Markets hit by geopolitical worries; UK car sales jump in January – business live

Key events

Australian startup Recharge wins bid for collapsed Britishvolt

An Australian company has been chosen as the preferred bidder to take over Britishvolt, the failed UK startup which hoped to build a major factory to make batteries for electric vehicles.

Recharge Industries was selected by auditors, EY, to buy the failed company which planned to build a battery factory in the North East. The deal is expected to finalise within the next week.

Recharge is an emerging Australian company yet to construct a major project, but will now be responsible for delivering on UK hopes to electrify its automotive industry after outbidding rivals to take over collapsed battery maker Britishvolt.

In a whirlwind fortnight, Recharge Industries put together an aggressive package that also revives plans to build a £3.8bn “gigafactory” in the north of England to supply the next generation of UK-built electric vehicles, free from Chinese materials.

The Australian company, which sits under New York-based investment firm Scale Facilitation, beat three other offers to become the preferred bidder to take Britishvolt out of the hands of administrator EY.

Here’s the full story:

Beijing has stepped up its condemnation of Washington’s decision to shoot down the Chinese balloon spotted in US airspace last week.

China accused the US of dealing a “serious blow” to relations, undermining the efforts to warm ties between the two nations since presidents Biden and Xi met in Bali last November.

Vice-minister of foreign affairs Xie Feng lodged a formal protest with the US embassy in Beijing, accusing the US of “seriously” violating the spirit of international law and international conventions.

Xie added:

What the US has done has dealt a serious blow and damaged the efforts and advances in stabilising China-US relations since the Bali meeting.

The drop in Chinese stocks today reflects concerns that the shooting down of the suspected spy balloon could lead to economic retaliation by the Biden administration.

Investors should pay attention to the diplomatic tensions over the Chinese balloon entering US air space, Deutsche Bank analyst Jim Reid told clients, adding:

The US shot it down over a weekend that was supposed to mark a thawing of diplomatic relations between the countries, with Secretary of State Antony Blinken visiting China, the first such visit in four years.

This was postponed last week and an originally conciliatory China turned more aggressive after the balloon was eventually shot down. We will see if there is any retaliation and/or how strong the rhetoric is.

Introduction: UK car sales jumped in January

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK car sales jumped in January, despite the fears of a recession and the squeeze on household incomes from high inflation.

New car registrations in the United Kingdom rose by around 14% year-on-year in January, preliminary industry data this morning shows.

The Society of Motor Manufacturers and Traders (SMMT) said it expects registrations to rise 11% to 1.79 million units in 2023, despite strained supply chains and inflationary pressures in the UK.

The SMMT will provide the final figures for the month at 9am.

The UK automobile industry needs a boost, after car production fell to its lowest level since 1956 last year. Companies continued to struggle to obtain parts due to supply chain problems caused by Covid, meaning manufacturers struggled to meet demand.

Financial markets are a little edgy today, as tensions between Washington and Beijing rise.

China’s CSI 300 index has dropped by 1.3%, and Hong Kong’s Hang Seng is down 2%, as traders react to the cancellation of US secretary of state Antony Blinken’s weekend visit to China and the shooting down of a Chinese balloon.

European markets are expected to open lower, while the UK’s FTSE 100 could drop back from Friday’s record closing high.

Last Friday’s surprisingly strong US employment report is also weighing on markets, explains Naeem Aslam, chief market analyst at Avatrade.

Firstly, it is Friday’s US Job report which has made traders to think that the Fed may continue with its interest rate and perhaps could adopt a hawkish stance as the labour market is more than robust.

Secondly, geopolitical tensions have flared up between the two biggest economies of the world, and the concern is that this could have an adverse impact on the economic relationship between the US and China.

We’ll hear from two Bank of England policymakers today, with monetary policy committee member Catherine Mann giving a speech this morning and chief economist Huw Pill holding a question and answer session this afternoon. This may give fresh insight into whethet the BOE is close to ending its interest rate hikes, after lifting rates to 4% last week.

Last Friday, Pill said the Bank must be careful not to raise borrowing costs too high:

• 8.30am GMT: Eurozone construction PMI for January

• 8.40am GMT: Bank of England policymaker Catherine Mann speaks at the Lamfalussy Lectures Conference ‘New dimensions of central banking in the post-Covid era’

• 9am GMT: UK car sales figures for January

• 9.30am GMT: UK construction PMI for January

• 10am GMT: Eurozone retail sales for December

• 5pm GMT: BoE chief economist Huw Pill holds Q&A