More than a year into the pandemic, Covid-19 is no longer the biggest risk worrying investors.

Bank of America’s latest survey of fund managers has found that the pandemic is no longer the number one ‘tail risk’ for the first time since February 2020.

Instead, inflation is the top threat on investors’ minds, as they fret that a surge in prices could lead to rising borrowing costs.

They are also concerned about the risk of a ‘taper tantrum’ in the bond market [ie, that the prospect of central banks slowing their stimulus programmes causes bond prices to suddenly fall, driving yields up].

BofA also reports that investor sentiment is also “unambiguously bullish” with investors widely expecting a V-shaped recovery.

That optimism is leading to a jump in interest rate expectations, and driving investors out of technology companies and into commodities and cyclical stocks.

This caused the biggest drop in tech exposure in 15 years, BofA’s report found.

Here are more details and reaction.

Nokia is trying to “regain its competitiveness after losing out in the early rounds of 5G networks to Huawei and Ericsson”, says the Financial Times:

Nokia was caught flat-footed by the rollout of 5G networks as it was still digesting its €15.6bn takeover of Alcatel-Lucent. In recent years it has struggled financially compared with Sweden’s Ericsson and China’s Huawei.

Nokia is preparing to update investors on its new strategy under Lundmark at a capital markets day on Thursday.

The BBC reports that about 96 Nokia jobs in the UK are under threat as part of the €600m (£518m) cost cutting plan.

“We currently expect the consultation process in the UK to cover an estimated 96 roles,” a Nokia spokesperson said.

“At this stage, however, these are only estimates. It is too early to comment in detail, as we have only just informed local works councils and expect the consultation processes to start shortly, where applicable.”

France, where the company slashed more than 1,000 jobs last year, will be spared in the latest round of cuts.

Bloomberg explains that Nokia is slashing costs so it can invest more in the race to win orders for 5G networks.

The decision to part ways with as much as 10% of its workforce follows an annual report that left investors disappointed by the prospect of a continued slide in revenue. Nokia said the restructuring plan could cost as much as €700m over the coming two years.

“It’s a massive program” that reflects “the pace of change in the industry,” analyst Kimmo Stenvall at OP Group said by phone. “The shareholder will be left with nothing, all the proceeds will go toward R&D and developing the company.”

Finnish telecoms group Nokia is planning to cut between 5,000 and 10,000 jobs over the next two years, in a plan to “reset its cost base” and focus on new technologies.

Nokia said this morning it is aiming to slash costs by €600m by the end of 2023, to fund increased investments in research and development, and boost future capabilities including 5G, cloud and digital infrastructure.

The move means Nokia will cut its workforce to between 80,000 and 85,000 employees over the next two years, down from around 90,000 employees today. The exact number will depend on market developments over the next two years, it explains.

Pekka Lundmark, Nokia’s President and CEO, says:

Nokia now has four fully accountable business groups. Each of them has identified a clear path to sustainable, profitable growth and they are resetting their cost bases to invest in their future.

“Each business group will aim for technology leadership. In those areas where we choose to compete, we will play to win. We are therefore enhancing product quality and cost competitiveness, and investing in the right skills and capabilities.

Under the plan, Nokia’s Mobile Networks group will invest more in 5G R&D, while cutting investment in ‘mature or declining’ areas, while its ‘Cloud and Network Services’ will ‘align’ itself with the move towards on-demand services.

Nokia says:

Cloud and Network Services’ customers are shifting away from owning products to consuming outcomes, delivered as-a-service from the cloud. The business group’s priorities and how it operates must align with this shift.

Its ‘Network Infrastructure’ and ‘Nokia Technologies’ will remain largely unchanged, though.

Just in: Business morale in Germany rose this month, according to the latest survey from economic think tank ZEW.

ZEW’s monthly index of economic sentiment shows a sharp rise in March to 76.6, from 71.2 in February.

Economic expectations picked up, while the measure of ‘current conditions’ also improved, with survey participants expecting a broad-based recovery of the German economy.

It’s another sign that hopes of an economic bounce back this year have picked up, thanks to stimulus measures and vaccine rollouts.

However, the survey was conducted before Germany suspended use of the AstraZeneca vaccine, which could potentially undermine sentiment – especially with intensive care doctors calling for new restrictions to combat a third wave.

John Moore, senior investment manager at Brewin Dolphin, flags up that Greggs’ annual loss, although unprecedented as a listed company, was better than feared.

He says Greggs is in good shape to thrive when the pandemic is over:

“On the back of lockdown, analysts had pencilled in a potential loss of up to £15 million for Greggs; but the company has once against proven its resilience by beating expectations thanks to its careful, can-do attitude.

The baker is in a strong cash position with access to ample liquidity and has used this period to upgrade processes and systems so that it can emerge stronger. The high street is likely to be a very different place when lockdown restrictions are fully ended, with many empty spaces and chains such as Pret re-focusing on suburban areas – the traditional heartland of Greggs.

David Madden of CMC Markets agrees that Greggs’s prospects are picking up – and that its tie-up with Just Eat (agreed before the first lockdown) helped it sell goods online.

Greggs is known for its sausage rolls and baked goods but in recent years it introduced healthier options such as soups, a wide range of sandwiches and vegan items too. The company made a concerted effort to broaden its menu and it paid off, as the Greggs share price hit a record high in January 2020. The subsequent lockdown clobbered the stock price as it lost over half its value by September.

At the start of 2020, the group announced that it would be partnering with Just Eat for its food delivery business. In light of lockdowns, it proved to be a very lucrative deal as delivery capabilities are a huge advantage in the current climate. Greggs began to reopen stores in the summer, even trading is still challenging, the fact it is still motoring along puts it in a good position for when restrictions are eased. Greggs fared better than most eatery groups because a relatively small number of its outlets have city centre locations, the shops are typically in suburbs, which are gaining far more footfall in the current environment.

Chris Daly, CEO at the Chartered Institute of Marketing, adds:

“Greggs is yet another high street name that has been hit hard by the pandemic. Despite being able to keep many shops open the lack of footfall has made trading extremely difficult. The baker has sought to adapt by offering a click and collect service and a new delivery partnership with Just Eat and without these innovations it’s results might have been worse.

Innovation and an agile marketing strategy is nothing new to Greggs; who can forget the success of its vegan sausage roll. The brand’s willingness to adjust, invest in marketing and adapt its strategy to meet the current environment stand it in good stead. The future of the high street remains a subject of much debate, however Greggs’ focus on expanding its drive-throughs suggest the baker has a plan for beyond the pandemic.”

The London stock market has also picked up this morning, with the FTSE 100 index of blue-chip shares currently 45 points higher at 6794 points.

AstraZeneca is currently the top riser on the FTSE 100, up 3%. This morning the pharmaceutical firm announced an agreement with the US to supply up to half a million extra doses of its experimental antibody-based COVID-19 combination therapy.

Reuters explains:

The antibody therapy, which has yet to be approved by U.S. regulators, is designed to treat the disease rather than prevent it like the vaccine, which several countries have stopped using while reports of blood clots in some people are investigated.

The Anglo-Swedish drugmaker said on Tuesday the $205 million U.S. extension for 500,000 antibody doses builds on a contract agreed with government agencies in October for initial supplies of 200,000 doses of the antibody cocktail, AZD7442.

Companies who will benefit from the reopening of the UK economy, and a relaxation of travel restrictions, are also rallying.

That includes commercial property firm Land Securities (+2.7%), engineering group Melrose (+2.7%), jet engine manufacturer Rolls-Royce (+2.6%), Barclays bank (+2.8%) and Primark owner AB Foods (+2.3%).

Despite posting its first annual loss as a listed company, Greggs has lifted its target for UK stores – anticipating that the pandemic will create new opportunities on the high street.

In the short term, it plans to open around 100 new bakery outlets this year, on top of its 2,078 existing shops (last year it opened 84 and closed 56).

In today’s financial results, CEO Roger Whiteside explains:

Shops accessed by car have been the strongest performers during the Covid crisis and these location types already formed most of our new shop pipeline. This gave us the confidence to restart our new shop opening programme in the second half and we are targeting a rapid return to previously planned growth levels of circa 100 net new shops for the year ahead.

And with an eye to the future, Greggs now hopes to eventually have 3,000 stores in the UK, [up from a previous target of over 2,500 a year ago].

The crisis in UK retail means it is now cheaper and easier to expand into areas like London, and major transport hubs.

Whiteside says:

In addition, new opportunities now exist in previously underrepresented locations such as central London and mass transport hubs where availability and rental levels will now make those locations more accessible. Similarly, relocation opportunities to expand into bigger, better shop space are expected in existing locations that will support our continued drive to improve the quality of the estate and develop new opportunities with additional seating.

With a strong pipeline and support from multi-channel development we have raised our target for the UK estate to 3,000 shops.

Greggs also says that sales so far this year has been better than expected, although the current restrictions on retail in Scotland are hitting takings.

On current trading, it reports:

• Positive sales trend, better-than-expected start to 2021 given the extent of lockdown conditions
• Shops in Scotland temporarily closed to walk-in customers for the majority of the year to date
• Company-managed shop like-for-like sales down 28.8% year-on-year in the ten weeks to 13 March 2021
• Outside of Scotland, company-managed shop like-for-like sales in the rest of the UK estate were down 22.4% year-on-year
• Delivery sales particularly strong, at 9.6% of total company-managed shop sales in the first ten weeks of 2021

Chief executive Roger Whiteside says:

“Greggs has made a better-than-expected start to 2021 given the extent of lockdown conditions and is well placed to participate in the recovery from the pandemic. It has a clear strategy to extend its digital capabilities and to grow further in new locations, channels and dayparts.

These opportunities will benefit all of its stakeholders in the years to come.

Whiteside adds that Greggs’s staff have been working hard providing takeaway food to customers unable to work from home, many of whom were themselves key workers.

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

British baker and fast food retailer Greggs has underlined the impact of Covid-19 on the UK high street this morning, by reporting its first ever loss as a listed company.

Greggs, well-known for its steak bakes, sausage rolls and recent vegan offerings, made a pre-tax loss of £13.7 million for 2020. That’s down on a pre-tax profit of £108m in 2019.

It’s the first time Greggs has posted an annual loss since it floated on the London stock markets back in 1984.

Greggs was forced to close its stores in the first lockdown a year ago, and then reopened last summer. But social distancing measures, and restrictions keeping customers at home, hit sales hard.

Total sales across Greggs stores fell by 30.5% during the year, while like-for-like sales slumped by over 36%.

Greggs has moved to online – partnering with Just Eat to offer deliveries of its baked goods just before the pandemic – which helped to keep sales moving in the pandemic.

And encouragingly, the firm says that trading so far this year was better than expected.

Chairman Ian Durant says Greggs rose to the “most formidable of challenges in 2020”, and is recovering well.

With lower-than-normal sales levels Greggs made a loss in 2020; the first time in its history as a listed business. Government support has been essential to mitigate the impact of Covid and protect as many jobs as possible through this period.

Shareholders have made a significant contribution, forgoing dividends and accepting reduced investment in the business, and there has been terrific support from our employees.

The impact on staff has been hard. Last November, Greggs announced that over 800 jobs were being cut, due to the pandemic’s hit to sales.

Yesterday, another high street stalwart Thorntons announced plans to close its 61 chocolate stores, threatening 600 jobs, and further highlighting economic cost of the pandemic.

Also coming up today

European stock markets are on track to open higher, despite several major EU member states halting their rollouts of the Oxford-AstraZeneca jab in recent days.

Health experts insist there’s no evidence of a link between the vaccine and a small number of blood clots reported among those receiving the jab.

As our health editor Sarah Boseley explained:

Experts say that the numbers of blood clots and thrombocytopenia cases in people who have been vaccinated is no higher than in the population that has not received the jab. The International Society on Thrombosis and Haemostasis, representing medical experts around the world, said on Friday that “the small number of reported thrombotic events relative to the millions of administered Covid-19 vaccinations does not suggest a direct link”.

Blood clots are common, they said, but not more common in people who have had a Covid jab, from evidence so far. They recommended that even people with a history of blood clots or taking blood-thinning drugs should go and get their vaccination.

On the economic front, February’s US retail sales figures are likely to show a slowdown after a burst in January, while economic optimism in Germany may have picked up.

Michael Hewson of CMC Markets explains.

With the DAX hitting record highs last week, it can safely be assumed that investor sentiment is fairly bullish this month with the latest German ZEW expectations survey set to rise to 74, from 71.2 in February.

We also have the latest February retail sales data for February, which could well struggle to live up to the rebound seen in January.

When it comes to the last 12 months of US consumer spending, its resilience has largely been driven by the US government and the issuance of stimulus payments.

The agenda

• 10am GMT: ZEW survey of German economic sentiment
• 12.30pm GMT: US retail sales for February
• 1.15pm GMT: US industrial production for February
• 2pm GMT: US NAHB Housing market index