3.30am EDT
03:30
Next shares hit record high despite price and staff warning
Next is the top riser on London’s FTSE 100 index, after the UK fashion chain raised its full-year outlook again on the back of soaring sales, although it also warned over rising prices and staff shortages in the run-up to Christmas.
Its shares went up 3.6% in early trading to hit a fresh record of GBP84.08, after the company reported pre-tax profits of GBP346.7 million for the six months 31 July. Full-price brand sales jumped 62% year-on-year and were 8.8% higher compared with pre-pandemic levels.
However, Next said due to supply chain problems, higher freight costs had pushed up prices by about 2% in the first half and cautioned this would continue into next year, with prices set to rise by about 2.5% in the first half of next year.
Next added that it was also seeing some areas of the business come under pressure from staff shortages, particularly in logistics and warehousing, which may affect its delivery service going into the peak festive season.
3.21am EDT
03:21
Oil prices fall for second day as rally fades
Oil prices are falling for a second day as crude’s rally petered out, with Brent crude – the global benchmark – down 1.7% at $77.75 a barrel and US light crude trading 1.8% lower at $73.9 a barrel. US crude inventories unexpectedly rose and doubts over demand have resurfaced as Covid-19 cases continue to climb around the world.
Oil prices had been rallying as economies recover from the coronavirus crisis and fuel demand has picked up, while some oil producing countries have suffered supply disruptions.
3.14am EDT
03:14
Europe’s stock markets have opened higher, rebounding from yesterday’s losses.
UK’s FTSE 100 index up 42 points, or 0.6%, to 7,071
Germany’s Dax up 0.7%
Spain’s Ibex up 0.6%
Italy’s FTSE MiB up 0.5%
3.11am EDT
03:11
James Spencer, managing director at Portland Fuel, told the BBC that the fuel crisis was easing.
I would say logically the worst is behind us. The original crisis – if you want to call it that – was caused by 25 to 30 petrol stations closing down near the south coast.
It was never a particularly major crisis in the first place, obviously then there was the panic buying, sales at forecourts went up by 500% over the weekend.
Lot of people have filled up their tanks now, so you might actually see a dip in demand and the replenishment of fuel at petrol stations is a 24-hour, seven-days-a-week job, so as we speak the petrol stations are being replenished.
To a certain extent that hasn’t been helped by all the queues at the petrol stations because all of the tankers have not been able to get in.
He added:
I would probably have to say there is a minor supply problem which is related to a shortage in tanker drivers. The shortage of tanker drivers is nothing like as acute as the shortage of general haulage drivers.
3.08am EDT
03:08
Introduction:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, eurozone, business, and the UK’s supply chain crisis.
The prime minister said yesterday that the fuel situation was “improving” adding that keyworkers would not get priority at petrol stations, while Sky reported a Ministry of Defence source saying it was “highly likely” army deliveries would begin within days.
The BBC reported that a decision on whether to deploy military tanker drivers has yet to be taken but about 150 will now get ready. A government source said 16% of all petrol stations were now fully supplied with fuel, compared with 10% at the weekend during some of the worst of the fuel rush. The source said that in normal times 40% of petrol stations are fully supplied.
Long queues formed outside petrol forecourts in north London today and on the busy M25 motorway circling the capital, Reuters reported.
The Petrol Retailers Association said yesterday that just over a third of filling stations had run out of fuel, compared with 50% to 90% at the weekend.
Stock markets had a bad day yesterday, with European indices down over 2%, with the exception of the FTSE 100 which only edged down 0.5% to 7,028, helped by its energy component. US markets also recorded losses, with the Nasdaq hitting its lowest levels in over a month.
Michael Hewson, chief market analyst at CMC Markets UK, says:
Once again it is fears about surging energy prices, supply chain disruptions, and concerns about more persistent inflation that is sparking a move out of the more highly valued areas of the stock market, as the volatility that we saw last week, continues into this week as bulls and bears indulge in a game of pass the parcel. The pound is also suffering as a consequence of the entirely self-inflicted fuel crisis, that has seen petrol station forecourts run dry, and concern over an economic slowdown.
Having been told for months that inflation is transitory, and that rates would stay low until 2024, it is becoming increasingly apparent that recent events are sowing concern amongst policymakers, that a rate rise could well be on the cards by the end of next year, two years earlier than had originally been priced in March.
We are already seeing declining consumer confidence because of these headwinds, as US consumer confidence for September hit a six-month low, and yesterday’s comments from Fed chair Jay Powell would suggest that it would need a very high bar for the Fed not to start tapering by the end of this year, though he was keen to stress that this shouldn’t be interpreted as a timetable towards a rate hike.
Asian stocks declined, with Japan’s Nikkei down 2.1% and Australia 1.2% lower, while markets in Europe have opened higher today. The focus will be on three top central bankers who are speaking at the European Central Bank’s forum on central banking this afternoon: Christine Lagarde of the ECB, Andrew Bailey of the Bank of England and Fed chair Jay Powell.
The Agenda
8am BST: Spain inflation for September (forecast: 3.5%)
9am BST European Central Bank Forum on central banking
9.30am BST: UK Mortgage approvals (forecast: 73,000) and consumer credit for August
10am BST: Eurozone consumer confidence (final) for September (forecast: -4)
3pm BST: US Pending home sales for August
3.45pm BST: US Federal Reserve chair Jerome Powell speaks
4.45pm BST: ECB president Christine Lagarde and BOE governor Andrew Bailey speak
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