Christmas shopping starts early in UK; Austria's lockdown knocks travel stocks and oil – as it happened | Business | The Guardian

• 5.22pm GMT17:22 Market close
• 2.47pm GMT14:47 Wall Street opens mixed
• 11.02am GMT11:02 Travel and hospitality stocks drop on Austrian lockdown news
• 10.08am GMT10:08 Full story: Retail sales rise as Christmas shopping starts early in Great Britain
• 9.44am GMT09:44 German factory gate inflation highest since 1951
• 8.38am GMT08:38 Rising debt repayment costs keep UK government borrowing high
• 7.24am GMT07:24 Retail sales rise in early Christmas spending boost

And finally, the FTSE 100 has ended the day down 32 points or 0.45% at 7223.

That’s its lowest close in around a month, as concerns over the lockdown in Austria weighed on travel and hospitality stocks.

Oil stocks were also pulled lower, tracking the fall in the price of crude today.

There were also losses across Europe, with Austria’s ATX tumbling by 3%, Spain’s IBEX down 1.7% and Germany’s DAX off 0.4%.

That’s all for today. Goodnight, and have a good weekend. GW

Oil continues to slide, with Brent crude at its lowest since 1st October on concerns that pandemic restrictions will hit demand for energy:

Here’s a good round-up of the situation:

The rally into tech stocks, the ‘winners’ of the pandemic economy, has pushed the Nasdaq Composite to a new record high.

Jim Reid, research strategist at Deutsche Bank, also worries that the US could be vulnerable to a new wave of Covid-19 infections.

His Chart of the Day shows daily cases per million for a selection of large countries and regions plus interesting other countries, especially those in eastern Europe that seem to be going through an aggressive wave.

Reid explains:

For most of the countries near the top, the spike in cases has occurred fairly rapidly over the last couple of weeks. The exception is the UK where cases have been high and steady since the summer as high vaccination rates plus high infection rates have seemingly provided some degree of herd immunity. It’s important to bear in mind that testing rates vary considerably (the UK does the most per person in the G7) and that can affect the relative rankings, but the overall trend higher is clear.

The news is hitting European markets hard this morning as fears mount that the virus and restrictions will spread across the continent again. However the curveball might be the US. DB’s Robin Winkler has been pointing out that the vaccination rate in Austria (64%) is somewhat lower than the likes of Spain (79%), Italy (74%), France (69%), the UK (69%) and Germany (68%) but it is still higher than the US (58%).

So although all the headlines are in Europe at the moment, will the US be more vulnerable than many European countries over the course of the full winter? Recent history suggests the US have a higher bar for economic restrictions related to covid but it also has a lower vaccination rate than their European peers.

The jump in European Covid-19 infections is causing concerns that America could see a new wave too this winter.

Paul Ashworth, chief North America economist at Capital Economics, says the possibility of another winter wave of coronavirus infections is a significant downside risk to activity over the next few months.

He told clients:

We wouldn’t expect a winter COVID wave to trigger the types of restrictions on activity now being implemented in countries like Germany and Austria, particularly not when new therapeutics should further reduce the mortality rate.

But we would nevertheless expect such a wave to weigh on consumer spending on high-contact and travel services. Workplace outbreaks could also compound supply chain problems.

Our baseline GDP forecasts don’t explicitly allow for such a wave, but it is one of the key reasons why we are happy to be below consensus on the near-term growth outlook and why we doubt that the Fed will accelerate the pace of its QE taper in the next few months, opening the door to an earlier interest rate hike next year.

The New York stock market has opened rather gingerly, as the rise in Covid-19 cases in Europe weighs on investors’ minds.

The Dow Jones industrial average has fallen by 218 points, or 0.6%, to 35,652 points in early trading, as anxiety over the pandemic hits banks, energy stocks and airlines.

Chemicals company Dow Inc is the top faller on the DJIA, down 3.1%, with Goldman Sachs down 2.1%, oil major Chevron losing 2%, and Boeing and American Express both dropping 1.9%.

Tech stocks are faring better, though, with the Nasdaq Composite up 0.3% or 54 points at 16,048 points.

Fiona Cincotta, Senior Financial Markets Analyst at City Index, explains:

Cyclicals are trading under pressure amid a rotation back into tech as COVID lockdown concerns rise. Austria has re-imposed full lockdown restrictions as COVIDA cases jump. Germany also recorded a record number of cases.

With Europe the new epicentre for COVID could transatlantic travel see restrictions again before its really even taken off? The travel sector is likely to trade under pressure.

Tumbling oil prices will also keep oil giants in the red.

On Austria’s lockdown, Manuela Finger, partner at the Munich office of law firm, Gowling WLG, says:

“While a disappointing move for businesses and retailers especially at time when pre-Christmas footfall and sales are key, the Austrian government has clearly broadly considered the varied needs at play and come up with a solution that causes minimal business impact while protecting the health prospects of the nation.”

On the wires....

Mark Sweney

Nationwide Building Society has said there could be a “cooling” of the UK’s red-hot housing market because of rising inflation and interest rates.

Robert Gardner, the chief economist at the UK’s second-largest mortgage lender, said the housing market is currently “remarkably robust” despite the end of incentives such as the government’s stamp duty holiday at the end of September.

However, he said that in the coming months a lot would depend on the performance of the wider economy.

“There are a few things that could moderate [housing demand] a bit in the coming quarters. For example, there are not many homes on the market at the moment. That is likely to hold back activity.

“If you look at rising inflation squeezing household budgets a little and if interest rates rise, then that is likely to exert a cooling influence as well. But if the recovery holds up, then activity is likely to remain pretty solid.”

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