Indices rise days after S&P endured worst day in almost two years amid global stock market sell-offWall Street enjoyed its best day of trading in nearly two years, recovering most of the losses it suffered during a sell-off sparked by US economic fears earlier this week.The S&P 500 rose 2.3% to 5,319.32, its biggest single-day jump since November 2022. The Dow Jones industrial average rose 1.8% to 39,446.49. The technology-focused Nasdaq Composite rose 2.9% to 16,660.02. Continue reading...
Asda, Britain's third biggest supermarket group, has posted a 5.3% decline in underlying sales in the three months to the end of JuneWith volatility high, global markets are settling into a yo-yo pattern" as volatility remains high, says Matt Britzman, senior equity analyst at Hargreaves Lansdown:Markets may have simmered down but this roller-coaster week isn't over yet. UK markets opened lower in a move that unwinds a good chunk of yesterday's gains.Corporate earnings are starting to slow but there's plenty for traders to get their teeth into. Continue reading...
Labour is right to get tough with rioters. But that won't solve the deep-seated problems stoking the disorderRachel Reeves has been in the US this week trying to lure investment into the UK. Good luck with that, chancellor. With racist riots occurring nightly, it is perhaps not the best time to be declaring that Britain is open for business.Rather, the message likely to be picked up on the other side of the Atlantic is that Britain is awash with thuggery, that xenophobia is rampant and that the country's economy is broken. The government seems to have been taken by surprise by the far-right violence.Larry Elliott is the Guardian's economics editorDo you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...
Investors may have got too excited about something they don't fully understand - and are now paying the priceHas the artificial intelligence bubble burst? The question has been on the lips of many this week as they have watched the stock market slide, with billions wiped off the value of technology companies that had boomed since the arrival of large language models. It was the economist Hyman Minsky who thought Wall Street encouraged too much risk and gulled investors into parting with cash for all the wrong reasons. The result was ruinous boom-and-bust cycles. His model began with displacement", which is when investors get excited about something they don't fully understand - something like AI.Last year, OpenAI's ChatGPT chatbot got to 100 million users in two months. What follows displacement, according to Minsky, is boom, euphoria, profit-taking and panic. There's been a boom. It is reported that more than 200 AI startups globally are unicorns - meaning they're valued at $1bn or more. Continue reading...
Niesr forecasts raise doubts over chance of further cuts by Bank of England before end of yearThe UK's economic recovery will accelerate over the next year, forcing the Bank of England to keep interest rates higher for longer, according to the National Institute of Economic and Social Research (Niesr).Signalling that bets on further interest rate cuts before the end of the year could be misplaced, the thinktank said a modest economic recovery and the threat from persistent inflationary trends should make the central bank more cautious about reducing the cost of borrowing. Continue reading...
Senior figures praise repeal of law but privately some want full workers' rights overhaul implemented without delayUnions have welcomed the government's move to formally scrap a draconian" anti-strike law that would have ensured a minimum level of service during industrial action as the legislation had restricted workers' rights.The deputy prime minister, Angela Rayner, and the business secretary, Jonathan Reynolds, have written to government departments with sectors that were most affected by the strikes to give a clear message" the measures will be repealed and have urged all metro mayors to start engaging with local employers on the change. Continue reading...
Share markets around the world saw huge falls on Monday - with Japan's Nikkei sinking by 12% - after questions over the health of the US economyFears of a US recession have gripped global markets, triggering a share market rout that prompted investors across Asia, Europe and North America to all unwind their positions - at the same time.The severe plunge has raised questions over whether investors are facing a historic share market crash - similar to the global financial crisis or 1987's Black Monday - or if it's simply an overdue pull-back after a stellar period of strong returns. Continue reading...
by Richard Partington Economics correspondent on (#6PRNM)
Rise in clothing and beauty marks recovery from washout June, says British Retail ConsortiumThe late arrival of warm summer weather drove a recovery in retail sales last month, industry data shows, despite continuing signs of consumers holding back on big ticket purchases amid the cost of living crisis.Figures from the British Retail Consortium showed that UK total retail sales increased by 0.5% year on year in July, a recovery from the washout month of June when colder weather deterred shoppers from spending on the high street. Continue reading...
Shares in FTSE 250 company slump 37% in early trading after Dubai-based Sidara cites geopolitical riskThe share price of the British oil services company John Wood Group has plunged by more than a third after a Dubai-based suitor pulled out of a purchase amid global market turmoil.In a statement to the stock market on Monday the engineering company Sidara said it had pulled out of a bid for Wood in light of rising geopolitical risks and financial market uncertainty". Continue reading...
It was good news for homebuyers as interest rates finally went down. But it has raised a lot of tricky questions for themLast week's Bank of England interest rate cut, the first since 2020, spelled good news for millions of homeowners and would-be buyers - but it has also given them lots to think about.If you are looking to buy a home, what sort of mortgage do you go for, and is this going to push house prices even higher? And if your existing mortgage deal is about to end, should you grab another one right now, or hold fire in case lenders launch cheaper products? Continue reading...
Though tiny compared with rivals, English wine trade is thriving as climate crisis fuels flood of new capital from investorsThe largest English vineyards increased their revenues by 15% last year, as wine investors respond to the climate crisis by planting more vines.While the UK still languishes well down the list of the largest wine-producing nations, below countries such as Uzbekistan and Tunisia, the industry's output has soared in recent years, rising by 77% last year to 161,960 hectolitres, equivalent to 21.6m bottles. Continue reading...
Analysts await key services sector metric to gauge US vulnerability to recession as stocks in Middle East fall amid regional tensionGlobal investors are bracing for further turmoil, after fears that the powerhouse US economy could be drifting towards recession sent stock markets tumbling at the end of last week.Investors in Europe, Asia and New York were spooked by US data that include worse-than-expected job numbers on Thursday, prompting concern that the world's largest economy is in worse shape than previously thought. Continue reading...
Trade bodies blame lack of lab facilities at Brexit border posts for longer delays and shorter shelf life of foodImported food coming into the UK through Brexit border posts is being sent back to Europe to be tested due to a lack of laboratory capacity in Britain, food bodies have said.The SPS Certification Working Group, which represents 30 trade bodies covering 100bn worth of the UK's food supply, has written to the government warning that members are being advised that some samples of imported foods are being sent to countries such as Germany to be tested before they can be released at the border. Continue reading...
A 22bn black hole' could be filled overnight if Labour stopped paying unnecessarily high interest on balances at Threadneedle StreetWell that didn't take long. Less than a month after becoming chancellor Rachel Reeves has gone native at the Treasury, putting a red pencil to plans for new hospitals, roads and rail projects that the government says it can't afford.The latest to bite the dust is the 800m for an exascale supercomputer at the University of Edinburgh and a further 500m for the AI Research Resource, which funds computing power for AI. Continue reading...
Rachel Reeves once spoke about long-term borrowing for vital projects. Now she seems to embrace the spirit of ThatcherismCan somebody please tell the Labour party that they won the election? Most people I know are relieved and delighted that the Conservatives have got their comeuppance; but the relief that Labour is finally back in office is tempered by apprehension that the spectre of Philip Snowden is haunting them all these years later.An iron - Labour - chancellor almost 100 years before Rachel Reeves (briefly in 1924 and then between 1929 and 1931), Snowden, after early popularity with the party and the trade unions, became a victim of the Treasury view" of the day: balance the budget at all costs, rather than balance the economy. Continue reading...
Warren Buffett's firm increased its cash reserves to $227bn, sparking concerns about company's view of US economyWarren Buffett appears to have soured on stocks, letting cash soar at his Berkshire Hathaway firm to nearly $277bn and selling a large chunk of its stake in Apple, even as the conglomerate posted a record quarterly operating profit.Berkshire sold about 390m Apple shares in the second quarter, on top of 115m shares from January to March, as Apple's stock price rose 23%. It still owned about 400m shares worth $84.2bn as of 30 June. Continue reading...
When the honeymoon ends, Keir Starmer's team will be judged on its handling of pressure points - from the economy to North Sea oil drillingIn the Britain of September 1939, it became known as the phoney war. Hitler had invaded Poland. War had been declared. For months, though, there was little military action. At home, the country was placed on a war footing. But these were not yet the decisive times. Those would come later; they would last for years and would change the country for ever.In the Britain of August 2024, we are living through something comparable in terms of the arc of Keir Starmer's prime ministership. Labour has been elected. It is settling into government. It has a radically different project from its predecessors, the scale of which is widely underestimated. But these are not the decisive times either. For Britain, these might be dubbed a period of phoney government. Continue reading...
Fed chair urged to cancel his summer vacation' and take action as unemployment rose to highest rate since October 2021The US labor market cooled significantly last month as unemployment unexpectedly rose, sparking fears of a slowdown across the world's largest economy.American employers added 114,000 jobs in July - short of the 180,000 additions expected by economists, and a marked decrease from the 179,000 added in June. Continue reading...
Mortgage payers and business owners vainly hope cut to 5% signals return to pre-pandemic era of cheap borrowingMortgage payers and business owners will be hopeful that a cut in interest rates to 5% by the Bank of England this week signals a return to the pre-pandemic era of low borrowing costs.Unless much lower interest bills arrive soon, thousands of homeowners and businesses could be forced to sell up. Continue reading...
Non-farm payrolls show US economy created 114,000 jobs in July, well below expectations, sparking speculation of an emergency interest rate cutRyanair has revealed it cancelled some 650 flights in July because of air traffic delays, while rival Wizz Air said the global technology outage that hit Windows computers directly disrupted about 1% of its flights, Press Association reports.The two airlines reported the impact of disruption as they unveiled how many passengers they flew last month.Apple reported better-than-expected earnings in the third quarter of 2024, with buzz about its new AI features offsetting a continuing decline in its key China market.Earnings exceeded analyst predictions despite a year-over-year decline in iPhone sales, with revenue rising 4.9% to $85.78bn in the three months ending 29 June, beating the average analyst estimate of $84.53bn. The company maintained its cash dividend at 25 cents for each share. Continue reading...
Europe's main indices all decline and Japanese equities suffer worst day since 2020 while gold hits fresh recordStock markets in Europe, Asia and New York tumbled on Friday as fears of a US economic slump grew and technology shares were hit by underwhelming earnings.Concerns that the US could be sliding towards a recession spurred a global sell-off, which accelerated after a poor employment report on Friday showed that the US jobs market was cooling fast, pushing up the unemployment rate. Continue reading...
Government must defuse ticking timebomb' of people not saving enough for retirement, says Royal London CEOThe boss of Royal London, the UK's biggest insurance group owned by its members, has expressed caution about Labour's ambition to use pensions to drive economic growth, as he warned of a ticking timebomb" and urged the government to make greater saving for retirement a priority.The chancellor, Rachel Reeves, is launching a landmark pensions review, and pledged a big bang" for private pension funds, as the government wants to unlock billions of pounds to invest in UK infrastructure and housing. Continue reading...
Cooling job market, slowing manufacturing and tumbling stock market lead to big tech sell-offsUS investors triggered a major sell-off on Wall Street on Thursday set off by fears that the job market is cooling, manufacturing is slowing and the Federal Reserve has left cutting interests too late to head off a recession.The Dow Jones fell nearly 500 points (1.2%), while the S&P 500 was also down 1.3%. A series of disappointing results from tech companies have led to sell-offs in big tech. Continue reading...
Even after the base rate reduction, businesses and households will still be paying record sums to borrowBeware the narcissism of small differences. On Thursday, the Bank of England cut UK interest rates by 0.25%, reducing the base rate from 5.25% to 5%. This is not a large cut. It was narrowly approved by a single vote, five to four, on the Bank's monetary policy committee. It is not expected to be the first of a cascade of similar reductions. It cannot therefore be claimed as marking a real turning point for Britain's economy.Instead, the cut marks a milestone along the road and a cautious reversal, welcome as far as it goes, after four years of heightened rates in the wake of the pandemic and, in particular, the shock to energy prices caused by Russia's invasion of Ukraine. It follows a similar reduction by the European Central Bank in June. And it came a day after the Federal Reserve hinted that it could cut US rates in September. Continue reading...
City economists predict further cut in November, after first reduction in UK interest rates since 2020, as Bank lifts its growth forecast for this year
Emergency cuts, empty pockets, a maxed-out credit card': why is Rachel Reeves using the language and logic of austerity?A spectre is haunting Rachel Reeves. It has the tonsure of an abbot and a jawline kept taut by intermittent fasting, but any trace of asceticism is dispelled by its perma-smirk: a half-smile, half-jeer that taunts I've got one over you!" It is the spectre of George Osborne.I am not the only one to see his shade. Other commentators have observed this week how the new chancellor has copied her predecessor's trick of beaming over the threshold of No 11, before scowling like Captain Renault and claiming to be Shocked! Shocked! at the debauchery inside.Aditya Chakrabortty is a Guardian columnist Continue reading...
Chair Jay Powell says central bank getting closer to the point' of possible rate cut - but we're not quite there yet'The US Federal Reserve announced on Wednesday it will hold interest rates steady, though officials hinted at optimism that rates could be cut later this year.Interest rates are set by the Fed's federal open market committee (FOMC), which meets eight times a year and will next meet in September. Continue reading...
Live coverage of business, economics and financial markets as 64-year-old aerospace veteran becomes latest boss tasked with turning around US manufacturer's fortunesDaniel Kral of Oxford Economics questions if the small dip in Eurozone services inflation will be enough to persuade the European Central Bank to continue cutting interest rates.He points out that it has stayed sticky at about 4% during all of 2024. That is not a sign that inflationary pressures are cooling in Europe's economy. Continue reading...
Shadow chancellor says successor confected story of black hole' to distract from tax rises, but things are not clearcutRachel Reeves has accused Jeremy Hunt, her predecessor as chancellor, of lying about the state of the public finances inherited by the Labour government. Hunt has dismissed the claims as absolute nonsense". Continue reading...
Rolling coverage of the latest economic and financial news, including growth figures from across the eurozoneShares in drinks giant Diageo have sunk to the bottom of the FTSE 100 leaderboard, down 8%, after reporting a drop in sales and profits.Diageo, whose brands include Johnnie Walker, Captain Morgan, Guinness, Smirnoff and Baileys, posted a 1.4% drop in reported net sales in the year to the end of June, to $20.3bn.Fiscal 24 was impacted by materially weaker performance in LAC [the Latin America and Caribbean region].Excluding LAC, organic net sales grew 1.8%, driven by resilient growth in our Africa, Asia Pacific and Europe regions. This offset the decline in North America, which was attributable to a cautious consumer environment and the impact of lapping inventory replenishment in the prior year. Continue reading...
In today's newsletter: The new chancellor announced a series of public spending cuts, blaming the previous government while also looking to their playbook Sign up here for our daily newsletter, First EditionGood morning.During the election campaign, Labour said economic growth would fund their pledges, despite warnings from economists that their sums did not add up. Many said that the next government would have to either cut spending, raise taxes, or abandon certain pledges. That prediction seems to be coming to bear.UK news | Two children have died and nine have been injured, six critically, after a series of stabbings at a children's dance class in Southport on Monday. Two adults are also in critical condition after what police described as a ferocious attack". The stabbings took place at a Taylor Swift-themed yoga and dance class at a studio in the north-west seaside town.US news | Republican presidential candidate Donald Trump has defended Senator JD Vance's past comments, in which he called Kamala Harris and other Democrats childless cat ladies", saying that Vance was simply trying to show how much he values family life.Media | The former BBC presenter, Huw Edwards, has been charged with three counts of making indecent images of children. Edwards, who left the BBC in April, will appear at Westminster magistrates court on Wednesday on charges relating to images shared on a WhatsApp chat.Middle East | A frantic diplomatic push to deter Israel from striking Beirut in response to a deadly rocket attack on the Golan Heights was under way on Monday, as the governments of the UK, Germany, France and America issued travel warnings to their citizens, calling on them to leave Lebanon or avoid travel there.Transport | HS2 has revealed more than 2bn in costs linked to Rishi Sunak's decision to downgrade the high-speed rail line. The UK's largest infrastructure project revealed that it had written off 1.1bn in costs incurred during phase two", which was due to link Birmingham to Manchester. Continue reading...
The chancellor's initial cuts must be followed by an autumn budget that taxes the richest and focuses on growthThat was authentic anger, Rachel Reeves's indignation well justified as she thundered in the Commons at the inheritance she has been left. Labour is genuinely outraged at the destruction the former chancellor Jeremy Hunt deliberately inflicted, knowing his party would be out of there for years to come. They did indeed put party before country", as she said, by cutting tax without having the funds to pay for their promises. The Treasury's audit shows her victorious battlefield strewn with landmines: unfeasible commitments for Boris Johnson's fantasy 40 new hospitals, roads without budgets, every public service burned out and councils everywhere tipping into bankruptcy. This was not mere fecklessness but deliberate sabotage, an act of treason against the country.That Tory wreckage will stay vividly imprinted in the public memory. All that matters now is how to find the resources to breathe renewal and growth into the national decay all around us. The depth of the dishonesty in this year's budget meant she made tough cuts in-year: the winter fuel allowance made no sense for pensioners not on benefits. Social care charging caps, endlessly delayed, will not go ahead: the idea needs to be wrapped up in a better future reform. She will pay all public employees the raise they deserve, though this is still behind the private sector. Cutting 3.2bn shared between every cabinet minister's budget looks too harsh after the starvation years: what efficiency" savings could there be? Continue reading...
by Richard Partington Economics correspondent on (#6PK8R)
Figures show weak consumer demand persisted in June and July as Bank of England ponders interest rate decisionUK consumers have cut back on summer spending amid the impact of poor weather and the cost of living crisis, figures show, underscoring the challenge for the Bank of England ahead of its interest rate decision on Thursday.In a sign of weakness in consumer spending over the summer months, figures from the British Retail Consortium (BRC) show that clothing and footwear prices fell for the seventh consecutive month in July as weak demand persisted. Continue reading...
by Sarah Marsh Consumer affairs correspondent on (#6PK3J)
Larger number of homes for sale will help push up prices by 2%, says property portalHouse prices are expected to rise over the second half of the year across the UK, according to a forecast, with the market bolstered by more people selling their homes. Prices are likely to increase by 2% towards the end of 2024, Zoopla has predicted.The improved outlook for the housing market was the result of an increased number of homes for sale, the property portal said. The number of sales agreed in the four weeks to 21 July was 16% higher than the same period a year ago and the average estate agent had more homes for sale than at any point in the past six years. Continue reading...
by Pippa Crerar, Larry Elliott and Peter Walker on (#6PK06)
Measures include cutting winter fuel payments for wealthier pensioners and shelving cap on social care paymentsRachel Reeves has cut winter fuel payments for 10 million wealthier pensioners as she sought to plug a 22bn black hole in the public finances she said was covered up" by the Conservative government, while hinting at tax rises in her first autumn budget.The chancellor also shelved the long-delayed cap on what people would pay for social care as she ignited a bonfire of Tory policies she said would be needed to deal with the deficit, telling MPs: If we cannot afford it, we cannot do it." Continue reading...
The chancellor was right to call out her predecessors' culpability for a disastrous inheritance. But Labour must be bolderIn his emergency budget" of 2010, delivered a month after that year's general election, the newly appointed chancellor, George Osborne, set out the rationale for an age of austerity that would frame British politics for the next decade. Falsely associating the devastating impact of the global economic crash with Labour spending and borrowing policies, Mr Osborne exploited a crisis to launch a disastrous crusade to shrink the size of the state.On Monday afternoon, in another defining Commons moment, Rachel Reeves also turned on her immediate predecessors, but with more legitimate arguments at her disposal. In a withering analysis, Ms Reeves laid out a 22bn hole" of unfunded commitments for this year, much of it discovered only on opening up the books in office. The outgoing government, which calculated that an election defeat was assured, had made no attempt to make its own sums add up.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...
by Vicky Graham (now) and Andrew Sparrow (earlier) on (#6PJEQ)
Chancellor suggests budget, on 30 October, will involve tax rises and cuts to spending and benefitsDowning Street has refused to comment on a report saying junior doctors are being offered a pay rise worth about 20% over two years.In a story for the Times, Steven Swinford reports:The British Medical Association's (BMA) junior doctors committee has recommended an offer that includes a backdated pay rise of 4.05 per cent for 2023-24, on top of an existing increase of between 8.8 per cent and 10.3 per cent.Junior doctors will be given a further pay rise of 6 per cent for 2024-25, which will be topped up by a consolidated 1,000 payment. This is equivalent to a pay rise of between 7 per cent and 9 per cent.As we've said before, we're committed to working to find a solution, resolving this dispute, but I can't get into detailed running commentary on negotiations.We've been honest with the public and the sector about the economic circumstances we face. But the government is determined to do the hard work necessary to finally bring these strikes to an end. Continue reading...
The chancellor's message was: this is going to hurt, but it's not my fault. Haven't we heard that somewhere before?For George Osborne read Rachel Reeves. For 2010 read 2024. The party affiliation might be different but the message from the two chancellors shortly after arriving at the Treasury was the same. In both cases it amounted to two basic propositions: this is going to hurt, and the other lot are to blame.Like Osborne, Reeves said she would not duck tough decisions, and she was as good as her word. Labour's first chancellor in 14 years announced 5.5bn of spending cuts and made no secret of the fact there would be more pain to come in the budget on 30 October. Continue reading...
Live, rolling coverage of business, economics and financial markets as McDonald's faces pressure to cut prices and lure back customersA three month view of Bitcoin prices shows the steady price climb in recent weeks, which was boosted even further on the prospect that Trump would clear regulatory hurdles to the cryptocurrency's ascent.A closer look at the rise in cryptocurrency over the past five days: Continue reading...