AstraZeneca becomes Britain’s first £200bn company
AstraZeneca has become Britain’s first £200bn company following a 20pc rally in its share price since the start of the year.
Shares in the pharmaceutical business rose 1.1pc yesterday to value the company at £200.3bn.
AstraZeneca’s stock has surged so far this year amid strong sales of its roster of cancer and rare disease medicines. The drug company jumped ahead of Shell in April to become the most valuable business on the FTSE 100.
AstraZeneca surpassed its long-term revenue targets last year, generating $45.8bn (£35.7bn) of sales compared with $25.7bn in 2014.
It said in May it was now targeting annual revenues of $80bn by 2030, claiming it was embarking on a “new era of growth”.
Pascal Soriot, the AstraZeneca chief executive, said many of the treatments it was developing had the potential to generate more than $5bn of revenue in a year.
It is aiming to launch a further 20 new medicines before the end of the decade.
As part of this push, AstraZeneca struck a £1.6bn deal in November for an experimental weight loss pill being developed by Chinese biotech company Eccogene.
Read the latest updates below.
06:29 PM BST
Signing off...
Thanks for joining us today. We’ll be back tomorrow morning with all the latest from the markets from around 7am.
06:29 PM BST
US stocks push higher amid rising hopes of a rate cut
US stocks are pushing higher after the fresh figures on the economy this week came in better than expected.
The S&P 500 is 1.4pc higher after the US government reported inflation at the wholesale level slowed last month by more than economists expected. The Dow Jones Industrial Average is up 0.8pc, while the Nasdaq Composite was 2.2pc higher.
High inflation has been the scourge of shoppers and financial markets for years. It finally looks to be slowing enough to get the Federal Reserve to ease up on high interest rates, which the Fed has been keeping at economy-crunching levels in order to stifle inflation.
Treasury yields eased in the bond market following the inflation data, as traders remain convinced the Fed’s meeting next month will bring the first cut to interest rates since the Covid crash of 2020.
The yield on benchmark 10-year US Treasury bonds fell to 3.85pc from 3.91pc late on Monday.
05:46 PM BST
Starbucks is a fast food restaurant that can learn from Chipotle, says analyst
We reported earlier on Starbucks’ appointment of Chipotle Mexican Grill boss Brian Niccol as its new chief executive.
Chipotle’s sales have surged since Mr Niccol joined in 2018, and the stock has more than tripled over the last five years.
Peter Saleh, an analyst at broker BTIG, said:
This is a significant victory for Starbucks. Niccol has earned the respect and confidence of the investment community and will be given the much-needed leeway to make investments and time to turn around Starbucks.
Starbucks had been under pressure from Elliott Investment Management, which had built a $2bn (£1.6bn) stake. Elliott had suggested Starbucks expand its board and make its executive Jesse Cohn a director, though it was not demanding a CEO change.
Elliott on Tuesday said that Niccol’s appointment was “a transformational step forward” for the company. “We look forward to continuing our engagement with the Board as it works toward the realization of Starbucks’ full potential,” it said.
Craig Garthwaite, a professor at Northwestern’s Kellogg School of Management, said Niccol “has taken an upscale fast food restaurant chain and improved it before, and that is what Starbucks is today, a fast-food restaurant. For Niccol this could be the ultimate challenge in fixing the perception that’s weighing on the company and the business problems.”
05:18 PM BST
Europe’s Stoxx 600 hits two-week closing high
Europe’s benchmark stock index closed at a near two-week high on Tuesday, as growing hopes of an interest rate cut from the US Federal Reserve in September offset a drag from weak earnings from the likes of Swiss medtech firm Tecan.
The continent-wide Stoxx 600 index, which includes some of Britain’s biggest companies, closed 0.5pc higher. While healthcare and utilities were the top sectoral gainers, basic resources was the worst hit.
05:15 PM BST
Global stock markets climb as data shows US inflation slows
Global stocks mostly rose on Tuesday as slowing US inflation boosted hopes of interest rate cuts.
The week’s main focus for the markets is expected to be US consumer inflation figures out on Wednesday, which could influence the Federal Reserve’s monetary policy decision-making.
However, investors got reassuring wholesale price data on Tuesday, sending Wall Street stocks higher.
The producer price index (PPI) rose by 0.1 percent in July, down slightly from a 0.2 rise in June, the US Labor Department said.
France’s Cac 40 rose 0.4pc, while Germany’s Dax rose 0.5pc. The pan-European Stoxx 600 was also up 0.5pc.
Currently, on Wall Street the S&P 500 is up 1.2pc, while the Dow Jones Industrial Average of 30 blue-chip businesses is up 0.7pc. The tech-heavy Nasdaq Composite is up 1.9pc.
05:12 PM BST
Footsie closes up
The FTSE 100 rose 0.3pc today, with the top riser being insurer Admiral, up 2.2pc, followed by housebuilder Persimmon, up 2.1pc.. The biggest faller was miner Antofagasta, which fell 2.2pc, followed by M&S, down 1.8pc.
Meanwhile, the mid-cap FTSE 250 rose by a similar 0.3pc. The top riser was financial services business Just Group, up 14.5pc, followed by investment company Bridgepoint, up 5.8pc. The top faller was housebuilder Crest Nicholson, down 20.7pc, followed by engineering firm Goodwin, down 6.1pc.
04:50 PM BST
Chipotle plunges 11pc after Starbucks hires its boss
Shares in Chipotle Mexican Grill are down 11pc this afternoon after its boss, Brian Niccol, was announced as the new chief executive of Starbucks.
Starbucks shares are up 21pc.
04:45 PM BST
AstraZeneca becomes Britain’s first £200bn company
British drug giant AstraZeneca has become Britain’s first £200bn company after its stock market valuation rose 1.2pc in trading today.
Shares in the company have risen 20pc since January, with the company jumping ahead of Shell in April as the top FTSE 100 company.
AstraZeneca is best known in Britain for its Covid vaccine, which saved millions of lives around the world and was at the centre of a row with EU leaders.
The drug company has grown rapidly under its chief executive Pascal Soriot, who has built a national champion after rejecting a hostile bid from Pfizer in 2014.
04:27 PM BST
Russian rouble touches 10-month low following Kursk attack
The Russian rouble weakened to a 10-month low against the dollar today following Ukraine’s unexpected attack a week ago on Russia’s Kursk region - but then rebounded to the day’s opening level.
By this afternoon, the rouble was flat at 90.99 to the dollar, according to LSEG data after falling to 96.60, the lowest level since October 20 last year. It has lost 6.2pc since the start of the attack on August 6.
Trading between the rouble and major currencies shifted to the so-called over-the-counter market, meaning trade that is not made on a formal exchange, after new Western sanctions were introduced on June 12.
04:19 PM BST
Switch to electric cars may take ‘longer than anyone expects’
The switch to electric cars risks taking far longer than hoped as demand stalls in Europe and America, the boss of one of the world’s biggest parts suppliers has warned. Matt Oliver reports:
Liam Butterworth, chief executive of GKN Automotive parent Dowlais, said the scrapping of electric vehicle (EV) tax breaks in countries such as Germany had triggered a sales slowdown that was reverberating through the industry.
This is translating into smaller orders for component suppliers, as big car manufacturers including Ford, Volkswagen and Mercedes-Benz push back production schedules.
Mr Butterworth said: “Consumer sentiment associated with EVs – when you look at insurance, residual values and charging infrastructure – has clearly got to a point where the pace of the transition has slowed down significantly.
“My view is that transition is going to take much, much longer than anybody expected.”
Concerns continued to grow on Tuesday, as it emerged Volkswagen may delay the launch of a new version of its ID.4 electric car from 2026 until the early 2030s.
04:06 PM BST
Boeing orders rebound in July thanks to Farnborough Airshow
US aeroplane manufacturer Boeing’s orders rebounded in July after a first half of the year overshadowed by quality control problems, and remained on track with deliveries, according to data unveiled Tuesday.
In the wake of the Farnborough International Airshow in the United Kingdom in July, Boeing said it had booked 72 orders, including 57 for its flagship 737 Max aircraft.
Orders for the Max came mainly from two leasing companies: Aviation Capital Group, which ordered 35, and Macquarie AirFinance which ordered 20.
The strong figures for July mark a significant change from May and June, when Boeing’s net orders were just three and 12, respectively.
In the first seven months of the year, Boeing won 228 gross orders, but a net figure of only 98, after cancellations and conversions were taken into account. Over the same period last year, it won 579 orders, according to its website.
Boeing’s order book contained 6,184 aircraft as of July 31, including almost 4,200 737 Maxes.
04:01 PM BST
‘Back to normal’ for tech stocks
Nasdaq, the US index that heavily represents tech stocks, is up 1.6pc this afternoon. Chris Beauchamp, chief market analyst at online trading platform IG, said:
It feels like ‘back to normal’ for markets as tech stocks lead the way higher again following the lower US PPI [inflation] data [covered on this blog earlier].
The reading has given heart to beleaguered investors, who remain skittish after last week’s volatility.
Setting aside the carnage in the yen and the Nikkei, last week feels very much like a normal pullback in an otherwise strong year, and recession fears, like expectations of a more dramatic cut in rates, have been dialled back over the past few sessions.
03:58 PM BST
Pound rises against softening dollar
The pound has risen against other major currencies today, rising 0.4pc against the dollar and the yen, and by 0.2pc against the euro.
Sterling has been boosted after Britain’s unemployment rate unexpectedly fell in June.
Meanwhile, the dollar has weakened against the rest of its peers, with markets waiting for fresh US inflation data that could indicate the outlook for Federal Reserve interest rate cuts.
The dollar began softening after the release of data showing US producer prices increased less than expected in July as a rise in the cost of goods was tempered by cheaper services, indicating that inflation continued to moderate.
Erik Nelson, macro strategist, at Wells Fargo Securities in London, said:
We’re seeing little bit of weakness, and part of the issue is we don’t have a CPI [inflation report] yet. We did see a little bit of dollar weakness. The core PPI [inflation] number was actually kind of strong, which may be holding back the dollar weakness as well.
03:48 PM BST
HelloFresh shares soar 14pc after promise that costs will be cut
Thanks for joining me, Alex Singleton, this afternoon on the Markets blog.
Investors smiled on HelloFresh shares today, as the meal kit business attempts to boost profits with a cost-cutting plan.
Underlying profits for second quarter of 2024 was €146m (£125m), compared with €192m a year earlier.
But sales at the meal kit business continued to grow, rising by 4.7pc, which the company said was driven by its ready-to-eat range.
Bloomberg reported that Bernstein analysts have told their clients that the lack of major surprises, after the company had previous lowered investors’ expectations in March and November, is “crucial” for rebuilding investors’ confidence.
Shares rose 14pc, but are still down 75pc over the past year.
03:33 PM BST
Lab-grown diamonds to overtake traditional stones by 2035, says Pandora
Lab-grown diamonds will be more popular than traditional stones within the next 10 years, the boss of jewellery giant Pandora has said, as younger customers look for cheaper alternatives.
Our retail editor Hannah Boland has the details:
Alexander Lacik said the “vastly lower cost” and smaller environmental impact of the jewels would spark a “massive” shift in customers towards lab-grown diamonds.
Pandora stopped selling mined diamonds in 2021, saying this would allow it to make its pieces more accessible to more shoppers. Lab-grown diamonds sell for around a third of the price of mined jewels.
Speaking to Bloomberg, Mr Lacik said: “A diamond is a diamond regardless of whether it comes from the mine or it comes from the lab. So ten years on my prediction is that the vast majority of diamonds being sold are going to be lab grown. I think we’re in front of a big transformation here.”
The comments came as Pandora raised its forecasts for sales this year, despite saying consumer spending had been “somewhat sluggish”. Other luxury firms have been struggling with a slowdown, including leader LVMH which warned over customers reigning in spending on champagne last month. Richemont, the owner of Cariter, also said it had been hit by weaker demand, particularly in China.
The upgrade from Pandora came just months after another lift to its forecasts when it cited the strong demand for lab-grown diamonds.
Pandora had previously been viewed as a retailer which focused on charms for bracelets and necklaces, but has been looking to transform itself into a full-range jewellery chain.
03:13 PM BST
Asda hit by fresh sales slowdown after chairman attacks ‘embarrassing’ performance
Asda has been hit by a fresh slump in sales just days after its chairman admitted he was “embarrassed” by the supermarket’s recent performance.
Our retail editor Hannah Boland has the latest:
Asda sales tumbled 6pc in the 12 weeks to August 4, according to new year-on-year figures from Kantar, making it the only major supermarket where trading is in decline.
The latest drop in sales led to its market share sliding to 12.6pc, down from 14.8pc when the business was bought by the Issa brothers in February 2021.
By contrast, in the latest 12-week period rival Sainsbury’s recorded its largest year-on-year market share increase since July 1997.
Read how the industry data will fuel concerns over Asda’s competitiveness in the retail market.
02:53 PM BST
UK stocks rise amid declining US wholesale inflation
The FTSE 100 is back in positive territory after a lunchtime lull as figures showed US wholesale inflation fell by more than expected last month.
The blue-chip stock index was up 0.2pc and the midcap FTSE 250 was up 0.3pc as the data cemented bets that the Federal Reserve will cut interest rates at its September meeting.
Money markets predict there is a 62pc chance that the Fed will cut rates by half a percentage point, boosting the world’s largest economy.
The pound is now up 0.4pc today to $1.282.
02:34 PM BST
US stocks jump after wholesale inflation falls
Wall Street shares rose at the opening bell after wholesale inflation dropped by more than expected in July in a boost to hopes for interest rate cuts.
The Dow Jones Industrial Average rose 88.3 points, or 0.2pc, at the open to 39445.27.
The S&P 500 rose 32.6 points, or 0.6pc to 5376.98​, while the Nasdaq Composite rose 164.1 points, or 1pc, to 16944.735.
02:20 PM BST
Traders reduce bets on interest rate cuts after unemployment surprise
Traders are reducing bets on the Bank of England cutting interest rates next month after a surprise fall in unemployment.
Money markets are pricing in a 37pc chance that policymakers will follow up their first rate cut in four years earlier this month with an immediate second reduction in borrowing costs in September.
The pound rose 0.3pc and tipped over $1.28 for the first time since the global stock market sell-off last week after the latest official figures showed unemployment unexpectedly fell in the three months to June.
The Office for National Statistics said the unemployment rate dropped to 4.2pc, down from 4.4pc in the three months to May and well below analyst estimates that it would rise to 4.5pc.
However, wage growth slowed to its lowest level for more than two years, complicating the picture for the Bank of England.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “We still think the Bank will pause in September before pressing ahead with two more 25 basis point rate cuts in November and December.”
02:11 PM BST
Gold prices rise as US wholesale inflation drops
The price of gold has risen as falling US wholesale inflation cemented bets that the Federal Reserve will begin cutting interest rates next month.
Bullion was up 0.2pc to $2,468.50 after gaining 1.7pc on Monday after the producer price index (PPI) rose less than expected last month.
Gold has gained almost 20% so far this year, benefiting from mounting optimism on rate cuts and large purchases by central banks.
It has also benefited from conflicts in Ukraine and the Middle due to its status as a safe haven asset.
01:53 PM BST
Crest Nicholson ‘confident’ despite Bellway abandoning £720m takeover
Crest Nicholson said it “remains confident in its standalone prospects” after Bellway abandoned its £720m takeover of the house builder.
It previously said it was “minded” to accept the deal, but Bellway has now said it will not put forward a firm offer after talks between the companies.
Crest shares have fallen 15.7pc despite the company saying it was confident thanks to a “review of provisions for completed development sites supported by external consultants, its highly attractive land portfolio and the new leadership of Martyn Clark”.
The house builder has also received interest over a potential merger deal from rival developer Avant Homes, which is owned by New York hedge fund Elliott.
Avant, which is led by former Persimmon boss Jeff Fairburn, saw its bid to buy Crest rejected last month.
The bid interest is the latest in a line of major mergers in the housebuilding industry, with companies joining forces after a period of high mortgage rates and weaker demand.
Earlier this year, two of Britain’s biggest housebuilders, Barratt Developments and Redrow, agreed to a tie-up worth £2.5bn which they said would accelerate housebuilding across the country.
01:37 PM BST
Wall Street expected to open higher after wholesale inflation falls
US stock indexes are on track to make gains when markets open later after a producer prices report showed inflation pressures easing, keeping the Federal Reserve on track to cut interest rates in September.
Data from the US Labor Department showed the producer price index rose to 2.2pc in July, higher than an estimate of a 2.3pc and down from 2.7pc the previous month.
Excluding volatile food and energy components, core PPI fell to 2.4pc, versus an estimated 2.7pc advance and down from 3pc in June.
In premarket trading, the Dow Jones Industrial Average was up 111 points, or 0.3pc, the S&P 500 was up 32 points, or 0.6pc, and the Nasdaq had gained 154 points, or 0.8pc.
01:34 PM BST
Wholesale inflation falls more than expected in boost to US rate cut hopes
Wholesale inflation fell at a sharper pace than expected last month, official figures show, in a boost to hopes that the Federal Reserve will cut interest rates at its next meeting.
The producer prices index (PPI) rose by 2.2pc in July, which was down from an upwardly revised 2.7pc in June, the Labor Department said.
Core PPI, which strips out volatile food and energy prices, also fell further than expected from 3pc to 2.4pc.
01:25 PM BST
Starbucks chief executive departs after just five months
Starbucks has announced its boss Laxman Narasimhan has stepped down just five months after taking the helm at the struggling coffee giant.
Chipotle chairman and chief executive Brian Niccol has been appointed to the same positions and will move over on September 9, having turned around the fortunes of the Mexican grill chain.
Starbucks shares have fallen by 28pc since November last year, including a 16pc drop in May amid declining sales as customers shun more expensive coffee.
Mr Narasimhan, who joined after serving as chief executive of Reckitt, which owns brands like Lysol, Durex and Mucinex. He also previously worked at PepsiCo and McKinsey.
Starbucks shares jumped 12pc after the appointment of Mr Niccol, who has also served as chief executive of Taco Bell.
Mellody Hobson, Starbucks board chair, who will become lead independent director in the boardroom shakeup, said:
We are thrilled to welcome Brian to Starbucks. His phenomenal career speaks for itself. Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth.
Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience.
Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.
01:09 PM BST
Bellway pulls plug on £720m takeover bid for Crest Nicholson
Bellway has pulled out of its planned £720m takeover of rival Crest Nicholson as it said it is confident it can build more homes on its own.
Crest Nicholson’s board had already said it was “minded to accept” the approach from Britain’s fifth-largest housebuilder.
Bellway shares jumped 4pc as it said it was “confident that its robust balance sheet and operational strength, combined with the depth and quality of its land bank, will enable Bellway to deliver volume growth in the years ahead and support ongoing value creation for shareholders”.
Meanwhile, Crest Nicholson’s shares plunged 15.6pc to the bottom of the FTSE 250.
Bellway, which has a market valuation of £3.5bn, had last month been given an extra 12 days to make a firm takeover offer for its rival.
12:47 PM BST
Wall Street mixed ahead of wholesale inflation figures
US stock indexes lacked direction in premarket trading ahead of producer prices data that will likely offer some clues on the Federal Reserve’s next steps on interest rates.
Stocks wobbled on Monday with the S&P 500 nearly flat and the Nasdaq eking out modest gains, following a turbulent week marked by mixed economic reports and a rate hike by Japan’s central bank.
The US producer price index (PPI) before the opening bell is expected to show that inflation moderated to 2.3pc in July on a yearly basis.
This will be followed by the all-important consumer price index (CPI) figures for July on Wednesday and retail sales data on Thursday.
Traders continue to be evenly split between quarter of a percentage point and a half point interest rate cut by the Federal Reserve in September and expect the year-end rate at 4.25pc to 4.5pc.
In premarket trading, the Dow Jones Industrial Average was down 0.1pc, the S&P 500 was up 0.2pc and the Nasdaq 100 was up 0.3pc.
12:20 PM BST
Britain becomes investors’ favourite European stock market, says Wall Street bank
Britain’s stock market has become the preferred choice for investors in European indexes, a Wall Street bank has said, amid a change in fortunes for the UK economy.
Bank of America said the number of investors planning to take outsized stakes in UK stocks over the next year has jumped over the last month.
Its poll showed the share of so-called “overweight” positions was up to more than 30pc from less than 10pc in July.
By contrast, Germany was the least preferred, with more than net 30pc of respondents saying they would be “underweight” regarding the country over the next year, meaning they plan to reduce the size of related investments in their portfolios.
The change in attitudes to Britain comes as the FTSE 100 held up relatively well during the recent turmoil in markets thanks to its strong exposure to the resilient energy and mining industries, while Britain’s economy is expected to enjoy relative stability following Labour’s election victory.
It is a big turnaround from 18 months ago, when Bank of America said UK stocks were the most disliked globally amid runaway inflation, an energy crisis and after former Prime Minister Liz Truss’s unfunded tax cuts fuelled a sharp sell-off in British assets.
Meanwhile, separate data today showed investor confidence in Germany almost halved over the last month amid the turmoil in global markets and an uncertain economic outlook.
12:02 PM BST
Musk’s cyber attack claim in Donald Trump interview was fake, claim insiders
Elon Musk was wrong to claim that a massive cyber attack derailed his interview with Donald Trump, insiders at the billionaire’s social media company have claimed.
Our senior technology reporter Matthew Field has the latest:
Mr Musk said that a lengthy delay to his conversation with Mr Trump was caused by a “massive DDOS [distributed denial of service] attack on X”, hitting the app’s Spaces feature.
However, company insiders told The Verge there had been no such attack and there was a “99pc” likelihood Mr Musk’s claim was false.
The type of cyber attack blamed by Mr Musk involves hackers directing enormous amounts of traffic at a website, forcing it offline. But security firms monitoring global hacking threats did not record unusual levels of traffic to X, formerly known as Twitter.
Read how it comes days after Mr Musk shared a fake Telegraph article to his millions of followers, which he later deleted.
11:39 AM BST
Private sector pay heading in right direction for Bank of England, say economists
Private sector pay growth slowed down even more markedly than overall regular pay, dropping from 5.6pc to 5.2pc in the three months to June.
Bank of England Governor Andrew Bailey said at a press conference earlier this month that private sector pay was a bigger concern with regard to wage growth than pay in the public sector.
Julian Jessop, an economist at the IEA think tank, said it is going in the right direction for policymakers:
Most important figure for the #BankofEngland today is regular private sector #pay growth, which slowed from 5.6% to 5.2% in the 3m to June and to just 4.9% in June alone 👇
Still high but, if you're worried about a 'wage-price spiral', heading in the right direction.#inflation pic.twitter.com/os5xcybM8F— Julian Jessop FRSA (@julianHjessop) August 13, 2024
11:20 AM BST
Oil prices fall amid potential surplus
Oil prices have edged lower after the International Energy Agency warned of a potential surplus later this year.
Brent crude, the international benchmark, was down 0.3pc to about $82 a barrel after rising by almost 8pc over the previous five sessions.
US-produced West Texas Intermediate was down 0.2pc to below $80 a barrel after the Opec cartel on Monday trimmed its forecast for global oil demand, blaming a weak economy in China.
Today, the IEA warned that the global oil market could face a surplus in the final quarter of the year if Opec pushed ahead with plans to ramp up production in October.
Yeap Jun Rong, a market strategist at IG Asia, said:
Eyes will be on the upcoming US inflation to anchor the Fed’s upcoming policy easing path.
Risks of a hard landing are not totally out of the window yet.
10:56 AM BST
Gas prices decline as Russian supplies hold up
Gas prices have edged lower for a second day amid signs that Russian gas will keep flowing through Ukraine despite conflict around a key transit point.
Dutch front-month futures, Europe’s benchmark contract, fell as much as 2.4pc to trade at about €39 per megawatt hour.
Prices rose as high as €42 from €34 at the start of last week after Ukrainian soldiers crossed the Russian border about 330 miles southwest of Moscow a week ago.
Ukraine launched fresh drone attacks on Russia’s border region of Kursk today.
Florence Schmit, a European energy strategist at Rabobank, said:
Now that Russia and Ukraine have said they want to continue the gas flows some of the risk premium is easing.
But the risk premium from the Middle East is still a reality, and this is why prices will most likely remain in the mid 30s range in the absence of a further escalation.
10:29 AM BST
German confidence plunges at sharpest pace in two years
Investor confidence in Germany has suffered a steep decline amid the turmoil in global markets and an uncertain economic outlook, a closely watched survey shows.
The ZEW Indicator of Economic Sentiment showed that confidence more than halved in one month, plummeting by 22.6 points to 19.2 points.
It was the sharpest drop since July 2022 and took sentiment to its lowest level since January.
ZEW president Professor Achim Wambach said:
The economic outlook for Germany is breaking down. In the current survey, we observe the strongest decline of the economic expectations over the past two years.
Economic expectations for the eurozone, the US and China also deteriorate markedly. As a result, especially the expectations for export-intensive German sectors decline.
It is likely that economic expectations are still affected by high uncertainty, which is driven by ambiguous monetary policy, disappointing business data from the US economy and growing concerns over an escalation of the conflict in the Middle East.
Most recently, this uncertainty expressed itself in a turmoil on international stock markets.
Germany Zew Economic Sentiment Indexhttps://t.co/2TOP8G26fS pic.twitter.com/1MlsnYML0b
— TRADING ECONOMICS (@tEconomics) August 13, 2024
10:13 AM BST
Oil market faces glut of supply, industry warns
The oil market could be hit with a surplus of stocks later this year if the Opec cartel proceeds with plans to ramp up production from October, an industry body has warned.
Oil stockpiles will stabilise in the final quarter of the year, according to the International Energy Agency (IEA), but would tip into surplus if the Saudi-led group increases output.
The Opec+ cartel - which includes allies like Russia - has outlined plans that would increase production by about 543,000 barrels a day during the final quarter of the year, but it has stressed the plans could be “paused or reversed” depending on market conditions.
The Paris-based IEA said:
Despite the marked slowdown in Chinese oil demand growth, Opec+ has yet to call time on its plan to gradually unwind voluntary production cuts starting in the fourth quarter.
For now, supply is struggling to keep pace with peak summer demand, tipping the market into a deficit.
09:51 AM BST
Food inflation rises for first time in more than a year
Grocery price inflation has risen for the first time since March last year, figures show, clouding the picture for the Bank of England as policymakers decide whether to cut interest rates again next month.
Supermarket prices were 1.8pc higher than a year ago over the month to August 4, nudging up slightly from 1.6pc in July, analysts Kantar said.
The increase follows 17 straight months of falling rates from a peak of 17.5pc to its lowest point since September 2021 in July.
Consumers are witnessing a mixed picture on supermarket shelves, with prices rising across 182 product categories while the cost of 89 others fell. Kitchen towels and baked beans are 7pc and 5pc cheaper respectively than last year.
Fraser McKevitt, head of retail and consumer insight at Kantar, said:
Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly.
While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost-of-living crisis.
With this kind of pricing spread, shoppers will find that the type of product they’re putting in their baskets will really dictate how much they pay.
09:44 AM BST
Russian rouble plunges further after Ukraine launches assault
The Russian rouble weakened for the sixth consecutive trading session following Ukraine’s unexpected attack a week ago on Russia’s Kursk region.
The rouble was 1.6pc weaker on the day at 92.50 to the dollar, according to LSEG data. It has lost 8.5pc since the start of the attack on August 6.
The weakening of the rouble against the dollar and euro has continued despite support from higher oil prices and increased net daily sales of yuan by the central bank and finance ministry.
Ukraine has pummelled two Russian regions with drones today as its ground forces try to smash through defensive lines in a bid to carve out even more territory in its biggest attack on Russian territory since the war began two years ago.
Ukrainian soldiers crossed the Russian border, about 330 miles southwest of Moscow, a week ago.
President Vladimir Putin said the surprise attack was aimed at improving Kyiv’s negotiating position ahead of possible ceasefire talks.
Much of the fighting has centred around the town of Sudzha, through which Russia pumps gas from Western Siberia through Ukraine and on to Slovakia and other European Union countries.
09:29 AM BST
Pound rises after unemployment surprise
The pound rose after data showed Britain’s unemployment rate unexpectedly fell in June, although wage growth slowed.
Figures showed the UK jobless rate dropped to 4.2pc in June, according to the ONS, down from 4.4pc in May and below expectations of a rise to 4.5pc.
Sterling was last up 0.3pc and tipped over $1.28 for the first time since the global sell-off in financial markets last week.
The euro was down 0.3pc against the pound at 85.3p.
The ONS figures also showed average weekly earnings excluding bonuses were 5.4pc higher than a year earlier in the three months through June, down from 5.8pc in May.
09:08 AM BST
£3.4bn electricity ‘superhighway’ between Scotland and England approved
Energy regulator Ofgem has approved a £3.4bn electricity “superhighway” between Scotland and England in the biggest single investment for electricity transmission infrastructure in Britain.
The 311-mile Eastern Green Link 2 (EGL2) project will stretch from Aberdeenshire to North Yorkshire and will transport vast amounts of renewable energy between Scotland and England.
The joint venture between Scottish and Southern Electricity Networks and National Grid is part of a push to modernise the electricity grid to deal with greater demands placed on it by the green transition.
The new network capacity from the power line will carry enough renewable electricity to power two million homes, Ofgem said, describing it as a “superhighway”.
The massive new interconnector cable will be able to move two gigawatts of electricity between Scotland and England, partly enabling the latter to benefit from offshore wind energy generated by offshore wind farms in the North Sea.
Chief executive Jonathan Brearley said:
Ofgem is fully committed to supporting the Government to meet its aims of getting clean power by 2030.
Today’s announcement is a further step in putting the regulatory systems and processes in place to speed up network regulation to achieve its aim.
08:57 AM BST
FTSE 100 rises ahead of inflation figures
The FTSE 100 inched higher amid broader gains in the run-up to crucial inflation numbers in the United States and the UK.
The blue-chip FTSE 100 index was up 0.1pc, while the mid-cap FTSE 250 index added 0.3pc.
The indexes were set to extend their rally for a third consecutive session after closing lower for a second straight week on Friday.
Most sectors trended upward but car makers lead declines amid a fall of as much as 17.4pc in Dowlais Group.
The company sank to the bottom of the FTSE 250 after it said it was exploring a potential sale of its GKN Powder Metallurgy unit, among other options, and cut its annual revenue forecast.
Industrial metal miners dipped as much as 0.7pc amid easing copper prices.
Among other stocks, Just Group surged 13.5pc to top the FTSE 250 after it said it expected to exceed its previous 2024 profit forecast after its first-half earnings surpassed market expectations.
Investors are awaiting inflation figures for the UK and US, both of which are out tomorrow, to indicate how quickly the Bank of England and Federal Reserve will cut interest rates.
08:39 AM BST
Wage growth likely to raise state pension by £517
Wage growth will likely be used to calculate the rise in the state pension, analysts have said, likely giving pensioners a £517 boost next year.
Total pay, which includes bonuses, rose by 4.5pc in the three months to June, which was down from 5.7pc in the previous period after it was affected by the payment of one-off bonuses in NHS last year.
The figure is still far higher than inflation or 2.5pc, making it likely that wages will be the figure taken for state pension uprating next month under the triple lock.
If the figure were to remain the same next month, then we could see the full new state pension get a boost of around £517 – taking it to approx. £12,019 per year.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said:
Wage growth remains robust, so it’s highly likely that next month’s figure will be the one used to uprate state pension under the triple lock.
Such a rise will be welcomed by pensioners still emerging from the cost-of-living crisis. However, with many still reeling from the news that their Winter Fuel payment is to be taken away, it won’t be quite the boost that many hoped for.
There’s another looming challenge - frozen tax thresholds mean that the full new state pension is creeping ever closer to tax paying territory and a similar rise next year could see it surpass it. With these freezes in place until 2028, there’s every chance, we could see pensioners solely reliant on the state pension finding part of it is making its way to the taxman.
08:31 AM BST
Slowdown in wage growth ‘clears path for more rate cuts this year’
UK earnings growth slowed to its lowest for more than two years, which economists have said has “cleared the path for more interest rate cuts” by the Bank of England later this year.
The Office for National Statistics (ONS) revealed that regular wage growth was 5.4pc year on year over the three months to June, down from 5.7pc in the previous three months and represented the smallest increase since the period to August 2022.
Ruth Gregory, deputy chief UK economist at Capital Economics, said:
The further easing in wage growth will be welcomed by the Bank of England as a sign that labour market conditions are continuing to cool.
This lends some support to our forecast that the Bank of England will press ahead with two more 25bps interest rate cuts later this year.
We still think the Bank will pause in September before pressing ahead with two more 25bps rate cuts in November and December.
But much will depend on a broader range of indicators of price pressures, including services CPI inflation. July’s inflation figures will be released tomorrow.
08:18 AM BST
Britain needs training system that prepares young people for work, says BCC
Amid surging worklessness, the British Chambers of Commerce’s deputy director of public policy Jane Gratton said:
The labour market is continuing to give mixed signals as the number of vacancies declines for the 25th time alongside persistently high levels of economic inactivity and falling unemployment.
Employment costs also remain a major concern for employers, with real wage earnings still rising strongly, amid widespread recruitment difficulties and ongoing competition for skilled workers.
Bridging the UK’s long-standing skills gap will be crucial to bringing more balance to the labour market.
The focus must be on creating an education and training system that properly prepares young people for the world of work. It must help adults to return to work, stay in work, and continuously upskill and reskill for a rapidly changing workplace.
As hundreds of thousands of students receive A-level, T-level and vocational qualification results this week, employers will be eager to bring new talent into their businesses.
They will be looking beyond the technical and academic achievements to assess people’s real-world work-readiness and development potential.
08:10 AM BST
UK markets open higher after unemployment surprise
The FTSE 100 began the day higher despite a surprise drop in unemployment, which has seen traders rein in bets on interest rate cuts.
The UK’s blue chip stock index rose 0.3pc to 8,238.48 while the midcap FTSE 250 gained 0.4pc to 20,706.83.
Unemployment unexpectedly fell to 4.2pc in the three months to June, down from 4.4pc and well below analyst estimates of a rise to 4.5pc, which would have raised pressure on the Bank of England to cut interest rates.
Traders have reduced bets on a rate cut at the next meeting in September to less than 38pc from 39pc on Monday and 44pc on Friday.
08:02 AM BST
Job vacancies fall amid pressure on employers
Another decline in vacancy rates also showed continued pressure in the UK jobs market.
The number of vacancies in the UK decreased by 26,000 to 884,000 for the three months to June.
Estimates for the number of payrolled employees in the UK increased by 14,000 between May and June, the Office for National Statistics said.
There were 884,000 job vacancies in May to July 2024, down 26,000 on the quarter and 141,000 on the year. It is still 88,000 above pre-#COVID levels, though.
Read Vacancies and jobs in the UK ➡️ https://t.co/WSm1QFuHck pic.twitter.com/wuH1wSmgah— Office for National Statistics (ONS) (@ONS) August 13, 2024
07:55 AM BST
UK staff ‘more in touch with mental health challenges’
Britain’s workforce is “more in touch with mental health challenges than ever before”, the Government has been told as it faces the task of solving the UK’s worklessness crisis.
The gross number of people out of work and not looking for a job rose to 9.5m in the three months to June, its highest since 2011, while the seasonally adjusted number -which removes calendar-related variation - hit 9.4m.
Julia Turney, partner at Barnett Waddingham, said:
The UK labour market continues to face persistent challenges as the country continues to deal with an ageing, disengaged, and economically inactive population.
And in June, the economically inactive - the number of working-age people not actively looking for work - rose to a whopping 9.41m across the UK; a 350,000 increase from 2023.
The workforce we are dealing with today is older, increasingly remote, and more in touch with mental health challenges than ever before.
In fact, earlier this year Mental Health UK found that in the past year, 1 in 9 UK adults had experienced high levels of stress that contributed to them also taking time off work during that period.
And so, if we are to meet the Government’s ambitious goal of ‘rebuilding our country’ and strengthening the labour market, we must tackle these issues head on. This will not only require a concerted effort in promoting wellbeing and resilience in organisations across the country, but targeted support from the Government to reduce the economically inactive, and get us back on track.
07:45 AM BST
Unemployment lower than a year ago, says ONS
ONS director of economic statistics Liz McKeown said:
Basic pay growth, while remaining relatively strong, continues to slow.
Growth in total pay slowed markedly, with last year’s one-off NHS bonuses affecting the comparison.
There was a fall in the unemployment rate, which is now lower than a year ago.
Meanwhile, there was a modest increase in both the total numbers of people in employment and the number of employees on payroll in the latest quarter.
However, the medium-term picture remains somewhat subdued with the employment rate still lower than a year ago and the growth rate in the number of payrolled employees having slowed over the year.
The number of job vacancies continues to decline, although the total number remains above pre-pandemic levels.
07:40 AM BST
UK jobs market illustrates ‘dire inheritance’, says minister
Liz Kendall has described the latest labour market data as “yet more evidence of the dire inheritance we face”.
The Work and Pensions Secretary said:
This is yet more evidence of the dire inheritance we face, with millions of people denied the support they need to get work and get on at work, harming their opportunities and holding back growth.
This Government will deliver the change the country is crying out for by making work pay, transforming skills, overhauling jobcentres and giving local areas the power they need to drive jobs and growth.
07:37 AM BST
Unemployment unexpectedly falls in blow to hopes for interest rate cuts
The rate of unemployment fell to 4.2pc in the three months to June, official figures showed, in a potential blow to hopes for interest rate cuts.
The rate was down from 4.4pc in the previous three months, the Office for National Statistics has said.
It had been expected to rise to 4.5pc and the surprise drop sent the value of the pound higher as it reduces the likelihood of the Bank of England cutting interest rates at the next meeting in September.
Sterling was up 0.3pc against the dollar to tip over $1.28.
07:32 AM BST
Wages growth slowest in two years
Wage growth has slowed to the lowest level in nearly two years, official data showed, in a sign the jobs market is slowing down.
UK average regular earnings growth fell to 5.4pc in the three months to June, the Office for National Statistics said, which was the lowest level since August 2022 and down from 5.7pc in the three months to May.
It meant that wages were 2.4pc higher after taking inflation into account.
Pay excluding bonuses grew by 5.4% in the year to April to June 2024; including bonuses it was up 4.5%, though this comparison is affected by last year's one-off NHS bonus.
Read Average weekly earnings in Great Britain ➡️ https://t.co/BjehERVy9A pic.twitter.com/Swggl5o65d— Office for National Statistics (ONS) (@ONS) August 13, 2024
07:31 AM BST
Worklessness surges to 13-year high in blow for Starmer
The number of people out of work and not looking for a job has surged to a near record high, official figures show, in a blow to Sir Keir Starmer’s hopes to get Britain’s economy growing.
More than 9.5m people were classed as economically inactive in the three months to June, according to the Office for National Statistics.
The level of inactivity - a gross figure which has not been adjusted for the time of year - was the highest since 2011 and comes as 2.8m people were out of work through long-term sickness, which was close to record levels.
Chancellor Rachel Reeves said:
Today’s figures show there is more to do in supporting people into employment because if you can work, you should work.
This will be part of my Budget later in the year where I will be making difficult decisions on spending, welfare and tax to fix the foundations of our economy so we can rebuild Britain and make every part of our country better off.
07:28 AM BST
Good morning
Thanks for joining us. Britain remains gripped by a worklessness crisis as the number of people out of employment and not looking for a job hit a 13-year high.
More than 9.5m people were classed as economically inactive in the three months to June, according to the Office for National Statistics, which was the highest since 2011.
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What happened overnight
Asian shares were trading mixed as Tokyo’s benchmark stock index bounced back from last week’s plunge.
Japan’s Nikkei 225 gained 2.8pc to 36,014.26, after jumping more than 1,000 points at one point.
Australia’s S&P/ASX 200 rose 0.1pc to 7,821.60. South Korea’s Kospi lost 0.3pc to 2,610.17.
Hong Kong’s Hang Seng was little changed, inching down less than 0.1pc to 17,107.52, while the Shanghai Composite was up less than 0.1pc at 2,859.62.
In Tokyo, computer chip stocks were in demand, with Tokyo Electron surging 5.4pc, echoing the strong performance of technology-related companies on Wall Street.
Investors also seemed to be cheered by how the recently volatile yen value appeared to be calming. Although a cheap yen is a boon for Japan’s major exporters - boosting the value of overseas earnings when translated into yen - a cheap currency gradually erodes away at a nation’s purchasing power.
The US dollar rose to 147.30 Japanese yen from 147.17 yen. The euro cost $1.0936, little changed from $1.0935.
On Wall Street, the S&P 500 finished flat, and the Nasdaq Composite index added 0.2pc, while the Dow Jones Industrial Average of 30 leading American companies slipped 0.4pc. MSCI’s gauge of stocks across the globe also ended flat.
The yield on the 10-year US Treasury bonds, which sets the tone for borrowing costs around the world, slipped to 3.9035pc after climbing 0.15 percentage points last week in its biggest rise since April.