved yet they also tell a much bigger story about the threat to our high streets. The scale of job losses was not inevitable but the incompetence of this government means we’re now seeing wave after wave of redundancies, and store closures. Labour has called for a Hospitality and High Streets Fightback Fund to support businesses in distress and to save jobs now. Ministers must change course. 10.28am BSTEmployees at other high street retailers will be watching events at M&S nervously.Although every chain is different, they all face the consequences of the accelerated move towards online shopping and away from store visits – especially during the ongoing pandemic. “Consumer shopping habits have transformed during the pandemic. As a result, many bricks and mortar retailers have been forced to take drastic action to rightsize their business models by stripping away superfluous layers of management and back office support services.Coming on top of 950 job losses announced last month by the retailer, this development is a significant step that may well encourage others to bring forward radical restructuring plans in the next few months.” 10.06am BSTIt’s been a choppy morning’s trading in the City of London.The FTSE 100 index of blue-chip shares fell initially, but has now recovered its losses to sit unchanged at 6126 points. The French, German, Spanish and Italian markets are all slightly higher, though.COVID-19 impact has come in a pivotal year for Capita when we expected to see revenue growth.Profit has been significantly affected and the delay in the return to growth means we will not generate sustainable cash flow for 1-2 years 9.59am BSTMarks & Spencer’s future prospects depend heavily on the success of its new tie-up with Ocado.That partnership starts next month, and will let people order M&S food for home delivery through Ocado (supplanting Waitrose). Related: Stand and deliver: Waitrose and M&S fight for Ocado customers “The company should thank its lucky stars that it has a successful food arm, as that has helped to prop up trading during a very difficult time. Its clothing and home interests have struggled in the face of serious headwinds as demand fell off a cliff for office dressing and formal wear.“The next big test for Marks & Spencer will be the imminent launch of its supply deal with Ocado for UK online food orders. A lot is riding on this joint venture being a success and further accelerating growth in Marks & Spencer’s food sales. 9.52am BSTSpeaking of Australia…. the country’s wine industry is facing the threat of new tariffs on sales to the fast-growing Chinese market. Related: China opens door to tariffs on Australian wine imports as trade tensions spiral 9.22am BSTIn the mining sector, BHP Billiton has pledged to sell its thermal coalmines within two years.It’s part of the global mining giant’s push for a low-carbon future, following heavy pressure from investors to clean up its business.Announcing a full-year profit of US$7.95bn on Tuesday, BHP chief executive Mike Henry also left the door open to supporting a resolution from activist shareholders that would require BHP to stop mining that would destroy Aboriginal cultural heritage sites in Australia until laws are changed to strengthen their protection.Henry said BHP agreed with the intent of the resolution, which was to prevent “another Juukan Gorge” – a reference to rival miner Rio Tinto’s decision to blow up 46,000-year-old-caves in the Pilbara to get access to higher quality iron ore. Related: BHP commits to selling its thermal coalmines within two years 9.17am BSTWhile retailers struggle, housebuilders are hopeful that conditions in their sector are improving.Persimmon, the UK’s biggest home builder, restored its dividend this morning after reporting that business has picked up strongly this summer.The Group has had an excellent start to the second half with a c. 49% year on year increase in average weekly private sales rates per site since the start of July and a current forward order book of c. £2.5bn, a 21% increase on last year. 9.08am BSTShares in Marks & Spencer have fallen by almost 4% in morning trading, down 4.4p to 109.2p.That suggests investors are underwhelmed by M&S’s latest attempt to transform the business. 8.57am BSTJulie Palmer, partner and restructuring expert at Begbies Traynor, says M&S’s job cuts highlight the ‘huge structural change’ in UK spending habits.With more people shopping online – retailers need fewer people in the stores, and more people shipping goods to customers’ homes.“This is a huge transformation for the brand. And one that is needed because consumers have become used to the convenience of shopping during lockdown. The movement of shop floor jobs to warehouse jobs, stronger emphasis on logistics and a greater wealth of talent that can support the online offering will be where the jobs in retail start to appear. The increase in technology in the workplace to streamline organisations will also become more commonplace as retail moves towards its future structure. 8.50am BSTClothing has been the weak side of M&S’s business for many years, with food sales consistently stronger. Covid-19 appears to have accelerated that trend, leading to this morning’s job cuts.“Today’s announcement, while difficult for the staff involved at M&S, has been a long time in the making. The company’s fall from established FTSE 100 constituent to mid-cap has reflected past strategic errors; but, more recently, the business had been going through significant changes even prior to the Covid-19 pandemic.Indeed, the measures taken today underline the degree to which the economic impact of the virus has super-accelerated many of the trends that were already sweeping through retail and other sectors. The hope will be that M&S, one of the UK’s most iconic brands, emerges from this process a stronger, more future-proof business on the other side – but the next few months will be tough for the company and its staff.” 8.30am BSTRetail analyst Nick Bubb says:M&S Food sales are doing quite well, but M&S Clothing & Home sales are very weak and so it is no surprise to see the business set out big cost-cutting plans, dressed up as “streamlining”… 8.27am BSTM&S’s job cuts look to be the most severe announced by a UK company since the pandemic drove the economy into its worst recession in decades.But many other retailers have also made sweeping redundancies and store closures. 8.10am BST Related: Marks & Spencer says it will cut 7,000 jobs over three months 7.58am BSTIf you’re just tuning in, here’s the details of M&S’s major job cuts plan, announced at 7am.Marks & Spencer is to cut around 7,000 jobs over the next three months, in the latest round of redundancies at the retailer as it cuts costs and changes the business following the pandemic.The job cuts will be in its central support centre, regional management, and its UK stores, adding to the swathe of job cuts announced by UK companies during the Covid-19 crisis. 7.51am BSTMarks & Spencer is ‘desperately’ trying to adjust to the new Covid-19 world by slashing 7,000 jobs across its business, says Richard Lim, CEO of Retail Economics.He also fears many more jobs will go, as the government’s furlough scheme winds up this autumn:“This is a massive reduction in their workforce and the retailer is desperately attempting to reposition the business towards a new normal emerging in the sector. This painful readjustment period will see a significant reduction in labour costs, cutting back on store numbers and pivoting the business model to become nimbler and more digitally focused. “Retailers were already battling with the pace of structural change facing the sector but the impact of the pandemic has been a step-change for the industry. Retailers remain in survival mode, preserving cash and hanging on for more sustainable levels of demand to return. But the way we shop has changed on a permanent basis for many parts of the sector almost overnight.Major blow as Marks & Spencer announces around 7,000 job losses – far worse than feared. Cuts, to hit in next three months, will be in central support centre, regional management, and stores.What was once the darling of the UK high street – Marks & Spencer – says it plans to cut 7,000 jobs over the next 3 months. It’s streamlining its business for a “post COVID-19sales mix.” More change and restructuring…will it work? 7.37am BSTThe scale of the slump in M&S’s clothing and homeware business is quite stunning — down almost 30% since stores reopened in mid-June.Over the last eight weeks, in-stores sales are down 47.9% compared with a year ago.The performance of store sales has varied widely across the estate with some of the newer out of town stores trading close to last year’s level of sales overall in recent weeks but legacy town centre stores and some shopping centres still heavily impacted by social distancing and reduced footfall.Furthermore, with the closure of many workplaces and lack of social gatherings, the clothing sales mix has seen a substantial shift from office dressing and formal wear into casual clothing and leisure wear. 7.27am BSTMarks & Spencer’s CEO Steve Rowe is blaming the ‘uncertain outlook’ for today’s huge job cuts.In this morning’s statement, he tells shareholders:“In May we outlined our plans to learn from the crisis, accelerate our transformation and deliver a stronger, more agile business in a world in which some customer habits were changed forever. Three months on and our Never the Same Again programme is progressing; albeit the outlook is uncertain and we remain cautious. As part of our Never The Same Again programme to embed the positive changes in ways of working through the crisis, we are today announcing proposals to further streamline store operations and management structures.These proposals are an important step in becoming a leaner, faster business set up to serve changing customer needs and we are committed to supporting colleagues through this time.” 7.20am BSTM&S says it’s also planning to create some new jobs as part of this streamlining plan, but there’s no details of how many.It says:Concurrently we expect to create a number of new jobs as we invest in online fulfilment and the new ambient food warehouse and reshape our store portfolio over the course of the year. 7.13am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Some grim breaking news to start the morning – Marks & Spencer is preparing to cut almost 7,000 jobs.As previously outlined Clothing & Home trading in the stores remains well below last year, with online and home delivery strong. It is clear that there has been a material shift in trade and whilst it is too early to predict with precision where a new post Covid sales mix will settle, we must act now to reflect this change.We have also learnt that we can work more flexibly and productively with more colleagues multi-tasking and transitioning between Food and Clothing & Home. The deployment of our leading store technology package developed in partnership with Microsoft has also enabled us to reduce layers of management and overheads in the support office.In line with our longstanding value of treating our people well, we will now begin an extensive programme of communication with colleagues. Continue reading…
