Pound hits two and a half-year high
The pound hit its highest against the dollar in two and a half years after official data showed consumer confidence in the US dropped sharply this month.
Traders also trimmed expectations of quick rate cuts by the Bank of England, which looks likely to move more slowly than the Federal Reserve.
Adding to sterling’s pep was China’s central bank unveiling its biggest stimulus since the pandemic earlier on Tuesday to prop up the economy.
Beijing’s new measures - including a cut to banks’ reserve requirements and the signalling of potentially more easing in lending rates, as well as property market support measures - gave the yuan and other more currencies such as the pound and the Australian dollar a lift.
By the afternoon, the dollar was on the back foot after the US Conference Board’s index of consumer confidence fell unexpectedly in September, as concern builds over the state of the labour market in the world’s largest economy.
Sterling rose by as much as 0.38pc to a high of $1.33985, its strongest since March 2022. Against the euro, the pound was virtually flat at 83.305 pence, also around its strongest since April 2022.
The Federal Reserve last week cut interest rates by half a percentage point. The futures market points to at least another three quarters of a percentage point before the end of the year, which would leave US rates around 4pc.
In Britain meanwhile, the Bank of England last week kept rates unchanged and said it would be cautious about future rate cuts. Markets expect just 0.4 percentage points more of cuts by December, which would leave the base rate closer to 4.5pc.
The prospect of a slower decline in British interest rates than those elsewhere has given sterling an edge over other major currencies. The pound is the top-performing G10 currency against the dollar this year, with a gain of 5.2pc, compared with a rise of just 1pc in the runner-up, the euro.
“We do not see sterling/dollar positioning as particularly stretched and given, perhaps, a softer dollar environment, the direction of travel continues to be towards $1.35,” ING strategist Chris Turner said.
Read the latest updates below.
06:10 PM BST
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06:09 PM BST
Phasing out oil a ‘fantasy’, says Opec
Opec has said that phasing out oil is a “fantasy”, as the Saudi-led cartel forecast that demand would keep growing until at least 2050, a key year in the battle against climate change.
The oil cartel’s prediction runs counter to the assessment of the Paris-based International Energy Agency, which sees demand for fossil fuels peaking this decade as the world turns to renewable energy and electric cars.
In the group’s annual World Oil Outlook, Opec Secretary General Haitham Al Ghais said oil and gas make up well over half of the energy mix today “and are expected to do the same in 2050”.
“What the Outlook underscores is that the fantasy of phasing out oil and gas bears no relation to fact,” Mr Ghais said in the report’s foreword.
“A realistic view of demand growth expectations necessitate adequate investments in oil and gas, today, tomorrow, and for many decades into the future,” he added.
05:45 PM BST
Wall Street edges up despite consumer confidence hit
Wall Street is edging up this evening, despite taking a hit earlier this afternoon from figures showing that consumer confidence is weakening in the US.
The S&P 500 is up 0.2pc, the Dow Jones is up 0.1pc and the Nasdaq is up 0.6pc.
Michael James, senior vice president of equity trading at Wedbush Securities, said:
We got a little bit of cold water with the consumer confidence number this morning that might add to concerns the Fed may have been a little late.
05:18 PM BST
US causing ‘a lot of volatility’ in stock markets, says analyst
Uncertainty about the US economy is causing volatility in stock markets, an analyst has said.
Danni Hewson, AJ Bell head of financial analysis, said:
An early boost to investor sentiment from China’s economic stimulus fizzled out as the day progressed, although mining stocks continued their run of good form.
There’s still a lot of volatility around as investors second guess last week’s jumbo Fed move and wonder if today’s weak US consumer confidence data heralds a gloomy fourth quarter.
Coming off the back of another slew of record-breaking highs investors would do well not to read too much into today’s slight cooldown, although there is plenty of other data which might upset the apple cart later in the week.
London markets have been rather more subdued but there have been some decent individual performances with Raspberry Pi’s first results since IPO proving that UK tech stocks do have legs.
05:07 PM BST
Global stock index hits record high
A global stock index rose to a record high after China unveiled stimulus measures to support its economy.
MSCI’s world index rose 0.3pc, to 3688.33, and hit a record high.
04:54 PM BST
FTSE 100 closes up
The FTSE 100 rose 0.3pc today.
It was a strong day for miners, after the Chinese government’s stimulus plans raised expectations of increased demand for commodities.
Anglo American rose 6.6pc, the biggest riser in the index. It was followed by Antofagasta, which runs mines in Chile. It rose 6.3pc.
At the other end of the market, engineering firm Smiths Group fell 5.2pc, followed by housebuilder Vistry, down 1.9pc.
Meanwhile, the FTSE 240 fell 0.4pc.
The top riser was Raspberry Pi, up 6.6pc, followed by Dr Martens, up 6pc.
The biggest faller was Scottish soft drinks company AG Barr, down 8.5pc, followed by Dunelm, down 6.3pc.
04:50 PM BST
French borrowing costs rise above Spain’s for first time since 2008
France’s borrowing costs briefly rose above Spain’s for the first time since 2008 today, according to LSEG data, in a sign of investor concerns about the new French government’s ability to tackle the high budget deficit.
Spanish bonds have traded with higher yields than French bonds since the financial crisis as the country is traditionally seen as a riskier investment.
But the so-called spread between French and Spanish 10-year bonds briefly fell into negative territory in morning trading.
Investors have sharply increased the premium they demand to hold French debt compared with the country’s euro zone peers since President Emmanuel Macron called a surprise election in June. The poll resulted in a hung parliament, with the leftist bloc unexpectedly becoming the biggest grouping.
France’s newly appointed finance minister Antoine Armand on Tuesday acknowledged concerns over his young age and lack of experience and said the country faced “one of the worst deficits in our history”. The deficit could reach 6pc this year, well above the European Union’s limit of 3pc.
04:39 PM BST
Shot in the arm for yuan as China unleashes stimulus
China’s yuan hit a 16-month high against the US dollar today, after the central bank of the world’s second-largest economy revealed new stimulus measures. The dollar was also hit after soft data on the consumer.
The Chinese yuan strengthened 0.3pc.
Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, said:
[China] hit all the things that people wanted to see - more support for the housing market, lower interest rates, reserve rate cut and that support for the stock market.
At least initially the market is giving Beijing the benefit of the doubt ... I’m not convinced that the underlying problems, the underlying challenges are really being addressed.
04:35 PM BST
Pound hits two and a half-year high
The pound hit its highest against the dollar in two-and-a-half years this afternoon. It came after US data showed a deterioration in consumer confidence and as the Bank of England looks likely to cut interest rates more slowly than the Federal Reserve.
Adding to sterling’s pep was China’s central bank unveiling its biggest stimulus since the pandemic earlier on Tuesday to prop up the economy.
Beijing’s new measures - including a cut to banks’ reserve requirements and the signalling of potentially more easing in lending rates, as well as property market support measures - gave the yuan and other more currencies such as the pound and the Australian dollar a lift.
By the afternoon, the dollar was on the back foot after the US Conference Board’s index of consumer confidence fell unexpectedly in September, as concern builds over the state of the labour market in the world’s largest economy.
Sterling rose by as much as 0.38pc to a high of $1.33985, its strongest since March 2022. Against the euro, the pound was virtually flat at 83.305 pence, also around its strongest since April 2022.
The Federal Reserve last week cut interest rates by half a percentage point. The futures market points to at least another three quarters of a percentage point before the end of the year, which would leave US rates around 4pc.
In Britain meanwhile, the Bank of England last week kept rates unchanged and said it would be cautious about future rate cuts. Markets expect just 0.4 percentage points more of cuts by December, which would leave the base rate closer to 4.5pc.
The prospect of a slower decline in British interest rates than those elsewhere has given sterling an edge over other major currencies. The pound is the top-performing G10 currency against the dollar this year, with a gain of 5.2pc, compared with a rise of just 1pc in the runner-up, the euro.
Chris Turner, a strategist at ING, said:
We do not see sterling/dollar positioning as particularly stretched and given, perhaps, a softer dollar environment, the direction of travel continues to be towards $1.35.
03:58 PM BST
EU green lights UAE takeover of European phone company
The European Commission gave the green light today for an Emirati group to acquire the assets of a Eastern European telecoms operator - after it agreed not to use foreign subsidies to distort competition in the EU.
Emirates Telecommunications (e&), whose majority stakeholder is the United Arab Emirates government, signed a €2.15-billion-euro ($2.3-billion) agreement in August 2023 to purchase Czech PPF Telecoms group’s assets in Bulgaria, Hungary, Serbia and Slovakia.
The Commission opened an investigation in June into the planned acquisition to determine in particular whether the e& bid was propped up by foreign subsidies.
Brussels has ramped up its scrutiny of outside investment into the bloc, and the probe was the first under new rules allowing it to crack down on unfair foreign subsidies.
It concluded that aid provided to e&, in the form of grants, loans and unlimited state guarantees “did not lead to actual or potential negative effects on competition,” a Commission statement said.
However, it did find there was a risk the subsidies could lead to a distortion of competition in the EU internal market post-transaction, and secured a series of concessions as a result.
The Emirati group agreed to give up unlimited state guarantees, and not to finance PPF’s activities in the EU internal market - except for certain emergency funding with prior approval from Brussels.
It also agreed to notify the European Commission of any future acquisition, regardless of size.
03:48 PM BST
S&P 500 and Nasdaq slip after weak sentiment data
On Wall Street, the benchmark S&P 500 and the Nasdaq slipped this afternoon, as investors digested a weak consumer confidence report and mulled on the Federal Reserve’s next policy move.
But mining stocks got a boost after China unveiled a sweeping stimulus package.
A Conference Board report showed an index tracking consumer confidence stood at 98.7 in September, compared with estimates of 104 as per economists polled by Reuters. The index was revised to 105.6 for the month before.
Rate-sensitive growth stocks such as Amazon, Meta and Microsoft lost over 1pc each following the data.
Still, the benchmark S&P 500 and the blue-chip Dow were hovering near record highs as data earlier in the week pointed to a robust economy overall, and as a number of policymakers supported further policy easing by the Fed.
The Dow Jones Industrial Average is up 0.1pc, the S&P 500 is down 0.2pc an d the Nasdaq is down 0.4pc.
Seven out of the 11 S&P 500 sectors trended downwards, although materials stocks outperformed peers with a 1.1pc rise.
Metal prices got a boost after the world’s second-largest economy, China, unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk.
Copper and lithium miners such as Freeport-McMoRan added 6.4pc, Southern Copper rose 6.7pc, Albemarle advanced 3.3pc and Arcadium climbed 4.6pc.
03:43 PM BST
European gas prices dip
UK and European natural gas prices dipped today after weather forecasts suggested that demand might be less over the coming days as a result of a shorter spell of cold.
03:37 PM BST
Russia’s oil and gas revenue rises by 49pc year on year
Russia’s oil and gas revenue rose significantly in the first nine months of the year, according to new calculations by Reuters.
The data suggests that revenue from January to September rose by 49pc year-on-year to 8.3 trillion roubles (£67bn) thanks to higher oil prices and a weaker rouble.
Oil and gas revenue has been the most important source of cash for the Kremlin, accounting for about a third to a half of total federal budget proceeds over the past decade.
Preliminary estimates project Russia’s September oil and gas revenue at 779bn roubles, up 5pc from the same month in 2023 and unchanged from August 2024.
Russia’s Finance Ministry is due to publish the September data on Oct 3.
The coffers have been boosted by a rise in the average price of Russia’s Urals oil grade to $69.88 a barrel on average in the first eight months of the year, up from $56.61 in the same period in 2023.
For 2024 as a whole, the Russian government budgeted for federal revenue of 10.7 trillion roubles from oil and gas sales, up 21pc from 2023, when weaker oil prices and a fall in gas exports reduced the revenue by 24pc.
That 2024 target was revised down from initial plans for 11.5 trillion roubles.
Russia has heavily increased defence and security spending since launching its invasion of Ukraine, what it calls its special military operation, in February 2022, leading to two consecutive annual deficits exceeding 3 trillion roubles, about 2pc of GDP.
03:31 PM BST
US consumer confidence unexpectedly slumps ahead of presidential election
US consumer confidence unexpectedly dropped in September, according to a survey, indicating that optimism about the economy is weakening ahead of November’s presidential election.
The Conference Board’s consumer confidence index fell sharply to 98.7 in September, down from a revised 105.6 last month.
The drop, which was well below market expectations, is a blow to Democratic Vice President Kamala Harris given the economy remains a top concern for voters ahead of the election against Republican former president Donald Trump.
The Conference Board’s chief economist Dana Peterson said: “The deterioration across the index’s main components likely reflected consumers concerns about the labour market.
“The proportion of consumers anticipating a recession over the next 12 months remained low but there was a slight uptick in the percentage of consumers believing the economy was already in recession.”
She added that the steep decline in September was the largest since August 2021, with all five components of the index falling.
I will take this opportunity to thank you for following the updates so far today and hand you over to the one and only Alex Singleton.
#ConsumerConfidence fell in September to 98.7 (1985=100) from an upwardly revised 105.6 in August.
This was the largest decline since August 2021, bringing the index to near the bottom of the narrow range that has prevailed over the past two years. pic.twitter.com/TIJK5QzOng— The Conference Board (@Conferenceboard) September 24, 2024
03:17 PM BST
Budget must restore confidence in North Sea, say Aberdeen bosses
The Aberdeen and Grampian Chamber of Commerce hailed the “fantastic news” that GB Energy will be headquartered in Scotland’s third-largest city - but urged the Government to “restore confidence in the North Sea”.
The group, which had been campaigning for the agency to come to the region, said the move will “secure the north-east’s status as a global energy capital for many decades to come”.
Sir Keir and Labour had promised in the lead-up to the election that GB Energy - which he has described as an “investment vehicle” - would have its headquarters north of the border, sparking speculation and repeated questions over where it would be located.
In his first speech to the Labour Party conference since entering Downing Street in July, the Prime Minister said the agency “could only ever be based in one place in Scotland”.
Aberdeen and Grampian Chamber of Commerce chief executive Russell Borthwick said:
With the people, skills, strategic infrastructure and future pipeline of projects already in place, the north-east of Scotland is ready to lead the way.
However, we do not need to kill off one industry to grow another - in fact, the opposite is true, as one cannot exist without the other.
We therefore urge the UK Government to use next month’s Budget to restore confidence in the North Sea to protect the jobs, supply chain and energy production we need to ensure a just transition.
03:03 PM BST
Oil prices rally amid China stimulus
The price of oil has continued to move higher amid hopes that efforts to revive China’s economy will lead to more demand.
Brent crude, the global benchmark, has climbed 1.8pc today to more than $75 a barrel, with US-produced WTI up 2pc towards $72.
Brent crude hanging out more convincingly above $75/bbl following Chinese stimulus news.
But hardly a breakout as of yet. pic.twitter.com/xm2uTecqMD— Rory Johnston (@Rory_Johnston) September 24, 2024
02:53 PM BST
Starmer aims to ‘eradicate inactivity and unemployment for young people’
Sir Keir Starmer said the Labour Government would introduce new foundation apprenticeships and rebalance funding in the training system as a first step to a youth guarantee “that will eradicate inactivity and unemployment for young people once and for all”.
The Prime Minister said:
But at the same time we’ll also get our skills system right.
We’ve got to give businesses more flexibility to adapt to real training needs and also unlock the pride, the ambition the pull of the badge of the shirt that young people feel when building a future, not just for themselves but for their community.
So we will introduce new foundation apprenticeships, rebalance funding in our training system back to young people, align that with what businesses really need - the first step to a youth guarantee that will eradicate inactivity and unemployment for our young people once and for all.
02:52 PM BST
Nigeria raises interest rates to 27.25pc
Nigeria’s central bank surprised the market by raising its benchmark lending rate to 27.25pc from 26.75pc.
Governor Olayemi Cardoso said the decision of the monetary policy committee (MPC) was unanimous.
The decision by the committee is the fifth straight rate hike this year, after increases of 50 basis points (bps) in July, 150 bps in May, 200 bps in March and 400 bps in February, its largest in around 17 years.
Analysts had widely predicted the central bank would keep rates unchanged after inflation fell for a second consecutive month in August and the naira currency held steady, converging on both the official and parallel markets after the bank resumed regular dollar sales to dealers to help stabilise the currency.
02:48 PM BST
Starmer: People must be prepared for pylons overground and new homes
Sir Keir Starmer has set out some of the “trade offs this country faces” under his Government.
He said that “if we want justice to be served, some communities must live close to new prisons” and “if we want cheaper electricity, then we need new pylons overground”.
He added that “if we want home ownership to be a credible aspiration for our children”, then “every community” has to contribute.
He told the Labour party conference in Liverpool: “If we are serous about levelling up, then we must be proud to be the party of wealth creation.”
02:38 PM BST
US stocks open higher amid China stimulus
Wall Street’s main indexes opened higher as commodity stocks were boosted by China’s bumper stimulus package.
The Dow Jones Industrial Average rose 110.3 points, or 0.3pc, at the open to 42,234.99.
The S&P 500 rose 9.1 points, or 0.2pc, at the open to 5727.66​, while the Nasdaq Composite rose 72.2 points, or 0.4pc, to 18,046.442 at the opening bell.
02:35 PM BST
GB Energy to be based in Aberdeen
Sir Keir Starmer has used his Labour conference speech to announce that his nationalised investment body GB Energy will be based in the “Granite City” of Aberdeen.
Labour has pledged to bring in a green electricity system by 2030 – five years ahead of the timeline promised by the Conservatives.
Its flagship project is Great British Energy, a publicly owned energy company that will invest in renewables in conjunction with the private sector.
Aberdeen has long been a critical city for Britain’s North Sea oil and gas industry, which is a huge employer in the area.
02:30 PM BST
Elon Musk says he is ‘actively looking’ for ways to invest in Argentina
Elon Musk has said his companies are “actively looking” for ways to invest in Argentina.
Argentina is the world’s fourth-largest producer of lithium, which is needed for many of the batteries used in electric vehicles.
Mr Musk is the chief executive of Tesla and SpaceX among others.
My companies are actively looking for ways to invest in and support Argentina
— Elon Musk (@elonmusk) September 24, 2024
It comes a day after Argentinian President Javier Milei visited the New York Stock Exchange before attending the annual General Debate of the United Nations General Assembly.
He and Mr Musk later posed together for a photograph.
02:14 PM BST
US should lower interest rates at ‘measured’ pace, says Fed official
The Federal Reserve should lower interest rates at a “measured” pace, one of its top officials has said, arguing that inflationary risks remain in the American economy.
Fed Governor Michelle Bowman voted for a smaller quarter of a percentage point reduction in interest rates by the US central bank last week.
It lowered borrowing costs from 23-year-highs by an outsized half a percentage point last week.
Ms Bowman told the Kentucky Bankers Association: “In my view, beginning the rate-cutting cycle with a
quarter percentage point move would have better reinforced the strength in economic conditions, while also confidently
recognising progress toward our goals.”
She added: “Turning to the risks to achieving our dual mandate, I continue to see greater risks to price stability, especially while the labour market continues to be near estimates of full employment.”
02:00 PM BST
Keir Starmer poised to give major speech at Labour conference
Sir Keir Starmer is set to address his first Labour party conference as Prime Minister as he seeks to move forward from donations and welfare rows that have dominated his first three months in office.
You can watch the speech below and follow updates in our politics live blog.
01:54 PM BST
World stocks hit record high as China scrambles to revive economy
World stocks hit a record high after China unveiled stimulus measures to support its economy and stock markets, sending Asian and European shares higher and triggering a bounce in commodity prices.
People’s Bank of China Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households’ mortgage repayment burden.
He also said China would roll out structural monetary policy tools for the first time to help stabilise capital markets.
The moves sent Chinese stocks higher, with the blue-chip CSI300 index and the Shanghai Composite index surging more than 4pc each. Hong Kong’s Hang Seng Index jumped 4.1pc to a four-month high.
The MSCI world stocks index gained 0.3pc to touch a record high as the FTSE 100 in London climbed 0.2pc, while the Cac 40 in Paris gained 1.1pc and the Dax in Frankfurt rose 0.4pc. Wall Street is also expected to open higher.
Ecaterina Bigos, chief investment officer at AXA Investment Managers, said: “The immediate reaction is certainly positive for markets because the measures have been more forceful than the previous ones we’ve seen from policy makers.
“But for us to see a sustained impact of all these measures, we need to see some support from the fiscal side as we move to the year end.”
01:36 PM BST
Dulux paint maker to cut 2,000 jobs
AkzoNobel, the manufacturer of Dulux paint, said it was cutting 2,000 jobs globally as it strives to cut costs.
Chief executive Greg Poux-Guillaume said the job losses would allow the Dutch company to “become more agile in volatile markets and offset headwinds such as rising labour cost”.
The announcement that it will shed more than 5pc of its workforce drove AkzoNobel stock as much as 2.5pc higher at the opening of the Amsterdam exchange, but it has since dropped to be down 0.2pc.
AkzoNobel has turned in three consecutive quarters of growth but the industry has suffered from rising raw material costs and a slowing global economy.
The company employed 35,200 people in more than 150 countries at the end of last year, according to its most recent annual report.
01:15 PM BST
Most people think Starmer should not accept gifts from businesses, poll finds
Three in four people believe it is wrong for the Prime Minister to accept gifts from businesses or organisations, polling has found.
The Ipsos study found 75pc of Britons believe it is “rarely acceptable” or “never acceptable” for the Prime Minister to accept such items.
But 15pc feel it is “usually acceptable” and 5pc think it is “always acceptable”.
The survey was carried out in the wake of stories about how Sir Keir Starmer and members of the Government, including Chancellor Rachel Reeves, have accepted donations towards items of clothes.
The Prime Minister and his most senior ministers will no longer accept donations to pay for their clothes, according to No 10 sources.
Politicians from the three major parties, including the Prime Minister, have also accepted donated tickets to events.
01:01 PM BST
TSB customers left without payments after glitches
A raft of customers of high street lender TSB have been left without benefit and salary payments due to a systems error in the latest in a series of online banking glitches.
TSB said the problems started in the early hours of the morning with some Bacs (Bankers’ Automated Clearing System) payments and remain ongoing.
Customers have complained on social media about not receiving salaries and child benefit payments.
The bank said it was working on a fix, but many customers on social media have complained that they have been left without crucial payments in their accounts for many hours.
A TSB spokeswoman said: “We’re aware of an issue with some Bacs payments not yet showing on customers’ accounts.
“We are working on fixing this and will provide an update as soon as possible.”
Some BACS payments customers expected to receive today haven't arrived in their accounts. We're sorry for this and we are working on fixing it. We will provide an update as soon as possible.
— TSB (@TSB) September 24, 2024
12:46 PM BST
Top Chinese economist disappears after criticising Xi Jinping
A leading economist in China has vanished from public view after allegedly criticising Xi Jinping’s handling of the country’s economy on a mobile messaging app.
Our property correspondent Pui-Guan Man has the details:
Questions over Zhu Hengpeng’s whereabouts have arisen after he was detained by officials in spring and stripped of his role as deputy director at a prominent Chinese think tank.
This came after he allegedly scrutinised the Chinese president’s judgment in a private group chat on WeChat, according to the Wall Street Journal, which led to him being investigated.
He has not been seen in public since April, with his disappearance coinciding with Xi’s attempt to crackdown on dissent.
Read why economists are raising fears over China’s debt levels.
12:09 PM BST
Wall Street poised to rise after China stimulus
US stock indexes are on track to open higher after China announced a stimulus package designed to revive demand in the world’s second largest economy.
The S&P 500 and the blue-chip Dow closed at record highs on Monday after a survey signaling steady business activity soothed concerns of an imminent recession.
A number of Federal Reserve policymakers also supported further interest rate cuts.
Yields on longer-dated Treasury bonds rose as traders priced in a greater likelihood of the economy achieving growth with low inflation and unemployment.
Among top premarket movers, US-listed shares of Chinese companies such as Alibaba and PDD added 5pc each and Li Auto advanced 7.3pc.
China unveiled its biggest economic stimulus since the pandemic overnight.
In premarket trading, the Dow Jones Industrial Average and S&P 500 were up 0.1pc, while the Nasdaq 100 gained 0.2pc.
11:43 AM BST
Bank of England will keep cutting rates until 2026, say economists
The Bank of England will not finish cutting interest rates until 2026, economists have said, as Britain’s economy grapples with inflationary pressure and a tight jobs market.
Interest rates will fall “gradually”, according to the latest forecasts by S&P Global, as inflation hits 2.6pc at the end of this year, before falling to 2.3pc by the end of 2025 and 2pc by the end of 2026.
However, the financial data group said the drop in rates would be steeper than markets expect, falling to 3pc by early 2026.
Money markets indicate interest rates will fall to about 3.5pc within two years.
S&P increased its forecast for GDP growth in the UK this year from 0.6pc to 1pc as the economy benefits from falling inflation and interest rate cuts.
However, analysts said the “surprisingly buoyant” jobs market had become the “main source of upward pressure on inflation”.
Senior economist Marion Amiot said:
Despite tight monetary policy, the UK economy has done better than expected this year. Although we see no evidence of a structural shift in wage setting, the Bank of England’s inflation target of 2pc requires looser labour markets, in our view.
We therefore expect a very gradual easing cycle, with rates reaching their terminal rate of 3pc only in early 2026.
11:30 AM BST
‘Smart money’ is in the UK, says Raspberry Pi boss
The chief executive of Raspberry Pi has said the company has no regrets over choosing London over New York for the microcomputer maker’s recent flotation.
Our technology editor James Titcomb has the details:
Eben Upton said that there was a lot of “smart money” in the UK that understood technology and “hard engineering”, in contrast to the often-repeated view that British investors do not understand tech.
It came as the company reported better than expected profits, sending its share price up by more than 7pc.
“I became a convert from being naturally more inclined to the US market [due to] the ability to access US funds from the UK and the local pool of smart money and good analysis here. I feel that more than I did during IPO time” Mr Upton said.
“There’s a paucity of listed tech companies, there is [also] that long-term history of doing hard engineering in this country, that bleeds out to a level of knowledge in the financial services community which was surprising.”
Raspberry Pi sold £179m of shares in June’s flotation, both raising new funds and from majority shareholder the Raspberry Pi Foundation selling down its stake. It was the biggest UK IPO of the first half of the year.
Delivering its first results since the flotation, Raspberry Pi reported a half-year gross profit of $34.2m (£25.6m), up 47pc. Revenues rose 61pc to $144m.
Although staff shared in the windfall, Mr Upton said the company’s car park “is not conspicuously full of shiny cars”.
11:01 AM BST
Shein being allowed to ‘dodge tax’, says Superdry boss
Fast fashion giant Shein is being allowed to “dodge tax” because of an exemption on import duties on low-value parcels, according to the boss of one of its UK rivals.
Julian Dunkerton, chief executive of Superdry, told the BBC that the exemption is a tax “loophole” and that Shein is getting an unfair advantage.
Shipment parcels sent directly to UK customers that are worth less than £135 do not face import tax.
That contrasts with other fashion companies that bring in larger consignments, which are taxed, before distributing them.
Chinese-founded Shein, which was valued at $66bn during its latest funding round, has disrupted the fast fashion industry by shipping cheap clothes direct from factories in China to UK and US-based shoppers.
The company has previously said it is successful because of an “efficient supply chain” and not tax exemptions. It has also said in the past that it complies fully with all its UK tax obligations.
Mr Dunkerton said: “The rules weren’t made for a company sending individual parcels [and] having a billion-pound turnover in the UK without paying any tax.
“We’re allowing somebody to come in and be a tax avoider, essentially.”
10:45 AM BST
Card Factory profits fold after minimum wage rise
Retailer Card Factory has revealed tumbling profits as costs soared after this year’s rise in the National Living Wage.
The chain, which has more than 1,070 stores across the UK and Ireland, reported a 43pc drop in pre-tax profits to £14m for the six months to July 31.
It said the hit came after its wage bill was sent surging by April’s near 10pc increase in the National Living Wage.
The group also suffered from higher international shipping and packaging costs.
Shares in the company slumped as much as 21.5pc in early trading, despite assurances from Card Factory that it remains on track for full-year profit expectations as it takes action to offset the cost impact.
Chief executive Darcy Willson-Rymer said: “As we move into the second half of the year and the important Christmas trading period, our expectations for the full year are unchanged and we continue to focus on managing inflationary pressures within the business.”
The group said its profits took a £64.4m hit from store and warehouse wages in the first half - now representing 28pc of sales - after the National Living Wage rose by 9.8pc on April 1.
10:32 AM BST
Why crypto high rollers are betting millions that the polls are wrong on Trump
Donald Trump’s perceived chances of winning the US election have swung dramatically in the last few weeks.
Our technology editor James Titcomb reveals how this is being driven by gamblers with skin in the game:
Donald Trump, at the time of writing, has a 47pc chance of winning November’s US election.
On July 16, three days after the Republican presidential candidate narrowly avoided death at a Pennsylvania rally, it peaked at 72pc. At the start of the year it was around 40pc.
These numbers are based on close to $1bn (£750m) wagered on Polymarket, a cryptocurrency-based predictions website, by wannabe super-forecasters who believe they can beat the polls.
At any second, a single number sums up his chances in black and white.
Read why cryptocurrency gamblers say Trump’s chances are being underestimated.
10:13 AM BST
Geopolitics is getting worse, warns JP Morgan boss
The boss of JP Morgan has sounded the alarm about the risks to the global economy from increasing tensions between nations around the world.
Jamie Dimon, who has led the Wall Street bank since 2006, said geopolitical instability has become his “biggest caution” when assessing the risks to growth.
It comes amid Russia’s war in Ukraine, the war between Israel and Hezbollah and continuing tensions surrounding China and Taiwan.
During his visit to India, Mr Dimon told CNBC:
My caution is all geopolitics, which may determine the state of the economy.
Geopolitics is getting worse, they are not getting better. There is chance for accidents in energy supply.
God knows if other countries get involved. You have a lot of war taking place right now.
09:56 AM BST
Germany in ‘self-reinforcing vicious cycle of economic stagnation’
German business confidence dropped for a fourth month in a row as Europe’s largest economy comes “under ever-increasing pressure”.
The Ifo Institute said its closely watched business climate index dropped to 85.4 points, down from 86.6 points in August.
It comes as VW considers axing thousands of jobs and the closure of German factories for the first time in its history, while PMI data on Monday showed companies are cutting staff at the fastest pace in 15 years outside of the pandemic.
The Ifo said: “The companies were particularly less satisfied with the current business situation. The outlook for the coming months continues to decline.
“The German economy is coming under ever-increasing pressure.”
Carsten Brzeski, global head of macro at ING, said: “This illustrates that the economy is currently stuck in what appears to be a self-reinforcing vicious cycle of economic stagnation.”
He added: “The German economy is back where it was a year ago: the growth laggard of the eurozone with few signs of an imminent improvement.”
🇩🇪 ifo Business Climate Index has declined – The ifo Business Climate Index fell in September to 85.4 points, from 86.6 points in August, the fourth decline in a row. The German economy is coming under ever-increasing pressure.#ifosurvey@KlausWohlrabe@FuestClemens pic.twitter.com/qNIUKTzLP1
— ifo Institut (@ifo_Institut) September 24, 2024
09:38 AM BST
Pound hits two-year high as US rates expected to fall quickly
The pound hit its highest level against the dollar in two years after Federal Reserve officials indicated that “many more rate cuts” are on the way in the US.
Sterling rose 0.1pc to $1.337 after the Fed’s Bank of Chicago President Austan Goolsbee said on Monday that interest rates need to be lowered “significantly” to protect the US jobs market and support the American economy.
It comes after Goldman Sachs raised its forecast for the performance of the pound, predicting it will hit $1.40 over the next 12 months, compared to earlier forecasts of $1.32.
Meanwhile, sterling was down 0.1pc against the euro, which is worth 83.3p despite growing bets that the European Central Bank will have to pick up the pace of rate cuts in the face of a weakening eurozone economy.
Overnight index swaps lifted the chance of an October rate cut to 41pc on Monday, having been at just 26pc by Friday’s close. Money markets indicate today the chance has raised again to 53pc.
Deutsche Bank analyst Jim Reid said “weakness in Europe led investors to dial up the chance that the ECB would accelerate their rate cuts and move again at the next meeting in October”.
He said poor PMI data “led to mounting expectations that the ECB might speed up the pace of their rate cuts from the quarterly pace they’ve delivered so far, and instead start cutting at every meeting”.
09:20 AM BST
Northern trains will get worse without HS2 extension, says Burnham
Greater Manchester mayor Andy Burnham has warned northern trains may be forced to run slower with fewer seats than they do currently, after the previous government cancelled a plan to extend HS2 between the West Midlands and Manchester.
Put to him on the BBC’s Today programme that he is saying train services might get worse, he said:
It’s barely believable, isn’t it, after the promises of the northern powerhouse and all of the debates about HS2, that in the kind of middle of this century, you would find it harder to get a seat on a train going north, because there would be smaller trains serving Manchester, because the HS2 trains couldn’t go at full length, and then they’d have to go at lower speeds because the tilting pendolinos can go faster on the curvy West Coast mainline, but not the HS2 trains, and that’s the point.
You know, how can this country rely on an overcrowded West Coast mainline and a saturated M6 for the connectivity between the West Midlands and the North West? But that was the effect of the decision taken last year.
Mr Burnham added that more capacity is needed as “the big arteries up the country are already full”, adding: “If you carry on and do nothing at this point in time, this will be an anti-growth policy, because the overcrowded nature of our rail and road infrastructure between the West Midlands and the North West would be a barrier to economic growth.”
He also agreed he was calling for a link between Liverpool and Manchester, calling it an “investment in growth”.
09:08 AM BST
Consumers still thirsty for soft drinks despite ‘disappointing summer’, says Irn-Bru maker
Irn-Bru maker AG Barr has revealed a rise in sales for the past six months amid strong soft drink demand despite “disappointing early summer weather”.
The Scottish company however revealed a decline in profits due to one-off costs related to the closure of the Barr Direct delivery operation earlier this year and the integration of Boost, the energy drink business it bought in 2022.
Nevertheless, recently appointed boss Euan Sutherland said he was “pleased to report a strong set of first-half results”.
The company revealed that total revenues increased by 5.2pc to £221.3m for the six months to July 26.
This was driven by its soft drink business, which saw 7pc sales growth on the back of increased pricing and higher sales volumes from customers.
The company said this came despite a slight volume decline in the wider UK soft drink market, which was “partly as a consequence of the disappointing early summer weather”.
It highlighted a particularly strong sales performance from its Rubicon brand while Irn-Bru also grew on the back of positive trading linked to its Euro 2024 marketing campaign.
08:36 AM BST
Union refuses to vote on 30pc pay offer by Boeing
Union negotiators said Boeing’s new offer to lift hourly wages by 30pc “missed the mark” and won’t be voted on by members.
Boeing had sweetened its initial offer of a 25pc pay rise in an effort to end a 10-day strike that has halted production at plants in Seattle.
About 33,000 members of the International Association of Machinists and Aerospace Workers union from District 751 in the Pacific Northwest region walked out on September 13 after overwhelmingly voting down an earlier offer, effectively shutting down assembly plants for the 737 MAX and 777.
The aviation giant gave workers until Friday at midnight to ratify its “best and final offer.”
Union negotiators told members:
This proposal does not go far enough to address your concerns, and Boeing has missed the mark with this proposal.
They are trying to drive a wedge between our members and weaken our solidarity with this divisive strategy.
Boeing said it “presented the offer to the union and then transparently shared the details with our employees”, adding it has “bargained in good faith” with union leaders.
08:26 AM BST
China stocks rise but more stimulus needed, say analysts
Shares in Hong Kong surged after China unveiled a slew of measures aimed at kick starting the struggling economy.
The Hang Seng Index jumped 3.2pc, or 575.73 points, to 18,822.84, while the Shanghai Composite Index rose 2.4pc, or 65.38 points, to 2,814.30.
The Shenzhen Composite Index on China’s second exchange added 2.4pc, or 35.17 points, to 1,531.99.
However, analysts have warned that this is “hardly a bazooka stimulus”.
Heron Lim at Moody’s Analytics said: “Far more monetary easing and a stronger government stimulus is also desirable to finish bailing out the real estate market and inject more confidence into the economy.”
At a minimum, he added, “broader direct household support in helping them consume more goods will be useful, which is currently just too narrowly designed for industrial goods”.
Lynn Song, chief economist for Greater China at ING, said: “We continue to believe that there is still room for further easing in the months ahead.”
Ken Wong, Asian equity portfolio specialist at Eastspring Investments Hong Kong added:
It’s hard to say what silver bullet can help resolve everything.
While it’s good to have monetary easing measures that are accommodative, more needs to be done in order to help solidify fourth quarter growth.
08:15 AM BST
China’s latest stimulus ‘insufficient’ to boost growth
China’s latest measures to stimulate the economy will be “insufficient” to boost growth, according to economists.
Julian Evans-Pritchard, head of China economics at Capital Economics, said:
In a departure from their previous approach of drip-feeding piecemeal support measures, China’s financial regulators have just announced a coordinated package of stimulus measures.
This is a step in the right direction. But it will probably be insufficient to drive a turnaround in growth unless followed up with greater fiscal support.
The big picture is that, with households deleveraging and many private firms cautious about borrowing, monetary policy has lost much of its effectiveness in China.
As such, today’s moves are unlikely, on their own, to drive a turnaround in credit growth and economic activity.
Achieving that would require more substantial fiscal support than the modest pick-up in government spending that’s currently in the pipeline.
08:04 AM BST
UK markets open higher as China seeks to boost economy
The FTSE 100 climbed at the open as China unveiled measures designed to stimulate its economy, which will boost demand from the world’s second largest economy.
The UK’s blue chip stock index climbed 0.5pc to 8,300.48 as trading began while the midcap FTSE 250 was also up 0.5pc to 20,944.72.
07:57 AM BST
Customers spending on holidays despite price rises, says Tui
Travel giant Tui has said it remains on course for annual earnings to rise by at least a quarter as consumers continue to prioritise spending on holidays.
The German group, which recently ditched its listing on the London stock market to focus on Frankfurt, said it was seeing a “promising start” to the winter season, with bookings up 7pc.
The price of its holidays rose 3pc higher for the summer period and are up 5pc so far for winter.
But this is not just down to increased prices, with Tui saying it is also partly due to holidaymakers choosing more expensive trips.
It confirmed guidance for underlying earnings over the full year to September 30 to rise by “at least” 25pc.
Tui said it has been a “promising start to winter 2024-25 as consumers continue to prioritise spend for leisure experiences”.
07:44 AM BST
Bailey: Do not expect a return to near zero interest rates
Andrew Bailey has warned consumers not to expect interest rates to return to their low levels near zero after the Bank of England left borrowing costs unchanged last week.
The Governor of the Bank said he is “very encouraged” that inflation is heading “downwards”, adding that interest rates would also be moving “downwards, gradually”.
He told KentOnline:
Where [interest rates] will settle is a good question. Simple answer is I can’t tell you with any great accuracy. What I would say is ‘will we go back to the very low near zero interest rates that we had until not that long ago’?
My answer is I would not expect that because what caused interest rates to go that way it was, amongst other things, two very big shocks to the economy.
It all started with the financial crisis then Covid was another big shock.
To go back down to those levels, you’d have to have very big shocks. Of course, you don’t want very big shocks to happen.
That’s one way of saying my best guess will be it settles at a neutral rate - quite what that will be depends on a lot of things - but I expect rates to come down.
07:32 AM BST
Oil prices rise after 490 killed in air strikes on Hezbollah
Oil prices have risen after Israeli airstrikes killed more than 490 people in Lebanon - raising tension in the Middle East.
Brent crude was up 1.1pc and heading towards $75 a barrel after dropping 0.8pc on Monday, with West Texas Intermediate up 1.3pc above $71.
The deadly Israeli strikes killed more than 90 women and children on Monday, the Lebanese health minister said, rising wider conflict.
Oil was also boosted by the stimulus measures announced by the People’s Bank of China Governor Pan Gongsheng, aimed at putting the world’s second largest economy back on track to hit leader Xi Jinping’s target of 5pc growth.
Han Zhong Liang, an investment strategist from Standard Chartered, said:
At the margin, this would be positive for China demand.
The feed-through from lower rates to the real economy will be key from here.
07:31 AM BST
China slashes rates in scramble to hit Xi Jinping’s growth target
China has unveiled some of its most dramatic measures in years aimed at stimulating its faltering economy as leader Xi Jinping fears it could miss his 5pc growth target.
Commercial interest rates have been cut and banks have been freed up to hold less cash in reserve amid a prolonged property sector debt crisis and high youth unemployment.
Pan Gongsheng, the Governor of the People’s Bank of China, told a news conference in Beijing that it would cut a slew of rates in a bid to boost growth, pledging to “promote the expansion of consumption and investment”.
Asian stocks rose on Tuesday to their highest in more than two and half years following the measures, which will see the central bank reduce interest rates on its loans to commercial banks.
China will also cut the down payment requirement on purchases of second homes to 15pc from 25pc and cut to the reserve requirement ratio (RRR), which dictates the amount of cash banks must hold in reserve.
The latter move will inject around a trillion yuan (£106bn) in “long-term liquidity” into the financial market, Mr Pan said.
Recently, Chinese leader Xi Jinping urged officials to do more to get growth back on track.
China’s economy grew at a 4.7pc annual rate in the last quarter after expanding 5.3pc in the first three months of the year.
07:23 AM BST
Good morning
Thank for joining me. China has rolled out a raft of measures aimed at countering a prolonged downturn in its property market that is weighing on the world’s second largest economy.
The chief of China’s central bank said it would cut the amount of reserves banks are required to keep and slash interest rates on its loans to commercial banks among swathes of measures designed to put China back on track to hit its 5pc growth target.
5 things to start your day
1) North faces ‘Armageddon’ without HS2 links, says Andy Burnham | Greater Manchester mayor warns over slower trains and congestion without northern leg alternative
2) Germany will ‘suffer greatly’ if Trump elected, warn economists | Car exports to the US would crash, leaving economy scarred, experts fear
3) California sues oil giant over plastic recycling ‘lies’ | The Democrat-led US state launched legal action against Esso owner ExxonMobil
4) Ben Wright: Reeves is desperately trying to pull the fuse out of her own petard | Pervasive pessimism since the election now risks becoming a self-fulfilling prophecy
5) Matthew Lynn: The boiler tax is just the start of Labour’s energy catastrophe | Reinstating this backward levy ignores the realities of the UK energy transition
What happened overnight
Asian stocks rose to their highest level in more than two and half years after China announced a slew of measures to support its economy.
Shares in Hong Kong jumped 3.6pc and the Shanghai Composite index surged 3.4pc after People’s Bank of China Governor Pan Gongsheng said the reserve requirement for banks would be cut by 0.5 percentage points and that the central bank would follow up with further cuts. That would free up more money for lending.
Investors appeared impressed, with major developer Shimao Group shares jumping 7.6pc and Longfor Group rising 4.6pc.
The Hang Seng in Hong Kong surged more than 600 points to 18,895.54, while the Shanghai Composite picked up nearly 100 points to 2,843.00.
The optimism spilled into other regional markets, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.9pc to 591.47, which was last seen in April 2022.
In Tokyo, the Nikkei 225 index climbed 0.9pc to 38,077.33, while the Kospi in Seoul jumped 0.8pc to 2,622.13.
Australia’s S&P/ASX 200 fell 0.2pc to 8,135.50.
On Wall Street on Monday, the Dow Jones Industrial Average rose 0.2pc, to 42,124.65, the S&P 500 rose 0.3pc, to 5,718.57 and the Nasdaq Composite rose 0.1pc, to 17,974.27.
The yield on benchmark 10-year US Treasury notes, which influences investment decisions worldwide, rose to 3.75pc, from 3.73pc late on Friday.
