LIVE – Updated at 09:09
Rolling coverage of the latest economic and financial news, as aviation sector faces a “long-haul recovery”.
European stock markets have opened higher after a turbulent Monday.
The UK’s FTSE 100 has gained 0.45% to 7,477 points, towards last week’s 22-month highs.
The pan-European Stoxx 600 is 0.75% higher, recovering around half yesterday’s fall, with investors relieved that the New York stock market staged a late recovery last night.
Oil is also stronger, with Brent crude up 1% at $81.73 per barrel
Victoria Scholar, head of investment at interactive investor, says:
“As well as equities, oil is catching a bid on the back of firmer risk appetite after a challenging start to the year. WTI and Brent crude are both up by around 1% with the benchmarks trading around $80 a barrel. A softer US dollar is also buoying energy prices as the markets await a slew of Fed speakers this week.
Amid a backdrop of improving demand fundamentals and contained supply from OPEC, the near-term outlook continues to look optimistic. However the threat of further variants or more hawkish than expected tones from the Federal Reserve may limit potential upside.”
Shares in cybersecurity specialist Darktrace have surged by around a fifth this morning after it lifted its revenue and profit forecasts.
Darktrace, which uses artificial intelligence algorithms to spot and neutralise cyber-attacks on companies, says it’s seen significant growth in the first half of its financial year, with stronger than expected sales.
Customer numbers grew almost 40% year-on-year, to 6,531 — typically private sector firms keen to avoid losing precious data or facing extortion threats.
Cathy Graham, CFO of Darktrace, said:
In December, we delivered the first module of our new Prevent product line to early adopters. This is the next logical step in fulfilling our vision of creating a Continuous AI Loop, a virtuous circle that equips customers with a suite of technologies that strengthen and reinforce each other.
The power of our innovative underlying technology, Self-Learning AI, enables us to expand our ability to protect organisations from the cyber threats of today and tomorrow.”
Shares have popped 18% to 465p.
Darktrace’s floated on the stock market at the end of April at 250p per share, immediately surged 40%, and hit £10 in September. But it then fell back to 400p, as a lock-up on insiders selling shares ended, and analysts at Peel Hunt questioned its products’ usefulness.
Recruiter Robert Walters boosted by hiring pick-up
Recruitment firm Robert Walters has reported that business picked up at the end of last year, as firms looked to hire more staff.
Net fee income jumped by 33% year-on-year in the final quarter of 2021, including a “record December performance” (suggesting Omicron didn’t have an immediate impact on hiring).
Fee income in the UK rose by 7% with a shortage of candidates leading to “heightened competition for talent” in both London and the regions. Legal, commerce finance and technology sectors were particularly active, it says.
Fee income surged 48% in Asia-Pacific markets, with Indonesia, Hong Kong, Singapore, mainland China, Japan and Australia all seeing strong net fee income growth.
Robert Walters, the company’s chief executive, says:
We are seeing candidate shortages across all locations and disciplines, a fierce competition for talent and wage inflation kicking in which together create huge opportunities across the recruitment market.
Following a strong quarter including a record December, trading is now comfortably ahead of current profit expectations, Walters adds.
Analyst: High hopes of a 2021 recovery dashed for Heathrow
Today’s Heathrow travel stats show that hopes of a 2021 recovery have been dashed, says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Mass vaccination programmes failed to have the desired effect in 2021, in bringing the rebound in travel there had been such high hopes for this time last year.
The web of rules and regulations which was spun across different countries and regions and swept away, and then spun again as new variants emerged, clearly led to a drop in confidence in the travelling public. The threat of expensive hotel quarantines following a rapid rule change and the risk of being left stranded overseas if testing positive were hardly a relaxing prospect for holidaymakers wanting to get away from it all.
It’s “little surprise” Heathrow Airport wants all tests for fully vaccinated passengers to be scrapped, in favour of a predictable playbook to go by, in the event of fresh variants of concern, Streeter adds.
Despite hopes for pent up demand to translate into a bounce back in bookings this year, the industry looks set to face a long haul recovery ahead. Many consumers are faced with an income squeeze which is likely put to expensive holidays out of reach. Others might have splashed their piles of savings on other luxury treats instead.
Among some older travellers who may still have the cash to spare, there is still a lingering fear of the new variants and they are likely to keep putting off booking that once coveted overseas trip.
So summer 2022 may not be as strong as the travel sector hopes….
The spring summer season is set to get warmer for Heathrow in terms of business, but it’s unlikely to be the scorcher the travel industry, and the retail and hospitality businesses which rely on transport hubs, sorely need.’’
Introduction: 600,000 Heathrow passengers cancel December travel plans over Omicron
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Heathrow Airport has warned that the aviation sector faces a “long-haul recovery”, after the omicron variant sparked a rush of cancelled flights last month.
The UK’s largest airport has revealed that at least 600,000 Heathrow passengers cancelled travel plans in December, after the discovery of the Omicron variant led to travel restrictions to be imposed.
For 2021 as a whole, Heathrow says it only saw 19.4 million passengers – less than one quarter of 2019, before the pandemic, when it handled 80.9m. That’s also around 12% less than in 2020 (when it handled 22.1m passengers).
And the outlook looks uncertain, Heathrow warns, as it urges ministers to drop Covid-19 testing for fully vaccinated passengers to encourage travel.
- There is significant doubt over the speed at which demand will recover. IATA forecasts suggest passenger numbers will not reach pre-pandemic levels until 2025, provided travel restrictions are removed at both ends of a route and passengers have confidence they will not return rapidly
- We are urging the UK government to remove all testing now for fully vaccinated passengers and to adopt a playbook for any future Variants of Concern that is more predictable, limits additional measures only to passengers from high-risk destinations and allows quarantine at home instead of in a hotel
Also coming up today
European markets are set to open higher, after worries about possible US interest rate rises hit stocks on Monday.
Wall Street managed a late recovery last night, after the Nasdaq Composite index dipped into correction territory (10% off its record high), ahead of Wednesday’s US inflation report.
Asia-Pacific stocks have dropped today though, with Australia’s S&P/ASX down 0.8%.
Kyle Rodda of IG explains:
Stocks have remained on the backfoot today, with sentiment across the ASX200 particularly weak.
Global pressures stemming from heightened volatility on Wall Street and fears about tighter global monetary policy are probably behind some of that, as is a market discounting marginally weaker profits from what’s shaping as a fairly material hit to the Australian economy from the current COVID-19 outbreak.
Investors will be keen to hear from Federal Reserve chair Jerome Powell today, when he appears before the Senate banking committee for a confirmation hearing.
Powell, who has been nominated for a second term, will be questioned about the Fed’s plan to control rising prices, and its recent hawkish twist.
In testimony released overnight, Powell says the central bank is prepared to take action to ensure elevated inflation does not become entrenched, while also pointing out that the post-pandemic economy may look different than before.
- 9.30am GMT: World Economic Forum publishes Global Risks Report 2022.
- 9.30am GMT: UK labour productivity statistics for Q3 2021
- 11am GMT: NFIB index of US business optimism
- 3pm GMT: US Federal Reserve chair Jerome Powell’s confirmation hearing at the Senate banking committee
UK retailers warn sales at risk from soaring cost of living in 2022
Britain’s retailers have said the soaring cost of living risks dragging down high street sales in 2022 after a bumper Christmas trading period and year of recovery in consumer spending.
Sounding the alarm over the risks for the UK economy as whole, the British Retail Consortium said there were significant headwinds for the industry in 2022 from high inflation, rising energy bills and planned tax increases.
In a joint report with the accountancy firm KPMG, the BRS said soaring living costs would erode households’ spending power and had the potential to weigh on retail sales after a strong festive season and a year of recovering ground that was lost during the first stage of the Covid-19 pandemic.
According to the latest snapshot, total retail sales rose by 2.1% during the key month of December, compared with a year earlier, and were up by 4.6% compared with 2019, before the pandemic struck.
Reflecting a stronger performance for the full year, as Britain’s economy recovered from repeated lockdowns, total sales grew by 9.9% compared with 2020, and by 6.6% compared with 2019.
However, retail bosses said the emergence of Omicron and increasing pressure on household budgets could hit sales at the start of 2022.
Helen Dickinson, chief executive of the BRC, said:
“Retail faces significant headwinds in 2022, as consumer spending is held back by rising inflation, increasing energy bills, and April’s national insurance hike.
“It will take continued agility and resilience if they are to battle the storm ahead, while also tackling issues from labour shortages to rising transport and logistics costs.”
Omicron hit Heathrow just a few weeks after the US lifted its travel ban, which was marked by a simultaneous double take-off by British Airways and Virgin Atlantic.
Despite the latest variant, Heathrow saw nearly 800,000 North America passengers in December – a 540% increase from 2020.
But that’s barely half as many as in December 2019, when Heathrow handled over 1.5m North America passengers, just before Covid-19.
David Edwards of Scattered Clouds, a tourism market intelligence service, tweets:
Heathrow CEO: aviation industry will only fully recover once restrictions lift
Heathrow CEO John Holland-Kaye argues that the sector will only “fully recover” once the risk of Covid-19 restrictions has lifted for good.
“There are currently travel restrictions, such as testing, on all Heathrow routes – the aviation industry will only fully recover when these are all lifted and there is no risk that they will be reimposed at short notice, a situation which is likely to be years away.
While this creates enormous uncertainty for the CAA in setting a new 5-year regulatory settlement, it means the regulator must focus on an outcome that improves service, incentivises growth and maintains affordable private financing.”
The Civil Aviation Authority proposed last October that Heathrow could increase charges by up to 56% by 2023 as it seeks to recoup losses from the pandemic. That’s less than Heathrow hoped, but much more than airlines argue is fair as they try to recover from Covid-19.
Source: Thanks msn.com