Julia Kollewe 

Ofgem to review response to Storm Arwen, removes compensation cap for power-cut homes – as it happened

Ofgem says 10,500 homes still without power after Storm Arwen, as markets continue their rollercoaster ride owing to Omicron
  
  

Members of the armed forces carry customer care packs, which contain hot water bottles, hats, blankets, gloves and thermal socks, in St John's Chapel, Weardale, County Durham, to hand to residents who have been without power for a week since Storm Arwen caused
Members of the armed forces carry customer care packs, which contain hot water bottles, hats, blankets, gloves and thermal socks, in St John's Chapel, Weardale, County Durham, to hand to residents who have been without power for a week since Storm Arwen caused "catastrophic damage" to the electricity network Photograph: Danny Lawson/PA

Closing summary

Britain’s energy regulator has said today that is launching a review into the power networks’ response to Storm Arwen which left tens of thousands of people without power last week when strong winds swept across many parts of the country.

Ofgem said 10,500 homes are still without power in parts of Scotland and the north of England after gusts of up to 100 miles per hour destroyed power lines. It has lifted the cap on compensation, which means households can calaim up to £140 a day for every day they are without power.

The US economy added 210,000 jobs in November, less than half the jobs growth that economists had expected, while the unemployment rate fell more than expected to 4.2% from 4.6%.

The Bank of England could benefit from waiting to see the impact of the Omicron coronavirus variant on the UK economy before raising interest rates, one of its policymakers has said.

Michael Saunders, who voted last month to raise interest rates, said he believed there could be advantages from taking no action when the central bank meets to set borrowing costs in just under two weeks’ time.

Our other main stories:

Thank you for reading. Have a great weekend! We’ll be back next week. Bye, JK

The US economy added 210,000 jobs in November, less than half the jobs growth that economists had expected in a report that was compiled before the discovery of the Omicron coronavirus variant that now threatens to derail the economic recovery from the pandemic, reports Dominic Rushe in the US.

The unemployment rate dropped to 4.2% as employers added jobs in business services, transportation, warehousing and construction. The overall gain was less than half the 500,000 plus jobs that economists had expected to be added over the month.

November’s jobs report comes after the US added 531,000 in October, a sharp increase after a slowdown in hiring triggered by the spread of the Delta coronavirus variant over the summer.

It remains to be seen whether the Omicron variant will have a similar damping effect on the jobs market. The Organisation for Economic Co-operation and Development (OECD) thinktank warned this week that Omicron and rising inflation could prove significant threats to the global economy.

Ofgem said 10,500 homes are still without power in parts of Scotland and the north of England after gusts of up to 100 miles per hour destroyed power lines and freezing conditions caused faults.

Ofgem chief executive Jonathan Brearley said:

The absolute priority remains getting people back on power as quickly as possible, but for those who have not had power because of Storm Arwen, there are ways for customers to claim compensation by contacting their network company.

The Energy Network Association, which represents the UK’s electricity and gas network companies, said that by Wednesday, 97% of affected homes had been reconnected.

Mark Brown, our north of England correspondent, has spoken to people who have been affected by Storm Arwen.

“Anyone who thinks there is romanticism to reading by candlelight needs their head examined,” said 69-year-old Fran Marshall as she braced herself for a sixth night without power. “There is no romance. None whatsoever. It has been freezing cold and it has been miserable.”

Updated

Yesterday, 30,000 households were still without power, a week after Storm Arwen’s gusts of nearly 100mph hit parts of the UK. The energy companies have said they have reconnected about a million homes.

The army has been deployed to help residents in northern England and Scotland who have been without power since the storm caused “catastrophic damage” to the electricity network.

Durham county council said about 100 forces staff would be based in Weardale to help local people.

Updated

Consumer group Which? has spelled out customers’ rights here.

Typically your electricity distribution company has 24 hours to restore your electricity supply if it fails due to a storm. Although after a severe storm like Arwen this deadline can be increased to 48 hours. If power isn’t restored by this deadline, £70 should be paid to customers, with a further £70 to be paid for each additional period of 12 hours in which supply is not restored, up to a cap of £700.

But, as just reported, Ofgem is lifting the cap on compensation. Hooray!

Ofgem to review power network response to Storm Arwen, removes compensation cap

Over here, Britain’s energy regulator has said today that is launching a review into the power networks’ response to Storm Arwen which left tens of thousands of people without power last week when strong winds swept across many parts of the country.

The review is aimed at offering better support to customers in case of extreme weather in the future, Ofgem said, adding that the £700 cap on compensation for customers had been removed. Customers can now receive up to £140 a day, for every day they are without power.

Updated

US economy adds 210,000 jobs, less than expected

NEWSFLASH: The US economy added 210,000 jobs in November, far less than the 550,000 expected, while October’s increase was revised higher to 546,000 from 531,000 and September was revised to 379,000 from 312,000, according to official data.

At the same time, the jobless rate fell more than expected, to 4.2% from October’s 4.6%, while economists had expected a dip to 4.5%.

In just a few minutes, we’ll be getting the closely-watched non-farm payrolls data from the US. They are expected to show that the economy added 550,000 jobs in November, compared with 531,000 in October. A strong number would bolster the case for faster tapering of the US Federal Reserve’s bond-buying programme, and earlier interest rate hikes.

The unemployment rate is forecast to have dipped to 4.5% from 4.6%, while wage growth will also be watched closely.

Updated

Bank of England policymaker Michael Saunders sums up the main points of his speech thus:

  • At the November MPC meeting I voted to tighten monetary policy by curtailing the asset purchase program and raising Bank Rate to 0.25%. If the economy develops as I expect, then some additional tightening, on top of such a move, probably will be needed fairly soon.
  • But policy is not on auto pilot. The pace, and scale, of any monetary policy changes will depend on economic developments and the outlook. In particular, at the December meeting, a key consideration for me will be the possible economic effects of the new Omicron Covid variant, and the potential costs and benefits of waiting to see more data on this before – if necessary – adjusting policy.
  • It is likely that any rise in Bank Rate will be limited given that the neutral level of interest rates remains low. Provided we do not delay too long, it should be a case of easing off the accelerator rather than applying the brakes.

Europe’s main stock markets are all trading higher again, although gains are pretty small, as this week’s rollercoaster ride continues in response to the new Omicron variant and hawkish comments from the US Federal Reserve.

  • UK’s FTSE 100 index up 29 points, or 0.4%, at 7,158
  • Germany’s Dax up 32 points, or 0.2%, at 15,295
  • France’s CAC flat at 6,797
  • Italy’s FTSE MiB up 95 points, or 0.37%, at 26,100

The government failed to guard properly against fraud in its £47bn Covid emergency lending programme for small businesses, opening itself up to billions of pounds of losses, the UK’s public spending watchdog has said.

The bounce-back loan scheme launched in May 2020 and did not include credit checks or fully verify the identity of small businesses applying for loans, the National Audit Office, which scrutinises public-sector spending, said.

“Government prioritised getting bounce-back loans to small businesses quickly but failed to put adequate fraud prevention measures in place,” said Gareth Davies, the NAO’s comptroller and auditor general. “One impact of these decisions is apparent in the high levels of estimated fraud.”

‘The fruit bowl is emptier and petrol is shocking’: one family’s experience of soaring cost of living – from our Money editor Hilary Osborne.

From running a car, to food bills and pet products, everything has become more expensive and UK household expenditure is stacking up.

Here is our full story on Nationwide appointing TSB boss Debbie Crosbie as the first female chief executive in the building society’s 175-year history.

The 51-year-old, who has led the turnaround of the troubled bank TSB as its chief executive since May 2019, will take over from Joe Garner, who has run Nationwide for the last six years.

And our full story on the Chinese ride-hailing firm Didi planning to move its listing from the New York stock exchange to Hong Kong, as Beijing cracks down on the country’s biggest technology companies.

Shell to go ahead with seismic tests in whale breeding grounds

Shell is dominating the headlines today after its decision to pull out of the controversial Cambo oilfield off the Shetland Islands.

Our energy correspondent Jillian Ambrose has another story on the company.

Royal Dutch Shell will move ahead with seismic tests to explore for oil in vital whale breeding grounds along South Africa’s eastern coastline after a court dismissed an 11th-hour legal challenge by environmental groups, she writes.

The judgment, by a South African high court, allows Shell to begin firing within days extremely loud sound waves through the relatively untouched marine environment of the Wild Coast, which is home to whales, dolphins and seals.

Campaigners filed an urgent legal challenge against the seismic survey, which was scheduled to begin on Wednesday, but the last-minute interdict was dismissed by a judge on Friday morning.

BioNTech CEO: can adapt jab quickly for Omicron

Germany’s BioNTech should be able to adapt its coronavirus vaccine relatively quickly in response to the emergence of the Omicron variant, its chief executive Ugur Sahin told the Reuters Next conference today.

BioNTech and Pfizer Inc together produced one of the first vaccines against Covid-19 and Sahin also reiterated that vaccines should continue to provide protection against severe disease, despite mutations.

Sahin said:

This variant might be able to infect vaccinated people. We anticipate that infected people who have been vaccinated will still be protected against severe disease.

The BioNTech chief also said that mutations in the virus meant it was more likely that annual jabs would become likely, as is the case with seasonal flu and that a new vaccine would be needed against Covid-19, although it was not yet clear when it would be required.

Much remains unknown about Omicron, which was first detected in southern Africa last month and has been spotted in at least two dozen countries, just as parts of Europe were already grappling with a wave of infections of the Delta variant.

We expect this variant might be able to infect vaccinated people and this variant will most likely be able to infect people with high exposure. That is one of the things that is now getting more and more clear. It is not clear whether this variant produces more severe disease,

Sahin said. He said the new variant had emerged sooner than he had expected, adding that he had anticipated one some time in 2022.

BOE policymaker Saunders: best to wait for Omicron data before rate decision

Bank of England policymaker Michael Saunders, who voted for an interest rate hike last month, said today that he wanted more information about the impact of the new Omicron strain on public health and the economy, before deciding how to vote this month.

He said in a speech:

At present, given the new omicron Covid variant has only been detected quite recently, there could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy.

But he also warned against the risks of waiting too long before raising borrowing costs, because the record low in the Bank’s main interest rate could cause the labour market to tighten further and push up long-term inflation expectations which are already rising.

This could require a more abrupt and painful policy tightening later. For me, the balance between these considerations is likely to be a key factor at the December meeting.

Saunders has long advocated higher borrowing costs, and was one of two members of the Bank’s nine-strong monetary policy committee who voted to raise Bank rate to 0.25% from its all-time low of 0.1%.

You can read his speech in full here.

Retail sales increased by 0.2% in the euro area and by 0.3% in the EU in October, compared with September, according to Eurostat, the statistical office of the European Union.

Petrol and diesel sales were strong while food, drink and tobacco sales fell.

Yesterday we heard from Germany, where retail sales dropped 0.3% in October.

Updated

On the currency markets, sterling is down 0.2% against the dollar at $1.3279, and down by a similar amount against the euro at €1.1741.

Lawrence Kaplin, senior dealer at the international business payments firm Equals Money, says:

Sterling continues to be rangebound as events elsewhere dominate markets. UK/EU Brexit trade talks are set to continue today but with both sides remaining steadfast in their respective positions the prospects for a post Brexit trade deal hang in the balance.

Ahead of the talks, Irish foreign affairs minister, Simon Coveney, poured cold water over hopes of a full deal being agreed before Christmas, and with the UK continuing to threaten invoking Article 16, and French PM Macron calling Boris “a clown” and “a knucklehead” the mood music going into the talks is hardly conducive to a deal being reached.

With no major UK economic data slated for today, the pound will continue to trade in line with broader market sentiment.

Turkish inflation jumps to three-year high of 21%

Turkey’s annual inflation jumped more than expected to a three-year high of 21.31% in November, official data showed on Friday, laying bare the risks of recent aggressive rate cuts that prompted a historic slide in the lira.

Under pressure from President Tayyip Erdogan, the central bank has slashed the policy interest rate to 15% from 19% since September, leaving Turkey’s real yields deeply negative, a red flag for investors and savers.

The consumer price index rose 3.5% from the previous month, the Turkish Statistical Institute said. Producer prices rose 10% from the previous month and 56.6% on the year. This suggested the lira’s depreciation is stoking import prices and will feed through to overall inflation in the coming months, with economists forecasting annual inflation to approach 30%.

European stock markets dip into the red

Europe’s main indices have turned negative again, wile the FTSE 100 index in London is flat at 7,129.

  • Germany’s Dax down 0.1% at 15,247
  • France’s CAC down 0.1% at 6,789
  • Italy’s FTSE MiB down 0.15% at 25,967

Nationwide appoints Debbie Crosbie as first female CEO

Nationwide Building Society has appointed the TSB boss Debbie Crosbie as chief executive, the building society’s first female boss in its 175-year-history.

Crosbie, 51, will take up her new position in the second half of next year and Joe Garner is set to remain as CEO in the meantime. It is an interesting time for the mortgage lender, Britain’s biggest mutual, with UK interest rates expected to go up.

There aren’t many female CEOs in UK banking. Crosbie is only the second woman to lead a major lender, alongside Alison Rose who heads up NatWest, formerly known as Royal Bank of Scotland.

Goodbody analyst John Cronin says Crosbie is an “excellent choice” for Nationwide while it is disappointing for TSB to see her go.

Crosbie is currently CEO of TSB and has delivered a remarkable turnaround in financial performance at the lender on the back of relentless restructuring efforts. We think she is an excellent choice for the Nationwide CEO seat, and we wish her well in the new role.

TSB has appointed Robin Bulloch, its chief customer officer and a former MD at Lloyds, as interim CEO, another strong appointment, he says.

In the UK, government departments are reportedly cancelling Christmas parties, ignoring calls by the prime minister to go ahead with them.

The Times reports “Omi-shambles in Whitehall” as multiple government departments call off festive celebrations.

The education department has already suspended plans for its annual talent show, says the newspaper, and the business department has decided against putting on a staff Christmas party.

However, Oliver Dowden, who co-chairs the Conservative party, says he does not plan to cancel the Tories’ Christmas party.

You can read more on our Covid-19 live blog here.

WHO: jabs, not travel curbs, key to battling Omicron

On the Covid-19 front, the World Health Organization has urged countries to boost healthcare capacity and vaccinate their populations to fight a surge in inflections driven by the new Omicron variant, saying travel restrictions could buy time but weren’t really the answer.

Takeshi Kasai, the WHO’s western Pacific director, told a media briefing:

Border controls can buy time but every country and every community must prepare for new surges in cases.

People should not only rely on border measures. What is most important is to prepare for these variants with potential high transmissibility. So far the information available suggests we don’t have to change our approach.

Aside from vaccinations, the WHO recommended preventative measures such as mask wearing and social distancing.

Updated

The composite survey for the UK, which comprises both services and manufacturing, dipped to 57.6 last month from 57.8 in October, but remained well above the 50 no change mark for a ninth month.

Service sector growth (index at 58.5) remained much stronger than the recovery in manufacturing production (52.7), with the latter once again held back by shortages of raw materials and electronics components.

UK service sector boosted by export sales

The UK service sector recorded strong growth in November, helped by the fastest rise in new business intakes in five months. Export sales were key, with looser travel rules contributing to the steepest upturn in new business from abroad since March 2017.

The headline business activity index was 58.5 last month, a tad higher than the flash rating of 58.6 and down only slightly slightly from October’s three-month high of 59.1.

The latest survey from IHS Markit and CIPS highlights another round of rapid cost inflation, driven by higher fuel prices, wages and utility bills. Prices charged by service providers also increased at the fastest rate since the survey began in July 1996.

Eurozone growth picks up in November; Germany weak

  • Final Eurozone Composite Output Index: 55.4 (Flash: 55.8, Oct Final: 54.2)
  • Final Eurozone Services Business Activity Index: 55.9 (Flash: 56.6, Oct Final: 54.6)

The final readings for the eurozone as a whole show that economic growth in the private sector re-accelerated last month. IHS Markit, which compiles the surveys, says that rate of expansion was sold and remained above its historical average, mainly reflecting resilience in the service sector while manufacturers were held back by severe supply shortages.

However, the strongest rates of growth were seen away from the two largest euro area economies monitored by the survey, with Germany in particular recording a weak rate of growth in November. And there was a further intensification of price pressures across the bloc, with rates of output charge and input cost inflation both accelerating to fresh highs.

Countries ranked by Composite PMI, which comprises manufacturing and services:

  • Ireland 59.3, 7-month low
  • Spain 58.3, 3-month high
  • Italy 57.6, 3-month high
  • France 56.1 (flash: 56.3), 4-month high
  • Germany 52.2 (flash: 52.8), 2-month high

In Germany, Europe’s biggest economy, the picture is more subdued. Services firms recorded another moderate rise in business activity in November following a similar result in October, with the sector’s growth having slowed notably since the third quarter.

Near-term prospects also dimmed, as a fourth wave of Covid infections saw inflows of new business fall whilst also dampening business confidence.

The headline business activity index edged up to 52.7 from 52.4 in October, a six-month low. It was the second-lowest reading since services returned to growth in May following the third wave of infections. Hotels and restaurants are particularly weak.

Phil Smith, economics associate director at IHS Markit, says:

Germany’s service sector was able to eke out further modest growth in November, but the survey’s forward-looking indicators gave reason for concern.

Given what we’ve seen in the survey data so far and the potential new risks posed by the Omicron variant, the economy is, at best, set for a notable slowdown in growth in the final quarter.

The survey data showed a further intensification of inflationary pressures in November driven by a surge in energy costs, with service providers joining manufacturers in recording an unprecedented rise in prices. This was despite signs of inflation already easing across consumer-facing sectors.

Another strong round of hiring across the service sector in November maintained the labour market’s solid pace of recovery. However, with recruitment tending to lag movements in activity and underlying demand, we can reasonably expect the pace of job creation to slow in line with weaker economic growth and lower business confidence.

Over in France, services activity accelerated to a five-month high in November, with the PMI headline activity reading at 57.4 versus 56.6 in October.

Businesses responded to higher cost burdens by raising their own selling prices in November. The rate of increase accelerated and was the strongest since June 2011.

Joe Hayes, senior economist at IHS Markit, which compiles the survey, says:

To be clear though, the service sector is what is keeping the economy afloat at the moment as France’s manufacturing sector is struggling with massive supplyrelated constraints.

This puts the wider economy in a precarious position, because as we’ve seen on other parts of Europe, the fate of the service sector is still a function of the trajectory of Covid-19 cases. Policymakers in France have so far talked down the potential for the most stringent of restrictions being implemented, which bodes well for economic activity through the next couple of quarters, but as we’ve seen before, this can change rapidly.

That said, if France manages the current wave of infections, this should allow robust growth in the service sector to continue.

Updated

Similar to Spain, Italy’s service industries enjoyed faster expansion in November. The PMI business activity index rose to 55.9 from 52.4 in October to signal a seventh monthly uplift in services and the sharpest since August. Inflationary pressures grew with both cost burdens and firms’ average charge rising at the fastest rates on record.

Lewis Cooper, economist at IHS Markit, which compiles the survey, says:

Italy’s service sector recorded stronger growth during November, with both business activity and new work rising at their fastest rates since August amid reports of strong client demand. Subsequently, companies expanded their workforces further, with job creation the strongest for four months and solid.

Across the private sector as a whole, output expanded at the fastest pace for three months, with the quicker upturn in services activity met with a near record rate of increase in factory production.

This bodes well for the Italian economy as we enter the final month of 2021. Concerns around inflationary pressures, which intensified at an unprecedented pace amid supply issues and rising energy and transport costs, as well as the resurgence of Covid-19 cases did dampen business confidence to a ten-month low, but overall firms remain upbeat towards activity over the next 12 months.

The FTSE 100 index in London is on track for a weekly gain, boosted by oil stocks. BP and Royal Dutch Shell are 2% and 1.2% ahead respectively on the back of a jump in oil prices. Brent crude has gained 3.4%, or $2.34, to $72.01 a barrel while US light crude has risen 3.3%, or $2.16 a barrel, to $68.67 a barrel.

Insurance stocks Prudential and Legal & General have both gained more than 1% after the German insurance giant Allianz raised its targets for shareholder returns for 2022 to 2024.

Covid booster shots significantly strengthen immunity, trial finds

A UK trial of seven different vaccines – the first study of how well Covid booster jabs work – has shown that the Moderna and Pfizer/BioNTech shots are the most effective. They are the jabs being used as boosters in the UK.

Covid booster shots can dramatically strengthen the body’s immune defences, according to the study that raises hopes of preventing another wave of severe disease driven by the Omicron variant, writes our science editor Ian Sample.

In a study published in the Lancet, researchers on the UK-based Cov-Boost trial measured immune responses in nearly 3,000 people who received one of seven Covid-19 boosters or a control jab two to three months after their second dose of either AstraZeneca or Pfizer vaccine.

Those boosted with Pfizer after two doses of AstraZeneca had antibody levels a month later nearly 25 times higher than controls. When the Pfizer booster was given following two Pfizer shots, antibody levels rose more than eightfold.

The most potent booster in the study was a full dose of the Moderna vaccine, which raised antibody levels 32-fold in the AstraZeneca group and 11-fold in the Pfizer group. When Moderna is used in the UK booster programme, it is given at a half-dose.

While the findings show that both Pfizer and Moderna mRNA vaccines are highly effective boosters, scientists cautioned about comparing their performance as people started with different antibody levels. For example, antibody levels tend to remain high a few months after a Pfizer vaccination, so a booster would not be able to drive them much higher.

“These are remarkably effective immunological boosters, way above what is needed to prevent hospitalisation and death,” said Prof Saul Faust, the trial lead and director of the NIHR clinical research facility at University Hospital Southampton NHS Foundation Trust. While side-effects varied, most people who reported them had fatigue, headache or arm pain and the study found no safety concerns.

Updated

Growth in Spain’s service sector hit a three-month high in November, according to the latest PMI survey from IHS Markit, although it warned that this could be short-lived. Incoming new business rose sharply but price pressures also intensified, at the fastest rate in the 22-year-history of the survey.

The headline business activity index rose to 59.8 in November from 56.6 in October.

Paul Smith, economics director at IHS Markit, which compiles the survey, says:

Spain’s service sector enjoyed a stellar November, expanding sharply on the back of a positive evolution of demand and new business. This encouraged firms to take on additional staff at a firmer rate as they struggled to keep on top of workloads. “However, a number of downside risks to the outlook persist.

Cost inflation shows no sign of abating, and this is being passed on to clients wherever possible, whilst foreign demand growth remains weak. With concerns rising over new emerging lockdowns and restrictions due to Covid also reported, there is a feeling that the sector’s current rate of expansion will be hard to sustain in the coming months.

Didi to move listing from New York to Hong Kong

Chinese Uber rival Didi Chuxing is to move its listing from the New York Stock Exchange to Hong Kong, as Beijing continues its regulatory crackdown on the country’s biggest technology companies, reports my colleague Mark Sweney.

The company, which like other leading Chinese tech companies such as Jack Ma’s Alibaba, said it is to start “immediate” preparations to de-list in New York and prepare to go public in Hong Kong.

“After a careful study, the company will start delisting on the New York Stock Exchange immediately, and start preparations for listing in Hong Kong,” the company posted on its Weibo account on Friday, a Twitter-like service in China.

Didi made its $4.4bn flotation in New York in June, making it the biggest listing by a Chinese company in the US since Alibaba in 2014, only to see investors sharply sell-off shares days later as China’s internet regulator ordered its ride-hailing app to be taken off domestic app stores.

It was also banned from signing up new users, and subjected to a “cyber security review”, as Beijing flexed its muscle to curtail Didi’s international expansion plans. In August, Didi suspended plans to launch in Europe and the UK, where it had secured licences to operate in Manchester, Salford and Sheffield.

Updated

Richard Hunter, head of markets at the trading platform interactive investor, says:

Markets have regained some poise at the end of a difficult week which was marred by Omicron fears and an increasingly hawkish outlook from central banks.

Investors switched into optimistic mode following the earlier Federal Reserve suggestion that the end of the tapering programme and therefore the beginning of interest rate hikes could come earlier than expected next year. Alongside no immediate change to its supply plans at Opec, there is a growing feeling that future variants may not, after all, be enough to derail economic policy per se.

Even so, the volatility index remains elevated in anticipation of further details on the variant, while the oil price has continued to whipsaw on unclear demand in the coming months. Despite the latest bout of volatility, oil remains up by 37% in the year to date, although some way off its more recent highs.

The next indication on the strength of the US economy will come in the form on the non-farm payrolls figure later. After a stronger-than-expected reading of 531,000 jobs being added in October, the expectations for the November outturn is a figure of 550,000. As ever, a stronger reading would tend to add weight to any Federal Reserve decision to accelerate tapering, while a lower figure would once more muddy the waters.

Despite the volatility, the performance of the main indices remains in rude health, with the Dow Jones having added 13.2% in the year to date, the S&P500 21.9% and the Nasdaq 19.3%.

Asian markets were rather more subdued overnight, as the announcement that the ride-hailing company Didi would delist from New York reignited concerns on both the fractious relationship between the US and China, as well as the general spectre of tech regulation.

European stocks open higher

European stocks have followed Wall Street’s lead to trade higher at the open. The UK’s FTSE 100 index in London is up nearly 50 points, or 0.7%, at 7,178 while Germany’s Dax and France’s CAC have both added 1%, and Italy’s FTSE MiB and Spain’s Ibex are both 0.8% ahead in early trading.

$75bn takeover of chip designer Arm by rival Nvidia in jeopardy

Also overnight, the $75bn takeover of Cambridge-based chip designer Arm by its rival Nvidia is in jeopardy after US regulators followed the UK and Europe in moving to block “the largest semiconductor chip merger in history,” reports my colleague Mark Sweney.

The Federal Trade Commission has sued to stop the takeover of Arm, which has ballooned in value from $40bn to $75bn since the offer was made last September due to a stock market surge in the chip sector, as seemingly almost insurmountable opposition now mounts after regulator action in Europe and the UK.

“The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” said Holly Vedova, bureau of competition director at the FTC. “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”

Shell pulls out of controversial Cambo oilfield

In other big news overnight, Shell has pulled out of a controversial new oilfield off the Shetland Islands, plunging the future of oil exploration in the area into doubt.

Shell, which was planning to exploit the field along with the private equity-backed fossil fuel explorer Siccar Point, cited a weak economic case as its reason for deciding not to go ahead with the project, writes our economics correspondent Fiona Harvey.

“After comprehensive screening of the proposed Cambo development, we have concluded the economic case for investment in this project is not strong enough at this time, as well as having the potential for delays,” Shell said.

Updated

Ipek Ozkardeskaya, senior analyst at the Swiss banking group Swissquote, has also looked at the US jobs.

Today’s non-farm payrolls data is important, but it is not as important as when the Fed focused on improving the health of the US labour market. There is a chance that today’s data won’t matter much for the Fed expectations, unless we see a surprisingly weak number that the Fed could not ignore. But we also know that even with a weak number, the Fed can’t do much to improve the labour numbers, as it needs to deal with inflation; it has its hands tied.

So, the worst-case scenario for the market mood would be a meaningfully low non-farm payrolls number combined with hawkish Fed expectations. But that’s not the consensus. The expectation is that the US economy added 550K new nonfarm jobs in November, slightly more than last month’s 530K. It is also in line with the ADP figure printed on Wednesday, which was around 530K.

A strong read on the other hand should be perceived as good news for stock prices, given that whether we see a soft or a strong non-farm payrolls read, the Fed will need to pull back support in the coming months; a strong number would at least mean that the economy needs less help.

Introduction: Stocks rise ahead of US jobs data

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

Stock markets have been on a rollercoaster this week, as investors are trying to figure out what the new Covid variant Omicron means for the pandemic, and markets going forward.

US stocks rebounded on Wall Street yesterday on expectations that Omicron is more contagious but less deadly (after the WHO said early indications are most cases are mild), but volatility remains high. The Dow Jones closed 1.8% higher, the S&P 500 up 1.4% and the Nasdaq gaining 0.8%. Meanwhile Asian indices are mixed: Hong Kong’s Hang Seng is 0.4% lower while Japan’s Nikkei has gained 1% and the Shanghai composite index is also up nearly 1%.

European markets are set to open higher, and the pan-European Stoxx 600 is still on track for a modest weekly gain despite a rocky week.

Oil prices are climbing, extending yesterday’s gains after the Opec oil cartel and its allies stuck to plans to to pump more 400,000 more barrels of oil per day from January. In an unusual move, though, oil producers agreed to review supply ahead of the next scheduled meeting, thereby leaving the door open to putting the brakes on production should the Omicron variant lead to further restrictions on travel and trade.

Brent crude, the global benchmark, has added 2% or $1.39 to $71.06 a barrel, while US light crude is 2.1% ahead at $67.92 a barrel.

The latest Caixin PMI survey of the services sector in China showed a softening in growth last month, with the headline business activity index falling from 53.8 in October to 52.1 in November. This is the third month of expansion. Higher labour, raw material and energy costs drove a sharper rise in firms’ input costs to a six-month high, prompting them to raise their own prices.

The composite survey, which comprises manufacturing and services, dropped to 51.2 from 51.5, indicating a slight weakening in growth at Chinese companies.

We’ll be getting PMI readings for mainland Europe and the UK this morning, and economists are expecting modest improvements in Italy, France, and Germany PMIs to 54.5, 58.2 and 53.4 respectively, although the improvements could prove temporary, in light of the recent surge in Covid-19 infections and renewed restrictions across Europe, even before Omicron was identified. The UK services PMI is expected to come in at 58.6, and US services at 57.

Today’s highlight is the November US jobs data, particularly after Federal Reserve chair Jerome Powell’s surprise hawkish tilt earlier this week, which raised expectations that the Fed will scale back its economic stimulus programme more quickly. Economists are expecting 550,000 more jobs to have been added to the economy. The unemployment rate is expected to fall further to 4.5%. Wage growth will also be watched closely, with evidence from retailers and some other big US employers that they are having to pay up for staff.

Michael Hewson, chief market analyst at CMC Markets UK, has looked at this in detail.

The October payrolls report helped to reaffirm the Federal Reserve’s decision a few days before to set the ball rolling on tapering its $120bn a month asset purchase program. 531k new jobs were added to the US labour market in October, while we also saw a decent upgrade to September from 194k to 312k.

The unemployment rate fell to 4.6%, from 4.8% while the participation rate remained unchanged at 61.6%. By any measure the numbers were positive and with wages also rising, jobs growth is expected to accelerate as we head into year end, especially around the holiday period when hiring trends tend to pick up.

This is already being borne out in the continuing claims numbers which are now only 200k above where they were pre-pandemic.

With recent US economic data showing decent levels of resilience, the conversation around tapering has moved on to the speed and level of the withdrawal of stimulus... We also have several policymakers arguing the central bank needs to go faster, which means that today’s November payrolls report has the potential to move this discussion fast forward to when the Fed meets later this month, if we see a similarly strong jobs report today.

The Agenda

  • 8.15am GMT – 9am GMT: Markit Composite and services PMIs for November from Spain, Italy, France, Germany, eurozone
  • 8.30am GMT: ECB President Christine Lagarde speaks
  • 9.30am GMT: UK Markit/CIPS Composite and services PMIs for November
  • 10am GMT: Eurozone retail sales for October (forecast: 0.2%)
  • 11am GMT: Bank of England policymaker Michael Saunders speaks
  • 11am GMT: Ireland GDP for Q3
  • 1.30pm GMT: US Non-farm payrolls for November (forecast: 550,000)
  • 3pm GMT: US ISM Non-Manufacturing PMI for November
 

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