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UK jobless rate highest since 2016; reopening hopes lift travel shares; tech stocks slide – business live UK jobless rate highest since 2016; reopening hopes lift travel shares; tech stocks slide – business live
(32 minutes later)
Rolling coverage of the latest economic and financial newsRolling coverage of the latest economic and financial news
Just in: America’s top central banker has warned that inflation and employment remain well below the Federal Reserve’s goals.
In his prepared testimony to Congress, Fed chair Jerome Powell says it will probably take “some time” to achieve substantial progress on bringing inflation to target and lowering unemployment.
This, as expected, is an indication from Powell that the current ultra-loose monetary policy will remain in place for some time.
CNBC has the details.
Powell also flagged up that the economic damage caused by the pandemic means inflation is still notably soft in parts of the economy:
Here’s Fawad Razaqzada, analyst at Think Markets, on today’s moves:
Razaqzada reckons twp factors are in play:
First, the fact that techs are falling and value stocks have been outperforming along with copper and crude oil are clear signs of rotation into assets that are expected to do well during good economic times. If this is the case, then the weakness for technology shares could be short-lived, and dip buyers will be happy to get back in at relatively inexpensive levels again.
But the flip side of the above argument is that the markets may have already priced in much of the prospective global recovery, spurred by vaccines and stimulus. Will rising inflation expectations become a reality? If so, could major central banks start ending emergency easing programmes that have supported global markets so far? This is the key risk facing the markets in the months ahead and so trading could become two-ways again rather than just up, up and more up for major US equity indices.
Tesla (-9%) isn’t the only major tech stock struggling today.Tesla (-9%) isn’t the only major tech stock struggling today.
Apple is down 3.5%, Amazon has lost 2.2%, Alphabet (Google) has fallen by 2.3% and Microsoft has lost 1.7%. Apple is down 3.5%, Amazon has lost 2.2%, Alphabet (Google) has fallen by 2.3% and Microsoft has lost 1.7% in early trading.
Wall Street has opened in the red, with technology stocks falling sharply.Wall Street has opened in the red, with technology stocks falling sharply.
The Dow Jones industrial average has dropped by 126 points, or 0.4%, to 31,394 points. The wider S&P 500 index is down 1%.The Dow Jones industrial average has dropped by 126 points, or 0.4%, to 31,394 points. The wider S&P 500 index is down 1%.
The Nasdaq composite is down 2.8%, or 377 points, at 13,155.The Nasdaq composite is down 2.8%, or 377 points, at 13,155.
And Tesla is leading the selloff, tumbling 10% to $638.And Tesla is leading the selloff, tumbling 10% to $638.
That’s its lowest level since the end of December, erasing the electric car company’s gains for 2021. Back in late January, it briefly hit $900.That’s its lowest level since the end of December, erasing the electric car company’s gains for 2021. Back in late January, it briefly hit $900.
Over in the US, house prices have jumped at the fastest rate in almost seven years.Over in the US, house prices have jumped at the fastest rate in almost seven years.
Home prices nationally increased by 10.4% year-on-year in December, according to the S&P/Case-Shiller home price index.Home prices nationally increased by 10.4% year-on-year in December, according to the S&P/Case-Shiller home price index.
Prices in the 20 largest metro areas jumped by 10.1%, the biggest annual rise since April 2014, with low borrowing costs and limited supply encouraging buyers to pay more.Prices in the 20 largest metro areas jumped by 10.1%, the biggest annual rise since April 2014, with low borrowing costs and limited supply encouraging buyers to pay more.
Worryingly, job losses across the UK’s wholesale and retail sectors have hit a record.Worryingly, job losses across the UK’s wholesale and retail sectors have hit a record.
The CBI’s latest ‘distributive trades’ survey, released this morning, shows that retail sales kept falling in the year to February. With internet sales growing at record pace, retail groups kept laying off staff.The CBI’s latest ‘distributive trades’ survey, released this morning, shows that retail sales kept falling in the year to February. With internet sales growing at record pace, retail groups kept laying off staff.
Employment across the wider distributive sector (retailers, wholesalers and car dealers) fell at the fastest pace since the survey began in 1983.Employment across the wider distributive sector (retailers, wholesalers and car dealers) fell at the fastest pace since the survey began in 1983.
The oil price has hit a new 13-month high today, lifted by the prospect of lockdown measures easing.The oil price has hit a new 13-month high today, lifted by the prospect of lockdown measures easing.
Brent crude traded as high as $66.79 per barrel, its highest since early January 2020, before dipping back.Brent crude traded as high as $66.79 per barrel, its highest since early January 2020, before dipping back.
It has risen steadily since November, when the first successful vaccine trial results raised hopes of an economic recovery in 2021.It has risen steadily since November, when the first successful vaccine trial results raised hopes of an economic recovery in 2021.
Bill Gates also struck a cautious note on bitcoin, telling Bloomberg TV yesterday that he’s not bullish about the cryptocurrency.Bill Gates also struck a cautious note on bitcoin, telling Bloomberg TV yesterday that he’s not bullish about the cryptocurrency.
Gates warned against retail investors being swept up in speculative “manias” - especially if they aren’t as rich as Elon Musk - and also cited its hefty energy demands, and the way it allows anonymous transactions.Gates warned against retail investors being swept up in speculative “manias” - especially if they aren’t as rich as Elon Musk - and also cited its hefty energy demands, and the way it allows anonymous transactions.
But, Gates does believe digital money is a good thing; saying the increased use of digital money by some emerging economies to get cash to citizens during the pandemic is a ‘super-positive’ move.But, Gates does believe digital money is a good thing; saying the increased use of digital money by some emerging economies to get cash to citizens during the pandemic is a ‘super-positive’ move.
Elon Musk, the maverick boss of Tesla, is no longer the world’s richest person after shares in the electric car company dropped 8.6% on Monday, wiping $15.2bn (£10.8bn) off his fortune.Elon Musk, the maverick boss of Tesla, is no longer the world’s richest person after shares in the electric car company dropped 8.6% on Monday, wiping $15.2bn (£10.8bn) off his fortune.
Musk, who last month leapfrogged Amazon founder Jeff Bezos to take the title of the world’s wealthiest person, dropped back into second place with a $183bn estimated fortune behind Bezos’ $186.3bn.Musk, who last month leapfrogged Amazon founder Jeff Bezos to take the title of the world’s wealthiest person, dropped back into second place with a $183bn estimated fortune behind Bezos’ $186.3bn.
The technology selloff is gathering pace, with the Nasdaq index on track to fall 1% when trading begins.
In London, shares in Scottish Management Investment Trust are now down 10%, while its fund manager, Edinburgh’s Baillie Gifford, have dropped 11%.
Baillie Gifford were an early investor in Tesla - a move which generated huge profits - and also hold investments in other major tech stocks including Amazon and Alibaba.
Bitcoin was ‘ripe’ for a technical pullback after its parabolic surge, argues Neil Wilson of Markets.com.
And this week’s selloff shows the perils of Tesla’s crypto investment, he explains:
Cryptocurrency bitcoin is tumbling today, falling sharply back from its record highs.
It’s currently trading around $46,500 - down over 15% today, and 20% off Sunday night’s peak of $58,445, following losses on Monday.
That’s its lowest level in over a week:
But it still leaves bitcoin up over 50% so far this year, following a remarkable surge.
The selloff comes after US Treasury Secretary Janet Yellen warned yesterday that bitcoin is an “extremely inefficient” way to conduct monetary transactions, and often used for illicit means.
She told CNBC on Monday that:
Bitcoin shot to a string of record highs in recent weeks, particularly after electric car company Tesla revealed it had bought $1.5bn of bitcoin in January.
Over the weekend, Tesla’s Elon Musk tweeted that bitcoin, and fellow cryptocurrency ethereum “do seem high lol” - which may have contributed to this week’s declines:
Shares in Tesla fell over 8% yesterday, and are down another 5% in pre-market trading....
Today’s jobs report presents a mixed, and somewhat confusing picture, explains our economics editor Larry Elliott:
But the big issue is clear -- a crunch is coming once the furlough scheme is phased out (either at the end of April, or later if Rishi Sunak extends it into the summer)....
Back on the jobless figures... and Cathal Kennedy, European economist at RBC Capital Markets, warns that today’s data doesn’t show the extend of unemployment in the UK:
Here’s that eurozone inflation report:
Over in the eurozone, inflation has picked up - highlighting the squeeze on living costs as energy prices rise and economies reopen.
Annual inflation across the euro area was 0.9% in January 2021, up from -0.3% in December, according to eurostat.
Josie Dent of the CEBR think tank explains:
Despite the rally in holiday and hospitality companies, the wider FTSE 100 share index is down 30 points or 0.5% at 6577 points.
Tech companies are under pressures, with online grocer Ocado down 4.3%, internet security firm Avast dropping 4.4% and Scottish Management Investment Trust (which holds stakes in US tech giants) shedding 5%.
The FTSE 250, which is more focused on UK stocks, is up 0.6%.
European markets are also in the red, after technology stocks fell on Wall Street yesterday (the Nasdaq lost 2.5%). Germany’s DAX has lost over 1%.
The recent rise in US government bond yields has signalled that investors are getting jumpier about rising inflation.
The possibility that central banks could slow their money-printing stimulus programmes and raise interest rates earlier than expected will weigh on tech stocks, as AJ Bell investment director Russ Mould explains:
Federal Reserve chair Jerome Powell could calm those fears, or not, when he testifies to Congress later today....
Boris Johnson’s reopening roadmap has accelerated the recovery in travel and hospitality stocks, says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown:
In the City, shares in holiday companies and hospitality firms are rallying, after the UK government outlined its four-stage plan to end the Covid-19 lockdown.
Rolls-Royce, the jet engine maker, has jumped by 9% to the top of the FTSE 100 risers, followed by IAG (+5.6%) the airline group behind British Airways.
Commercial property groups Land Securities (+3.9%) and British Land (+3.7%), catering group Compass (+3.8%) and hotel chains Intercontinental (+3.2%) and Whitbread (+3.2%) are also in the risers.
Among smaller stocks, SSP (which runs Caffè Ritazza and Upper Crust sites at railway stations and airports) has surged 17%, as investors anticipate a pick-up in demand for coffees and snacks from commuters.
Cinema chains are in demand too, with Rank up 9.5% and Cineworld gaining 9% on the prospect of screens being open again.
Holiday firms have reported a surge in bookings this week, as people plan head for life after lockdown, lifting shares in budget airline easyJet up over 8% this morning.
Last night, Boris Johnson outlined a cautious reopening strategy, with shops, pubs, gyms and holiday lets closed until at least 12 April, after Easter. By 21 June, the government hopes to be able to lift the restrictions on socialising - dependent on the success in curbing Covid-19.
Joe Morris, leisure partner at law firm Gowling WLG, says the travel industry can perform well once the lockdown is over: