FTSE 100 rises 0.8pc; Wall Street rallies 1pc on strong bank profits
Ambrose Evans-Pritchard: Britain’s Covid record is not the global horror story some wish to believe
Small energy supplier Daligas has become the third company to go bust this week, as the surge in wholesale gas prices shows no signs of easing.
London-based Daligas has around 9,000 domestic and non-domestic customers, Ofgem said. The regulator added that a new supplier will be chosen to take on stranded customers.
A statement on Daligas' website reads: "From the 14th of October 2021, due to the unprecedented energy market conditions, the record high wholesale prices and the current energy cap set by the industry regulator Ofgem, we are unable to keep our team and business operating."
It takes the total number of energy supplier failures to 12 since the start of September. Wholesale gas supplier CGN has also exited the market, sparking fears of a fresh wave of collapses.
That's all from us for today. Thanks for following.
Bank of England's Mann says she 'can wait' on rate hike
Bank of England policymaker Catherine Mann has said she “can wait” on tightening the interest rate, but also said a global supply chain crisis could leave British companies with more pricing power.
In a speech this afternoon she said: “There’s a lot of endogenous tightening of financial conditions already in train in the UK. That means that I can wait on active tightening to a bank rate rise.
“The concern that I have is that the global factor and the border factors, with respect to UK prices, are going to boost domestic firms’ pricing power relatively more in the UK than in ... the US and the euro area.”
Ms Mann added that markets were starting to price in the end of quantitative easing as the economy emerges from the pandemic.
She said: “Financial markets are doing their homework. They see that monetary policy normalisation is the direction of travel.
“How fast, how far – those are still issues – but it’s the direction of travel. They are doing their homework and starting to price in that direction of travel.”
Losses widen at Vogue publisher Conde Nast
Losses at the magazine publisher behind British Vogue and Tatler have widened as it grappled with a pressure on advertising during the pandemic, writes my colleague Ben Woods.
Conde Nast UK recorded a pre-tax loss of £6.2m for the year to December, compared to a £1.1m loss the year before, according to accounts on Companies House,
Turnover also fell 21pc to £77m over the period despite digital monthly subscriptions growing by 31pc for UK readers.
Magazine publishers have endured a torrid time during the Covid crisis as companies trimmed their ad spend to survive the economic upheaval.
With the vaccine roll-out driving a return to the office and an economic resurgence, magazine ad spend is now expected to grow by 18pc this year.
Conde Nast's UK arm owns magazines and websites spanning GQ, Vanity Fair, Wired, Conde Nast Traveller, Glamour and House & Garden.
Elon Musk says Starlink in talks with airlines
Elon Musk has said his space broadband network Starlink is in talks with airlines about provided in-flight internet services.
The billionaire, who is building a constellation of low-orbit satellites to beam broadband around the globe, wrote in a tweet that SpaceX was "talking to airlines about installing Starlink".
He added: "Please let them know if you want it on your airliner."
Yes, we are talking to airlines about installing Starlink. Please let them know if you want it on your airliner.
Low latency ~half gigabit connectivity in the air!
— Elon Musk (@elonmusk) October 14, 2021
Oil pares gains
Oil prices have eased from near-record highs after a US government report showed stockpiles rose by the largest amount since March last week.
Prices had climbed as much as 1.5pc earlier in the day after the International Energy Agency became the latest to say natural gas shortages are boosting demand for oil.
But they fell back after a report showed domestic crude inventories increased by more than 6m barrels last week as refineries decreased operating rate. The industry-funded American Petroleum Institute had reported a 5.21m barrel gain in crude inventories.
Marshall Motors buys rival for £64.5m
Car dealership group Marshall Motors has bought rival Motorline for £64.5m.
The deal adds 48 franchises to its business, including seven Nissan forecourts, four Peugeot dealerships and greater access to selling Toyota, Lexus and Hyundai cars.
Marshalls said revenues at Motorline were £695.2m in 2020 with pre-tax profits of £6.1m, adding that the takeover would help its business exceed £3bn.
The deal also sees Marshall buy a related freehold property for £2.9m and the option to buy two more for £24.9m.
Shares roses 3.3pc following the announcement.
Third energy supplier collapses this week
Small energy supplier Daligas has become the third company to collapse this week, as the surge in wholesale gas prices shows no signs of easing.
London-based Daligas has around 9,000 domestic and non-domestic customers, Ofgem said.
The regulator added that a new supplier will be chosen to take on stranded customers.
Daligas Limited, serving around 9,000 gas customers, has ceased trading.
Ofgem will now move you to a new supplier if you're affected. Your gas supply will continue as normal.
➡️ We've answered key questions for Daligas customers on our website: https://t.co/eyuPdIhXuk pic.twitter.com/uA4koRaWcs
— ofgem (@ofgem) October 14, 2021
Facebook whistleblower to give evidence to Parliament
A Facebook whistleblower known for exposing the social media company's reluctance to deal with misinformation in developing countries is set to give evidence to Parliament.
Sophie Zhang, a former data scientist for Facebook, emerged as a whistleblower last year. She will give evidence to MPs and peers on the joint committee on the draft Online Safety Bill – the first time she has given public evidence.
Damian Collins, chair of the committee, said: "The joint committee on the draft Online Safety Bill will question Sophie Zhang about her work as a data scientist for the Facebook Site Integrity fake engagement team, dealing with bot accounts, often operated by government backed agencies in countries such as Russia.
"These networks have sought to spread disinformation and interfere in the politics of other countries. Combating inauthentic accounts spreading disinformation is an important challenge in making social media safer and we want to understand what the companies are doing now, and what more should be done."
It comes after another Facebook whistleblower, Frances Haugen, gave evidence to a US Senate committee over claims the company knew how harmful its platform was for young users.
She will also appear in front of the parliamentary committee later this month.
Wall Street banks boost profits
US stocks are very much in positive territory today, and it's largely due to a string of better-than-expected results for some of Wall Street's biggest banks.
Four of the largest US banks said their profits grew by double-digits last quarter, as a healthier economy has allowed lenders to have fewer bad loans and charge-offs.
Bank of America said net profit rose 58pc to $7.3bn (£5.3bn), or 85 cents a share – ahead of expectations. Meanwhile, Wells Fargo posted a 59pc jump in profit from a year earlier.
Both banks benefitted from being able to reverse some funds set aside early in the pandemic in case of loan defaults.
The results echoed upbeat figures from JPMorgan, which also saw its profits rise sharply last quarter due to the release of more loans from its troubled loan portfolio.
Morgan Stanley, which has a very small consumer banking business, was boosted by the bonanza of mergers and companies going public this year. Its investment banking fees jumped 67pc from a year earlier and advising fees were up threefold.
Meanwhile, financial conglomerate Citigroup benefited from both trends. Its profits jumped 48pc from a year earlier.
Microsoft to shut down LinkedIn in China
Microsoft is shutting down its local version of LinkedIn in China amid tightening online censorship by Beijing.
The tech giant, which launched in China in 2014, announced it will withdraw from the market later this year. It was the last major US social media firm still operating in the country.
Mohak Shroff, LinkedIn's head of engineering, wrote in a blog post: "While we’ve found success in helping Chinese members find jobs and economic opportunity, we have not found that same level of success in the more social aspects of sharing and staying informed.
"We’re also facing a significantly more challenging operating environment and greater compliance requirements in China."
He added that the company will instead launch InJobs, a new standalone jobs app for China. InJobs will not include a social feed or the ability to share posts or articles.
US producer prices record biggest jump in a decade
US wholesale prices jumped 8.6pc in the year to the end of September – the biggest increase in over a decade.
Double-digit jumps in food and energy costs drove the record gain in the producer price index (PPI), the largest since the data were first calculated in November 2010, according to the Labor Department.
But even excluding food and energy costs, wholesale price inflation was still high at 5.9pc.
It was the sixth consecutive record for the annual measure, which has tracked rising prices for firms as they deal with global supply chain bottlenecks and worker shortages amid the sudden rebound in demand as economies reopen from the Covid-19 pandemic.
Compared to August, however, PPI eased to 0.5pc, seasonally adjusted, while the gain came in at a modest 0.1pc if food and energy as well as trade services are excluded.
Petrol prices rose 3.9pc last month, while overall energy prices are more than 36pc higher than September 2020 as booming demand and supply strains send prices soaring.
Ikea warns shortages will last until mid-2022
Ikea has sounded the alarm over lingering supply chain troubles, warning that disruption will continued well into next year.
Backlogs at ports around the globe have wreaked havoc for global supply chains and sparked product shortages for major retailers including Ikea.
Jon Abrahamsson Ring, chief executive parent company Inter Ikea, said the Swedish firm would not "be out of the woods" during its current financial year, which runs until August. He added: “This is a very big challenge for the whole supply infrastructure.”
Mr Ring said the biggest challenge had been getting products out of China, which is suffering from "very limited" capacity.
Ikea posted record sales over the last fiscal year, recovering from its first decline in the prior 12 months when the pandemic shut stores. Revenue rose 5.8pc to €41.9bn (£35.5bn) as the company cashed in on a home renovation boom.
Wall Street opens higher
The positive jobs figures appear to have cheered investors, with Wall Street gaining ground at the opening bell.
The benchmark S&P 500 rose 0.5pc, while the Dow Jones was up 0.2pc. The tech-heavy Nasdaq jumped 1pc.
Momentum is also coming from better-than-expected quarterly results for Wall Street's biggest banks, which are helping to soothe fears about inflation concerns.
US jobless claims fall to fresh pandemic low
Unemployment claims in the US fell to a fresh pandemic low last week in a sign that employers are managing to retain workers in a tough labour market.
Initial unemployment claims stood at 293,000 in the week ended Oct 9, a decrease of 36,000 from the prior week, according to the latest official figures. This beat forecasts of a decrease to 320,000 applications in a Bloomberg survey.
Continuing claims for state benefits dropped to 2.6m in the week ended Oct 2.
Unemployment claims have continued to fall as the economy begins to recover from the pandemic. That said, September was the slowest month of job growth in the US this year, leading some economists to cut their growth forecasts.
Pension fee rise will mean working five years longer
Government plans to increase the pension fees cap would force people to work five years longer as new, higher fees would eat into investment returns, writes Sam Benstead.
The Government is considering relaxing the 0.75pc fee cap, which it hopes will raise funds for its so-called "levelling up" agenda.
However, any change could have a major impact on retirement plans. Based on reaching a typical retirement pot of £305,000 by age 66, the amount required to generate £19,000 a year including the state pension, savers would have to work five more years if fees rose from 0.75pc to 1.5pc, according to XPS Pensions Group, a consultancy.
If fees rose to 1pc this would mean an extra year working, while a 2pc fee would mean nine more years of work.
This is based on the assumption that a saver invests £200 a month from age 21, with investment returns of 5pc a year.
Criminal probe into Gupta steel firm closed
The Serious Fraud Office (SFO) has closed its investigation into one of Sanjeev Gupta's steel companies after nearly six years without bringing any charges.
The criminal probe into Speciality Steels, which is currently owned by Gupta's GFG Alliance, was launched in 2016 after an internal audit revealed a lapse in procedures.
Speciality Steels was then owned by Tata Steel, before being sold to GFG Alliance for £100m in 2017.
An SFO spokesman said: “There is a high bar for the SFO to charge individuals or companies with a criminal offense and we will close cases where it is not in the public interest for us to continue with our investigation.”
Speciality Steels, which produces steel components for the aerospace and energy industry, is one of the units of GFG that Gupta has earmarked for sale. The group plans to restart the steel plants as it looks for a buyer.
Gupta's empire is currently facing another SFO investigation relating to suspicions of fraud and money laundering, as well as GFG's financing arrangements with collapse firm Greensill Capital.
Boots bounces back as high street reopens
Boots has hailed a strong rebound in sales as the easing of lockdown restrictions helped bring shoppers back to the high street.
Owner Walgreens Boots Alliance (WGA) said like-for-like sales increased by 12.8pc to $34.3bn (£25bn) in the fourth quarter – ahead of expectations.
The group said it had benefited from strong trading for Boots, which grew in both its retail and pharmacy divisions.
Boots' managing director Sebastian James said sales through its online business had doubled against pre-pandemic levels, with the firm maintaining this growth despite returning high street footfall.
He added that growth in both healthcare and beauty meant the retailer was "now ideally placed to seize new opportunities" in the new financial year.
Boots also said it had started its winter flu vaccinations for the year and was expecting to administer three times more vaccinations than last year on the back of the pandemic.
FTSE 100 holds gains
Time to check in on the FTSE 100, which has held its gains thanks to a boost from heavyweight oil and mining stocks.
Rio Tinto is providing the biggest boost to the blue-chip index, rising 1.2pc, while Glencore, Anglo American, Shell and BP have all pushed higher.
British Airways owner IAG is the top riser, up 3.2pc after falling earlier in the week on fears of higher fuel prices.
Tesco is today's biggest laggard, down 0.4pc as its shares trade ex-dividend.
The domestically-focused FTSE 250 is up 0.5pc, led by a 7.9pc rise for Darktrace, which hiked its revenue forecasts on Wednesday.
Power prices jump amid low wind
Power prices have jumped to their highest level since September's unprecedented surge as low wind exposes the UK market to high coal and gas prices.
Day-ahead prices for Friday hit £298 per megawatt-hour with wind output forecast to plunge. This remains below highs of £424 reached on Sept 14, but marked a step-up in prices once again.
Inspired Energy told Bloomberg: “A strong drop in wind generation is likely to see coal return to the UK power stack tomorrow. This offers upside to UK emissions markets, and by extension UK power and gas.”
German bond yields dive for second day in a row
German bond yields were set for their biggest two-day falling streak in months as bond markets continued to reverse a recent spike in borrowing costs.
Reuters has the details below:
Government bond yields across major developed markets, driven higher over the last month by worries around inflation and hawkish comments from central banks, have fallen sharply since Tuesday as markets started to consolidate. Bond yields move inversely with prices.
On Thursday in the euro area, Germany's 10-year yield, the benchmark for the bloc, was down 4 basis points to -0.17pc by 11.34am, far below Wednesday's near five-month high of -0.088pc. Down 7 bps over the last two sessions, it was set for its biggest two-day drop since early July.
The 30-year yield led Thursday's rally and down 11 bps in the last two sessions, was set for its biggest two-day fall since early March.
The yield curve continued to flatten after a sharp move on Wednesday and narrowed to the flattest since late August as measured by the gap between 10- and 30-year yields at 78 bps.
And Thursday's drop in yields continued to be driven by falling "real" yields on inflation-linked bonds, which outpaced the fall in nominal bond yields. Germany's 10-year real yield was down 5 basis points to -1.87pc, the lowest in over a week.
Peter McCallum, rates strategist at Mizuho, noted that moves in euro area yields were being driven by moves in the UK government bond market in particular, where investors are betting on a rate hike from the Bank of England by the end of the year, while long-dated yields have fallen sharply.
The moves suggest the "market is thinking that would be a policy error, so that would curtail growth too much and might not necessarily have the desired impact on inflation. So it would really be a hit to demand that isn't warranted," McCallum said.
US futures rise
Wall Street is pointing to a higher open this afternoon as sentiment turned positive despite lingering inflation fears.
Futures tracking the benchmark S&P 500 are up 0.8pc, while the Dow Jones has risen 0.7pc. The tech-heavy Nasdaq has made gains of 0.9pc.
It comes after Wall Street snapped a three-day losing streak that was fuelled by further signs of inflationary pressures.
Bank of America shares rose as much as 2.5pc in pre-market trading after it reported better-than-expected third-quarter results. Boeing shares fell more than 1pc following reports the plane maker is dealing with a new defect on its 787 Dreamliner.
EDF not ready to take on more customers
While the energy crisis is hitting small energy firms the hardest, there are signs that larger players are also starting to struggle.
EDF has warned it's not able to take on any more customers from firms that collapse due to soaring gas prices.
Boss Philippe Commaret said his company was tied up with moving 220,000 customers from Utility Point, which went bust a month ago.
Ofgem appoints a supplier of last resort to take on stranded customers whose companies have gone out of business.
But Mr Commaret said there was now a "big question" over whether the regulator could force suppliers to take these customers on.
It comes after two more energy firms – Pure Planet and Colorado Energy – went bust, taking the total number to 11 since the start of September.
Small firms face quadrupling energy bills
Some small companies are set to see their energy bills quadruple, in a sign of how the energy crisis is harming businesses.
Around 500 small firms will be told their bills are rising from 3p per kilowatt-hour (KWH) to 12p per KWH, the BBC reports.
It comes after Glencore-backed CNG, which provides wholesale gas to utilities companies, said it was withdrawing from the market, leaving customers to seek new suppliers.
The price hike means a typical small business will see its energy bill increase from £3,000 to £12,000 per year with immediate effect.
Just spoke to a customer of CNG which supplies energy to some 500 small businesses - including takeaways, restaurants, nursing homes... https://t.co/muo0WqTEFC
— Ben Chu (@BenChu_) October 14, 2021
Labour: Chancellor must 'get a grip' on energy crisis
Bridget Phillipson, shadow chief secretary to the Treasury, has hit out at Rishi Sunak for failing to pledge support for struggling businesses.
Our brilliant British industries are a crucial cornerstone of our economy, and we should be supporting them to boost our recovery.
The Conservatives should be protecting and supporting them through a crisis which has come about from a severe lack of government planning.
It doesn’t make economic sense, nor is it good value for money, to allow a temporary increase in prices to destroy British industries and jobs.
The Chancellor should get a grip on this and support our industries - his complacent and out of touch approach is misguided and is storing up problems down the line that will leave working people paying the price.
Essar plots Stanlow hydrogen plant
There's more hydrogen news today, with oil giant Essar planning a major new plant at its Stanlow refinery.
The company has submitted a planning application seeking approval for the construction of hydrogen production plants at its existing complex in Ellesmere Port.
The proposed plants form a key part of plans for a low-carbon industrial cluster known as Hynet in northwest England.
If approved, construction work is scheduled to begin by the end of 2022, with hydrogen production set to start by the mid-2020s.
Two energy firms to spend £3bn on hydrogen plants
Two British energy companies are pledging £3bn over the decade to build hydrogen plants across the UK.
Octopus Energy and Renewable Energy Systems are teaming up for a fleet of new plants by 2030 in a bid to accelerate the shift away from fossil fuels.
The plants will make the most of green electrons when they are generated in abundance on sunny and windy days by storing them as green hydrogen. The fuel will be made available to large-scale consumers.
Alex Brierley at Octopus Renewables said: “The supply of green hydrogen will be critical to the success of many industries in meeting the UK’s net zero targets. We are providing a solution for those businesses.”
The companies said they were responding to the government's hydrogen strategy that was unveiled in August with the hopes to releasing as much as £4bn pounds of investments.
According to the plan, as much as 35pc of the nation's energy consumption could be met by the fuel in 2050.
Shell, Rolls-Royce and Airbus call for green jet fuel
The boss of Rolls-Royce has joined Shell and Airbus in calling for more work to reduce the carbon impact of flying.
Chief executive Warren East said the industry had to move ahead of United Nations targets to avoid aviation becoming an even bigger contributor to global emissions.
Under current UN plans, at least 10pc of fuel used in global aviation should be sustainable by 2030, but Mr East said the sector should ramp up these targets.
Alongside his statement, Rolls-Royce committed to ensuring that all its Trent engines, which propel many of the world's planes, will be able to run purely on sustainable fuel by 2023.
Meanwhile, Airbus said all its planes can currently use fuel which is a blend of half sustainable and half traditional. By the end of the decade they will be able to handle pure renewable fuels.
Shell, which makes the fuel, says it will increase production to two million tonnes per year by 2025 – 10 times the total produced globally today.
London Night Tube to return in boost for pubs and restaurants
There's good news for party-goers and late-night businesses as London's Night Tube is set to return in November, more than 18 months after it was scrapped due to the pandemic.
Transport for London said all-night services will resume on the Victoria and Central lines on Nov 27, providing a major boost for the capital's night-time economy. TfL said it would also give safer options for people travelling at night.
It said: “Restoring night running on these lines will help businesses like bars, clubs and restaurants as London’s night- time economy continues to recover following the pandemic.
“It will also provide a safe, quick travel option for Londoners and visitors.”
Mayor Sadiq Khan said work was ongoing with the government and TfL to resume Night Tube services in full. Before the pandemic, all-night trains also ran on the Jubilee, Northern and Piccadilly lines.
Dunelm warns on supply chain disruption
Homewares retailer Dunelm has reported a rise in sales during the first quarter, but warned of the ongoing threat from supply chain troubles and inflation.
The company reported an 8.3pc increase in sales to £388.8m in the three months to Sept 25. This marks a sharp slowdown from last year, when sales boomed on post-lockdown demand, but Dunelm said it was a 48pc rise on a two-year basis.
Dunelm warned of an "uncertain" outlook in the wider economy, clouded by supply chain disruption and rising costs due to freight and driver shortages, but stuck to its recently upgraded profit guidance.
It added it was weathering the storm thanks to good stock levels and with customers able to switch products if availability of certain lines are impacted.
Dunelm said: "The macro outlook remains uncertain, in particular regarding supply chain disruption and inflationary pressures from freight and driver shortages.
"Whilst we are not immune to the challenges being widely reported, we feel well placed relatively to manage them."
Shares in Dunelm rose 1pc following the update.
Uniqlo owner posts record profit
The owner of Japanese fashion brand Uniqlo has posted a record profit and hiked its expectations for the year ahead as Covid-related restrictions continue to ease.
Fast Retailing said trading had "recovered markedly" in recent months, including a sharp rebound in sales in Europe and North America after lockdowns were lifted.
The firm posted a record net profit of 169.8bn yen (£1bn) in the year to August – up 88pc on the previous year. A surge in demand for casual clothing and cost-cutting fuelled the bumper results, with sales up 6.2pc.
The company said recovery of demand in key overseas markets across Asia, North America and Europe should compensate for expected falls in domestic Uniqlo operations in the current financial year.
Bank of England dove comes out against 'self-defeating' rate rises
Bank of England dove Silvana Tenreyro has pushed back against growing momentum for rate rises, warning it would be "self-defeating" to tighten policy in response to the energy price spike.
Ms Tenreyro, a member of the Bank's monetary policy committee, said she expected inflation to be transitory and warned against rushing to hike rates.
She told BusinessLive: "Typically, for short-lived effects on inflation, such as the big rises in the prices of semiconductors or energy prices, it would be self-defeating to try to respond to their direct effects."
The rate-setter said part of the increasing inflation had been caused by "arithmetic base effects compared to a low level of prices last year".
She added: “That in part has been driven by global prices in energy and other commodities which push up on inflation, but these effects in general tend to be short-lived.”
UK industry slashes gas consumption as prices surge
Major British industries slashed their consumption of natural gas by 75pc ast month after prices soared to new record highs.
Consumption fell to 3m cubic meters a day in September, down from an average of 12m cubic meters, according to data from consultant Wood Mackenzie.
It’s since rebounded to between 5m and 6m cubic meters a day in October after the government pledged support to industries.
Penny Leake at Wood Mackenzie told Bloomberg: “It is definitely on the rise, but it is still very low compared to averages earlier in the year.”
The figures illustrate the pressure rising gas prices are piling on industrial consumers, with warnings that factories could be forced to close without extra support.
The government has already been forced to prop up fertiliser firm CF Industries – the UK's largest CO2 producer –after it shut two plants. A deal has since been struck with customers to keep one of the factories going.
UK to grant visas to butchers in bid to avoid pig cull
The government is expected to allow trained butchers to enter the UK on temporary visas in a bid to avoid a major pig cull.
Sky News reports that minsters will announce a package of measures, including dropping a requirement for fluent English, to allow more trained butchers to come to Britain.
It follows a meeting on Monday between farmers, processors and the government's recently-appointed supply chain adviser Sir Dave Lewis.
A shortage of workers at abattoirs has led to a major build-up of pigs on farms, with warnings that up to 10,000 pigs a week could have to be culled.
German growth forecast slashed
There are also warning signs for Germany's economy as top research institutions slashed their joint forecasts for recovery as supply bottlenecks take their toll.
The downgrade to a 2.4pc expansion in GDP, from 3.7pc previously, reflects continued material shortages, a lack of shipping capacity and a recent spike in energy costs that is threatening rebounds across the globe.
The outlook for 2022 was upgraded to 4.8pc from 3.9pc.
The institutes wrote: “Supply bottlenecks for intermediate products are hampering production in the manufacturing sector – as a result, only the consumer-related service industries are growing.”
Europe's largest economy has faltered in its recovery this year. Its heavy reliance on manufacturing – particularly the automotive sector – has left it particularly exposed to supply chain issues.
Bank of England warns on rising loan defaults
The Bank of England has warned about rising defaults on household and business loans as a "winter of discontent" looms ahead.
The Bank said the net percentage balance for changes in default rates decreased in the third quarter, but was expected the increase in the final three months of the year.
The report also showed an increase in secured and unsecured lending to households in the third quarter, with a further increase expected in the fourth quarter.
Meanwhile, lenders reported that overall demand for unsecured lending increased across both credit cards and other unsecured lending and was expected to increase further.
Simon Lister at Investing Reviews said: "There is a potential red flag in the fact that demand for unsecured lending in the form of credit cards and loans increased in the third quarter and that lenders expect it to increase further in the next quarter.
"On the one hand, it could be a sign of confidence, on the other it could be a sign of finances being stretched and people increasingly relying on loans and plastic to stay afloat. The fact that lenders think defaults on unsecured lending will increase in the fourth quarter should be a shot across the bows for both the Bank of England and Government."
London lags in the Pret recovery index
There's some interesting new data out from the ONS, which is using sales at Pret A Manger as in indicator of economic recovery.
The experimental figures show London is lagging behind the rest of the country, with transactions at 82pc of the weekly average level in January 2020.
Scotland is the only other region under 100pc of January 2020 levels, while Yorkshire is booming at 142pc.
The figures give further indications that the capital is lagging behind in its recovery despite hopes for a widespread return to the office.
Separate data from the Centre for Cities showed footfall in London was only half its pre-Covid levels by the end of September – the lowest of all UK cities.
New data from @Pret A Manger show in the week ending 7 Oct 2021, sales at stores in Manchester increased to 113% of its average level in Jan 2020 🥪
This is the highest level of transactions in Manchester, post #COVID19, since the series began https://t.co/BWcsRRX4ak pic.twitter.com/LIAKboWA42
— Office for National Statistics (ONS) (@ONS) October 14, 2021
Sterling hits two-week high on rate rise expectations
Sterling has hit a two-week high as expectations grow that the Bank of England will increase interest rates this year.
The pound is up 0.3pc versus the dollar to $1.3704. Against the euro, it ticked up 0.1pc at 84.78p after briefly touching a two-month high.
Two Bank of England policymakers are giving speeches later today, with traders watching closely for any further signs of a rate rise.
ING analysts wrote: "Should they fail to push back against the aggressive, early pricing of BoE rate hikes, GBP could get a further lift."
Traders will also be keeping an eye on post-Brexit trade tensions between the UK and the EU, which could cap gains for sterling.
National Express swerves petrol shortages
National Express has said it avoided the impact of fuel shortages and rising prices, but is feeling pressure on its driver numbers.
The coach operator said it's already bought all the fuel it needs until part-way through 2023 – a practice known as hedging.
This allowed it to mitigate price rises and dodge the problem of long queues at forecourts up and down the country.
Chief executive Ignacio Garat said: "I am pleased to say that our ongoing focus on cost management along with our long-established procurement and fuel hedging programmes mean that we have seen no material impact from input cost inflation."
However, National Express said it had needed to work hard to ensure it was not hamstrung by driver shortages.
The company has continued its slow recovery from the pandemic, with third-quarter revenue only 17pc lower than in 2019 – an improvement from 24pc lower in the second quarter.
IEA: Energy crisis threatens global recovery
The global energy crunch could stoke inflation and slow the world's economic recovery from the pandemic, the International Energy Agency (IEA) has warned.
The group said the crisis is expected to boost global oil demand by half a million barrels per day (bpd), with demand now expected to recover to pre-Covid levels next year.
The IEA said: "Record coal and gas prices as well as rolling blackouts are prompting the power sector and energy-intensive industries to turn to oil to keep the lights on and operations humming.
"Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery."
The agency estimated that producer group Opec will pump 700,000 bpd below the estimated demand for its crude oil in the fourth quarter, meaning demand will outpace supply at least until the end of 2021.
An upsurge in demand in the last quarter led to the biggest draw on oil products stocks in eight years, it added, while storage levels in OECD countries were at their lowest levels since early 2015.
Recruiter Hays boosted by hiring spree
Shares in Hays pushed higher this morning after the recruiter cashed in on a surge in hiring.
The company reported a 41pc increase in net fees in the three months to the end of September, adding that 12 countries produced record fees, including the US and China.
Hays said there were "clear signs" of skill shortages and wage inflation – especially at higher salary levels – reflecting wider pressure in the labour market.
The firm announced a one-off dividend of £150m and said it will resume ongoing special dividends in 2022. Shares rose 3.7pc after the update.
Chinese factory inflation hits 25-year high
There were some more worrying signs of inflation overnight, as new figures showed China's factory inflation hit its highest level in a quarter of a century last month.
The producer price index, which measures the cost of goods at the factory gate, hit 10.7pc, the National Bureau of Statistics said, marking the biggest jump in its data going back to October 1996.
The index had already hit a 13-year high in August as the energy crisis pushes up commodity prices – and piling pressure on businesses.
Many factories have been forced to halt operations because of power outages caused by emissions reduction targets, the surging price of coal and supply shortages.
Consumer prices are more subdued, rising 0.7pc in September – slightly down from the previous month. Still, rising price pressures in China are expected to feed through to the global economy.
Defence firm QinetiQ plunges on supply woes
Defence contractor QinetiQ Group has plunged to the bottom of the FTSE 250 after it warned supply chain troubles threatened its profit.
The company said it was struggling with technical and delivery issues on one of its major projects and was battling to keep the costs to below £15m.
It also warned about Covid-related supply chain issues in the US, saying underling operating profit margin would come in at the lower end of its current targets.
While the firm maintained its medium to long-term guidance on revenue, it said margin would be lower in the short term.
Shares in QinetiQ tumbled as much as 11pc this morning – their biggest intraday drop in seven years.
Domino's to hire 8,000 drivers for Christmas period
Domino's has said it'll hire an extra 8,000 drivers as it prepares for a surge in pizza orders over the Christmas period.
It came as the company reported an 8.8pc rise in like-for-like sales over the last three months to £375.8m.
The company said it sold seven pizzas each minute over the period, with online orders peaking to 13 per second on July 3 as England took on Ukraine in the Euros.
Orders collected from stores – a key area of growth for the business – were up 40pc and stand at 82pc of pre-pandemic levels.
Bosses said they remain on target to open 30 new stores this year, having opened five in the last three months. However, they also warned that supply chain issues and rising staff wages are starting to impact the business.
The company said: "We have seen some impact from the well-publicised pressures on labour availability and food cost inflation, which we expect to extend into next year, but continue to take proactive, preventative measures to ensure our world-class supply chain service levels are maintained and that cost increases are constrained."
Metals prices head for all-time highs
Base metals are on track to hit all-time highs as the energy crisis puts a major squeeze on supplies around the globe.
Zinc prices soared to their highest level since 2007 the day after Nystar – one of the metal’s top global producers – said it will cut output at three European smelters by up to 50pc due to rising power prices and costs associated with carbon emissions.
Copper is also rebounding, while aluminium is heading for its highest price since 2008.
The surging prices have driven up major miners, which are topping the FTSE 100 today. But it will add to widespread inflation fears and put further strain on factories.
Xu Maili at Everbright Futures told Bloomberg: “Metal prices are set to stay strong during the fourth quarter, keeping the upside momentum for inflation.
“Against the backdrop of easy global liquidity, anything that brings imbalances to the market, such as the energy crisis, could trigger price spikes.”
FTSE risers and fallers
The FTSE 100 is in positive territory this morning, rising more than 0.5pc in early trading.
The rise is mainly being driven by miners, with Anglo American, Antofagasta, Rio Tinto, Glencore and BHP all jumping to the top of the index as metals prices continue to surge.
Tesco is the biggest faller, down 1pc, as its shares trade ex-dividend.
The domestically-focused FTSE 250 is up 0.6pc, with recruiter Hays jumping 3.5pc after the company reported higher quarterly net fees.
Gas prices jump despite Putin supply pledge
Gas prices are back on the rise again this morning as traders were left unimpressed with Russia's pledge to supply as much gas as Europe needs.
The European benchmark surged back above €100 per megawatt-hour – a 9.5pc increase and the highest level since last Friday. The UK equivalent rose as much as 9.1pc.
Russian President Vladimir Putin said his country was "prepared to discuss any additional steps" to stabilise the turbulent energy market.
However, he blamed the region's energy crisis on flawed policies rather than a lack of supply and pushed for the approval of Russia's controversial Nord Stream 2 pipeline – fuelling concerns among some European politicians that President Putin is using the crisis as a political weapon.
France's Le Pen vows to tear down wind turbines
Over in France, far-right presidential candidate Marine Le Pen has her own response to the energy crisis – a pledge to tear down wind turbines.
Ms Le Pen said she will also end all subsidies for renewable energy if she is elected president next year, shifting focus instead to nuclear sources.
She told French radio: "Wind and solar, these energies are not renewable, they are intermittent. If I am elected, I will put a stop to all construction of new wind parks and I will launch a big project to dismantle them."
The politician said subsidies for wind and solar added up to €6bn or €7bn per year and put a heavy burden on consumer energy bills.
Ms Le Pen said she would support France's nuclear industry by giving the green light for the construction of several new reactors and funding a major upgrade of existing infrastructure.
FTSE 100 opens higher
The FTSE 100 has opened higher this morning, building on Wednesday's gains.
The blue-chip index rose 0.7pc at the open to 7,175 points.
EU plunged into energy row
Meanwhile, the European Union has been plunged into its own row over energy, with Spain taking aim at the bloc's plans to tackle the crisis.
The Spanish government said proposals put forward by the European Commission were "incongruous" and fell short of what was needed.
Ecological Transition Minister Teresa Ribera said the while the Commission recognised the impact of soaring gas prices, “its proposals don’t address the exceptional nature of the situation we’re in, with exceptional measures to meet the challenge we have ahead”.
Spain has clashed with Brussels over the response to the power crisis, with Madrid calling for a more interventionist approach.
The EU has set out guidelines for member states to help protect their most vulnerable companies and citizens from the unprecedented surge in energy prices. The proposals call for state aide and investments, but do not mention prices caps, something Spain is pushing for in Parliament.
Jim Ratcliffe warns of industry shutdown
Sir Jim Ratcliffe has warned that UK industry could be forced to shut down this winter amid a chronic shortage of gas.
The billionaire industrialist warned prices will remain sky-high for the whole of winter, and blamed the Government for failing to secure enough gas supplies.
My colleague Rachel Millard has the full story: Jim Ratcliffe predicts winter-long energy crisis and blames Government
Fears of more energy failures as gas shipper cuts supply
Fears are mounting that the UK could be facing a fresh wave of energy firm collapses after a key gas supplier exited the market.
CNG, which is backed by commodities giant Glencore, said it will no longer supply gas to its utilities clients. Chief executive Paul Stanley said “the company has been forced into an impossible position” after many of its energy customers ceased trading.
The move threatens a fresh wave of turmoil in the energy market, which has been left reeling by a surge in natural gas prices that has already put a string of companies out of business. Last night two more energy firms – Colorado Energy and BP-backed Pure Planet – went bust.
More firms are now at risk of collapse, with roughly 18 CNG utility customers now needing to find alternative sources of gas.
London footfall lags
New figures have cast doubts over London's post-pandemic recovery, with around half of workers still shunning a return to the office.
By the end of September footfall in the capital was just half its pre-Covid levels, according to the Centre for Cities. That's the lowest in the country, with airport hubs Luton and Slough also in the bottom five.
Overall, the think tank's weekday footfall gauge rose from 60pc in late August to 67pc last month across 63 cities and towns, despite hopes for a more widespread return to the office.
5 things to start your day
1) Jim Ratcliffe predicts winter-long energy crisis and blames Government The billionaire industrialist has blamed ministers for Britain’s gas crisis and warned that sky-high prices will last throughout winter.
2) Inside Ethic, Harry and Meghan's favourite investment start-up The Brit-founded asset manager boasts A-lister endorsements and dogs with job titles, but experts warn its focus on ESG is a big risk.
3) Sir Terry Leahy loses £30m on Hut Group The shares fell further on Wednesday and analysts slashed their forecasts after a meeting with investors went awry this week.
4) Post-Covid rate rise to cost homeowners £800 a year The Bank of England expected to increase interest rates from current record low to a post-financial crisis high of 1pc in 2022.
5) Air fares to soar thanks to Brussels biofuel rules, warns Willie Walsh Ex-BA boss says airlines forced by EU to increase their use of sustainable fuel will pass on cost to passengers
What happened overnight
Asian markets mostly rose on Thursday morning before China said factory-gate inflation had in September hit its highest level in a quarter of a century owing to a spike in commodity costs and rocketing demand as economies reopen. Tokyo, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta all rose, while Shanghai flitted between positive and negative territory. Singapore dipped following the surprise policy tightening by the city's central bank.
Coming up today
Trading update: Dunelm, Hays, National Express, Rank Group, Domino's Pizza
Economics: RICS house price balance (UK), inflation (China), producer price index (US), jobless claims (US), Bank of England credit conditions