Closing summary

The FTSE 100 is the major holdout across global stock indices thus far on Thursday, up by 0.2%, with Wall Street indices weakening and European stocks retreating from record highs.

A couple of notable deals have given Wall Street investors something on which they can focus, with Victoria’s Secret being sold into private hands and Morgan Stanley pushing further into investment management with the $13bn purchase of E-Trade.

But as so often this month the fallout from the coronavirus outbreak has set the tone, with Air France-KLM, Qantas, shipping company Maersk and iPhone manufacturer Foxconn all warning of financial damage.

Investors seeking safe havens appear to have rushed to the US dollar, forcing down the Japanese yen and the pound.

Thank you as ever for joining us for live coverage of the worlds of business, economics and the markets – and come back tomorrow for more of the same. JJ

Another big Wall Street deal announced today: Morgan Stanley is buying online stockbroking platform E-Trade for about $13bn.

The combination will have $3.1tn in client assets and 8.2m retail client relationships and accounts – with E-Trade shifting the balance towards less wealthy customers and a more direct, lower-cost approach.

The Associated Press calls it “one of the biggest deals on Wall Street since the financial crisis” and “the latest chapter in Morgan Stanley’s transformation from the scrappy, deal-doing, stock-trading investment bank to a more well-rounded financial firm now more reliant on its asset and wealth management businesses”.

The combined wealth and investment management businesses will account for about 57% of the firm’s pre-tax profits, compared to only approximately 26% in 2010.

Stocks have dipped at the open on Wall Street.

The Nasdaq, the Dow Jones industrial average and the S&P 500 have all fallen by 0.2%.

US stock market futures suggest that Wall Street is going to drop at the opening bell, following the lead of European markets.

The FTSE 100 is the only major index that is not in the red – and it has only edged up by less than 0.1% (possibly thanks to the dollar surge, which makes US earnings relatively more valuable for companies that report in sterling).

The Euro Stoxx 600 index has lost 0.5%, while France’s Cac 40 and Germany’s Dax have both lost 0.3%.

Foxconn, the biggest maker of Apple’s iPhone, has warned that its revenues will be hit by the coronavirus, but it did not say exactly how big the impact might be.

Apple had already warned this week that it faced a supply shortage because of the virus, so the hit to a major supplier does not come as a surprise.

Foxconn, which is formally known as Hon Hai Precision Industry, added that it is restarting some production at Chinese plants, after extended closure.

Reutes also reported that Foxconn said its plants in countries such as Vietnam, India and Mexico continue to operate at full capacity with expansion plans under way as it seeks to minimise the impact of the virus.

Who knew that the £20 was the most popular bank note in the UK? Anyway, there’s a new one out today.

The Bank of England has begun the mammoth operation to replace it, with at least 2bn printed, reports the Guardian’s Patrick Collinson.

The Bank expects half of the country’s cash machines to have switched over within the next fortnight.

The note will feature Turner’s portrait in front of The Fighting Temeraire, his tribute to the ship that played a distinguished role in Nelson’s victory at the Battle of Trafalgar in 1805. (The painting also symbolises the changing of the guard – as Carney prepares to leave the Bank in less than a month).

The US dollar is on something of a tear at the moment: the trade-weighted basket of currencies measured against it has hit its strongest level since May 2017.

The Japanese yen has fallen – even though it is usually considered something of a safe haven – amid fears of recession in the world’s third-largest economy. It may have also been affected by its proximity to China, the centre of the coronavirus epidemic.

“Dollar tramples yen and everything else in its path” is the apt headline on a Reuters report. Rabobank senior currency strategist Jane Foley said:

I think this has really brought into focus the role the dollar is playing as a safe haven.

The yen has lost 2% to the dollar since Tuesday to its lowest since April 2019.

However, UBS’s wealth management arm said it thinks the dollar surge against the yen is “unsustainable”. Mark Haefele, global chief investment officer at UBS Global Wealth Management, said:

Broadly, we attribute the yen move to a combination of risk-on trade in equity markets, rising headwinds for Japan’s economy, and continued US dollar strength. The move may have been exacerbated by other factors, from rising Covid-19 infections in Japan to GPIF [Government Pension Investment Fund] outflows.

Some more reaction on the British retail sales rebound. It appears that experts aren’t quite convinced that the post-election bounce means the sector is out of the woods.

Kallum Pickering, senior economist at Berenberg, an investment bank, said:

One month does not make a trend. Retail sales are typically quite volatile. However, they do provide an early indicator of the much bigger category of household spending – which makes up about 70% of GDP.

So far, the data just show a rebound from the fourth quarter and not yet evidence of a strong gains to come throughout 2020. However, the uptick in spending along with the sharp improvement in household survey data at the start of the year suits our call that real household consumption is on track to recover solidly in the first quarter (+0.6% quarter-on-quarter) after the disappointing 0.1% gain in the fourth quarter of 2019.

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, said:

Have UK consumers chosen ‘buy more big ticket items’ as their New Year’s resolution? Though UK retailers will certainly hope so, this will have required a real growth in consumer confidence. Last year was characterised by nervousness in the market, which led to muted spending and frustration for many businesses.

January’s ONS figures offer a glimmer of hope that this pent up consumer demand could now slowly be being released, but the jury is still out on this at the moment.

Joe Morris, retail partner at law firm Gowling WLG, said:

While promising, there is a need to remember the backdrop of this improvement, which has seen failures and insolvencies in the areas with the highest sales – both in terms of physical store footfall and a failure to successfully unify on and offline efforts into one seamless experience.

The need to meet these core customer needs will continue to challenge the sector, with global supply chain efficiencies also playing a key part. Survival of the fittest has never applied more, but as ever, retailers with strong brands and reactive and widely available lines will continue to do well.

A just after mid-morning update on markets: the FTSE 100 has given up almost all of its gains to trade flat for the day.

The Euro Stoxx 600 index is down by 0.14%, with Italy’s Milan-based FTSE MIB index down by 0.45% amid political uncertainty.

The pound has dropped by 0.3% against the US dollar to $1.2890, its lowest in 10 days, despite the rebound in UK retail sales.

Here’s the full report on Lloyds Banking Group’s profits hit – and some bad news for its chief executive: he is no longer Britain’s best paid banking boss, as we earlier reported.

António Horta-Osório has seen his pay packet fall to a mere £4.7m, a 28% cut.

Horta-Osório, the chief executive, is now the second-highest paid UK bank boss, behind Barclays’ chief executive, Jes Staley. Staley was paid £5.9m for 2019 despite UK regulators launching an investigation over his links to the sex offender and disgraced financier Jeffrey Epstein in December. Horta

Horta-Osório’s pay peaked at £11.5m in 2014. Between 2011 and 2019 he has been paid £56m by the bank.

This year’s pay packet includes a £12,000 “car or car allowance” and a £37,606 “transportation”. That’s £49,606 for various forms of transport alone – about 1.7 times the average UK salary, which is roughly £28,300 based on the Office for National Statistics’ weekly earnings figures.

Full story here:

The end of election uncertainty in December may be driving the improvements in the data, economists suggest.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said:

January’s official retail sales figures confirm that the decisive general election has released the handbrake of political uncertainty on consumers’ spending. The headline number has been depressed by a huge 5.7% month-to-month drop in fuel store sales – the biggest since March 2015 – driven by a rise in fuel prices and bad weather.

The overall picture on retail sales is still pretty weak, cautioned Simon French, chief economist at Panmure Gordon – although the outlook is moderately more positive as household finances improve this year.

Textile, clothing and footwear stores recorded the strongest increase among the retail sectors, with volumes up by 3.9% compared to the previous month, the ONS found.

Food sales rose by 1.7% month-on-month, counterbalancing a 5.7% fall in fuel sales as prices increased.

Gold prices have held near seven-year highs this morning – after breaking the mark late on Thursday night as the coronavirus outbreak compounded concerns about slowing global growth.

The spot price of a troy ounce of the yellow metal rose above $1,612 late last night – the highest point since March 2013. This morning gold was trading at $1,609.

A note from Mark Haefele, chief investment officer at UBS Global Wealth Management, said:

We continue to see value from an insurance and diversification angle, but would caution that absolute returns may be limited if coronavirus-related disruptions are largely limited to the first quarter.

An interesting story from the Belfast Telegraph this morning on the maker of the “Boris bus”: Northern Ireland’s Audit Office is to probe a £2.5m loan made by Invest NI to Wrightbus just months before the company went into administration.

Wrightbus was once hailed as one of Northern Ireland’s most successful manufacturers, but it fell into administration last year after sales slumped. The company and its family owners also faced questions over multimillion-pound donations made by the company to a church run by Jeff Wright.

The collapse was politically awkward for the government, given prime minister Boris Johnson’s personal association with the company after he ordered new Routemaster double deckers during his time as London’s mayor.

NI’s public spending watchdog issued the statement after an MLA raised the issue with the economy committee at Stormont yesterday. From the BelTel’s report:

Sinn Fein’s Caoimhe Archibald, chair of the committee, made the call after a number of concerns about the firm’s financial affairs were raised by experts in a BBC Spotlight investigation

Wrightbus, based in Ballymena, collapsed into administration in September 2019. About five months earlier, Cornerstone – the firm’s parent company – spent £1m buying back the shares held by Wright family member Dr Lorraine Rock, the programme broadcast on Tuesday revealed. [...]

Wright has branded any claims money was wrongly donated untrue and “extremely hurtful” and “damaging”.

The top riser on the FTSE 100 this morning is Smith & Nephew, the maker of medical products such as dressings and surgical devices, after it beat expectations.

Smith & Nephew forecasted another year of revenue growth after topping annual sales expectations for 2019, helped by higher demand from emerging markets and growth in its sports medicine unit.

The company’s revenues topped $5bn for the first time, and slightly outperformed consensus estimates – shares rose by 8%.

NMC Health is the second top performer, up 4%, although given that it is still worth less than a third of its valuation in mid-December the term dead cat bounce springs to mind.

The Middle Eastern private hospitals group has been in turmoil since it revealed that its ownership details had been incorrectly reported and short seller Muddy Waters targeted it.

Maersk handles one in every five containers shipped by sea across the world, so it is on the front line of impacts from the outbreak. It has issued a warning on the impacts – but perhaps most strikingly there is no number put on the cost.

The Danish company cited “fear of the virus and the efforts to prevent its spread” as denting demand, hampering deliveries at ports and preventing some upgrades to its ships.

The outlook for 2020 is impacted by the current outbreak of the Coronavirus (Covid-19) in China, which has significantly lowered visibility on what to expect in 2020. As factories in China are closed for longer than usual in connection with the Chinese New Year and as a result of the Covid-19 we expect a weak start to the year.

It is still early days to measure the overall impact[. H]owever, the weekly container vessel calls at key Chinese ports were significantly down compared [to] last year during the last weeks of January and the first weeks of February. Freight rates are expected to decrease due to dropping demand for containerised goods transport.

However, Maersk said it still expected global container demand to grow by 1% to 3% this year, compared to 1.4% last year and 3.8% the year before.

European markets have lost some ground in early trading – aside from in the UK, where the pound is slightly lower.

London’s blue-chip FTSE 100 is up by 0.2% to about 7,469 points, while the FTSE 250 has gained 0.4%.

France’s Cac 40 and Germany’s Dax both lost about 0.1% in early trades, dragging down the Euro Stoxx 600 index down by the same amount.