In This Article:
Shell is to scale back its oil and gas exploration and development workforce by 20pc as chief executive Wael Sawan widens his cost-saving drive.
The cuts to the highly profitable division come after deep cuts in renewables and low-carbon businesses, company sources told Reuters.
It comes as global investment clean energy in clean energy to hit $2 trillion this year, according to the International Energy Agency. That is nearly twice the level going into fossil fuels, as governments push for net zero.
Last month, BP predicted that global demand for oil would peak next year.
The restructuring in Shell’s oil and gas units will see hundreds of job cuts around the world, the sources said.
Shell’s oil and gas production division, which includes the exploration and well development units, accounted for over one third of the company’s $28.25bn (£21.4bn) in underlying earnings in 2023.
A company spokesman said: “Shell aims to create more value with less emissions by focusing on performance, discipline and simplification across the business. That includes delivering structural operating cost reductions of $2-3bn by the end of 2025.”
Mr Sawan, who took office in January 2023, has vowed to improve Shell’s performance to boost profitability and narrow a wide gap in its shares’ valuation compared with larger US rivals.
The energy giant has, in recent months, scaled back operations in offshore wind, solar and hydrogen, sold retail power businesses, refineries and some oil and gas production.
08:03 PM BST
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07:31 PM BST
Dow Jones hit record high
Wall Street stocks rose and the Dow Jones Industrial Average, of 30 leading US companies, hit a record high during trading today.
It follwoed robust US economic data, while artificial intelligence chipmaker Nvidia slipped after its forecast failed to impress investors.
The US economy grew faster than initial estimates due to strong consumer spending, the Commerce Department reported, supporting expectations that America is likely to avoid a recession.
Jeffrey Roach, chief economist for LPL Financial, said:
Downward revisions to inflation accompanying an upward revision to spending builds the case for a soft landing.
Nvidia’s quarterly revenue forecast late on Wednesday disappointed investors used to the chipmaker beating expectations by massive margins in recent quarters.
Nvidia’s stock dipped 4.9pc, trimming its 2024 gain to 148pc.
Notably, the Nvidia sell-off did not spread to other AI-related stocks. Microsoft gained 1.2pc, while Google-owner Alphabet added 0.5pc.
Terry Sandven, chief equity strategist at US Bank Wealth Management, said:
It’s too early to put the bear suit on for AI related companies. We think there’s still more upside. We see the AI revolution still in the relatively early innings and that bodes well for tech names.
The Dow Jones industrial average hit an all-time high, while S&P 500 index was close to its July record high close as expectations for a September interest rate cut remained robust.
The Nasdaq Composite Index rose by as much as 1.3pc this afternoon, and is currently up 0.2pc.
06:40 PM BST
Billionaire boss who banned WFH wants to stop staff leaving the office for coffee
A billionaire mining boss who has already banned home-working has said he wants to stop staff at the company “walking down the road for a cup of coffee”. Lucy Burton reports:
Chris Ellison, the chief executive of the Australian miner Mineral Resources, said he was trying to make its Perth headquarters as appealing as possible as he does not want staff “leaving the building”.
06:07 PM BST
Europe’s chip stocks rise while Nvidia drops
European chip stocks rose today, despite the market turning negative on US giant Nvidia.
Investors had braced for potential ripples through global equities if the AI darling posted less-than-impressive results, but Europe’s chip stocks were broadly unbothered.
ASM International, STMicroelectronics and ASML Holding rose between 3pc and 3.7pc.
Russ Mould, investment director at AJ Bell, said:
It’s quite nice that the European markets have taken Nvidia results in their stride, and not been too influenced by them either way. If we’re not reliant upon seven companies worldwide, that’s probably a healthy thing.
Mr Mould was referring to the so-called Magnificent Seven influential stocks that include Nvidia.
The pan-European Stoxx 600 has gained nearly 10pc from its six-month lows in August, following a steep global selloff, as expectations have increased for easier monetary policy in the U.S. and Europe.
The US-listed British chip champion Arm Holdings is up 6pc.
06:02 PM BST
Nvidia offers ‘unique growth at a very reasonable valuation’, says Bank of America
Nvidia shares may see volatility in the short term but they offer “unique growth at a very reasonable valuation”, Bank of America has said.
Analysts at the US bank giant have urged investors to “ignore the quarterly noise”.
They believe in Nvidia’s “unique growth opportunity, execution and dominant 80pc+ share as generative AI deployments are still in their first 1-1.5 year of what is at least a 3-4 year upfront investment cycle”.
05:54 PM BST
‘Baffling’ affordable housing rules will wreck Rayner’s building plans, says Barratt executive
Strict affordable housing rules proposed by Angela Rayner will make construction projects unaffordable and derail her goal of building 1.5m homes by 2029, an executive at the UK’s biggest housebuilder has said. Pui-Guan Man reports:
The planned target, for 50pc of properties on green belt developments to be affordable, is “baffling” and risks ruining the Housing Secretary’s broader ambitions, according to Philip Barnes, land and planning director at Barratt Developments.
05:26 PM BST
Nvidia down 3.4pc amid ‘concerns about slowing growth’
Nivida shares are current trading down 3.4pc today despite doubling sales in its results that were released last night.
Some have noted that Nvidia’s rate of growth is starting to slow, and wider fears have been raised about increasing competition with chip rivals and the surge in tech stocks being a bubble, which prompted a drop in the firm’s share price in after-hours trading on Wednesday, and the dip after markets reopened on Thursday.
Kate Leaman, chief market analyst at AvaTrade, said:
Although Nvidia is set for future success, and is expecting big revenue from its upcoming Blackwell platform later this year, there are concerns about slowing growth, competition in China, and overall market jitters, which is affecting related stocks like AMD and Dell.
05:21 PM BST
US and European stocks rise on rate hopes
US and European stock markets rose Thursday as investors shrugged off a drop in shares of chip giant Nvidia and turned their attention back to expectations of lower interest rates.
The main US stock indexes were all up even as Nvidia fell after the tech titan reported earnings that did not meet everyone’s sky-high expectations.
Independent analyst Stephen Innes said:
Investors have become spoiled, expecting Nvidia not just to meet but obliterate expectations.
Charles Schwab strategist Joe Mazzola said the wider market shrugged off Nvidia’s slump partly because almost all companies reporting earnings recently, including Nvidia, have beat analysts’ sales forecasts.
Traders are now focused on a raft of economic indicators that could shed light on the possible size of expected rate cuts by the US Federal Reserve and the European Central Bank next month.
Federal Reserve chief Jerome Powell gave markets a boost last week when he declared that the central bank was ready to finally cut borrowing costs, which sit at a 23-year high.
Government figures showed today that the US economy expanded more than initially thought in the second quarter, growing at an annual rate of 3pc, up from 2.8pc in an earlier estimate.
Other figures out today showed US jobless claims fell slightly last week. Investors will next look at the Fed’s favoured gauge of inflation on Friday and key jobs data next week.
In Europe, Germany reported the country’s inflation rate slowed to 1.9pc in August, the lowest in more than three years and within the ECB’s two-percent target.
With Spain also reporting slower inflation and other eurozone countries expected to do the same, “that paves the way for a September rate cut,” said Franziska Palmas, senior Europe economist at Capital Economics.
05:05 PM BST
Germany stock index hits all-time high
The Dax closed at an all-time high this afternoon, closing up 0.7pc at 18.912.57.
The German blue-chip index has risen 12.9pc since the start of the year, outpacing the 8.5pc growth of the FTSE 100 but beating the French Cac 40’s lacklustre 1.5pc growth.
Aneeka Gupta, director of macroeconomic research at WisdomTree, told Bloomberg:
Germany is once again proving to be European stock markets’ hidden champion. Industry-specific drivers may have resulted in its outperformance given the larger weight of growth stocks.
04:55 PM BST
FTSE 100 closes up
The FTSE 100 closed up today by 0.4pc.
The top riser was engineering business Spirax, up 3.9pc, followed by Premier Inn owner Whitbread, up 3.7pc. The the other end of the index, LondonMetric Property fell 3.5pc, followed by Segro, down 1.9pc.
Meanwhile, the FTSE 250 fell 0.2pc.
City firm Close Brothers led the risers, increasing by 8.1pc, followed by promotional products business 4imprint, up 4.1pc.
Vehicle hire business Zigup fell the most, losing 5pc, followed by telecoms tower company Helios, down 3.5pc.
04:45 PM BST
World shares edge higher despite as market shrugs off Nvidia results
Global shares edged higher today, shrugging off investor disappointment at artificial intelligence powerhouse Nvidia’s results, while oil prices rebounded from two sessions of losses helped by Libyan supply disruptions.
Wall Street’s main indexes were trading higher, with the Dow Jones Industrial Average and S&P 500 both up 0.7pc and the Nasdaq Composite up 1.1pc.
European stocks rose 0.7pc after hitting a record high powered by technology shares. MSCI’s gauge of stocks across the globe rose 0.6pc.
Nvidia beat analyst estimates on Wednesday with second quarter revenue of $30bn (£22.8bn) and third quarter revenue forecast at $32.5 billion.
But the results failed to meet lofty investor expectations that have underpinned a massive rally in Nvidia shares and catapulted the company into one of the main drivers of the benchmark S&P 500. The stock is down 3.4pc.
Mark Malek, chief investment officer at SiebertNXT in New York, said:
Interestingly, Nvidia did as well as anybody expected. They did even better, I would say they even crushed the numbers.
04:28 PM BST
Gazprom profits triple as it boosts sales to China
Kremlin-owned gas giant Gazprom said today its profit for the first half of the year more than tripled from a year earlier.
Net profit rose to more than 1 trillion roubles (£8.3bn), thanks to rising gas exports and cost controls.
Gazprom plunged to a net loss of around $7bn (£5.3bn) in 2023, its first year in the red since 1999, as its gas trade with Europe, once its main sales market, dwindled due to the military conflict in Ukraine.
Deputy chief executive Famil Sadygov also said on Gazprom’s Telegram channel that core earnings in the January to June period rose 19pc year on year to 1.459 trillion roubles due to an improving oil trade and a rise in gas exports, including to China.
He added that a rise in Gazprom’s stake in the Sakhalin Energy oil and gas project in Russia’s Pacific also boosted its financials, while adjusted net profit, the base for the dividend payment, reached 779bn roubles for six months.
Gazprom said it swung to a second-quarter net income of 389.7bn roubles from a loss of 18.6bn roubles a year before.
Russia has continued to diversify its trade away from the West, which has imposed numerous unprecedented sanctions against Russian business and individuals over the conflict with Ukraine, and cemented its ties with Asia, notably China.
Gazprom’s chief executive Alexei Miller said earlier today that the group increased natural gas exports to China by 37pc in the first eight months of the year.
04:03 PM BST
Shell to cut oil and gas jobs as it widens cost cutting
Shell plans to scale back its oil and gas exploration and development workforce by 20pc as chief executive Wael Sawan widens his cost-saving drive to the highly profitable division after deep cuts in renewables and low-carbon businesses, company sources told Reuters.
The restructuring in the exploration and wells development and subsurface units will see hundreds of job cuts around the world, and will be felt in particular in its offices in Britain and the Netherlands, the sources said.
Shell’s oil and gas production division, which includes the exploration and well development units, accounted for over one third of the company’s $28.25bn in underlying earnings in 2023.
A company spokesman said:
Shell aims to create more value with less emissions by focusing on performance, discipline and simplification across the business. That includes delivering structural operating cost reductions of $2-3bn by the end of 2025.
Mr Sawan, who took office in January 2023, has vowed to improve Shell’s performance to boost profitability and narrow a wide gap in its shares’ valuation compared with larger US rivals.
The energy giant has, in recent months, scaled back operations in offshore wind, solar and hydrogen, sold retail power businesses, refineries and some oil and gas production.
In March, Shell weakened a 2030 carbon reduction target and scrapped a 2035 objective, citing expectations for strong gas demand and uncertainty in the energy transition.
03:52 PM BST
‘There is no stopping the equity buying frenzy’ claims analyst as German stocks set new record
Investors are seemingly not being put off investing in shares at their current prices, despite recent turbulence. Axel Rudolph, senior technical analyst at online trading platform IG, said:
The stock market rally has legs with the German Dax 40 index hitting a new record high while US indices near theirs.
03:49 PM BST
China says will not impose tariffs on Cognac - for now
China will not impose provisional tariffs on European brandy makers, the government announced Thursday, even though it said it had found evidence of dumping.
Beijing launched an investigation in January into brandy imported from the European Union, months after the EU undertook an investigation into Chinese electric vehicle subsidies.
An organisation representing French Cognac producers expressed alarm over China’s dumping claims, saying Cognac houses are “collateral damage in a conflict out of their control”.
The Chinese Ministry of Commerce said the probe followed a complaint filed in November by China’s liquor association on behalf of the domestic brandy industry.
Beijing’s investigation found that imported brandy from the European Union had been dumped into China and “the domestic brandy industry was threatened with substantial damage”, the Ministry of Commerce said in a statement.
But “no provisional anti-dumping measures will be adopted at this time”, the statement added, not ruling out future tariffs.
Shares in French spirits makers Remy Cointreau and Pernod Ricard rallied on Thursday following the announcement.
Cognac’s interprofessional bureau warned that should they be imposed, tariffs could go as high as 34.8pc, and that China accounts for about a quarter of Cognac exports.
“This announcement is especially incomprehensible because we fully cooperated with the Chinese authorities throughout their investigation and demonstrated the full transparency of our practices,” it said.
The group called on the French government and the European Union to “immediately negotiate” an end to the threatened tariffs.
China imported more brandy than any other spirit in 2022, with most of it coming from France, according to a report by research group Daxue Consulting.
03:35 PM BST
Apple and other tech giants rise as they avoid contagion from Nvidia drop
Markets have seesawed between marginal gains and losses in the run-up to Nvidia’s results, as traders waited to see if the company would sustain its unmatched revenue growth.
Nvidia’s upbeat second-quarter results and largely “in-line” estimate for the current quarter disappointed investors. The chip bellwether’s shares are down 4pc.
Peter Andersen, founder of Andersen Capital Management, said:
This is the first time that there has been criticism of the estimates beat and the outlook raise. It is not as great as some investors had anticipated.
Semiconductor peers Broadcom and Advanced Micro Devices rose 1.5pc and 0.8pc, respectively, aiding a 1.2pc rise in the Philadelphia Semiconductor index of 30 top US chip companies.
Nvidia’s heavyweight megacap customers, which have been the focus of market euphoria on the prospect of artificial intelligence use boosting corporate profits, also rose. Microsoft is up 2.5pc, Meta us up 1.2pc and Alphabet is up 1.4pc.
Apple gained 2.4pc after Citigroup selected the iPhone maker as its top AI pick over Nvidia.
03:27 PM BST
$100bn wiped off Nvidia amid tech bubble fears
More than $100bn (£76bn) was wiped off the market value of chip-making titan Nvidia at the start of trading, amid fears the surge in tech stocks may be a bubble.
Fluctuations in the shares of the $3 trillion behemoth quickly pared those losses to $60bn, underlying the uncertainty over the growth of the darling of the AI boom.
The slide came despite Nvidia’s sales rising to a record $30bn, beating analysts expectations.
That is more than double its revenues in the same quarter a year ago.
Jensen Huang, founder and chief executive of the company, has a stake worth $106bn, according to Bloomberg data. It means the drop in the share price is a personal blow to his fortune to the tune of around $2bn.
However, the share price is still up by almost 150pc so far this year, indicating the extent of Nvidia’s meteoric rise.
Daniel Ives, analyst at Wedbush, said the huge demand for AI-capable chips and strong financial reports from across the tech industry means he has a “firmly bullish view of tech stocks over the next year.”
“While investors may fret about this massive spending wave and frustrated that top-line growth/margins from these investments could take time to materialise this ultimately speaks to our view this is a 1995 (almost 1996) start of the Internet Moment and not a 1999 Tech Bubble-like moment,” he said.
“We focus with eyes on the prize: the AI buildout and the tech winners of this 4th Industrial Revolution.”
03:24 PM BST
US economic growth revised up to a solid 3pc annual rate
The US economy grew last quarter at a healthy 3pc annual pace, fueled by strong consumer spending and business investment, the American government said this afternoon in an upgrade of its initial assessment.
The Commerce Department had previously estimated that the nation’s gross domestic product expanded at a 2.8pc rate from April through June.
The second-quarter growth marked a sharp acceleration from a sluggish 1.4pc growth rate in the first three months of 2024.
Consumer spending, which accounts for about 70pc of US economic activity, rose at a 2.9pc annual rate last quarter. That was up from 2.3pc in the government’s initial estimate. Business investment expanded at a 7.5pc rate, led by a 10.8pc jump in investment in equipment.
Thursday’s report reflected an economy that remains resilient despite the pressure of continued high interest rates. The state of the economy is weighing heavily on voters ahead of the November presidential election. Many Americans remain exasperated by high prices even though inflation has plummeted since peaking at a four-decade high in mid-2022.
But measures of consumers’ spirits by the Conference Board and the University of Michigan have shown a recent uptick in confidence in the economy.
03:20 PM BST
Stock markets rise as investors shrug off Nvidia share drop
US and European stock markets advanced today, as investors shrugged off a drop in shares of chip giant Nvidia and turned their attention back to interest rates.
The main US stock indexes opened higher even as Nvidia fell after the tech titan reported earnings that did not meet everyone’s sky-high expectations.
After US markets closed on Wednesday, Nvidia said its sales more than doubled to $30bn (£22.8bn) in the second quarter, but at a slower pace than in previous quarters, and that profits also doubled, to $16.5bn.
Nvidia has become a bellwether for the tech sector owing to its huge role in the development of AI chips and its shares have risen more than 150 percent since the start of the year, accounting for a third of the broad-based S&P 500 index’s gains.
Despite the impressive earnings, Nvidia’s shares initially fell by more than eight percent in after-hours trading Wednesday as traders had hoped for even better results from one of the world’s most valuable companies.
The FTSE 100 is up 0.3pc, while the FTSE 250 is almost flat. Germany’s Dax has risen by 0.5pc, while France’s Cac 40 is up 0.7pc.
The S&P 500 has risen 0.5pc, the tech-heavy Nasdaq Composite is up 0.7pc, while the Dow Jones is up 0.6pc.
02:55 PM BST
Two-thirds back limit on airport boozing
Almost two-thirds of people would support a two-drink limit on airport boozing, according to a survey from YouGov.
It follows the exclusive report from the Telegraph’s Christopher Jasper this week that Ryanair’s boss Michael O’Leary wants a cap on how many alcoholic drinks fliers are allowed to consume in airports before boarding.
“Most of our passengers show up an hour before departure. That’s sufficient for two drinks. But if your flight is delayed by two or three hours you can’t be guzzling five, six, eight, ten pints of beer,” Mr O’Leary told the Telegraph.
“Go and have a coffee or a cup of tea. It’s not an alcoholics’ outing.”
Sir Tim Martin, the boss of Wetherspoons, hit back to defend pre-flight drinking as he said the pub chain removed two-for-one alcohol deals and “shooters” from airport menus “years ago”.
YouGov’s survey found 62pc would support a limit of two drinks per person, with only 24pc opposing the measure.
A previous study by the pollster found drunkenness on planes tops the list of things which irritate travellers, with three-quarters deeming it unacceptable on board.
02:18 PM BST
British self-driving car start-up wins Uber backing
From our senior technology reporter Matthew Field:
Uber has taken a stake in British self-driving car start-up Wayve, providing further funding to the artificial intelligence (AI) business after it raised more than $1bn earlier this year.
02:03 PM BST
Stronger US growth calms recession fears
The US economy grew at an annualised rate of 3pc in the three months to June, according to the Bureau of Economic Analysis.
That is above the 2.8pc initially estimated, easing investors’ fears that the world’s largest economy risks slowing so fast that it enters recession.
It means the economy is growing more than twice as fast as the 1.4pc recorded in the first quarter of the year.
The BEA said consumer spending in particular is rising more strongly than previously estimated, as households keep on spending even in the face of high interest rates.
At the same time the number of people making new claims for unemployment benefits came in at 231,000 last week, according to the Department of Labor, down 2,000 on the previous week and almost precisely in line with the 232,000 predicted by economists.
That also raises hopes that unemployment is not spiralling.
Expectations are high that the Federal Reserve will make its first cut to interest rates next month, with traders in financial markets anticipating a move of at least 0.25 percentage points, which would take the Federal Funds rate from 5.5pc to 5.25pc.
01:21 PM BST
Drax to pay £25m for misreporting wood burning data
Energy giant Drax has agreed to pay £25m into an industry redress fund after the Ofgem, the regulator, found “inaccurate reporting of data about the forestry type and sawlog content being used” to fuel its power plant in Yorkshire.
Jonathan Brearley, chief executive of Ofgem, said there are “no excuses” for the company’s failings.
“Energy consumers expect all companies, particularly those receiving millions of pounds annually in public subsidies to comply with all their statutory requirements,” he said.
“There are no excuses for Drax’s admission that it did not comply with its mandatory requirement to give Ofgem accurate and robust data on the exact types of Canadian wood it utilises. The legislation is clear about Drax’s obligations – that’s why we took tough action.”
The regulator said “we have not found evidence to suggest deliberate misreporting”, nor did it “find any evidence suggesting that Drax does not meet the government’s threshold that a minimum of 70pc of biomass must come from sustainable sources in order to receive scheme funding.”
Nonetheless it found poor governance and data controls in place at Drax to monitor wood burning and the subsidies on offer for energy generated from renewable sources.
Will Gardiner, CEO, Drax Group, said “sustainability is a constant journey of progress and learning.
“As biomass and Drax become an increasingly important part of delivering energy security and decarbonising societies both in the UK and globally, we must be ready to adapt and respond to ever greater standards and expectations,” he said.
“It is incumbent on us to proactively identify and fix issues, whether they are in the biomass supply chain itself or in our reporting policies and procedures. That is what we have done in this instance, and what I am committed to continue doing going forward.”
12:19 PM BST
Sainsbury’s launches £130m scheme to refit Homebase shops as supermarkets
From our retail editor Hannah Boland:
Sainsbury’s has launched a bid to extend its lead over Asda as it unveiled a £130m plan to open new supermarkets.
12:12 PM BST
Britain to join Pacific trade bloc in December
Peru has approved Britain’s membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), meaning the UK will join the free trade area by 15 December this year.
It follows ratification by Japan, Singapore, Chile, New Zealand and Vietnam. The Government said 99pc of all trade with those nations will be tariff-free, with more to come as additional nations approve Britain’s membership of the bloc.
Businesses selling products from cheese and butter to car parts and machinery should benefit, as should companies offering services such as finance and insurance.
The Department for Business and Trade estimates the deal will add £2bn to Britain’s annual GDP by 2040.
Douglas Alexander, the minster for Trade Policy, said: “This is good news for UK businesses, who are now one step closer to being able to take advantage of the opportunities our membership of CPTPP will bring.”
11:57 AM BST
Fashion firm Quiz seeks £1m loan from founder
Retail editor Hannah Boland reports:
Fashion firm Quiz is in talks with its founder to try to secure a £1m cash injection after weaker demand for its clothes pushed it to a loss for its latest financial year.
11:51 AM BST
‘Supercharge’ building of rental homes, Starmer urged
More on those underwhelming housebuilding figures.
Melanie Leech, chief executive of the British Property Federation, has cautioned that the weak numbers “underline the scale of the challenge in delivering the Government’s target of 1.5m homes by 2029.”
“We will not reach and sustain this level of housebuilding nor meet the needs of individuals and families by focusing on homes for sale alone; we need to also supercharge the Build-to-Rent sector and look at how to unlock the delivery of affordable housing of all tenures,” she said.
“Built-to-Rent, or multi-family, is fundamental to housing supply in countries such as the US and Australia, and there is a huge opportunity through the Government’s reform of the planning system to attract more long-term institutional capital to accelerate the growth of the sector in the UK and alleviate the pressure on supply in our cities.”
11:30 AM BST
German shares hit record high despite economic malaise
Shares on Germany’s Dax index hit an all-time record on hopes of interest rate cuts, despite the economy’s seemingly-endless stagnation.
The eurozone economy has barely grown from its pre-pandemic size. Its prized manufacturers are beset by the challenge of converting its car industry from internal combustion engines to electric, even as demand from China has faltered and factories have found cheap Russian gas was not as reliable as they hoped.
However, stock market investors do not seem worried, propelling the Dax up another 0.65pc so far today.
This year the index has risen almost 13pc. That beats the UK where the FTSE 100 has climbed 8.2pc since the turn of the year, and France where the Cac 40 has edged up a meagre 1.2pc.
All are trailing the US, where the S&P 500 has boomed more than 17pc over the same period.
10:55 AM BST
Pound recovers all of August’s losses
The pound has rebounded strongly against the euro, entirely unwinding all of the losses which sterling recorded earlier this month.
One pound now trades at around €1.19, its highest level in just over a month.
Sterling dropped sharply at the start of August after the Bank of England cut its base rate from 5.25pc to 5pc, with the pound briefly falling below €1.16.
But it is back up again, rising just over a quarter of one per cent so far today as weak Spanish and regional German inflation figures increase expectations of more rate cuts in the eurozone.
10:07 AM BST
Drop in Spanish inflation raises hopes of rate cuts
Inflation in Spain dropped to 2.2pc this month, its lowest rate in more than a year, as lower fuel and food prices gave shoppers a lift.
Core inflation, which excludes some food and energy products, dropped to 2.7pc in August, according to estimates from the Spanish National Statistical Office, the lowest level since the cost of living crisis took hold.
It raises hopes that the European Central Bank can press on with more interest rate cuts, as price pressures drop even in the strongest of the major eurozone economies.
Spain has been boosted by a tourism boom which has helped it grow far more quickly than France or Italy, and far faster than stagnation-stricken Germany.
The ECB, led by Christine Lagarde, cut all of its key rates by 0.25 percentage points in June, moving ahead of the Bank of England, which cut this month, and the US Federal Reserve, which is expected to move next month.
That move took the ECB’s deposit rate down from 4pc to 3.75pc.
09:56 AM BST
Fewer homes built than at any point since depths of Covid lockdown
Builders finished just 38,400 new homes in the first three months of this year, according to the Office for National Statistics, the fewest since the worst of the Covid lockdowns in the second quarter of 2020.
That is down from just over 45,000 in the same period of 2023, and from a post-lockdown high of more than 60,000 completions in the final three months of 2022.
New starts are also weak, with builders breaking ground on fewer than 30,000 new homes. That is an improvement on the previous quarter’s new starts, but is still one of the weakest figures since the pandemic was at its height, and is a number rarely seen before Covid except in the financial crisis and its aftermath.
It bodes ill for Sir Keir Starmer and Angela Rayner’s plans to build 1.5m homes over five years, requiring an average pace of 300,000 per year, or 75,000 per quarter.
09:02 AM BST
Keir Starmer not popular enough to launch huge tax raid, says top economist
Sir Keir Starmer is not popular enough to launch a very large-scale tax raid, a top economist has warned, despite his vast majority in parliament.
Allan Monks, economist at JP Morgan, said big tax raids risk undermining economic growth and prosperity, and could easily hammer Labour’s political standing.
“Large tax increases don’t appear to fit Labour’s ongoing narrative that growth and wealth creation is ‘the number one priority of this government’ as Starmer said this week,” Mr Monks said.
“Labour will also be conscious that its supermajority of seats in parliament is fragile, i.e. underpinned by a very low share of the popular vote. Small shifts in public opinion could produce large changes in Labour’s prospects ahead of the next election.”
He predicts Rachel Reeves, the Chancellor, will settle for £10bn of tax rises and can “exploit leeway in the fiscal rules” to cover the rest of the black hole in the finances.
Just the passage of time adds another year to the five-year rolling debt target, which Mr Monks estimates will open up an extra £10bn to £15bn of borrowing space. Excluding the cashflows on the Bank of England’s quantitative easing (QE) programme from the sums could free up another £17bn.
“Given the challenges Labour faces, we expect it will try to spread the pain more thinly across several different areas to minimise the risk of a big shift in public opinion. That probably involves some combination of tax increases, spending restraint and creativity with the fiscal rules,” Mr Monks said.
08:55 AM BST
Bank stocks inch back up
British bank shares have clawed back some of yesterday’s losses, after sliding on fears of an extra tax raid in October’s Budget.
Barclays is up 1.1pc so far today, recovering some lost ground, with Lloyds and NatWest each up 0.5pc.
Standard Chartered is up 1pc while HSBC’s shares have climbed 0.6pc amid a management shakeup at the lender - unwinding all of Wednesday’s losses at those two banks.
08:29 AM BST
Mining boss: ‘I want to hold them captive all day long’
An Australian mining boss has banned working from home and said he wants his staff to spend as much time as possible in the office instead of stepping out even for a coffee break.
Chris Ellison, founder of Mineral Resources, said the restaurant and gym in the office will soon be joined by a creche for staff members’ children as the company seeks ways to keep workers at their desks as much as possible.
“When I get them first up in the morning, I want to hold them captive all day long,” he told analysts as he announced the company’s earnings.
“I don’t want them leaving the building, and we do that. So I don’t want them walking down the road for a cup of coffee. We’ve kind of figured out a few years how much that costs, wandering out around lunch time.”
Mr Ellison urged the wider mining industry to abandon Covid-era practices and get back to working full time.
The daycare centre is going to charge barely one-tenth of the market rate, he said.
“I found out one of the key things for women, in particular, was that they spend about A$180 (£93) a day on daycare. We’re installing one now to take 105 kids and it will cost them about A$20 a day,” he said.
“So [that is] another reason for them to come and enjoy work, drop the little tykes next door. We’ve got doctors on board and nurses. We’re going to feed them, but mum and dad will be working in our office.”
07:57 AM BST
Rebound in family finances to hit a wall as bosses set to slam brakes on pay rises
This year is set to be the high point for rising living standards, as bosses prepare to slam the brakes on the boom in wages.
Families’ incomes are set to grow by 3pc above inflation on average this year, according to the Resolution Foundation, in a sharp rebound from the cost of living crisis.
Tumbling inflation combined with large pay rises and the Conservatives’ cuts to national insurance contributions are helping to restore household finances after the energy price crunch.
But living standards will barely budge beyond this year, rising by just 2pc in total over the subsequent five years.
Weak productivity growth means employers will be forced to cut back pay rises, while unemployment is forecast to edge up in the coming years, harming those families’ incomes.
The freeze on tax thresholds means a growing share of workers’ wages will be subject to income tax and national insurance. At the same time rising rents and sustained high interest rates will keep pressure on housing costs.
Alex Clegg, economist at the Resolution Foundation, said it means the mini-boom currently sweeping the economy is going to end soon.
“Britain is currently experiencing a mini living standards recovery as inflation falls but wage rises remain high. But this isn’t set to last, with the majority of income growth projected over the Parliament coming in this year alone. After that, wage rises are forecast to weaken and be overtaken by rent and mortgage cost increases,” he said.
07:47 AM BST
UK car production slumps
Britain’s car industry turned out 65,478 vehicles last month, down more than 14pc compared with July of 2023.
The share of electric cars - including battery and hybrid models - slipped from 39.5pc a year ago to 37.5pc now.
Almost 53,000 cars were made for export, according to the Society of Motor Manufacturers and Traders (SMMT). That represents a drop of more than 16pc on the year. Just over half of these exports go to the EU, with the US taking 17.6pc and China in third place buying one car in every 12 of those made for sale abroad.
By contrast production for domestic demand held up better, slipping only 5pc to 12,515 cars.
Mike Hawes, chief executive of the industry group, said the drop in production was caused by model changeovers and temporary supply chain disruptions.
“Following significant growth last year, some readjustment in output was to be expected. Indeed, an ongoing degree of volatility is likely as the industry restructures to transition to zero emission vehicle production. As the billions already committed to new models start to deliver a return, volume growth will resume, providing we seize every opportunity to enhance our global competitiveness,” he said.
07:32 AM BST
End of party in China for Pernod
French drinks titan Pernod Ricard is suffering something of a hangover in China as sales in the world’s second-largest economy dropped by 10pc in the company’s latest financial year.
The slump contributed to a 35pc fall in profits to €1.48bn (£1.25bn) for the group, which owns brands including Absolut Vodka, Chivas Regal whisky and the champagne Perrier-Jouët.
Alexandre Ricard, its chairman and chief executive, said the slide in sales represented a “normalisation” after the post-Covid boom.
“Pernod Ricard achieved robust results for the fiscal year ending June 2024 within an environment of economic and geopolitical uncertainty and spirits market normalization after two years of exceptional post-pandemic growth,” he said.
07:26 AM BST
Double capital gains tax to close north-south divide
Currently capital gains tax (CGT) - charged on the profit made on the sale of assets including shares and buy to let homes - is charged at between 10pc and 28pc, depending on the type of asset and the income of the person making the gain.
It is set to raise £15.2bn this year, so the proposed increase is estimated to more than double revenues for the Exchequer from the tax.
Aligning it with income tax rates would push the tax up as high as 45pc. The precise extent of the increase could be limited by allowing investors to earn a certain amount before applying the tax, for instance by only charging CGT on gains above inflation.
The Chancellor has refused to rule out a raid on capital gains.
However, there are fears an increase in the tax would paralyse the housing market by scaring buyers, drive entrepreneurs abroad, and make Britain a less attractive place to invest, risking undermining economic growth.
Ramping up taxes on dividends and revamping council tax to increase the burden on those with the most valuable homes should also be considered, the IPPR said, with the impact largely falling on those in the capital and the surrounding counties.
The Chancellor has also been advised to limit inheritance tax reliefs on businesses and agricultural land, as a step towards wider reform ultimately “replacing inheritance tax with a lifetime capital acquisitions tax to reduce intergenerational wealth inequality in this Parliament”.
07:07 AM BST
5 things to start your day
Thanks for joining us. We begin the day with sustained demands on Rachel Reeves, as the Chancellor seeks more cash and unions and think tanks propose targets for the Chancellor. Targeting rich households in London and the South East of England could net her Treasury £18bn, according to the Institute for Public Policy Research (IPPR), a left-leaning think tank.
5 things to start your day
1) Wealth tax looms amid pressure from Labour’s union paymasters | Unite leads calls for raid on super-rich as Rachel Reeves seeks to plug £22bn ‘black hole’
2) City whistleblower who raised alarm over ‘Chinese spy’ wins £500,000 | Bharat Bhagani was sacked by Hong Kong-based employers after raising concerns with FCA
3) ‘There’s incredulity’: Why Rayner’s right to switch off has bosses terrified | Confusion reigns as British businesses fear hefty fines if they fall foul of new rules
4) Victoria Beckham pumps millions into fashion empire after £3m loss | Beauty business struggles to turn profit despite boost from new lines of belts and perfume
5) Daniel Johnson: Starmer’s Brexit plot could turn Britain into the sick man of Europe | Cosying up to crisis-ridden Germany will only hurt the UK’s relatively rosy outlook
What happened overnight
Stocks on Wall Street closed lower last night as a pullback in big technology companies outweighed gains elsewhere in the market.
The S&P 500 fell 0.6pc, to 5,592.18, weighed down by drops in Nvidia, Apple, Microsoft and Amazon. About 56pc of the stocks in the benchmark index finished in the red.
Nvidia’s shares continued their plunge from earlier on Wednesday and were down more than 7pc in overnight trading.
The Dow Jones Industrial Average, which was coming off two consecutive all-time highs, fell 0.4pc to 41,091.42. The Nasdaq Composite, which is heavily weighted with technology stocks, closed 1.1pc lower at 17,556.03.
The selling came ahead of an eagerly anticipated earnings report from the semiconductor company Nvidia, whose chips power AI applications. The company is one of the most influential stocks on Wall Street, with a total market value topping $3 trillion.
Nvidia reported its second-quarter results after the market closed. Its earnings and revenue topped Wall Street’s forecasts, but the stock fell in after-hours trading, at one point by more than 8pc.
Meanwhile, in the bond market, the yield on benchmark 10-year Treasury notes rose to 3.84pc from 3.83pc late on Tuesday.
Stocks in Asia tracked their US peers lower after underwhelming earnings from Nvidia dampened the outlook for the tech sector.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6pc, the Nikkei eased 0.4pc and South Korea dropped 0.7pc.