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UK business activity shrinking as lockdown hits services firms – business live | Business

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Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Stock markets are heading higher this morning after AstraZeneca announced that its Covid-19 vaccine is effective in preventing infection from the virus.

The pharmaceuticals firm reported that trials of its vaccine developed by Oxford University showed it can be 90% effective in giving immunity to Covid-19.

AstraZeneca
(@AstraZeneca)

Today we announced high-level results from the AstraZeneca @UniofOxford #COVID19 vaccine clinical trials. https://t.co/eTz7cdY4hN pic.twitter.com/d6Wzo11Ftr


November 23, 2020

AstraZeneca reports that AZD1222 showed 90% efficacy when given as a half dose, followed by a full dose at least one month apart.

Another regime, two doses at least a month apart, showed 62% efficacy – giving an average efficacy of 70%.

That follows the encouraging results from Pfizer and Moderna earlier this month, who both reported 95% efficacy, and should further boost hopes of a solid economic recovery in 2021.

Julia Kollewe
(@JuliaKollewe)

The Covid-19 vaccine from AstraZeneca and Oxford University has shown 90% efficacy in global trials, similar to PfizerBioNTech and Moderna (around 95%)…and crucially it can be stored at fridge temperature. AZ will file for regulatory approval; wants to make 3bn doses next year


November 23, 2020

AstraZeneca also reports that no serious safety events were recorded during the trial. It now plans to immediately prepare regulatory submission of the data to authorities around the world that have a framework in place for conditional or early approval.

It will also seek an Emergency Use Listing from the World Health Organization for an accelerated pathway to vaccine availability in low-income countries.

Julia Kollewe
(@JuliaKollewe)

AstraZeneca/Oxford Covid-19 vaccine: no hospitalisations or severe cases of the disease were reported in those receiving the vaccine


November 23, 2020

The half dose/full dose result, of 90% efficacy, is the most exciting, as Professor Andrew Pollard, Chief Investigator of the Oxford Vaccine Trial at Oxford, explains:


These findings show that we have an effective vaccine that will save many lives. Excitingly, we’ve found that one of our dosing regimens may be around 90% effective and if this dosing regime is used, more people could be vaccinated with planned vaccine supply.

Today’s announcement is only possible thanks to the many volunteers in our trial, and the hard working and talented team of researchers based around the world.”

Owenna Griffiths
(@omrgriffiths)

“We’ve got a a vaccine that is able to protect against coronavirus disease” Prof Andrew Pollard of the @OxfordVacGroup on the Oxford/AstraZeneca vaccine. Bright news on a dark November morning @BBCr4today


November 23, 2020

The news is expected to push European stock markets higher, with the FTSE 100 expected to gain around 0.5% — back to last week’s five-month highs.

CMC Markets
(@CMCMarkets)

Live Market Update from the CMC dealing desk – European Opening Calls:#FTSE 6383.3 0.5%#DAX 13221.44 0.64%#CAC 5533.86 0.69%#IBEX 8014.77 0.46%
Prices are indicative only. $FTSE $DAX $CAC $IBEX


November 23, 2020

Also coming up this morning.

New economic surveys from the UK and eurozone will highlight the sharp impact of the latest Covid-19 lockdowns, and underline just why effective vaccines are needed.

Data firm IHS Markit’s latest Purchasing Manager surveys are expected to show that UK private sector activity is contracting this month, due to the closure of hospitality venues, non-essential shops and leisure activities.

The UK Services PMI is forecast to fall to just 42.5, showing a rapid downturn, from October’s 51.4 which showed modest grwoth.
France’s ‘flash’ PMI will also likely show that its economy is shrinking again this month [forecast to drop to 34, from 47.5] That could pull the wider eurozone into contraction this month, after it stagnated in October.

The agenda

  • 8.15am GMT: French flash manufacturing and services PMI for November
  • 8.30am GMT: German flash manufacturing and services PMI for November
  • 9am GMT: Eurozone flash manufacturing and services PMI for November
  • 9.30am GMT: UK flash manufacturing and services PMI for November
  • 1.30pm GMT: Chicago Fed National Activity index
  • 2.45pm GMT: US flash manufacturing and services PMI for November



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10,000 stores set to close in 2021, Covid keeps pummeling retailers

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A man passes by a Banana Republic store, which is going out of business, in New York, January 10, 2021.

Scott Mlyn | CNBC

One retail research and advisory group is forecasting there could be as many as 10,000 store closures announced by retailers in the United States this year, which would set a new record, as the Covid pandemic continues to take a toll on the industry and companies rethink how many locations they’re able to keep open.

10,000 closures would represent a 14% uptick from 2020 levels, Coresight Research said in a report released Thursday. Coresight is also forecasting retailers will announce 4,000 store openings in 2021, driven by growth from grocery discounters and dollar store chains.

Last year, in the thick of the pandemic, Coresight predicted in the June that there were going to be as many as 25,000 closures announced by retailers in 2020. But it ended up tracking just 8,741, along with 3,304 openings. That was a deceleration from the 9,832 closures it tracked in 2019 — the highest number Coresight has seen as long as it has been following retail closings and openings.

The reason for the large gap between the final tally and its initial prediction, Coresight said, was because some companies have been “holding out for an upturn in store-based sales.” Many retailers have also been able to buy more time by reducing their rents and striking deals with their landlords to be able to stay open a little longer, it said.

“In 2021, the rollout of [Covid] vaccination programs should result in a partial recovery in store-based sales,” Coresight CEO and Founder Deborah Weinswig said. “However, these programs may take many months to reach a wide base of consumers.”

Some companies won’t be able to wait much longer, Weinswig said, especially those that didn’t have the holiday season they were hoping for. Consumers are going to continue to spend more of their money online, which is another reason for the heightened store closure forecast this year, she said.

As of Jan. 22, Coresight said retailers in the U.S. have already announced 1,678 closures, which include ones by Bed Bath & Beyond, Macy’s and J.C. Penney.

Weinswig also pointed to a pattern that took shape in the retail industry after the Great Recession, which could repeat itself this year.

“Although retail was significantly impacted in 2008 and 2009, the repercussions in terms of retail bankruptcies peaked in 2010,” she said. “We could see history repeat itself in 2021, resulting in greater numbers of store closures this year than we saw in 2020.”

Coresight said apparel retailers, including Ascena Retail Group and The Children’s Place, accounted for 36% of all store closures in 2020, tallying more than 3,000. The apparel category will likely make up a substantial portion of closures this year, too, it said.

A study released earlier this week by First Insight found 40% of consumers plan to shop for apparel in brick-and-mortar stores either the same amount or less after being vaccinated, implying there won’t be an immediate rush back to the mall.


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McDonald’s (MCD) Q4 2020 earnings miss estimates

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People wear protective face masks outside McDonald’s in Times Square as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on September 18, 2020 in New York City.

Noam Galai | Getty Images

McDonald’s on Thursday reported that its U.S. same-store sales jumped to 5.5% in its latest quarter, but the coronavirus pandemic is still adding costs and slowing recovery in many of its international markets.

Shares of the company fell less than 1% in premarket trading.

Here’s what the company reported for the quarter ended Dec. 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.70, adjusted, vs. $1.78 expected
  • Revenue: $5.31 billion vs. $5.37 billion expected

The fast-food giant reported fourth-quarter net income of $1.38 billion, or $1.84 per share, down from $1.57 billion, or $2.08 per share a year earlier. The company reported that higher restaurant closing costs of $30 million and lower gains on the sales of restaurant businesses hurt profits for the quarter.

Excluding gains related to the sale of McDonald’s Japan stock and other items, McDonald’s earned $1.70 per share, missing the $1.78 per share expected by analysts surveyed by Refinitiv.

Net sales dropped 2% to $5.31 billion, falling short of expectations of $5.37 billion. Worldwide same-store sales shrank by 1.3%, but improved from the third quarter.

In the United States, same-store sales were positive for the second straight quarter. The company’s home market reported same-store sales growth of 5.5%. The company credited marketing investments and promotional activity, including those focused on core menu items like the Big Mac. The consumer trend of spending more per order stayed true during the quarter as well, although traffic remained negative.

McDonald’s international operated markets, which includes France, Germany and Australia, was the laggard of the quarter. Its same-store sales fell 7.4%. Resurgences of Covid-19 hit most of the segment’s markets, leading to increased government restrictions. However, the company reported that the United Kingdom and Australia both reported positive same-store sales growth for the quarter.

The chain’s international developmental licensed markets segment fared better. Its same-store sales fell just 3.6% in the quarter. Japan showed strong same-store sales growth, but it wasn’t enough to offset declining sales elsewhere in Asia and Latin America.

Read the full earnings report here.

This story is developing. Please check back for updates.


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EU suggests AstraZeneca diverts Covid-19 vaccines from UK

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An AstraZeneca vaccine production line.

Bloomberg | Bloomberg | Getty Images

The European Union has suggested that drugmaker AstraZeneca divert supplies of its coronavirus vaccine from the U.K. to mainland Europe, as a battle over production delays and supply continues.

It comes after AstraZeneca told the EU last week that it would initially deliver far fewer doses of its Covid vaccine to the 27-member bloc than originally thought.

The EU demanded on Wednesday that the pharmaceutical giant fulfil its agreement to supply it with coronavirus vaccines, by whatever means necessary.

Health Commissioner Stella Kyriakides said talks with the company, which continued Wednesday, had been “constructive.” But she also tweeted that “contractual obligations must be met, vaccines must be delivered to EU citizens.”

She said in a statement that the EU had rejected the “logic of first come first served,” after AstraZeneca’s CEO blamed supply delays on teething issues at its European manufacturing sites, and said similar issues in the U.K. had been ironed out because it had ordered its vaccine dose three months earlier than the EU.

In a press briefing, Kyriakides said there was “no hierarchy” in the production plants named in its advance purchase agreement with AstraZeneca, and no stipulation on which ones would or wouldn’t supply the EU.

“In the contract there are four factories listed but it does not differentiate between the U.K. and Europe. The U.K. factories are part of our advance purchase agreement and this is why they have to deliver,” she said. There was no clause in the contract stating that the drugmaker would prioritize the U.K., she added.

Battle brewing

It marks the latest development in the very public argument between the EU and AstraZeneca, as the latter confronts problems at two of its European plants.

The British-Swedish company’s CEO Pascal Soriot stoked tensions further on Tuesday when he said in an interview with Italy’s La Repubblica newspaper that its agreement with the EU was a “best effort” one and not a “contractual commitment.”

The EU hit back, demanding that the drugmaker present detailed plans over its delivery schedule. One official explicitly asked AstraZeneca to divert doses made in the U.K. to the EU, although the company did not respond to this issue, according to a Reuters report.

In the Tuesday interview Soriot said: “The U.K. government said the supply coming out of the U.K. supply chain would go to the U.K. first. Basically, that’s how it is. In the EU agreement it is mentioned that the manufacturing sites in the U.K. were an option for Europe, but only later.”

British Prime Minister Boris Johnson did not comment directly on the matter Wednesday, but said: “We’re very confident in our supplies, we’re very confident in our contracts, and we’re going ahead on that basis.”

Vaccination drives

The EU is struggling to get its vaccination drive into gear as it lacks supplies. It was first dealt a blow by vaccine maker Pfizer-BioNTech, which announced that it had to temporarily lower production in order to upgrade its manufacturing capacity in Belgium. This was then followed by AstraZeneca last Friday reducing its delivery estimates for the region.

One unnamed senior EU official told Reuters that the bloc expected about 80 million doses by March, but had been told it would receive only 31 million doses instead. The company has not confirmed the quantities involved.

The European Medicines Agency is expected to approve the AstraZeneca vaccine for use on Friday.

The U.K. ordered 100 million doses of the AstraZeneca vaccine last May, making it the first country to do so. It is heavily reliant on the vaccine for its immunization drive, which has sprinted ahead of those in continental Europe, having begun in early December. The EU began its rollout on Dec. 27; it originally ordered 300 million doses of the AstraZeneca vaccine in August.

So far, the U.K. has vaccinated over 7.1 million people with a first vaccine dose, and almost half a million have received their second dose, meaning it has carried out more immunizations than German, France, Italy and Spain combined, according to Our World In Data figures.


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