What to watch: Europe double-dip fears, Barclays boost, retail sales leap

Tom Belger
·Finance and policy reporter
·3-min read
PARIS, FRANCE - OCTOBER 22: A waitress wearing a protective face mask waits for customers in front of an empty restaurant terrace near Notre-Dame Cathedral during the coronavirus outbreak on October 22, 2020 in Paris, France. In the absence of tourists due to the coronavirus pandemic (COVID 19) and measures taken by the French government to curb the disease, many bars, restaurants and souvenir shops are empty in tourist sites in the capital. (Photo by Chesnot/Getty Images)
A waitress wearing a protective face mask waits for customers in front of an empty restaurant terrace near Notre-Dame Cathedral, Paris, France. Photo: Chesnot/Getty Images

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

Double-dip fears on weak eurozone PMI data

A leading business survey shows activity in Europe’s dominant services sector declined in October, as rising infection rates and restrictions hit firms reliant on social contact.

A purchasing managers’ index (PMI) survey for services and manufacturing combined fell from 50.4 to 49.4, with a fall below the 50 mark signalling declining output.

Services firms recorded declines from 48 to 46.2 while manufacturing output grew.

“Today’s PMI confirms that after a stellar third quarter GDP figure, we could be in for the dreaded double dip,” wrote ING analysts.

Barclays beats forecasts as it sets aside another £600m for COVID losses

Barclays (BARC.L) beat forecasts for income, profits, and loss provisions in the third quarter, but downgraded its outlook for the UK economy moving forward.

Barclays’ third quarter results showed revenue slipped 6% to £5.2bn ($6.8bn), while pre-tax profit rose over 350% to £1.1bn.

Both measures beat forecasts. Analysts had expected the bank to report net income of £4.8bn in the quarter and a pre-tax profit of £507m.

The bank set aside another £608m ($781m) to cover expected future losses, which was below the £1bn expected by analysts.

“The bank, six months into this historic time, is strong and resilient and profitable,” chief executive Jes Staley told journalists. “We have a good chance to come out of this crisis stronger than when we went in.”

Watch: Why tax rises may be inevitable in Britain

UK retail sales surged in September

Retail sales continued to rebound in Britain last month, smashing forecasts for growth.

The Office for National Statistics said on Friday that retail sales grew by 4.7% in September. Month-to-month sales grew by 1.5%.

Economists had expected annual sales growth of 3.7%, or 0.4% on a monthly basis.

Sales were driven by DIY and garden items, as well as a revival in supermarket food sales as the Eat Out to Help Out scheme came to an end.

The data confirmed the fifth consecutive month of growth for retail sales and marks an acceleration in growth. Sales grew by 2.3% in August, undershooting economists’ forecasts.

“Retail sales continued to benefit in September from households spending more of the ‘enforced savings’ that they accumulated during the second quarter,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

European stocks edge higher on strong earnings and economic data

European stocks edged higher on Friday, with strong corporate earnings and economic data nudging markets higher.

The pan-European STOXX 600 (^STOXX) rose 0.9% in the first hour of trading, largely helped by Britain’s FTSE 100 (^FTSE), which rose 1.1%, and France’s CAC 40 (^FCHI) at +1.15%. Germany’s DAX (^GDAXI) was up 0.8%.

In France, L’Oreal shares jumped 1.3% as its sales rebounded into positive territory. Closely watched purchasing managers index (PMI) data for France’s manufacturing sector showed firms expanding output in October, though in services activity levels declined and were slightly worse than expected.

In Germany, Daimler shares were up 1.1% as it hiked its profit outlook for this year, highlighting resilient demand in China. PMI data also showed a slight decline in output in its services sector, though manufacturing output surged higher and exceeded analysts’ expectations.

Leading indices mostly edged higher in Asia overnight. China’s Shanghai Composite (^SSEC) fell 0.9%, but Japan’s Nikkei (^N225), the Kospi (^KS11) in South Korea and the Hang Seng (^HSI) in Hong Kong all rose 0.2%.

Wall Street looked set to drop on the open. S&P 500 (ES=F) futures were trading 0.3% lower, while Dow Jones futures (YM=F) and Nasdaq (NQ=F) were down 0.2%.

Watch: European bank stocks jump on strong Barclays results