FTSE 100 jumps 0.4pc
German Chancellor Olaf Scholz is slashing tax on household energy bills as Europe’s largest economy braces for a winter crisis.
The sales tax on gas will be lowered to 7pc from 19pc in an effort to cushion the blow of additional charges being placed on consumers to help prevent suppliers from collapsing.
The reduced rate will apply as long as the levy is charged. Under current plans, it will run until the end of March 2024.
The move will pile more pressure on the UK to do more to support families in the face of surging energy bills. The price cap is now expected to top £4,200 in January, adding to the strain on household budgets.
Germany had been in talks with the EU to find a way to reduce the cost burden on consumers after the bloc rejected its request for an exemption to VAT.
Earlier this week the Government announced a new levy that will add hundreds of euros onto household energy bills to help suppliers such as Uniper that are struggling with soaring wholesale prices after Putin slashed gas flows to the continent.
That's all from us today, thank you for following! Before you go, have a look at the latest stories from our reporters:
Record numbers resign in France as bargaining power balance shifts
More French employees than ever quit their jobs at the end of 2021 and start of 2022, as the balance of bargaining power shifts away from employers.
Over one million quit between October and March, a study by the French labour ministry's Dares research body showed, 90pc of whom had coveted permanent labour contracts offering some of the highest level of job protection in the world.
Even though the figures were historically high, the trend was not as strong when viewed in relative terms, taking into account that the overall workforce has been growing in recent years, Dares said.
Growing numbers of people across many countries have left their jobs during the pandemic as skilled workers start to re-evaluate careers and life choices amid the "Great Resignation".
FTSE 100 boosted by commodity stocks rally
The FTSE 100 has risen amid a rally of commodity shares, although gains were limited by fears that rapid policy tightening by the Bank of England to tame inflation will trigger a recession.
The index ended 0.4pc higher, with Chilean miner Antofagasta at the top as copper prices gained on hopes for solid demand in China.
"The Bank of England remains painted into a corner, forced to become increasingly hawkish because of high inflation and a tight labour market, even as the economy rapidly slows," BCA analysts said.
"A recession is now unavoidable given the magnitude of the inflation shock, which is leading to a toxic mix of tightening monetary policy and contracting real incomes."
Glencore to spend £335m to fix arsenic-emitting plant
Commodities giant Glencore Plc will invest C$520m (£335m) over five years in a copper smelter in northern Quebec to curb toxic emissions that health officials say have caused increased risk of cancer and other problems.
The Horne Smelter has for decades been at the centre of the economy in Rouyn-Noranda, a small town 373 miles northwest of Montreal. A public health study from 2005 to 2018 showed that arsenic levels on site were 165 nanograms per cubic meter of air. That was 55 times the standard safe level of 3 nanograms.
Glencore’s investment will bring the arsenic level down to 15 nanograms by 2027, according to the plan announced by the company’s head of copper operations in North America, Claude Belanger. Last week, Quebec’s public health director said public-health objectives would be achieved at that level. “It’s the maximum we can do” considering the technical knowledge in place, Belanger said.
Central Group and Signa Holding complete Selfridges acquisition
Central Group and Signa Holding have completed the acquisition of Selfridges from the Weston Family.
They didn't disclose the final price but it was previously reported to be around £4.7bn.
Stefano Della Valle, chief of Central and Signa’s luxury department store group in Europe, will lead the portfolio of 18 stores, which consists of Selfridges in England, Brown Thomas & Arnotts in Ireland, and De Bijenkorf in the Netherlands.
US home sales fall again in July as housing slowdown deepens
Sales of previously occupied US homes slowed for the sixth consecutive month in July, deepening the housing market's slide under the weight of sharply higher mortgage rates, surging inflation and slower, but still solidly rising home prices.
The National Association of Realtors said that existing home sales fell 5.9pc last month from June to a seasonally adjusted annual rate of 4.81m. That's lower than what economists were expecting, according to FactSet.
Sales fell 20.2pc from July last year. Sales have now fallen to the slowest pace since May 2020, near the start of the pandemic. The last time there was a six-month losing streak for home sales was between August 2013 and January 2014.
Marshalls warns of waning consumer confidence
Marshalls has reported higher profits, but shares dipped after it highlighted "pressure on household budgets" and the impact of soaring inflation on consumer confidence.
The landscaping and building materials firm posted a 15pc jump in profits to £48m over the six months to June 30. Revenues grew by 17pc to £384.4m.
The building projects arm benefited from "resilience" in newbuild housing. However, sales dipped by 1pc in the landscape products business amid softening demand.
That's all from me today – thanks for following! Giulia Bottaro will take things from here.
Treasury taps City again in bid to boost IPOs
The Government is holding talks with top finance executives to find ways to boost demand for stock market listing.
Chancellor Nadhim Zahawi and Treasury officials are holding a series of informal discussions with senior bankers in an effort to stimulate investor demand, Bloomberg reports.
Ideas under consideration include a new dedicated fund that would invest in listings, as well as incentivisting institutional and retail investors to participate in share sales.
It comes as the Government tries to boost the City's competitiveness after Brexit. The London Stock Exchange is facing its quietest period for listings since the financial crisis, with the problems compounded by the war in Ukraine.
Energy firms call for more support for customers
The UK energy industry has called on the Government to do more to help households and businesses facing eye-watering bills this winter.
Energy UK, which represents suppliers and generators, wants the Government to increase its £400 support for each household and introduce a programme to stabilise prices using state-backed loans.
In a letter to Chancellor Nadhim Zahawi, Energy UK's Dhara Vyas said:
These prices will be unaffordable for far too many households, and swift action to help people with the cost of energy this winter is now crucial.
US stocks steady as traders assess Fed minutes
Wall Street's main indices were subdued at the opening bell, with traders looking for fresh signals about the Fed's plans for interest rate rises.
The S&P 500 opened flat, while the Dow Jones and Nasdaq both slipped 0.1pc.
Discovery offloads GB News stake as channel builds £60m warchest
GB News has secured £60m of fresh investment as part of a ownership shake-up in which the Hollywood titan Warner Bros. Discovery has sold its stake in the fledgling news network.
Ben Woods has the story:
Sir Paul Marshall and Dubai-investment firm The Legatum Group have bought out the US entertainment giant and GB News co-founders Andrew Cole and Mark Schneider.
The departure of high-profile backers just over a year since GB News launched is the latest upheaval to strike the opinionated news station, which endured a rocky start caused by technical problems, an advertising boycott and the departure of key talent, including chairman and lead presenter Andrew Neil.
However, the cash-injection from two of its existing shareholders will embolden the broadcaster's attempts to amass an audience big enough to turn a profit and become a credible challenger to the BBC's 24-hour rolling news channel.
Chairman Alan McCormick, a partner at Legatum, said the investment was "testament to our confidence in the momentum and trajectory of GB News after a very strong first year".
Mecca Bingo owner braces for 'tougher autumn'
The company behind Mecca Bingo has said it's bracing for a "tougher autumn" as spiralling household bills threaten spending by punters.
Rank Group warned that soaring inflation and a further rise in energy bills could hit consumer demand, and would also eat into the company's profitability.
Chief executive John O'Reilly told PA that recent trading had been "resilient" but said the company was aware of pressures on consumer finances.
He said: "A lot of people we meet in bingo venues have only come back recently following Covid so there is still a lot of positivity there among customers.
"But we know we might see a tougher autumn as energy price rises come through."
It came as Rank, which also owns the Grosvenor Casino brand, swung to a pre-tax profit of £74.3m for the year to June 30, bouncing back from a £107.3m loss in the previous year.
Meanwhile, net gaming revenues almost doubled to £644mfor the year.
US jobless claims post surprise fall
US jobless claims fell unexpectedly for the first time in three weeks, suggesting there's still robust demand in the labour market.
Initial unemployment claims decreased by 2,000 to 250,000 in the week ending August 13, according to Labor Department data.
Continuing claims for state benefits climbed to 1.44m in the week ending August 6.
The drop in jobless claims points to healthy labour demand as companies try to attract and retain employees amid lingering worker shortages.
However, several employers have been laying off staff or freezing hiring amid economic uncertainty, which could continue as the Federal Reserve pursues an aggressive path of interest rate hikes.
Billionaire Peter Thiel’s luxury New Zealand lodge blocked by environmentalists
Billionaire Peter Thiel's plan to build a luxury lodge in a secluded New Zealand skiing resort has been thwarted by an environmental group.
Helen Cahill reports:
The Paypal co-founder and prominent Donald Trump supporter had hoped to build a private residential estate by a lake set against mountains in a remote part of southern New Zealand.
But his application for planning permission has been refused on the grounds it would have “sufficient adverse landscape and visual effects on the environment”.
Even ditching his plans for a purpose-build pod for meditation to reduce the visual impact of the project on the natural environment failed to bring planners on side.
Mr Thiel's company Second Star applied for consent to build the lodge at Damper Bay near the ski resort of Wanaka, which is popular with billionaires looking for a secluded getaway in the winter months.
He was proposing to build the luxury homes on land he had purchased on the shores of Lake Wanaka near Queenstown.
Turkey delivers shock rate cut despite surging inflation
Turkey's central bank has made the shock decision to slash interest rates despite even though inflation is at a 24-year high and the lira has plummeted.
The bank lowered rates to 13pc after keeping them at 14pc for the last seven months. The lira dropped about 1pc against the dollar before paring losses.
The Monetary Policy Committee denied it was kicking off a cycle of monetary policy easing, saying that “the updated level of policy rate is adequate under the current outlook”.
It added: “It is important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as escalating geopolitical risk.”
Turkish President Recep Tayyip Erdogan has vowed to cut rates, pursuing his belief that cheaper borrowing costs can slow inflation instead of pushing it higher.
He ousted three central bank governors last year as he tightened his sway over monetary policy.
Russian LNG plant asks buyers to pay Gazprombank
Russia has asked buyers from its Sakhalin-2 liquefied natural gas to pay Gazprombank, plunging customers such as Japan and South Korea into a dilemma over sanctions.
Sakhalin Energy, the plant's new operator, sent instructions to consumers for paying in dollars to Gazprombank, Bloomberg reports.
Gazprom owns just over 50pc of Sakhalin Energy, while Gazprombank is the lending arm of Russia's gas exporter. Payments were previously made to non-Russian banks.
The majority of LNG shipments go to Japan, while South Korea and Taiwan are also importers.
They'll now need to check whether they can make payments to Gazprombank without violating any western sanctions.
Earlier this month the Kremlin seized control over Sakhalin-2. Shell is currently trying to sell its 27.5pc stake in the project.
US futures edge higher despite inflation woes
US futures traded slightly higher this morning even as sentiment remained fragile on signs the Fed will pursue its plan for raising interest rates.
Wall Street closed lower last night after the minutes from last month's Fed meeting raised expectations of a continued hawkish approach.
Cisco rose in pre-market trading after issuing an upbeat sales forecast.
Futures tracking the S&P 500, Dow Jones at Nasdaq all rose 0.1pc.
Travelodge hunts for 140 new hotel sites
Travelodge is looking for more than 140 new hotel sites which could lead to over £3bn of investment and create thousands of jobs.
The company said it wants to open 127 new hotels in London, creating 6,000 jobs, and 16 in the North East, leading to 400 new jobs.
The announcement was made as the chain officially opened its first new-build "budget luxe" hotels in London's Docklands and in Hexham.
Travelodge now operates 595 hotels across the UK, Ireland and Spain.
Competition watchdog finds concerns in tap merger
The competition watchdog has raised concerns over a planned office tap merger, saying the deal could lead to reduced competition in the supply of multifunctional taps to businesses.
Culligan, which makes taps that can provide chilled, hot or boiling and even sparkling water, has agreed to buy rival Waterlogic.
But the Competition and Markets Authority warned the takeover would leave just three large suppliers of these taps to businesses, which could lead to higher prices or lower quality of service.
The two companies now have five working days to submit proposals to address the concerns, or face an in-depth investigation.
Sorcha O’Carroll at the CMA said:
Multifunctional taps are an increasingly popular option for employers who need to make drinking water readily available to employees and want to reduce waste.
By removing a key player that offers this product, this deal could lead to higher costs to businesses and lower quality service.
Premier League revenues set to hit £6bn
The Premier League's revenues are on track to top £6bn this season for the first time – rapidly outpacing its European rivals.
Top-flight clubs earned £4.9bn in the 2020/21 season, according to the latest figures from Deloitte, despite an almost complete loss of matchday revenue due to the pandemic.
This was an 8pc rise on the previous year, while Germany's Bundesliga and Spain's La Liga both suffered a 6pc fall in revenues.
Deloitte expects the Premier League to have made £5.5bn in 2021/22 and to exceed £6bn in the current season, which began earlier this month.
The league has continued to surge in popularity around the globe and has cashed in on a sharp rise in its international broadcast rights.
Liz Truss is right that Britain has a productivity crisis – here’s why
Liz Truss ruffled feathers this week when she declared that dire productivity rates outside in London were largely self-inflicted, writes Szu Ping Chan.
But the frontrunner to become Britain's next prime minister has a point. Workers in London are 50pc more productive than the national average, according to the Office for National Statistics (ONS). The South East is a distant second, while Wales, Northern Ireland and Yorkshire and the Humber lag far behind.
But Ms Truss’s belief that more "graft" is needed is harder to implement in theory than in practice. When it comes to solving Britain's productivity puzzle, it's not so much the graft you put in, but what you get back out that matters.
UK activity worsens as economy shrinks
Real-time activity slipped in the UK in August as data showed the economy contracted in the second quarter.
The latest ONS figures showed overall retail and recreation visits fell 2pc from the previous week. Daily flights also slipped 1pc to 5,542.
Credit and debit card purchases decreased seven percentage points, in a sign the cost-of-living crisis is taking its toll.
On August 12 the total volume of online job adverts decreased 1pc from the previous week, with job ads in London falling 2pc.
Consumer behaviour indicators showed mixed activity in the latest week:
🥪 Transactions at Pret A Manger stores decreased in 5 of 10 regions
🌳 Park visits were up by 8%
🍽 UK seated diners remained unchanged.
— Office for National Statistics (ONS) (@ONS) August 18, 2022
430 jobs at risk as supermarket supplier shuts factory
Supermarket fruit and juice business Orchard House Foods is shutting its Gateshead factory, with the loss of up to 430 jobs.
The company, which supplies the likes of Marks & Spencer, Morrisons and Pret A Manger, said it plans to relocate production to its existing base in Corby, Northamptonshire.
Orchard House, which makes prepared and packaged fruit, fruit drinks, fruit jellies, fresh fruit yogurts, compotes and granolas, said the move is part of plans to consolidate production at Corby by the end of November this year.
It comes amid soaring costs for food, energy, labour and transport.
The company said it has "started a consultation process with affected colleagues, with up to 430 jobs at risk of redundancy".
It added that a significant number of jobs will be created in the East Midlands, with support for colleagues from Gateshead who wish to relocate.
PwC raises UK partner pay to £1m for first time
PwC partners are now earning £1m on average for the first time thanks to a rebound in consulting work and the sale of part of the company.
The professional services giant said its revenue in the UK and Middle East grew 12pc to £5bn in the year to the end of June.
That was boosted by a 33pc jump in revenue from consulting, which overtook audit to become the group's biggest business area.
PwC said it made its biggest investment in staff pay in a decade, with half of its 24,000 getting a pay rise of 9pc or more.
About 900 partners earned on average £920,000 – up 12pc on the previous year. They earned an additional £105,000 each from the sale of the group's global mobility and immigration business.
Pound slides against stronger dollar
Sterling has extended losses against the dollar, hitting its lowest level since late July.
The US currency has gained ground after minutes from the Federal Reserve's July meeting pointed to interest rates staying higher for longer to bring down inflation.
The pound fell 0.4pc against the dollar to $1.1995. Against the euro it slipped 0.2pc to 84.66p.
Chinese takeover of tech company blocked over security fears
ICYMI – The Government has blocked the takeover of a Bristol-based electronic design company by a Hong Kong rival in a fresh sign of Britain’s increasing hostility to Chinese investment.
Giulia Bottaro reports:
The Business Secretary Kwasi Kwarteng, who is tipped by some Conservatives to be the next chancellor, ruled that stopping the acquisition of Pulsic, whose software can be used to build circuits, by Super Orange HK was “necessary and proportionate to mitigate the risk to national security”.
Pulsic’s intellectual property and software “could be used to build defence or technological capabilities,” said the Department for Business, Energy and Industrial Strategy (Beis).
Its products could “facilitate the building of cutting-edge integrated circuits” used in a “civilian or military supply chain,” Beis added.
Mr Kwarteng’s decision signals the UK’s increasing aversion to Chinese involvement in its economy, spurred by deteriorating ties between the two countries over human rights, defence and security concerns.
FTSE risers and fallers
The FTSE 100 has started the day on the back foot as fears of further interest rate rises continue to weigh on markets.
The blue-chip index was down 0.2pc, with several major stocks traded ex-dividend.
Miner Anglo American fell 3.8pc as it traded without entitlement to its dividend payout. HSBC, asset manager Abrdn and insurer Legal & General all fell between 2.4pc and 4.8pc, weighing on the index.
The FTSE 250 edged up 0.2pc after hitting a one-week low in the previous session.
Among small caps, AO World jumped more than 14pc despite tumbling to a loss, while Made.com dropped 9pc after confirming plans for a possible equity raise.
Made.com shares drop on share sale plans
Shares in Made.com have slumped in early trading after the online furniture website confirmed it's considering selling more shares.
The company said it's looking at a potential equity raise to allow it to strengthen its balance sheet. Shares fell as much as 7.2pc.
Made last month warned its gross sales would be lower than previously expected as Brits cut back on home improvements.
AO World tumbles to loss as costs surge
AO World has crashed to an annual loss after it was hit by the dual impact of rising costs and declining sales.
The white goods retailer posted a pre-tax loss of £37m for the year to the end of March, down from a £20m profit the previous year.
It said the poor performance was partly driven by headwinds from global supply chain disruption, labour shortages and cost-of-living pressures impacting consumer sentiment.
Profitability was also hamstrung by increased staff costs as the company sought to resolve driver shortages.
It's the latest blow for the group, which has seen its shares tumble more than 80pc over the past 12 months after a series of profit warnings.
AO World launched a £40m fundraising round last month and will close its struggling business in Germany as part of an effort to return to profit.
FTSE 100 opens lower
The FTSE 100 has lost ground at the open as inflation fears continue to grip investors.
The blue-chip index slipped 0.3pc to 7,496 points.
Recession will force next PM into U-turn, says former BoE official
A looming recession will force the next prime minister to ditch talk about tax cuts and deliver a huge support package to prevent the economy from collapsing.
That's according to former Bank of England official Danny Blanchflower, who said interest rates should be cut now, and probably will be reduced at the end of this year.
While markets are betting on further interest rate rises to tackle surging inflation, Mr Blanchflower said the main focus in the current crisis will have to be either Liz Truss or Rishi Sunak – not the Bank.
He told Bloomberg: "Nothing they've said goes anywhere close to dealing with the problem that's coming. The idea that tax cuts and corporate tax changes are going to help the woman riding on the Mile End Road omnibus is a joke."
Mr Blanchflower also took aim at former colleague Andrew Sentance, who yesterday said interest rates should rise to 3pc or even 4pc this year. He said this following this advice would be "completely disastrous".
Truss plans City watchdog shake-up
Liz Truss is said to be considering merging three City watchdogs as part of a broader shake-up of financial regulation.
Under the plans, the Financial Conduct Authority, Prudential Regulation Authority and Payments Systems Regulator would be combined into one new organisation.
The move would form part of a “wider war on technocrats” and civil servants as the Tory leadership frontrunner puts focus on economic growth, the Financial Times reports.
It comes after torrid period for the FCA, which has been criticised for its failings in the London Capital Finance mini-bond collapse and faced its first ever strike earlier this summer.
5 things to start your day
1) Inflation surge threatens Truss's tax cut plans, says IFS Government’s benefits, pensions and borrowing bills expected to soar next year
2) Chinese takeover of tech company blocked over security fears Kwasi Kwarteng stops acquisition of Pulsic by Super Orange HK
3) Madame Tussauds owner hit with winding up petition in dispute over debt Merlin Entertainments brands threat by Experian 'wholly inappropriate'
4) Ofgem director quits regulator over price cap Christine Farnish stands down after accusing watchdog of failing to strike right balance
5) Norway’s sovereign wealth fund loses record $174bn after tech bets go wrong The fund's big bets on technology made a return of minus 27pc
What happened overnight
Asian shares tracked lower this morning, in step with Wall Street's losses.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2pc, after US stocks ended the previous session with mild losses. The index is up 1.3pc so far this month.
Hong Kong's Hang Seng Index was down 0.5pc while China's blue chip CSI300 was off 0.3pc.
Coming up today
Corporate: AO World, Rank (full-year results); Helios Towers, Marshalls (interims)
Economics: Inflation final reading (eurozone), jobless claims (US)