Vauxhall says it is cutting jobs at Ellesmere Port so it can move to a single daily production shift. This will “accelerate the recovery of plant productivity”, it argues.
Unions, though, say the cuts show the importance of a transition deal that shields the industry from Brexit disruption.
Here’s the full story:
And that’s all for tonight, GW
Here’s Rebecca Long-Bailey MP, Labour’s Shadow Business Secretary, on the loss of a further 250 jobs at Vauxhall’s Ellesmere Port plant:
‘’When PSA Group took over Vauxhall last year the Government promised it would do the utmost to protect workers, but since then a third of jobs at Ellesmere Port have been cut.
“The Tories are failing to give businesses and workers the security they need to navigate Brexit, which has been demonstrated again in today’s EEF report on manufacturer’s expectations for 2018.
“The Government must set out how it will support the plant and urgently provide certainty for the sector as a whole after Brexit.’’
Hello again. London’t stock market couldn’t close at a fresh record high tonight.
The blue-chip index ended the day down 27 points at 7696, a drop of around 0.3%.
Europe had a better day, though, with the German DAX and Italian FTSE MIB both up 0.38% and the French CAC close behind.
Fiona Cincotta, Senior Market Analyst at City Index, says:
The FTSE quickly hit a fresh record high in early trade as the “January Effect” boosted equities. However, the index was unable to maintain the pace and soon drifted into the red, where it spent most of the day. It was a fairly muted start to the trading week; however, volatility is due to pick up given the slew of corporate releases on the calendar going forward.
Micro Focus was the standout loser on the FTSE, shedding over 16% after the software maker disappointed investors with the interim update. The shares hit a low of 2116, its lowest level since August last year.
Vauxhall cuts more jobs; Jaguar Land Rover warns on UK outlook
Britain’s car industry has just been dealt two pieces of bad news.
Firstly, auto group PSA is cutting an extra 250 jobs at its Vauxhall factory at Ellesmere Port, in the North West of England.
This takes the total headcount cuts to 750.
In a statement, Vauxhall says:
“At a meeting held on Thursday 4 January 2018 between representatives from Vauxhall Motors and UNITE the Union, the company explained that although the initial voluntary separation programme at its Ellesmere Port plant announced in October (aligned to adjustment of production volumes in order to protect its future) has been successful, it needs to initiate a further voluntary programme for eligible employees of a further 250 heads in the period from April to the end of September 2018.”
The Ellesmere Port, which produces the Vauxhall Astra, has been hit by falling demand. PSA has also warned that Brexit uncertainty will also affect investment decisions.
PSA, which also owns Peugeot, says it remains committed to the Ellesmere Port site - but dropped a heavy hint that future improvements are needed.
“Vauxhall Management affirmed the company’s continued commitment to the Astra plant at Ellesmere Port.
“The company remains confident in the ability of the Ellesmere Port workforce to deliver the necessary improvements in financial performance.”
Secondly, rival carmaker Jaguar Landrover has warned that the UK economy is tough.
JLR says it achieved record worldwide sales last year, up 7% to 621,109 vehicles, thanks to strong demand in China and the US. Britain, though, is more problematic.
Group sales operations director Andy Goss says:
“We have once again delivered year-on-year sales increases thanks to a world-class product range and new models such as the E-PACE and Velar, as well as China-specific models such as the XFL.
“But we are facing tough times in key markets such as the UK where consumer confidence and diesel taxes will hit us.”
Take note, bullish investors.
Bloomberg’s Luke Kawa has calculated that several major stock market indices have now surged to levels that suggest they are ‘overbought’. That’s often (but not always) a prelude to a correction.
The S&P 500 Index, MSCI Asia Pacific Index, MSCI World Index, Nikkei 225 Index, and MSCI Emerging Markets Index are all in overbought territory, while the Euro Stoxx 600 Index lingers just shy of such a level.
The average reading for this collection of gauges soared to a weekly record as of Jan. 5, according to data compiled by Bloomberg going back to 1988.
The relative strength index is a technical indicator that tracks the magnitude and speed of price fluctuations. Typically, a security with an RSI above 70 is considered to be overbought, while those below 30 are viewed as oversold.
A calm start on Wall Street
The New York stock market has opened without major drama.
In early trading, the Dow Jones industrial average and the S&P 500 indices have both dipped by 0.1%.
In other news... the former executive chairman of auto repair and insurance group AA is bringing legal action over his sacking last year, following a bust-up with a colleague.
Bob Mackenzie lost his job - and share options worth millions of pounds - after reportedly starting a ‘physical altercation’ in a hotel bar, which triggered his dismissal.
The Press Association has the story:
AA has said it is “astonished” over news that ousted chairman Bob Mackenzie is pushing for an employment tribunal hearing after being fired over gross misconduct last summer.
The breakdown recovery and car insurance firm may now be forced to defend its decision to sack Mr Mackenzie - a move that was formally announced in August.
AA said in a statement: “We are astonished that Mr Mackenzie is taking this to an employment tribunal.
“We stand by our decision to dismiss him for gross misconduct following his sustained and violent assault on another employee of the AA, and will robustly defend any action.”
Reports have linked his dismissal to an attempted spin-off of the AA’s insurance arm, which led to a physical altercation between Mr Mackenzie and insurance chief Michael Lloyd, as well as an earlier altercation in a public place with someone not thought to be an employee of the company.
AA has since called on Mr Mackenzie to pay back more than £1.2m, accounting for annual bonuses stretching from 2016 to 2017.
No change at the top of Britain’s finance ministry:
Philip Hammond MP remains Chancellor of the Exchequer @HMTreasury #CabinetReshuffle pic.twitter.com/ce2eZL9ASX
— UK Prime Minister (@Number10gov) January 8, 2018
It’s been another lively day in the world of crypto-currencies.
Bitcoin has tumbled by over 9%, taking its value back down to $14,650. Three weeks ago hit an all-time peak of nearly $20,000 before retracing its steps.
But other digital currencies are in vogue, including Ether (the coin behind the Ethereum distributed app platform).
Crypto update:#BITCOIN 14933.94 -11.24%#ETHER 1109.41 +16.08%#BITCOINCASH 2376.00 -0.03%#RIPPLE 2.424 -4.53%#cryptocurrency#BTC #ETH #BCH #XRP
— IGSquawk (@IGSquawk) January 8, 2018
The crypto boom has also pushed dogecoin to a fresh record high - even though this particular digital coin was created as a spoof.
The FT’s Alice Woodhouse explains:
Dogecoin, the cryptocurrency based on an internet meme of a Shiba Inu dog, almost doubled in value over the weekend, bringing its market capitalisation to more than $2bn on Sunday.
Launched as a joke digital currency in late 2013 by self-described “data geek” Jackson Palmer, Dogecoin describes itself as the “fun and friendly internet currency”. The digital currency’s recent gains suggest it has been caught up in the recent investor frenzy for cryptocurrencies such as Bitcoin.
Such crypto, many value: the market cap of joke cryptocurrency Dogecoin surpasses $2bn https://t.co/aLXOZoalgt pic.twitter.com/tqij0uQP4o
— fastFT (@fastFT) January 8, 2018
Fitch: credit quality now highest since 2008
Credit rating agency Fitch has added to the optimistic mood in the markets, by reporting that the outlook for credit is the best in a decade.
Fitch reports that the number of likely credit upgrades in 2018 and 2019 outnumbers potential downgrades by the most since 2008.
But it also warns that this may be as good as it gets - some companies could find it harder to service their debts once interest rates rise higher.
Monica Insoll, a Fitch managing director, explains:
“The rating outlook trend is the most upbeat in a decade, with positive outlooks outnumbering negatives. But the net bias is only just over 1% and occurs as the world is about to hit peak growth in the current cycle.
The continued tightening of monetary policy, together with significant policy and political uncertainty, is likely to pose increasing challenges to ratings.”
The futures market suggests the US stock market will hold onto Friday night’s record highs, when trading begins in an hour.
US Opening Calls:#DOW 25277 -0.05%#SPX 2737 -0.16%#NASDAQ 6643 -0.10%#IGOpeningCall
— IGSquawk (@IGSquawk) January 8, 2018
Over in Germany, acting chancellor Angela Merkel has entered coalition talks with the left-leaning Social Democrats.
It looks like a final attempt to form a new government, following last autumn’s inconclusive election.
Reaching an agreement could be tough; the SPD are likely to demand concessions on issues like welfare spending, tax, and European integration.
But optimism that a deal is possible is helping the market today, says Mike van Dulken, head of Research at Accendo Markets:
“Equities are off their best levels but maintain a northerly bearing, buoyed by German coalition talks and fresh highs on Wall St, despite mixed Eurozone macro data and commodities off their best levels.
A stronger US dollar helps, pushing the British pound and the euro lower, especially the latter to ensure the German DAX outperforms the UK FTSE.
US futures point to another positive opening this afternoon.
Greek PM: We're in final stretch of the bailout
Over in Athens, prime minister Alexis Tsipras has told his first cabinet meeting of the year that Greece is in the “final stretch” of its third bailout programme.
Helena Smith reports from Athens
The leftist leader told cabinet members that he expected the debt-stricken country, under international surveillance since 2010, to return to international markets after its current economic adjustment program officially expires in August.
Sounding an optimistic note, Tsipras described 2018 as a landmark year that would be replete with challenge, adding:
“2018 is a milestone year ... a year full of challenges that in order to be met require hard work so that this can also be a year of vindication for the sacrifices of the Greek people.”
The third - and penultimate - compliance review of terms agreed in exchange for emergency funding under Greece’s latest bailout was reaching conclusion, the prime minister told his cabinet.
When Athens enters “the last chapter” of fiscal adjustment Greece will have closed a “huge circle of supervision which began in May 2010 when the country was excluded from money markets,” he said.
A multi-bill outlining almost 100 agreed reforms known as “prior actions” will be submitted to parliament tomorrow ahead of a three-day debate.
Leading members of Tsipras’ leftist Syriza party have voiced opposition to some of the more onerous measures, such as electronic auctions of property owners who are indebted to banks.
Updated
Sterling has made a subdued start to the week, as traders watch Theresa May reshuffle her cabinet.
The pound dropped 0.2% to $1.354 against the US dollar, but has risen a little against the euro to €1.13.
The cabinet reshuffle could have implications for Brexit; according to the Daily Telegraph, the PM will appoint “a cabinet minister for no-deal”, who will prepare for a Hard Brexit.
Royal Bank of Canada say:
The UK papers are full with reports of a pending cabinet reshuffle of May’s government.
The most interesting development for markets seems the planned creation of a ‘minister for no-deal Brexit’ which should underpin the notion of the UK being in a position to walk away from the negotiations with the EU.
The reshuffle is getting up to speed now, with Northern Ireland secretary James Brokenshire resigning on health grounds, and confusion over whether transport secretary Chris Grayling has been moved to become Conservative Party chairman.
#Reshuffle latest: The Conservative party has tweeted, then deleted, an announcement Chris Grayling is to be named its new party chairman, says @CatNeilan https://t.co/HWNFFM5bet pic.twitter.com/WHlGKVwEed
— City A.M. (@CityAM) January 8, 2018
BBC confirming Grayling appointment but advisers saying its speculation and he hasn't been to no10 yet. The Conservatives had tweeted a congrats, though its now disappeared. What is going on!? pic.twitter.com/8GDc0RE4kS
— Anushka Asthana (@GuardianAnushka) January 8, 2018
My colleague Andrew Sparrow has full details in his Politics Live blog:
Updated
World stock markets are celebrating their best start to a new year since 2010 this morning.
European shares are doing their bit, having hit their highest level since August 2015 this morning, after Asia rallied to near-record levels.
Traders are encouraged by this morning’s strong consumer confidence and investor sentiment survey, which suggests the eurozone economy is continuing to flourish.
Dennis de Jong, managing director at UFX.com, sees no sign of ‘January Blues’ in the markets today:
“All the key indicators for December show that confidence amongst investors and consumers is firmly on the rise, which only increases the likelihood of the European Central Bank winding down its quantitative easing programme.
“After being in the doldrums for so long, the eurozone has rebounded in spectacular fashion, with investors piling into the euro in their droves.
In another piece of encouraging soft data, the European Commission’s economic confidence index has hit its highest level since 2000.
The sentiment index has risen to 116, beating forecasts of 114.8, showing that the pick-up in Europe’s economy has raised morale in the region.
Euro-area economic confidence soars to nearly two-decade high https://t.co/IVjrdL1TTj pic.twitter.com/JCyBcgTrHD
— Bloomberg Economics (@economics) January 8, 2018
Euro area starting 2018 with a bang. EC Economic Sentiment Index now highest since 2000.
— Frederik Ducrozet (@fwred) January 8, 2018
Just in: Investor optimism across the eurozone has risen, in the latest sign of confidence in the global economy.
The monthly survey of investor morale produced by research group Sentix jumped to 32.9, up from December’s 31.1.
When asked about the current economic situation, investors were at their most upbeat since 2007.
This optimism underlines why stock markets have been rallying recently, as investors react to signs that economic growth is picking.
Sentix says:
“The economy in all regions of the world is looking stable and positive and is showing moderate improvements....
“The upturn is therefore broad and synchronous. The likelihood of possible overheating is rising.”
EuroZone Jan Sentix Investor Confidence comes in at 32.9 (f'cast 31.2) vs 31.1 in Dec
— Mauro 📈 (@Trader_Mauro) January 8, 2018
Jonathan Samuels, CEO of property lender Octane Capital, agrees that UK house prices will be subdued this year.
Halifax’s verdict on 2017 is of a flat and uneventful year, restrained by economic uncertainty in the light of Brexit and consumer caution given the high cost of living.”
Few would argue with theHalifax’s conclusion that UK price growth is likely to remain pedestrian at best during 2018.
“Low single digit growth is about as exciting as it’s going to get, but in reality this is a positive for the market given the affordability crisis in many areas of the country.
Jeremy Leaf, north London estate agent, says UK house-buyers are driving harder bargains - so owners need to be ‘realistic’ when setting prices.
There is no doubt that prices are softening, particularly in London, but Halifax also confirms what we are seeing on the high street - that a lot of hard bargaining is going on and people are generally trying to get on with their moves.
‘We don’t expect to see any great change in the next few months but the realistic players will succeed, whereas those wedded to the idea of the housing market we have seen in previous years will simply not sell.’
Halifax also reports that house price buyers, and sellers, are in short supply:
New buyer enquiries appeared a little more stable over the month having declined sharply in autumn, this measure, however, has now fallen for the last eight months.
Turning to supply, new instructions to sell continued to deteriorate at the headline level and has now fallen for 22 consecutive months – the worst sequence for close to eight years.
Halifax: UK house prices fell last month
UK house prices fell by 0.6% in December, according to the latest survey from Halifax bank.
It’s the first monthly decline since last June, and the latest signal that Britain’s property market is weakening.
Halifax also reports that prices only rose by 2.7% during 2017, with the quarterly growth rate slowing to 1.3% in October-December.
Russell Galley, Managing Director, Halifax Community Bank, blames economic uncertainty and falling real wages.
“As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat.
This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.
However, nationally house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of housebuilding, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms.
Overall we expect annual price growth to continue in the range of 0-3% at the end 2018.”
Here’s some rapid reaction from property analyst Pete Wargent...
House Price Index, UK
— Pete Wargent (@PeteWargent) January 8, 2018
m/m Dec-17: -0.6pc (prev: 0.5pc)
3m/y/y Dec-17: 2.7pc (prev: 3.9pc)
(The Halifax) pic.twitter.com/F91qAP4xRr
..and economist Shaun Richards
Another sign of UK house prices turning south? Halifax " house prices in December fell by 0.6%; the first monthly decline in six months."
— Shaun Richards (@notayesmansecon) January 8, 2018
Updated
FTSE 100 climbs to new peak
Britain’s FTSE 100 index has hit a fresh record high today.
The blue-chip gauge of the biggest companies listed in London rose to 7733 points, nine points higher than Friday’s record close.
But the rally didn’t last long. The Footsie then slipped back, thanks to tech firm Micro Focus which has slumped by 9% after releasing its latest financial results
Micro Focus, which merged with Hewlett Packard’s enterprise software arm last year, reported a 9.5% drop in earnings per share, despite am 80% jump in revenues thanks to the HP deal.
Ouch! Shares in Mothercare have tumbled by a quarter after this morning’s profit warning.
Shares slumped to just 42p at the open before stabilising around 47p, down from 62p on Friday. It looks like a record low.
Mothercare has shed around 90% of its value since the start of the decade, and is now worth just £80m.
Neil Wilson fo ETX Capital says the company has suffered from its decision not to cut prices in the run-up to Christmas.
We should look to management’s decision not to discount in the peak trading season as a significant contributing factor. Admirable perhaps but with competitors slashing prices ahead of Christmas amid (justified) fears of a slowdown in consumer spending, it looks as if the ‘conscious decision’ to remain at full price prior to Christmas but to then discount more heavily in the end of season sale was a mistake.
Clearly Mothercare et al are up against it and the update does not bode especially well for the retail sector ahead of an important week of releases.
Mothercare profits warning
UK mother and baby retailer Mothercare has just become the second high street retailer to hit the City with a profits warning, after a disappointing Christmas.
And it looks like a stonker: Mothercare’s UK like-for-like sales shrank by 7.2% in the last 12 weeks over 2017. It even managed to shrink its online sales, by 6.9%.
Profits are now expected to shrink to between £1m and £5m this financial year; investors had expected more like £10m.
Mothercare blames:
...lower footfall and spend, both in stores and online, following the continuation of consumer trends flagged in our half year results.
And worryingly, Mothercare’s CEO Mark Newton-Jones doesn’t expect any improvement in the short-term market conditions for the UK.
Hot on the heels of Debenhams last week, Mothercare warns on profits this morning. Like-for-likes down an eye-watering 7.2% in 12 weeks to December 30
— Luke Tugby (@LukeTugby) January 8, 2018
Oof Mothercare.
— Katie Martin (@katie_martin_fx) January 8, 2018
"We are not anticipating any improvement in the short-term market conditions for the UK"https://t.co/3kyZDGlkQD pic.twitter.com/cCHJlfMRpL
This follows the profits warning from high-street chain Debenhams last week.
Updated
Boom! European stocks have opened at their highest level in two and a half years.
The Stoxx 600, which tracks the biggest companies in the region, has gained 0.3% in early trading, reaching levels last seen in August 2015.
Here’s Reuters take on the stock market rally:
Asian shares crept toward all-time peaks on Monday after Wall Street boasted its best start to a year in over a decade, with brisk economic growth and benign inflation proving a potent cocktail for risk appetites.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2 percent having climbed 3.1 percent last week, its strongest performance in six months.
At 588.55, the index is within spitting distance of its record top of 591.50 hit in November 2007.
The Philippines is already at a record, while Australian stocks eked out another decade top. Japan’s Nikkei was closed for a holiday but last week touched its highest since 1992.
The eurozone: Market rally continues
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global stock markets remain buoyant this morning, as the bull market shows no signs of running out of steam.
Investors remain optimistic about the prospects for growth and corporate earnings this year, putting aside concerns such as Brexit and the Trump presidency.
China’s stock market has risen to its highest levels since the second half of November, amid an optimistic session in Asia.
Asian bourses tackle markets with cautious optimism ahead of earning season, which starts in earnest on Friday with Wells Fargo & JP Morgan - ASX +0.11, Shanghai +0.35%, Hang Seng -0.04%, Nikkei (closed holiday)
— David Buik (@truemagic68) January 8, 2018
Europe is expected to follow suit today too, with Germany’s DAX also tipped to rally.
European Opening Calls:#FTSE 7717 -0.09%#DAX 13386 +0.50%#CAC 5488 +0.31%#MIB 22847 +0.37%#IBEX 10462 +0.49%
— IGSquawk (@IGSquawk) January 8, 2018
Jasper Lawler, head of research at London Capital Group, says:
Shares in Europe look set for a strong open on Monday. The FTSE 100 could buck the trend by opening lower after a record-breaking first week of trading in 2018.
Optimism stemming from strength of European and global economy should help the German DAX index open at 7-week highs.
The opening strength tracks small gain in Asia, where markets were unperturbed by reports from China that the PBOC think “there is room for an increase in interest rates in the short term”.
Last Friday’s underwhelming US jobs report hasn’t punctured the rally. So traders - some of whom have driven the euro up in recent weeks - will be looking at new eurozone investor confidence and retail sales figures today.
In the UK, the Halifax bank will report new house price figures - at a time when prices seem to be slowing.
The agenda:
- 8.30am GMT: Halifax UK house price index for December
- 9.30am GMT: The Sentix survey of investor confidence in the eurozone
- 10am GMT: Eurozone retail sales figures for November
Updated
