Russia to blame for energy crisis sweeping Europe, declares IEA

That's all from the blog today, thank you for following us! Before you go, check out some of the latest business stories:

• Payments company overtakes Revolut as UK’s most valuable start-up
• MG overtakes Honda, Renault and Mazda as UK sales hit record high
• US inflation hits 40-year high in new blow for Joe Biden
• Teenage hacker claims Tesla security flaw let him take control of 25 cars
• Office commuters shun London but trips to Soho and Bluewater soar

Oil prices that rallied 50pc in 2021 will power further ahead this year, some analysts predict, saying a lack of production capacity and limited investment in the sector could lift crude to $90 or even above $100 a barrel.

Though the Omicron coronavirus variant has pushed Covid cases far above peaks hit last year, analysts say oil prices will be supported by the reluctance of many governments to restore the strict restrictions that hammered the global economy when the pandemic took hold in 2020.

Brent crude futures are trading near $85, hitting two-month highs.

"Assuming China doesn't suffer a sharp slowdown, that Omicron actually becomes Omi-gone, and with OPEC+’s ability to raise production clearly limited, I see no reason why Brent crude cannot move towards $100 in Q1, possibly sooner," said Jeffrey Halley, senior market analyst at OANDA.

The owner of the Moshi Monsters children's franchise is scrambling to renegotiate its debt with a US lender as it tries to stay afloat for long enough to turn around its business.  James Titcomb has more:

Mind Candy, once seen as one of London’s most promising start-ups, said it would have to restructure a £12.6m loan payment due in June in order to keep the company running.

Annual accounts said it had secured verbal agreements to receive £1.7m in new funding from existing investors, but that its financial position indicates “the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern”.

Mind Candy developed the hit children’s game Moshi Monsters and was an early member of the “Silicon Roundabout” cluster of technology companies to emerge after the financial crisis, but it struggled to adapt to more people playing games on mobile phones and wound down its Petlandia book service after failing to find a buyer.

It has sought to relaunch itself with a relaxation and bedtime app for children, voiced by celebrities including Sir Patrick Stewart and Brian Blessed, and revenues more than doubled in 2020 to £4.5m. The majority of its sales now come from mobile apps, with the US its biggest market. However, losses rose from £5.4m to £6.4m in the year.

The FTSE 100 has closed in the green, led by mining and oil giants following a global rally in risk assets, while a slew of positive earnings updates including a forecast lift from supermarket group Sainsbury's also aided the mood.

The blue-chip index added 0.8pc to 7,551, with heavyweight metal miners BHP Group, Glencore, Antofagasta and Anglo American jumping about 3pc on hopes of more economic support in China, the world's top metal consumer.

Overall, global equities took comfort from less hawkish comments by US Federal Reserve Chairman Jerome Powell yesterday after fears about quicker US interest rate rises had dented markets in recent sessions.

Sainsbury's gained 3.1pc after it raised its full-year profit forecast by at least 9pc following stronger-than-expected food sales over Christmas, even though it fell short of its stellar 2020 festive performance.

State Street Global Advisors, one of the world’s biggest asset managers with a $3.9 trillion (£2.8 trillion) portfolio, said all global companies in which it invests must have at least one woman on their boards to gain its support during the upcoming proxy season.

The firm’s previous policy applied only to companies that are included in major indexes. These are now required  to have at least 30pc women directors for the 2023 voting season.

“While boards have become more gender diverse, it is clear that this work isn’t yet complete,” said Cyrus Taraporevala, chief executive officer of State Street’s investment-management unit. 

Shares in one of Britain’s top video game developers have crashed after it delayed a crucial new release and issued its second major profit warning in three months. Ewan Somerville writes:

Frontier Developments shares fell by 25pc on Wednesday, as it pushed back its Age of Sigmar strategy game to late next year.

Interim results saw the Cambridge-based firm swing to an operating loss of £1.3m in the six months to the end of November, compared to a £6.9m operating profit a year earlier.

The hotly-anticipated Warhammer Age of Sigmar was planned for release during “calendar 2023”, but the company said it will now release “later in that calendar year” to “improve the quality and longevity of the game”.

It said it expected revenue in its next financial year to be between £130m and £160m, down from previous forecasts. The warning led analysts at Jefferies to cut revenue predictions for this year from £100m-£130m to £100m-£120m.

Sticking to the salary theme, Morgan Stanley will raise its annual bonus for top-performing staff by over a fifth, Reuters reported.

Bankers will pocket some of the highest sums in Wall Street following a boom in dealmaking last year, as the firm's equity underwriting and M&A advisory arms did particularly well.

Companies are fighting to keep the best talent in a fiercely competitive business environment, with the annual bonus season about to start.

Pret a Manger is increasing wages for the second time in two months, allocating £9.2m in staff pay, as the hospitality industry struggles with labour shortages.

From 1 April 2022, 8,000 UK employees will be paid up to £10.15 per hour from a baseline of £9.40-9.56.

The cafe chain said this was possible thanks to its transformation strategy implemented in 2020.

In-shop sales have fallen after working from home guidance amid the recent omicron surge, but sales across other channels, including the Pret Coffee Subscription, have performed strongly.  

Sir Martin Sorrell's digital advertising empire has taken control of the data consultancy 4 Mile Analytics as he continues his drive to become a tech tycoon. My colleague Ben Woods has more:

S4 Capital is pushing deeper into technology services by merging digital ad business Media Monks with 4 Mile, the data analytics and engineering specialist.  

Sir Martin has drawn parallels between his deal-hungry firm and the Silicon Valley giants Google and Facebook in an attempt to distance himself from traditional advertising firms. 

The company was created four years ago following Sir Martin's acrimonious departure from WPP as he sought to capitalise on the digital advertising boom. 

Shares in S4 rose more than 7pc to  571p after it said revenues and profits would be "well ahead" of the 40pc growth previously predicted. 

S4 had previously forecast gross profit to grow by 35pc, before lifting its targets in September. 

Europe will be slapped with the biggest energy bill in a decade this year as hyperinflation in natural gas and power prices hits homes and factories across the continent, according to Citigroup.

Using current forward prices, the region’s total primary energy bill will come in at about $1 trillion (£730bn), comparing with about $300bn last year and $500bn in 2019.  

While previous peaks were largely driven by surging oil prices, this time it’s about the cost of heating and powering everything from homes to transport and big industrial plants that will help reduce carbon emissions. 

“It is gas and electricity that is becoming prohibitively expensive in Europe,” Citigroup analysts wrote. “Consumers and industry across the region are likely going to have to make some tough choices about their energy consumption.”

Electricity giant EDF has announced a further delay and cost overruns for France's flagship new-generation nuclear plant, in a blow to President Emmanuel Macron's strategy of making atomic power a cornerstone of energy policy.

EDF said that the Flamanville plant on the Channel coast would not be loaded with fuel until the "second quarter of 2023", instead of late 2022.

The statement came after Macron announced plans for new reactors to provide low-carbon energy and as France backs classing nuclear as a "green" technology under future EU rules.

Projected costs increased by another €300m (£250m) to €12.7 bn, EDF said - around four times more than the initial forecast of €3.3bn. Construction on the new-generation EPR plant began in 2007, and was supposed to be finished in 2012.

That's all from me today, thanks for following! Giulia Bottaro will take over from here.

Chemicals group Johnson Matthey is set to to close its battery materials business after failing to find a buyer for the division.

In November the company said it would pursue a sale of the business after concluding the potential returns would not be enough to justify further investment.

The announcement sparked a share price crash, and the company was later relegated from the FTSE 100.

In a statement today, Johnson Matthey said it was starting a consultation with employees about a full or partial closure. It said the move would lead to costs of around £150m after anticipated asset disposal proceeds.

Shares fell 3pc following the announcement.

Apple has deleted a wave of apps imitating the viral online game Wordle after concerns that puzzle fans were being left out of pocket by developers copying the free game.

My colleague Ewan Somerville has more:

Multiple games sprang up on Apple’s App Store on Tuesday resembling the online word challenge created by Josh Wardle, which has rocketed in popularity in recent weeks.

Mr Wardle, a British-born software engineer, released the free brain teaser in October last year and now has hundreds of thousands of users guessing a single five-letter word.

A key part of Wordle’s attraction is its simplicity, offering only a single puzzle each day.

However, the game is only available on a web browser and Mr Wardle has defended not charging for it, prompting rival developers to latch on to its surging popularity and create spin-off versions on the App Store.

Wall Street has pushed higher at the open following data that showed inflation surged in 2021.

The consumer price index jumped 7pc last year – the biggest rise since 1982 but in line with expectations. This eased some concerns about an acceleration of interest rate hikes.

The Dow Jones and S&P 500 rose 0.2pc and 0.3pc respectively, while the tech-heavy Nasdaq led gains with a rise of 0.7pc.

Sterling has jumped to a two-month high against a weakening dollar after new data showed US inflation surged to a four-decade high last year.

The pound rose 0.5pc against the dollar to $1.3685 – its highest level since November.

It comes after official data showing US consumer prices rose 7pc in 2021, marking the fastest pace of growth since 1982.

Oil has climbed to its highest level since November after two major agencies indicated there could be more of a squeeze on the market than previously thought.

West Texas Intermediate rose 1pc to $82 a barrel, while benchmark Brent crude climbed to more than $84.

It comes after IEA boss Fatih Birol said the relatively small hit to demand from omicron meant consumption has been stronger than many observers had expected.

That followed a monthly report from the US Energy Information Administration that showed global oil inventories will decline slightly in the first quarter, compared with a previous forecast of expansion.

The EIA’s report also showed that global oil stockpiles declined by almost 3m barrels a day in December, underscoring recent bullish price moves.

Seema Shah, chief strategist at Principal Global Investors, says the sky-high inflation figures will make for uncomfortable reading for the Fed.

Inflation at 7pc is no joke. It’s the highest annual CPI number since 1982 and driven not by energy prices, but by just about everything else.

Yet, December’s number could mark the peak for annual inflation readings. Not only are the base effects starting to fall out of the annual comparisons, but there are growing signs of supply strains easing, with freight rates coming down, delivery times shortening, and backlogs reducing.

This should mean that the most acute price pressures start to fall back in coming months, suggesting a more digestible run of CPI readings are in the offing in the coming quarters.

For the Fed however, a 7pc figure will inevitably make for uncomfortable reading. Chair Powell believes that there is no need to rush to get back to neutral, but today’s number will increase pressure on the Fed to get monetary policy tightening off the starting block.

Digging a bit deeper into the numbers, we can see which sectors are the key drivers behind soaring inflation in the US.

Unsurprising, surging energy costs were a key contributor to the headline 7pc figure. Housing and cars also helped drive up prices.

Richard Flynn, managing director at Charles Schwab UK, says the rise in US inflation was within investors' expectations, but the Federal Reserve may still come under pressure to act.

Fears about higher and persistent inflation have been well telegraphed in recent months. Therefore, investors had been expecting the rate of inflation to rise. Today’s rise in the rate of inflation falls within investors’ expectations.

It’s clear that both the virus and the recent inflation surge have put a big dent in measures of consumer confidence. There are rampant fears of stagflation akin to the 1970s, but the good news for now is that unemployment is not on the rise.

Nevertheless, assuming no significant hit to economic activity from omicron, nor a surprise-retreat in inflation, the Fed may come under pressure to tighten monetary policy as we head further into 2022. Based on history, it’s not the timing of the first-rate hike that matters, it’s the trajectory and speed once rate hikes begin.

US consumer prices rose 7pc last year, marking the fastest rate of growth in nearly four decades.

The jump in the consumer price index was in line with expectations, with re-hot inflation pushing up prices at the fastest rate since 1982.

The closely-watched inflation gauge rose 0.5pc from November, which was ahead of expectations.

Excluding the volatile food and energy components, so-called core prices rose 0.6pc from the prior month and 5.5pc from a year earlier.

Recruitment giant PageGroup has upgraded its profit forecasts yet again as widespread labour shortages drive up hiring demand.

The company said it expected full-year operating profit to be "marginally in excess" of previous guidance of around £165m. It's the fourth time the London-listed firm has upgraded its forecasts in the last seven months.

Steve Ingham, chief executive officer of PageGroup, hailed a "record year" for the business due to the buoyant hiring market.

PageGroup posted a gross profit of £246.8m for the three months to December, rising from £166m in the same period last year.

This helped the business's overall gross profit for the year rebound to £879.1m, surpassing its performance in 2019 before the pandemic struck.

It comes a day after rival Robert Walters also forecast better-than-expected profits thanks to booming demand.

Around one in three UK consumers are planning to cut their household spending this year as the country braces for a cost of living crisis.

A new poll by KPMG revealed Brits are nervous about their finances for the coming year as inflation rises, energy bills surge and taxes go up in April.

A quarter of respondents said they hadn't saved anything during the pandemic, further highlighting the perilous state of household budgets.

The poll showed hospitality firms, which have been among the hardest hit by Covid, are set to shoulder the brunt of the cuts, with 55pc planning to spend less on eating out. Around half also plan to cut their spend on clothing.

The number of office workers commuting into London dropped to just one fifth of pre-pandemic levels last week even as bustling crowds packed Soho’s restaurants and one of the country’s biggest shopping centres.

Matt Oliver has more:

Anonymised mobile phone data collected by Virgin Media O2 showed commuter levels in the capital slumped to 20pc of figures recorded in February 2020, a month before the first nationwide lockdown came into force, amid continued guidance for people to work from home where possible. 

In the City of London, crowd volumes reached only 25pc of pre-pandemic levels on Thursday, which is now often the busiest day of the week for bankers commuting into the Square Mile. 

By comparison, crowd levels in Soho, a hotspot for restaurants and nightlife, were back to pre-pandemic levels over the preceding weekend and visitor numbers to the Bluewater shopping centre in Kent even exceeded them.

The figures underline how guidance telling office staff to work from home is increasingly at odds with how many people are choosing to socialise at pubs and restaurants during their own free time.

​Read Matt's full story here

The UK's population growth is projected to slow dramatically in the next decade, largely due to lower assumptions about future fertility levels making net immigration a crucial variable over coming decades.

The United Kingdom's population is projected to grow 3.2pc to 69.2m in the decade to 2030, up from 67.1m in 2020. In the decade to 2020, the population grew by 4.3m, or 6.9pc.

From 1995 to 2020, the population grew by 9.1m, or 15.6pc; from 2020 to 2045, it will grow 3.9m, or 5.8pc, the ONS said. By 2045, the UK population will be 71m.

England will grow faster than Scotland, Wales or Northern Ireland. More people will be old and there will be more deaths than births as people born in the baby boom generations after World War Two and in the 1960s reach older ages.

US futures pushed higher this morning ahead of key data on inflation.

Futures tracking the S&P 500 and Dow Jones both rose 0.2pc, while the tech-heavy Nasdaq pushed up 0.3pc.

Investors settled into a wait-and-see mode hours before the release of the US consumer price index, expected to show price pressures accelerated in December to 7.1pc – the highest in four decades. 

Ryanair chief Michael O’Leary has accused Germany’s government-backed airline of crying “crocodile tears” in a bid to win more EU state aid, writes Oliver Gill.

Lufthansa wants Brussels to continue to relax rules compelling the airline to run a minimum number of flights from popular airports or lose valuable take off and landing slots.

Failure to do so risks the German carrier being forced to operate 18,000 “ghost flights” so that it does not fall foul of “use-it-or-lose-it rules”, it claimed last week.

But Mr O’Leary, whose airline wants to expand across capacity-constrained airports on the Continent, hit back at Lufthansa’s pleas.

“The solution to Lufthansa’s 'ghost flights' problem is a simple one – just sell these seats to consumers,” he said. “If Lufthansa really needs to operate these flights, solely to prevent the release of these slots to competitor airlines, then they should be required to sell these seats to the public at low fares.

“Lufthansa loves crying crocodile tears about the environment when doing everything possible to protect its slots.”

Read Ollie's full story here

Saudi Arabia has called for flexibility as the world transitions away from fossil fuels towards green energy, warning energy security shouldn't be compromised for the sake of a "publicity stunt".

Prince Abdulaziz bin Salman al-Saud, the Gulf state's energy minster, said he was still worried about the energy transition and that it needed to be thought through carefully.

He told a mining conference in Saudi Arabia: "It may end up being a leap into the future, unfortunately an unknown future.

"We should not forfeit energy security for the sake of a publicity stunt. That transition needs to be [a] well-thought of transition."

The energy minister also said Saudi Arabia planned to use its vast uranium resources to develop a nuclear power programme.

He added: "Let me be very specific about it, we do have a huge amount of uranium resources that we would like to exploit and we will be doing it in the most transparent way, we will be bringing in partners."

It's looking like Amazon will press ahead with plans to block the use of UK Visa credit cards on its website from next week after the companies failed to reach an agreement.

The two sides have been locked in a row over Visa's transaction fees, which Amazon argues create an "obstacle" for small online sellers trying to keep their prices competitive.

Visa previously said it believed it could resolve the issues with the ecommerce giant.

But Amazon today said it's pressing ahead with plans to ban the cards from 19 January due to the "continued high cost of payments".

Visa told the Daily Mirror, which first reported the development, it was "very disappointed that Amazon is threatening t restrict consumer choice in the future".

Shares in Trustpilot rose almost 4pc this morning after the consumer review website said it had beaten revenue expectations for the first half.

The FTSE 250 firm reported revenues of $131m (£96m) - up by just under a quarter. Bookings rose 27pc to $150m.

Trustpilot didn't give any figures for profitability, but analysts at JP Morgan said they expected numbers close to the break-even mark as the company invested more for growth in key markets such as the US and mainland Europe.

Peter Holten Mühlmann, chief executive of Trustpilot, said:

We are very encouraged by this excellent financial result, with revenue ahead of expectations and strong growth in bookings and annual recurring revenue.

Over the past twelve months, we have continued to make strong progress against our strategic ambitions for Trustpilot to be the most trusted and most used global consumer reviews platform.

Through this, we are fast becoming a universal symbol of trust that inspires confidence in people and businesses, thus providing a real benefit to society.

Bloody protests against Kazakhstan's ruling elite throw its troubling relationship with the British establishment under fresh scrutiny.

My colleague Matt Oliver has dug into how these ties – which span the Royal Family, top politicians, big businesses and lawyers – have opened the UK to a flood of Kazakh money.

Read Matt's full story here

Shares in Philips slumped after the health equipment group said sales were around €350m (£292m) lower than expected in the fourth quarter due to supply chain troubles.

Global chip shortages have hampered production at manufacturers across a range of sectors, but Philips said the situation unexpectedly deteriorated over the fourth quarter, leaving it unable to sell medical treatment products to customers like hospitals and clinics.

Group sales for the latest three-month period fell by about 10pc year on year and are now expected at €4.9bn.

The company also raised a provision for a recall of ventilation equipment to treat sleep apnea – a sleep disorder in which breathing repeatedly stops and start – by around €225m.

Shares tumbled 14pc, wiping around €4bn off Philips' market value.

Britain is likely to suffer far higher inflation than the eurozone as the cost of living crisis intensifies this spring.

Tim Wallace and Tom Rees have more:

Inflation will surge to a peak of almost 7pc in the UK in April, according to Jari Stehn, chief European economist at Goldman Sachs.

By contrast he thinks price rises on the continent have already passed their worst point with inflation of 4.6pc in the final quarter of 2021 dropping to 3.9pc in the opening three months of 2022.

Mr Stehn said: “We think eurozone inflation has peaked and will soften to fall back below 2pc from here.”

In the short-term that is driven by factors such as last year’s rise in German VAT dropping out of the annual comparisons, but there are also signs of limited pay rises and some slack in the southern European nations which will keep a lid on price pressures.

Mr Stehn added: “That contrasts quite significantly with what we expect in the UK. The peak in the UK is meaningfully higher, headline inflation we think will climb to almost 7pc as there is a big increase that is likely coming in the energy cap.”

Read the full story here

A 19-year-old security researcher has claimed to have taken control of more than 25 Teslas around the world by hacking into them after finding a software flaw.

David Colombo, who describes himself as an IT security specialist and hacker, said the software flaw allowed him to unlock doors and windows, start the cars without keys and disable their security systems.

In a series of tweets, Colombo also claimed he could see if a driver was present in the car, turn on the vehicles’ stereo sound systems and flash their headlights.

The teenager didn’t reveal the exact details of the software vulnerability, but said it wasn’t within Tesla’s software or infrastructure and added that only a small number of vehicle owners globally were affected.

Mining companies are cheap but their valuations are not compelling. That's according to analysts at UBS, who've written a note on the sector.

They say there's no fundamental reason to expect the long-term iron ore price to rise above $70 a tonne, but Rio Tinto, BHP and Anglo American are all discounting an iron ore price of $90 a tonne.

Valuations for Antofagasta are more attractive, according to US, but not enough to buy the stocks.

The only buy rating from the brokers went to Glencore. It said the company continued to discount the lowest implied copper price and the highest dividend yield.

Still, UBS warned Glencore could face near-term challenges from a decline in coal prices.

DFS shares gained as much as 4.8pc this morning after the sofa retailer kept its forecast for full-year profits unchanged.

The company said gross sales were up 10pc in the first half of the year compared to pre-Covid levels. However, they lagged behind last year's levels, when trading was boosted by significant pent-up demand after lockdown.

Analysts at Shore Capital said resilient demand and orders were encouraging, with order intake momentum continuing in the period after Christmas.

Gas prices are back on the rise this morning as Russian supplies remain limited ahead of a NATO meeting to discuss Russia's potential invasion of Ukraine.

Benchmark European prices jumped as much as 9.2pc this morning after falling for the last three days. The UK equivalent was up by as much as 5.5pc.

Moscow is continuing to curb supplies to the continent just as the weather turns colder, while traders remain on edge before the NATO meeting later this morning.

It comes after the boss of British Gas owner Centrica warned high gas prices were likely to linger for up to two years.

Food delivery giant Just Eat Takeaway saw orders jump by a third last year as the pandemic kept driving demand for eating at home.

The Amsterdam-based company said total orders surged to 1.1bn in 2021, with 274m falling in the final three months alone. The strongest growth came from the UK and Ireland.

Gross transaction value – a key metric for the firm – also rose by around a third to €28.2bn (£23.5bn).

But total group orders, stripping out its US brand Grubhub, missed a 45pc growth target, rising just over 40pc due to the reopening of restaurants as restrictions eased earlier in the year.

Just Eat said it will continue to invest heavily, especially in its London network, and expects to further improve profitability in 2022.

Sterling has steadied not far off its recent highs against the dollar and euro as investors focus on a possible interest rate rise by the Bank of England.

The pound has strengthened in recent weeks amid growing expectations of more rate rises, while the Government's decision not to revert to lockdown measures has boosted sentiment.

Political instability around lockdown parties in No 10 appears to have had little impact on the market, and traders will turn their attention to a speech by the Bank's deputy governor Jon Cunliffe this afternoon.

The pound ticked up 0.1pc against the dollar to $1.3630 after hitting its highest level since 4 November overnight. Against the euro, it's unchanged at 83.37 after touching its highest since February 2020 on Tuesday.

Meanwhile, there's also good news for Savills, which has hailed an "extraordinarily strong" end to the year.

The estate agent group said it had benefited from abnormally low levels of discretionary spending in respect of travel, entertaining and marketing events in particular. 

As a result, it expects profits for the full year to be "very significantly" ahead of the upper end of its previous forecasts.

Savills said it expected some normalisation in the housing market in 2022, as well as pressure from inflation. Despite this, it said its previous forecasts for the year remained unchanged. Shares rose just over 3pc.

Dunelm is the high-flyer in early trading this morning, with shares leaping as much as 8.4pc – their biggest jump since September.

It came after the home furnishings retailer said full-year profits will be materially ahead of market expectations of £181m.

Dunelm put the upgrade down to strong trading across all its ranges, with higher full-price sales in its seasonal products also helping margins.

The upbeat outlook also helped other home related stocks including B&Q owner Kingfisher, which rose 0.8pc.

The FTSE 100 has continued its rise this morning, gaining 0.7pc amid global relief about comments from Federal Reserve chairman Jay Powell.

Wall Street rose last night after Mr Powell said the US was ready for tighter monetary policy but that the process may take several months – a less hawkish tone than expected.

Miners BHP, Antofagasta, Anglo American and Glencore all led the FTSE gainers this morning, tracking steady metal prices.

JD Sports rose as much as 3pc after hiking its profit forecasts for the full year, while Sainsbury's gained 2pc after it also raised expectations.

The FTSE 250 is up 0.6pc, led by a 7pc jump for Dunelm following its positive trading update.

Amisha Chohan at Quilter Cheviot says JD Sports is well-placed for further growth even as inflationary pressures bite.

Demand for trainers and athleisure remains buoyant globally, and shows no signs of slowing. JD Sports is in prime position to capitalise on the demand for athleisure, and posted a positive trading statement this morning...

Many retailers still suffer from the same fragile financial structures they had pre-pandemic and will come under intense pressure. JD Sports, however, is a high-quality business and well-positioned to consolidate the market and with a strong management track record and ‘trusted partner’ relationships with the premium brands such as Nike and Adidas, the path to further growth remains clear for JD Sports.

Furthermore, in an environment of increasing inflationary pressures, JD Sports benefits from strong pricing power and a younger consumer base.

Next up in a busy morning for results is JD Sports, which has lifted its profit forecasts after Brits splashed out on its trainers and tracksuits in the run-up to Christmas.

The retailer expects to pull in profits of at least £875m in the year to the end of January, up from its previous estimates of around £810m.

JD Sports said sales in the 22 weeks to 1 January were 10pc higher than in the same period in 2020, with an "equally positive" performance over Black Friday and Christmas. Shares rose as much as 3pc.

Premier Inn owner Whitbread said it suffered a dent in demand over the festive period due to the omicron variant, while it warned over rising costs.

The FTSE 100 group said UK sales dropped 4.4pc compared to two years ago in the six weeks to 6 January, dragged down by a slump in food and drink revenues due to virus fears and restrictions on eating out in Scotland, Wales and Northern Ireland.

Tough lockdown measures in Germany have also taken their toll, with hotel occupancy levels plunging by more than a third over the period.

Whitbread said it was too early to tell the impact of omicron on full-year trading, but it still hopes Premier Inn will recover to pre-Covid levels this year.

Alison Brittain, chief executive of Whitbread, said:

UK accommodation sales remained resilient in December, albeit softening as we moved through the month and into the festive period as a result of the onset of the omicron Covid-19 variant.

Whilst our hotel performance was excellent, the value pub and restaurant sector in which we operate remains more challenging.

The FTSE 100 has gained ground at the open, taking its cue from Wall Street's late rally on Tuesday.

The blue-chip index rose 0.5pc to 7,531 points.

Ross Hindle, analyst at Third Bridge, says supermarkets are attractive to private equity investors, but Sainsbury's is a complex target.

The group is not vertically integrated, does not boast an impressive property portfolio, and is currently faced with some market share risk from both the discount and rapid-delivery sector of the market.

Food inflation is expected to continue to outpace cost inflation and could ultimately result in higher operating margins for the industry as a whole.  However pricing and market share remains a balancing act, with Sainsbury's contending with not just cost pressures but a highly competitive jobs market and pressure from the rapid-delivery players.  

Despite many expecting the discounters to flourish in the face of food inflation pressures, our experts don't expect Sainsbury’s to be easily caught out. Demonstrating its readiness, Sainsbury’s is already promoting its Aldi price match offer on around 150 items and it is expected the innovation around value to continue in the current inflationary environment.

Read more on this story: Supermarkets face uncertain year after a bumper Christmas

Richard Lim, chief executive Retail Economics, said strong trading for Sainsbury's portrayed a "defiant consumer who prioritised Christmas get-togethers despite rising anxieties about the virus".

Food sales held up well against the previous year (given the restrictions 2020) as more family gatherings took place and consumers indulged across premium lines.

To ensure a Covid-free Christmas, many people limited their social interactions in the run-up the big day, boosting home-cooked meals to the detriment of the hospitality sector. This displacement of spending from bars, restaurants and pubs supported food sales over the period.

The retailer was also much better placed to cope with the surge in online grocery sales having invested heavily to boost capacity and improve efficiency over the last couple of years. A wave of new online grocery shoppers helped almost double sales on 2019 levels.

Sainsbury's has lifted its profit forecasts after posting stronger-than-expected sales over the festive period and slashing costs.

The supermarket giant said strong sales had offset the impact of higher operating costs and investment in the business.

Grocery sales dipped 1.1pc compared to last year, when lockdown boosted demand, but were up 6.6pc on 2019 levels.

Sainsbury's hailed a bumper performance for its premium Taste the Difference range over the Christmas period, with record sales of champagne and sparkling wine.

Simon Roberts, chief executive of Sainsbury's, said:

I am really pleased with how we delivered for customers this Christmas. More people ate at home and our significant investment in value, innovation and service led to market share growth. At the same time, we are pleased to increase profit guidance for the full year.

The backdrop was challenging and our teams worked hard throughout the year to make sure we had all of the products everyone wanted. Our suppliers did a great job in challenging conditions throughout the quarter and I thank them for all their support for our business.

Asked about potential solutions for the energy crisis, Centrica boss Chris O'Shea outlined three potential measures:

1. Delay costs for remaining energy suppliers that have taken on customers from collapsed rivals - rather than adding them to upcoming bills.

2. Remove the 5pc VAT rate charged on energy bills.

3. Shift green levies from energy bills to general taxation. 

The Government is considering slashing a £1bn levy on energy bills that covers the cost of insulation for the poorest households. Ministers are also said to be mulling a windfall tax on oil and gas companies – a move backed by Labour.

Good morning. 

We kick off the day with some gloomy comments from the parent company behind Britain's biggest energy supplier.

Chris O’Shea, chief executive of British Gas owner Centrica, warned the current spike in energy crisis was likely to last as long as two years.

He said hopes that soaring prices – which are expected to lead to energy bills jumping 50pc to £2,000 – would be short-lived may be misplaced.

He told the BBC there was no reason to believe prices would come down "any time soon".

5 things to start your day 

1) Inflation to hit almost 7pc, warns Goldman Sachs  Bank argues price rises in the eurozone have already peaked but problem in Britain will require several interest rate rises to tackle

2) Partners at Alan Howard's hedge fund share £120m pandemic bounty  Brevan Howard Asset Management enjoys profit surge after betting on right investments

3) Time to live with Covid and treat virus like the common cold, says Wellcome  Britain's biggest independent funder of medical research says restrictions can no longer be economically justified

4) Architect of Boots takeover mulls new bid for chemist chain  CVC Capital and Bain Capital consider multi-billion pound joint offer

5) Commuters must wait another six months to spend a penny on South Western trains  Operator leaves some passengers without access to toilets as it delays new carriages

What happened overnight 

Asian equities rallied on Wednesday following a strong performance on Wall Street as Federal Reserve chief Jerome Powell said he was determined to rein in runaway inflation. Hong Kong, Tokyo, Seoul and Manila were all up more than 1pc. Shanghai, Sydney, Singapore, Taipei and Jakarta also rose.

Coming up today

• Corporate: J Sainsbury, JD Sports, Vistry, Whitbread, Page Group, Grafton Group, Just Eat Takeaway, Ferrexpo, Topps Tiles, DFS (Trading update)
• Economics: Consumer price index (US, China), producer price index (China), industrial production (EU), monthly budget statement (US)