Talk of interest rate cuts ‘premature’, says US Fed deputy

Thanks for joining us today on the Markets blog. Chris Price will be back on Monday, but I’ll leave you with some of the latest business stories elsewhere on The Telegraph website:

• Starbucks faces festive misery with strikes, boycotts and competition from McDonald’s
• World’s largest crane ‘Big Carl’ puts the ‘lid’ on Hinkley Point C
• Russian energy giant Gazprom makes £39m profit in North Sea
• Google develops selfie scanning software ahead of porn crackdown

Rab, the sports brand which sells sleeping bags costing as much as £900, is being lined up for sale as demand for camping and hiking equipment grows. Daniel Woolfson reports:

Investment bankers are said to have been drafted in to explore options for Equip Outdoor Technologies, which owns Rab and sister brand Lowe Alpine.

The Financial Times, which first reported plans for a sale, said suitors could be expected to value the business at more than £150m.

Rab was founded in 1981 by Rab Carrington, a Scottish mountain climber who had learned how to make sleeping bags when he was stranded in Argentina without camping gear.

The company’s first products were hand-stitched by Mr Carrington himself and sold out of the attic of his house in Sheffield before the opening of its first factory.

Today Rab is one of Britain’s leading camping and hiking brands with revenues of £120m last year, according to accounts.

Neither Equip nor investment bank Raymond James, which is reportedly advising the company, were available for comment when approached.

Shares in newspaper publisher Reach rose today, despite a High Court judge ruling that its Mirror Group Newspapers (MGN) unit had hacked Prince Harry’s phone.

In a statement to investors, the publisher highlighted that the judgement would limit future claims against the publisher. It said:

“The detailed judgment found that following MGN’s widely-publicised admission of historical wrongdoing in September 2014, claimants ought to have been aware they had a potential claim within, at the most, a few weeks.

“As a result of this ruling all claims issued after 31 October 2020 are now likely to be dismissed other than where exceptional circumstances apply.”

Shares in Reach closed up 2.64pc.

Pearson has come under pressure from its largest investor to move its listing to New York in the latest blow to the London Stock Exchange.

Cevian Capital, one of Europe’s most prominent activist investors, said it is urging the FTSE 100 education group to move across the Atlantic.

Christer Gardell, managing partner and founder of Cevian Capital, told Bloomberg:

To change the listing is an easy and effortless way to increase the value of a company.

Pearson is a US company with the majority of sales and executives there. It’s only due to historical reasons it is still listed in the UK.

Despite being listed in London, Pearson last year made almost 70pc of its £3.8bn in revenues in North America and its chief executive is based in the US.

Growing focus on America has fuelled speculation that the 179-year-old company could shift its listing to New York. Bosses have denied there are immediate plans to do so, but have not ruled out the move.

The pressure from Cevian, which holds a 12pc stake in Pearson, comes after the Swedish investor pushed building materials group CRH into moving its listing from London to New York.

Cevian, which is backed by US billionaire Carl Icahn, has said listing changes will be a major theme in the coming years.

Mr Gardell said the investor has had “really good experiences” with listing changes, adding that Pearson could enjoy a sharp jump in value if it relocated to New York.

A Pearson spokesman said: “We are proud of our London listing and the access that it provides for investors around the world.”

High street challenger bank Metro has dropped plans to sell its portfolio of residential mortgages, according to an announcement it has made to investors.

In late November, Sky news reported that Barclays was in exclusive talks to potentially purchase the home loans, with a deal expected by the end of the year.

According to Metro Bank:

Following the completion of its recent capital package and cost reduction plan announced on 30 November, Metro Bank Holdings plc has renewed balance sheet strength. The Board has carefully considered a potential sale of up to £3bn of residential mortgages and concluded that, given the prevailing market environment, it is in the best interests of shareholders to retain the existing loan portfolio.

The FTSE 100 was down 0.95pc. The biggest rise was from industrial manufacturer Spirax-Sarco Engineering, up 2.64pc, followed by cardboard manufacturer DS Smith, up 2.41pc. The biggest faller was St James’s Place, down 4.7pc, followed by AutoTrader, down 4.57pc.

Meanwhile the FTSE 250 index of mid-cap companies dropped 0.25pc. Trainline surged 11.33pc after the government axed plans to set up a rival, while investment trust Syncona rose 5.08pc. Drug company Indivior dropped the most, by 7.56pc, followed by oil company Energean, down 4.11pc.

Shares in St James’s Place dropped today after the Financial Times reported that it was planning to raise £1bn by 2023 to buy out retiring partners who provide financial advice.

The FTSE 100 weath manager relies on a 4,800 self-employed financial advisers working at partner firms, rather than having a huge directly employed workforce.

These partners can sell on their client bases to other St James’s Place partners as they retire, funding by loans backed up by SJP. But as interest rates have increased, demand has reportedly evaporated.

Iain Rayner, SJP’s chief operating officer, told the FT:

We have been thinking about how we increasingly employ equity alongside debt to help with succession planning.

Providing continuity of client servicing if and when advisers retire and being able to occasionally move client relationships around the partnership is really important to us.

The boss of Naked Wines has refused to rule out job cuts as the struggling online retailer purses £10m in cost savings, writes Daniel Woolfson: 

The prospect of potential redundancies comes as losses hit £9.7m in the six months to October, up from £200,000 during the same period last year.

Challenges across the business have led to Naked Wines’ share price plummeting in recent months, triggered by two consecutive profit warnings.

Bosses are now ramping up a cost-cutting drive in a bid to stablise the business, raising the prospect of a further round of redundancies.

Rowan Gormley, chief executive of Naked Wines, refused to provide further information on where savings will come from.

He said: “We’re not being specific in where the cost cuts are coming from. There are a number of areas where we’re incurring costs that we’re having a good look at.”

Naked Wines sells wines as part of a subscription service rather than using a distributor like a typical retailer.

It previously owned Majestic Wine until 2019 when it sold the business to investment giant Fortress.

The company benefited from a surge in shoppers buying wine online during lockdowns, although it has been hammered by a drop-off in demand since restrictions eased.

This has led to the company struggling to shift a mountain of unsold stock.

The markets got carried away with dreaming of a quick cut to interest rates in America, explains Michael Hewson, chief market analyst at CMC Markets UK:

After the euphoria of the [US Federal Resarve chief Jerome] Powell pivot party on Wednesday we got a wake-up call from New York Fed President John Williams when he pushed back on market expectations of a March rate cut saying it was premature to be even considering anything like that.

Given the sharp move in bond markets since Wednesday it was perhaps felt necessary to pour a little cold water on the moves of the last 48 hours, with Williams sent out to say it was premature to be thinking in terms of rate cuts. That’s not to say they wouldn’t happen next year but to be pricing in between 5-6 rate cuts next year as markets appeared to be doing seems to be a case of getting a little carried away.

The S&P 500 and the Dow Jones Industrial Average have dropped after a member of the US committee that sets interest rates poured pushed back on market expections of interest rate cuts.

John Williams, New York Federal Reserve President, said the US central bank is still focused on whether it has monetary policy on the right path to continue bringing inflation back to its 2pc target.

Money markets now see a 73.7pc chance of at least a 25-basis point rate cut as soon as March 2024, down from nearly 80pc before Williams’ comments, while still pricing in a 95.4pc chance of another cut in May 2024, according to CME Group’s FedWatch tool.

Art Hogan, chief market strategist at B Riley Wealth, told Reuters: “It’s not unusual for Fed speakers to try to walk back outsize reactions to any particular Fed meeting, whether positive or negative.”

The S&P 500 is currently down 0.031pc, while the Dow Jones Industrial Average of 30 leading companies is down 0.24pc. The Nasdaq Composite index, weighted heavily towards technology businesses, is up 0.45pc.

We reported this morning that insolvencies jumped by a fifth in November, following all the interest rate hikes.

Tim Symes, Partner for Insolvency and Asset Recovery at law firm Stewarts, says that creditors have become less tolerant:

This month’s figures tell a bleak story. There is a 40pc increase on last month in companies forced into liquidation by their creditors, and shockingly November also now holds the record for the most winding up orders of any month in the last three years.

This record spike in compulsory liquidations combined with the lower numbers for administrations and voluntary arrangements presents an overall picture of not only increasing distress and failure in business generally, but lower tolerance by creditors prepared to be passive parties to company failures.

Any suggestion there is light at the end of the UK’s economic tunnel is not supported by these statistics.

The cost of living is putting more people off starting a business than lack of industry knowledge, formal education or fear of failure, according to a survey.

A poll of 2,000 people who had considered starting or owning a business found that 38pc of people were “mainly” held back from starting a business by the cost of living crisis, but only 24pc were put off by fear of failure.

A much-smaller 13pc were putt off by the time involved, 12pc by being unsure of how to develop a business plan, 8pc by lack of market knowedge.

Only 2pc were held back by a lack of formal education, 4pc by the pressure to look successful on social media and 7pc by a lack of support network.

The research was commissioned by Venture Planner and conducted during November by research agency Vitreous World.

London-listed mining company Antofagasta has told investors that it is buying 19pc of Buenaventura, which it describes as “Peru’s largest, publicly traded precious and base metals company and a major holder of mining rights in Peru”.

Antofagasta, which was founded in 1888, mostly operates in Chile, where it has four copper mines and a transportation business.

Jean-Paul Luksic, Chairman of Antofagasta, said:

Our investment demonstrates the significant potential we see in Buenaventura’s asset portfolio. We are excited by the prospect of working together with Buenaventura to realise that potential, in a way that maximises value for Buenaventura and its stakeholders and is consistent with responsible and sustainable operation and engagement with communities, employees, customers, suppliers, regulators and other stakeholders.

Output from US factories grew 0.3pc last month, according to official figures.

Bloomberg reported that this was less than markets expected.

The data was boosted by a 7.1pc surge in vehicle production, following the end of a strike of among members of the United Auto Workers.

In October, there was a 0.8pc decline.

Yesterday, GM announced that it was to cut more than 1,300 jobs at plants in Michigan, while earlier this week its Cruise self-driving car unit announced 900 redundancies.

Heathrow Airport has told investors that it expects passenger numbers to reach record levels next year, after delivering a 30.1pc revenue hike in the first nine months of 2023.

Its profits forcast for 2024 - using the airport’s Adjusted Ebitda measure (earnings before exceptional costs, interest, tax, depreciation and amortisation) - will, however, fall from £2.2bn in 2023 to £1.9bn. This, the company says, is primarily driven by the reduction in what it can charge airlines following a decision by the Civil Aviation Authority.

It said:

In 2024, traffic is forecast to increase to 81.4 million passengers, exceeding 2019 levels. This is based on the strong recovery seen this summer continuing alongside the flight schedule and slot utilisation stabilising, although we remain cautious in the face of a higher cost of living, the global economy remaining relatively subdued and the potential fall-out from geopolitical events. We expect sustained growth in passenger numbers from the Asia Pacific region now that borders have fully re-opened.

The airport’s busiest year to date was 2019, before the pandemic, when passenger numbers hit 80.9 million.

ICYMI – Mark Harper, the Transport Secretary, has scrapped plans for a Government-backed ticketing app that promised rail passengers an easier way to receive refunds. 

Luke Barr reports:

The proposal for a new “Great British Railways” website and smartphone app has been shelved just two years after it was introduced by Mr Harper’s predecessor Grant Shapps.

At the time of its rollout, Mr Shapps vowed to provide a taxpayer-backed ticketing sales service that could compete with private companies such as Trainline.

He said the Great British Railways website would sell tickets and provide a single compensation system to make it easier for customers to access information and apply for refunds.

However, Mr Harper has ditched the plan as he prioritises collaboration with the private sector. 

Read the full story here

Shell has agreed to sell its stake in a Germany refinery that has been caught up in Europe’s stand-off with Moscow over the war in Ukraine.

Shareholdings in the PCK Schwedt refinery, which was seized by Germany from Russian majority owner Rosneft after the invasion, were left in limbo as Europe worked to recover from last year’s energy crisis.

Shell Deutschland will now divest its 37.5pc holding to Prax Group. The transaction is expected to close in the first half of 2024, subject to regulatory approvals.

The oil giant said: “The divestment is part of Shell’s intention to reduce its global refining portfolio to core sites integrated into Shell’s operational hubs.”

Germany’s central bank on Friday sharply cut its growth forecast for next year, saying it would take time for Europe’s top economy to pull itself out of the doldrums.

The Bundesbank expects output to be 0.4pc in 2024, down from its last forecast of 1.2pc in June.

In 2023, Germany’s economy is expected to shrink slightly as it battles high energy and food costs, a manufacturing slowdown and global economic weakness.

And while a recovery will begin next year, it will be “subject to some time lag,” the Bundesbank said in its latest projection.

Weak foreign demand remained a drag on industry, private consumption was still restrained and higher financing costs were dampening investment, it said.

The competition regulator has launched a probe into mattress seller Simba Sleep amid concerns its could be misleading shoppers with price reduction claims.

The Competition and Markets Authority (CMA) said it will examine whether the firm has “misled consumers about price reductions and put unfair pressure on consumers to make quick purchases”.

It comes after the watchdog called on firms earlier this year to stop using sales practices which could break consumer laws by putting “undue pressure” on potential shoppers.

The CMA said on Friday that the probe will focus on claims by Simba related to the extent of price reductions on its mattresses and other products.

It will also look at the use of selling tactics such as countdown times which the regulator claimed “may mislead consumers on the availability of special offers”.

The pound is trading higher against the euro on Friday after UK business activity showed further signs of improvement in December.

The S&P Global/CIPS UK Composite Purchasing Managers’ Index (PMI) - spanning services and manufacturing firms - rose to 51.7 this month, the highest in six months and up from November’s final reading of 50.7.

The pound was last up 0.4pc at 85.75p per euro , heading back towards its strongest level in three months of 85.495p per euro reached on Monday.

A spokesman for MGN said:

We welcome today’s judgment that gives the business the necessary clarity to move forward from events that took place many years ago.

Where historical wrongdoing took place, we apologise unreservedly, have taken full responsibility and paid appropriate compensation.

Prince Harry has been awarded £140,600 after the High Court ruled he had been a victim of “modest” phone hacking and other unlawful information gathering by journalists at Mirror Group Newspapers (MGN).

The prince – who became the first senior royal to appear as a witness in court for 130 years at the trial in June – had sued MGN, which publisher of the Daily Mirror, Sunday Mirror and Sunday People. MGN is owned by Reach.

Prince Harry said he was targeted by MGN for 15 years from 1996 and that more than 140 stories which appeared in its papers were the result of unlawful information gathering, though the trial only considered 33 of these.

Of those the judge found unlawful actions had contributed to 15 articles during a period when he concluded that there had been extensive phone-hacking and widespread unlawful actions at the newspapers, of which some executives and in-house lawyers were aware.

Global demand for coal will hit a record high of 8.5bn tonnes in 2023 despite the worldwide push for net zero, the International Energy Agency has warned. 

Jonathan Leake has the story:

Rising usage of coal in China and India has driven an increase in demand, which comes just days after the Cop28 climate summit agreed to “transition away” from fossil fuels to help hit net zero targets by 2050. 

Increased coal consumption in Asia has offset declining demand in advanced economies across Europe and the US, which both recorded drops of around 20pc. 

The IEA said: “This year, China, India and South East Asia are set to account for three-quarters of global consumption, up from only about one-quarter in 1990.

“Consumption in South East Asia is expected to exceed for the first time that of the United States and that of the European Union in 2023.”

Coal is the dirtiest of fossil fuels, producing the highest CO2 and air pollution levels compared with gas and oil. 

However, it is also the cheapest way to meet energy demand. 

Here’s Jonathan’s full story

David Kelly, head of insolvency at PwC, gives his view on the latest stats:

Although the persistently high number of insolvencies is unfortunately no surprise, it is concerning that in the first eleven months of this year we have already exceeded the total number of insolvencies in 2022, with the outlook for next year looking precarious for many highly geared companies. 

Despite the recent easing in the rate of inflation, tighter credit conditions, lack of access to working capital, and high interest rates are still making conditions difficult to navigate for businesses, especially those at the smaller end of the market, with 98pc of all insolvencies in November being for companies with less than £1m turnover. 

However, this climate - especially the high interest rates - means we are also starting to see the fall of more zombie companies, which were sustained during the pandemic and have barely been surviving since. 

We expect a significant uptick in the number of zombie companies facing the prospect of insolvency next year as liquidity pressures become insurmountable.

The number of companies in England and Wales declared insolvent in November was 21pc higher than a year earlier, official figures showed, adding to the pattern of higher corporate failures as the Bank of England raises interest rates.

The Insolvency Service, a public body, said there were 2,466 registered company insolvencies during the month.

The BoE raised rates 14 times between December 2021 and August this year, taking Bank Rate from 0.1pc to 5.25pc. 

On Thursday, the BoE kept borrowing costs at that level and said they would need to stay high for an extended period.
 

Revelations about Aviva’s recruitment policy have sparked a diversity debate in the City, reports Lucy Burton:

“It’s rough out there for white men,” reads the subject line of one recent Reddit post.

“Anyone else witnessed an industry-wide hiring freeze on ‘straight white guys’?” asks another poster, explaining that his friend had just been told by a recruiter: “Agencies just aren’t hiring people like you at the moment”.

A growing number of men feel that strict diversity policies aimed at creating a level playing field are instead pushing them out.

The sentiment was expressed by former Tesco chief John Allan, who claimed white men were becoming an “endangered species” in British boardrooms in 2017.

When Amanda Blanc, the chief executive of Aviva, told MPs this week that the appointment of all senior white male recruits must get final sign-off from her as part of a drive to stamp out sexism in finance, frustrated male workers saw red.

Read the full story...

Britain’s economy bounced back at the end of the year as activity rose to a six-month high amid “tentative signs” of a revival in demand, a closely-watched survey showed.

Here’s Szu Ping Chan with more:

The rise in the S&P Global ‘flash’ UK PMI to 51.7 in December from 50.7 was driven by a rise in new orders and a stronger performance in technology and financial services as hopes for lower interest rates increased. Any reading over 50 signals growth.

However, economists suggested Rishi Sunak’s pledge to grow the economy remained in doubt, with activity expected to flatline for the rest of 2023.

The outlook for business activity also rose to its highest level since September, though Chris Williamson, chief business economist at S&P Global, said the rise in activity reflected a “dual-speed economy”, with manufacturing output still shrinking sharply.

Price pressures across the economy also remained elevated, while companies cut staff for the fourth straight month.

Mr Williamson said: “The UK economy continues to dodge recession, with growth picking up some momentum at the end of the year to suggest that GDP stagnated over the fourth quarter as a whole. While employment meanwhile fell for a fourth month, the decline was only marginal and not indicative of any material rise in unemployment.

“This is, however, a dual-speed economy, with manufacturing contracting sharply while services regained some poise, the latter growing faster in December thanks in part to financial services activity being buoyed by hopes of lower interest rates in 2024.”

Shares in Trainline jumped 16pc this morning after the Government scrapped plans for a Government-backed ticketing app.

Transport Secretary Mark Harper last night shelved proposals for a new “Great British Railways” website and smartphone app only two years after it was first announced.

 At the time of its roll-out, his predecessor Grant Shapps vowed to provide a taxpayer-backed ticketing sales service that could compete with private companies such as Trainline.

Russ Mould, investment director at AJ Bell, said:

This removes a potential competitive threat for the business in its core market and unsurprisingly investors have reacted accordingly and climbed aboard.

 Focus can now turn to the company’s efforts to expand in Europe, where rail travel is more reliable and affordable, and as it consolidates its position in its domestic market.

Here’s the full statement from Mohammad Syed, chief executive of Coutts:

Although Travers Smith confirm that, in general, decisions were appropriate and that there was no evidence of discrimination, it is clear there are lessons to be learned.

This report reaffirms that there were a number of shortcomings in our approach to account closures at Coutts and, in particular, in the quality and consistency of our communications.

The experience of some of our customers fell short of what they should expect and we apologise to them.

We are committed to implementing all of the recommendations made by Travers Smith, including comprehensively reviewing and updating exit and communication processes, so that we deliver a better, more consistent experience for all our customers.

An independent review into debanking at NatWest has found no evidence of discrimination due to political views in Coutts’ decision to close customer accounts.

The banking group, of which Coutts is a subsidiary, said lawyers from Travers Smith analysed 84 account closures from the two years before the review was commissioned - a sample of around 10pc of relevant account closures over the period.

But NatWest said “it is clear there are lessons to be learned” and that it will be implementing recommendations to improve how Coutts communicates with customers.

The review was commissioned after Nigel Farage said Coutts unfairly shut down his bank account because it disagreed with his political beliefs.

Germany likely ended the year in recession after a closely-watched survey showed activity in Europe’s largest economy slipped into deeper decline at the end of the year.

Szu Ping Chan has more:

S&P Global’s flash reading of activity in the manufacturing and services sector showed businesses were in the grip of a “sustained drop in demand for goods and services” in December amid “customer reluctance, geopolitical uncertainty and high interest rates”.

Germany’s manufacturing sector has struggled with high energy costs since Russia’s invasion of Ukraine.
Activity, according to S&P’s and Hamburg Commercial Bank (HCB) purchasing managers’ index (PMI) stood at 46.7 in December. This is well below the 50 level that divides growth and contraction and down from 47.8 in November.

Commenting on the data, Cyrus de la Rubia, chief economist at HCB, said: “If you are on the hunt for gifts right now, you will not strike gold in the latest PMI survey for Germany. What you will find instead is an increasing number of companies reporting a reduction in output in both the service and manufacturing sectors. This confirms our view of a second consecutive quarter of negative growth by the year’s close, driven by the manufacturing sector.”

The average house price in London has more than doubled in the 20 years since the release of hit Christmas film Love Actually.

Analysis by estate agent Savills revealed the price of average home in the capital has surged from £278,000 in the middle of 2003 to £705,000 by the middle of this year.

The research also looks at property values in some key locations where Richard Curtis’s romcom was set.

In one scene, High Grunt’s character of the Prime Minister is seen dancing through Downing Street. Price prices in the wider St James’s ward have jumped from £491,655 to £1.75.

In the West End, where a Mayfair wedding scene featuring Keira Knightley and Chiwetel Ejiofor takes place, a typical home cost £585,529 back in 2003. Now, a buyer would get little change from £4m.

China has “weaponised” the supply of critical minerals needed for green energy by restricting access “for political leverage”, a group of MPs has warned.

Howard Mustoe has the story:

Britain’s net zero drive has been left dangerously exposed to a reliance on Beijing for supplies of crucial materials, Parliament’s Foreign Affairs Committee warned. 

In a report, the group of MPs urged the Government to come up with a credible plan to secure vital supplies of rare earth minerals.

Alicia Kearns, chair of the Foreign Affairs Committee, said: “For three decades we have been asleep at the wheel, repeatedly failing to recognise the importance of critical minerals and the dangers of our current reliance on autocratic countries. 

“It is particularly clear that we need to confront the weakness created by our dependency on a single state: China. These minerals power modern life and if China pulls the plug, we will all pay the price.” 

Lithium, cobalt and silicon are among 18 minerals the UK considers “critical” to harness low-carbon energy. The materials are used in making batteries but they are also needed to make electric motors, hydrogen fuel cells and high-power electronics.

Read Howard’s full story here
 

The FTSE 100 is on track for a weekly rise, with miners leading the gains on higher commodity prices.

The blue-chip index was up as much as 0.2pc in early trading, while the domestically focused FTSE 250 rose 0.3pc.

Miners of both industrial and precious miners rose 1.8pc and 0.1pc respectively. Heavyweight energy stocks climbed 1.2pc on higher crude oil prices.

Sentiment was boosted this week when the Fed signalled it could cut interest rates next year.

The exporter-heavy FTSE 100 is on track for its third straight weekly gain, while the midcap index is likely to post a weekly advance as well.

Oil is poised to post its first weekly gain in almost two months after the Federal Reserve signalled interest rate cuts.

Benchmark Brent crude was trading at $77 a barrel after rising more than 4pc over the last two days, while West Texas Intermediate was just below $72.

The move higher comes after seven straight weeks of declines that brought prices to their lowest since June just before the Fed meeting.

But comments by Fed chair Jay Powell hinted at rate cuts next year triggered a rally across markets.

The FTSE 100 is on track to end the week on a high.

The blue-chip index edged 0.2pc higher at the opening bell to 7,667 points.

UK consumer confidence rose in December to its highest level in almost two years as households look forward to lower inflation and a slightly improved economy in 2024.

The latest survey from GfK showed sentiment was up two points to -22 – the highest level since January 2022.

The negative reading shows household confidence is still fragile, though.

Joe Staton, GfK’s client strategy director, said:

Despite the severe cost-of-living crisis still impacting most households, this slow but persistent movement towards positive territory for the personal finance measure looking ahead is an encouraging sign for the year to come.

Meanwhile, separate data from the Recruitment and Employment Confederation showed the number of job vacancies in the economy is still unusually high. 

Postings on the REC’s measure ticked up 7.7pc to 1.44m in the week starting November 27, though this was 8.6pc lower than the same time a year earlier.

H&M has reported a fall in revenues as consumers cut back spending on the chain’s fast fashion.

Sales were down 4pc in the three months to November, with store closures in Russia exacerbating the issue.

Slowing sales increases pressure on H&M to slash prices to clear inventory. The retailer has struggled with a build-up of unsold clothes for more than seven years.

H&M is facing increased pressure from the likes of Zara and Chinese fast fashion brand Shein. It also previously warned that sales would be impacted by an abnormally warm start to autumn in Europe.

Last year’s sales were boosted by a temporary reopening of H&M stores in Russia before the company permanently discontinued operations in the country.

Sticking with Russia, the rouble inched higher this morning ahead of an expected interest rate rise.

Continued inflation, fuelled by labour shortages and lending growth, is set to push the Bank of Russia to extend its monetary policy tightening to one more hike.

Policy makers are expected to lift rates by 100 basis points to 16pc.

The rouble rose 0.3pc against the dollar at 89.60, not far from a near two-week high hit in the previous session.

5 things to start your day 

1) Sunak risks clash with Bailey as Britain teeters on the brink of recession | Sunak risks clash with Bailey as Britain teeters on the brink of recession

2) China has ‘weaponised’ its dominance in critical minerals, say MPs | Britain’s net zero drive has been left dangerously exposed to a reliance on Beijing

3) Coal use to hit a record high in 2023 despite net zero push | Rising usage in China and India drives demand

4) How diversity policies have attacked the dominance of white men in the office | Revelations about Aviva’s recruitment policy have sparked a diversity debate in the City

5) Ben Marlow: Thames Water has a new face but the same old problems | Chris Weston steps into a rancid mess as new head of Britain’s debt-laden water company

What happened overnight 

The Dow Jones Industrial Average of 30 leading American companies rose 0.43pc, to 37,248.35, while the broader-based S&P 500 gained 0.26pc, closing at 4,719.55. The technology-heavy Nasdaq Composite added 0.19pc to 14,761.56.

Ryan Detrick, chief market strategist at Carson Group, said: “Under the surface we’re seeing extreme strength from small caps and mid caps while large caps catch their breath, potentially a sign this bull market is broadening out with more stocks participating.” The S&P 400 Mid Cap Index was up 2.37pc while the S&P SmallCap 600 Index rose 2.91pc.

The yield on benchmark 10-year US Treasury bonds dropped to 3.9152pc from 4.033pc late on Wednesday, after the US Federal Reserve indicated that interest rate cuts are likely in 2024. It is the first time the yield has falled below 4pc since August.

Asian shares powered higher on Friday in response to the Dow’s ascent. 

Hong Kong led Asia’s gains with property developers jumping after some Chinese cities eased buying restrictions.

The Hang Seng surged 3pc to 16,893.62. The Shanghai Composite index was up 0.3pc at 2,968.49.

Troubled developer Country Garden’s shares jumped 5.1pc, while China Evergrande gained 3pc and Sino Ocean Holding surged 5.7pc.

China’s National Bureau of Statistics reported that factory output rose 6.6pc in November and retail sales were up more than 10pc, glimmers of improvement for the economy after the post-COVID recovery faded much more quickly than expected.

However, investments in property weakened further, indicating that the crisis over excessive debt in that industry is far from resolved.

Tokyo’s Nikkei 225 index gained 0.9pc to 32,965.55 and the Kospi in Seoul added 0.9pc to 2,565.71. In Australia, the S&P/ASX 200 advanced 0.9pc to 7,443.40.

Bangkok’s SET climbed 1.3pc and the Sensex in India was up 0.6pc.