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5pm: BT slides after pay deal

BT shares were 3.10p (2.44%) softer at 124.05p after it reached an agreement with the Communication Workers Union (CWU) over pay after months of negotiation.

The package includes pay permanently increasing by £3,000 from 1 April, with a further review from 1 September 2023 to “allow for further negotiations to resolve pay, grading and structuring issues”. This will represent a pay rise ranging from 6% to 16% across the grades.

Shares in Curtis Banks fell back 13p (3.9%)to 319.5p following Friday’s 26% surge after Scottish wrap platform Nucleus Financial confirmed it is in “advanced discussions” over a possible cash offer for the self-invested personal pension (Sipp) provider. Full story here.

11am: Retail slide

Retailers saw their sales volumes fall in the year to November, according to the CBI’s latest quarterly Distributive Trades Survey. Firms anticipate little festive cheer in December, with a similar rate of decline expected. 

There is continuing pessimism about their business prospects for the next three months, which is reflected in declining employment numbers and deteriorating investment intentions. 

Global markets

China’s stock markets and its currency opened sharply lower this morning, as widespread protests against the country’s stringent Covid-19 restrictions over the weekend dented investor sentiment.

The demonstrations are said to be the most significant public display of defiance since Tiananmen Square.

Hundreds of protesters and police clashed in Shanghai, with many waving blank sheets of paper in a symbolic protest against censorship.

Frustration grew following the death of ten people trapped in a high-rise fire in the city of Urumqi, in Xinjang region, on Thursday. Their deaths are widely blamed on control measures that blocked escape routes and obstructed rescue efforts. 

Investors were worried over how the government in Beijing would react to the the wave of civil disobedience when COVID cases are rising.

Protesters are calling for the removal of President Xi who recently won his third term as party head. The authorities are concerned by low vaccination rates. Five days ago, China reported nearly 30,000 new locally transmitted Covid infections, with outbreaks in every region. This figure had spiralled to 40,000 by yesterday.

London’s FTSE 100 index traded 64 points lower at 7,423.19 at the open.

Hong Kong’s Hang Seng Index fell as much as 4.2% in early trading. It has since pared some losses and last traded 2% lower.

The Shanghai Composite briefly fell 2.2%, before trimming losses to 0.9% lower than Friday’s close. The tech-heavy Shenzhen Component Index dropped 1.1%.

The dollar climbed and consigned the Chinese yuan to a more than two-week low against the safe-haven greenback.

“We’re really looking at the government response to what’s happening … the government response is so unpredictable, and of course that just means derisking,” said Chris Weston, head of research at Pepperstone.

China’s stringent COVID restrictions have taken a heavy toll on its economy, and authorities have implemented various measures to revive growth.

Iris Pang, chief economist for Greater China at ING, said: “Companies are currently facing weaker retail sales from a higher number of COVID cases and falling home prices from unfinished home projects.”

AJ Bell investment director Russ Mould said: “China is a rapacious consumer of global commodities and signs economic activity is being disrupted by the mounting dissent in the country will be seen as negative for demand. It’s worth noting that unrest is already affecting business in China including Apple which has seen violent clashes at one of its facilities in Zhengzhou.

“In this context the selling in mining, oil and gas stocks makes a lot of sense and it’s notable that other European indices aren’t as impacted as much as the resource-heavy FTSE 100 this morning.

“In the medium term the protests could be positive for growth if they persuade Beijing to adopt a looser approach to Covid but given how strident Xi Jinping has been in pursuing the hard-line policy, it’s difficult to see it being surrendered easily.

“Part of the problem for China is vaccination levels are behind those seen in other parts of the world and this means a ‘living with the virus’ strategy comes with substantial risks attached.”

In the US, Federal Reserve chair Jerome Powell is due to speak on the outlook for the US economy and the labour market at a Brookings Institution event on Wednesday, which could provide more clues on the outlook for monetary policy.

7am: Pension Bee hits milestone

PensionBee, the online pension provider, has achieved assets under administration of more than £3 billion this month.

It described it as “important financial milestone” driven by a combination of high customer retention and strong net inflows.

Romi Savova, CEO, said: “We are growing the business in line with our ambitions while helping to meet the country’s ever greater need for long term retirement planning and preparedness.”

7am: Superdry finance

Casual fashion group Superdry has confirmed it is in negotiations with Bantry Bay Capital, a specialist lending provider, to replace its existing up to £70m asset-backed lending facility.

Superdry operates 740 branded stores across 61 countries and employs more than 2,500 people in the UK and Ireland.