BUSINESS CLOSE: One in three firms expects to cut jobs

It was a subdued day for London markets, with the FTSE 100 closing up 18 points at 6,050 and the FTSE 250 rising 102 points to 17,724. 

McDonald’s is suing its former chief executive, Steve Easterbrook – who was fired last year for having an inappropriate relationship with an employee – after claiming he covered up sexual relationships with three other workers and destroyed evidence so he wouldn’t be caught. 

Meanwhile, Twitter expressed an interest in buying video platform TikTok’s US operations, reports claimed last night. The video-sharing app is already the subject of takeover discussions with Microsoft.

It comes after Donald Trump announced plans to ban TikTok over security concerns unless its Chinese owners sell off the US arm. 

In the UK, one in three companies is preparing to cut jobs by the end of September, according to a new poll by the CIPD.  The survey spoke to 2,000 employers and found that the proportion planning to cut jobs had risen from 22 per cent to 33 per cent over the past three months. 

Elsewhere, Superdry greed to a new £70million financing deal with its banks and said sales fell less than expected.

The fashion chain, which was already struggling before the coronavirus crisis, said the new loans it has secured through its lenders HSBC and BNPP will run until January 2023. It comes as it posted a 24 per cent decline in sales in the three months to the end of July, which the company says is smaller than they had feared. 

  • Camilla Canocchi

    Host commentator


The FTSE 100 has closed up 0.3%, or 18 points, at 6,050

The FTSE 250 has closed up 0.6%, or 102 points, at 17,724.


Unemployment figures are released tomorrow… what to expect?

Official figures due on Tuesday are expected to show employment levels heading towards three million – reaching depths unseen since the 1980s.

Up to 60,000 more people are believed to be claiming unemployment benefits as job losses mount.

Read our preview below…


Markets have subdued session – Footsie is up 0.3% at 6,049

Michael Hewson, chief market analyst at CMC Markets UK, sums up the day:

European markets have undergone a fairly subdued session today, with gains constrained by today’s decision by Chinese authorities to retaliate on the US decision to sanction its Hong Kong officials, by implementing sanctions of its own against US senators Marco Rubio and Ted Cruz amongst others.

It could well be that the decision by Chinese authorities to limit their retaliation to the senior Republican senators, and not senior administration officials is limiting any damage to risk in the short term.  

The decision by Hong Kong police to implement a fresh crackdown on the media by arresting a number of pro-democracy figures, is also concern given that one of the people arrested is independent media tycoon Jimmy Lai, whose Next Media company owns the second best-selling newspaper in the region, Apple Daily.

The signing by President Trump of a number of executive orders to mitigate the loss of the $600 enhanced unemployment benefit, appears to have introduced an element of comfort to markets who believe rightly, or wrongly that there will be a longer term agreement in the coming weeks. In short, the President’s executive actions appear to be being interpreted as a starting point for a possible deal in the coming days.

Travel stocks appear to be getting a lift despite concerns over rising infection rates in Europe, however this could well be the inevitable result of higher testing rates. The big test will come if fatality rates start to edge up again, and evidence of this could well start to manifest itself over the course of the next couple of weeks. 


Capita wins £335m contracts from Transport for London

Outsourcing giant Capita said it has won a £335million contract with Transport for London to run London’s congestion charge and low emission zones for another five years.

As part of the deal, Capita picks up added work with the expanded ultra-low emission zone and other TfL plans. To cope with the extra workload, it will hire another 900 people. 

The multimillion-pound contract is a major coup for chief executive Jon Lewis after some speculation that TfL might cancel the contracts and decide to do everything itself.


More on McDonald’s lawsuit…

The lawsuit reveals that McDonald’s received allegations in July. The filing states:

In July 2020, the Company received an anonymous report alleging that a McDonald’s employee (“Employee-2”) engaged in a sexual relationship with Easterbrook while he was CEO.

An internal investigation into this allegation discovered photographic evidence that, while he was CEO, Easterbrook had engaged in a physical sexual relationship not only with Employee-2, but also with two other Company employees in the year before his termination.  That evidence consisted of dozens of nude, partially nude, or sexually explicit photographs and videos of various women, including photographs of these Company employees, that Easterbrook had sent as attachments to messages from his Company e-mail account to his personal e-mail account.  The date and time stamps on the photographs of the three Company employees show that the photographs were all taken in late 2018 or early 2019.


Royal London slumps to £181m loss – full story below…


McDonald’s sues former boss over alleged relationships with employees

McDonald’s says it is suing Steve Easterbrook, the chief executive it ousted last year over an inappropriate relationship with an employee, in order to to recover his exit package.

It said an internal investigation showed that he ‘concealed evidence and lied about his wrongdoing’ to the company as he had sexual relationships with multiple employees, violating company policy.

Based on what the company knew in November, McDonald’s board approved a separation agreement ‘without cause’ that allowed Mr Easterbrook to keep around $40million (£36million) in stock-based benefits plus 26 weeks of pay, amounting to compensation of about 670,000 dollars (£603,000).

The filing states:

Based on the results of the investigation, the Board concluded that Mr. Easterbrook lied to the Company and the Board and destroyed information regarding inappropriate personal behavior and in fact had been involved in sexual relationships with three additional Company employees prior to his termination, all in violation of Company policy.  Had the Board been aware of this information, it would not have approved the terms of the Separation Agreement […].


Wall Street mixed

The Dow is up 0.9% at 27,666.

The S&P 500 is up 0.1% at 3,355.

The Nasdaq has slipped into the red, falling 0.4% to 10,969.


Eat Out to Help Out scheme sees early success – full story

Rishi Sunak’s Eat Out to Help Out scheme has served up a huge 25 per cent increase in people going out – but most diners picking the evening to eat mean neighbouring shops may not see the benefit.

Hungry Brits locked down during the Coronavirus pandemic found the scheme’s ingredients of up to £10 on Monday to Wednesday irresistible.

The drive saw the number of people in retail destinations surge by 18.9 per cent after 6pm last Monday compared with the week before, with market towns seeing 25 per cent more.

Full story below…


High Street was already facing disaster before Covid, figures show

Employment in shops in town and city centres fell by a quarter in some places between 2015 and 2018, and dropped in three quarters of local authorities.

The figures emerged amid fears that urban areas are being ‘hollowed out’ because so many people are still working from home due to coronavirus.

The Office for National Statistics (ONS) has analysed figures on the structure of the high street from this year, and the most recent employment figures and residential from 2018.

Full story below…


Volkswagen has appeal REJECTED against High Court

Volkswagen’s appeal against a High Court ruling that it fitted unlawful ‘defeat devices’ in thousands of UK diesel cars has been rejected. 

The German car maker failed in its attempt to fight the decision via the Court of Appeal, which has been described as a ‘landmark’ ruling in what looks set to become the UK’s largest group action in history.

Rob Hull has the story…


Footsie up 0.2% at 6,044; Wall Street set to open slightly higher

Craig Erlam, an analyst at OANDA, sums up the day so far, and what’s in store for the rest of the week:

Stock markets are edging higher in a relatively chilled start to the day, as we navigate through the low-tier economic data portion of the week.

The data this week is likely to show unemployment rising and the economy shrinking by more than 20% in the second quarter. I don’t think there’ll be much dwelling on the data though, especially with the Bank of England having significantly improved their growth forecast for this year on Thursday, albeit with a sharp annual contraction on the cards.

On Capitol Hill, lawmakers failed to pass a new relief package on Friday which prompted Trump to sign executive orders on Saturday on unemployment benefits – at a reduced rate of $400 a month, from $600 – evictions, payroll tax and student loan repayements. While the legality and details of the orders will undoubtedly be challenged, it may temporarily ease any market fears, while angering a sidelined Congress at the same time.

Tensions between the US and China will remain at the forefront this week after the Treasury sanctioned officials linked to the controversial national security law. This comes after Trump signed executive orders against WeChat and TikTok and effectively forcing through the sale of the latter to an American firm, with Twitter now entering the frame alongside Microsoft. Retaliation from China is inevitable.


Royal London slumps to a £181m loss as Covid-19 bites

Royal London, the UK’s largest mutual insurer, slumped to a loss in the first half as the coronavirus pandemic resulted in lower investment returns and a reduction in bond yields.

The insurer also said it paid out £85million to the families of more than 1,200 customers who lost their lives as a result of Covid-19 and set aside another £10million for potential future claims.

But it added: ‘There remains uncertainty over the eventual impact of the pandemic including both future rates of mortality, as well as the wider health impacts from the deferral of non Covid-19 related medical treatments.’

Royal London, which provides life and protection insurance as well as pensions and savings policies to around 8million people in the UK, posted a pre-tax loss of £181million in the first six months of the year, compared to a profit of £397million in the same period in 2019.  


High Street boosted by Eat Out to Help Out scheme

Rishi Sunak’s Eat Out to Help Out scheme seems to be working.

Between Monday and Wednesday last week – the days of the Eat Out to Help Out scheme –  footfall rose in all retail destinations across the UK by 18.9 per cent after 6pm and 9.6 per cent at lunchtime (12pm to 2pm), Springboard said.

The scheme, which was launched last Monday, offers 50 per cent off the bill for eat-in food and drink with a maximum discount of £10 pounds per person and excluding alcohol.

Springboard also said shopper numbers rose 3.8 per cent in the week to August 8 versus the week before.


House prices and shares are booming in a bust… why?

Because the world’s central banks are piling huge amounts of money into the global economy – and that money has to go somewhere, explains The Mail on Sunday’s columnist Hamish McRae.

Read his full column from the weekend below…


Superdry shares rise 20% – full story….

Shares in Superdry jumped today after the fashion retailer agreed to a new £70million financing deal with its banks and said sales fell less than expected.

The fashion chain, which was already struggling before the coronavirus crisis, said the new loans it has secured through its lenders HSBC and BNPP will run until January 2023.  

It comes as it posted a 24 per cent decline in sales in the three months to the end of July, which the company says is smaller than they had feared.

Full story below…


FTSE 100 is up 0.3% at 6,048

British Airways owner IAG is the top riser, with shares up 5 per cent. 

Oil giants BP and Shell are also among some of the biggest risers this morning, on the back of rising oil prices, with shares up 2.4 per cent and 1.4 per cent respectively.

Shares in miners and banks are in demand too, with Evraz, Antofagasta and Natwest Group all up between 2 and 3 per cent.


Unilever’s London HQ ready in November

Unilever said the move to end its Anglo-Dutch structure and establish a single headquarters in London is set to complete in November.

The consumer giant behind Ben & Jerry ice cream announced the decision in June – less than two years after it was forced into an embarrassing U-turn on a previous proposal to switch its HQ from London to Rotterdam in 2018 following widespread shareholder anger.

The group’s former chief executive, Paul Polman, and previous chairman, Marijn Dekkers, both quit soon after the botched plan.


Superdry’s ‘customer base may just have tired of its faux-Japanese stylings’

The company’s shares are shooting up this morning, up 20 per cent, after it said it secured extra funding from lenders. And sales fell less than expected.

Yet, Russ Mould, investment director at AJ Bell, said the ongoing concern with the company is more that its hoodies and jackets adorned with Japanese text may have just fallen out of fashion. He said: 

With the immediate issue of survival seemingly addressed for now, attention will turn back to Dunkerton’s efforts to restore the brand’s appeal and credibility among shoppers.

The fear for shareholders is that its traditional customer base may just have tired of its faux-Japanese stylings and moved on.

Dunkerton will have to demonstrate to the market that there is some light at the end of the tunnel as he looks to set the business on an upwards trajectory or investors may run out of patience.


A third of firms are planning lay offs this autumn…

Fears are mounting of a ‘bonfire of jobs’ amid warnings a third of firms are planning to lay off staff this autumn.

Shock research found huge numbers of companies expect to axe roles in the third quarter of the year as coronavirus hammers the economy. 

Many of the cuts are set to come from hospitality businesses such as hotels, restaurants and cafes, as well as shops that were already on the brink before the pandemic.

The hit emerged in a survey carried out by the Chartered Institute of Personnel and Development (CIPD) with recruiter the Adecco Group. 

Full story below…


Footsie’s rally evaporates

After a positive start, the FTSE 100 is now flat at 6,033.

The FTSE 250 is up 0.4% at 17,693.


JUST IN: China imposes sanctions on a group of US officials

Reuters reports:

China’s foreign ministry said it would apply sanctions against U.S. officials including Senators Ted Cruz and Marco Rubio starting Monday, in response to Washington’s move on Friday to impose sanctions on 11 Hong Kong and Chinese officials whom it accused of curtailing political freedoms in the city.

Last month, China had already announced sanctions against Cruz, Rubio and other U.S. officials after Washington penalised senior Chinese officials over the treatment of Uighur Muslims in its Xinjiang region.


Pret A Manger to cut staff working hours

Pret a Manger is set to slash the working hours of its staff by around 20 per cent, blaming the move on a reduced footfall.

The sandwich shop has been using Rishi Sunak’s furlough scheme to maintain its workforce during the coronavirus lockdown.

However, despite Prime Minister Boris Johnson’s drive to get people back to work, only a third of office workers in Britain have done so, according to a survey conducted by US investment bank Morgan Stanley in mid-July, the Sunday Times reports.

Full story below…


Intercontinental Hotels and Ashley’s Frasers Group expected to cut jobs

Holiday Inn owner Intercontinental Hotels Group (IHG) and Mike Ashley’s Frasers Group are expected to be the latest firms to warn of job losses this week as Britain reels from the fallout of coronavirus. 

The companies will report financial results after months of being battered by lockdown restrictions. Both have warned of potential redundancies. 

Full story below…


Markets ‘choose to ignore many issues’ including rising Covid cases in UK

Arguably against the odds the European markets got off to a strong start of Monday, choosing to ignore the many issues that arose over the weekend, says Connor Campbell, an analyst at Spreadex.

There’s a list the length of your arm why investors should be feeling edge. Congress is yet to agree on a fresh stimulus plan. The number of covid-19 cases in the United States has now crossed 5 million. The UK just saw its daily number of fresh cases surpass 1000 for the first time since June, ahead of the likely confirmation of a 21% economic contraction in Q2 on Thursday.

And, most importantly, Donald Trump followed up his TikTok and WeChat bans with sanctions on 11 Chinese and Hong Kong officials, while having US health chief Alex Azar praise Taiwan’s democracy and response to the pandemic in a move designed to rile up Beijing. This as China starts to aggressively enforce the new national security laws in Hong Kong, including the arrest of pro-democracy property tycoon Jimmy Lai.

Setting all of that aside, the markets decided to instead celebrate the latest payroll tax-cutting executive orders from Trump, designed to bypass the blockade in Congress regarding coronavirus relief – despite critics of the actions claiming, in the words of Joe Biden, that it is a ‘reckless war on Social Security’, and may not actually provide much benefit to American citizens.


Saudi Aramco sees oil demand from Asia recover – but profits tumble

Oil prices are on the rise today, with analysts putting this down partly to comments by Saudi Aramco’s chief executive Amin Nasser, who yesterday said that he sees oil demand recovering in Asia as economies gradually open up after the easing of coronavirus lockdowns.

This is what he said:

Look at China, their gasoline and diesel demand is almost at pre-COVID 19 levels. We are seeing that Asia is picking up and other markets (too).

As countries ease the lockdown, we expect the demand to increase.

That’s despite Aramco posting a 73 per cent plunge in profits in the second quarter.


Markets boosted by upbeat data from China

Fiona Cincotta, an analyst at City Index, sums up what’s moving the markets this morning:

The FTSE, along with its European peers are being boosted by upbeat data from the US and China. However, gains could remain capped in a quiet day for corporate releases and as the focus remains on US lawmaker’s ability to agree additional stimulus.

China’s consumer inflation accelerated for a second straight month in July. The CPI inflation gauge grew 2.7 per cent on last year, up from 2.5 per cent in June. On a monthly basis, prices increase 0.6 per cent. Official data also showed that PPI which measures inflation at factory level rose 0.4 per cent month on month.


Cincotta adds: 

The data adds to mounting evidence that the economic recovery in China is not only solid, but also gaining momentum, boosting optimism that the world’s second largest economy will offer serious support to the global economic recovery. The data comes following Friday’s better than forecast non-farm payroll data.


However, concerns over rising tensions between the US and China remain. She says:


Concerns over rising US – Sino tensions are likely to weigh on sentiment, keeping gains in check. On Friday Trump signed executive orders banning TikTok and WeChat whilst also sanctioning Hong Kong’s C


Superdry shares jump 17% as it agrees £70m financing deal with lenders

Superdry has agreed to a new £70million financing deal with its banks to help it through the coronvirus crisis as it revealed that stores sales continue to tumble.

The fashion brand said its performance in the three months to July 25 was better than first feared as total sales declines narrowed to 24.1 per cent.

But it admitted that trading remained ‘materially’ affected by the pandemic despite 95 per cent of its shops now having reopened.

Online sales surged 93.2 per cent in the quarter, though it said they have started returning to more normal levels in recent weeks as stores reopen with the easing of lockdown restrictions.

Shares in the mid-cap fashion retailer have risen 17 per cent to 138p.


Business lending by banks expected to reach 13-year high in 2020

Business lending by banks is expected to reach a 13-year high in 2020, according to research. 

Because of the strain put on company finances by the pandemic, the EY Item Club said business lending was set to grow by 14.4 per cent this year. 

It said most firms would only be in a position to start paying down the huge sums borrowed by 2022 because the economy’s return to normal would be ‘relatively slow-paced’.

Full story below…


Oil prices rise amid hopes of economic recovery

Oil prices have risen almost 1 per cent after hopes a bullish demand picture from Saudi Aramco, the largest oil producer in the world, and a pledge from Iran to further cut supply.

State owned Aramco’s chief executive said that oil consumption in Asia, Aramco’s biggest market has almost returned to pre-covid levels. 

Brent crude, the global benchmark, is up 0.9 per cent at $44.81 a barrel.

WTI rose 1.4 per cent to $41.78.


London markets open higher

Ther FTSE 100 has risen more than 1 per cent to 6,095, helped by heavyweights BP and Shell, which are higher on the back of rising oil prices.

Meanwhile, the UK-focused FTSE 250 has also risen 1 per cent to 17,788.

Among the mid-caps, fashion retailer Superdry jumped 14 per cent after it agreed to a new credit facility to get it through the coronavirus crisis. 

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