Yahoo Finance Inflation to fall below 2pc by spring, say economists
Inflation will fall below 2pc by April or May this year, economists have said, in a boost to mortgage holders hoping for interest rates to fall.
Economists at Deutsche Bank said that price rises could slow down sharply from the 3.9pc recorded for November, according to Deutsche Bank.
In a research note this morning, Deutsche Bank predicts that inflation will average 2.5pc in 2024, down from a previous forecast of 2.7pc.
The bank said inflation will drop “a little below 2pc in April and May” before hovering around 2pc to 2.5pc for the remainder of the year.
The Bank of England has raised interest rates to 16-year highs of 5.25pc in an effort to reduce inflation back down to its target of 2pc. Prices were rising at a pace of 11.1pc a year in October 2022, which was a 41-year high.
Governor Andrew Bailey told MPs today that Britain has not seen a jump in unemployment as a result, while household incomes have risen in recent months, limiting the blow from higher borrowing costs.
Read the latest updates below.
06:28 PM GMT
Signing off
Thanks for joining us today on this blog. My colleague Chris Price will be back in the morning from around 7am but I’ll leave you with a couple of stories just published elsewhere on The Telegraph website:
05:56 PM GMT
FTSE closes in the red
The FTSE 100 closed down 0.42pc today. The biggest risers were housebuilder Berkeley Group, up 2.34pc, followed by testing company Intertek, up 2.24pc. The biggest faller was Sainsbury’s, down 6.34pc, followed by insurer Admiral, down 5.62pc.
Meanwhile, the mid-cap FTSE 250 closed down very slightly by 0.07pc. The biggest riser was another housebuilder, Persimmon, up 6.25pc, followed by Greggs, up 5.17pc. Direct Line was the biggest faller, down 7.46pc, followed by Tullow Oil, down 5.07pc.
05:21 PM GMT
OpenAI launches app store
The company behind artificial intelligence bot ChatGPT has launched GPT Store, a marketplace for personalised artificial intelligence apps. These are known as GPTs and act as custom versions of ChatGPT that people can create for a specific purpose.
OpenAI has says its app store, located within its popular chatbot, will initially be rolled out to users who are on paid ChatGPT plans. In coming months, the company intends to add a way for app creators to monetise their personalised AI apps.
The Microsoft-backed startup, which is led by Sam Altman, announced the GPT Store in November at its first developer conference. It was originally set to go live later that month.
05:12 PM GMT
Brewdog drops ‘real’ living wage as it brews plan to step losses
Brewdog has dropped a commitment to the “real” living wage set by the Living Wage Foundation after struggling to escape losses.
The company lost £26.4m in 2022, up from a £10.5m loss the year before.
In a note to staff, which was shared on social media by the Unite union, the company said:
There is no hiding from the fact that in 2023, we made a trading loss, and despite many efforts in the past 12 months to reduce our spending we still need to find more ways to get this business back to profitability and the financial stability that is needed. Inevitably, this does mean making some hard decisions …”
From January 3 this year, new members of staff will be hired on the UK Government’s National Living Wage which currently stands at £10.42 an hour. All current staff rates will remain unchanged, and this has no impact on staff currently employed with us.
Brewdog has been approached for comment.
05:02 PM GMT
BMW to retool flagship factory
BMW is spending €650 million (£559m) to retool its flagship factory in Munich making it the carmaker’s first site that will only make fully electric vehicles, Bloomberg reported.
The investment involves four buildings including a new assembly line and will be completed by the end of 2027. The Munich plant has been building cars since 1922 and currently manufactures a range of combustion-engine models, hybrids and electric vehicles.
04:42 PM GMT
Amazon's Twitch to make 500 people redundant
Twitch, the video game streaming platform bought by Amazon a decade ago for around $1bn (£790m), is making more than 500 employees redundant as the company tries to turn the division profitable.
Dan Clancy, Twitch’s chief executive, told employees that even with cost cuts and growing efficiency, the platform “is still meaningfully larger than it needs to be given the size of our business.”
He said:
For some time now the organisation has been sized based upon where we optimistically expect our business to be in 3 or more years, not where we’re at today.
Amazon purchased Twitch as it looked for a way to take part in video gaming’s growth as an online spectator sport. The service lets people watch some of the best gamers in the world in a similar way as people watch professional sports.
Mr Clancy wrote to employees saying:
As you all know, we have worked hard over the last year to run our business as sustainably as possible. Unfortunately, we still have work to do to rightsize our company and I regret having to share that we are taking the painful step to reduce our headcount by just over 500 people across Twitch.
04:30 PM GMT
France's post office innovates to help online clothes shopping
If you’ve been put off buying clothes online because of the hassle of returning them if they don’t fit, the French post office might have come up with a solution.
It is experimenting with opening changing rooms in some branches to make it quicker for customers to return unwanted items. The changing rooms have a chair, mirror, and shelf to place your package for on-the-spot returns.
France’s La Poste said the idea came about after seeing many customers pick up their packages only to return shortly thereafter as their purchases didn’t fit.
La Poste said the experiment is more than just a changing room and hopes will will drum up trade its branches.
Not everyone is happy. It is “causing deep displeasure among small independent retailers and poses serious risks to the vibrancy of local economies if it is rolled out nationally,” according to the the French Retailers Association, which represents 450,000 small shops.
04:23 PM GMT
Church Commissioners' chief investment officer resigns
Tom Joy, the long-service chief investment officer of the Church of England’s investment wing, is to step down in April.
He has been in the post, which manages over £10bn in assets, since 2009, and also serves on the board of F&C Investment Trust.
As a land owner, the Church Commissioners has an objective “to deliver, across England, high-quality, safe and stable new homes”. However, its biggest area of investment, at 28.9pc over its assets, is in public equities, according to its 2022 annual report.
04:10 PM GMT
Danone cuts infant formula pricing as regulator probes
French food producer Danone is to cut the British price of its Aptamil infant formula from next week after the Competition and Markets Authority (CMA) launched an investigation into rising prices.
In November, the CMA said:
The prices for baby formula in the UK have risen by 25pc over the past two years.
Similar to other products the CMA examined, evidence suggests that branded suppliers of baby formula have also increased their prices by more than their input costs. On top of this, the market is highly concentrated (two firms have around 85pc of the market share) and brands have maintained high profit margins over the last two years.
Unlike other products examined, there is little evidence of parents switching to cheaper branded options as prices have risen and very limited availability of own-brand alternatives.
Danone said the price cut was not linked to the CMA investigation.
03:56 PM GMT
Advertising giant WPP mulls sale of market research business
The advertising giant WPP, which was founded by Sir Martin Sorrell, is reportedly considering selling its 40pc stake in market research group Kantar.
WPP sold 60pc of Kantar to Bain Capital in 2019 for a reported £2.5bn after it posted profit warnings and grappled with a sinking share price.
The group, which is part of the FTSE 100 index, owns a global network of marketing agencies, including Ogilvy.
WPP declined to comment.
03:45 PM GMT
Housing giant Persimmon boosted by easing mortgage rates
Shares in Persimmon rose by more than 5pc following its announcement that it sold more homes than expected in 2023 although completions were still down 33pc compared to 2022.
Our reporter Riya Makwana has more on the story:
The FTSE 250 housebuilder revealed its sales numbers hit 9,922 in 2023, which was more than its original forecast of 9,500.
UK housebuilders faced a tough 2023 as high mortgage rates slowed demand, particularly among first-time buyers.
However, mortgage rates have begun to ease in a sign of positivity for the housing sector, with lenders such as Co-op Bank, Santander and Barclays all now offering deals below 4pc.
At the start of December, the average five-year fixed rate was 5.65pc, whereas this fell to 5.37pc on Tuesday.
Persimmon said in its latest update that it has seen an increase in the use of home-buying incentives, such as its so-called deposit unlock scheme which allows buyers to purchase a new-build home with a 5pc deposit.
Persimmon, alongside other major housebuilders Taylor Wimpey and Barratt Developments, benefited hugely from the Help to Buy scheme which ended in March last year.
Its chief executive, Dean Finch, warned that buyers may hold off on purchasing until after the UK election, which is expected to take place this year.
Persimmon’s house prices edged up by 5pc last year to around £285,770.
03:37 PM GMT
Bitcoin’s momentum has fallen away, says Bank of England governor
The Governor of the Bank of England, Andrew Bailey, poured cold water over the idea that Bitcoin could pose a major risk to the financial system. He told the Commons Treasury committee this afternoon:
My own sense is that it’s not taking off as a core financial service. For instance, using Bitcoin as a payment method is pretty inefficient and it isn’t taking off much … We had some momentum a few years ago; it hasn’t kept up.
But, let me say two things. We have to keep a close eye on it and, secondly … it has no intrinsic value so I’m afraid people may want it extrinsically because they want to own things but it doesn’t have intrinsic value.
03:30 PM GMT
Handing over
That’s all from me today. Alex Singleton will be keeping a watchful eye across the markets to make sure you are kept up to speed with everything you need to know.
I’ll leave you with another image of the weird and wonderful technology going on display at the CES 2024 show in Las Vegas.
Here a man is trying out the Aduro Facial Tronic facemask from Red Lite Therapy Collective, which is designed to help with inflammation, anti-ageing, acne, spot removal, softer skin, balanced skin tones and cell rejuvenation.
03:19 PM GMT
UK banks able to withstand shock from China property collapse, insists Bank deputy
UK banks have been suffering losses as a result of the downturn in the property market in China but will be able to withstand a major shock, a Bank of England deputy governor has said.
Sarah Breeden told MPs that it is clear there are “vulnerabilities” in in the property market, in particular in China, which have been “crystallising” since mid-2021.
She acknowledged there had been a fall in activity and that as developers have defaulted “some of our banks that are particularly active in China have been taking impairment charges”.
However, she said the Bank of England expects the downturn to be contained and that UK banks “are resilient”.
Her comments come after Zhongzhi Enterprise Group, a major shadow bank in China that has lent billions in yuan to property developers, filed for bankruptcy liquidation last week after it was unable to pay its debts.
Meanwhile, executives at Chinese property giant Evergrande have been detained by the country’s authorities on suspicion of “illegal crimes”.
02:58 PM GMT
Markets have felt little impact from quantitative tightening, says Bank deputy governor
Quantitative tightening has had a “relatively small” impact on banks and markets, according to a Bank of England deputy governor.
Sarah Breeden said that the unwinding of the Bank’s vast balance sheet of bonds bought during the global financial crisis and the pandemic has only added 10 to 15 basis points to yields - the returns bond issuers promise to pay buyers of their debt.
She told the Treasury Select Committee:
The quantity of reserves, which are a key liquid asset for banks, will reduce as a result of quantitative tightening.
In addition, there’ll be fewer deposits in the economy which the banks will need to adjust to as well.
The Bank began its programme of quantitative tightening as a way of tightening the availability of debt in the economy, helping to reduce inflation toward its 2pc target.
02:40 PM GMT
Bailey: Red Sea crisis has not impacted oil prices too badly
The Governor of the Bank of England has said the current conflict in the Middle East has not affected oil prices as much as initially feared.
During a Treasury Committee session, Andrew Bailey said:
The world, unfortunately, is a pretty uncertain place. The potential for further global shocks is clearly there.
The events in the Middle East are obviously tragic from an individual point of view, interesting from an economic point of view ... if you take oil prices, it hasn’t actually had the effect I feared it might.
But, obviously, it remains a very uncertain place.
Sarah Breeden, deputy governor for financial stability at the Bank, said: “The risk environment at the moment feels particularly challenging ... the set of circumstances that we currently face are extraordinary.”
02:34 PM GMT
Wall Street edges higher ahead of inflation figures
The benchmark S&P 500 and the blue-chip Dow Jones Industrial Average were muted at the open as investors avoided big bets ahead of inflation reports and earnings from major lenders later in the week.
The Dow rose 27.75 points, or 0.1pc, at the open to 37,552.91.
The S&P 500 opened higher by 3.44 points, or 0.1pc, at 4,759.94, while the Nasdaq Composite gained 19.99 points, or 0.1pc, to 14,877.70 at the opening bell.
02:21 PM GMT
Higher wages and low unemployment have limited blow of high rates, says Bailey
Britain has not seen a jump in unemployment and household incomes have risen in recent months, limiting the blow from higher interest rates, Andrew Bailey has told MPs.
The Governor of the Bank of England told the Treasury Select Committee that there is less stress in the household borrowing and mortgage markets.
He said the sector is “nowhere near as stretched” as it was during the global financial crisis.
02:11 PM GMT
Workers clock in fewer hours than before Covid as sick notes surge
Workers are putting in fewer hours than before the pandemic around the world as the number of sick days surge, according to a new global report.
Our senior economics reporter Eir Nolsøe has the details:
People are clocking in fewer hours on average in all countries apart from those with low incomes, according to the International Labour Organisation (ILO), after a “significant” rise in sick days.
Sick days in the UK rose by 36pc between 2019 and 2022, according to the report. A record 185.6 million working days were lost because of sickness or injury in 2022, the Office for National Statistics (ONS) has previously said.
A surge in ill health has been blamed on long waiting lists for NHS treatment and a rise in mental health issues post-pandemic, as well as back problems.
Read how the ILO report shows the issues are not unique to Britain.
01:46 PM GMT
Transparent TVs are clear hit at CES show
Transparent TVs have been one of the talking points of the Consumer Electronics Show in Las Vegas, running this week.
Tech giant LG has created a massive live display of the screens at the centre of its booth as it looks to cement itself as a leader in this new TV technology.
01:28 PM GMT
Donald Trump’s Scottish golf course hit by mounting losses
Donald Trump’s Scottish golf course has been hit by mounting losses as the former US president continues to burn cash on the venture.
Our reporter James Warrington has the latest:
Trump International Golf Club Scotland, which owns the resort near Aberdeen, posted a loss of more than £738,000 in 2022.
That is deeper than the £697,000 loss recorded in the previous year, according to company filings.
The figures mark continued losses for the resort, which was built on 2,000 acres of coastal land overlooking the North Sea and which Mr Trump claimed would be the “world’s greatest golf course”.
Accounts for Golf Recreation Scotland, which owns the larger Turnberry golf course in Ayrshire, are overdue. That company posted losses of £14.7m in 2021.
Read what bosses have blamed for their woes.
01:14 PM GMT
Eton delays restart of school term after sewage block
Eton College has reportedly delayed the restart of its school term after telling parents the toilets in its boarding houses are backing up as a result of sewage problems yet to be resolved by Thames Water.
Pupils at the £50,000 a year private school had been due to return on Tuesday evening to begin lessons today but the college will instead run remote lessons, according to Bloomberg News.
In an email sent to parents, Eton said:
I am very sorry to say that Thames Water have just alerted us to the fact that their sewerage drains are back filling due to flood water.
The sewers in the centre of Eton won’t cope with the arrival of nearly 1,350 boys.
We cannot safely operate as a school until Thames Water have resolved the issues around our sewerage drains.
Thames Water updated its website with a notice on January 8 that “the heavy rainfall of recent weeks and a high water table have put huge pressure on our sewers and pumping stations”.
01:01 PM GMT
US markets subdued ahead of inflation figures
Wall Street stocks were mixed in premarket trading as investors braced for key inflation reports.
Traders have taken a step back since the start of the year to reassess the timing and pace of the monetary policy path after contrasting economic data and mixed signals from Federal Reserve officials.
Optimism surrounding interest rate cuts had driven much of the rally towards the end of 2023. The latest US inflation figures are published on Thursday.
Among megacap stocks, Amazon, Tesla, Nvidia and Advanced Micro Devices added between 0.5pc and 1pc in premarket trading, as yields on US Treasury bonds ticked lower.
Gains in chipmakers were also helped as TSMC, the world’s largest contract chipmaker, beat analysts’ fourth-quarter revenue expectations.
In trading ahead of the opening bell, the Dow Jones Industrial Average was down 0.1pc, the S&P 500 was flat and the Nasdaq 100 was up 0.1pc.
12:50 PM GMT
Gender pay gap 'worsened by cost-of-living crisis'
The ongoing cost-of-living crisis is worsening the gender pay gap, research suggests.
Employment group Reed said its study found that the average woman worker needs a 55pc pay rise to live comfortably, compared to 31pc for men.
Its analysis of more than 17m job adverts and a survey of 5,000 workers indicated that they feel they need to earn £49,000 to live comfortably.
Reed said this was “alarmingly” ahead of their average pay.
As well as earning less money, the research also found that women are receiving fewer workplace benefits, with 65pc receiving company perks, compared to 75pc of men.
Karen Jackson, HR Director at Reed, said: “We all know the gender pay gap remains alive and strong, yet these results reveal how much more work needs to be done, and how much further women have been pushed behind due to the cost-of-living crisis.”
12:21 PM GMT
PM: Horizon scandal 'one of the greatest miscarriages of justice'
Rishi Sunak said the Government will introduce primary legislation to ensure those convicted as a result of the Horizon scandal are “swiftly exonerated and compensated”, the Prime Minister said.
Speaking at the start of Prime Minister’s Questions, he said:
Today I can announce that we will introduce new primary legislation to make sure that those convicted as a result of the Horizon scandal are swiftly exonerated and compensated.
We will also introduce a new up-front payment of £75,000 for the vital GLO (group litigation order) group of postmasters.
To the victims of the Horizon scandal. pic.twitter.com/jK9txzq9IU
— Rishi Sunak (@RishiSunak) January 10, 2024
12:16 PM GMT
HS2 costs could hit £66.6bn, MPs told
The estimated cost of building HS2 between London and Birmingham has soared to as much as £66.6bn, MPs have been told.
HS2 Ltd executive chairman Sir Jon Thompson told the Transport Select Committee that the estimated cost for Phase 1 is between £49bn and £56.6bn at 2019 prices, but adjusting the range for current prices involves “adding somewhere between £8bn and £10bn”.
In 2013, HS2 was estimated to cost £37.5bn (in 2009 prices) for the entire planned network, including now-scrapped extensions from Birmingham to Manchester and Leeds.
Sir Jon said reasons for the cost increase include original budgets being too low, changes to scope, poor delivery and inflation.
He said: “This is a systemic problem. It’s not just about HS2, it’s about large projects that the Government funds.”
12:07 PM GMT
Sunak: New law to ensure Post Office victims 'exonerated'
Rishi Sunak has said a new law would be introduced so people wrongly convicted in the Horizon scandal are “swiftly exonerated and compensated”.
He was speaking as he faced MPs during Prime Minister’s Questions.
11:49 AM GMT
Vodafone goes down for thousands of customers
Thousands of Vodafone customers reported issue with their mobile network service today.
More than 3,500 people said they had been experiencing issues on the tracking website Downdetector.
A Vodafone spokesman confirmed that some customers are still experiencing issues:
Some customers have experienced issues using our network. We’re sorry for the inconvenience.
We have identified and isolated the problem and for many affected customers normal service has now been restored.
Our team is working hard to resolve the issue as quickly as possible.
11:37 AM GMT
Pound edges up ahead of Bailey's appearance in front of MPs
The pound has edged upwards ahead of an appearance by the Governor of the Bank of England in front of MPs, which will be closely watched for hints on the future path of interest rates.
Andrew Bailey will respond to questions from the Treasury Select Committee at 1.15pm on the Financial Stability Report published on December 6.
The pound has moved 0.1pc higher against the dollar ahead of his appearance to $1.27. Against the euro, the pound edged down 0.1pc to 86p after rising to an almost one-month high on Tuesday.
Sterling has been supported so far this year by the reduction in traders’ bets on the pace of interest rate cuts by the Bank of England. Money markets are currently pricing in around 115 basis points (bps) of cuts in 2024, compared with 140 bps last Thursday, according to money market pricing.
Francesco Pesole, FX strategist at ING, said he expects Mr Bailey’s tone on the future path of monetary policy to be in line with his words at the Bank of England’s latest meeting.
He said: “Bailey focused on pouring cold water on rate cut bets.”
11:24 AM GMT
Sainsbury's boss holding 'regular calls' with Government over Red Sea
The boss of Sainsbury’s has said the supermarket giant has held “regular calls” with the Government over potential disruption as a result of shipments avoiding the Red Sea following a series of attacks.
Simon Roberts, chief executive of the retailer, said shipments of wine and general merchandise, which includes electricals, were among those facing delayed journeys.
In recent weeks, attacks by Houthi rebels on ships in the Suez Canal have seen the world’s largest shipping firms halt shipments through the Red Sea, adding thousands more miles to journeys.
Last week, fashion retailer Next said stock deliveries and sales could be affected if the attacks continue to disrupt the vital shipping route.
Sainsbury’s boss Mr Roberts said the business is working hard to reduce potential disruptions and costs from redirected shipments. He said:
Through the last three or four weeks our team have spent time working out how to get the impact to an absolute minimum.
The vast majority of container ships are instead going around the Cape of Good Hope which is making journeys 10 to 14 days longer.
11:15 AM GMT
R&A chief Martin Slumbers to stand down with golf at crossroads
Martin Slumbers will stand down as R&A chief executive at the end of the year after nine years as one of golf’s leading administrators, with the professional male game at a critical juncture.
Our golf correspondent James Corrigan has the latest:
Mr Slumbers will leave one of the most powerful roles in the sport – and the hunt for a successor is already under way.
Despite the timing of today’s announcement – with the merger negotiations between the PGA Tour and the Saudi sovereign wealth fund on an apparent knife edge – Mr Slumbers’s departure will create ripples through the corridors of power.
But at 63, the former investment banker had trailed the likely date of his retirement ever since he took over the St Andrews hotseat from Peter Dawson in 2015.
Slumbers signalled his intention to do “five to 10 years” in the position and October will be the decade anniversary of when he was unveiled as Dawson’s successor, before shadowing his predecessor.
Read about the legacy he will leave at the golf governing body.
11:04 AM GMT
Hundreds of thousands to escape mortgage crisis in boost for house prices
More than one in 10 borrowers will escape the mortgage crisis unscathed, analysis suggests.
Our money reporter Noah Eastwood has the latest:
Some 1.6m out of more than eight million mortgage borrowers in Britain are locked into five-year fixed mortgages taken out around the pandemic property boom years when interest rates fell to historic lows.
They are not due to refinance until 2025 or after, when analysts now expect interest rates will have reverted back to far more manageable levels.
It means hundreds of thousands of people who took out loans to buy residential property from 2020 onwards are likely to escape the era of surging interest.
Read what it means for the property market.
10:42 AM GMT
German rail strikes add to travel misery
Hundreds of thousands of people face train cancellations across Germany as a three-day nationwide rail strike added to travel chaos in Europe’s largest economy, where farmers’ protests have blocked highways and snarled traffic.
The strikes, called by the GDL train drivers’ union from today until Friday evening, have forced national rail operator Deutsche Bahn to run only stripped-back emergency timetables.
One in five long-distance high-speed rail services were running and regional services have been “massively thinned out”, a Deutsche Bahn spokesperson told reporters at Berlin’s central station, empty of its usual crowds.
At Cologne railway station in western Germany, commuters wrapped up against freezing temperatures checked departure boards for timetable changes.
It comes as the head of the German farmers’ association DBV vowed to ramp up their protests, after convoys of tractors and trucks blocked roads across the country earlier this week.
10:21 AM GMT
Germany's property crisis 'about to get worse'
The outlook for Germany’s construction sector is grim for 2024, according to two prominent research institutes, in a further bad sign for the nation’s struggling property industry.
German construction spending is set to fall this year for the first time since the financial crisis, according to a study by the DIW economic institute.
A separate survey by the Ifo economic institute showed sentiment in residential construction at an all-time low.
For years, the property sector in Germany and elsewhere in Europe boomed as interest rates were low and demand was strong.
But a rapid rise in rates and costs put an end to the upsurge, pushing some developers into insolvency as bank financing dried up and deals froze.
Laura Pagenhardt, an author of the DIW study, said: “The slump in the construction industry is taking longer than expected.”
Klaus Wohlrabe, head of surveys at Ifo, added: “The prospects for 2024 are bleak.”
It comes as the latest official data from Eurostat shows that house prices fell by 2.1pc across the eurozone in the third quarter of last year, declining by 1.4pc in Germany compared to the previous three months.
09:50 AM GMT
Bitcoin swings after fake tweet on SEC approval
Bitcoin has been volatile after a fake social media message was posted on the US securities regulator’s account indicating wider trading measures for the digital token had been given the go-ahead
The Securities and Exchange Commission (SEC) said someone briefly accessed its X social media account and posted a false message saying it had approved exchange traded funds (ETFs) for bitcoin, a move eagerly awaited by the crypto industry.
The SEC said it had not yet approved spot bitcoin ETFs.
Bitcoin slid 0.9pc to $45,693.10 and was down to £35,912.95 after surging to a 21-month peak of $47,897 (£37,568.84) on the fake post.
Anticipation of a positive SEC decision on ETFs, which is likely to draw billions in new investments, has boosted bitcoin prices in the past two months.
Chris Weston, head of research at Pepperstone, said: “The reality is most who have followed the saga have moved on and the green light from the SEC is fully priced.”
09:38 AM GMT
Oil slips despite fresh Red Sea attacks
Oil prices have edged downward even as more attacks on vessels in the Red Sea raised the risk that Middle East supply could be disrupted.
Brent has slipped 0.3pc toward $77 a barrel, while West Texas Intermediate dropped 0.3pc to near $72.
Crude has seesawed since the start of the year, rising and falling on alternate days, as traders attempt to gauge the outlook for the coming year.
On Tuesday, the American Petroleum Institute said nationwide inventories fell 5.2m barrels last week.
Meanwhile, Iran-backed Houthi rebels launched further attacks on merchant vessels in the southern Red Sea.
The market has been supported by Opec+ supply cuts, tensions in the Middle East including the Red Sea, and outages in Libya.
However, a deep reduction in official prices by Saudi Arabia has suggested that there is underlying weakness.
09:18 AM GMT
Bond yields edge down after sharp rally to start the year
Government borrowing costs have eased slightly after the rises in bond yields so far this year.
The yield on the benchmark 10-year UK gilt - the return the Treasury promises to pay buyers of its debt - has fallen slightly to 3.76pc, having risen by 23 basis points so far this year.
It comes as traders reassessed their bets on significant rate cuts from major central banks in Europe and the United States in 2024 on the back of slowing inflation.
Money markets are pricing in a cut by the Bank of England by May, while the odds of the European Central Bank cutting interest rates in March has fallen to about 40pc.
09:01 AM GMT
Eurozone faces weak prospects and recession, says ECB vice president
The eurozone may have entered a recession at the end of last year and its prospects remain weak, a European Central Bank chief has warned.
Vice President Luis de Guindos said the recent rapid slowdown in inflation is likely to take a pause now.
He said in a speech in Madrid:
Soft indicators point to an economic contraction in December too, confirming the possibility of a technical recession in the second half of 2023 and weak prospects for the near term.
Incoming data indicate that the future remains uncertain, and the prospects tilted to the downside.
Mr de Guindos repeated the ECB’s guidance that its record high interest rates of 4pc would be maintained for a “sufficiently long duration” to bring inflation back down to the ECB’s 2pc target.
Investors expect at least five rate cuts this year with the first move coming in March or April, a timeline several policymakers have called excessive given lingering price pressures.
08:47 AM GMT
Sainsbury's slump drags down FTSE 100
The FTSE 100 fell as investors await comments from Bank of England governor Andrew Bailey later today.
The blue-chip index was down 0.3pc, while the midcap FTSE 250 index was up 0.1pc.
The main driver of losses were the shares of Sainsbury’s that dropped 5pc to the bottom of FTSE 100 despite revealing a Christmas sales boost.
Britain’s second biggest supermarket group kept its profit forecast for the full year, following a 7.4pc increase in underlying sales in the key Christmas quarter.
Greggs soared by 9.4pc to the top of the FTSE 250 as the British baker reported a better-than-expected 9.4pc rise in like-for-like sales in the fourth quarter, diven by the demand for seasonal products.
Persimmon rose 2.7pc even as the housebuilder acknowledged that housing market conditions would remain challenging this year amid broader economic woes.
The broader homebuilders index climbed 0.8pc.
Andrew Bailey is due to speak at 3.15pm in front of Parliament’s Treasury Committee about the Bank of England’s half-yearly Financial Stability Report.
08:21 AM GMT
Gas prices rise after more Red Sea attacks
Gas prices have moved higher as fresh attacks in the Red Sea indicated disruptions will remain for a prolonged period.
Dutch front-month futures - the benchmark European contract - rose as much as 3.1pc to more than €31 per megawatt hour while the UK equivalent gained as much as 3.3pc to 79p per therm.
Houthi rebels carried out their 26th attack on commercial shipping lanes in the region since November 19.
US and UK forces shot down 21 drones and missiles fired by the Iranian-backed rebels in what Defence Secretary Grant Shapps described as the “largest attack from the Iranian-backed Houthis in the Red Sea to date”.
The attacks come as the number of container ships using the route was down 90pc in the first week of January compared to a year ago, according to research by the London-based shipping services company Clarksons.
Gas prices are also being pushed higher by colder temperatures, which are expected to remain over the UK and Europe for at least another week.
08:07 AM GMT
UK markets open lower
The FTSE 100 fell at the open as traders nervously await key US inflation data and the start of the “earnings season” as companies begin reporting their financial results later this week.
The UK’s blue-chip index was down 0.4pc to 7,663.37 while the midcap FTSE 250 dropped 0.6pc to 19,269.02.
08:02 AM GMT
Post Office scandal solution 'imminent' says minister
Postal services minister Kevin Hollinrake said an announcement on the Horizon scandal is “imminent” and the Government believes it has a “solution”.
Mr Hollinrake told Sky News he could not promise a “particular timeframe” as a decision “has not been finalised”.
“We’re very, very close,” he said, refusing to “speculate” as to whether an announcement might come as soon as this afternoon.
07:58 AM GMT
Completions slump by a third at Persimmon in 'challenging' market
Persimmon revealed completions of new homes slumped by a third last year, although the drop was less than it had previously expected.
The housebuilder revealed it sold 9,922 properties last year, down from 14,868 in 2022, in what chief executive Dean Finch called “challenging market conditions”.
Its average selling price increased by 3pc to £255,750 while bosses said it has begun the new year with private forward sales ahead of 2023.
It said in a trading update: “We anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers and with an election likely this year.
“However, mortgage rates are beginning to ease, and the response to our recent Boxing Day campaign has been positive, generating a substantial number of leads for our sales teams.
“Encouragingly, build costs continue to moderate which will benefit completions in 2024.”
07:49 AM GMT
Greggs plans to open 160 stores as cost pressures ease
High street bakery chain Greggs has revealed plans to open up to another 160 stores in the year ahead as it cheered a strong end to 2023.
The group opened a record 220 new shops over 2023, with 33 closures and 42 relocations leaving it with 145 new sites on a net basis and taking its total estate to 2,473.
Greggs is set to open between 140 and 160 new shops on a net basis in 2024 as it looks to give customers more convenient access to its stores.
It posted a 9.4pc rise in like-for-like sales across its own-managed shops in the fourth quarter, with comparable store growth of 13.7pc overall in 2023.
The final quarter performance marks a slowdown on the 14.2pc growth seen in the previous three months as Greggs said there was less contribution from price inflation.
The company said cost pressures were continuing to ease back, with expectations for a “more stable cost base in the coming year”.
Roisin Currie, chief executive of Greggs added: “We enter 2024 with plans to continue to invest in our shops and expand supply chain capacity.”
07:46 AM GMT
Sainsbury's boosts sales as food and drink price rises ease
Sainsbury’s has revealed a jump in sales over the key Christmas period, with improved grocery sales volumes as food and drink inflation slowed down.
However, the supermarket witnessed a drop in trade for clothing and in its Argos business.
The UK’s second largest supermarket chain said total retail sales, excluding fuel, grew by 4.9pc over the six weeks to January 6, with grocery sales rising by 8.6pc.
The strong grocery performance helped to offset a 4.2pc decline from Argos - driven by the closure of its Argos Ireland business - and a 6pc fall for Christmas clothing sales.
It came as total retail sales, excluding fuel, grew 6.5pc over 16 weeks to January 6.
Simon Roberts, chief executive of Sainsbury’s, said:
We enter 2024 with strong momentum and next month we will share our updated strategy, building on all we’ve done to put food back at the heart of Sainsbury’s over the last three years.
There is a lot to be excited about and we remain absolutely committed to deliver for our customers, colleagues and shareholders.
Read which items helped spark the Christmas boost for Sainsbury’s.
07:31 AM GMT
Good morning
A water company has splashed out £380m on buying a rival utilities company despite campaigners urging it to invest in fixing sewage discharge problems.
Pennon, which owns South West Water, has bought Sumisho Osaka Gas Water UK, the holding company of Sutton and East Surrey Water.
Chief executive Susan Davy said the takeover would expand the company’s water supply across Southern England “building on our successful similar acquisitions of Bournemouth Water and Bristol Water alongside the adoption of water supply in the Isles of Scilly”.
The company was fined £2.15m in April last year for illegally dumping sewage into rivers and the sea in Devon and Cornwall, following an investigation by the Environment Agency that found South West Water culpable for significant environmental harm.
Last year Ofwat said South West Water had fallen short of its expectations on customer and environmental performances linked to bonuses.
This year the regulator will be able to block companies from paying out bonuses from customer bills.
5 things to start your day
1) Britain to borrow record £206bn from private investors this year as election looms | Expensive election pledges risk unnerving investors and driving up debt costs
2) China is winning the ‘Sino-Japanese car war’ in Southeast Asia | Thailand’s embrace of the new Chinese order is a warning for Western carmakers
3) Wall Street watchdog Twitter hacked by Bitcoin scammers | The fake message will raise further questions about the operations of the social media platform under owner Elon Musk
4) AI race a free for all, warns veteran investor Terry Smith | Fundsmith founder predicts no single company will dominate artificial intelligence market
5) Duolingo replaces 10pc of translators with AI | Cuts show how AI tools threaten to replace jobs traditionally done by human workers
What happened overnight
Japanese stocks hit a near 34-year high while other Asian equities meandered around one-month lows and bond markets traded cautiously ahead of US inflation data due this week.
Japan’s Nikkei - which had its best year for a decade in 2023 - climbed 2pc to break above 34,000 for the first time since 1990.
Exporters led the charge, helped by a softening yen to end at 34,441.72, while the broader Topix index gained 1.3pc to 2,444.48, its highest since 1990.
The rally contrasts with China, where the blue chip CSI300 slid to a five-year low.
Bitcoin steadied after spiking when an unauthorised post from the US Securities and Exchange Commission’s X account said it had approved bitcoin exchange-traded funds.
The S&P 500 and Dow lost ground and closed lower on Tuesday, as investors assessed the timing and size of any Federal Reserve interest rate cuts in 2024 ahead of inflation data this week.
Expectations the Fed could begin cutting rates as soon as March have been slowly decreasing.
The Dow Jones Industrial Average of 30 leading American companies fell 0.42pc, closing at 37,525.16. The S&P 500 lost 0.15pc, closing at 4,756.50, while the Nasdaq Composite index gained 0.09pc, closing at 14,857.71.
The benchmark 10-year yield on US Treasury bonds was up slightly at 4.017pc.
