Yahoo Finance Housing market slump feared as mortgage lending plunges by a third - live updates
Return of imperial measures will fuel inflation, warn supermarkets
FTSE 100 adds 0.2pc to 7,600
US market closed on Monday for Memorial Day
Matthew Lynn: Businesses must go on strike over Sunak’s disgraceful tax raid
Mortgage lending fell by more than a third in April, stoking fears of a slowdown in house prices.
Total lending for house purchases slumped to £4.1bn, from £6.4bn in March, as the impact of higher interest rates kicked in. Data from the Bank of England showed mortgage approvals fell to around 66,000 over the month, compared with 70,700 in March.
The number of loans granted was well beneath economists’ expectations, and below the average for the half-decade before the pandemic.
11:10 AM
More flights cancelled ahead of bank holiday weekend
Holiday giant Tui is cancelling more flights over the next month as staff shortages continue to cause havoc for travellers.
As Oliver Gill reports:
The Telegraph has learnt that bosses at Tui took the decision to cut 43 flights a week in June following chaotic scenes at airports over the weekend.
Manchester Airport is one of Tui’s biggest bases in the UK. Tui flights carry around 200 passengers each, meaning as many as 37,000 holidaymakers will be affected in June.
Hours-long queues were once again snaking out of terminal buildings this morning at Manchester, Bristol, Birmingham and Gatwick as industry bosses grapple with chronic staff shortages.
10:59 AM
Euro zone inflation surges higher
Euro zone inflation hit a record high yet again in May, rising to 8.1pc compared to 7.4pc in April.
It means that headline inflation is now more than four times the European Central Bank's 2pc target, and is likely to lead to fresh calls for them to take a different approach than gradual interest rate increases from July.
The inflation figures for the 19 countries which use the euro came in higher than forecasts of 7.7pc.
Central Bank governors of Austria, the Netherlands and Latvia have been pushing for the ECB to consider a 50 basis point rate hike in July.
10:37 AM
Reaction: Mortgage figures show 'heat starting to come out of housing market'
Some reaction is coming out on those latest mortgage figures.
Nicholas Farr from Capital Economics said "it seems as though some of the heat is starting to come out of the housing market”, which he said “may be an early sign of higher mortgage rates starting to take effect”.
Meanwhile, Hina Bhudia from estate agent Knight Frank said: "There is a real sense of urgency among many borrowers who sense they must act soon or reassess what they can afford."
Gabriella Dickens from Pantheon Macroeconomics said timelier measures such as internet search activity indicated the slowdown would continue over the coming months.
“The combination of falling real disposable incomes, surging mortgage rates and low consumer confidence suggests mortgage approvals will remain below their 2015-to-19 average in the second half of this year."
10:16 AM
Fears mount over slowdown in house prices
Mortgage lending fell by more than a third in April, stoking fears of a slowdown in house prices.
As Louis Ashworth reports:
Total lending for house purchases slumped to £4.1bn, from £6.4bn in March, as the impact of higher interest rates kicked in. Data from the Bank of England showed mortgage approvals fell to around 66,000 over the month, compared with 70,700 in March.
The number of loans granted was well beneath economists’ expectations, and below the average for the half-decade before the pandemic.
09:51 AM
'Serious consequences' for Europe from Russia gas moves
Dutch gas trader GasTerra has warned of “serious consequences” for Europe’s gas supply after it was cut off by Russia.
The company, which buys and trades gas on behalf of the Dutch government, will stop getting gas from Russia’s Gazprom from today after refusing to agree to Moscow’s demands for payments in rubles.
GasTerra said it had contracted to buy about 2bn cubic metres of gas from other sources to replace Russian supply.
However, it added: “It is impossible to predict how the lost supply [of two billion cubic metres] of Russian gas will affect the supply/demand situation and whether the European market can absorb this loss of supply without serious consequences.”
09:30 AM
Britons visiting more supermarkets to try get better deals
As household budgets are squeezed further by fuel price rises, new figures have suggested that more people are shopping around to try get the best-value deals.
Figures from NielsenIQ showed that there has been a 7pc increase in the number of stores people are visiting compared with last year.
It comes after inflation hit a 40-year-high in April, of 9pc. Experts expect it to go even higher over the coming months.
Mike Watkins, NielsenIQ’s UK head of retailer and business insight, said shoppers were "becoming more considered in what they buy".
09:04 AM
What has happened to fuel prices since January?
08:45 AM
Fuel prices reach record high ahead of bank holiday weekend
Families planning bank holiday get-aways risk facing eye-watering prices at the pump, after new figures showed average petrol prices were now at record highs.
The average price for petrol is now at 173.02p a litre - coming as Brent crude surges on the news that the EU will be cutting imports of oil from Russia.
The steeper prices are set to pile further pressure on families as they plan Jubilee bank holiday breaks. Already many are struggling with higher grocery bills, with some products around 20pc more expensive than they were at the start of the year.
08:35 AM
Bavarian Nordic raises guidance amid monkeypox vaccine rush
Bavarian Nordic hikes forecasts after countries pile in to buy more monkeypox vaccine doses.
The Danish company said it was now expecting revenues to come in at between £160m and £182m for the year, compared to earlier forecasts of £148m and £171m.
It did not say which countries it had struck deals with but that it had signed "a number of supply contracts" and was in talks with other countries.
Paul Chaplin, president and CEO of Bavarian Nordic said: “The current monkeypox outbreak continues to call for a swift and coordinated response from health authorities, and we are pleased to assist more countries with supply of vaccines while we continue our dialogues with other governments to make vaccines available as fast as possible to mitigate the situation.”
08:23 AM
GSK buys US biotech for up to $3.3bn
GlaxoSmithKline is snapping up US biotech business Affinivax in a deal worth up to $3.3bn (£2.6bn), as it bolsters its pharmaceutical and vaccine operations ahead of a split later this year.
GSK said it will be making a $2.1bn upfront payment for Affinivax as well as up to $2.1bn in potential development milestones. Affinivax is working on a new class of vaccines which could target diseases such as pneumonia and meningitis.
Last month, GSK swooped on Californian cancer firm Sierra Oncology in a £1.5bn deal. Both purchases come ahead of GSK splitting out its consumer healthcare arm this summer and listing that business in London.
07:58 AM
Brent crude on the rise as EU agrees Russian oil ban deal
Oil prices pushed higher on Tuesday, after the EU said it had struck a deal to cut most Russian oil imports.
The move is expected to lead to tighter supply, sending Brent crude prices above $123 a barrel.
Brent crude on the rise today and closing in on peak levels from March. EU sanctions on Russian oil import likely were about as expected by the market. Beyond this reopening in China should fuel a further rise in global oil demand, while OPEC+ likely to stick to pre-war oil plan. pic.twitter.com/cpL3tZpr1t
— Jens Nærvig Pedersen (@jnaervig) May 31, 2022
07:52 AM
Factory slowdown continues in China in May
Elsewhere, new figures out from China shed some light on how the country is faring in the wake of sustained lockdowns.
As Louis Ashworth reports:
China’s factories remained stuck in a slowdown during May, but a slowing pace of contraction suggested the worst of the country’s economic woes may be passing.
The official purchasing managers’ index for China’s manufacturing sector rose to 49.6 from 47.4, where any reading below 50 indicates a contraction compared with the previous month.
Services-sector activity also slowed, registering a reading of 47.8 that was still above forecast according to the National Bureau of Statistics. The readings may be the last to show an overall slowdown as China begins to pare back lockdowns, including in the key manufacturing hub of Shanghai.
07:45 AM
French inflation hits all-time-high
French inflation has risen to an all-time high, piling pressure on the European Central Bank, writes Louis Ashworth.
Consumer prices in the eurozone’s second-biggest economy rose 5.8pc over the year to May, driven by soaring energy and food costs. Readings for Germany and Spain have already beaten expectations, suggesting the bloc-wide figure will come in hot when it is published at 10am.
Separately, French growth was revised down during the first quarter, from an initial estimate of no change to a 0.2pc decline that raises the possibility of a recession.
ECB chief economist Philip Lane has said interest rate increases in July and September would be a “benchmark pace”, but some Governing Council members have pushed for more rapid increases.
07:28 AM
Unilever sent higher by Peltz addition
Shares in Unilever jumped by more than 6pc after it said it had added Peltz to its board, dragging the FTSE 100 higher.
It comes after months of the stock underperforming the FTSE 100.
07:11 AM
Unilever adds activist Peltz to its board
Consumer goods giant Unilever has added activist investor Nelson Peltz to its board in a move which will raise fresh speculation over a break-up of the business.
Mr Peltz, the chief executive of Trian Fund Management, is joining the Unilever board as a non-executive director in July. The annoucement comes months after it first emerged that Trian had taken a stake in the business. The fund is Unilever's fourth largest shareholder, with a 1.5pc holding.
The move to add the activist investor to its board will add to further speculation that Trian is pushing for change at the business. It is known for having pushed through streamling at other companies where it has taken a stake.
Earlier this year, analysts said Unilever should opt for a break-up before an activist forces its hand.
On the news of his appointment on Tuesday, Mr Peltz said:
"We believe it is a company with significant potential, through leveraging its portfolio of strong consumer brands and its geographical footprint.
Trian has made a considerable investment in Unilever.
We look forward to working collaboratively with management and the board to help drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders.”
07:01 AM
How much does Europe rely on Russia for its gas?
The Netherlands has relied on Russia for 15pc of its gas supply - something which will now have to rapidly switch as Gazprom cuts supply.
Other European countries are also hugely dependant on Russia for their supply too, as the below chart shows:
06:49 AM
Russia cuts gas supply to the Netherlands over payment row
Russia's Gazprom has stopped delivering gas to the Netherlands, after Dutch gas trader GasTerra refused to pay in roubles.
Gazprom said it had fully cut off the supplies to the trader. It comes after GasTerra said it had "decided not to comply with Gazprom's one-sided payment requirements". Gazprom is demanding payments in roubles, something GasTerra said put it at risk of breaching EU sanctions.
GasTerra, which is partially owned by the Dutch state, said it had anticipated the cut in supply by buying gas from other providers. Russia has already cut off Poland, Finland and Bulgaria.
06:24 AM
Government ends contract with P&O Ferries
Good morning. The Government has scrapped a contract with P&O Ferries, criticising its 'unacceptable behaviour' in sacking almost 800 workers earlier this year.
P&O's contract with UK Border Force will end with immediate effect, the Home Office said. It comes just days after P&O was criticised for failing to return some of the possessions of employees who had been fired, as part of efforts to cut costs.
5 things to start your day
1) Britain lags behind France for foreign investment Emmanuel Macron has been on a charm offensive to woo international businesses after Brexit
2) West Midlands to get research hub for next generation electric car batteries Facility near Birmingham will focus on high-performance car brands such as Aston Martin
3) Car ownership falls as drivers hit by surging cost of fuel Motorists ditch their vehicles after severe shortage of new models
4) Scramble to reopen Rough natural gas storage site Kwasi Kwarteng in talks with mothballed facility's owners as part of efforts to ease energy crisis
5) Alexander Lebedev’s charity to shut Billionaire steps down from Lebedev Foundation following sanctions in Canada
What happened overnight
Asian markets fluctuated on Tuesday as investors struggled to maintain a global rally, with inflation continuing to niggle owing to a pick-up in oil prices. Hong Kong edged slightly lower after two days of gains that saw it put on around five percent, while Shanghai was also marginally off. Sydney, Taipei and Manila were also in the red, though Tokyo, Seoul, Singapore, Jakarta and Wellington rose.
Coming up today
Full-year results: B&M, Pennon Group
Economics: Inflation (EU), manufacturing PMI (China), Nationwide house price index (UK), BRC shop price index (UK), consumer confidence (US), housing price index (US)
