Tesla profits jump amid rebound in demand for electric cars
In This Article:
Elon Musk’s Tesla has revealed an unexpected rise in profits in a sign of rebounding demand for electric cars.
Tesla said net income had risen by 17pc to $2.2bn (£1.7bn) in the three months to the end of September, reversing two consecutive quarters of declining profits.
It came as the company reported an increase in sales as it seeks to hang on to its position as the world’s most popular electric car manufacturer. Revenues rose 7.8pc to $25bn.
Shares jumped 12pc after the results, helping to reverse a drop after Mr Musk’s disappointing launch of his “Robotaxi” concept earlier this month.
It comes as Mr Musk devotes much of his time and tens of millions of dollars seeking to return Donald Trump to the White House.
Tesla has been struggling with subdued demand for electric cars and growing competition from established manufacturers as well as Chinese upstarts, threatening the company’s lead in the market.
It sold a record 463,000 cars in the most recent quarter, with sales boosted by price cuts and subsidised financing deals.
However, it said production improvements had driven down the cost of manufacturing.
Tesla’s operating margin, a measure of the profit it makes on each car, rose from 7.6pc a year ago to 10.8pc.
“In order to continue accelerating the world’s transition to sustainable energy, we make EVs affordable for everyone,” the company said.
The company’s followers are eagerly awaiting news of a new lower-cost model, production of which Mr Musk has promised to speed up.
However, they were left disappointed earlier this month when Mr Musk unveiled the company’s Robotaxi, or “Cybercab”, which features no steering wheel or pedals and which is designed to operate completely autonomously.
The event provided few details about how Tesla expects to secure regulatory approval to release its cars onto public roads or any evidence about the technology’s development.
Tesla is facing multiple investigations over its Full Self-Driving (FSD) and Autopilot features, which are seen as precursors to a totally-autonomous system. It has also been dealt setbacks in Europe, where regulators recently delayed plans to approve such systems until 2028.
On Wednesday night, Mr Musk claimed Tesla’s self-driving software would be safer than humans within a year, stating that the technology would need fewer “interventions” than the frequency at which human drivers crash.
“The current internal expectation is for Tesla FSD having longer miles between interventions than human is the second quarter of next year, which means it may end up being the third quarter, but it seems extremely likely to be next year,” he said
He said Tesla employees in California were now testing an early version of its driverless taxi-hailing app.
Mr Musk is also throwing resources at developing Optimus, a humanoid robot, which he says will carry out work in manual jobs including Tesla’s own factories.
Tesla has maintained a small lead over China’s BYD as the world’s most popular electric car manufacturer by volume, but may be overtaken in the final months of this year.
Mr Musk, the world’s richest man, has recently become one of the most prominent backers of Donald Trump, donating $75m to a group seeking to re-elect the former president and holding rallies in Pennsylvania seeking to drum up support.
Mr Trump has said that if he is elected, Mr Musk could lead a “government efficiency” taskforce, which critics have said could influence how companies such as Tesla, as well as his other ventures SpaceX and X, are regulated.
Read the latest updates below.
09:35 PM BST
Signing off...
Thanks for joining us this evening.
My colleague Chris Price will be back at around 7am tomorrow to cover the latest from the markets.
In the meantime - and keeping on the theme of big tech firms - here’s Matthew Lynn’s take on potential government plans to hike business rates on Amazon.
09:26 PM BST
Tesla shares rise by 8.8pc after profit boost
Tesla shares are continuing to push upwards in after-hours trading this evening.
They are currently up around 8.8pc.
09:24 PM BST
Tesla expects slight growth in 2024 vehicle deliveries
Tesla said this evening that it expects to achieve slight growth in vehicle deliveries this year and reported a higher-than-expected profit margin for the third quarter.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” Tesla said in a statement.
It also said that cost of goods sold - or raw material costs - per vehicle fell to its lowest level ever at around $35,100.
Tesla said earlier this month that its quarterly deliveries grew by more than 6pc on a year-over-year basis, marking the first quarter of growth after a decline in the January-June period.
The company slashed prices last year leading to a sharp decline in profit margins. This spring, it shifted its strategy to offering cheaper financing options and discounts that analysts have said could slow its margin bleed over the coming quarters.
Prices of raw materials used to make EV batteries have been falling and Tesla has said its costs will decline as a result this year, with the effect diminishing over time.
09:07 PM BST
Tesla stock jumps 5pc after better than expected results
Tesla stock jumped 4.6pc in after-hours trading as profits beat expectations.
Tesla reported a higher-than-expected profit margin for the third quarter on Wednesday even as it offered lucrative financial incentives to boost demand for its ageing electric vehicle line up.
09:06 PM BST
Tesla profit higher than expected
Tesla has told investors that its operating profit for the third quarter was $2.72bn, compared with the estimate of £1.96bn.
Gross margin came in higher than analysts expected at 19.8pc, compared with 16.8pc predicted.
09:02 PM BST
Investors ‘starting to lose patience with Tesla’
In the run-up to Tesla’s quarterly results, David Wagner, portfolio manager at Aptus Capital Advisors, told Bloomberg:
Investors are starting to lose patience with Tesla, especially after the robotaxi event [earlier in the month] that was long on idea, but short on execution, and as growth expectations from their core business remain low over the next two years.
08:58 PM BST
Tesla down 1.7pc as market awaits results
Tesla shares are down 1.7pc just before the close of Wall Street trading, as traders await the carmaker’s quarterly financial results. They are expected shortly after 9pm.
06:06 PM BST
Signing off...
Thanks for joining us today.
We will be back at around 9pm to report on the latest Tesla financial results but you can also follow the latest business news from The Telegraph here.
06:04 PM BST
Argentina to contract out freight railway as it steps up privatisation push
Argentina is to privatise its key freight rail network as its Thatcherite president Javier Milei steps up plans to sell off nearly 60 state-owned companies.
Mr Milei will sell off Belgrano Cargas, one of the South American farming nation’s key cargo rail operators for grains and raw materials.
The company, which is loss-making, operates 4,722 miles of tracks that will be contracted out to private firms, according to the government.
The government said that the aim of the privatisation was to increase the competitiveness of rail freight transport, promote investment in the sector and “introduce market logic to the railway sector”.
Argentina is one of the largest global suppliers of soybeans, corn, wheat and their derivatives, a portion of which is transported by Belgrano Cargas.
Mr Milei has described Margaret Thatcher, who pioneered privatisation in the UK, as “one of the great leaders of humanity”.
Thatcher’s successor, John Major, privatised railways in the mid-1990s, but Labour has pledged to bring all of Britain’s train operating companies back into public ownership.
05:53 PM BST
Tesla shares dip ahead of quarterly results
Shares in Tesla dropped 1.6pc today as investors await the carmaker’s latest quarterly results, which are expected after 9pm tonight.
David Laut at Abound Financial told Bloomberg:
Earnings season is heating up and we will soon hear from big tech companies.
05:45 PM BST
Gucci owner issues fresh profit warning
French luxury giant Kering has issued a fresh profit warning, as sales of its biggest label Gucci continue to tumble.
Kering said it was now expecting operating income of €2.5bn (£2.1bn) for the year, compared to €4.75bn last year. It said sales slowed more than expected in its third quarter, driven by weaker demand for Gucci, which accounts for two thirds of its profit and half of its sales.
Sales at Gucci were down by a quarter in the latest three-month period. Kering said the brand was hit by tougher trading conditions in China.
It comes as the latest in a series of profit warnings from Kering. However the signs of further pressure at Gucci will come as a blow to Kering bosses, who have been battling to revive demand for the brand following years of declining sales.
Last year, Kering appointed Sabato De Sarno as Gucci’s new creative director in an effort to boost sales. It also hired Jean-François Palus as Gucci’s chief executive.
Kering chairman and chief executive Francois Henri Pinault said: “We are executing a far-reaching transformation of the group, and at Gucci in particular, at a time when the whole luxury sector faces unfavourable market conditions.”
Last week, luxury giant LVMH, which has been much more resilient in recent years, reported a surprise drop in sales.
05:44 PM BST
Stock markets fall in UK, US and Europe
The FTSE 100 slipped lower for the fourth consecutive day as the pound struck a two-month low against the dollar.
Miners and commodity firms were among the fallers as metal prices receded following a spike in value earlier in the week.
Strong earnings updates from WPP and Reckitt Benckiser provided some positivity but were ultimately unable to halt a largely lacklustre session.
London’s top index finished 0.6pc lower.
Across the Channel, the French Cac 40 ended 0.5pc lower for the day and the German Dax index was down 0.2pc.
In the US, the main markets opened in negative territory amid notable slumps for Boeing and McDonald’s. The S&P 500 fell 0.9pc, the Dow dropped 1.2pc and the Nasdaq fell 1.4pc.
05:39 PM BST
Lagarde says Europe should be ‘careful’ over rise of gold and Chinese yuan
Europe should keep a close eye on the rise of gold and emerging currencies like the Chinese yuan, the European Central Bank’s president Christine Lagarde warned this afternoon.
“China has been buying gold like never before, Russia is supporting gold because it is extracting a lot of gold out of its underground,” she said in an interview in Washington DC.
“And there are clearly attempts to push other currencies,” she said, adding that the Chinese yuan was currently “neck-to-neck with the euro on trade finance.”
“We need to be really attentive to developments around the world,” Ms Lagarde said, noting that the US dollar still accounts for around 50 percent of transactions, and the euro for just under 20 percent.
It came as Vladamir Putin urged the so-called Brics group of countries gathering in Russia to move away from the US currency. “The dollar is being used as a weapon,” he said. “We really see that this is so. I think that this is a big mistake by those who do this.”
In the face of Western sanctions, and with its main banks excluded from the Swift international payment system, Russia has been calling for an alternative system to counter the dollar’s hegemony.
05:27 PM BST
Reeves hints at national insurance raid
Rachel Reeves has hinted employers’ national insurance will rise next week in a tax raid on jobs.
The Chancellor said taxes paid by workers will not rise, leaving the door open to the levy paid by bosses on their workers’ wages.
“Let me be specific about what we promised in our manifesto. We said that because working people had already paid the burden under the last Government, we wouldn’t increase the main taxes working people pay - so income tax, all rates, national insurance and VAT. Those taxes that working people pay, we’re not increasing those taxes in the budget,” she said in an interview with BBC Radio 5 Live.
Asked what this meant for employers’ national insurance contributions, which is often referred to as a “jobs tax” Ms Reeves declined to rule out an increase.
“We set out in our manifesto the taxes that we would not be increasing. Obviously we do need to look at other taxes to make sure that the sums add up,” the Chancellor said.
“We do need to find additional money, but I have also been very clear that those taxes on working people, income tax, NI and VAT, will not be rising.”
It comes amid reports the Government is considering charging employers’ national insurance on businesses’ contributions to their workers’ pensions, potentially raising in the region of £10bn for the Exchequer.
If the Chancellor were to consider raising the rate of employer NI from its current level of 13.8pc, figures from HM Revenue and Customs indicate that a one percentage point increase would bring in almost £9bn per year for the Treasury.
Chris Sanger, a tax expert at EY, said a raid on employer NI contributions would push up the cost of employing workers and ultimately hit wages.
“The fact that you can change this [tax] straight away, and it affects the business and doesn’t immediately affect the employee, doesn’t stop this being a tax on labour,” he said.
“Ultimately, I think, as we see this work its way through, some of that will be absorbed by the business, and some of that will, no doubt, be absorbed by reducing the pay rises that would otherwise come to employees.”
05:24 PM BST
Traders bet on euro zone strong rate cuts as continental economy suffers
The spread between UK and euro zone bond yields is growing as the European economy continues to struggle. Kathleen Brooks, research director at XTB, said:
There has been a huge recalibration of rate cut expectations for the Eurozone in the past month.
05:19 PM BST
Gold drops back from fresh record high
Gold has fallen since lunchtime as investors cash in after the precious metal struck yet another record high today.
The safe haven asset has been boosted as markets struggle to nail down a winner in the upcoming US presidential election and amid market fears of an escalating crisis in the Middle East.
Gold dropped as much as 1.5pc after hitting a record of $2,758.49 an ounce.
04:57 PM BST
FTSE closes down
The FTSE 100 closed down 0.6pc today.
The top riser was the advertising group WPP, which rose 6.1pc, followed by Dettol owner Reckitt Benckiser, which rose 4pc.
At the other end of the index, City firm 3i fell 2.5pc, while mining group Anglo American fell 2.4pc.
Meanwhile, the mid-cap FTSE 250 also fell around 0.6pc.
The top riser was real estate investment rust PRS Reit, which gained 3.9pc. Wizz Air was close behind, rising 3.6pc.
Industrial group RHI Magnesita was the biggest faller, down 4.4pc, followed by asset manager Ninety One, which fell 4.1pc.
04:40 PM BST
Apple sharply cuts back on Vision Pro production, says report
Apple has sharply scaled back its Vision Pro production since early summer and could stop making the existing version of the mixed reality headset by year-end, according to a report by The Information.
Sales for the device have reportedly been waning after initial enthusiasm following its launch in February, due to the hefty price tag and competition from cheaper options.
While Apple’s Vision Pro starts at £3,499, the Meta Quest 3 headset has a price tag of around £470.
According to the report, employees at three Vision Pro suppliers have so far built enough components to make between 500,000 and 600,000 headsets. One of the employees said their factory suspended production of Vision Pro components in May.
Apple in recent weeks has also told the device’s assembler, Luxshare, that it might need to wind down its manufacturing in November, the report said, citing an employee at the manufacturer.
The Telegraph has approached Apple for comment.
04:29 PM BST
Trump car tariffs would cause Mexican peso to ‘fall sharply’, says economist
Mexico could suffer a major hit to its economy along with a plunging currency if Donald Trump were to enact his plans for tariffs on imported cars, an economist has warned.
Jason Tuvey, deputy chief emerging markets economist at Capital Economics, said:
If implemented, they would deal a big blow to Mexico’s economy – a 0.6% drop in real GDP for every 10% decline in vehicle exports – and the peso would fall sharply...
04:20 PM BST
Gold hits record high while stocks fall
Gold prices hit record highs on Wednesday, while global stocks edged lower amid investors’ reluctance to place major bets ahead of the US election.
Investors are also rethinking how much the Federal Reserve might need to cut interest rates after the most recent economic data pointed to an American economy that continues to expand and create jobs.
Markets are pricing a 92pc chance of a quarter of a percentage point cut at the Fed’s next meeting in November and another quarter point cut by year end.
A month ago, traders were pricing in as much as a full percentage point in cuts by January. The yield on benchmark US 10-year notes hit three-month highs at 4.244pc.
Thomas Hayes, chairman at Great Hill Capital in New York, said:
The yields rising are implying a pro-growth administration is potentially coming into power and there’s some fear about deficit spending.
On Wall Street, all three main indexes were trading lower, driven by losses in consumer discretionary, healthcare and technology stocks.
The S&P 500 fell 0.7pc, the Dow Jones Industrial Average fell 0.9pc and the Nasdaq dropped 1pc.
03:57 PM BST
Investors worried about ‘nasty surprise’, says analyst
Markets may be worried that there is “nasty surprise lurking just around the corner”, according to Chris Beauchamp, chief market analyst at online trading platform IG:
The lack of enthusiasm among investors to chase this market is palpable.
03:53 PM BST
Coke’s revenue falls but still beats expectations
Coca-Cola has revealed that its its third-quarter revenues fell as sales volumes flattened or declined around the world.
But the company still beat Wall Street’s forecasts and said it expects full-year organic revenue to rise 10pc, which is at the high end of its previous guidance.
The US beverage giant said its revenue fell 1pc to $11.9bn (£9.2bn). That beat Wall Street’s forecast of $11.6 billion, according to analysts polled by FactSet.
Coke hiked prices by 10pc in the July to September period. The company said that was partly due to hyperinflation in markets such as Argentina. Coke has raised prices every quarter since the end of 2020.
But those higher prices are hurting demand. Coke said its unit case volumes fell 1pc for the quarter. Demand for Coca-Cola Zero Sugar was up 11pc but sales of juice, dairy, water, sports drinks and coffee were down.
James Quincey, Coca-Cola chief executive, said:
There’s clearly parts of the consumer landscape where there’s pressure on disposable income.
Coke shares fell 2.4pc.
03:44 PM BST
Germany warns Trump against starting trade war
Germany’s finance minister has urged Donald Trump to avoid starting a trade war.
Christian Lindner urged solidarity between the US and Europe to counteract the threat from China, which he said was a risk to “the league of liberal democracies and free traders.”
Trump has proposed up to 20pc tariffs on imports from all countries except China, which would be hit by 60pc.
In comments on Bloomberg TV, Mr Lindner said:
Every kind of trade conflict harms both sides. There won’t be success for anyone out of a trade controversy between the US and EU...
It comes after the Cato Institute, a major Washington DC think tank, warned that the lack of checks and balances on tariffs gives too much power to the US president. This, it said, would mean that trade policy “will continue to be ripe for abuse that would cause enormous economic and geopolitical damage”.
It said that despite economists’ warnings that Mr Trump’s plans for tariffs “would harm both the US economy and the country’s foreign policy”, the US Congress will be powerless to prevent them.
Clark Packard and Scott Lincicome of the Cato Institute said:
For more than 80 years, presidents largely avoided abusing the enormous unilateral tariff powers that Congress had delegated to the executive branch under several different laws.
03:34 PM BST
Worst month for US home sales in 14 years
Sales of previously owned homes in the United States fell unexpectedly in September to reach their worst level in nearly 14 years.
Existing home sales fell 1pc last month from August to an annual rate of 3.84m, seasonally adjusted, said the National Association of Realtors (NAR).
It was the slowest annual sales pace since October 2010 when the housing market was still in a deep slump following the global financial crisis.
The fall came despite cooling mortgage rates and analysts had expected a slight uptick.
Lawrence Yun, chief economist of the US National Association of Realtors, said:
Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing... Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election.
Although mortgage rates rose quickly in recent years as the Federal Reserve rapidly hiked the benchmark lending rate to curb surging inflation, the levels have been coming down since the central bank started cutting rates last month.
As of September 26, the popular 30-year fixed-rate mortgage averaged 6.1 percent, according to government-sponsored lender Freddie Mac.
This was down from 6.4 percent in the last week of August and significantly below the 7.3 percent in late September last year.
With that, let me thank you for following the live updates so far and hand you over to Alex Singleton, who will keep you informed for the rest of the day.
03:22 PM BST
Eurozone bond yields drop amid bets on faster rate cuts
Germany’s two-year government bond yields fell as money markets increased their bets on a half a percentage point interest rate cut in December.
The gap - known as the spread - between German and UK bond yields widened to more than two full percentage points for the first time this year.
It comes as Bank of France chief Francois Villeroy de Galhau said the ECB could undershoot its inflation target and be at risk of acting too late in unwinding past rate rises.
Markets have fully priced in a quarter of a point rate cut by the ECB in December with a 40pc chance of a bigger reduction.
Bas van Geffen, senior macro strategist at RaboResearch, said: “Markets showed a reaction to these comments, but I don’t think that the economic outlook justifies a 50 bps rate cut in December.”
Germany’s two-year bond yield, which is more sensitive to ECB rate expectations, dropped 6.5 basis points to 2.1pc while the UK’s two-year yield rose to 4.1pc amid signs of a stronger British economy.
03:04 PM BST
Bank of Canada announces outsized interest rate cut
The Bank of Canada has announced a half a percentage point cut in interest rates amid rapidly falling inflation.
The central bank reduced its key rate from 4.25pc to 3.75pc in its biggest reduction in borrowing costs since March 2020 during the early days of the pandemic.
It comes as inflation fell to 1.6pc in September.
02:35 PM BST
US stocks fall amid rate cut doubts
Wall Street’s main indexes opened lower as stocks were pressured by rising Treasury yields amid declining bets on interest rate cuts.
The Dow Jones Industrial Average fell 222.65 points, or 0.5pc, at the open to 42,702.24.
The S&P 500 fell 16.7 points, or 0.3pc, at the open to 5,834.5​, while the Nasdaq Composite dropped 71.1 points, or 0.4pc, to 18,502.06.
02:16 PM BST
Mike Ashley’s Frasers abandons pursuit of Mulberry
Mike Ashley’s Frasers has ended its pursuit of luxury handbag maker Mulberry after its second £111m bid was rejected.
The tycoon’s retail group said the rebuttal of its takeover bid was “disappointing” and “remains concerned about the governance” of the business.
It “remains a long-term supporter of the well-loved British brand”.
Mr Ashley had said he had made the takeover bid to “avoid another Debenham’s situation” after his £180m stake in the retailer became worthless when the chain went bankrupt.
12:58 PM BST
Boeing turnaround ‘will take time’ says new boss as it plunges to $6bn loss
Boeing blamed strikes by workers at its factories on the US West Coast as it slumped to a massive pre-tax loss of more than $6.2bn (£4.8bn) in its third quarter.
Revenues slumped by 1pc to $17.8bn as it reported a work backlog of $511bn, including more than 5,400 commercial airplanes.
Boeing has not had a profitable year since 2018, and it said today that it lost $9.97 per share for the three months to the end of September, with an adjusted loss of $10.44 per share. Analysts had expected $10.34 per share.
Chief executive Kelly Ortberg earlier laid out a turnaround plan for the struggling plane maker in a message to staff as it grapples with a crippling strike and mounting debts.
The US aerospace giant’s boss stressed the need to improve performance in its defence business and its 737 MAX and 777 programs to stabilising the company, which is “at a crossroads” after lapses in its performance disappointed customers and eroded trust.
Mr Ortberg said: “It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again.
“Going forward, we will be focused on fundamentally changing the culture, stabilising the business, and improving programme execution, while setting the foundation for the future of Boeing.”
12:01 PM BST
US stocks slump amid doubts about Fed rate cuts
Wall Street is on track for falls at the opening bell amid doubts about the pace of interest rate cuts by the Federal Reserve.
Stocks are expected to come under pressure as US Treasury yields trade at three-month highs as markets reassess the size of interest-rate cuts over the next several months against the backdrop of strong economic data.
Thierry Wizman, global FX and rates strategist at Macquarie, said: “It’s clear to cross-asset watchers like us that stocks are finally being pulled downward by the rise in yields that has characterised global bond markets since late September.”
Investors are also thought to be making a so-called “Trump trade” as they revise their portfolios in the event of the former president winning the US election and enacting inflationary policies.
Tesla will be the first of the so-called “Magnificent Seven” to report results after markets close. Its shares slipped 0.7pc, while Coca-Cola and Boeing were trading flat ahead of their results.
In premarket trading, the Dow Jones Industrial Average was down 0.5pc, the S&P 500 was down 0.3pc and the Nasdaq 100 had fallen 0.4pc.
11:42 AM BST
Elon Musk declares ‘war’ on Labour-linked online campaign group
Elon Musk has declared “war” on a Labour-linked online campaign group founded by Sir Keir Starmer’s chief of staff.
The billionaire owner of X, formerly Twitter, accused the Centre for Countering Digital Hate (CCDH) of violating rules “against foreign interference in elections”.
Mr Musk wrote on the social media network: “We are going after CCDH and their donors.”
The Tesla owner was responding to a report from the The Disinformation Chronicle newsletter which claimed this week to have uncovered a strategy document from the CCDH which included a plan to “Kill Musk’s Twitter”.
11:20 AM BST
Barratt Redrow moving ‘at pace’ with plans to cut 800 jobs
Newly-merged housebuilder Barratt Redrow has said it is moving “at pace” on plans that will see it shut nine offices and axe around 800 workers to save costs following the two housebuilder’s recent £2.5bn combination.
Barratt, which completed its takeover of Redrow earlier this month after getting approval from the competition watchdog, said it had this week launched a consultation on the proposed closure of five of the nine divisional offices earmarked for closure.
It is thought 400 to 500 workers are impacted by the five closures so far, with back office and central support roles affected, although final numbers are subject to the consultation.
The group stressed workers on development sites and sales office-based staff will not be impacted by the cost cutting.
Barratt is looking to save at least £90m in costs following the Redrow acquisition and it revealed earlier this year that around 10pc of the 8,300-strong combined workforce, or about 800 jobs, would go.
In its latest update, it said: “Following the receipt of CMA (Competition and Markets Authority) clearance on 4 October 2024, and the lifting of restrictions on our ability to undertake any integration activity, we have begun the integration of the two businesses at pace.
“As a result of our planning to date, we are confident that we can deliver cost synergies of at least £90m.”
11:00 AM BST
Budget to boost growth, predicts Bank of America
The Budget will lead to stronger growth in the British economy, according to Bank of America.
The Wall Street bank said it thinks the Chancellor’s statement will be “net growth positive relative to March” and could potentially add 0.3 to 0.4 percentage points to GDP in the near term.
It said: “The Budget could be the first step towards improving trend growth in the economy.
“Less fiscal tightening also adds to the case for a cautious rate cutting cycle from the Bank of England.”
10:54 AM BST
Rachel Reeves to spare public sector workers from pensions raid
Rachel Reeves is set to spare public sector workers from a backdoor tax raid on pensions, reports suggest.
The Chancellor is expected to raise tax on employer pension contributions in her October 30 Budget – a move which would cost higher earners around £1,800 a year on their retirement savings, Telegraph analysis suggests.
But The Times reports that the Treasury will reimburse public sector employers – which includes NHS and government departments – on the cost of the scheme.
Our senior money writer Fran Ivens has the details on how the Chancellor’s ‘outrageous’ move could cost private sector an extra £5bn.
10:37 AM BST
Reeves to raise taxes by £35bn a year in Budget, says Wall Street bank
Rachel Reeves will put up taxes by £35bn within five years as part of her plans to increase investment and spending on public services, according to a Wall Street bank.
The increase in taxes by the 2029 to 2030 tax year will help fund £57bn of increases to public spending by the same point, Bank of America said.
Its forecast for increased taxes is higher than estimates by the Institute for Fiscal Studies (IFS), which said Ms Reeves must raise taxes by as much as £25bn by 2028/29 in order to ensure Britain does not return to austerity.
The consultancy Capital Economics also expects the Chancellor to raise taxes by £25bn a year by 2029/30, with borrowing up £18bn a year to help cover an increase in public investment of up to £53bn.
In its forecasts for the Budget, Bank of America said the Chancellor will raise borrowing by about £22bn a year to cover her investment plans.
Ms Reeves’s plans will mean borrowing could be 0.7pc higher as a proportion of GDP compared to March, it said.
10:11 AM BST
Oil prices fall amid Gaza ceasefire efforts
Oil fell as the Biden administration renewed efforts to secure a ceasefire in the Middle East.
Brent dropped 0.9pc towards $75 a barrel after gaining more than 4pc over the previous two days, while West Texas Intermediate was down 1pc near $71.
Secretary of State Antony Blinken and Israeli Prime Minister Benjamin Netanyahu agreed the recent killing of Hamas leader Yahya Sinwar opened new possibilities for ending the conflict in Gaza.
However, traders are waiting to see how Israel retaliates against Iran for a missile strike earlier this month.
Meanwhile, the American Petroleum Institute estimated stockpiles rose by 1.6m barrels last week, according to Bloomberg.
09:45 AM BST
Former Abercrombie & Fitch boss arrested on sex trafficking charges
The former boss of fashion giant Abercrombie & Fitch and his British partner have been arrested and face sex trafficking charges.
Ex-chief executive Mike Jeffries, his partner Matthew Smith and a third man, Jim Jacobson, were arrested on Tuesday morning in Brooklyn, New York.
The trio were arrested following allegations that they sexually abused young men at parties in the United States and other countries.
Lawyers for both Mr Jeffries and Mr Smith have previously “vehemently denied” any wrongdoing.
09:23 AM BST
Pound falls as ‘Trump trade’ strengthens dollar
The pound dipped further against the dollar as markets bet that Donald Trump will win the US election and for the Federal Reserve to keep interest rates higher.
Sterling was last down 0.1pc at $1.297, just above the previous day’s intraday low of $1.295, its lowest since August 19.
Traders are awaiting a speech by Bank of England governor Andrew Bailey that could affect expectations of the central bank’s rate cut path.
However, the pound’s weakness has largely been a result of a stronger dollar, as traders repositioned for a more moderate pace of rate cuts from the Federal Reserve than they had seen a few months ago.
Money markets are reducing bets on a Fed rate cut at its next meeting amid the potential for former President Donald Trump to win the US election in November.
Trump’s policies, particularly his tariff proposals, are seen as likely to lead to higher US yields, and a stronger dollar.
Kathleen Brooks, research director at XTB, said: “A strengthening US dollar is part of the Trump trade, with traders buying the US dollar as the US presidential election polls narrow.
“Thus, with two weeks to go before the US election, it is hard to see the dollar fall in a meaningful way ahead of this event.”
09:04 AM BST
British stocks lack direction ahead of Bailey speech
UK stock markets were mixed in early trading ahead of a speech by the Governor of the Bank of England which could set out the direciton of interest rates.
The FTSE 100 was up 0.1pc while the midcap FTSE 250 was down 0.1pc after lacklustre sessions on Wall Street and overnight on Asian markets.
Andrew Bailey will give a speech later, a day after he declined to give any indications on interest rates during a public address in New York.
Investors have been left uncertain by escalating tensions between Israel and Iran and a potential Donald Trump victory in the US election.
In corporate news, Lloyds Banking Group rose 1.9pc to hit its highest level in four years after its third quarter profits were better than expected.
WPP led gains on the FTSE 100, rising as much as 5.4pc after its third quarter revenues were in line with expectations and maintained its guidance.
It was closely followed by Reckitt Benckiser, which rose as much as 3.2pc after it revealed a smaller than expected hit from damage caused by a tornado.
08:38 AM BST
Heathrow hits passenger record after Taylor Swift and Olympics boost
Heathrow has increased its forecast for passenger numbers this year after record numbers of people travelled through the hub on the way to Taylor Swift concerts and the Olympics.
The airport expects to serve 83.8m people this year after 30.7m people travelled from June to September, bringing the total for the first nine months to 63.1m.
It experienced its busiest ever day for both departures and arrivals on July 24 and September 2, respectively.
It said: “While Olympic travellers were taking advantage of European city breaks, iconic music stars passing through the UK caused a late summer spike in departures.”
It returned to profit in the first nine months of the year, earning £350m.
Chief executive Thomas Woldbye said:“This summer has tested our colleagues, infrastructure and airlines to cooperate harder than ever before, with record numbers of passengers travelling through the busiest two runway airport in the world.
“We have risen to this challenge, delivering excellent service with over 91pc of passengers waiting at security for less than five minutes.”
08:16 AM BST
Minister hints at abolishing Ofwat over water company failures
The Environment Secretary said he would not rule out abolishing Ofwat if a review of the water industry recommends it.
Steve Reed said “I don’t rule it out” when asked about the regulator, adding that proposals to raise water bills by 84pc by 2030 were “eye-watering”.
Sir Jon Cunliffe, a former deputy governor of the Bank of England, is leading a major review of the privatised sector in the wake of a series of scandals about pollution and mounting debts.
Environment Secretary Mr Reed told Sky News “What I’ve asked Sir Jon (Cunliffe) to do is a root-and-branch review of the entire sector - that includes looking at regulation and the regulator.
“We need to make sure that the regulator and the regulations that they’re applying are strong enough to ensure that we get the outcomes that we want.
“That is a sufficient water supply, affordable bills and our rivers, lakes and seas cleaned up of the pollution that is filthy in them today.”
08:06 AM BST
UK markets mixed amid Budget uncertainty
UK stock markets were mixed at the open amid uncertainty about both the upcoming Budget and the US presidential election.
The FTSE 100 began the day initially lower and was last flat at 8,308.58 while the midcap FTSE 250 edged up 0.1pc to 20,962.65.
08:01 AM BST
Deutsche Bank profits surge as it settles Postbank lawsuits
Germany’s biggest lender Deutsche Bank reported a sharp jump in third-quarter profits after it settled lawsuits related to its Postbank division.
Net profits came in at €1.5bn (£1.2bn), up 42pc from a year earlier and ahead of analysts forecasts of €1.3bn.
Profits were lifted by the settlement this year of lawsuits with some former shareholders of Postbank, who took legal action against Deutsche Bank alleging that a 2010 takeover shortchanged them.
The settlement meant Deutsche Bank could cut provisions that had been set aside related to the cases.
Deutsche Bank chief executive Christian Sewing said: “We made important progress in putting legacy litigation matters behind us, while also producing a record third-quarter profit in our operating business.”
In the second quarter, Deutsche Bank had booked a loss of €143m, dragged down by the huge provision it had to set aside related to the Postbank saga.
Following Wednesday’s results, Mr Sewing said Deutsche Bank was now going to apply for further share buybacks.
07:52 AM BST
Reckitt suffers £100m blow after warehouse hit by tornado
Household goods giant Reckitt Benckiser has revealed falling third-quarter revenues after a £100m hit to sales of its Mead Johnson baby formula powder following tornado damage to a key warehouse in America.
The Nurofen-to-Dettol maker said like-for-like net revenues fell 0.5pc in its third quarter, dragged lower by a 17.4pc tumble in sales at its nutrition division caused by the tornado impact.
It said the third quarter performance in the division was knocked by around £100m of supply-related challenges from the tornado in July, though it said this was lower than initially feared.
Reckitt said in July that the third-party warehouse in Mount Vernon, Indiana, suffered “significant damage” from a tornado.
It confirmed at the time that all employees were safe, but said there would be a short-term hit to sales given the importance of the warehouse for the Mead Johnson Nutrition business, which makes baby formula.
07:43 AM BST
Lloyds Bank profits fall amid declining interest rates
Lloyds Banking Group has revealed its earnings dipped in recent months, but said it was seeing signs of improved financial confidence among consumers.
It reported a pre-tax profit of £1.8bn between July and September, about 2pc lower than the £1.9bn generated this time last year.
It nevertheless came in significantly ahead of analysts’ expectations, who had been anticipating a profit of £1.6bn for the third quarter.
The bank said underlying net interest income fell 8pc to £9.6bn as its banking net interest margin fell to 2.94pc.
The Bank of England has begun lowering interest rates after inflation fell to its 2pc target.
Lloyds said it had seen a 5pc increase on spending on non-essential items among its customers over the first nine months of the year, while average spending on energy bills dropped nearly 20pc.
07:34 AM BST
McDonald’s shares plunge after fatal e.coli outbreak
McDonald’s shares plunged in after-hours trading after its Quarter Pounder hamburgers were linked to a fatal outbreak of e.coli.
One person died and at least 49 people across 10 US states were taken ill, including a child who was hospitalised with severe kidney complications, according to the US Centers for Disease Control and Prevention (CDC).
Shares in the fast food giant plunged as much as 9pc in after-hours trading after the watchdog said everyone interviewed in connection with the outbreak had reported eating at McDonald’s before falling ill. Most mentioned eating Quarter Pounder hamburgers, the CDC said.
McDonald’s officials said that initial findings suggest that some illnesses are linked to onions sourced from a single supplier.
The company has halted distribution of the slivered onions and temporarily removed the Quarter Pounder from menus in the affected states, and also in portions of Idaho, Nevada, New Mexico and Oklahoma.
A McDonald’s spokesman said: “We take food safety extremely seriously and it’s the right thing to do.”
07:29 AM BST
Good morning
Thanks for joining me. McDonald’s shares plunged in after-hours trading after its burgers were linked to a fatal outbreak of e.coli.
One person died and at least 49 people across 10 US states were taken ill, with everyone interviewed by the CDC sayig they had eaten a McDonald’s shortly beforehand.
5 things to start your day
1) Reeves plots ‘Amazon tax’ to prop up struggling high street | Chancellor looks to level the playing field between in-store and online retailers
2) Uber rival vows to ‘stop insanity of people working from places like Bali’ | Bolt chief cracks down on remote working after claiming staff are ‘disconnected’
3) How Britain’s benefits system ‘throws you on the scrap heap’ | Financial disincentives and feeling of ‘uselessness’ stop long-term sick working
4) Ambrose Evans-Pritchard: China and the global south will not save ‘big oil’ | Opec tells us that demand will continue to grow for decades – as if technology stands still
5) Jeremy Warner: Reeves’s decision to tax, spend and borrow more is entirely political | Reeves is gambling that her Budget will see tangible improvements to public services
What happened overnight
Asian shares struggled for direction in early trade on Wednesday, reflecting subdued risk appetite as traders mulled the prospect of less aggressive Federal Reserve interest rate cuts.
Stocks moved between losses and gains in Japan and South Korea, with those in Australia modestly higher. Futures pointed to gains in Hong Kong. US contracts were flat after the S&P 500 closed little changed. Treasury 10-year yields hovered near 4.2pc after topping that level for the first time since July.
The lacklustre performance of equities comes as investors have pared back bets on rapid policy easing as the US economy remains robust and concerns rise about wider fiscal deficits after the presidential election. Since the end of last week, traders have trimmed the extent of expected Fed cuts through September 2025 by more than 10 basis points.
The stamina of China’s recent stock rally continues to draw attention, after a top government-linked think tank called on authorities to issue 2 trillion yuan ($281 billion) of special government bonds to help create a market stabilisation fund.
In currency markets, the dollar was steady in Asia after the euro hit the lowest since early August amid bets the European Central Bank will keep lowering rates.
Meanwhile, Japan’s 40-year government bond yield climbed to its highest level in 16 years amid growing speculation that the nation’s central bank will push ahead with interest rate increases in coming months.
Also making headlines in Tokyo, Metro Co.’s shares rose 36pc in their debut. The company raised 348.6 billion yen ($2.3 billion) in the country’s largest initial public offering since mobile carrier SoftBank Corp. listed in 2018.
On Wall Street yesterday, the Dow Jones Industrial Average was roughly flat at 42,924.89, the S&P 500 fell 0.1pc to 5,851.20 and the Nasdaq Composite rose 0.2pc to 18,573.13.
In the bond market, US Treasury yields have risen since the start of the week amid rose amid market uncertainty ahead of the US election as well as the outlook on interest rate cuts. The yield of 10-year US notes rose to 4.214pc yesterday from 4.212pc late on Monday and 4.096pc late on Friday.