US inflation exceeds expectations to hit 2.4pc
US inflation was higher than expected in September amid increases to food costs, but the annual increase in the consumer prices index (CPI) was the smallest in more than three and a half years.
The CPI slowed to 2.4pc in September from a year ago, down from 2.5pc in August, the US Labor Department said. Economists had predicted a 2.3pc rise.
Wall Street dipped this afternoon, with falls particularly affecting those stocks that are most rate sensitive, such as in the real estate sector, which fell 1pc. However, money markets interpreted the figures as meaning the Federal Reserve is still on track to cut interest rates again next month.
Austan Goolsbee, president of the Chicago Fed, played down the importance of the latest inflation data, saying that people should “not get worked up by one report”.
He told CNBC that the data is “noisy”, and that “the overall trend is what’s important, not the day-to-day fluctuations.”
“The overall trend over 12 to 18 months is clearly that inflation has come down a lot and the job market has cooled to a level which is around where we think full employment is, and we’d like to get both of them to kind of stay in the space where they are right now,” he added.
Other data from the Labor Department on Thursday showed that first-time applications for unemployment benefits surged last week to the highest level in more than a year, driven by Hurricane Helene and a nearly month-old strike at Boeing.
The S&P 500 and Dow Jones dropped 0.4pc, while the Nasdaq fell 0.2pc.
Read the latest updates below.
06:25 PM BST
Signing off...
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The Markets blog will be back around 7am tomorrow, but you can follow all the latest business news and analysis from The Telegraph here.
06:23 PM BST
Traders strengthen bets on a US rate cut next month
Wall Street’s main indexes struggled for direction this afternoon, after a hotter-than-expected inflation reading kept expectations for a cut by the Fed in November alive.
The Dow Jones Industrial Average fell 0.3pc, the S&P 500 fell 0.2pc and the Nasdaq Composite was flat.
The Russell 2000, which tracks economically sensitive small-cap stocks, dipped 0.9pc.
After the inflation data was released, traders firmed bets on a quarter of a percentage point cut in November at 89pc, according to CME’s FedWatch.
Brian Mulberry, portfolio manager at Zacks Investment Management, said:
What you’re seeing here is a bounce in prices that could push another rate cut back - but we got the other side of the coin, which was a little warmer unemployment number as well.
06:16 PM BST
MyProtein owner to spin off tech platform as it seeks £75m funding boost
Online retail business THG has said it will spin off its technology platform and plans to raise £75 million in an equity raise.
It came as the MyProtein and Cult Beauty owner revealed a fall in sales over the latest quarter, but pointed towards a recovery in its under-pressure nutrition business.
Last month, THG said it was considering a demerger of its Ingenuity platform business, amid efforts to grow value for shareholders.
Now it has told investors it will separate the business, which works closely with warehouses to manage online sales.
Ingenuity is used by brands including Holland & Barrett and L’Oreal, as well as THG’s brands which also include Lookfantastic and Dermstore.
THG said the move would help to simplify its operations by focusing on its beauty and nutrition arms, as well as boost its balance sheet and provide more cash for investment.
06:04 PM BST
Traders to make a fortune on chippies’ used fat
The fat and oils thrown away by Britain’s legion of fish-and-chip shops have long been viewed as useless waste.
But now the nation’s chippies may want to reconsider: they could be sitting on supplies of liquid gold.
For the first time, a major stock exchange is set to launch a market for supplies of waste cooking oils as production of eco-fuels becomes big business.
Bursa Malaysia, Malaysia’s biggest stock market and the main hub for trading palm oil globally, is considering the launch of futures contracts for used cooking oil, according to Bloomberg.
05:42 PM BST
European stocks end lower after US inflation data
European shares closed lower this afternoon, with defence and industrial stocks leading losses.
It came as traders mulled data showing US inflation for September was higher than expected, while investors waited for France to unveil its 2025 budget.
The pan-European Stoxx 600 index, which includes some of Britain’s biggest companies, fell 0.2pc, with defence, industrials and technology each losing over 1pc.
The Stoxx 600 has been choppy this week as uncertainty around Beijing’s stimulus plans weighed on sentiment. China’s finance ministry will detail plans on fiscal stimulus at a highly anticipated news conference on Saturday.
05:25 PM BST
CAB Payments rejects £368m takeover offer
A British foreign exchange business has rejected a takeover offer from an American rival, saying it was “not in the best interests of the company and its shareholders”.
CAB Payments, the owner of Crown Agents Bank, told investors that it had received an unsoliticed non-binding offer from StoneX for £1.45 a share. That values the business at £368m, an 18pc premium on its current market capitalisation of £313m.
Crown Agents Bank has provided financial services since 1833, originally as a state-owned instituion.
05:04 PM BST
FTSE closes down
The FTSE 100 closed down 0.1pc.
The top riser was mining company Fresnillo, up 3.5pc, followed by insurer Beazley, up a similar amount.
At the other end of the index, housebuilder Taylor Wimpey fell 4.9pc, followed by rival Vistry, down 4.6pc, in a bad week for the sector.
Meanwhile, the mid-cap FTSE 250 fell 0.6pc.
The top riser was Hochschild Mining, up 5.9pc, followed by Auction Technology, up 5.6pc.
The biggest faller was Bytes Technology, down 5.4pc, followed by biotechnology business Genus, down 4.6pc.
05:01 PM BST
Don’t get ‘worked up’ by today’s inflation data, says US central banker
Austan Goolsbee, the Chicago Fed president, has played down the importance of September’s inflation data, which was released this afternoon, saying that people should “not get worked up by one report”.
The consumer price index (CPI) slowed to 2.4 percent in September from a year ago, down from 2.5pc in August, the US Labor Department said in a statement. This was slightly slighly higher, though, than expected.
In an interview with CNBC, he said that the data is “noisy”, and that “the overall trend is what’s important, not the day-to-day fluctuations.”
“The overall trend over 12 to 18 months is clearly that inflation has come down a lot and the job market has cooled to a level which is around where we think full employment is, and we’d like to get both of them to kind of stay in the space where they are right now,” he added.
04:40 PM BST
Euro zone bond yields fall back after US data
Euro zone government bond yields reversed their rise on Thursday after US economic data led investors to slightly increase bets on Federal Reserve interest rate cuts.
Europe’s benchmark, 10-year German bonds, are currently roughly flat compared with yesterday night, at 2.257pc compared with 2.293pc earlier.
US consumer prices rose slightly more than expected in September, but their annual increase was the smallest in more than three and a half years.
Also in the mix, US weekly claims for unemployment benefits surged, leaving money markets pricing in 0.46 percentage points of rate cuts across the Fed’s two remaining meetings by year-end from 0.43 percentage points before the data.
Royal Bank of Canada analysts said:
The small upward surprise in September price growth isn’t likely enough to prevent the Fed from following through with additional interest rate cuts.
04:25 PM BST
World Trade Organisation warns over escalation in the Middle East
The World Trade Organisation has raised its outlook for global goods trade this year slightly, but warned that increasing geopolitical tensions and uncertainty over economy policy pose “substantial” risks to its forecast.
The Geneva-based WTO projected that global goods trade will increase by 2.7pc this year, compared with the 2.6pc it forecast in April. But it predicted growth of 3pc next year, down from the 3.3pc it forecast previously. Last year, the volume of world merchandise trade was down 1.1pc, pushed lower by high inflation and rising interest rates.
The global trade body cautioned that “rising geopolitical tensions and increased economic policy uncertainty continue to pose substantial downside risks to the forecast.”
Ngozi Okonjo-Iweala, the WTO’s director-general, said:
We are expecting a gradual recovery in global trade for 2024, but we remain vigilant of potential setbacks, particularly the potential escalation of regional conflicts like those in the Middle East. The impact could be most severe for the countries directly involved, but they may also indirectly affect global energy costs and shipping routes.
04:00 PM BST
Oil prices rebound as market on Middle East fears
The price of oil has jumped 2.3pc today to around $78.33 a barrel on expectations of an Israeli attack on Iran.
It came after Gila Gamliel, an Israeli minister, said: “Our attack on Iran will be deadly, precise and above all surprising. They will not understand what happened and how it happened. They will see the results.”
Chris Beauchamp, chief market analyst at online trading platform IG, said:
It looks increasingly likely that Israel will go for a large-scale attack on Iran, as reports emerge of Gulf states lobbying the US to rein in its ally.
Oil prices have surged on hints that Israel is seeking to take advantage of the Iranian attack to deliver a major strike on its opponent. The consequences of that could include a closing of the Straits of Hormuz, leading to major disruption to oil supplies.
03:56 PM BST
Wall Street drops back from records after inflation report
US stocks are edging back from their records this afternoon, after a pair of reports showed inflation failed to improve as much as expected last month and more workers filed for unemployment benefits last week.
The S&P 500 dipped 0.3pc. The Dow Jones Industrial Average dropped 0.3pc, after likewise setting an all-time high the day before, and the Nasdaq Composite fell 0.3pc.
Stocks had stormed to records in large part on excitement about easing interest rates, now that the Federal Reserve is cutting them from their two-decade high as it widens its focus to include keeping the economy humming instead of just fighting high inflation.
Lower interest rates ease the brakes off the economy and juice prices for investments, but the pace of further cuts will depend on if inflation continues to head down toward the Fed’s 2pc target as it expects.
Today’s report showed inflation slowed to 2.4pc in September from 2.5pc in August, according to the consumer price index, but economists were expecting an even sharper slowdown to 2.3pc. And after ignoring the swings for food, gasoline and other energy prices, underlying trends that economists say can be a better predictor for where inflation is heading were also a touch hotter than expected.
At the same time, a separate report showed 258,000 US workers filed for unemployment benefits last week. That number is relatively low compared with history, but it was a sharper acceleration than economists expected.
In the bond market, Treasury yields rose immediately after the release of the economic data, only to then swing up and down as traders tried to understand what they would mean for the Fed.
03:44 PM BST
Europe will cut rates at every meeting until March, says economist
It is almost a dead cert that the European Central Bank will cut rates next week, a euro zone economist has said, after signalling from ECB boss Christine Lagarde and others.
Jack Allen-Reynolds, of Capital Economics, said:
A [quarter of a percentage point] interest rate cut looks nailed on next week, taking the deposit rate down to 3.25pc. Christine Lagarde is likely to reiterate that policymakers expect to cut rates further but avoid committing to a specific path. We expect the Bank to cut by [a quarter of a percentage point] at each meeting until the deposit rate hits 2.5pc in March...
The latest data show that in September, headline inflation fell below the 2pc target for the first time in over three years. While it is likely to rise above 2pc again in the next couple of months, this pick-up will be temporary. We think the headline rate will average just 1.5pc next year.
With energy inflation negative, and both food and core goods inflation back to normal levels, the key remaining concern is services inflation. It has been stuck around 4pc since last November and the timelier three-month-on-three-month rate is no more encouraging.
But there are good reasons to think that services inflation will start to come down soon. Some temporary effects have kept services inflation high this year which should soon fade. At the same time, the cooling of the labour market and slower wage growth should help to bring services inflation down.
03:39 PM BST
Ikea urges further Chinese stimulus after property market slump
Swedish furniture retailer IKEA has urged China to deploy a further stimulus, ahead of government announcement planned for Saturday that is expected to outline plans to reinvigorate the economy.
Falling Ikea sales, which we reported on earlier, are highly sensitive to property markets and interest rates as people spend more on furniture and homewares when moving house, and downturns tend to dent activity.
Jesper Brodin, CEO of Ingka Group, which runs most Ikea stores globally, including in China, said:
Still we see consumer confidence in China is slightly lower than the global average, [but] we are optimistic that the stimulus package will have a positive impact.
We would like to encourage even more stimulation to the market because the market needs a little extra boost.
China accounted for 3.5pc of global sales for Ingka Group in its 2023-24 financial year, down from 3.6pc in the previous year.
In September, Ingka opened an Ikea store in the Changning District of Shanghai, its fourth in the city. Ikea now has 39 stores in China, four more than in its 2022-23 financial year, and it said store visits increased by 11pc over the year.
Since entering China in 1998, Ikea has expanded aggressively and the country was for several years in its top five markets by revenue, but its relative significance has since fallen.
In an effort to reverse its economic downturn, China unveiled two weeks ago its most aggressive monetary stimulus package since the Covid-19 pandemic, coupled with extensive property market support.
Tolga Oncu, retail manager at Ingka Group, said:
We are quite excited to see what this [stimulus] would mean for the Chinese economy and in particular for the Chinese home furnishing market. We are doing the assessment as we speak.
03:35 PM BST
Oil prices push higher
Oil prices are moving even higher as traders wait to see if there is an Israeli response to Iran’s missile attack last week.
Brent crude oil, the global benchmark, was up 2.6pc towards $79 a barrel.
I’ll drop out now, and my colleague Alex Singleton will keep sending live updates into the evening.
03:03 PM BST
TSB charged mortgage arrears to dead customer
TSB charged mortgage arrears fees to the account of a dead customer, regulators have revealed as they fined the lender £10.9m for its “woeful” systems.
The Financial Conduct Authority revealed that arrears fees were applied to a mortgage in a deceased customer’s sole name when there had been no grant of probate or personal representative in place.
It meant there was no prospect of repayment activity taking place on the account at that time.
TSB has paid nearly £100m in redress to more than 230,000 mortgage, overdraft, credit card and loan customers found to have been affected by its failure to treat customers in financial difficulty fairly over a six-year period.
The Financial Conduct Authority (FCA) said the bank’s “woeful systems and controls exposed its customers to risk of harm”.
02:48 PM BST
Germany has worst aviation market in Europe, says Ryanair
Ryanair said demand in Germany has been stifled by a combination of the government’s aviation and security taxes, together with higher air traffic control (ATC) fees.
The country has the worst-performing aviation market in Europe, it said, with passenger numbers recovering to barely 80pc of pre-Covid levels even as airports such as Heathrow report record numbers. Traffic in Dresden is stuck at half the 2019 level.
Eddie Wilson, chief executive of Ryanair’s main airline division, said the company presented a seven-year plan to more than double annual passenger numbers in Germany to 34m, but has had “no engagement” from the federal or local governments.
Mr Wilson warned that the reduction in flights, amounting to 12pc of Ryanair’s German capacity, “will be devastating for jobs, tourism, and connectivity”.
He added: “The refusal to incentivise growth at German airports is short-sighted. Citizens will continue to pay the highest air fares, in the worst recovered aviation market in Europe. Only lower costs will allow Germany to recover its pre-Covid traffic level.”
Ryanair said transport minister Volker Wissing should abolish the aviation tax, reduce ATC charges that have doubled since 2019, and defer a 50pc increase in the security fee cap from January to avoid any further cuts.
Sweden, Italy, Hungary and Poland have all cut aviation taxes to encourage growth, leading the airline to boost flights there, it said.
02:33 PM BST
Wall Street opens lower as US inflation proves stronger than expected
US stock markets dropped at the opening bell on Wall Street after inflation proved more persistent than expected last month.
The Dow Jones Industrial Average fell 0.2pc to 42,413.04 after the consumer prices index eased from 2.5pc in August to 2.4pc in September, which was above estimates of a drop to 2.3pc.
The S&P 500 was down 0.3pc to 5,777.25 while the tech-heavy Nasdaq Composite fell 0.3pc to 18,225.28.
02:27 PM BST
England suffers second-worst harvest on record
England suffered its second worst harvest on record as heavy rain hit production of wheat.
All the main cereal crops and oilseed rape suffered reduction in yields compared to 2023, with the exception of oats, according to Defta figures.
Provisional estimates indicate the English wheat harvest suffered a 22pc hit, producing 10m tonnes.
Many farmers fear they will face a repeat of this year’s poor yields in 2025, according to the Energy and Climate Intelligence Unit.
Analyst Tom Lancaster said:
This year’s harvest was a shocker, and climate change is to blame. Whilst shoppers have been partly insulated by imports picking up some of the slack, Britain’s farmers have borne the brunt of the second worst harvest on record.
It is clear that climate change is the biggest threat to UK food security. And these impacts are only going to get worse until we reduce our greenhouse gas emissions to net zero, in order to stop the warming that is driving these extremes.
At the Budget this month the new government has the opportunity to invest in more sustainable farming that would build our food security resilience to these extremes. The alternative is to allow the effects of these climate impacts to worsen in the years ahead.
02:08 PM BST
Traders increase bets on quarter-point Fed rate cut
Derivatives traders have increased their bets that the US Federal Reserve will cut interest rates by a quarter of a point at the next policy meeting in November.
Money markets indicate there is a 93pc chance of a cut from the range of 5.25pc to 5pc to a range of 5pc to 4.75pc next month.
The chances stood at 82pc on Wednesday before the latest inflation figures showed the consumer prices index came in higher than expected at 2.4pc in September.
Meanwhile, the number of Americans filing for unemployment benefits last week jumped to their highest level in a year.
Neil Birrell, chief investment officer at Premier Miton, said: “It’s hard to know if it’s US jobs data or CPI that is more important overall, but today it’s undoubtedly the CPI as it came in a little higher than expected, particularly core inflation.
“However, this shouldn’t be enough to worry markets or indeed the Fed. Although there’s more data to be released before the next Fed meeting, this will probably firm up views that a 0.25pc cut is appropriate. As we know, one rogue number can get people worried or excited in equal measure, but there’s nothing to do that today.”
Lindsay James, investment strategist at Quilter Investors, said: “Despite the slight miss compared to expectations for US inflation, coming in a fraction hotter than many predicted, there should be enough for the Federal Reserve to crack on with a quarter point rate cut in November.”
The US Inflation Rate (CPI) has moved down from a peak of 9.1% in June 2022 to 2.4% today.
What's driving that decline?
Lower rates of inflation in every major component: Fuel Oil, Gasoline, Used Cars, New Cars, Food at Home, Apparel, Gas Utilities, Medical Care, Electricity,… pic.twitter.com/oJ4l0tYCvN— Charlie Bilello (@charliebilello) October 10, 2024
01:53 PM BST
US jobless claims rise amid strikes and hurricane
The number of Americans filing for unemployment benefits last week jumped to their highest level in a year as the US economy grappled with strike and Hurricane Helene.
The Labor Department said that applications for jobless claims jumped by by 33,000 to 258,000 for the week of October 3.
That is the most since August 5, 2023 and well above the 229,000 analysts were expecting.
Applications for jobless benefits are widely considered representative of US layoffs in a given week, however they can be volatile and prone to revision.
Hurricane Helene swept across the North Carolina and Florida a fortnight ago. Communities are now being hit by Hurricane Milton.
The four-week average of claims, which evens out some of that weekly volatility, rose by 6,750 to 231,000.
The total number of Americans collecting jobless benefits rose by 42,000 to about 1.86m for the week of September 28.
Claims:
1/ Big spike in the weekly initial claims data, reflecting a lot of special factors (strikes, Hurricane Helene).
Not much information here about the state of the economy, and we might not get it until November. pic.twitter.com/bIqGusTG13— Guy Berger (@EconBerger) October 10, 2024
01:38 PM BST
US stocks slump as inflation stronger than expected
Wall Street extended losses ahead of the opening bell as US inflation was higher than expected in September, in a sign that the Federal Reserve will slow down the pace of interest rate cuts.
A Labor Department report showed the consumer prices index rose 2.4pc in September, compared with an estimate of a 2.3pc rise.
The core figure, excluding volatile food and energy components, was 3.3pc versus an estimated 3.2% increase.
Investors also scrutinised a separate Labor Department report that showed jobless claims were 258,000 for the week ended October 5, versus an estimate of 230,000.
In premarket trading, the S&P 500 was down 12.5 points, or 0.2pc, the Nasdaq 100 fell 69.25 points, or 0.3pc and the Dow was down 70 points, or 0.2pc.
01:35 PM BST
US inflation slows slightly in blow to swift rate cut hopes
The rate of US inflation slowed down last month in a sign the American economy remains resilient.
The consumer prices index dropped from 2.5pc in August to 2.4pc in September, which was slightly above analyst estimates of a drop to 2.3pc.
Core inflation, which strips out volatile food and energy prices, edged up from 3.2pc to 3.3pc in a blow to any hopes that the Federal Reserve will following up its half a point interest rate cut last month with a similar move in November.
01:25 PM BST
Delta Air Lines suffered $380m hit from global IT outage
Delta Air Lines has revealed its profits slumped by heavily in the third quarter after the global technology outage caused by a glitch with CrowdStrike software led to thousands of flight cancellations.
Delta said it took a $380m hit from July’s mass shutdown when CrowdStrike, a cybersecurity company that provides software to scores of companies worldwide, deployed a faulty update to computers running Microsoft Windows.
Shares fell 6pc in premarket trading as the company said it earned $971m in the third quarter, down from $1.3bn a year earlier.
01:10 PM BST
Right to switch off confirmed as ‘next steps’ to Employment Rights Bill
The government has confirmed plans to give workers the right to switch off as part of the reforms to employment rights.
In a so-called “next steps” document published alongside the Employment Rights Bill, ministers said the world of work needs an “urgent upgrade” to keep pace with a modern economy and help drive growth and living standards.
“By making work more flexible, more secure and more family-friendly, the Plan to Make Work Pay supports more people to stay in work.
“Many businesses are already ahead of the curve and showing that family-friendly conditions can be good for productivity, retention and their bottom line,” said the document.
Powers already exist to deliver many of the reforms and do not need to be included in the Bill, such as the commitment to tightening the ban on unpaid internships where there will be a call for evidence by the end of the year.
Another example is the commitment to allow the use of modern and secure electronic balloting for trade union statutory ballots.
12:52 PM BST
Wall Street shaky ahead of inflation figures
US stock indexes declined in premarket trading as investors braced for a highly anticipated inflation report.
Most megacap stocks were flat-to-lower before the opening bell, although Tesla gained 1.1pc ahead of the unveiling of its robotaxi at an event scheduled for about 3am UK time.
The S&P 500 and the Dow notched up record closing highs on Wednesday, after minutes from the Federal Reserve’s last meeting showed a “substantial majority” of policymakers had favoured September’s outsized 50-basis-point rate cut.
In the wake of strong economic data over the past week, traders have steadily decreased bets on another 50-basis-point rate reduction at the Fed’s next meeting, now pricing in an 82pc chance of a 25bps cut in November and an 18pc chance of no change at all.
In premarket trading, the Dow Jones Industrial Average and S&P 500 were down about 0.1, while the Nasdaq 100 was down 0.2pc.
12:34 PM BST
‘Budget uncertainty’ sparks £1.1bn withdrawals at City fund giant
One of the UK’s top asset managers has blamed fears of a tax raid in Rachel Reeves’s upcoming Budget for sparking withdrawals of £1.1bn from its funds.
Liontrust Asset Management has become the latest company to criticise the Government for knocking investor confidence by raising the prospect of significant tax changes.
The business said it had suffered net outflows of more than a billion pounds in the last three months amid growing concerns around the Oct 30 fiscal event.
Read what it’s chief executive said.
12:06 PM BST
Ikea sales slump as it cuts prices for hard-pressed shoppers
Ikea UK has revealed a slump in sales for the past year as under-pressure shoppers held off buying bigger-ticket items.
The UK arm of the Swedish homeware giant said the fall was also partly driven by price reductions to keep attracting customers hit hard by the higher cost of living.
The company revealed that retail sales dropped by 6.8pc to £2.3bn for the year to August, compared with the previous financial year.
Ikea linked the drop to a “strategic decision to prioritise affordability” as it invested more than £117m into lowering prices over the year.
Peter Jelkeby, chief executive and chief sustainability officer of Ikea UK, said: “In a year of economic uncertainty, our priority was clear: stand with our customers.
“In spite of our reduced turnover, continuing to lower prices remains our long-term priority.”
11:56 AM BST
Ryanair axes thousands of flights to Germany in tax row with Scholz
Ryanair will axe as many as 10,000 flights to Germany next year in a row with Olaf Scholz’s government over tax rises.
The discount carrier said it would halt departures to Dortmund, Dresden and Leipzig from next summer, closing 22 routes and cutting its capacity by 1.8m seats.
The Dublin-based airline said the move was a result of the German government’s “continued failure” to scrap its air traffic tax and reduce air traffic control fees.
It also called for a 50pc increase in the security fee cap to be delayed from its planned introduction in 2025.
Ryanair is not the only carrier to have protested against the measures, with flag carrier Lufthansa also raising concerns.
EasyJet has also cut back its German service.
11:47 AM BST
TSB fined £11m after putting customers ‘at risk of harm’
TSB Bank has been fined £10.9m by the UK’s financial watchdog for failing to treat customers in financial difficulty fairly over a six-year period.
The bank has paid nearly £100m in redress to more than 230,000 mortgage, overdraft, credit card and loan customers found to have been affected.
The Financial Conduct Authority (FCA) said the bank’s “woeful systems and controls exposed its customers to risk of harm”.
Between June 2014 and March 2020, TSB was found to have inadequate training for staff who were in charge of agreeing repayment plans for customers in arrears.
Staff were potentially encouraged by incentive schemes to prioritise the number of plans they made over taking the time to understand individual circumstances and set realistic repayment plans.
This meant TSB risked agreeing unaffordable payment arrangements with people in difficulty or charging them inappropriate fees, according to the regulator’s findings.
It said this could have heightened uncertainty and stress, including for vulnerable customers.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “TSB’s woeful systems and controls exposed its customers to risk of harm and meant it missed opportunity after opportunity to do the right thing.”
11:25 AM BST
Oil prices rise amid Middle East tensions
Oil prices have risen after a two-day decline as traders remain on edge about a possible Israeli response to Iran’s missile attack last week.
Brent crude rose 1.5pc above $77 a barrel and West Texas Intermediate was up 1.6pc above $74.
Israeli Defense Minister Yoav Gallant said on Wednesday that the response to Iran “will be deadly, precise and above all surprising,” while Tehran has warned it is ready to launch thousands of missiles.
SEB analyst Ole Hvalbye said: “The market remains in a ‘wait and see’ mode, with considerable upside risks if the conflict escalates further and impacts energy infrastructure in the Persian Gulf.
“The potential for upside risks outweighs the downside in the current volatile environment.”
11:11 AM BST
Unilever sells Russian business two years after start of Ukraine war
Consumer goods giant Unilever has completed the sale of its Russian subsidiary more than two years after Vladimir Putin’s decision to invade Ukraine.
Unilever, which makes an array of products from Hellman’s to Cif, said in a statement that it had offloaded the subsidiary to Arnest Group, a Russian manufacturer of perfume, cosmetics and household products, for an undisclosed amount.
Unilever said its business in Russia’s close ally Belarus was included in the sale.
Unilever chief executive Hein Schumacher said: “The completion of the sale ends Unilever Russia’s presence in the country.”
He added that the sale “includes all of Unilever’s business in Russia and its four factories in the country”.
While strongly condemning Moscow’s invasion of Ukraine in February 2022, Unilever joined other multinationals that decided to maintain operations in Russia, triggering widespread criticism.
Kyiv’s response had been to place Unilever on Ukraine’s “International Sponsors of War” list.
10:58 AM BST
Mortgage defaults to increase over next three months, warns Bank of England
Mortgage defaults will increase over the next three months, the Bank of England has warned, as households struggle under the weight of high interest rates.
Mortgage default rates among households have increased in the past few months, the Bank’s survey of lenders found, and are expected to rise again in the run-up to Christmas.
Defaults for non-mortgage lending, including credit cards, have decreased in recent months and banks and building societies expect this to remain unchanged in the next few months, the Bank of England’s Credit Conditions Survey found.
Lenders reported that default rates on loans to companies were unchanged for all business sizes in recent months and were also expected to be unchanged for all business sizes in the next few months.
The survey of lenders is carried out each quarter, as part of the Bank of England’s role in maintaining financial stability.
It asked lenders to report changes in the three months to the end of August, relative to the period between March and May - as well as expected changes in the three months to the end of November.
The survey was carried out between August 27 and September 13.
10:34 AM BST
Small businesses criticise ‘poorly planned’ Employment Rights Bill
The Federation of Small Businesses joined Unite in criticising the Government’s new Employment Rights Bill announced today.
It described the legislation as a “rushed job, clumsy, chaotic and poorly planned.”
However, other business leaders have welcomed the Government’s plans for a major overhaul of workers’ rights.
Leading business group the CBI said ministers deserved credit for engaging with employers and unions on the Employment Rights Bill, which includes improvements to parental leave and sick pay as well as banning exploitative zero hours contracts.
CBI chief executive Rain Newton-Smith said: “Politicians and businesses have a shared goal in wanting to raise living standards through higher levels of growth underpinned by investment and increased productivity.
“The Government deserves credit for its willingness to engage with businesses and unions on how to make a success of the Plan to Make Work Pay.”
John Dickie, chief executive of business group BusinessLDN, said: “Good businesses already have good working standards. That is why we support Labour’s objectives to increase living standards, make work pay and drive up productivity through regulation to improve employer practice across the economy.”
Ann Francke, chief executive of the Chartered Management Institute, said: “For many modern, forward-thinking employers the changes proposed in the Employment Rights Bill won’t create much of a challenge, as the Government is in many cases just formalising practices that smart employers already follow.”
10:28 AM BST
Rayners’ workers’ rights law has ‘more holes than Swiss cheese’, claim unions
Labour’s biggest union donor Unite has slammed the government’s workers’ rights reforms for having “more holes than Swiss cheese”.
Union chief Sharon Graham said that although she welcomed the shake-up, she was concerned that certain areas had been watered down within the draft law of 28 measures being announced on Thursday.
Ms Graham said that the long-anticipated Employment Rights Bill “ties itself up in knots trying to avoid what was promised”.
She added: “Failure to end fire a rehire and zero hours contracts once and for all will leave more holes than Swiss cheese that hostile employers will use.”
The government has said that it is fulfilling its promise of introducing ‘day one’ workers rights, ending exploitative zero-hours contracts and banning fire and rehire practices.
However, it is not completely banning zero-hours contracts following pushback from employers. Instead, it is making companies offer staff fixed hours after a certain time, though staff will be free to opt to remain on zero-hours contracts.
‘Fire and rehire’ tactics will also still be allowed if a company would otherwise go bust.
An extra 9m staff will be granted powers to sue their employers from ‘day one’ in a job, but a probation period of up to nine months will mean that bosses can still let go of underperforming staff. Many of the changes also won’t take effect until 2026.
“Unite will continue to make the workers’ voice heard as we push for improvements to the legislation as the Bill goes through parliament,” Ms Graham said.
10:07 AM BST
Pound muted ahead of US inflation figures
The pound was little changed against the dollar ahead of US inflation figures which will shed light on the next moves for interest rate cuts.
Sterling was flat versus the greenback at $1.307 ahead of the report which is expected to show prices rose at a slower pace of 2.3pc in September, compared to 2.5pc in August.
The pound has dropped nearly 2.5pc so far this month amid signs that the US economy is proving resilient, which traders are increasing bets on the Bank of England cutting interest rates.
Kyle Rodda, senior financial markets analyst at Capital.com, said rhe “US exceptionalism trade” has reignited on the back of the recent spate of strong jobs data las week.
He said: “The US dollar is regaining supremacy... mostly because of continued US economic outperformance.”
The pound was up 0.1pc against the euro, which is worth 83.6p.
09:48 AM BST
Staff at City regulator allowed to work at home 3-days a week until 2026
The financial watchdog has said it will allow staff to keep working from home for three days a week for at least another two years.
The Financial Conduct Authority told its roughly 5,000 staff at the end of last month that most of them could continue
to spend 60pc of their working days at home until at least the end of next year, according to Bloomberg.
It comes despite a trend in the City for ordering staff back to work.
Lloyd’s of London has begun monitoring office attendance amid concerns that Mondays are still not busy enough.
Meanwhile, Amazon is to make its white-collar workers turn up at the office five days a week, as tech giants increasingly try to cajole workers back to the office.
09:25 AM BST
Employers to be given ‘statutory guidance’ on flexible working, says minister
The Government will introduce statutory guidance on when companies can refuse workers permission to work flexibly, the Business Secretary has said.
Asked who will decide when flexible working is not possible, Jonathan Reynolds told the BBC:
There will be some clear statutory guidance with grounds upon which that wouldn’t be possible.
So that might mean you have to train junior members of staff, it might be that you have management responsibilities.
But it will be straightforward and of course we should always recognise where this can be agreed between an employer and employee.
There are real business benefits and benefits for the employee of that flexibility, keeping more people in work for longer, having more people in the labour market, so those are good things.
But of course, we are not going to dictate, it doesn’t work for everyone, but the process will be improved by this legislation.
09:02 AM BST
FTSE 100 falls ahead of US inflation data
The UK’s benchmark FTSE 100 edged lower ahead of crucial US inflation figures.
The blue-chip index initially rose by as much as 0.4pc after a surge from heavyweight drugmaker GSK, which has settled tens of thousands of lawsuits over its Zantac heartburn treatment.
However, the FTSE 100 lost gains as traders await a key US inflation report later, which could provide more hints on whether the Federal Reserve will lower interest rates next month and by how much.
The mid-cap FTSE 250 was down 0.2pc
GSK surged as much as 7pc after the drugmaker agreed to pay up to $2.2bn to settle most US lawsuits claiming that a discontinued version of the heartburn drug Zantac caused cancer.
Elsewhere, Liontrust Asset Management fell 3pc after it reported a drop in its third-quarter assets under management and advice (AuMA), hurt by weak investor sentiment ahead of the new government’s maiden budget.
08:40 AM BST
GSK value surges by £4.2bn after settling Zantac claims
GSK shares surged by the most in nearly two years in early trading after it said it will pay as much as $2.2bn (£1.7bn) to settle legal disputes over its claims that its Zantac drug caused cancer.
The London-listed pharmaceutical giant surged by as much as 7pc to add £4.2bn to its valuation after it agreed to resolve about 80,000 US court cases.
The company said it had struck a settlement deal with 10 law firms that represent more than 90pc of legal claims related to the medicine.
The settlement figure was much smaller than analysts had feared.
08:26 AM BST
Hurricane Milton to cause ‘at least $60bn of damage’
Hurricane Milton is expected to cost insurers at least $60bn (£45.9bn) as it triggers rare flash flooding warnings across Florida, analysts have warned.
Up to nine inches of rain have fallen in Orlando, home to Disney World, which is located along Florida’s east coast, with three to six more inches expected.
Some 19 tornadoes have struck Florida, killing at least two pensioners as Hurricane Milton generated powerful storm surges and freak winds.
Analysts at Morningstar DBRS estimated that the initial losses for insurers could rise to as much as $100bn (£76.5bn) and compared Hurricane Milton’s impact to that of Hurricane Katrina, which devastated the city of New Orleans and its surrounding area in 2005.
The credit rating agency said: “Our initial insured loss projections if Hurricane Milton makes direct landfall in Tampa remain in the $60 billion to $100 billion range, potentially making Hurricane Milton’s insured losses on par with those of Hurricane Katrina, which reached $100bn in today’s dollars and is still considered the costliest natural catastrophe in US history.”
It added: “The insurance industry has always feared a major hurricane (Category 4 or 5) hitting Tampa Bay directly, given the city’s vulnerability to storm surges and flooding.”
08:07 AM BST
FTSE 100 rises ahead of inflation figures
The FTSE 100 gained at the start to the day ahead of the latest US inflation figures, which could set the tone for global interest rate cuts later.
The UK’s blue chip index was up 0.3pc to 8,267.88 while the midcap FTSE 250 was flat at 20,828.26.
08:03 AM BST
JD Williams owner returns to profit despite tough trading
Simply Be and JD Williams owner N Brown has revealed it swung to a first half profit despite falling sales amid a tough market and unseasonable weather.
The group reported pre-tax profits of £200,000 for the six months to August 31 against losses of £2.8m a year ago as cost cutting and a focus on more profitable sales helped offset ongoing tough trading.
Product revenues dropped 7.9pc to £172.7m, but N Brown said this was an “improving trend”.
It added that trading in the first five weeks of the third quarter had been “encouraging” with product sales declines paring back to 2pc.
Steve Johnson, interim executive chairman and chief executive of N Brown, said: “We have built on our return to profit in 2023-24 by delivering year-on-year progression in the first half of 2024-25.
“Our focus on maximising profitable sales and managing the cost base in a soft trading environment has ensured we remain on track to achieve management’s full year adjusted EBITDA expectations and we are encouraged by trading at the start of the third quarter.”
07:59 AM BST
Crowds mourn ‘titan’ industrialist Ratan Tata
Crowds of mourners gathered in India’s financial capital Mumbai for the funeral of industrialist Ratan Tata, who has been hailed as a “titan” who led one of the country’s biggest conglomerates.
Tata, who died aged 86 on Wednesday, transformed the Tata Group into a sprawling international enterprise, with a portfolio ranging from software to sports cars.
His coffin, draped in an Indian flag, was flanked by a guard of honour, with a marching band of trumpets and drums accompanying the procession.
Mumbai has declared a day of mourning, with the funeral rites to take place this afternoon.
“A titan of Indian industry”, The Hindu newspaper called him on its front-page. “India loses its crown jewel”, the Hindustan Times wrote.
Tributes also poured in from fellow industrialists, with Asia’s richest man Mukesh Ambani saying it was a “big loss, not just to the Tata group, but to every Indian”.
07:43 AM BST
Pensioners will be better off under this Government, says Business Secretary
Everyone will be better off under the new Government, the Business Secretary said, as he rejected the suggestion pensioners would have to “hide behind the sofa” when the Budget was announced.
Asked whether it was fair to say pensioners would have to “hide behind the sofa wrapped in a blanket” on October 30, Jonathan Reynolds told Sky News:
This is a Government that is going to make everybody better off.
Specifically for pensioners, we already have the commitment to the triple lock, that’s a guarantee that pensioners will be better off this year, next year, the year after that.
That is a significant pledge from this new Government, so people should be reassured from commitments like that.
Yes, it is a challenging situation, but we are serious on delivering on our objectives, which is an economy that works better for everyone, better growth, better investment and to make sure everyone benefits from that.
07:35 AM BST
Just Eat to deliver Waitrose groceries
More Waitrose customers will soon be able to get shopping delivered to their door in a matter of minutes after the upmarket grocery chain announced a tie-up with Just Eat.
The delivery giant has added Waitrose products to its range for customers in London, Birmingham, Glasgow, Manchester and other cities, in a multi-year deal starting in October.
Waitrose said it has seen weekly on-demand grocery sales surge by 140pc in the first six months of the year, following similar partnerships with Deliveroo and Uber Eats.
Waitrose executive director James Bailey said: “As demand for greater convenience has grown, so have expectations of convenience food - and rightfully so. Neither show signs of slowing and that is a huge opportunity for us.”
07:26 AM BST
China shares rally again after steep drop
Chinese stocks resumed their rally overnight ahead of a briefing from finance officials this weekend.
Mainland shares got a lift early in the Asia session as China’s central bank kicked off its 500 billion yuan facility to spur capital markets, a plan it announced late September as part of a series of stimulus measures.
Lorraine Tan, director of equity research for Asia at Morningstar said: “I believe the move provides liquidity to help companies fund trades if needed.”
China’s blue-chip CSI300 index rose about 3pc, partially reversing the previous day’s 7pc drop, which was triggered by some investor concern about the lack of details in the stimulus package.
Hong Kong’s Hang Seng surged over 4pc, after slipping 1.3pc on Wednesday and is up 26pc this year.
07:13 AM BST
HSBC senior bankers under fire in cost-cutting drive
The new chief executive of HSBC will target the lender’s layers of senior bankers in a cost-cutting restructure, it has been reported.
Georges Elhedery is planning to merge HSBC’s commercial banking unit with its investment bank in his first big step to cut costs since taking the job last month.
The move will reduce the “expensive layer” of top layer of managers, according to the Financial Times, which said an announcement is due in October.
07:12 AM BST
Bank of England ‘risks scarring economy with high interest rates’
The Bank of England risks inflicting unnecessary damage to the economy by keeping interest rates too high for too long, a leading City economist has warned.
Benjamin Nabarro, chief economist at Citi, said a large share of the impact of the post-lockdown jump in rates from 0.1pc to 5pc today was yet to be felt.
“The MPC are unfortunately still operating with an inflation-averse state of mind. Given the outlook, we see that as increasingly inappropriate,” he said.
He predicted the Bank, led by Andrew Bailey, will cut rates next month and again in February, before accelerating the pace to cut by 0.25 percentage points in every meeting from May.
“We think, however, that that risks still waiting too long and therefore scarring investment further than is necessary. While the MPC should of course remain primarily focused on their inflation mandate, growth concerns including more structural issues should not be irrelevant in monetary policy deliberations.”
Citi expects the UK economy to grow by 1pc this year but slow to 0.7pc in 2025 as unemployment continues to rise.
Mr Nabarro warned that “rather soggy” growth means Rachel Reeves should not expect a rebound in the economy to come to the rescue with stronger tax receipts or lower demand for benefits.
“Growth has picked up since the start of this year [but] none of the core demand engines of the UK economy, in the form of private consumption, business investment or external demand, seem to be yet motoring. For now we think the underlying growth rate is 0.2-0.3pc quarter-on-quarter, so relatively subdued,” he said.
The warning came as part of the IFS’s pre- Budget briefing, which was partly informed by economic forecasting prepared by Citi.
06:54 AM BST
Good morning
Thanks for joining us. We start the day with a warning from Citi economist, who think the full impact of the rapid rise in interest rates in recent years is yet to be felt.
Benjamin Nabarro, chief economist at Citi, said the Bank of England could damage Britain’s economy if it keeps interest rates too high for too long.
5 things to start your day
1) Extra 9m workers to be given right to sue employer in Rayner’s jobs overhaul | Staff can take businesses to court from day one under ‘chaotic’ employment reforms
2) Reeves ‘needs up to £25bn of tax rises to avoid austerity’ | Budget risks pushing tax burden to highest ever peacetime level, IFS warns
3) British billionaire secures golden visa for Dubai after ‘losing confidence’ in UK politics | Richard Desmond’s move fuels fears UK is becoming unattractive for entrepreneurs
4) US law firm to pay British trainees £70k a year amid talent war | Davis Polk sets record for London entry-level salaries in a move that will put pressure on homegrown firms
5) Alexandria Ocasio-Cortez threatens ‘out and out brawl’ with Harris’s billionaire backers | Democrat congresswoman sends Silicon Valley a warning over its Washington power struggle
What happened overnight
China and Hong Kong share prices rose on Thursday after the People’s Bank of China kicked off a swap programme aimed at supporting the stock market, while investors await directions from further policy announcements.
China’s blue-chip CSI300 Index and the Shanghai Composite Index both climbed nearly 3pc each by midday. Hong Kong’s benchmark Hang Seng index was up 4.2pc.
The central bank said it would start accepting applications for its 500-billion-yuan ($70.62 billion) swap facility from financial institutions – a move aimed at channelling more cash into the stock market.
Other Asia-Pacific shares mostly rose Thursday, as market optimism got a small boost from the record highs set on Wall Street.
Japan’s benchmark Nikkei 225 edged up 0.4pc in morning trading to 39,439.50. Australia’s S&P/ASX 200 rose 0.6pc to 8,239.10. South Korea’s Kospi added 0.3pc to 2,601.66.
On Wall Street, both the Dow and S&P 500 cloased at record levels. The Dow Jones Industrial Average rose 1pc, to 42,512.00, the S&P 500 rose 0.7pc, to 5,792.04, and the Nasdaq Composite rose 0.6pc, to 18,291.62.
The yield on 10-year US Treasury notes rose to 4.07pc from 4.02pc late on Tuesday.