UK and European stocks hit amid French election uncertainty
British and European stock markets fell today, while the euro retreated, on concerns about the potential economic fallout should the far-Right win power in France in weekend elections.
The pan-European Stoxx 600 fell 0.6pc, France’s Cac 40 dropped 0.3pc, while Germany’s Dax dropped 0.8pc.
The Footsie was also lower, down 0.6pc.
“Political concerns continue to weigh on European stocks,” said Joshua Mahony, chief market analyst at Scope Markets.
Candidates in France today faced a deadline to register for the run-off round of a high-stakes parliamentary election, as President Emmanuel Macron’s centrist camp and a Left-wing alliance scrambled to prevent the far-Right from taking power.
On Sunday, French voters go to polls for the decisive final round of the snap election Macron called after his camp received a drubbing in European elections last month.
His gamble appears to have backfired, with the far-Right National Rally (RN) of Marine Le Pen scoring a victory in the first round of voting last Sunday.
Ahead of the vote, official data Tuesday showed eurozone inflation cooled in June - but experts said it would be insufficient to convince the European Central Bank, or ECB, to accelerate its rate-cutting cycle despite sluggish economic growth.
Consumer prices have remained stubbornly above the ECB’s two-percent target, although the return to easing inflation will no doubt be welcomed by officials.
Consumer price inflation in the single currency area came in at 2.5pc in June, down from a 2.6pc rate in May, the EU’s statistics agency said.
In Britain, the Labour party is this week on course to end 14 years of power by the Conservatives and the premiership of Rishi Sunak.
Read the latest updates below.
06:10 PM BST
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05:52 PM BST
Tesla’s ‘bag of tricks’ has been exhausted, says car market expert
Tesla shares are currently up 9pc after the company reported a smaller-than-expected 5pc drop in vehicle deliveries in the second quarter.
But Jessica Caldwell, head of insights for US car shopping guide Edmunds, warned that Tesla is having trouble in a market where most early adopters already have electric vehicles, and mainstream buyers are more skeptical that electric cars can meet their needs.
Tesla’s “haphazard” price cuts don’t work as well as they once did because consumers now expect them, she said. “We’ve seen the automaker exhaust its bag of tricks by lowering prices and increasing incentives to spur demand without much success in the US market,” she said.
Also, Tesla’s aging model lineup doesn’t look much different than it did years ago she said. And with price cuts, used Tesla prices tumbled. Anyone wanting a Tesla can get a far better deal buying a used one, Ms Caldwell said.
Ms Caldwell doesn’t see any big catalyst this year that would boost Tesla sales unless petrol prices spike, and she said Elon Musk’s shift to the right since taking over Twitter has hurt the brand’s image.
05:42 PM BST
Super-tall London skyscraper delayed amid row over outdoor space
A decision to approve London’s largest skyscraper has been delayed amid fresh criticism that the design would “rob” office workers of vital outdoor space. Michael Bow reports:
The 1 Undershaft building, a proposed 73-storey behemoth in the heart of the financial district, had been expected to be signed off on Tuesday but the decision was deferred by officials owing to disagreement over the impact on the Square Mile.
The future of the building’s design is now in limbo as developers work to reassure the City of London Corporation, which is responsible for approving the plans, about the impact of the skyscraper.
The delay coincides with criticism from the chairman of the insurance market Lloyd’s of London over the proposal. Bruce Carnegie-Brown is the most prominent public figure to raise concerns about the new skyscraper so far.
05:28 PM BST
Biggest EU political grouping wants 2035 petrol car ban revised, draft shows
The European People’s Party, the biggest group of legislators in the European Parliament, will seek to weaken the bloc’s planned 2035 phase-out of CO2-emitting cars, a draft document showed.
At a meeting in Portugal this week, lawmakers from the centre-Right group are discussing policy priorities for the EU Parliament’s next five-year term.
A draft of those priorities, seen by Reuters, included the aim of “revising the rules for CO2 reduction for new cars and vans to allow for the use of alternative zero-emission fuels beyond 2035”.
The EU passed a policy last year that will ban sales of new CO2-emitting cars in 2035, effectively ending sales of new combustion engine vehicles running on petrol and diesel.
The EPP did not specify in what ways it would want the car CO2 policy changed. The document added that the group wanted to “revise the ban on combustion engines and develop cutting-edge combustion engine technology”.
The draft document, if taken forward by the EPP, will pressure European commissioner Ursula von der Leyen - who belongs to the EPP group - over how she will manage Europe’s green agenda, as she seeks approval from a majority of EU lawmakers for a second term in her role.
The Telegraph has approached the EPP for comment.
05:16 PM BST
UK and European stocks hit amid French election uncertainty
British and European stock markets fell today, while the euro retreated, on concerns about the potential economic fallout should the far-Right win power in France in weekend elections.
The pan-European Stoxx 600 fell 0.6pc, France’s Cac 40 dropped 0.3pc, while Germany’s Dax dropped 0.8pc.
The Footsie was also lower, down 0.6pc.
“Political concerns continue to weigh on European stocks,” said Joshua Mahony, chief market analyst at Scope Markets.
Candidates in France today faced a deadline to register for the run-off round of a high-stakes parliamentary election, as President Emmanuel Macron’s centrist camp and a Left-wing alliance scrambled to prevent the far-Right from taking power.
On Sunday, French voters go to polls for the decisive final round of the snap election Macron called after his camp received a drubbing in European elections last month.
His gamble appears to have backfired, with the far-Right National Rally (RN) of Marine Le Pen scoring a victory in the first round of voting last Sunday.
Ahead of the vote, official data Tuesday showed eurozone inflation cooled in June - but experts said it would be insufficient to convince the European Central Bank, or ECB, to accelerate its rate-cutting cycle despite sluggish economic growth.
Consumer prices have remained stubbornly above the ECB’s two-percent target, although the return to easing inflation will no doubt be welcomed by officials.
Consumer price inflation in the single currency area came in at 2.5pc in June, down from a 2.6pc rate in May, the EU’s statistics agency said.
In Britain, the Labour Party is this week on course to end 14 years of power by the Conservatives and the premiership of Rishi Sunak.
04:52 PM BST
FTSE closes down
The FTSE 100 closed down 0.6pc. The top riser was investment company 3i, up 2pc, followed by chemicals business Croda International, up 1.5pc. The biggest faller was insurer Beazley, down 5.2pc, followed by BT, down 2.9pc.
Meanwhile, the mid-cap FTSE 250 fell 0.1pc. The top riser was bricks and concrete group Ibstock, up 5.2pc, followed by property company Tritax EuroBox, up 4.4pc. The biggest faller was Auction Technology, down 4pc, followed by Wizz Air, down 3.9pc.
04:50 PM BST
Euro zone bond yields drop slightly as inflation slows
Euro zone government bond yields were lower today after data showed euro zone inflation cooled in June, as the market steadied after sharp rises the previous day.
Germany’s 10-year bond yield, the benchmark for the euro zone bloc, was down one basis point at 2.59pc.
Figures showed that euro zone inflation fell to 2.5pc in June from 2.6pc in May, as economists expected.
Yet core inflation - which strips out volatile food and energy costs - came in at 2.9pc. That was unchanged from May and above expectations for a fall to 2.8pc.
The euro zone is “very advanced” on the disinflationary path but there remain “question marks” over the economic outlook, European Central Bank president Christine Lagarde said.
Bond yields rose sharply on Monday as a rally in safe-haven bonds, driven by French President Emmanuel Macron’s gamble in calling snap elections in early June, unwound after the results of the first round came in. Bonds are seen as more stable than stocks and preferable at times of stress.
Marine Le Pen’s far right Rassemblement National party comfortably won the first round. Analysts said the market was comforted by signs that the most likely outcome is a hung parliament, however, prompting a rally in stocks and the euro.
France’s 10-year yield was 2 basis points lower at 3.33pc.
04:39 PM BST
Expansion scaled back at electric car battery champion after mystery deaths
Europe’s best bet for battery manufacturing is poised to scale back a big expansion offensive amid mounting financial losses. Eir Nolsøe reports:
Swedish battery maker Northvolt, which has raised more than £10bn to take on China, has hinted that it could delay new factories in Germany, Canada and Sweden.
Several problems with its first gigafactory in Sweden have prompted it to launch a strategic review, in a story first reported by the Financial Times.
It comes after the promising start-up has also been plagued by a series of unexplained accidents, with five employees dying since November last year.
Two deaths occurred at the factory in separate accidents, whereas three others took place off-site and were described as a “tragic coincidence” by the company.
04:30 PM BST
Super-rich ‘already fleeing Britain ahead of Starmer’s crackdown’
The super-rich are already fleeing Britain amid fears Sir Keir Starmer will introduce a series of wealth tax rises if he becomes prime minister this week, a leading City lawyer has warned. Luke Barr reports:
Ayesha Vardag, whose firm represents the wealthy in high-profile divorce battles, said she has already seen a “flood” of clients quit the UK in anticipation of Labour’s expected election victory on Thursday.
She said clients are relocating to low-tax destinations such as Dubai and Monaco to escape the prospect of Labour increasing capital gains tax and reforming inheritance tax.
Ms Vardag said: “People are flooding out of the UK. The axis of the world is shifting away from England. And it’s been destroyed with this idea that you get votes by bashing the rich.”
Labour has vowed not to raise levies on “working people” as part of its manifesto, although concerns have been raised after the party refused to rule out increasing the levy on profits made on sales of companies, second homes and shares.
There is also speculation that Labour could reform inheritance tax, including measures to make it tougher to gift money and assets tax-free.
04:25 PM BST
Billionaire ex-boss of Paramount mulls takeover bid
Billionaire Barry Diller’s digital-media conglomerate IAC is exploring a bid to take control of Paramount, amid concerns that the big American film producers have over-invested in content for streaming platforms.
IAC has entered into non-disclosure agreements with National Amusements, which holds the Redstone family’s controlling interest in Paramount, a source told Reuters.
Shari Redstone, controlling shareholder of National Amusements, abruptly ended talks with David Ellison’s Skydance Media last month, killing the potential sale of a stake in Paramount to the independent studio.
CNBC reported that Paramount was holding talks with other media and tech companies to determine a viable structure where its streaming platform Paramount+ can be merged with another streaming entity and potentially co-owned.
Fears of market saturation have forced media companies to bundle their streaming businesses and offer discounted rates to lure customers who are wary of signing up and paying for numerous individual services.
IAC said that it does not comment on rumors or speculation. Paramount declined to comment. The Telegraph has approached National Amusements.
04:00 PM BST
Bird flu concern prompts US to award Moderna $176 million for vaccine development
The US government has awarded $176m (£139m) to Moderna to advance development of its bird flu vaccine, as concerns rise over a multi-state outbreak of H5N1 virus in dairy cows and infections of three dairy workers since March.
Funds from the US Biomedical Advanced Research and Development Authority will be used to complete late-stage development and testing of a pre-pandemic mRNA-based vaccine against H5N1 avian influenza, the company said in a statement.
In March, American officials reported the first outbreak of the H5N1 virus in dairy cattle, which has since infected more than 130 herds in 12 states.
Scientists are concerned that exposure to the virus in poultry and dairy operations could increase the risk that the virus will mutate and gain the ability to spread easily among people, kicking off a pandemic.
03:55 PM BST
European stocks indexes are down amid French election worries
Major European stock markets are in the red this afternoon as investors worry about the results of the French elections. The pan-European Stoxx 600 is down 0.4pc, the France’s Cac 40 is down 0.3pc and the Germany’s Dax is down 0.7pc. The FTSE 100 is down 0.6pc.
Axel Rudolph, senior market analyst at online trading platform IG, said:
Concerns over the second round of French legislative elections weigh on European stock indices.
Despite the euro area inflation rate slowing to 2.5pc year-on-year, and the eurozone jobless rate holding steady at a record low of 6.4pc, European stock indices continue to fall.
A slightly higher-than-expected year-on-year core inflation reading of 2.9pc and concerns regarding the second round of the French legislative elections on Sunday might be to blame.
US indices regained earlier losses as job openings topped expectations and US Treasury yields slid on Fed Chair Jerome Powell comments which reinforced bets of 2024 Fed rate cuts.
03:46 PM BST
M&S ‘absolutely not trying to leave city centres’, says Archie Norman
Bosses at Marks & Spencer have said they will not “leave city centres” amid criticism from shareholders over moving some stores to out-of-town developments.
It came as the retail giant announced plans to invest £38m in major new high street stores in Bath and Bristol at its annual general meeting in west London.
The retailer has undergone a sweeping overhaul under chief executive Stuart Machin, and previous boss Steve Rowe, which saw the group shake up its store estate.
In 2019, the group launched 110 store closures as part of the plans, affecting a number of its longstanding high street shops.
The group’s bosses were asked whether they have “given up on the high street” at the AGM on Tuesday, amid concerns they are shifting increasingly towards retail parks.
Archie Norman, chairman of the business, said:
No, we haven’t given up on the high street.
We have a very important store rotation programme but we are absolutely not trying to leave city centres - that has never been our intention.
We do have some older stores that are hard and costly to maintain and run so we have to look at that.
03:43 PM BST
Wall Street floundering as Powell signals caution
Wall Street indexes have floundered this afternoon amid comments by Federal Reserve chairman Jerome Powell, who said more evidence was needed before cutting interest rates, while gains in Tesla shares kept losses in check.
Tesla leapt 10pc to its highest since January after the company reported a smaller-than-expected 5pc drop in vehicle deliveries in the second quarter.
Stocks also pared initial losses as Fed chair Jerome Powell told a panel that recent economic data represented “significant progress”, though noting the central bank needed to see more before changing policy.
Microsoft and Apple reversed early losses, but AI chip leader Nvidia dropped 2.4pc and Facebook owner Meta fell 0.1pc.
The Nasdaq Composite is currently up 0.1pc, the S&P 500 is currently flat and the Dow Jones is down 0.1pc.
03:34 PM BST
Drug companies slump after Biden criticism
US president Joe Biden and Left-wing senator Bernie Sanders called on Novo Nordisk and Eli Lilly to reduce the prices of their weight loss and diabetes drugs, in an comment article by them published in USA Today today.
The politicians said:
If the prices of these drugs are not substantially reduced, they have the potential to bankrupt the American health care system. Novo Nordisk must substantially reduce the price of Ozempic and Wegovy.
Shares of the Danish drugmaker fell 2.8pc, while rival Eli Lilly fell 3pc.
Investors also sent down shares of other drugmakers, with Britain’s AstraZeneca down 1.9pc and GSK down 1.6pc.
A Novo Nordisk spokesman said:
We are disappointed that a very difficult and complex problem is being oversimplified and mischaracterised for political purposes ... We take patient access and affordability very seriously. In fact, the cost of both Ozempic and Wegovy has decreased approximately 40 percent since launch and over 80pc of Americans with insurance only pay $25 or less per month for these important medicines.
A Lilly spokesman said that it offers its Zepbound and Mounjaro drugs “for as low as $25 a month to those eligible for our savings card programme”.
03:21 PM BST
Powell says Fed needs more evidence of falling inflation before cutting rates
The US central bank still needs more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture of what is happening to underlying price pressures, Federal Reserve chair Jerome Powell said today.
Data for May showed the Fed’s preferred measure of inflation did not increase at all that month, while the 12-month rate of price increases has ebbed to 2.6pc, still above the central bank’s 2pc target but on the way down.
Powell told a conference in Portugal sponsored by the European Central Bank:
We just want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation. We want to be more confident, and frankly because the US economy is strong ... we have the ability to take our time.
Still, Powell acknowledged the central bank has entered a sensitive phase in its policy deliberations where the risks to both the Fed’s inflation and employment goals “have come back much closer to balance.”
In particular, some closely watched measures of the job market suggest the US economy may be approaching a point where further progress on inflation will involve the sort of tradeoffs with rising unemployment that the Fed has so far avoided.
“You can’t know that with precision,” Powell said, “but it is understood that we have two-sided risks.”
“Given the strength we see in the economy we can approach the question carefully,” Powell said, while also noting that policymakers don’t want to keep policy too tight for too long and “lose the expansion.”
03:16 PM BST
Sajid Javid made partner at asset manager Centricus
Former Chancellor Sir Sajid Javid has been named as a partner at asset manager Centricus.
Sir Sajid, who is not standing for re-election at the election, will take up the role next month. He already serves as a senior adviser to the London-based firm.
Sir Sajid, who was Chancellor under Boris Johnson, announced his retirement from politics earlier this year after serving as MP for Bromsgrove in Worcestershire since 2010.
Before entering politics he working in investment banking, becoming a vice president at Chase Manhattan Bank at the age of 25 and later joining Deutsche Bank.
Sir Sajid, who was knighted in the New Year Honour List, said:
I am thrilled to join the team at Centricus. I look forward to contributing to our mission of driving growth and creating long-term value for our clients through innovative and strategic solutions.
03:01 PM BST
How ‘hypermasculine’ electric cars left women behind
With Tesla’s sales in the spotlight, here’s a timely feature from our industry editor Matt Oliver about the gender divide plaguing the EV shift:
The car industry’s “woman problem” has long been a subject of criticism, from macho advertising to the lack of female-shaped crash-test dummies.
It was hoped that the dawn of electric vehicles (EVs) might offer a useful moment to turn the page – but on current trends, electric car cheerleaders risk being disappointed.
Worrying research by online dealer Auto Trader shows the problem is getting worse, not better.
“We imagined there was going to be this great moment for some of that gender imbalance we’ve seen in the past to be redressed with EVs,” says Catherine Faiers, chief operating officer of Auto Trader.
“Slightly depressingly, we have found the exact reverse. Women feel even more left behind by the EV transition and find it even more daunting.
“That’s due to a combination of a lack of confidence, very technical language being used and horror stories they’ve read about. So this is a real challenge for the industry.”
02:46 PM BST
Tech giants drag down Wall Street
US stocks have started the day on the back foot as tech stocks retreated after a strong session, while investors are cautious ahead of jobs data and upcoming comments from Fed chair Jerome Powell.
The benchmark S&P 500 and Dow Jones were both down 0.2pc, while the tech-heavy Nasdaq lost 0.4pc.
02:37 PM BST
Tesla sales fall amid stalling EV demand
Here’s some more from James Titcomb on the latest Tesla figures:
Electric car sales in the US and Europe have stalled in recent months as motorists continue to opt for petrol-powered vehicles, put off by high EV prices and concerns about range and charging availability.
The drop in demand has been a setback to Tesla, which has become the world’s most valuable carmaker on the back of repeated growth.
The only other time Tesla’s sales have fallen was in 2020, when lockdowns forced its California factory to close.
Mr Musk has pledged that Tesla will speed up work on cheaper vehicles but has not outlined a timetable or said how much they will cost.
Next month, Tesla is also poised to unveil its “robotaxi” or “cybercab”, a car designed around autonomous driving.
Although the car is unlikely to be released for several years, Mr Musk is likely to present it as a vision of the company’s future.
02:32 PM BST
Reaction: Worst is in the rear view mirror for Tesla
Dan Ives, an analyst at Wedbush, has an upbeat take on the latest Tesla figures:
This was a huge comeback performance from Tesla and Musk with the Street expecting a clear miss this quarter with EV demand still choppy globally.
Model 3/Y deliveries was 387,000 and Other Models 24,000 with production of 411,000. It appears China saw a “mini rebound” in the quarter along with pricing stabilization that helped Tesla battle through headwinds to deliver a much stronger delivery quarter than even the bulls were expecting.
In a nutshell, the worst is in the rear view mirror for Tesla as we believe the EV demand story is starting to return to the disruptive tech stalwart ahead of a historical Robotaxi Day on August 8th.
While its been a difficult period for Tesla and the company has been through some significant cost reductions (roughly 10pc-15pc) to preserve its bottom line/profitability, it appears better days are now ahead as the growth story returns.
02:18 PM BST
Saudi Arabia’s $1 trillion wealth fund swings to profit
Saudi Arabia’s near-$1 trillion sovereign wealth fund swung to a profit last year thanks to a rally in global markets.
The Public Investment Fund made $25bn from its investment activities in 2023, a sharp reversal from the $11bn loss posted in the previous year.
Dividend income and better performance from third-party funds also helped to boost performance.
The PIF controls roughly $925bn in assets, making it one of the biggest state-backed investors in the Middle East behind the Abu Dhabi Investment Authority.
The PIF’s investments span a range of sectors and include high-profile companies including Disney, Uber and Facebook, as well as Newcastle United FC.
01:57 PM BST
City of London defers decision on super-tall skyscraper built to rival the Shard
The City of London Corporation deferred a vote on plans for a new 73-story office tower in the City of London that will rival the Shard.
The authority’s planning committee voted today to hold off on a decision on plans for One Undershaft, a 310-metre (1,016-feet) skyscraper next to the Gherkin.
Plans for a slightly smaller office tower were previously approved in 2019 on a site currently occupied by the former headquarters of UK insurer Aviva Plc.
However, the latest design has been tweaked to “better respond to post-pandemic needs,” according to council documents.
The project, submitted by developer Stanhope, is expected to take six to seven years to complete should it win approval.
However, it has drawn a series of objections from the building’s neighbours, including the owners of the so-called Cheesegrater tower and the developers behind another proposed skyscraper on Leadhenhall Street.
On that note, I am heading off and will hand over the reins to James Warrington, who will keep the live updates coming.
01:39 PM BST
European stocks plunge as ‘political risk’ returns in France
European stock markets have plunged as “political risk” on both sides of the Atlantic worries investors.
The Cac 40 in Paris dropped as much as 1.1pc while the Dax in Frankfurt fell as much as 1.3pc amid the possibility of a Donald Trump presidency and French parliament led by Marine Le Pen’s National Rally.
Opponents of France’s far-Right party have stepped up their bid to block it from power as more candidates said they would bow out of this weekend’s run-off election to avoid splitting the vote.
Meanwhile, US government borrowing costs remain elevated after the Supreme Court ruling on Monday meant Donald Trump is unlikely to face more criminal trials before the November presidential election.
Samy Chaar, chief economist at Lombard Odier, said: “The economic backdrop remains favourable for Europe, but political risk is back - in France - and proving impactful.”
Derek Halpenny of MUFG added: “It certainly looks to us to be investors increasingly trading on the prospect of a Trump victory.
“More fiscal stimulus and trade tariffs (are) ... inflationary and could be putting upside pressure on longer-term yields.”
01:17 PM BST
Top bankers ordered to rein in travel and entertainment expenses
HSBC has warned its top bankers to rein in spending on entertainment and travel as it races to slash costs.
Our employment editor Lucy Burton has the details:
Money-makers who would have once enjoyed frequent lavish lunches and first-class travel have been reminded in recent days that they need to restrain their expenses and have at least three meetings a day if they do travel for work, sources told Bloomberg.
HSBC would not reveal its new rules on lunch or travel expenses.
The crackdown comes amid a hiring freeze in some departments as the outgoing boss of Europe’s biggest lender, Noel Quinn, prepares the banking giant for a new chief executive.
Read how other banks are tightening their belts.
01:03 PM BST
Clarkson’s pub must show challenges for hospitality, says Kerridge
Chef Tom Kerridge has said he hopes Jeremy Clarkson will shine a light on the challenges of running a pub when he opens his own.
Mr Kerridge, who owns The Hand and Flowers in Buckinghamshire, the first pub with two Michelin stars, said it is “going to be very difficult” for the Clarkson’s Farm star.
Mr Clarkson revealed at the weekend that he paid “less than £1 million” for The Windmill, which is set in five acres of countryside near Burford in Oxfordshire.
He will sell his own Hawkstone lager as well as produce reared on his nearby Diddly Squat Farm.
Mr Kerridge now hopes that Mr Clarkson will highlight the challenges that face the hospitality industry in the same way he did with farming when he bought the Cotswolds farm and started his reality show Clarkson’s Farm.
The chef told ITV’s Good Morning Britain:
It’s very, very difficult operating a pub. Even if it’s busy and packed on a Saturday night, the profit margin is very, very small, particularly when you’re a wet-led (drink-led) pubs.
You need to be busy on Monday and Tuesday lunchtime, not just a weekend, and the pressures that come into that business are absolutely huge.
Revenues look like they may be busy, you turn up on a Sunday lunch and it is packed, that doesn’t necessarily mean to say it’s making money.
12:36 PM BST
Stocks fall amid concerns National Rally could win power in France
European stock markets have retreated amid concerns about potential economic fallout should the far-Right win power in France.
The Cac 40 in Paris was down 1pc while the Dax in Frankfurt had fallen 1.2pc.
Candidates in France face a deadline today to register for the run-off round of the parliamentary election, as President Emmanuel Macron’s centrist camp and a left-wing alliance scramble to prevent the far-Right from taking power.
Joshua Mahony, chief market analyst at Scope Markets, said: “Political concerns continue to weigh on European stocks.”
Meanwhile, official data showed eurozone inflation cooled slightly in June, although experts said it would be insufficient to convince the European Central Bank to cut interest rates in July.
12:10 PM BST
Pound recovers after being ‘biggest casualty’ of Macron’s French election rout
The pound has regained ground after falling close to its lowest level in two months as it suffered a double blow from the US and Europe.
Sterling neared its weakest level against the dollar since May 15 as traders contemplate the prospects of a second Donald Trump presidency after President Joe Biden’s faltering debate performance last week and Monday’s Supreme Court ruling.
The pound remains down 0.1pc versus the greenback at $1.264.
It has risen 0.1pc against the euro, which is worth 84.8p, although it is hovering around its lowest since early June.
Eurozone inflation edged down in June, official figures showed today, although services inflation proved persistent, raising doubts about the potential for interest rate cuts.
European Central Bank President Christine Lagarde on Monday said the central bank was in no rush to cut interest rates, which gave the euro a boost against the pound the day before.
The euro had also made gains after the first round of the French parliamentary elections indicated that Marine Le Pen’s National Rally is unlikely to secure an overall majority.
Caxton strategist David Stritch said: “Funnily enough, the biggest casualty of Lagarde’s comments and the French election has been the pound, whose decline in value against the euro has sent the overall pound index to its lowest level for five weeks.”
11:52 AM BST
Vape supplier Supreme ‘not concerned’ about potential ban
The distributor of vapes ElfBar and Lost Mary has revealed it doubled its annual profit, as its boss insists the company is “not concerned” about a potential future ban on disposable vapes.
Supreme, which also makes and distributes products including batteries, light bulbs and protein powder, said it delivered a “record financial performance” in the past year.
It reported a pre-tax profit of £30.1m for the year to the end of March, up from £14.1m generated a year earlier. Total revenues also surged by 42pc year on year to £221.2m.
Supreme said it made about a third of all its sales from its disposable vapes, driven by its agreement to distribute ElfBar and LostMary into shops and major supermarkets like Tesco and B&M.
It also makes its own brand of disposable vapes and e-liquids, 88Vape.
The company has a long-standing contract with the HM Prison and Probation Service, where it supplies vaping products to UK prisons.
The London-listed company said it was “mindful of the UK Government’s highly publicised proposal to ban disposable vaping devices in a bid to combat under-age vaping,” as well as plans to introduce a new tax on vapes.
But chief executive Sandy Chadha said she was “not concerned” that the proposals will have “any long-term impact on Supreme as a responsible manufacturer and distributor”.
11:37 AM BST
Rupert Murdoch launches free Netflix rival in UK
Rupert Murdoch’s Fox Corporation has launched a free streaming service in the UK, adding a new player to a crowded market that already includes Netflix, Disney, Apple and Amazon.
Matt Oliver has the details:
Tubi, a free service supported by advertisements, has already garnered 80m viewers in the US.
The platform has more than 20,000 films and television shows, according to the company, including Billy Elliott, Pacific Rim and content produced by Disney, NBCUniversal, Sony Pictures among a host of other studios.
It is the latest example of the ad-supported streaming services launched in the wake of the pandemic.
Read how it has already grown in the US and previously planned a UK launch.
11:21 AM BST
Wall Street on track to fall amid higher borrowing costs
US stocks have dipped in premarket trading as some caution crept in ahead of jobs opening data and higher borrowing costs.
Microsoft, Apple and Amazon.com slipped in premarket trading after jumping 2pc to 3pc on Monday.
Tesla shed 1pc after Monday’s 6pc jump ahead of the EV maker’s June-quarter deliveries, expected to fall for two straight quarters for the first time.
AI chip leader Nvidia also dropped 1.4pc, with other semiconductor stocks such as Micron Technology, Marvell Technology and Arm Holdings also slipping nearly 1pc.
It comes after a jump on US Treasury bond yields on Monday amid the heightened prospect of a Donald Trump presidency, which markets think will likely mean higher spending.
On the data front, the job openings and labor turnover survey, or JOLTS, is due after market open and is expected to show job openings fell to 7.91m in May from 8.06m in the previous month.
The data would be crucial in determining the state of the US jobs market, which remains resilient even against the backdrop of high interest rates.
In premarket trading, the Dow Jones Industrial Average was down 0.3pc, the S&P 500 had fallen 0.4pc and the Nasdaq 100 had dropped 0.5pc.
11:00 AM BST
Sunak: Labour risk reversing ‘downhill slope’ on inflation and taxes
Rishi Sunak said “we’re on the downhill slope” when it comes to inflation, taxes and energy bills, which could be “reversed” if Labour wins the election.
The Prime Minister was challenged over the rising cost of doing business in a staff Q&A at a distribution company in Banbury, Oxfordshire.
He said:
Because of everyone’s hard work and resilience, and our policies, we’ve got inflation back to normal, back where it should be at 2pc, which also means now interest rates can start to be cut.
So, you’re going to start to feel the benefits of that. Those pressures of the past few years are now dissipating.”
Now we’re cutting your taxes, inflation’s back to normal, energy bills coming down, interest rates to follow.
We’re on the downhill slope now. And we can look forward with confidence and with optimism. But not if there’s a change in government and all those things are reversed.
Once you make that decision on Thursday, there's no going back.
Don't do something you might regret.— Rishi Sunak (@RishiSunak) July 2, 2024
10:44 AM BST
Shell halts constriction of biofuel plant as boss seeks to boost investor returns
Shell will pause construction work at one of Europe’s largest biofuel plants due to weak market conditions.
The facility at its chemicals park in Rotterdam becomes the latest low-carbon project to suffer a setback as chief executive Wael Sawan strives to boost returns to investors.
It is rare for companies to suspend development of projects underway. Rival BP last week said it is pausing two biofuel projects in Germany and the United States.
Under Mr Sawan, who took charge in January 2023, Shell has scrapped and sold renewable and hydrogen projects, retreated from European and Chinese power markets and sold refineries in order to focus on the most profitable operations, primarily in oil and gas.
Shell shares have gained over 11pc so far this year.
Shell gave the greenlight for the development of the 820,000-ton-a-year plant in the Netherlands in September 2021 which was originally planned to start production in 2025. The project is now expected to go online towards the end of the decade.
10:24 AM BST
ECB not expected to cut rates despite falling inflation
The latest fall in eurozone inflation comes after the European Central Bank (ECB) cut interest rates for the first time since 2019 on June 6.
ECB officials have however tried to temper expectations of another cut to borrowing costs at their July meeting, saying there was no “pre-determined” rate path.
ECB president Christine Lagarde said on Monday:
Our work is not done, and we need to remain vigilant.
We will not rest until the match is won and inflation is back at 2pc.
Economists view the chances of another cut at the ECB’s next meeting in July as low, but there are growing expectations that it could lower rates later this year.
The ECB in June also revised its predictions, expecting eurozone inflation to come in at 2.2pc in 2025 before falling to 1.9pc the following year.
10:09 AM BST
Eurozone inflation gripped by stubborn services prices
Inflation in the eurozone edged down as expected last month, according to preliminary estimates, amid falling energy prices.
The consumer prices index for the single currency area dropped from 2.6pc to 2.5pc in June, according to statistics office Eurostat.
Core inflation, which strips out volatile food and energy prices, was unchanged at 2.9pc, as services inflation remained stubbornly high at 4.1pc. It had been predicted to fall to 2.8pc.
Euro area #inflation expected to be 2.5% in June 2024, down from 2.6% in May. Components: services +4.1%, food, alcohol & tobacco +2.5%, other goods +0.7%, energy +0.2% - flash estimate https://t.co/9Kfk797fhj pic.twitter.com/IFcPkfFtOM
— EU_Eurostat (@EU_Eurostat) July 2, 2024
10:01 AM BST
Food prices to drop to pre-Covid levels in relief for millions of households
Families can at last look forward to cheaper food as the price of staples including wheat and maize is set to fall below pre-Covid levels on a sustainable basis in the coming years.
Our deputy economics editor Tim Wallace has the details:
In the pandemic, grain prices soared as global trade was shattered by lockdowns which threw the carefully calibrated machinery of international supply chains into turmoil.
With delays to lorries and ships, as well as shifting demand patterns as households ate more at home and less at workplaces and restaurants, wheat prices jumped by almost two-thirds between 2019 and 2021.
Soybeans surged by 58pc, and maize spiralled by almost three-quarters.
Prices stayed high with Russia’s invasion of Ukraine, a key producer and exporter of grains and sunflower oil, while spiralling energy and fertiliser costs also hit farmers.
But costs are at long last set to fall back to pre-Covid and pre-war levels, according to projections from the Organisation for Economic Cooperation and Development (OECD) and the United Nations’ Food and Agriculture Organisation (FAO).
Wheat prices this year should fall to an average of within 1pc of their 2019 level, before dropping steadily over the course of the decade.
In the early 2030s, wheat should cost around 10pc less than it did in 2019, in inflation-adjusted terms.
09:49 AM BST
Tax loophole benefiting Shein should be closed, says Sainsbury’s boss
The chief executive of Sainsbury’s has called for Britain to close a tax loophole used by Chinese fast fashion websites such as Shein amid a growing backlash over the practice among UK retail leaders.
Our retail editor Hannah Boland has the details:
Simon Roberts said Sainsbury’s pays “all of our taxes and all retailers should be working on the same basis”.
Mr Roberts added: “I want to make sure that the loopholes are closed for some of the businesses that aren’t paying tax in the right way so it’s a level playing field for everybody.”
The comments come amid growing concerns that the next government will not be looking to clamp down on the practice. Last month, Labour insiders suggested the party was not planning to close the tax loophole despite calls from UK retail chiefs. Earlier this year, Next chief executive Lord Wolfson urged ministers to look at how fast fashion companies were avoiding customs bills by shipping individual orders directly from China.
This is because typically the orders then fall under the £135 threshold where retailers then have to pay customs duties. British retailers have warned that this tax “loophole” allows overseas rivals to undercut them as they generally ship in bulk into UK warehouses and then distribute from there. Lord Wolfson said: “I wouldn’t underestimate the difficulty and the administrative complexity of trying to tax lots of small deliveries. But I think it’s important that the Government look at it.”
The Retail Sector Council last year said there should be restrictions on this practice, saying: “It is to the detriment of the economy and to the outlook of those retailers that pay full taxation, including VAT.
“Without the playing field being evened, there will be more business failures, less taxation and more unemployment.”Shein has responded to criticism by saying its success “comes from our ability to produce fashionable products for our customers”. A spokesman has said that its “on-demand business model and flexible supply chain” is what allows it to keep prices low and offer customers the best deal.
09:32 AM BST
Possible Trump presidency has ‘spooked the markets,’ say analysts
Traders are concerned about what a Trump presidency could mean for the world’s largest economy and “the sustainability of the US debt load,” according to analysts.
US veteran Pollster Nate Silver gave Trump more than 68pc chance of winning the presidential election in November against President Biden. He has also predicted that Trump would win the popular vote.
Kathleen Brooks, research director at XTB, said:
This spooked the markets and put upward pressure on US Treasuries at the start of the week.
However, the US 10-year yield, which rose 10 basis points on Monday, is a touch lower at the start of trading on Tuesday, suggesting that the market is not convinced that the world’s biggest economy and reserve currency is likely to have a debt crisis any time soon.
Stocks across Europe are a sea of red and the Cac 40 is also lower, partly erasing a recovery rally on Monday.
Interestingly, bond yields are mostly flat to lower in Europe, which does not suggest that a broad-based sell-off is upon us, although there are still some acute political risks coming up.
09:21 AM BST
Ryanair carries record 19m passengers
Ryanair has recorded its busiest month in terms of passenger numbers as increases in ticket prices were less severe than feared.
The Dublin-based airline said 19.3m passengers booked tickets for its flights in June, an increase of 10.9pc from 17.4m during the same month last year.
Chief executive Michael O’Leary said in May that recent ticket pricing was “softer” than expected, having predicted in February that a looming shortage of airliners from both Boeing and Airbus would force up fares for holidaymakers.
Meanwhile the Hungarian low-cost airline Wizz Air suffered a small decline in passenger numbers over the same period.
It said 5.3m passengers held tickets for its flights last month, down 0.2pc from June 2023.
The carrier said load factor - the proportion of seats filled - fell by 0.6 percentage points to 91.7pc, which reflects “a focus on overall revenue management”.
09:11 AM BST
Revolut returns to profit as it awaits banking licence
Revolut revealed it made a record profit in 2023 as it continues its long wait for a British banking licence.
The company made a pre-tax profit of £438m last year, up from a loss of £25m in 2022, while revenue almost doubled to £1.8bn.
The London-based group has expanded aggressively in recent years, opening offices in new countries including Brazil and New Zealand in 2023.
It added 12m customers last year, taking the total to more than 45m.
The rate of expansion has seen it far outstrip the growth of rival digital money firms like Monzo and Starling, which have roughly nine million and three million customers respectively.
However, unlike Monzo and Starling, Revolut is still not allowed to offer lending products like credit cards, personal loans, or mortgages without a banking licence.
Revolut filed for a licence in 2021, and has repeatedly claimed that approval is just around the corner.
On March 1 2023 it said it would be given the green light “any day now”, but that has still not happened.
09:00 AM BST
Oil prices rise amid fears of Middle East war
Oil prices are trading near a two-month high amid escalating in tensions in the Middle East and concerns over the rapid start to the Atlantic hurricane season.
Brent crude was up 0.1pc to more than $86 a barrel after rising Monday, while West Texas Intermediate was above $83.
Israel’s military said 18 soldiers were injured in a drone attack by Iran-backed Hezbollah, one of them seriously, threatening to move the conflict closer to a full-scale war.
Meanwhile, Hurricane Beryl has strengthened to category 5, the highest level on the Saffir-Simpson scale, becoming the strongest storm to ever form in the Atlantic at this time of the year.
The system earlier made landfall on Carriacou Island in the Caribbean and is headed toward Jamaica.
08:43 AM BST
FTSE 100 falls ahead of election
The FTSE 100 tumbled as investors maintained caution ahead of the general election.
The blue-chip FTSE 100 was down 0.6pc, hitting its lowest in more than two weeks, while the mid-cap FTSE 250 fell 0.4pc.
Investors refrained from placing big bets ahead of the election on Thursday. Rishi Sunak has suggested voters could deliver a hung parliament by only 130,000 people switching to the Tories, as he urged the public to deny Labour a majority.
Meanwhile, prices in British shops rose at the slowest pace in almost three years last month, according to industry figures that underscore how inflation has cooled.
The last key inflation reading showed that May inflation had fallen to the Bank of England’s 2pc target for the first time in nearly three years. However, investors do not expect it to help the Prime Minister’s fortunes in the election.
In corporate news, Sainsbury’s fell 3pc to the bottom of the FTSE 100 after it kept its annual financial guidance as it reported a 3pc rise in first-quarter underlying sales.
GSK slipped 1.3pc after a Delaware judge rebuffed a request by the drugmaker and others to appeal a ruling allowing over 70,000 lawsuits claiming that the heartburn drug Zantac caused cancer to go forward.
Energy stocks were the top gainers after oil prices held near two-month highs amid expectations of rising fuel demand from the summer travel season and possible US interest rate cuts.
08:25 AM BST
Revolut revenue doubles as auditors approve accounts
Revolut revealed its revenues nearly doubled last year as it published its audited accounts following two years where its financial statements were delayed.
The British fintech company revealed its net interest income jumped sixfold to £500m in 2023 as it was boosted by high interest rates.
Its revenues nearly doubled revenues to £1.8bn from £920m last year while it made a pre-tax profit of £438m.
Chief executive Nik Storonsky said:
As we reached 45 million retail customers (as of June 2024), Revolut remains poised for exponential growth.
Our customer base is expanding at impressive rates year after year, and our diversified business model continues to
fuel exceptional financial performance.
The publication of its 2023 accounts comes as a friend of the Princess of Wales has hit out at Revolut for “debanking” her sex party business.
Emma Sayle, who set up her female-led sex events brand Killing Kittens in 2005, criticised the banking app for shutting down her company’s account because of the “nature of our business”.
08:08 AM BST
UK markets fall amid rising borrowing costs
UK markets fell as trading began under the weight of large jumps in borrowing costs in the US and Europe.
The FTSE 100 was down 0.3pc to 8,138.59 while the midcap FTSE 250 dropped 0.1pc to 20,194.91.
US Treasury bond yields jumped on Monday amid the prospect of a second Trump presidency, while eurozone bond yields rose sharply after French elections indicated Marine Le Pen’s National Rally would be the largest party in parliament.
07:57 AM BST
Dollar surges as Supreme Court clears legal hurdles to Trump presidency
The US dollar hovered near an almost 38-year high to the yen following the surge in Treasury yields as investors contemplated the potential for a second Donald Trump presidency.
The dollar was slightly stronger at 161.56 yen, keeping close to the overnight high of 161.72 yen, a level not seen since December 1986.
The currency pair is highly sensitive to US Treasury bond yields, which have jumped in the wake of the Supreme Court decision.
A ruling issued by the court on Monday found that Trump had a “presumption of immunity” in most of the charges brought against him by the US government, which accuses him of trying to overturn the 2020 election result.
The ruling kicks off a fresh round of litigation over the case in a federal court in Washington DC, and will almost certainly delay a verdict until after the presidential election on November 5.
The dollar was also up 0.1pc against the pound, which is worth $1.263. The dollar was up 0.1pc against the euro, which is worth $1.073.
07:47 AM BST
US debt costs surge amid fears of ‘inflationary Trump 2.0’
The cost of US government borrowing jumped higher as a Supreme Court ruling raised the prospect of a second Donald Trump presidency.
US Treasury yields - the return the government promises to pay buyers of its debt - climbed following the ruling that Mr Trump cannot be prosecuted for official actions.
The court on Monday delivered a major boost to Donald Trump who has sought to claim presidential immunity over his actions related to the Jan 6 riots.
The 10-year bond yield rose nearly 14 basis points to 4.48pc to start the week as analysts considered the possibility of higher tariffs and government borrowing if the Republican nominee wins the election.
The 10-year yield stood at 4.45pc in Tokyo hours overnight.
President Joe Biden’s faltering debate performance last week was the trigger behind the yield surge, but an additional catalyst came with the Supreme Court’s ruling, said Chris Weston, head of research at Pepperstone.
He said: “Bond traders have an eye on Trump’s increasing odds of taking the White House, and the market senses Trump 2.0 will be inflationary.”
07:27 AM BST
Shoe Zone issues profit warning as bad weather hits sales
Shoe Zone sold fewer shoes than expected between April and June, and has issued a profit warning, blaming bad weather and high shipping costs, it said in a trading update.
The high street chain said it now expects adjusted profit before tax for the financial year ending October 2 to be £10m or above, coming in below previous guidance.
Its original profit forecast for the year was £15.2m. That was already revised down to £13.8m at its interim results in June.
Shoe Zone said shipping costs had risen because of “cost pressures associated with container prices due to a reduction in the supply of shipping vessels and the continuation of a reroute away from the Suez Canal”.
Meanwhile, the company has “experienced weaker than expected spring summer sales from April to June, due to unseasonal weather conditions”, it added.
07:21 AM BST
Sainsbury’s clothing sales drop despite gaining market share
Sainsbury’s revealed declining clothing sales in its first quarter as it continues its shift towards its core food business.
The supermarket suffered a 4.3pc drop in general merchandise sales, while Argos, which is set up inside its stores, experienced a decline of 6.2pc.
By contrast, its grocery business grew by 4.8pc during the three months to June 22, as it revealed the biggest market share gains of any grocer over the period.
Chief executive Simon Roberts said:
We’ve been winning from competitors every month for 15 months, as more and more people are choosing Sainsbury’s for their big weekly shop.
We are laser focused on delivering the best combination of value and quality in the market and our customers are recognising that with 98pc of big baskets including Nectar Prices or Aldi Price Match.
Innovation continues to be a top priority and we launched 400 new products this quarter, almost half of which were Taste the Difference, which continues to outperform a strong premium market.
Our Summer ranges are the perfect complement to this Summer of Sport and we’re gearing up for Wimbledon this week and England’s quarter final match on Saturday night.
He added its food business is “going from strength to strength”.
07:06 AM BST
Shop prices fall amid hopes of interest rate cuts
Prices in the shops fell between May and June, according to the British Retail Consortium, relieving some of the pressure on family finances.
Our deputy economics editor Tim Wallace has the details:
The industry group’s shop price index showed average costs on the high street dropped 0.2pc in the month.
It means that prices last month were up by 0.2pc compared with June of last year, on the BRC’s measure. That marks the slowest pace of inflation since October 2021, before the cost of living crisis really erupted and forced the Bank of England to raise interest rates from 0.1pc to 5.25pc in an effort to get on top of spiralling living costs.
The easing in prices will boost hopes that the Bank of England can press ahead with cuts to interest rates later this year without fuelling another inflation crisis.
Food prices are up 2.5pc on the year, while other goods on average cost 1pc less than they did in June 2023.
Helen Dickinson, chief executive of the BRC, said that companies worked hard in the pandemic and the energy crisis to cut costs.
“During the height of the cost of living crisis, retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs. This is clearly paying off,” she said.
“Food inflation is now lower than any time since 2021 helped by falling prices for key products such as butter and coffee.
Meanwhile, non-food prices went deeper into deflation as retailers tried to drive sales by discounting. This was particularly true for TVs with great deals to capitalise on the Euros fever.”
06:48 AM BST
Good morning
Thanks for joining me. Prices in shops fell last month in a boost to household finances, industry figures show.
The cost of goods on shop shelves fell 0.2pc between May and June, according to the British Retail Consortium (BRC).
Shop prices rose 0.2pc in the year to June, which was the slowest pace since October 2021, before Britain’s inflation crisis sent the cost of living soaring.
5 things to start your day
1) France’s flag carrier braces for €180m hit as tourists shun Paris Olympics | Foreign visitors expected to avoid French capital this summer despite allure of Games
2) Future of UK factory in doubt after Boeing deal puts 2,400 jobs at risk | Belfast business left without owner following carve-up of 737 Max supplier
3) British couple become wealthier than Larry Fink after £2.5bn BlackRock deal | Husband-and-wife duo land bumper payday after selling financial data empire
4) Solicitors to avoid ‘unfair’ drink-driving fines after regulator climbdown | Power of sanction intended to protect integrity of profession to be transferred to disciplinary tribunal
5) Ben Wright: Jeremy Clarkson is highlighting another British industry in peril | Down-trodden pubs have become the latest target of the presenter’s novel brand of lobbying
What happened overnight
Asian stocks were mixed after stocks advanced on Wall Street and yields jumped in the US bond market after the Supreme Court ruling that Donald Trump cannot be prosecuted for official action.
The Japanese yen fell to near a fresh 38-year low, reaching 161.66 yen to the dollar early Tuesday.
Tokyo’s benchmark Nikkei 225 added 1.1pc to 40,062.42, as the weaker yen spurred buying of export-oriented shares.
Australia’s S&P/ASX 200 shed 0.4pc to 7,719.30. South Korea’s Kospi dropped 0.9pc to 2,778.32 despite data from Statistics Korea showing the country’s consumer inflation slowed to an 11-month low in June.
Hong Kong’s market was higher after a holiday break on Monday. The Hang Seng climbed 0.6pc to 17,819.50 and the Shanghai Composite index edged was nearly unchanged at 2,995.78.
Elsewhere, Taiwan’s Taiex gained 0.6pc, while the SET in Bangkok was 0.6pc lower.
On Wall Street, all three major indexes finished higher in a choppy session led by gains in technology, discretionary consumer goods and services suppliers, and banking stocks.
Investors are also eyeing the potential impact from a Supreme Court ruling Monday that former presidents have broad immunity from prosecution, likely extending the delay in a criminal case against Donald Trump to after the November election.
The Dow Jones Industrial Average rose 0.1pc to 39,169.52, the S&P 500 gained 0.3pc to 5,475.09 and the Nasdaq Composite gained 0.8pc to 17,879.30.
Benchmark 10-year US Treasury yields rose to their highest since mid-June at the start of a holiday-shortened week that will likely be marked by low trading volumes. The yield climbed to 4.46pc from 4.39pc late on Friday and from 4.29pc late on Thursday.
