Closing summary
At the end of the first day of trading for 2024 here are today’s main stories.
Tesla overtaken by China's BYD as the world's top-selling electric vehicle seller
China’s BYD has overtaken Elon Musk’s Tesla to become the world’s top-selling electric car maker.
BYD, which has been backed by the US investment billionaire Warren Buffett since 2008, is on track to beat Tesla’s production for a second consecutive year.
BYD, which stands for Build Your Dreams, said that it produced 3.02m new energy vehicles in 2023, ahead of Tesla which announced Tuesday that it made 1.84m cars.
However, BYD’s sales figures include 1.6m battery-only cars, and 1.4m hybrids, which means Tesla is still the leader in the production of electric battery-only cars.
Nevertheless, in the final quarter of last year BYD outsold Tesla in battery-only car sales - 526,000 to 484,000 - for the first time.
Most of BYD’s vehicles sell at a lower price point than Tesla, which derives about 20% of its sales from the Chinese market.
Chinese electric car makers such as BYD and Nio have set their sights on becoming major players in international markets, with a particular focus on Europe.
In December, BYD, which currently sells five models in Europe and has plans to launch three more this year, announced plans to build a new production plant in Hungary.
Last year, the company said it did not consider building its first European car factory in the UK because of the impact of Brexit.
China’s top-selling electric car maker is targeting sales of about 800,000 cars annually in Europe by 2030.
BYD said that the UK had not even made a top 10 list of possible locations to build its first European car plant.
The Hong Kong-listed BYD, which was founded by former university professor Wang Chuanfu and began developing batteries in 1995, intends to become a global powerhouse in the electric vehicle market.
Updated
BT misses deadline to remove Huawei kit from mobile network over security concerns
BT has missed the deadline to remove Huawei equipment from its mobile network, following a UK government order that the Chinese company’s technology posed a security risk.
In 2020, the government ordered UK telecoms operators to replace Huawei technology used in core 5G mobile and broadband networks, where personal data is processed, as part of a wider ban over national security concerns that the Chinese government may be able to access customer information.
Huawei, which had been the preferred supplier of the hi-end technology for next generation UK telecoms networks, has always denied the allegations.
BT estimated that the work removing and replacing the technology from alternative suppliers would cost the telecoms group £500m.
At the time, Philip Jansen, the former chief executive of BT, said that the company would have “no problem” meeting the 31 December deadline.
“All 4G and 5G data sessions and voice calls are now delivered by non-Huawei core equipment – meaning that over 99% of all core traffic is now being served by non-Huawei kit,” said a BT spokesman.
The remaining 1% of data that is yet to be migrated off of Huawei tech is on EE’s old 2G and 3G networks.
BT said the process of removing Huawei kit from the core of its networks, which involves migrating 30 million active customers, has been “unprecedented in terms of scale, cost and complexity”.
Companies that miss the year-end target could be fined as much as 10% of their revenue, or £100,000 for every day they aren’t compliant, although officials are likely to look leniently on the timeline for completion of such a complex task.
Virgin Media O2 has said it has removed all the required equipment from its broadband and mobile networks.
Vodafone has said that it did not have Huawei kit in its core networks.
The government is allowing Huawei to be involved in the non-core parts of the UK’s 5G network, the masts and towers, but with a 35% cap on use of the Chinese company’s equipment which must be met by 2027.
Chip equipment maker ASML forced to stop some exports to China as tech battle escalates
Chipmaking equipment manufacturer ASML has been ordered by the Dutch government to restrict the shipment of some of its exports to China, prompting Beijing to urge the Netherlands to “respect market principles”.
The company said that the “partial revocation” of its export licence, which affects several lines of its state-of-the-art laser lithography machines which are crucial in the mass production of microchips, said the ban would only affect a “small number of customers in China”.
The move comes ahead of new restrictions coming into effect at the end of January, after the Netherlands followed the US and Japan in imposing strict curbs on technology exports.
In a statement the company said that after discussions with the US government it has “obtained further clarification of the scope and impact of the US export control regulations”.
The company added: “We do not expect the current revocation of our export license or the latest US export control restrictions to have a material impact on our financial outlook for 2023.”
Wang Wenbin, a spokesman for the Chinese foreign ministry, urged the Netherlands “to be impartial, respect market principles and the law, take practical actions to protect the common interests of both countries and their companies and maintain the stability of international supply chains”.
Bitcoin surges to 21-month high topping $45,000 on hopes of wider trading
Bitcoin hit a 21-month high of just over $45,000 as investors hope that US regulators will give the greenlight to the wider trading of the world’s largest cryptocurrency and its rivals.
Bitcoin hit an intra-day high of $45,532 (£35,737) on Monday night, the highest level since April 2022, and the first time it has traded above the $45,000 mark since then.
Traders, who drove big big price gains for bitcoin all last year, are excited at the prospect that the US Securities and Exchange Commission (SEC) could approve the first bitcoin exchange traded fund (ETF).
This would open the market to allow investors to buy a product that tracks the share price of bitcoin without actually having to own the cryptocurrency.
Investors are also awaiting the impact of a process known as “halving”, where every few years the reward offered to miners is slashed, which reduces the market supply and has historically resulted in share price rises.
Victoria Scholar, head of investment at Interactive Investor, said:
“After the heavy selling in 2022, bitcoin and other cryptocurrencies have been enjoying a resurgence and it feels like the crypto winter is over,” “After rallying over 150% in 2023, bitcoin continues its ascent. Growing hopes that US regulators will approve a bitcoin ETF are providing a tailwind to the cryptocurrency. The upcoming bitcoin halving event is also creating a lot of excitement among crypto investors. Historically bitcoin prices have picked up following a halving event.”
UK manufacturing production declines for 17th successive month
The UK manufacturing sector declined for a seventeenth successive month in December, capping a dismal year marked by job cuts and falls in new orders and output.
The latest flash estimate fromm the S&P Global/CIPS purchasing managers’ index (PMI) fell back to 46.2 in December - a score of 50 represents the neutral mark - having hit a six-month high in November.
The flash report also found that business optimism fell to a 12-month low in December “reflecting a faltering economy, client closures and high interest rates”
Caroline Litchfield, partner and head of manufacturing and supply chain sector at Brabners, said:
“December was reflective of a dismal year for the sector. Nevertheless, many manufacturers are optimistic for the year ahead as fresh stimuli – including the Government’s £4.5 billion advanced manufacturing pot and regional Investment Zones – create more fertile grounds for investment.”
UK #manufacturing PMI fell back to 46.2 in December from 47.2 in November, remaining below the neutral 50 mark for the 17th month running... 😦
— Julian Jessop (@julianHjessop) January 2, 2024
(Fortunately, the service sector is doing much better, so the composite PMI is back above 50) pic.twitter.com/R7abxsGvdR
Food inflation falls to 18-month low but retail bosses warn on acceleration risks
The rate of food price inflation fell to an 18-month low in December, but retail bosses have warned that there is a risk that the rate could rise again this year.
Grocery price inflation fell from 7.7% in November to 6.7% last month, the lowest level since June 2022, helped by falls in the price of wine, port and sherry before Christmas.
Fresh food inflation also fell to 5.4% in December, compared to 6.7% the previous month, according to new figures from the British Retail Consortium (BRC).
However, overall shop price inflation remained static at 4.3% because non-food products had a “challenging December” with price inflation rising to 3.1% from 2.5% in November.
Helen Dickinson, chief executive of the BRC, warned that shop prices are at risk of accelerating again this year.
“Retailers will continue to do all they can to keep prices down in 2024, but there are obstacles on the road ahead. New border checks for EU imports, hundreds of millions more on business rates bills from April. Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.”
My colleague Sarah Butler has the full story here.
Digital bank Chase UK targets profitability next year as savers look for deals
Chase UK, the digital bank launched by US giant JP Morgan two years ago, could reach profitability as soon as next year as savers hunt around for the most competitive deals in the market.
Canary Wharf-based Chase UK, which launched in 2021 with the goal of challenging the UK banking sector still dominated by a handful of high street lenders, said that it has attracted more than two million customers and manages around £15bn in deposits.
“We’ve been building the bank rapidly, so we believe that we can bring the UK business to profitability in 2025,” said Shaun Port, managing director of Chase UK, speaking to the Press Association. “We want to be a major player in the UK banking scene, and to do that, we obviously need to make banking with Chase compelling.”
In November, Daniel Pinto, president of JP Morgan, said that he expected the UK bank to break even in the next 12 to 18 months - at least two years earlier than previously expected.
JP Morgan had warned that losses from the UK digital bank would be about $450m (£352m) in 2022, and had estimated estimated a similar amount for last year.
Port said that Chase UK is “efficient” and “careful on costs” as it moves the loss-making business toward profitability.
He added that there is a “clear desire to be more resilient” among customers, with people more actively managing their finances, including by transferring their monthly salary into accounts with higher interest and then moving money out to cover major bills.
“The banking sector is in good health, but people can do more to earn more from their money, rather than just leave it with their existing provider and getting very little on their savings,” he said.
Chase UK is set to offer credit cards this year as it looks to further expand its consumer products.
Chase is also reportedly looking to launch in Germany and other European Union countries this year.
Updated
Oil prices rise after Iran sends warship to the Red Sea after Houthi ship attacks
The price of oil has surged by almost 2% in the first trading session of the New Year, after Iran sent a warship into the Red Sea.
The price of Brent Crude rose to almost $79 a barrel in early trading as tensions continue to rise in one of the world’s most vital shipping routes.
Iran sent a warship to the Red Sea following the US Navy’s sinking of three Houthi boats, killing 10 militants, to repel an attack on a Maersk container vessel over the weekend.
Attacks on boats transiting the route by Houthi rebels out of Yemen has forced shipping companies to use the alternative and much longer route around the southern tip of Africa instead of risking using the Suez canal to enter the Mediterranean Sea.
Kyle Rodda, senior financial market analyst at Capital.com, says:
“The prospect of escalating conflict in the region threatens energy supply stability through the important shipping channel, not to mention global economic activity, if it sparks broader hostilities through the Middle East.”
Global oil prices surged around 2% on 1st trading session of 2024 amid supply disruptions following a conflict in the Red Sea and expectations of a strong economic stimulus in China, the top crude importer.
— Mettis Global (@MettisGlobal) January 2, 2024
Brent #crude at $78.33 per barrel (+1.95%)https://t.co/ulzx85tcu6 pic.twitter.com/QvJudQSBqR
Germany’s Hapag-Lloyd, the world’s fifth biggest container company, said that it will continue to re-route its vessels around southern Africa until at least 9th Janaury.
Updated
Introduction: Aldi and Lidl enjoy record Christmas sales as shoppers seek to stretch festive budgets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Aldi and Lidl enjoyed record Christmas sales as shoppers turned to discount chains to stretch household budgets over the festive season amidst the cost of living crisis.
Aldi said that sales topped £1.5bn for the first time in the four weeks to Christmas Eve, with sales up 8% year-on-year, and has pledged to cut prices to keep up the pressure on rivals.
Meanwhile, Lidl said that its deluxe product range underpinned a 12% year-on-year sales increase in December, as shoppers sought a “touch of luxury at lower prices”.
Both chains said that Friday 22nd December, the last weekday before Christmas, proved to be a record trading day with Aldi, the UK’s fourth biggest chain, saying 2.5m customers used its stores for their full festive shop.
Last week, consumer card spending figures from Barclays showed that discount supermarket chains accounted for an all-time high 15.5% grocery spending last year, up a percentage point on 2022, as consumers looked for ways to reduce the cost of their weekly shop.
“The German discounters which are best known for their rock bottom prices have enjoyed a stellar Christmas amid the cost-of-living crisis as price sensitive consumers trade down to Aldi and Lidl’s attractively priced offering,” said Victoria Scholar, head oof investment at Interactive Investor. “The two supermarkets have intensified price competition in the UK, prompting other supermarkets to offer discounts and promotions and think of innovative ways to drive customer demand such as a renewed focus on their loyalty schemes.”
The agenda
9am GMT: Eurozone manufacturing report for December
9.30am GMT: UK manufacturing PMI report for December
2.45pm GMT: US manufacturing PMI report for December
Updated
