UK manufacturing optimism highest since 1973; ECB presses on with bond purchases – as it happened

Time for a recap

UK factory bosses are their most optimistic in almost 50 years, as confidence about the recovery grows.

The CBI reported that optimism, hiring intentions and output growth expectations all surged.

The European Central Bank has pressed on with its bond-buying stimulus, insisting it’s too early to consider slowing the pace of the PEPP programme.

ECB president Christine Lagarde said the economy is still “on crutches” and in need of support from both the central bank and government spending, as the 19 countries that use the euro limp through extended lockdowns in a third wave of the COVID-19 pandemic.

Lagarde said the eurozone probably contracted in the first quarter of 2021, warning uncertainty was clouding the recovery:

While the recovery in global demand, and the sizeable fiscal stimulus, are supporting global and euroarea activity, the near-term economic outlook remain clouded by uncertainty about the resurgence of the pandemic and the rollout of vaccination campaigns.

Persistently high rates of coronavirus infection, and the associated extension and tightening of containment measures, continue to constrain economic activity in the short term.

Jaguar Land Rover is to temporarily shut down production at two of its main UK factories because of a shortage of computer chips.

It’s the latest sign of the difficulties facing the global car industry during the pandemic.

Credit Suisse has posted a 757m Swiss franc loss (£592m) in the first quarter as the bank reeled from the collapse of US hedge fund Archegos.

Archegos wiped out what would have otherwise been its best quarterly performances in at least a decade, with CEO Thomas Gottstein saying the loss was unacceptable.

Credit Suisse also expects to lose another 600m Swiss francs (£470m) in the current quarter, as regulators start a probe into the issue.

On the economic front, US jobless claims have hit a pandemic low as vaccine programmes and stimulus spending boost the recovery...

...while eurozone consumer confidence is at the highest since the first lockdowns.

Activists have broken windows at HSBC’s London HQ, to highlight the financial industry’s involvement in the climate emergency on Earth Day.

Nestlé has reported a jump in sales, due to demand for coffee, home-baking and petfood in the pandemic.

Dominos has also seen strong sales during the latest lockdown, although pizza collections are lagging behind home deliveries.

European stock markets have closed higher, as investors again favour companies who should benefit when lockdowns ease.

But Deliveroo fell again, after a report that Odey Asset Management had shorted Deliveroo’s shares.

Here are more of today’s stories:

Goodnight. GW

Another piece of encouraging data from earlier - eurozone consumer confidence has hit its highest level since the pandemic began.

The index rose to -8.1 this month, up from -10.8, suggesting that Europeans are more upbeat about prospects for 2021.

Bert Colijn of ING says:

The surprising jump in consumer confidence is actually more noteworthy than any action at the ECB meeting this afternoon.

The increase from -10.8 to -8.1 in April reveals an optimistic consumer that finally sees light at the end of the tunnel. This is the highest reading since February last year, marking the best reading since the start of the pandemic. It far surpasses the levels seen in the summer of last year when reopenings led to only modest improvements in confidence, indicating that consumers really feel close to the end of things.

European stock markets have ended the day higher.

In London, the FTSE 100 index gained 42 points, or 0.6%, to finish at 6938.

Investors seem to have put their worries about the pandemic on the back burner again. Travel companies rose, with airline group IAG up 3.3%, as it recovers from Tuesday’s selloff. Property website Rightmove, retailer JD Sports and car website AutoTrader also gained around 3%.

The smaller, more UK-focused FTSE 250 gained 1.2%, with budget airline easyJet and cruise operator Carnival both rising 4.7%.

Danni Hewson, financial analyst at AJ Bell, says companies who will benefit from a speedy return to “normal life” are gaining ground.

Falling infection rates in Europe, a vaccination take-up in over 50’s of 95% in England and signs consumers here have remembered how to spend on the high street won’t harm that sentiment at all.

“But there have been other factors at play today. The global shortage of microchips is having a tangible impact on the automotive sector and Wall Street will be paying close attention when Intel updates markets later, hoping for further guidance on how quickly manufacturers can adapt.

On the chip shortage at JLR, Dominic Tribe, director and automotive sector specialist at management consultancy, Vendigital, says:

“Jaguar Land Rover is no means the only car manufacturer to be affected by the global shortage of semiconductors. Most other major car manufacturers have already announced production slowdowns.

“The main reason for the shortage is a significant increase in demand for semiconductors during the pandemic, partly due to increased sales of consumer tech, such as tablets and gaming hardware as well as the growing requirement for battery electric vehicles. The global market for semiconductors is now estimated to have a value of $433bn, and further growth of 8.4% is forecast this year.

“For the major car manufacturers, the situation is incredibly challenging and competition for supplies is intense. Normally, if a component is at risk of short supply, this is communicated upwards through the supply chain, so the OEM [Original equipment manufacturer] can plan ahead to meet capacity demands. However, in this case, car manufacturers are competing with strong demand from OEMs in other industry sectors.”

Over in the US, the number of people filing new unemployment claims have dropped to their lowest level since the pandemic began.

Initial unemployment claims dropped to 547,000 for last week, the lowest since the week of March 14, 2020 (figures released earlier today show).

That suggests America fast vaccine rollout, stimulus packages and loose monetary policy are all boosting the recovery (although it’s still much higher than before the pandemic).

Continuing claims, which run a week behind the headline data, also fell, dropping 34,000 to 3.67 million. That’s also a pandemic low, suggesting a stronger labour market.

Shares in Deliveroo have closed at a new low tonight, as it continues to struggle after the “worst IPO in London’s history” last month.

Deliveroo ended the day at just over 230p, down 1% today, or over 40% down on the 390p which investors (including some of its own customers) bought shares.

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People close to the deal had blamed short sellers for Deliveroo’s plunge on its first day of conditional trading on 31 March (although concerns about working conditions and growth prospects after the pandemic also put off investors).

And earlier today, the FT reported that Odey Asset Management had shorted Deliveroo’s shares, meaning the hedge fund will profit from a falling share price.

Odey Asset Management has revealed to clients that it took a short position against Deliveroo, the first sign that hedge funds are targeting the food delivery company after last month’s disastrous initial public offering.

The bet against Deliveroo’s share price was taken by James Hanbury and Jamie Grimston, fund managers at London-based Odey, according to investor documents seen by the Financial Times. The position appears to have been taken on March 31, the day of Deliveroo’s listing.

22 Apr 202112.09 EDT

Sarah Butler

The future of a landmark deal to improve safety at clothing factories in Bangladesh is in doubt, unions have said, in the run-up to the eighth anniversary of the collapse of the Rana Plaza building in which more than 1,100 garment workers died.

More than 200 brands, including Primark, Marks & Spencer and H&M, signed up to the Bangladesh accord on fire and building safety after the 2013 disaster at the factory in the outskirts of Dhaka. That deal, agreed with the international clothing workers’ unions UNI Global and IndustriALL, is due to expire next month.

It will be superseded by the Bangladesh-government backed Ready-Made Garment Sustainability Council (RSC), which brands and factory owners have already signed up to.

Gig economy workers have won another victory in the battle for employment rights - this time against cab and courier company Addison Lee.

My colleague Sarah Butler explains:

Thousands of Addison Lee drivers could be entitled to an average £10,000 each in compensation after the court of appeal found they were “workers” entitled to the national minimum wage and paid holiday.

Lord Justice Bean dismissed an appeal by Addison Lee against a 2017 employment tribunal that found that three drivers for the company were entitled to the minimum wage from the time they logged on as ready to take passengers to the time they logged off. That decision was also upheld by the employment appeal tribunal in 2018.

The ruling is the latest victory for gig economy workers after the UK supreme court dismissed Uber’s appeal against a landmark employment tribunal, which found that its drivers should be classed as workers with access to the minimum wage and paid holidays.

The pandemic has been a difficult and stressful time for many workers.

And at Swiss bank UBS, they’re introducing a new promotion bonus as part of a drive to keep young dealmakers healthy and engaged.

Financial News reports that UBS are also boosting recruitment to help lessen the workload for junior staff and adding programmes focused on physical and mental health. More here.

Banker burnout hit the headlines last month, when a leaked presentation by 13 aggrieved first-year Goldman bankers highlighted tough working conditions, including long hours, and abuse from co-workers.

Informa, the world’s biggest exhibitions group, has highlighted the economic disruption that is being caused by the pandemic.

Informa reported a loss of £1.1bn for 2020 as the coronavirus pandemic prevented gatherings around the world, sending its revenues plunging.

Stephen Carter, Informa’s chief executive, said 2021 would be “the year of transition” for the company as it seeks to recover. But it’s notable that Informa says its recovery will start in China and the US.

My colleague Jasper Jolly explains:

In the US, the first Informa event took place in February in Florida, which has had looser coronavirus restrictions than some other states. It has since run two large boat shows there.

Informa is planning to draw corporate crowds to Las Vegas from June for events such as the World of Concrete show, the International Surface Event and WasteExpo.

Prospects for the UK and Europe reopening remained more distant, but Carter said he hoped for “revitalisation and growth through 2022-2024”.

Also today, the chairman of funeral provider Dignity has been ousted in a coup led by the company’s biggest shareholder.

Clive Whiley lost an investor vote, with 55% of votes cast in favour of a motion to remove him. It follows growing pressure from Phoenix Asset Management over the handling of a strategic review at Dignity (which runs around 800 funeral locations and 46 crematoria in the UK).

It’s quite a shake-up: two non-executive directors have also resigned along with acting chair, while Phoenix’s chief investment officer Gary Channon is joining as an executive director. He’s favourite to become the next chair, says the Evening Standard.

Phoenix (which owns nearly 30% of shares) says it’s delighted with the result, and will get straight to work to show itself worthy of it.

But shareholders are concerned about disruption, as the FT points out:

Norway’s oil fund, the world’s largest sovereign wealth fund, voted against the proposal to oust Whiley and replace him with Channon, while a top-20 shareholder said he was extremely worried about the outcome.

He said: “We are very concerned there is going to be complete vacuum and chaos. Phoenix are acting extremely irresponsibly. “For the company, the stakeholders, the bereaved customer, it is potentially a disaster for everyone.”

Dignity made a pre-tax loss of £19.6m for 2020, while the Competition and Markets Authority said in December that Dignity and rival Co-operative Group charge much more for a typical funeral than many of the small, often family-owned, businesses.