Graeme Wearden 

European lockdowns hit travel firms and oil price – as it happened

Rolling coverage of the latest economic and financial news
  
  

The bull and bear sculptures in front of the Frankfurt stock exchange.
The bull and bear sculptures in front of the Frankfurt stock exchange. Photograph: Armando Babani/AFP/Getty Images

Closing summary

Time to recap.

Shares in airlines and travel companies fell again today as rising Covid-19 cases in Europe and tighter restrictions threatened to disrupt the summer holiday season.

Oil prices fell sharply, on forecasts of weaker demand, with Brent crude dropping over 4% to $61.90 per barrel.

And concerns over the pandemic, and the clash between the UK and EU over AstraZeneca’s vaccine, helped to push the pound to a six-week low against the US dollar.

Turkey’s stock market recovered from an early slump, as the shock sacking of its central bank governor last weeken reverberated.

The head of the IMF has warned that the recovery is ‘uncertain and even’.

The UK’s unemployment rate has dropped, as the government’s furlough scheme cushions the impact of the pandemic.

But the latest labour force figures also show that younger workers have been hit hardest by the last year’s disruption.

UK factories have reported a jump in order books, boosting their confidence.

But US new house sales have slumped, as bad weather, rising costs and higher mortgage rates hit demand.

Anxiety over the global semiconductor shortage intensified, after Swedish truckmaker Volvo warned its production will be hit by a lack of chips.

In other news...

The UK’s financial watchdog has warned that a new breed of thrill-seeking young investors are taking big financial risks when investing in cryptocurrencies, foreign exchange trading and other high-risk products.

Citigroup is embracing Zoom-Free Fridays....

..while Prince Harry has taken joined a Silicon Valley startup providing professional coaching, mental health advice and “immersive learning” as its chief impact officer.

Cinema chain Cineworld has outlined plans to reopen its screens

Here are more of today’s stories:

Goodnight. GW

Updated

London market close: Travel and hospitality hit

Britain’s FTSE 100 index has closed down 27 points, or 0.4%, at 6699, amid anxiety over rising Covid-19 cases in Europe.

Travel companies and oil giants were among the fallers, with IAG down 4.4% and BP losing 3.7%.

Rolls-Royce shed nearly 6%, after the Norwegian government vetoed the sale of its Norwegian subsidiary company Bergen Engines to Russian locomotive and railway equipment manufacturing and services company TMH Group.

The prospect of a £5,000 fine for travelling abroad on holiday hit other leisure firms too. Package holiday operator TUI fell 6.1%, and cruise operator Carnival lost 5.5%.

Other European markets were mixed, with Germany’s DAX ending the day flat despite chancellor Angela Merkel extending the country’s lockdown. France’s CAC fell 0.4% and Italy’s FTSE MIB lost 0.6%.

David Madden of CMC Markets UK sums up the day:

Concerns that Europe’s economic rebound will be hampered are playing on traders’ minds. Germany’s lockdown will last until 18 April, other countries have adopted tighter restrictions too in an effort to tackle the problem of rising Covid-19 cases. The EU’s vaccination distribution scheme is underperforming in comparison with Britain’s programme, and now fears of another wave of the virus in mainland Europe have sparked worries that several countries in the region will have to reopen their economies later than anticipated. The mood isn’t awful, traders aren’t running for the hills but there is a sense of fatigue that the restrictive climate will drag on a bit longer. Most European indices are in the red this afternoon.

International Airlines Group (IAG) has signed a three-year $1.755bn revolving credit facility with a syndicate of banks, a move that will bolster its finances.

The facility is available to its three airlines - Aer Lingus, British Airways and Iberia - who each have a separate borrowing limit.

It is secured against IAG’s “unencumbered aircraft assets” and its take-off and landing rights at both London Heathrow and London Gatwick airports.

IAG is also cancelling an earlier US dollar facility, so overall, this increases its credit facilities by €400m, and extends the average availability period by at least 1.5 years. More details here.

Updated

Spacs, or special purpose acquisition companies, are in the news again today.

Sir Martin Sorrell, the advertising mogul who has built his business empire through shell companies, has argued that these blank-cheque vehicles are too expensive to take off in the UK.

Financial News has the story:

Sorrell, who transformed Wire and Plastic Products (WPP), from a cash shell to the world’s biggest advertising agency more than three decades ago, claims the structure is better suited to the UK market than the new investment craze of so-called special purpose acquisition companies, or Spacs. The ad titan also used the well-established cash-shell route to launch his venture S4 Capital in 2018, just six weeks after his acrimonious split from WPP.

“I looked at a Spac in America [to set up] S4 Capital, I thought that Spacs were too expensive and took too long. I prefer the shell route because it’s cleaner, faster and more efficient,” he told Financial News.

Sorrell is not a fan of the Spac structure, which typically sees sponsors taking 20 per cent of the Spac’s equity - which can lead to lucrative profits if a deal goes well.

Financial News explains:

If you relapse significant amounts of the company to the promoter [of a Spac] or it becomes a beanfeast for advisers, in terms of legal fees and banking fees, I think that is potentially a problem,” Sorrell said. “The spac route is more a creation of bankers and promoters.”

More here: Cash shell king Martin Sorrell on ‘costly’ Spacs: They are a ‘beanfeast’ for bankers and lawyers

Interest in Spacs surged during the stock market rally of the last year. Investors flocked to these blank cheque companies which raise money through a public listing with the promise of finding a lucrative, but unidentified investment target.

There are signs, though, that the Spac craze may have faded.

But Spacs are still an important part of the market. Sky News is reporting that Kingswood Acquisition Corp, which listed in New York late last year, is in exclusive talks to buy Lombard, one of the UK’s biggest wealth management groups....

Another Spac, backed by tennis star Serena Williams, is merging with 3D printing company Velo3D Inc.

Back in Turkey, the stock market has recovered from its earlier sharp losses to end the day pretty much flat!

The benchmark BIST 100 index closed down just 1.8 points at 1,377, a drop of 0.13%, a day after crashing by nearly 10% (its worst fall since 2013).

Banks had a rough day, with the financial sector falling 7%. But basic materials and consumer cyclical goods makers rallied (traders perhaps calculating that a weaker currency will help their exports...).

The lira is also looking more stable, currently down just 0.5% at 7.8 lira to the US dollar, having slumped yesterday.

Today’s UK unemployment report gave a timely reminder that younger workers have been particularly hit by the pandemic, and the lockdown measures introduced to fight it.

My colleague Anna Bawden explains:

The numbers of young people out of work in the UK have reached new highs – with young people accounting for nearly two-thirds of job losses since the pandemic, according to official figures.

The regional employment figures from the Office for National Statistics show that long-term unemployment has risen 40% over the same period to 215,000 young people out of work for six months or more. Of all 16- to 24-year-olds who are currently unemployed, 74% have been unemployed for at least six months.

It comes as a report published on Tuesday by the National Youth Agency and Youth Employment UK, seen exclusively by the Guardian, says without a fundamental change in how young people are supported, far too many will be left behind.

It would take 1,000 new jobs and training places a day to get back to pre-pandemic levels by October 2021 and avoid a 50% rise in the numbers of 16- to 24-year-olds not in employment, education or training (Neet), the report concludes.

Here’s the full story:

Citigroup CEO ordains Zoom-free Fridays

After a year of lockdown, the novelty of using video calls to keep in touch with collegues and friends has definitely worn off.

So those suffering from Zoom fatigue might look enviously at Citigroup.

Th global investment bank has banned work video calls on Fridays in an attempt to help employees break free from the “relentlessness of the pandemic workday”.

Jane Fraser, Citi’s new chief executive, told staff that the last day of the working week would be known as “Zoom-free Fridays”.

In a memo, first reported by Financial News, Fraser explained:

“I know, from your feedback and my own experience, the blurring of lines between home and work and the relentlessness of the pandemic workday have taken a toll on our wellbeing,”

“It’s simply not sustainable.

Here’s the full story:

IMF chief: recovery prospects remain "uncertain and uneven"

The IMF’s managing director, Kristalina Georgieva, has warned today that the prospects for a recovery from the COVID-induced economic slowdown are uncertain and uneven.

Georgieva s pointed out that some emerging economies and almost all low-income countries, run the risk of a weak recovery -- underlying the need for a rebound in trade to lift growth.

Reuters has more details:

“It is the time to double down so trade can be again the engine of growth and opportunities it has been for so, so long,” Kristalina Georgieva said at an online event organised by the World Trade Organization. Trade volumes could grow 8.5% this year and 6.5% next year, she added.

“A rebound in trade, if managed well, can lift growth and living standards in the developing world,” Georgieva said.

US new home sales fall 18%

Over in the US, new homes sales tumbled by 18% in February -- in the latest sign that the economy weakened last month.

The US Commerce Department reports that sales of new single-family houses in February 2021 fell to an annual rate of 775,000, sharply down on January’s rate of 948,000.

However, it’s still 8.2% higher than a year ago, just before the first wave of the pandemic.

Analysts expected new home sales to drop, given the bad weather in February - but this is a much bigger drop than expected.

It may show that rising borrowing costs are hitting demand, especially with house prices at record levels.

Updated

Prince Harry has been given a job by a $1bn (£730m) Silicon Valley startup which provides professional coaching, mental health advice and “immersive learning” as its chief impact officer.

The Duke of Sussex said he hoped to be able to “create impact in people’s lives” by working with BetterUp to provide “proactive coaching” for personal development, increased awareness and “an all-round better life”.

It is the Duke’s first formal position at a private company since he stepped down from being a working member of the royal family a year ago.

Harry and his wife, Meghan, have also signed multimillion-dollar deals to provide content for Spotify and Netflix.

As chief impact officer at BetterUp Prince Harry will be expected to help with product strategy decisions, charitable collaborations, and advise on topics related to mental health. Harry has already worked closely with mental health charities.

“This is about acknowledging that it isn’t so much what is wrong with us, but more about what has happened to us over the course of life,” Harry told the Wall Street Journal, which first reported the appointment.

“Often because of societal barriers, financial difficulty, or stigma, too many people aren’t able to focus on their mental health until they’re forced to. I want us to move away from the idea that you have to feel broken before reaching out for help.”

Shares in pharmaceutical giant AstraZeneca are down 2% in London today, after its Covid-19 vaccine ran into more problems in the US.

In a rare move, the independent monitoring board that oversaw its US trial warned that the results released by the company on Monday were misleading.

Our health editor Sarah Boseley explains:

The Oxford/AstraZeneca vaccine against Covid has been dealt yet another blow within hours of AZ posting excellent results from its long-awaited big trial in the US.

Questions have been raised in the US by the independent Data and Safety Monitoring Board (DSMB), which has suggested that AstraZeneca may have provided “outdated information” in its statement on Monday, which gave “an incomplete view” of the results.

AstraZeneca’s statement said efficacy in the trial of more than 32,000 people was 79% against symptomatic disease and 100% against severe disease and death. Twenty per cent of participants were over the age of 65, to address the issue that had concerned some European countries as well as the US. Earlier trials did not include enough older people to be sure the vaccine worked in them.

Nearly two-thirds of participants were not in the best of health – 60% had underlying conditions including diabetes, severe obesity and heart disease, which would put them at serious risk if they caught the virus. The trial, which took place in the US, Chile and Peru, also had a bigger mix of ethnicities.

Experts were scrambling to understand the doubts of the DSMB, which were expressed in a statement from the US National Institute of Allergy and Infectious Diseases (NIAID). There were fears it could undermine confidence in the vaccine, which is being painstakingly rebuilt following worries in Europe over first the age issue and then blood clots.

Dr Anthony Fauci, Joe Biden’s chief medical adviser, who also heads the NIAID, said on the Good Morning America TV show that this was “an unforced error” by the company.

“The fact is this is very likely a very good vaccine and this kind of thing does … nothing but really cast some doubt about the vaccines and maybe contribute to the hesitancy,” he said.

PensionBee, an online pension provider, has become the latest company to announce plans to float on the London Stock Exchange, with an estimated market value of £350m.

The firm, which helps savers consolidate their old pensions into one new plan, aims to sell shares to institutional investors as well as its 130,000 active customers. It wants to list on the London Stock Exchange’s main market, which requires firms to have a market value of at least £300m at admission.

More than 8,000 customers have registered their interest for the offer so far through investment platform PrimaryBid.

Wall Street opens cautiously

The New York stock exchange has made a subdued start to trading.

  • Dow Jones industrial average: down 38 points or 0.12% at 32,693
  • S&P 500: down 4 points or 0.1% at 3,936 points
  • Nasdaq Composite: down 10 points or 0.1% at 13,367 points

Chris Beauchamp, Chief Market Analyst at IG, says investors are in a cautious mood:

Even fresh reports of a new infrastructure stimulus in the US have been treated with a degree of caution, investors preferring to wait for more concrete evidence before becoming too keen on jumping back into the water.

“Tech stocks continue to outperform, as the growth to value rotation starts to shift back in the other direction, as some of the optimism regarding a reopened economy falls away.

FCA warns younger investors are taking on big financial risks

Britain’s financial watchdog has warned today that a new wave of younger investors are taking on large financial risks.

The FCA reports that a “new, younger, more diverse group of consumers” are involved in higher risk investments, partly due to the new wave of investment apps which make it easier to trade foreign exchange, cryptocurrencies and shares.

The FCA is concerned that many of these investors are being driven by the ‘thrill’ of buying and selling assets, and the status that comes from a sense of ownership in the companies they invest in - rather than focusing on longer-term goals.

Many are taking investment tips and advice from YouTube and social media, which can create the perception of a ‘buzz’ around a topic or investment type -- such as cryptocurrency, and stocks like Tesla.

Sheldon Mills, Executive Director, Consumer and Competition at the FCA, says:

‘Much of the consumer investments market meets consumers’ needs. But we are worried that some investors are being tempted - often through online adverts or high-pressure sales tactics - into buying higher-risk products that are very unlikely to be suitable for them.

The FCA commissioned a survey of 517 ‘self-directed’ investors between 18th August 2020 – 20th January 2021.

The report (online here) found that nearly two thirds (59%) thought that a significant investment loss would have “a fundamental impact” on their current or future lifestyle.

But, only two in five (41%) believing that losing some of the money they invest is a genuine risk..... (which more experienced investors, who’d seen the ups and downs of the markets, know to their cost)

Updated

The weaker pound is propping up the FTSE 100 index, which is currently down just 0.2% at 6713 points.

But travel firms and oil majors are sharply lower, as Sophie Griffiths, market analyst at OANDA says:

Oil majors and airlines are among the steepest decliners as the likes of BP trace oil prices lower, while investors ditch airlines following the government’s latest travel restrictions.

With no end in sight to the “illegal” holiday restriction, it’s difficult to be bullish on airlines.

Travel shares still down, as UK foreign holiday ban weighs

Back in the City, travel shares are still sharply lower.

Jet engine manufacturer and servicer Rolls-Royce (-3.9%) and airline group IAG (-3.3%) are still the top fallers on the FTSE 100 index, along with oil major BP (-3.5%).

The news that Norway will block Rolls-Royce from selling a Norwegian maritime engine maker to a Russian company on national security grounds is also weighing on the UK manufacturer.

Among smaller companies, holiday operator TUI (-5.7%) and cruise firm Carnival (-4%) are also dropping, along with Upper Crust food outlet operator SSP (-6%).

New UK government reglations which introduce a £5,000 fine for going abroad on holiday are hitting the sector, alongside concerns that Europe’s third wave of Covid-19 will disrupt summer travel plans.

The latest UK regulations would impose a ban on international travel “without a reasonable excuse”, such as work, study, elite sports, medical reasons, caring for a vulnerable person or the wedding of a close family member.

The changes mean that those who travel abroad in order to go on holiday could risk a £5,000 fine.

This technically extends the ban on holidays until the end of June, although health secretary Matt Hancock has suggested it could be lifted earlier.

Hancock told Sky News:

“The earliest date by which we will allow for international travel ... is 17 May. That has not changed.”

default

UK factory outlook improves as order books hit two-year high

Order books at UK factories have swelled to their highest levels in nearly two years, in a sign that Britain’s manufacturing sector is picking up.

The CBI’s industrial trends survey found that total order books ‘improved considerably on February’, rising to their strongest position since April 2019, and above the long-run average.

The balance of firms reporting higher output volumes over the last quarter also rose, to its highest level since April 2019.

Eight out of 17 sub-sectors reported an increase in output in the three months to March; growth in the electronic engineering and plastic products was offset by declines in paper, printing & media and aerospace.

The survey also found that manufacturers expect output to pick up rapidly over the next three months, with expectations at their strongest since August 2017.

But... manufacturers also expect to raise prices as they grapple with increased costs; with expectations of output price growth reaching their highest since February 2019.

Anna Leach, CBI Deputy Chief Economist, said:

“It’s great to see the mood lift among manufacturers, buoyed by a jump in order books. But firms continue to grapple with higher freight costs as well as raw material shortages. Consequently, manufacturers anticipate prices to grow at a quick pace next quarter.

Meanwhile, risks to growth in European markets are elevated given the slow pace of vaccine roll-out and the likelihood of further lockdowns.

The CBI have tweeted the details too:

After a rotten year, cinema chain Cineworld is hoping that Godzilla and King Kong can lure customers back to its screens.

Cineworld, the world’s second-largest cinema operator, will reopen its screens in the US next month to coincide with the new film releases Godzilla vs Kong and Mortal Kombat, and has struck an exclusivity agreement with Warner Bros.

Cineworld, whose cinemas have been shut for the past six months because of the Covid-19 pandemic, said some of its 536 Regal theatres in the US would open on Good Friday for Godzilla vs Kong, the fourth film in Legendary Entertainment’s MonsterVerse. The remainder will reopen with Mortal Kombat on 16 April....

Pound falls amid vaccine tensions

Sterling is also down this morning.

It has dropped by a cent against the US dollar, to a six-week low of $1.376.

That takes the pound further away from the three year highs seen in February, when optimism about this year’s economic recovery was boosting the currency.

Against the euro, the pound is down 0.3% at €1.157.

Neil Wilson of Markets.com says investors are more risk-averse today.

Looks to be a pretty soggy morning for risk as sterling slipped to its weakest since the start of February, whilst the dollar is bid, shares slipped, oil fell and bond yields retreated ahead of the Congressional testimony of Fed chair Jay Powell and Treasury Secretary Janet Yellen.

We kind of know where the Fed is at in terms of yields, inflation and accommodation. We will want to hear a lot more about what Yellen says on additional stimulus, with Biden’s mooted $3tn plan in the offing.

The pound’s rally earlier this year was driven, in part, by the sucess of the Covid-19 vaccination programme, so the row over access to the Oxford/AstraZeneca vaccine could drag sterling lower.

Reuters explains:

“One of the reasons why sterling has strengthened this year is the successful vaccine rollout but the UK relies on imported vaccines,” said Lars Sparresø Merklin, senior analyst at Danske Bank.

“There are growing tensions between the UK and the EU, with more and more EU countries considering backing a vaccine export ban to the UK, which may delay the UK’s vaccination plan. We do not think the EU will implement an export ban (because it may turn out to hit themselves as well) but it is a topic to watch.”

Updated

Oil selloff intensifies

The oil price has now fallen over 3%, extending its earlier losses, amid worries that fresh Covid-19 restrictions in Europe will hit demand.

Brent cude is now down over $2 per barrel, at $62.40, while US crude has dropped back below $60 per barrel.

Naeem Aslam of AVA Trade explains:

Investors are concerned that oil demand is going to face a difficult time in the coming days because of the rollback of the coronavirus measures in a number of European countries.

Both Brent and Crude oil have seen over a 6% drop last week--the worst weekly drop for oil prices for this year. Oil producers are still optimistic as they believe demand recovery is taking place, but it will take some time.

Volvo shares fall 7% after chip shortage warning

A warning from Swedish truckmaker Volvo that the global shortage of semiconductors will hit its production is weighing on the auto sector today.

Volvo reported last night that it will introduce “stop days” across its global truck manufacturing operations, as it is struggling to obtain chips.

In a statement last night, Volvo said the global shortage of semiconductors will have a substantial impact on its production in the second quarter of this year.

It explained:

In the beginning of the quarter, the Group will implement stop days across its global truck manufacturing operations. In total, these are currently estimated to between two and four weeks depending on production site.

In addition, disturbances are also expected to impact the Group’s other business areas.

Visibility into the global supply chain of semiconductors as well as other components is currently very low and the uncertainty about the development is high.

The disturbances are expected to have a negative impact on earnings and cash flow.

Shares in Volvo have fallen 7%. Other European carmarkers are down too, with Volkswagen (-2.8%) and Daimler (-2.5%) leading the fallers on Germany’s DAX index today.

Manufacturers have been warning for weeks that semiconductors were in short supply due to a surge in demand, as the global economy recovers from the pandemic.

This means consumers face price rises and shortages of products, analysts say, with TVs, mobile phones, PCs and games consoles affected as well as cars.

Turkey's stock market falls again

Over in Istanbul, stocks are falling for the second day after the shock dismissal of central bank governor Naci Ağbal over the weekend.

The benchmark BIST 100 index slumped by 5% earlier today, and is currently down around 2.5% in volatile trading. That follows a tumble of around 9.8% on Monday -- the worst day since 2013.

Financial stocks are leading the fallers, with property and healthcare companies also hit, although consumer stocks are faring better.

Bloomberg reports that market-wide circuit breakers were triggered for a second day following the dismissal of Ağbal, whose recent interest rate rises had reassured investors.

President Recep Tayyip Erdogan’s ouster of Naci Agbal prompted speculation the monetary authority will break with his hawkish policies, sparking a slump in the lira and sending 10-year bond yields higher by more than 4 percentage points.

Foreign investors have a big presence in Turkey’s banking industry and the nation’s lenders have led the equity declines.

The Turkish lira is recovering a little after yesterday’s 8% slump, up around 1% at 7.7 to the US dollar.

The lira plunged 15% at one stage on Monday, amid predictions that Ağbal’s replacement, Şahap Kavcıoğlu, could cut interest rates from their current level of 19%.

Reuters reports that confusion and uncertainty over Turkey’s future gripped the markets again today:

Opposition politicians seized on what they called a dangerous and baffling move by the president to oust a bank governor, Naci Agbal, who had gained market credibility as an inflation-fighter in less than five months on the job.

“The ridiculous steps you take, the unqualified people you appoint are not enough,” Iyi Party chairwoman Meral Aksener said in parliament. “Every error you insist on carries us deeper into trouble ... We are on the verge of a balance of payment crisis.”

Updated

Here’s more reaction to the UK labour market report:

UK unemployment falls: What the experts say

Economists say the drop in Britain’s unemployment rate shows that the furlough scheme is protecting jobs... but there could still be more job losses ahead.

Ruth Gregory, senior UK economist at Capital Economics:

The drop in the unemployment rate from 5.1% in December to 5.0% in January highlights once again the extent to which the government’s job furlough scheme has protected jobs during the pandemic.

We still expect the unemployment rate to rise further to a peak of 6.0% by early 2022, but that would be a much better result than most feared only a few months ago.

Jai Malhi, global market strategist at J.P. Morgan Asset Management:

“Today’s strong labour market report has shone a light on how important the Chancellor’s furlough scheme has been at preventing job losses and keeping the UK on the road to recovery.

With the furlough scheme extended until the end of September, the chances that the unemployment rate rises to levels last seen in the financial crisis or even reaching the OBR’s forecast of 6.5% seems an unlikely destination.

“The Chancellor will now be hoping the vaccine proves to be the vehicle that takes us across the bridge that he’s helped to build, to the other side of the virus, and that the strength in jobs leads to a speedy rebound in economic activity in the second half of the year.”

Debapratim De, senior economist at Deloitte:

“With payrolls up for the third consecutive month in February, the furlough scheme continues to cushion the blow to the labour market from the current national lockdown.

We expect unemployment to remain somewhat steady until summer, followed by a gradual rise over the third quarter as employer contributions towards furlough pay begin to pick up in July.”

UK unemployment falls to 5%

Unemployment in the UK has fallen for the first time since the coronavirus pandemic began despite the toughest lockdown measures since the first wave spread a year ago, according to official figures.

The Office for National Statistics said the unemployment rate fell back slightly to 5% in the three months to January, representing 1.7 million people – down from 5.1% in the three months to December.

City economists had forecast a rise in the jobless rate to 5.2%. The government’s furlough scheme continues to support the jobs market, with nearly 5 million people still on the emergency wage scheme.

The latest snapshot showed a 68,000 increase in the number of workers on company payrolls in February, by compared with January, as the roadmap out of lockdown restrictions boosted prospects. It was the third consecutive monthly increase.

However, the number of people on payroll has plunged by 693,000 since the start of the pandemic, with younger workers under the age of 25 accounting for 60% of the jobs lost since February 2020. More than half of the fall was in hospitality, while almost a third was in London.

The unemployment rate remains 1.1 percentage points higher than a year ago before the pandemic struck. Figures compiled by the ONS also showed the number of non-UK born workers in the final quarter of 2020 was half a million lower than a year ago.

Here’s the full story:

All Europe’s stock markets are in retreat this morning.

Germany’s DAX index is leading the selloff, down 0.8%, after chancellor Angela Merkel extended lockdown restrictions and warned that the country in “in a new pandemic”.

The broader Stoxx 600 index is down 0.5%, away from the one-year highs seen last week.

It’s a similar picture on the FTSE 250 index of smaller, more UK-focused companies.

SSP Group, which runs Caffè Ritazza and Upper Crust outlets at airports and railway stations across the UK, has dropped 5%, while cruise operator Carnival are down 3%.

Package holidaymaker TUI and budget airline easyJet are both down 2.6%..... as are WH Smiths, which operates shops at transport hubs as well as the high street.

FTSE 100 opens lower

Travel and hospitality stocks are dragging the London stock market down, as trading begins.

British Airways parent company, IAG, has fallen 2.3%, as hopes of summer holiday getaways are hit. Hotel groups Intercontinental (-1.4%) and Whitbread (-1.3%) and luxury goods maker Burberry (-1.9%) are also down.

Oil giant BP has dropped 2%, following the slide in crude prices this morning.

Britain’s FTSE 100 index is 40 points lower at 6686, a drop of 0.6%.

Here’s a round-up of the latest Covid-19 restrictions in Europe:

Oil price hit by European lockdowns

The oil prices has fallen over 1% today amid concerns that the latest pandemic curbs and slow vaccine rollouts in Europe will hit the economic recovery.

Brent crude is down 1.1% to $63.91 per barrel, extending its recent losses, while US crude is back at $60.90.

Brent hit over $70 per barrel early this month, fuelled by supply curbs and hopes that the US stimulus package would drive demand.

But it has since weakened, amid the row over distribution of AstraZeneca’s vaccine, the temporary suspensions of jabs in Europe, and the rise in Covid-19 cases there.

Jeffrey Halley, senior market analyst at OANDA, explains:

The vaccine spat is negative for European and UK asset markets this week.

Europe is also contending with spiking Covid-19 cases and reimposing or extending lockdowns across major European economies. That has been felt most keenly in oil markets, with reassessments of future consumption taking place.

The spike in Covid-19 cases in India, the world’s third-largest oil importer, threatens to deepen that gloom. In Europe’s case, though, its recovery is now inevitably delayed and will be a headwind for the Bloc’s markets this week.

China's stock markets drops

China’s stock markets fell today amid worries over the sanctions imposed by the UK, Europe, US and Canada, and concerns that rising Covid-19 cases could hit the global recovery.

The benchmark CSI 300 index fell around 1%, back towards its lowest levels of 2021 -- and sharply away from the 13-year high seen in January.

Hong Kong’s Hang Seng index was worse hit, down 1.4%, while South Korea’s KOSPI has lost 1%.

Ipek Ozkardeskaya, senior analyst at Swissquote, says rising global diplomatic tensions and escalating Covid cases are weighing on investor appetite.

Market sentiment is mixed on the back of rising Covid cases despite vaccinations and escalating tensions between China and the West.

The major US indices kicked off the week on a positive footing, but Asian indices didn’t follow up on the New York session gains. Most Asian indices traded in the red. Chinese indices led losses on the back of reviving diplomatic tensions after the US, the UK, Europe and Canada imposed sanctions on Beijing over human right abuses in Xinjiang. The latter will further weigh on fragile US-China trade relations and add fuel to the global trade war.

Rising tensions between China and Western countries are also weighing on the markets today.

Last night Britain, the EU, the US and Canada imposed parallel sanctions on senior Chinese officials involved in the mass internment of Uighur Muslims in Xinjiang province.

The sanctions will be imposed immediately and include travel bans and asset freezes on four officials -- a co-ordinated move that sparked an immediate retaliation from Beijing.

Our diplomatic editor Patrick Wintour explains:

The move..marked the first time in three decades that the UK or the EU had punished China for human rights abuses, and both will now be working hard to contain the potential political and economic fallout. China hit back immediately, blacklisting MEPs, European diplomats and thinktanks.

The US and Canada also imposed sanctions on several senior Chinese officials as part of the coordinated pressure campaign.

The UK foreign secretary, Dominic Raab, said China’s treatment of the Uighur minority was “the largest mass detention of an ethnic and religious group since the second world war”. Evidence of repression in Xinjiang “is clear as it is sobering”, he said.

Introduction: European Covid-19 wave weighs on markets

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

European markets are heading for a lower open today as anxiety over a third wave of Covid-19 rises.

Overnight, Germany announced it will extending its lockdown over the Easter period in an attempt to slow the pandemic.

Chanceller Angela Merkel warned that the country was in a “very serious” situation and was racing to get vaccinations done.

Under the new restrictions, Social gatherings would be limited over Easter, with 1 - 5 April designated “quiet days” when no more than five adults from two households will be able to meet at home at once.

Merkel said at a news conference on Monday night:

“We are now basically in a new pandemic. The British mutation has become dominant.”

Yesterday, UK prime minister Boris Johnson warned that a third wave of coronavirus elsewhere in Europe would inevitably affect the UK.

People in this country should be under no illusions that previous experience has taught us that when a wave hits our friends, it washes up on our shores as well. I expect that we will feel those effects in due course.

Travel and hospitality stocks fell yesterday, as hopes of a summer holiday getaway took a knock.

The main European bourses are expected to open lower, with the UK’s FTSE 100 expected to drop 0.5%.

Fresh lockdown restrictions would be a blow to hopes of a strong economic recovery this year, as Stephen Innes of AXI Trader points out.

Germany is trying to slow the third wave by locking down over Easter. Although the major economies of the Eurozone are targeting a full vaccine roll-out by August, where they might still succeed, in the interim, a sustained recovery in consumer spending relative to the US and UK looks set to disappoint.

Oil is struggling in Asia as lockdown concerns rear their ugly head again. German Chancellor Merkel has proposed extending and slightly tightening the existing Covid restriction for another 4 weeks. Dr Fauci is warning of a possible Covid surge in the US following the rise in Europe. And the latter is likely sounding New York City reopening alarm bells with Mayor De Blasio urging a pause in the reopening narrative.

The agenda

  • 7am GMT: UK unemployment report
  • 11am GMT: Industrial trends survey of UK factories in March
  • 11.50am GMT: Bank of England governor Andrew Bailey at the Economist Sustainability week, on “Unlocking investment for net zero”
  • 2pm GMT: US new home sales report

Updated

 

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