Closing summary: Stock market gains and vaccine updates
Wall Street stock market indices have now edged up in early trading. With an hour of trading left on Wednesday, the FTSE 100 is still up by 1% at about 6,889 points - on a day that the benchmark index hit pre-pandemic lockdown levels.
Here are some of the top business stories from today:
Meanwhile, in our UK coverage, the European Medicines Agency (EMA) has confirmed that the “overall benefit-risk remains positive” for the Oxford/AstraZeneca jab despite rare cases of blood clots.
However, in the UK adults under 30 should be offered an alternative vaccine instead of the AstraZeneca jab if there is one available in their area and they are healthy and not at high risk of Covid, the government’s vaccination advisory body has said.
You can also continue to follow our live coverage of the international reaction to the EMA’s findings, as well as updates on coronavirus from around the world.
JP Morgan boss: 'Higher costs could force bank to move more out of London'
Dimon also had some uncomfortable words for the UK government: the unfolding Brexit process “cannot possibly be a positive for the United Kingdom’s GDP”, he said.
The JP Morgan boss’s words on Brexit particularly matter because of the US bank’s large presence in London - both its investment bank and its asset management services.
Brexit has added to costs for the bank because it has had to duplicate services. Further difficulties could spell trouble for London employees servicing EU customers, he said:
We may reach a tipping point many years out when it may make sense to move all functions that service Europe out of the United Kingdom and into continental Europe. But London still has the opportunity to adapt and reinvent itself, particularly as the digital landscape continues to revolutionize financial services.
More work will inevitably move from London to European cities such as Paris, Frankfurt, Dublin and Amsterdam, Dimon wrote - although he does not expect many clear winners to emerge. He wrote:
It is clear that, over time, European politicians and regulators will make many understandable demands to move functions into European jurisdictions.
JPMorgan Chase CEO Jamie Dimon speaks an event before the pandemic. Photograph: Jeenah Moon/Reuters
The flat opening on Wall Street in part reflects the lack of a strong narrative driving global markets today, while traders are also waiting for minutes from the Federal Reserve that might give more hints on the path of US interest rates.
The Fed has had to contend with concerns that inflation might jump even as economies stutter back to pre-pandemic life. Yet Jamie Dimon, the boss of investment bank JP Morgan, reckons a “Goldilocks moment” might be coming for the US economy - albeit Goldilocks and at least two bearish signs.
Dimon’s comments, made in an annual letter to shareholders published on Wednesday, comes in at a novella-sized 30,000 words for the brave. But perhaps most interesting from the boss of the world’s most systemically important bank are his thoughts that everything might be about to go just right in the world economy.
Dimon wrote:
It is possible that we will have a Goldilocks moment – fast and sustained growth, inflation that moves up gently (but not too much) and interest rates that rise (but not too much). A booming economy makes managing US debt much easier and makes it much easier for the Fed to reverse QE and begin raising rates – because doing so may cause a little market turmoil, but it will not stop a roaring economy.
And, of course, being who we are, while we are going to hope for the Goldilocks scenario – and we think there is a chance for that to happen – we will anticipate and be prepared for two other negative scenarios: 1) the new Covid-19 variants may be more virulent and resistant to the vaccine, which could obviously reverse a booming economy, damage the equity markets and reduce interest rates as there is a rush to safety, and 2) the increase in inflation may not be temporary and may not be slow, forcing the Fed to raise rates sooner and faster than people expect.
IMF suggests 'solidarity' taxes for pandemic profit-makers
The International Monetary Fund has suggested that companies that made the biggest profits during the coronavirus pandemic should pay higher taxes.
In an interview with the Financial Times (£), Vitor Gaspar, the IMF’s head of fiscal affairs, said large economies should increase their top rates of income tax temporarily so that companies who made big profits in 2020 should pay more. Gaspar said:
The symbolic impact of this type of contribution is sometimes very important... typically, they occur in a very exceptional circumstances where social solidarity plays a particularly strong role.
The Washington-based organisation had already said that a tax on “excess” corporate profits might be useful to tackle inequalities from the pandemic, but Gaspar’s comments represented a further justification of the proposal.
The IMF also said that governments should increase spending on vaccine programmes in order to benefit their economies - as well as public health. The tax revenue gains on offer for extra vaccine spending are “in excess of $1 trillion” by 2025 for big economies, the IMF said.
Its report said:
Vaccination will, thus, more than pay for itself, providing excellent value for public money invested in ramping up global vaccine production and distribution.
Some unsurprising figures on air traffic from February, but there are signs of hope as restrictions start to ease.
A United Airlines airplane takes off over a plane on the runway at San Francisco International Airport in San Francisco. Photograph: Jeff Chiu/AP
The International Air Transport Association’s (Iata) director general Willie Wash has said international passenger traffic was down 89% in February, showing no no sign of recovery in the current environment.
However, Walsh said Iata is optimistic that when restrictions are removed, passenger traffic with recovery strongly, according to Reuters.
He adds that the group is focused on working with governments to get airlines moving again.
HSBC moving over 1,200 UK staff to permanent home working
BREAKING: HSBC is moving more than 1,200 UK staff onto permanent home working contracts, according to Reuters, which is citing the Unite union.
The news comes weeks after HSBC confirmed plans to slash its office space around the world by nearly 40% as part of sweeping cost cutting designed to capitalise on new part-office-part-homeworking arrangements after the pandemic.
Staff will then be squeezed into less space though they will also work from home.
HSBC has 66 offices in the UK, at least 10 of which are in London, according to its annual report.
The pub chain Marston’s is among the raft of pubs and restaurants gearing up for outdoor service as Covid restrictions are ease further in England on 12 April.
The company confirmed this morning that it expects to reopen around 70% (around 700) of its managed and franchised pubs in England with outdoor spaces on or around 12 April and,
And if regulations allow, it plans to open the majority of its Scottish and Welsh pubs on 26 April.
Marston’s Brewery Shop in Burton upon Trent, Staffordshire. Photograph: Jacob King/PA
If the government’s reopening roadmap stays on track, it expects to reopen the rest of its sites with restricted indoor service on or around 17 May.
“We are assuming a return to normal trading conditions from 21 June,” Marston’s said in a statement.
Marston’s, formerly known as Wolverhampton & Dudley Breweries until a 2007 rebrand, owns about 1,400 pubs, restaurants, cocktail bars and hotels across the UK, including the Pitcher & Piano chain.
Oil prices steady, rising amid stronger growth outlook
Oil prices have been see-sawing throughout the trading session, but seem to have steadied.
Brent crude prices are now trading higher by around 0.8% at $63.28 per barrel, while WTI is up 0.7% at $59.76.
Brent crude prices are up 0.8%. Photograph: Tail1/Refinitiv
Stephen Innes, chief global markets strategist at axi, says liquidity issues are partly to blame for the see-sawing price moves:
The whipsaw effect remains in the full-blow as liquidity is still low across all markets post-Easter, which may be exaggerating moves and keeping active oil investors sidelined...I still feel oil traders may find comfort-buying dips [in prices] knowing OPEC+ will closely monitor macro conditions via monthly meetings on the flip side of the coin. There should be little doubt the group will step in to put a floor on the oil price, [if] macro conditions deteriorate.
The Royal Dutch Shell logo is seen at a Shell petrol station in London. Photograph: Toby Melville/Reuters
Royal Dutch Shell expects its oil production business to turn a profit this quarter for the first time since the outbreak of Covid-19 pandemic, our energy correspondent Jillian Ambrose writes.
The oil giant told investors that adjusted earnings from its ‘upstream’ oil business would turn positive, after three consecutive quarterly losses, after the company was able to capture higher oil market prices.
The global oil price reached a 21-year low last April after the price of Brent crude dipped below $20 a barrel in reaction to lockdown measures which brought major economies to a standstill, and sapped demand for transport fuels.
Today, oil barrels are trading at just below $63 a barrel, boosting the fortunes of oil producers.
Shell’s trading update included a warning that the deadly winter freeze which swept Texas earlier this year would deal a $200m blow to the group’s adjusted earnings in the first quarter, including a $40m hit to its upsteam oil business.
The storm will take a bigger toll on Shell’s oil products and chemicals business units due to the impact of the cold on its refineries.
Returning to protests at Barclays’ HQ in Canary Wharf, Reuters is reporting that 7 people have been arrested after activists broke windows as part of a protest against the financial sector’s role in the climate crisis.
Handout photo issued by Extinction Rebellion of their protest at Barclays in Canary Wharf, London, where they used hammers and chisels to break windows. Photograph: Joao Daniel Pereira/PA
Activists used hammers and pasted messages on the front of the building, which read “In Case of Climate Emergency, Break Glass.”
The group has accused the bank of “continued investments in activities that are directly contributing to the climate and ecological emergency.”
Police officers detain an activist from the Extinction Rebellion, a global environmental movement, outside the Barclays offices in Canary Wharf, London, Britain, April 7, 2021. Photograph: Toby Melville/Reuters
It is part of wider Money Rebellion protests that aim to use “non-violent direct action, causing damage to property to prevent and draw attention to greater damage.”
Barclays has issued a statement, criticising the property damage and defending the bank’s own climate policy:
Extinction Rebellion are entitled to their view on capitalism and climate change, but we would ask that in expressing that view they stop short of behaviour which involves criminal damage to our facilities and puts people’s safety at risk.
We have made a commitment to align our entire financing portfolio to the goals of the Paris Agreement, with specific targets and transparent reporting, on the way to achieving our ambition to be a net zero bank by 2050, and help accelerate the transition to a low-carbon economy.
Lutz Schuler, the chief executive of Virgin Media, has been appointed to head up the new £31bn company being created by the merger of the cable TV company with O2 Photograph: Andre M Chang/ZUMA Wire/REX/Shutterstock
Lutz Schuler, the chief executive of Virgin Media, has been appointed to head up the new £31bn company being created by the merger of the cable TV company with O2, the UK’s largest mobile operator,our media business correspondent Mark Sweney writes.
The appointment of Schuler means that Mark Evans, who has run O2’s owner Telefonica UK for the last five years and was also vying for the role of chief executive of the new company, is to leave when the merger completes later this summer.
The merger of the UK businesses owned by Liberty Global and Spanish telecoms group Telefonica is currently being investigated by the Competition and Markets Authority to see whether it could lead to higher prices or reduced quality of service for consumers.
Schuler, who was appointed chief executive of Virgin Media in 2019, was considered to have the edge to land the top job having worked at both Telefonica and Liberty Global in Germany during his two decade career.
The deal will create a new telecoms heavyweight combining the UK’s second-largest broadband network and the largest mobile operator to create a stronger competitor to BT.
Virgin Media has 5.3 million broadband, pay-TV and mobile users, while O2 has 34 million mobile customers.
US futures are pointing to a lacklustre start on Wall Street, with futures for the S&P 500, Dow and Nasdaq all flat, following a lower close on Tuesday.
Bit Neil Wilson, chief market analyst, for Markets.com, said investors will be eyeing the US Fed’s Federal Open Market Committee (FOMC) minutes from their meeting on 17 March.
At that meeting, the Fed revised its growth forecasts but said it didn’t expect any interest rate hikes though to 2023.
FOMC minutes tonight will one to watch. The minutes could help explain how the Fed plans to communicate future policy decisions and shed light on how some policymakers could change their view on monetary policy if inflation and growth does accelerate as expected this summer.
Whilst Jay Powell has kept market speculation at bay, the minutes could allow participants to focus on when the Fed will tighten.
As detailed after the meeting statement, it looks as though the Fed is happy to let the economy run hot and won’t intervene to cool it down.
Even with growth in excess of 6.5% this year, 3% in 2022 and 2% in 2023; it still sees no need to tighten policy within the next almost three years.
This reflects what we know already about the Fed’s view on employment and inflation and the new outcome-based regime focused on absolute employment levels, not on the Philip’s Curve.
It also doesn’t really think the sharp bounce back this year is sustainable, meaning now is not the time to remove the punchbowl. US 10-year yields have retreated to under 1.64% - given the pullback from the recent highs there is a risk the market sees something in the minutes which signals it could tighten policy sooner than it is currently guiding.
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