Europe facing gas shortage this winter, warn experts
Europe is facing a massive shortfall of natural gas this winter because of disruption in maintenance schedules on Norway’s gas platforms and pipelines, analysts have warned.
The predicted shortfall of 66m cubic metres a day predicted by Rystad Energy is about a third of the UK’s daily consumption.
The warning comes at a difficult moment with cold temperatures expected to hit the UK and Europe over the next two weeks, leading to a surge in gas demand and an early onset of the heating season.
If the shortages persist it could eventually mean higher prices for consumers - affecting the decisions made when the next UK price cap is determined.
Rystad said Norwegian state-owned pipeline operator Gassco reported delays as several fields and processing plants attempted to leave scheduled maintenance or reported unplanned outages.
Meanwhile, Europe also continues to experience reduced flows from Algeria, largely driven by scheduled maintenance at the Medgaz pipeline until September 27.
Such problems could be compounded by the Ukraine conflict.
Rystad said in a statement: “Claimed Russian advances in the Kursk region have moved within 10km of the Sudzha gas compressor station [which pumps gas from Russia into Europe], adding to the risk of damage and supply disruptions.”
Storms in the Gulf of Mexico are also hitting supplies of liquefied natural gas, said Rystad: “Adding further uncertainty, gas markets in the US remain on edge due to Hurricane Helene.”
Weather forecasters say low temperatures well below the long-term seasonal averages will hit Northern and Central Europe from this weekend.
In populous German federal states, such as Nordrhein-Westfalen and Hessen, temperatures are forecasted to be 4 degrees below the long-term average around September 29.
Rystad predicts demand will surge by up to 60.5m cubic metres a day in Germany over this weekend alone.
Read the latest updates below.
06:18 PM BST
Signing off...
Thanks for joining us today.
The Markets blog will be back in the morning but, in the meatime, you can catch up on the latest business stories from The Telegraph here.
06:06 PM BST
Britain paying highest electricity prices in the world
British companies are paying the highest electricity prices of anywhere in the developed world, official data has shown. Matt Oliver reports:
The cost of power for industrial businesses has jumped 124pc in just five years, according to the Government’s figures, catapulting the UK to the top of international league tables.
It is now about 50pc more expensive than in Germany and France, and four times as expensive as in the US.
The figures will fuel concerns about the future of UK industry amid warnings that high energy prices are crippling domestic manufacturers.
They underline the challenge facing Ed Miliband, the Energy Secretary, who wants industrial businesses to switch away from gas to electricity-powered processes.
05:50 PM BST
Crown Estate challenges Cineworld in court over survival plan
The Crown Estate has kicked off a legal battle with Cineworld over claims that the chain is acting unfairly by forcing through sweeping cuts to its rental bills to stay afloat. Hannah Boland reports:
The company – which runs the King’s estate, including the sites of three Cineworld cinemas – has lodged a legal challenge against the cinema group’s restructuring plan, which was voted through earlier this week.
In the challenge, which was made alongside fellow Cineworld landlord Tritax, the Crown Estate claims the cinema chain’s radical plans to cut the amount of rent it pays to landlords went against earlier pledges over leases.
The case centres on Cineworld securing rent reductions last year by promising it would protect leases on certain sites, including those run by the Crown Estate.
Those sites are now among those facing sweeping cuts under Cineworld’s survival plan, which it has said is necessary to avoid collapse.
05:43 PM BST
Threatened strike could cost US $5bn a day
Some 45,000 union workers could walk off the job at seaports on the US east and Gulf coasts on Oct 1 in a dispute over pay.
A JPMorgan analysis projected that the strike could cost the US economy $5bn (£3.7bn) daily. It would also cut off vital trade arteries just weeks ahead of the nation’s presidential election.
The strike could hit 36 ports that handle about a half of US ocean imports. That could affect availability of a range of goods from bananas to clothing to cars shipped via container, while creating backlogs lasting for weeks at ports.
05:30 PM BST
Tax raid on non-doms from ‘Cloud Cuckoo Land’, says economist
Rachael Reeves’ plans for the taxation of non-doms will mean Britain loses wealth and talent, a leading free-market economist has said.
Madsen Pirie, president of the Adam Smith Institue, said:
In Cloud Cuckoo Land, people suppose that if you tax rich people who have chosen to reside there and invest and spend some of their wealth there, you can tax them on their worldwide earnings as well as their domestic ones and they will meekly pay up with a sorrowful sigh.
In the real world they put on their marching boots and move to tax-friendlier climes. This is already happening. People I speak to tell me they are leaving.
Not a penny will be added to Treasury coffers from this ill-advised move. Instead we will lose some of the wealth and talent that enriches us.
His comments come after reports that officials at the Treasury fear that Labour’s plans to tax non-doms could raise no extra funds.
A Treasury spokesperson said that reports were “speculation”, adding:
We are committed to addressing unfairness in the tax system, which is why we are removing the outdated non-dom tax regime so we can raise the revenue needed to rebuild our public services, and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK.
05:23 PM BST
Oil company shares tank as cartel plans output hike
Big oil companies dropped on the FTSE 100 today as crude oil prices dropped more than 2pc on a report that Saudi Arabia and other Opec+ countries are planning to raise output.
BP lost 4.4pc and Shell dropped 4.3pc.
Dan Coatsworth, investment analyst at AJ Bell, said:
Growing concerns of an increase in oil production from various parts of the Middle East including Saudi Arabia pulled down the price of the black stuff.
That’s bad news for oil producers like BP.
05:18 PM BST
Europe’s Stoxx 600 clocks all-time closing high on China stimulus boost
European shares rose today, with China-exposed stocks such as luxury and miners outperforming on news of aggressive Chinese economic stimulus. Chip stocks also advanced following US firm Micron’s strong revenue forecast.
The pan-European Stoxx 600 index, which contains some of Britain’s biggest companies, closed 1.3pc higher at 525.61 points, an all-time closing high.
Chinese leaders pledged to deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5pc, acknowledging new problems and raising market expectations for fresh stimulus on top of measures announced this week.
Tim Graf, head of macro strategy at State Street Global Markets, said:
This is a very positive market reaction that will probably fade a little bit with time because issues around Chinese demand are going to take time to solve.
You’re seeing a little bit of a relief rally that there are efforts being taken to solve them, but it’s still a very long process.
China-exposed luxury firms such as LVMH and Hermes gained around 9pc each. A gauge of ten of Europe’s biggest luxury firms rose 6.5pc.
Europe’s technology sector gained 3pc as shares of semiconductor companies jumped after Micron Technology forecast higher-than-expected revenue on AI demand.
05:15 PM BST
US and China have forged ‘closer’ ties despite tariffs, claims Yellen
Janet Yellen, the US Treasury secretary, said in an interview this afternoon that Washington’s economic ties with Beijing are closer now despite recent tariff hikes.
“I do believe it’s gotten closer,” she told CNBC of the relationship between the world’s two biggest economies.
“We’ve found ways to constructively discuss and address our differences.”
This is in spite of intensifying competition between the United States and China in recent years.
President Joe Biden’s administration has taken moves to limit Chinese firms’ access to cutting-edge equipment, especially for military uses, and added on to tariffs on Chinese-made products introduced by his predecessor, Donald Trump.
In the run-up to the November election, in which Trump is facing off with Vice President Kamala Harris, both candidates have taken a firm stance on China.
But Yellen said of the current relationship: “We’re cooperating in areas that the world needs us to work together. Financial stability is one of these areas.”
05:11 PM BST
Europe facing gas shortage this winter, warn experts
Europe is facing a massive shortfall of natural gas this winter because of disruption in maintenance schedules on Norway’s gas platforms and pipelines, analysts have warned. Our energy editor Jonathan Leake reports:
The predicted shortfall of 66m cubic metres a day predicted by Rystad Energy is about a third of the UK’s daily consumption.
The warning comes at a difficult moment with cold temperatures expected to hit the UK and Europe over the next two weeks, leading to a surge in gas demand and an early onset of the heating season.
If the shortages persist it could eventually mean higher prices for consumers - affecting the decisions made when the next UK price cap is determined.
Rystad said Norwegian state-owned pipeline operator Gassco reported delays as several fields and processing plants attempted to leave scheduled maintenance or reported unplanned outages.
Meanwhile, Europe also continues to experience reduced flows from Algeria, largely driven by scheduled maintenance at the Medgaz pipeline until September 27.
Such problems could be compounded by the Ukraine conflict.
Rystad said in a statement: “Claimed Russian advances in the Kursk region have moved within 10km of the Sudzha gas compressor station [which pumps gas from Russia into Europe], adding to the risk of damage and supply disruptions.”
Storms in the Gulf of Mexico are also hitting supplies of liquefied natural gas, said Rystad: “Adding further uncertainty, gas markets in the US remain on edge due to Hurricane Helene.”
Weather forecasters say low temperatures well below the long-term seasonal averages will hit Northern and Central Europe from this weekend.
In populous German federal states, such as Nordrhein-Westfalen and Hessen, temperatures are forecasted to be 4 degrees below the long-term average around September 29.
Rystad predicts demand will surge by up to 60.5m cubic metres a day in Germany over this weekend alone.
05:04 PM BST
Dollar drops as market ‘doesn’t quite know’ what to do
The dollar is down in choppy trading this afternoon after a host of US data indicated a relatively healthy economy, while the Swiss franc rose after the country’s central bank cut interest rates.
The US currency began paring losses after data showed weekly jobless claims fell by 4,000 to a four-month low of 218,000, below the 225,000 forecast by economists.
In addition, other reports showed corporate profits increased at a more robust pace than initially thought in the second quarter while gross domestic product grew at an unrevised 3pc.
A gauge of new orders for key US-manufactured capital goods unexpectedly rose in August, although business spending on equipment appears to have waned in the third quarter.
Joseph Trevisani, senior analyst at FXStreet in New York:
Looks like pretty good news for the dollar.
Once again we have this split between the Fed cutting rates and an economy that is essentially growing at 3pc or more, so the market doesn’t quite know what to make of this.
04:56 PM BST
Footsie closes up
The FTSE 100 closed up 0.2pc today.
The biggest riser was Anglo American, up 6.2pc, followed by Prudential, up almost as much.
The biggest faller was Shell, down 4.6pc, followed by BP, down 4.1pc.
Meanwhile, the mid-cap FTSE 250 fell 1.2pc.
The top riser was Watches of Swtizerland, which rose 11.1pc, followed by Burberry, up 8.7pc.
At the other end of the index Petershill Partners fell 4.5pc, followed by Raspberry Pi, down 3.7pc.
04:36 PM BST
Pope Francis tells wealthy Luxembourg to help developing countries
Pope Francis on Thursday called on leaders in Luxembourg - a small nation with a thriving economy and the highest density of millionaires per capita in the world - to devote resources to help improve conditions in developing countries.
The 87-year-old pontiff, in the landlocked state for a day visit, suggested that an increase in foreign aid could help stem the flow of refugees and migrants seeking to enter Europe.
“Let us not forget that having wealth includes responsibility,” the pontiff told a gathering of political and civil leaders at Luxembourg’s Cercle Cite, a neo-baroque palace.
“I ask for constant vigilance so that the most disadvantaged nations ... may be helped to rise from their impoverished conditions.”
03:59 PM BST
Stock markets rise after Chinese hit stimulus
US and European markets are having a positive week, despite not matching the growth in the Shanghai Composite Index.
Chris Beauchamp, chief market analyst at online trading platform IG, said:
It has been a week that has seen huge gains for Chinese markets, while indices in Europe and the US have reacted enthusiastically, if not with quite the same big gains in prices.
The risk of a US recession has diminished and now Chinese economic weakness is being counteracted by some impressive action on the part of authorities there. Stock market bears are running out of reasons to support their negative theses.”
The Shanghai Composite Index is up 3.6pc over the past five days.
03:46 PM BST
Wall St rises on AI euphoria after Micron’s upbeat forecast
Wall Street’s main indexes rose this afternoon, with the S&P 500 hitting a record high
It came as an upbeat forecast from memory chip maker Micron revived the frenzy around artificial intelligence, and a softer-than-expected figures for benefit claims soothed worries about the jobs market.
Micron Technology jumped 15.6pc after the memory chip maker forecast higher-than-expected first-quarter revenue, underscoring that demand for memory chips used in AI computing was robust.
The optimism lifted other chip stocks, with Nvidia rising 1.5pc, Advanced Micro Devices advancing 2.9pc and Broadcom adding 1.7pc. The broader Philadelphia SE Semiconductor index jumped 2.9pc.
03:38 PM BST
Southern Water makes plan to ship water from Norway to avoid droughts
Southern Water is drawing up contingency plans to ship water from Norway to mitigate the risk of supply shortages and droughts.
The utility company’s plan aims to import up to 45m litres of water a day into the areas it covers - Hampshire, Kent, East and West Sussex and the Isle of Wight.
The regional monopoly, which is one of the biggest UK water firms, is in early stage talks with the Extreme Drought Resilience Service, a private UK company that supplies water by sea tanker, according to the Financial Times.
Tim McMahon, Southern Water’s managing director for water, said importing supplies would be a “last-resort contingency measure” in the event of an extreme drought in the early 2030s.
Most of the company’s supplies are currently abstracted from groundwater and globally rare chalk streams.
The Environment Agency has warned that overreliance on these sources can cause environmental damage, increasing the risk of droughts even further.
The regulator has ordered the company to make dramatic reductions by 2030, although Southern has recently admitted it may need to keep taking water from the rivers until as late as 2035 due to delays in shifting to new water sources.
Southern plans to pay for the shipped water from customers’ bills, the FT reported, adding that imports tend to be expensive because of weight and the additional processing required.
To help meet Hampshire’s water shortfall, the company is building the UK’s first new reservoir for more than 30 years at Havant Thicket.
Plans for other forms of mitigation include plans for universal smart metering, leakage driven mains replacements, desalination and agreements with businesses to reduce use, Southern said.
Mr McMahon said the possibility that it would need to import water is “very remote”.
Droughts are becoming more frequent and parts of England came close to running out of water in 2022 during one of the driest summers on record.
03:32 PM BST
Handing over
With that, I will thank you for following our live updates so far and implore you to continue with my colleague Alex Singleton.
On a day when China’s promises of stimulus have sent global stocks higher, here is a picture of the mist rising above residential tower blocks in Lianyungang in the Jiangsu province earlier today:
03:13 PM BST
ChatGPT inventor to receive $10bn as his company abandons non-profit status
The founder of ChatGPT-maker OpenAI is to receive more than $10bn (£7.5bn) as the artificial intelligence (AI) company abandons its long-held not-for-profit status.
Our technology editor James Titcomb has the details:
OpenAI is considering granting Sam Altman a 7pc stake in the company, which is currently raising funds at a valuation of around $150bn.
The valuation would make Mr Altman’s potential stake worth $10.5bn. It comes after a leadership exodus at the company with chief technology officer Mira Murati among those announcing their departure.
OpenAI was founded in 2015 by technology executives including Elon Musk as a non-profit that planned to make its technology “open source”, or freely available. Mr Altman has also not taken a direct stake in the company, saying he is only paid a modest salary that allows him to qualify for health insurance.
03:00 PM BST
Ubisoft shares plunge after delay to Assassin’s Creed game
Shares in French video game giant Ubisoft plunged more than 20pc after it dropped its profit targets following a delay to its latest “Assassin’s Creed” title.
The publisher warned that the game would now only hit shelves on February 14, missing out on the crucial festive season under its previous launch timeframe of mid-November.
Ubisoft shares were down as much as 21.1pc to €9.01, with the stock now down around 60pc since the beginning of this year.
Adding to investor concerns, Ubisoft said the profit alert also reflected a need to update its “Star Wars Outlaws” game, released in August, “in response to player feedback”.
Sales of the hotly awaited title have been lower than expected, and Ubisoft said it developers were focused on improving the game before moving to “further polish” the game-play of “Assassin’s Creed Shadows”.
02:45 PM BST
Micron surges by most in 13 years
Micron shares jumped by the most in 13 years at the opening bell after giving surprisingly strong sales and profit forecasts, helped by demand for artificial intelligence equipment.
The memory chip maker forecast its first-quarter revenue to be about $8.7bn (£6.5bn), which was higher than the average analyst estimate of $8.3bn (£6.2bn).
Shares jumped 20pc at the open, which was its biggest move in a single day since 2011.
02:37 PM BST
US stocks hit record highs after jobs boost
Wall Street’s main indexes opened higher after fewer Americans than expected began claiming jobless benefits, in a potential sign of reslience in the US economy.
The S&P 500 rose 40.0 points, or 0.7pc, at the open to a record high of 5,762.22​, while the Nasdaq Composite rose 245.1 points, or 1.34pc, to 18,327.34 as Micron’s upbeat forecast revived the frenzy around artificial intelligence.
The Dow Jones Industrial Average rose 198.7 points, or 0.5pc, at the open to 42,113.42.
02:29 PM BST
Opec+ ‘will go ahead with increase to oil production’
Opec+ will go ahead with plans to increase oil production from December, it has been reported.
The Organisation of the Petroleum Exporting Countries and allies such as Russia, known as Opec+, are scheduled to raise output by 180,000 barrels per day in the final month of the year.
The cartel had planned to ramp up production from October but announced a delay last month.
Now it will go ahead as Iraq and Kazakhstan have pledged to make extra cuts totalling 123,000 barrels per day in September, and additional curbs in future months, to compensate for earlier pumping above agreed levels, according to Reuters.
It comes as Saudi Arabia is reportedly ready to abandon its $100 a barrel price target for oil, which has helped send the cost of a barrel of Brent crude down 3.3pc so far today to about $71.
02:13 PM BST
US avoided recession.... in 2022
The Commerce Department has released a number of revisions to GDP data for the US going back five years.
Interestingly, one of those revisions has scrubbed out a recession that economists said America had suffered two years ago:
The recession debate was silly, mostly semantic, and the overwhelming data for the economy in 2022 was clear it was not a recession.
More meaningful, there has been a puzzling and record disparity between strong GDP growth and weak GDI. Well that was resolved--in GDP's favor. pic.twitter.com/40CBZfSJ65— Jason Furman (@jasonfurman) September 26, 2024
02:03 PM BST
US jobless claims hit four-month low
The number of Americans applying for unemployment benefits last week fell to the lowest level in four months.
The Labor Department reported that applications for jobless claims fell by 4,000 to 218,000 for the week of September 21.
It was the fewest since mid-May and less than the 224,000 analysts were expecting. Last week’s figure was revised up by 3,000.
The four-week average of claims, which evens out some of weekly volatility, fell by 3,500 to 224,750.
Applications for jobless benefits are widely considered a proxy for US layoffs in a given week.
Weekly filings for unemployment benefits have fallen two straight weeks after rising modestly higher starting in late spring.
Though still at historically healthy levels, the recent increase in jobless claims and other jobs market data signaled that high interest rates may finally be taking a toll on the labour market.
The Federal Reserve cut interest rates for the first time in four years earlier this month by half a percentage point to a range of 5pc to 4.75pc.
Claims:
1/ The "hump" we saw over the summer in initial claims continues to unwind. I don't think it reflected any fundamental change in layoffs - the increase wasn't indicative of things getting worse, and the current decrease isn't indicative of things getting better. pic.twitter.com/QKXfNaFVk9— Guy Berger (@EconBerger) September 26, 2024
01:56 PM BST
US economy grew by 3pc in second quarter
The American economy expanded by 3pc in the three months to June, official figures show, as it was boosted by strong consumer spending and business investment.
The Commerce Department reported that the US’s gross domestic product (GDP) — the nation’s total output of goods and services — growth picked up sharply in the second quarter from the tepid 1.6pc in the first three months of the year.
Consumer spending, the primary driver of the economy, grew last quarter at a 2.8pc pace, down slightly from the 2.9pc rate that the government had previously estimated.
Business investment increased at a vigorous 8.3pc annual pace last quarter, led by a 9.8pc rise in investment in equipment.
United States GDP Growth Ratehttps://t.co/sUMfkn31hz pic.twitter.com/ChuY8cH1Mo
— TRADING ECONOMICS (@tEconomics) September 26, 2024
01:28 PM BST
More than £11bn wiped off FTSE 350 oil and gas companies
More than £11bn has been wiped off the value of oil and gas sector companies across the FTSE 100 and FTSE 250 so far today.
Other companies hit include the North Sea’s largest oil and gas explorer Harbour Energy, which is down 1.9pc.
Ithaca Energy is down 3.7pc.
12:56 PM BST
UK misses out on global stocks rally amid plunging oil prices
The FTSE 100 may be up today but it is well behind other major markets around the world which have been boosted by the promise of fresh economic stimulus in China.
The UK’s blue chip index was up 0.2pc, well behind gains of 1.6pc on the Cac 40 in Paris, 1.2pc on the Dax in Frankfurt and 4.2pc on both the Hang Seng in Hong Kong and CSI 3000 in Shanghai.
It comes as falling oil prices weigh down the FTSE 100’s dominant oil and gas stocks, with BP and Shell the two biggest losers, down 4.8pc and 4.7pc respectively.
Global benchmark Brent crude has slumped 2.7pc today towards $71 a barrel after it was reported that Saudi Arabia is considering abandoning its unofficial target oil price of $100 a barrel.
12:45 PM BST
MoD seeks legal advice over £1.6bn Royal Navy ships contract
The Defence Secretary is seeking legal advice about a £1.6bn Royal Navy shipbuilding contract as the struggling British company hired for the work faces a Spanish takeover.
Our industry editor Matt Oliver has the details:
Belfast-based Harland & Wolff, which built the Titanic, was hired alongside Navantia, a Spanish state-owned shipbuilding giant, to build three Navy vessels but Harland’s decision to call in administrators last week has plunged the project into crisis.
John Healey, the Defence Secretary, and his team have asked civil servants to provide legal advice about the terms of the shipbuilding contract as the Ministry of Defence examines options for the fleet solid support (FSS) programme, a government-initiated plan to supply more Navy support vessels.
Harland is scrambling to find a potential buyer after calling in administrators, with Navantia seen as the frontrunner.
Read why unions are concerned about the Spanish company.
12:10 PM BST
Wall Street poised to rise amid fresh AI buzz
US stock indexes are on track to rise at the opening bell as a wave of optimism around artificial intelligence gripped Wall Street after an upbeat forecast from Micron Technology.
The memory chip maker jumped 15.8pc in premarket trading after it forecast higher than expected first-quarter revenue, underscoring that demand for memory chips used in AI computing was robust.
Other chip stocks also gained, with Nvidia rising 1.2pc, Advanced Micro Devices advancing 2.2pc and Broadcom adding 1.7pc.
Meta led gains among other growth names, with a 1.7pc rise, a day after unveiling an entry-level version of its Quest line of mixed-reality headsets. Alphabet added 1pc, Tesla climbed 1.3pc and Microsoft was up 0.7pc.
The benchmark S&P 500 and blue-chip Dow have hit multiple record highs since the start of this year and the tech-laden Nasdaq is about 3pc away from its own milestone as investors lap up shares of companies that could see a boost to earnings from AI-integration.
In premarket trading, the Dow Jones Industrial Average was up 0.5pc, the S&P 500 had gained 0.8pc and the Nasdaq 100 was up 1.5pc.
11:48 AM BST
Morrisons steps up loyalty card offers as sales growth weakens
Morrisons has revealed a slowdown in sales growth for the latest quarter amid “softer” market conditions.
The supermarket group said its like-for-like sales, excluding fuel and VAT, grew by 2.9pc in the three months to July 28.
It represented an easing from 4.1pc growth in the previous quarter as food and drink inflation reduced.
In response, the supermarket revealed “significant investment” in the Morrisons More Card in August and September, as it launched a rolling programme of over 2,000 prices for customers using the loyalty card.
Rami Baitieh, chief executive of Morrisons, said: “Our focus on listening to customers, better availability and improving the Morrisons More Card has driven another quarter of good headway across the board.
“Like-for-like sales remained positive, the switching data improved year-on-year and although the market was noticeably softer in the third quarter, our relative position improved and our market share stabilised.
“Our price competitiveness improved further in the quarter as our Aldi and Lidl price match, More Card offers and everyday low prices combined to give customers increasing confidence in Morrisons’ great value.”
11:32 AM BST
Prezzo appoints former BrewDog executive as new boss
Italian restaurant chain Prezzo has appointed former BrewDog executive James Brown as its new boss.
Mr Brown has joined as the group’s chief executive, replacing Dean Challenger who will return to his previous role of finance chief.
The company said Mr Brown would steer a new phase of growth since returning to profitability earlier this year.
It comes more than a year since the business announced the closure of 46 loss-making restaurants after being hammered by higher energy and food costs.
It came close to collapse in late 2020 when it fell into administration after the heavy impact of the Covid pandemic, before being rescued by current private equity owners Cain International.
Mr Brown had announced his resignation as the boss of BrewDog Bars on Wednesday, after nine years at the business.
11:17 AM BST
Pound rises as traders expect ‘gradual’ UK rate cuts
The pound has risen to within striking distance of its two-and-a-half-year peak against the dollar after China’s unveiled its latest stimulus plan.
The pound usually appreciates when investors go for risky assets such as stocks, which jumped today.
Meanwhile, more persistent UK inflation has raised expectations that the Bank of England will cut interest rates more slowly than other central banks around the world.
Governor Andrew Bailey said this week that rates would fall “gradually” while fellow rate setter Megan Greene argued for policymakers to take a “steady-as-she-goes” approach to reducing borrowing costs.
Patrick Ernst, director of forex investment strategy at UBS, said: “We think higher yield differentials will support the pound against the dollar over time..
“We expect the pair (sterling versus dollar) to gradually move higher but note that temporary setbacks are possible following the latest rally.”
The pound has risen 0.3pc so far today to $1.336, after hitting $1.34275 on Wednesday, its highest level since February 2022.
10:59 AM BST
Elon Musk: Don’t go to Britain, they release paedophiles
Elon Musk warned people not to visit Britain while “they’re releasing convicted pedophiles” after he was excluded from the Government’s upcoming investment summit following “deplorable” claims that Britain was sliding into civil war.
The world’s richest man has not been invited to the International Investment Summit next month, in response to his social media posts during the Southport riots this summer.
This was his response:
I don't think anyone should go to the UK when they're releasing convicted pedophiles in order to imprison people for social media posts
— Elon Musk (@elonmusk) September 26, 2024
10:41 AM BST
Mark Zuckerberg compares himself to a Roman emperor as he unveils AI glasses
Meta chief executive Mark Zuckerberg has compared himself to a Roman emperor while launching his new holographic smart glasses.
Our reporter Pui-Guan Man has the latest:
While previewing the technology at Meta’s yearly annual conference at its California headquarters at Menlo Park, the billionaire wore a t-shirt emblazoned with the phrase “Aut Zuck aut nihil”.
The original phrase, “Aut Caesar aut nihil”, means “either Caesar or nothing” and is used to express absolute ambition.
The comparison was made during the launch of Meta’s augmented reality smart glasses, named Orion.
They are able to live-translate words spoken in other languages, while users can also dub their videos into another language so it appears they are speaking natively.
Read what else the glasses can do.
10:26 AM BST
All Bar One owner rocked by UK riots
Pub and bar giant Mitchells & Butlers has revealed slower sales growth in the latest quarter after damp summer weather and disruption from the riots across Britain in August.
But the All Bar One and Toby Carvery owner said it expects to deliver full-year results at the “upper end” of analyst expectations.
Shares in the London-listed company were up 2.9pc after it said like-for-like sales have grown by 2.5pc so far over the latest quarter.
It reflects a continued slowdown after 3.4pc growth in the third quarter and 6.1pc in the second quarter.
Mitchells & Butlers, which also runs Harvester and Miller & Carter, said the reduced growth was due to “progressive easing of the inflationary environment, as well as an unseasonally cool and wet summer period and the disruption caused by riots in city centres during August”.
Like-for-like sales have increased by 5.2pc over the year to date, with all its brands in growth, Mitchells & Butlers said.
Chief executive Phil Urban said: “Sales growth has continued to normalise as inflationary cost pressures ease, whilst our diverse portfolio of established brands and advantaged estate locations underpin our outperformance against the market.
“We enter the new financial year armed with a fresh wave of initiatives under our Ignite programme and a full capital investment programme planned to deliver cost efficiencies, increased sales and to further drive market outperformance and increasing profitability.”
10:04 AM BST
German economy to shrink this year, say think tanks
Germany’s economy is expected to shrink slightly in 2024, leading economic institutes said, as the country continues to stagnate.
Output in Europe’s largest economy will decline by 0.1pc this year, five think tanks said in a joint statement, after it shrank by 0.3pc in 2023.
The new figure was a small but significant downgrade on the institutes’ previous estimate of 0.1pc growth for 2024, made earlier this year.
The DIW, Ifo, IfW Kiel, IWH and RWI said: “The German economy has been stagnating for more than two years.
“A slow recovery is likely to set in next year, but economic growth will not return to its pre-coronavirus trend for the foreseeable future.”
The institutes forecast growth to reach 0.8pc in 2025, a downward revision on their previous estimate of 1.4pc.
For 2026, they predicted the German economy to grow by 1.3 percent.
The general downturn was driven by “structural change” weighing on the economy, DIW’s head of forecasting Geraldine Dany-Knedlik said.
Decarbonisation and demographic change as well as stronger competition from key market China were “dampening the long-term growth prospects”, Ms Dany-Knedlik said.
Germany's leading economic research institutes cut their GDP forecast for 2024 and 2025. GDP will shrink by 0.1% in 2024, below consensus estimates of +0.1%. In March, institutes expected expansion of 0.1%. Next year, German growth is set to accelerate to 0.8%, the institutes… pic.twitter.com/LuRXr3FehT
— Holger Zschaepitz (@Schuldensuehner) September 26, 2024
09:50 AM BST
Trump would be bad if you care about the economy, says Haldane
A Donald Trump victory in the US presidential election would lead to higher inflation and lower global growth, the former chief economist of the Bank of England has warned.
Andy Haldane told LBC:
If you look at what Donald Trump has said about his economic policies, I think the consensus view is that would likely lead to higher inflation in the US, therefore to higher interest rates in the US, to lower growth in the US and therefore a dampener on global growth.
So, I think, if we care about the economy, then that speaks to Harris rather than Trump.
09:44 AM BST
Means testing millonaire pensioners is ‘entirely reasonable’, says Haldane
Expanding on the plans to cut winter fuel payments for pensioners, Mr Haldane added: “The principle of means testing benefits is not at all unreasonable. For millionaire pensioners it is entirely reasonable.
“Ultimately this is a failure of design rather than principle. They could have changed the design while retaining the principle.
“It would have raised less money but it would have got them out of a hole and they’ve kept on digging.”
09:30 AM BST
Cutting winter fuel payment was ‘bad politics and bad economics’, says former Bank chief
Cutting the winter fuel payment for pensioners was “bad politics and bad economics” according to a former chief economist of the Bank of England.
Andy Haldane, who is chief executive of the Royal Society for Arts, said the policy “didn’t fit with the narrative of the broadest shoulders bearing the burden”.
“I can’t see on any definition that a pensioner earning £14,000 has the broadest shoulders,” he told LBC.
“They are financially frail so it felt to me that it was bad politics and probably bad economics as well.”
The winter fuel payment, introduced by the last Labour government, previously doled out as much as £300 a year to all retirees but Rachel Reeves said she would scrap the measure as she battles to cover a “£22bn black hole” in the public finances.
09:19 AM BST
Swiss National Bank cuts interest rates to 1pc
Switzerland’s central bank cut its key interest rate by a quarter of a percentage point for the third time this year as it battles with the increasing strength of the Swiss franc.
Following similar cuts in March and June, the Swiss National Bank brought the rate down to 1pc and indicated further reductions may be coming down the line.
It said: “Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter.
“Among other things, this decrease reflects the appreciation of the Swiss franc over the last three months. The SNB’s easing of monetary policy today takes the reduction in inflationary pressure into account.
“Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.”
While most economists expected the 0.25-percentage-point cut, some wondered whether the SNB might go further and follow the lead of the US Federal Reserve, which cut rates by half a percentage point on September 18.
Thursday’s decision came amid strong pressure from industry, particularly from the key watchmaking exports sector, to rein in the rise of the franc.
🇨🇭The SNB cut rates by 25bp, to 1.0%, but the dovish shift is massive. Inflation forecasts revised massively lower, to as low as 0.5%! More rate cuts are very likely in coming quarters, well below neutral and closer to zero. pic.twitter.com/K34IA8y4xk
— Frederik Ducrozet (@fwred) September 26, 2024
09:08 AM BST
Electric car production falls by a quarter
Car makers reduced production of electric vehicles by more than a quarter last month, official figures show, amid signs of weakening consumer demand.
Factories cut output of battery electric cars and hybrid vehicles by 25.9pc last month, data from the Society of Motor Manufacturers and Traders (SMMT) showed.
The group said manufacturers were winding down production ahead of the release of new electric models.
However, it comes as figures in Europe show battery-electric cars accounted for 14.4pc of the EU car market in August, down from 21pc at the same time last year.
Overall, UK car production is down 8.5pc so far this year at 522,823 units.
08:48 AM BST
FTSE 100 rises amid hopes of China boost
UK stocks rose after China’s latest pledge for more policy measures to boost its economy.
The blue-chip FTSE 100 gained 0.5pc after China said it will deploy “necessary fiscal spending” to meet an economic growth target of roughly 5pc, following a raft of aggressive central bank policy easing measures earlier in the week.
UK stocks had slipped on Wednesday as investors questioned whether the scope of China’s proposed measures were sufficient.
Industrial metal and mining companies jumped 4.1pc as copper prices rallied in anticipation of a boost from the world’s second largest economy.
However, oil and gas stocks dropped as much as 4.6pc following a slump in crude prices after a report that Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel.
Watches of Switzerland jumped 4.9pc after Deutsche Bank upgraded the stock to “buy” from hold and raised its price target.
Burberry shares rose 6.7pc to the top of the FTSE 250 amid hopes of renewed demand in the Chinese market.
The midcap index gained 0.8pc.
08:32 AM BST
Thames Water’s credit rating cut deeper into junk territory
Thames Water suffered a further downgrade to its credit rating amid fears it could run out of money by December.
The utility had its class A and class B debt rating cut from BB and B to CCC+ and CCC- by the agency S&P, which also gave the finance a negative outlook.
It said: “We have revised our asssessment of Thames Water’s liquidity to weak from less than adequate and management and governance to negative from moderately negative.”
Last week, Thames Water admitted has said it risks running out of cash by December, as the troubled utility giant scrambles to delay billions of pounds in debt repayments.
Thames is at serious risk of being taken into the Government’s special administration regime (SAR), a process that would allow it to continue providing essential services whilst being in administration.
08:24 AM BST
Saudi Arabia to abandon $100 a barrel target as oil prices expected to remain low
Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output.
The Organisation of the Petroleum Exporting Countries, which is de facto led by Riyadh, along with allies including Russia - together known as Opec+ - have been cutting oil output to support prices.
Earlier this month, the cartel agreed to delay a planned oil output increase for October and November after crude prices hit their lowest in nine months, saying it could further pause or reverse the hikes if needed.
The group is now committed to increasing production as planned on December 1, even if that means a longer period of low oil prices, according to the Financial Times.
Global crude benchmark Brent was down about 2.4pc to less than $72 a barrel.
08:06 AM BST
UK markets open higher as Beijing pushes for ‘forceful’ rate cuts
The FTSE 100 jumped higher after China’s top leaders called for “forceful” rate cuts and vowed to make sweeping changes to the property sector after listening to “concerns” from the public.
The exporter-focused index rose 0.6pc to 8,315.54 while the midcap FTSE 250 gained 0.7pc to 20,901.61.
07:52 AM BST
H&M hit by washout summer
H&M reported profits that were lower than expected after sales were hit by a washout summer in Europe.
The Swedish retailer warned that its operating margin will be lower than its target of 10pc this year following cold weather across the continent in June.
Operating profit for the third quarter hit 3.5bn Swedish krona (£259m), which was well below analyst forecasts of 4.6bn krona (£341m).
Chief executive Daniel Ervér said it had also been hit by consumers’ living costs, which “have remained high during the year”.
07:42 AM BST
Parasite outbreak deals £16m blow to South West Water owner
South West Water owner Pennon has revealed a hit of around £16m from the parasite outbreak in Devon earlier this year.
The group said it racked up the costs from the contamination incident in Brixham after paying out compensation to affected households, providing bottled water for two months and following “extension” action to clean the network.
The outbreak in May left some people in hospital and hundreds of others taken ill after contamination of the water supply by cryptosporidium - a parasite which causes sickness and diarrhoea.
About 17,000 households and businesses in the Brixham area of Devon, supplied by South West Water (SWW), were issued with a “boil water” notice on May 15 as scores of reported cases of illness emerged in the town.
The boil water notice was lifted eight weeks later.
Pennon said: “The cryptosporidium water quality event in Brixham this summer was an incredibly rare event for South West Water and we worked swiftly and diligently to identify the issue, clean the network, and restore full supply to all customers.”
07:37 AM BST
Morrisons offloads property in £331m deal to ease debts
Supermarket group Morrisons has agreed a £331m property deal amid efforts to slash its significant debt pile.
The private equity owned retailer said that it expects to complete the “ground rent financing” deal around October 2.
It said the deal will see Morrisons sell 76 properties to an undisclosed business, reported by Sky News to be real estate investor Song Capital, before these are then leased back to the retailer.
07:19 AM BST
China stocks surge as Beijing calls for ‘forceful’ interest rate cuts
China stocks surged overnight as President Xi Jinping and China’s top leaders called for “forceful” interest rate cuts to kick start its stuttering economy.
The CSI 300 Index rose as much as 2.7pc after the 24-man Politburo - the highest political body of the Chinese Communist Party - called for sufficient fiscal spending and measures to stabilise the beleaguered property sector.
Shares in Hong Kong rallied more than 3pc and the Shanghai Composite Index added 2.2pc as the Politburo said China will push for the real estate market “to stop declining” amid a crisis that has rumbled on since the collapse of Evergrande in 2021.
The People’s Bank of China announced a series of measures this week designed to stimulate growth in the world’s second largest economy.
China’s leadership, including President Xi Jinping, admitted that the country’s economy was facing new “problems”, according to state media.
“Some new situations and problems have emerged in the current running of the economy,” Xinhua reported.
07:08 AM BST
Car production slumps ahead of new registrations
Car production fell last month, continuing a trend seen across the year, new figures show.
The number of cars built in UK factories was 8.4pc lower in August compared to the same month last year.
The Society of Motor Manufacturers and Traders (SMMT) said 41,271 new cars left production lines, 3,781 fewer than last August.
The trade body said the decline continues this year’s trend as factories wind down production of key models and prepare for new, mainly electric models.
Battery electric, plug-in hybrid and hybrid production for the month fell by 25pc but the SMMT said the decline is expected to be reversed as new models come onstream.
Production for the domestic market fell by almost 20pc while exports were down by 5.9pc.
Mike Hawes, SMMT chief executive, said:
With the traditional summer shutdowns and factories prepping to switch to new models, August was always going to be a quieter month for output.
The sector remains optimistic about a return to growth, however, with record levels of investment announced last year.
Realising those investments and securing more depends on the UK industry maintaining its competitiveness so we look forward both to the Chancellor’s autumn budget and the Government’s proposed Industrial Strategy as critical opportunities to demonstrate that it backs auto.
07:06 AM BST
Reeves’ gloom drags down consumer confidence
Rachel Reeves risks talking down the economy with her gloom on the economy and the public finances, as the British Retail Consortium revealed a sharp drop in consumer confidence this month.
Consumers’ assessment of the state of the economy and their personal finances dropped in September compared to August, the industry group said, amid the Chancellor’s warnings of “tough decisions” and Sir Keir Starmer’s promise of a “painful” Budget to come next month.
Helen Dickinson, chief executive of the BRC, said the warnings are so severe that consumers have become increasingly fearful.
“Retailers could face a turbulent few months as consumer confidence fell significantly in September. Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations,” she said.
“Despite this, expectations for future retail spending, while negative, did not yet appear to have been adversely affected, with many consumers expecting to reduce the amount they save instead.”
That impact on older generations comes after the Government announced most pensioners will no longer receive winter fuel payments, a benefit worth at least £200 each year to help with the cost of keeping homes warm.
The decision to restrict the payments was condemned by Labour members who voted at the party’s conference to oppose the fuel raid.
Ms Dickinson called on the Chancellor to cut business rates to encourage investment and job creation.
“The Budget is a key opportunity to inject some confidence back into the economy, boosting spending and helping to foster much needed investment by businesses,” she said.
A HM Treasury spokesman said: “The Chancellor has been clear that the prize for bringing stability to our economy is creating conditions for businesses to invest and for consumers to spend with more money in their pockets. That is the Britain we are building and next month’s Budget will be about delivering on the promise of change.”
06:46 AM BST
Good morning
Thanks for joining me. We begin the day with industry data indicate that Rachel Reeves’ constant referrals to a £22bn black hole in the public finances has begun to impact consumer confidence.
The British Retail Consortium warned that “negative publicity surrounding the state of the UK’s finances appears to have damaged confidence”.
5 things to start your day
1) Reeves explores shake-up of City regulator in battle to boost growth | Chancellor’s advisers allegedly approach industry chiefs calling for ‘substantial reform’ of watchdog
2) Biden’s net zero borrowing binge fuels $2.1 trillion global debt surge | Warnings mount over unsustainable spending as global debt surges to $312 trillion
3) How Europe is embracing industrial decline to become the world’s museum | Spain’s post-industrial pivot to tourism offers both blueprints and warnings for northern neighbours
4) Tom Stevenson:After 15 years in the desert, have emerging market shares finally reached the oasis? | Falling interest rates and commodities’ improving prospects could boost investors’ outlook
5) George Trefgarne: Starmer faces a profound humiliation over Labour’s private school tax raid | The irony of a defeat in a human rights case cannot be lost on the Prime Minister
What happened overnight
Shares in Hong Kong rallied more than 3pc in afternoon trading in Asia as stocks built on a surge this week fuelled by a raft of economy-boosting measures by China.
The Hang Seng Index jumped 3.2pc, or 604.28 points, to 19,733.38, while the Shanghai Composite Index added 2.2pc, or 63.08 points, to 2,959.39.
The Shenzhen Composite Index on China’s second exchange climbed 2.2pc, or 34.32 points, to 1,609.60.
Japan’s Nikkei 225 index advanced 2.5pc to 38,812.94 and oil prices also advanced.
The rally in Asia followed an announcement that the Chinese government plans to give cash handouts or discount vouchers to the poor ahead of next week’s National Day holidays.
While subsidies to ordinary people are uncommon, the ruling Communist Party sometimes marks special occasions with payments to families in difficulty.
The amount of the payments was not given. But they might help address a weak point for the economy — faltering consumer spending.
A notice on the WeChat social media account of the Ministry of Civil Affairs said authorities would “issue a one-time living allowance to the extremely poor, orphans and other needy people on the occasion of the 75th anniversary of the founding of New China,” which is marked on October 1, next Tuesday.
South Korea’s Kospi jumped 2.1pc, to 2,649.51, after semiconductor maker SK Hynix launched production of a new memory chip for artificial intelligence. SK Hynix shares jumped 8.8pc.
In Australia, the S&P/ASX 200 picked up 0.8pc to 8,187.60.
On Wall Street, the Dow Jones Industrial Average fell 0.7pc, to 41,914.75, the S&P 500 fell 0.2pc, to 5,722.26, and the Nasdaq Composite was almost flat, closing at 18,082.21.
In the bond market, the yield on 10-year US Treasury notes, which influences investment decisions around the world, was 3.79pc from 3.74pc a day earlier.
