Oil and FTSE plunge on China fears
In This Article:
Oil prices and the FTSE 100 plunged today after China held off announcing fresh measures to boost its economy.
Brent crude fell more than 5pc, while the FTSE 100 lost 1.4pc.
China’s National Development and Reform Commission (NDRC) disappointed investors by not announcing any further stimulus measures, which caused Hong Kong shares to slump.
Hong Kong’s Hang Seng index lost 9.4pc, suffering its worst day in 16 years.
In the City, mining and energy stocks - key industries in the FTSE 100 - were among the hardest hit, caused by worries that a lack of demand from China would be a negative influence on commodity and oil prices.
Oil prices sank by 5.3pc, also on worries about Chinese demand, and as Israel comes under international pressure not to strike Iranian oil installations.
It was fear about Israel’s response to Iran’s missile attack last week that on Monday had sent oil prices soaring to their highest levels since August.
But President Joe Biden has urged Israel not to attack Iran’s oil facilities, fearing it could push up oil prices, in turn hitting the US economy and influencing the US election.
Meanwhile, the FTSE 100 was also hit after the housebuilder Vistry revealed that it had underestimated the cost of building nine developments.
Shares in the company were briefly suspended from trading after plunging by as much as 36pc after it issued a profit warning which it said would impact earnings for the next three years.
The news wiped off as much as ￡1.5bn from the shares. It finished the day as the biggest faller in the FTSE 100, closing down 24.3pc.
Read the latest updates below.
06:17 PM BST
Signing off...
Thanks for joining us on the Markets blog on the day worries about the Chinese economy have pushed down mining, oil and luxury goods stocks around the world.
Brent crude, the global benchmark for oil, is down over 5.1pc and UK and European stock indexes fell. However, Wall Street has risen as a result of strong support for big tech firms, even though US mining and energy stocks took a hammering. The S&P 500 is currently up 0.6pc.
We will be back in the morning with all the latest from the worlds of business and finance. Do join us from around 7am.
06:09 PM BST
Britain needs fresh approach to risk-taking, says FCA boss
The head of Britain’s financial watchdog has urged the UK to adopt a “new mindset towards risk” amid concerns the regulator has failed to boost growth.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), said a new era of “predictable volatility”, where wild swings in markets happen more frequently due to increased connectivity in global markets, meant regulators and companies had to change their behaviour.
In a speech delivered at the FCA’s International Capital Markets Conference on Tuesday, he said that market shocks that used to happen once in a decade were now happening each month.
Because of the changing landscape, Mr Rathi said the FCA was “challenging long-standing principles to seize the opportunities” to boost growth.
This includes the regulator’s proposed stock market listing reforms to make it easier and cheaper for companies to raise cash and encouraging pension funds to take greater risks in their investments.
05:57 PM BST
Miners and luxury goods companies drag down European stock markets
European stocks dropped today, as a lack of fresh details over China’s stimulus measures sparked a selloff in sectors linked to the world’s second-largest economy such as mining and luxury goods.
The pan-European Stoxx 600 index, which includes some of Britain’s biggest companies, dropped around 1pc to touch a two-week low, before paring losses and closing down 0.6pc.
Luxury firms such as LVMH, Kering, Burberry and Hermes, which draw a large part of their revenue from China, fell in the range of 0.6pc to 4.5pc.
Miners fell the most among European sectors, down 4.4pc, as copper and iron ore prices dropped after Chinese officials failed to inspire confidence in stimulus plans intended to revive the economy.
Shares of spirits makers Remy Cointreau and Pernod Ricard dropped 6.4pc and 4.2pc, respectively, as China announced provisional anti-dumping measures on brandy imports from the European Union.
Chris Beauchamp, chief market analyst at IG Group, said:
The market can live with some additional tariffs here and there, but it can get escalated if they impose dramatic tariffs more quickly to really turn the screws.
A 5pc slide in crude prices hurt energy-focused stock indexes in the UK and Norway.
05:44 PM BST
French luxury giant appoints new boss at Gucci to revive sales
French luxury group Kering has named Stefano Cantino as the new boss of Gucci to revive sales at the troubled brand.
He will replace Jean-Francois Palus, a close associate of Kering chief executive Francois-Henri Pinault, who was named interim head of the Italian fashion company in July 2023 with the aim of hiring new top management.
Francesca Bellettini, deputy chief executive of Kering, said:
I am confident that, building on what has been set up over the past 15 months, Stefano and the Gucci team will succeed in the mission to take Gucci back to the leadership the brand deserves.
Mr Cantino joined Gucci in May 2024 as deputy chief executive following five-years at Louis Vuitton, where he oversaw communications and image, and 20 years at Prada.
Gucci sales fell 20pc in the first half of the year to €4bn euros (￡3.4bn). It represents almost half of Kering’s revenue and two-thirds of its operating profits.
05:36 PM BST
Wall Street rises, but energy and mining stocks fall on China worries
Wall Street’s main indexes rose this afternoon as investors look towards a season of quarterly earnings reports and await new inflation data.
The indexes regained some ground after a selloff on Monday, where all three major indexes fell roughly 1pc, pressured by surging Treasury yields, escalating Middle East tensions, and a re-evaluation of US interest rate expectations.
The Dow Jones Industrial Average rose 0.2pc, the S&P 500 gained 0.8pc and the Nasdaq Composite gained 1.2pc.
Most S&P 500 sectors were up, with the information technology index leading the gains with a 1.8pc rise.
However, amid worries around Chinese demand for metals and oil, the S&P 500 Metals & Mining Industry index plunged 3.1pc.
The S&P 500 Energy index lost 3pc and was on track for its worst day since April 30.
05:16 PM BST
EU says it will ‘robustly challenge’ China over brand exports
The European Union will “robustly challenge” at the World Trade Organisation (WTO) a decision by China to impose anti-dumping measures on imports of European brandy.
The European Commission said that using anti-dumping defences “for inappropriate reasons is a clear breach of WTO rules”.
04:57 PM BST
Russia blocks social media platform
Russia’s communications regulator has blocked the online discussion service Discord for violating Russian law, the Russian state news agency Tass reported on Tuesday.
It makes the San Francisco-based company the latest foreign technology platform to be restricted in Russia.
Russia has for several years ordered foreign technology platforms to remove content it regards as illegal, issuing relatively small but regular fines when it rules that companies have failed to comply.
The regulator, Roskomnadzor, last week ordered Discord to delete almost 1,000 items it deemed illegal and has previously fined the company for failing to remove banned content.
Moscow blocked Twitter, which has since rebranded as X, as well as Meta Platforms’ Facebook and Instagram soon after the invasion of Ukraine in February 2022.
The Telegraph has approached Discord for comment.
04:55 PM BST
FTSE 100 closes down 1.4pc
The FTSE 100 closed down 1.4pc.
The biggest riser was tobacco giant Imperial Brands, up 4.1pc, followed by British Airways owner IAG, up 2.1pc.
The largest fall was by housebuilder Vistry, which fell 24.3pc, followed by Anglo American, down 6.7pc.
Meanwhile, the mid-cap FTSE 250 fell 1.1pc.
Food producer Greencore added 8.8pc, while real estate investment trust PRS Reit rose 7.2pc.
At the other end of the index, engineering group Senior lost 12.8pc, while Ithaca Energy lost 9.9pc.
04:50 PM BST
Stock markets diverge as Hong Kong sinks and oil prices fall
Oil prices sank and global stock markets diverged today, with Hong Kong suffering its worst day in 16 years as China held off announcing fresh measures to boost its economy.
Wall Street’s main indexes were mostly higher this afternoon in New York on optimism about the health of the US economy.
European stock markets closed lower, pulled down by the slide in Asia and by dashed hopes of greater Chinese demand.
Kathleen Brooks, research director at XTB, said:
Financial markets are mostly in a risk-off mood on Tuesday, as China has stopped its drip feed of stimulus [and] commodity prices fall.
Oil prices were down as much as 5 percent at times in volatile trading Tuesday as doubts returned about Chinese demand and Israel comes under international pressure not to strike Iranian oil installations.
Healthy US stockpiles and expectations of ample supply both in and out of Opec also helped dent oil’s recent rally.
Global stock markets have been lifted in recent sessions as China announced stimulus measures, boosting hopes of greater Chinese demand for oil, metals, luxury goods and more.
Share prices across all three sectors slumped Tuesday, pushing Europe’s main indices into the red.
European luxury and spirits companies were further hit as Beijing announced tariffs on brandy imported from the European Union, in an apparent riposte to EU duties on Chinese electric cars.
Remy Cointreau - whose brands include Louis XIII, Remy Martin and Cointreau - tumbled more than 6pc.
Pernod Ricard, which owns Martell cognac, dropped nearly 4pc.
LVMH, which owns Hennessy cognac, shed more than 3pc and Gucci-owner Kering retreated over 4pc.
Burberry shares retreated 5.6pc in London. London was also pulled lower by energy and mining companies.
US shares slumped Monday after rallying the previous week, and that encouraged some “Pavlovian buy-the-dip interest” on Tuesday afternoon, according to Patrick O’Hare, an analyst at Briefing.com.
04:28 PM BST
China says raised ‘serious concerns’ with US over trade curbs
China’s commerce minister Wang Wentao today raised “serious concerns” with his US counterpart Gina Raimondo on Washington’s curbs on its trade. He urged the world’s largest economy to lift sanctions on his country’s firms “as soon as possible”.
The call, which Beijing described as “candid, in-depth and pragmatic”, comes a few weeks after sharp US tariff increases on Chinese electric vehicles, EV batteries and solar cells took effect.
Mr Wang “focused on expressing serious concerns about US semiconductor policy on China and its restrictions on China’s network-connected cars,” according to a statement from Beijing’s commerce ministry.
He “stressed that it is particularly necessary to clarify national security boundaries in economic and trade fields”.
That would allow for “maintaining the security and stability of global industrial and supply chains”, the ministry said.
It added that Beijing “urges the US side to attach importance to the specific concerns of Chinese companies, lift sanctions on Chinese companies as soon as possible, and improve the business environment for Chinese companies in the United States”.
04:20 PM BST
India races to exploit oilfields before world turns green
India is to ramp up the exploitation of its oil reserves before the switch to green energy curbs the market for fossil fuels, the country’s minister for petroleum and natural gas has said.
Hardeep Singh Puri told the Financial Times’ Energy Transition Summit India:
I was with Exxon yesterday. I was with BP a few days earlier. I have had meetings with Chevron ... I went to Brazil and had a discussion with Petrobras.
04:11 PM BST
Boeing delivers 27 Max jets in September despite strike
Boeing delivered 33 new aircraft to customers in September in spite of a labor strike of Seattle-area workers that has shuttered two major assembly plants, the company said Tuesday.
The aerospace giant delivered 27 Boeing 737 Max jets, which are assembled in Renton, Washington, which has gone quiet since the strike launched on Sept 13 by the International Association of Machinists and Aerospace Workers (IAM).
The 737 MAX planes were cleared for delivery by the Federal Aviation Administration, according to Boeing, which expects fewer deliveries in the coming period due to the strike.
Boeing also delivered four 787 Dreamliner planes, which are assembled at a non-union plant in Charleston, South Carolina that is not out on strike.
With the strike now in its fourth week, Boeing and the IAM met on Monday to resume negotiations, along with the Federal Mediation and Conciliation Service.
04:03 PM BST
Oil and FTSE plunge on China fears
Oil prices and the FTSE 100 plunged today after China held off announcing fresh measures to boost its economy.
Brent crude fell more than 4pc, while the FTSE 100 lost 1.4pc.
China’s National Development and Reform Commission (NDRC) disappointed investors by not announcing any further stimulus measures, which caused Hong Kong shares to slump.
Hong Kong’s Hang Seng index lost 9.4pc, suffering its worst day in 16 years.
In the City, mining and energy stocks - key industries in the FTSE 100 - were among the hardest hit, caused by worries that a lack of demand from China would be a negative influence on commodity and oil prices.
Oil prices sank more than 4pc, also on worries about Chinese demand, and as Israel comes under international pressure not to strike Iranian oil installations.
It was fear about Israel’s response to Iran’s missile attack last week that on Monday had sent oil prices soaring to their highest levels since August.
But President Joe Biden has urged Israel not to attack Iran’s oil facilities, fearing it could push up oil prices, in turn hitting the US economy and influencing the US election.
Meanwhile, the FTSE 100 was also hit after the housebuilder Vistry revealed that it had underestimated the cost of building nine developments.
Shares in the company were briefly suspended from trading after plunging by as much as 36pc after it issued a profit warning which it said would impact earnings for the next three years.
The news wiped off as much as ￡1.5bn from the shares.
03:37 PM BST
Wall Street bounces back after Monday sell-off
Wall Street’s main indexes have risen this afternoon, a day after they all lost roughly 1pc.
The S&P 500 gained 0.6pc, the Nasdaq Composite rose 1pc and the Dow Jones Industrial Average added 0.1pc.
All three major indexes had tumbled on Monday, pressured by surging Treasury yields, escalating Middle East tensions, and a re-evaluation of US rate expectations.
Fiona Cincotta, senior market analyst at City Index, said:
We did [a] see strong sell off yesterday so it’s not unnatural to see a slight bounce, particularly as there’s a vacuum of fresh data today.
03:30 PM BST
‘Godfather of AI’ wins the Nobel Prize
A British-Canadian computer scientist who warned that artificial intelligence (AI) could pose an existential threat to humanity has been awarded this year’s Nobel Prize in Physics.
Professor Geoffrey Hinton, often touted as the “godfather of AI”, shares the honour with US academic John Hopfield for their pioneering work on machine learning, which powers AI.
The announcement was made by the Royal Swedish Academy of Sciences at a press conference in Stockholm, Sweden.
Prof Hinton, 76, who has warned about the dangers of intelligent machines, said he was “flabbergasted”, adding: “I had no idea this would happen. I’m very surprised.”
The University of Toronto professor resigned from Google last year, saying he was worried about the “existential risk” posed by machines that could outsmart humans.
Speaking on the phone at the event in Stockholm, Prof Hinton described the call about being awarded the Nobel as a “bolt from the blue”, saying: “I am in a cheap hotel in California that does not have an internet connection and does not have a very good phone connection.
“I was going to get an MRI scan today, but I think I’ll have to cancel that.”
With that, I’m off to reboot and my colleague Alex Singleton will upload updates through to the evening.
03:13 PM BST
Households to be paid all year round to cut electricity
Households and businesses will be paid to cut electricity use all year round as part of plans by Ed Miliband to shift the UK’s grid reliance toward renewable energy.
Such payments, aimed at minimising the risk of blackouts, have been on offer for the last two years but only in winter. They were originally part of the UK’s response to the energy shortage caused by the Ukraine conflict.
The plan to make it a year-round option was announced on Tuesday by the The National Energy System Operator (Neso) which is seeking approval from Ofgem, the industry regulator.
It follows the closure of the UK’s last coal-fired power plant at Ratcliffe-on-Soar, and the looming closure of eight of the UK’s nine remaining nuclear reactors – with four closing in 2026 and another four in 2028.
Read how households can sign up.
02:58 PM BST
Brewery closure ‘devastating but predictable’, says Camra chairman
The national chairman of the Campaign for Real Ale (Camra) has described the planned closure of an historic brewery which opened in 1875 as “devastating but predictable”.
The Carlsberg Marston’s Brewing Company (CMBC) announced on Monday that it proposes to close its historic Banks’s Brewery in Wolverhampton in the autumn of next year.
CMBC bought out pub operator Marston’s remaining stake in the former joint venture in July for around ￡206m.
It said the restructuring plan was a response to a decision by Mahou San Miguel not to renew its long-term exclusive licence partnership from 2025, and the decline of cask ale volumes over several years.
Ash Corbett-Collins, the chairman of Camra, said: “This is devastating but predictable news from CMBC.
“Following the buyout of CMBC by Carlsberg - essentially turning Marston’s brewing business into a globally owned brand - we expected news like this sooner rather than later.”
Mr Corbett-Collins added: “However, we do welcome the news that Carlsberg are open to offers for purchase of the site for continued brewing operations.”
02:45 PM BST
HS2 likely to reach Euston, signals Transport Secretary
HS2 is likely to reach Euston, the Transport Secretary has indicated, saying it “would never have made sense” for that not to happen.
Louise Haigh said an announcement on the project will be made “soon”, and could happen around the time of the Budget on October 30.
In October last year, then-prime minister Rishi Sunak announced that extending HS2 from Old Oak Common, in the suburbs of west London, to Euston, near the centre of the capital, was reliant on private investment.
This was aimed at saving ￡6.5bn of taxpayers’ money.
Major HS2 construction work at a site alongside the existing station has been halted since the previous March due to funding doubts.
The Commons’ Public Accounts Committee issued a report in February stating it was “highly sceptical” that the Department for Transport would be able to attract private investment on “the scale and speed required” to make extending HS2 to Euston “a success”.
Asked by Times Radio on Tuesday if it is affordable for HS2 to reach Euston, Ms Haigh replied: “We will be making an announcement on that soon.
“But it certainly would never have made sense to leave it between Old Oak Common and Birmingham.”
02:34 PM BST
Wall Street rebounds ahead of inflation figures
US stock markets have rebounded from Monday’s sell-off as investors wait to see what inflation figures will show about the American economy later this week.
The Dow Jones Industrial Average edged up 0.2pc to 42,027.19, the S&P 500 rose 0.4pc to 5,720.12 while the tech-heavy Nasdaq Composite gained 0.5pc to 18,013.94.
02:17 PM BST
Pro-Palestinian activists cover Allianz offices in red paint
Pro-Palestinian activists targeted the British offices of Allianz today, covering the outside with red paint in protest over the company’s links to Israeli defence company Elbit Systems.
Palestine Action claimed responsibility for the protest on social media platform X, and said demonstrators had attacked 10 Allianz offices in the UK and “occupied” the insurer’s UK headquarters in Guildford overnight.
It said: “Without insurance, Elbit couldn’t operate in Britain.”
The group described the German financial services group as “investors and insurers of Israel’s biggest weapons firm”.
An Allianz spokesman confirmed disruption at several of the company’s offices.
Police said officers were called at 4am to reports of red paint being sprayed onto two buildings in London’s City financial district.
They arrested a 19-year-old man on suspicion of criminal damage following a foot chase.
Authorities also cordoned off Allianz Commercial’s office in the City after the vandalism, which coincides with the first anniversary of the start of the Gaza war, triggered by Palestinian militant group Hamas’ attack on Israel on October 7, 2023.
02:02 PM BST
Gas prices fall amid growing stockpiles
Wholesale gas prices have fallen as Europe’s gas storage sites filled up even more thanks to mild weather.
Dutch front-month futures, used as a benchmark for pricing on the continent, have fallen as much as 2pc today to less than €40 per megawatt hour.
It comes as storage sites are almost 95pc full, while missile attacks between Israel and Iran have not, so far, become a wider conflict in the Middle East which could threaten supplies.
01:49 PM BST
Migration surge drives fastest population increase on record
A surge in net migration has driven the fastest increase in the size of the UK population since at least the 1970s, official data shows.
The population grew by 1pc to 68.3m in the year to mid-2023, according to the Office for National Statistics (ONS), which was the biggest percentage increase since records began in 1971.
This was driven entirely by net migration as more people died across the UK than were born over the period, meaning the population would have shrunk without new arrivals.
Read how there has been a surge in arrival numbers to the UK in recent years.
01:35 PM BST
Britain’s borrowing costs nearly double Germany’s as investors brace for Budget
The gap between UK and German borrowing costs is at its widest in more than a year as Rachel Reeves prepares to announce plans to fill a ￡22bn “black hole” in the public finances.
The yield on 10-year UK bonds - the return the Government promises to pay buyers of its debt - is close to its highest level in three months, having soared by about 25 basis points over the last month to 4.2pc.
Meanwhile, Germany’s 10-year yield stands at 2.26pc.
It has left the difference between yields in Britain and Germany - known as the spread - at its widest level since August 2023.
UK bond yields have moved higher as investors expect the Bank of England to speed up the pace of interest rate cuts.
Governor Andrew Bailey said last week that policymakers may become “more aggressive” about reducing the Bank Rate from the current level of 5pc.
01:17 PM BST
Changing Budget rules will not lead to Truss-moment, says No 10
Downing Street dismissed concerns that changing the fiscal rules in the Budget would trigger a Liz Truss-style meltdown.
There has been speculation that Chancellor Rachel Reeves is preparing to amend the fiscal rules to potentially unlock billions in additional spending.
Fears have been voiced by some bond market analysts that a change could unleash chaos similar to Ms Truss’s mini-Budget.
Asked whether the Chancellor was still committed to the borrowing rules she set out before the election, the Prime Minister’s official spokesman said:
Well, I would obviously not accept that characterisation.
Pressed on whether the current fiscal rules are set in stone, Number 10 said: “The Government remains committed to the fiscal rules that were set out in the manifesto.”
12:53 PM BST
Shein’s UK revenues hit ￡1.6bn ahead of planned London float
Shein’s British business made ￡1.6bn in revenue last year, a filing by the online fast-fashion group showed today, as the company prepares for a planned listing in London.
Shein’s rapid growth, which saw pre-tax profit reach ￡24.4m, has been fuelled by its low-cost business model of sending parcels to customers worldwide straight from factories in China.
However, the business is facing opposition from some rival retailers who are concerned that its use of a legal tax loophole for overseas shipments has given it an unfair advantage.
It has disrupted the budget fashion industry and put pressure on incumbents such as Sweden’s H&M and London-listed Asos and Boohoo.
The 2023 revenue for Shein Distribution UK Limited marked a 38pc increase on its previously reported sales of ￡1.1bn over the 16-month period from September 6 2021 to the end of 2022.
12:37 PM BST
Channel 4 sinks ￡52m into the red with biggest-ever funding shortfall
Channel 4 has revealed a ￡52m black hole in its finances after posting the biggest deficit in its 40-year history.
The Left-leaning broadcaster, which is publicly owned but commercially funded, said it lost money last year after an advertising slowdown impacted revenues.
However, Alex Mahon, the chief executive, blamed the deficit on its decision to keep investing in programming despite the tough economic backdrop.
Read how it is grappling with a sharp slowdown in the advertising market.
12:08 PM BST
Pepsi sales fall as consumers cut back on snacks and drinks
PepsiCo said sales fell as US consumers cut back on buying its snacks and drinks.
The company now expects its organic revenue to increase in the low single-digit range for the year. It had expected an increase of 4pc.
Globally, PepsiCo said it raised prices by 3pc, leading sales volumes to fall in every market except Europe.
PepsiCo said its performance in North America was “subdued,” hurt by a big recall of its Quaker Oats granola bars and cereals as well as weak demand for its Frito-Lay snacks and drinks.
Frito-Lay North America’s sales volumes slipped 1.5pc, while North American beverage volumes fell 3pc.
PepsiCo shares fell 1pc in premarket trading.
11:48 AM BST
US stock markets rise as bond yields fall
US stock indexes have risen ahead of the opening bell after a sell-off on Monday triggered by rising yields in the bond market.
All three major indexes closed down around 1pc on Monday as a jump in Treasury yields put pressure on stocks amid expectations that the Federal Reserve will cut interest rates at a slower pace than previously forecast.
US Treasury yields retreated slightly today, although the yield on the benchmark 10-year note remained above 4pc.
Bond yields - a proxy measure of government borrowing costs - rose after strong jobs figures at the end of last week indicated the American economy is proving resilient.
Traders have priced in a 90pc chance of a quarter of a percentage point rate cut next month by the Fed, having put the odds of a larger half a point reduction at 40pc just a week ago.
Meanwhile, Fed Governor Adriana Kugler said earlier today that she supported further interest rate cuts if inflation continues to ease, as she expects.
In premarket trading, the Dow Jones Industrial Average was up 0.1pc, the S&P 500 rose 0.3pc and the Nasdaq 100 had gained 0.4pc.
11:27 AM BST
Oil falls amid China demand fears
The price of oil has dropped afetr traders were left disappointed by a lack of new stimulus for China’s economy and few details about measures announced last month.
Brent crude, the international benchmark, was down as much as 2.6pc today below $79 a barrel. US-produced West Texas Intermediate fell as much as 2.6pc to nearly $75.
It comes just a day after Brent briefly tipped back above $80 and puts it on track to end a five-day rally.
Today the National Development and Reform Commission, China’s economic planning agency, announced 200bn yuan (￡21.6bn) in spending would be advanced from next year.
The figure spooked investors as it was well below analysts’ forecasts for a fiscal package worth as much as 3 trillion yuan (￡325bn).
ING analysts Ewa Manthey and Warren Patterson wrote: “China failed to meet the market expectations for more government spending. Without policy support, an economic slowdown could keep China’s oil demand subdued in the short to medium term.”
11:06 AM BST
Sterling edges up after slump triggered by Bailey
The pound has rebounded slightly from three-week lows after the Governor of the Bank of England suggested interest rate cuts could become “more aggressive”.
Sterling tumbled last week after the comments from Andrew Bailey and hit $1.306 on Monday, its lowest since September 12.
The pound has gained 0.1pc today to $1.31, although it is still about 2.5pc below its more than two-and-a-half year peak in late-September.
Michael Pfister, FX analyst at Commerzbank, said:
With inflation remaining stubbornly high, the real economy picking up and the prospect of a more stable government, we expect the pound to remain well supported in the coming months.
10:42 AM BST
FTSE 100 sinks at sharpest pace in two months
The FTSE 100 has dropped at its fastest pace since early August amid concerns about the health of the Chinese economy.
The UK’s blue-chip stock index was down as much as 1.3pc after Beijing officials gave few details on China’s long-awaited fiscal stimulus plans.
It sent mining stocks sharply down amid fears of low demand, sinking as much as 5.4pc in their worst day since March 2023.
Antofagasta was down 5.5pc, Anglo American fell 5.4pc, Rio Tinto dropped 4.6pc and Glencore fell 4pc.
Rong Ren Goh, a portfolio manager at Eastspring Investments, said: “Markets were hoping to obtain some guidance on the size of fiscal stimulus.
“It is likely we see markets consolidating and digesting what has already been announced, which arguably is meaningful, but not quite enough to satiate lofty expectations.”
10:22 AM BST
Hong Kong shares suffer worst day since 2008
Hong Kong stocks suffered their biggest fall in 16 years after China left investors disappointed by a lack of new stimulus for its struggling economy.
The Hang Seng Index dived 9.4pc, or 2,172.99 points, to 20,926.79 as officials gave few details about measures announced last month.
The loss is its heaviest since 2008 during the global financial crisis.
Shanghai and Shenzhen started the day on a blistering note - piling on more than 10pc - as they reopened after a week-long holiday.
But investors cut back those gains as a much-anticipated news conference - in which there were hopes for more meat on the plans or another round of pledges - failed to provide much detail.
Zheng Shanjie, head of China’s National Development and Reform Commission (NDRC), said the government was “fully confident” it will achieve its goal of around 5pc growth this year - a target analysts say is optimistic.
That gave traders little reason to press on with a market rally that has seen Hong Kong, Shanghai and Shenzhen bound more than 20pc higher since the first batch of measures was announced. Shanghai ended up just 4.6pc and Shenzhen 8.9pc.
Stephen Innes of SPI Asset Management said: “China’s markets rally has hit a wall, leaving investors deflated.”
10:06 AM BST
France to make 240m fewer bottles of wine than expected
France’s vineyards will make about 240m fewer bottles of wine this year than expected after a poor harvest.
The French farm ministry has lowered its projection for this year’s wine output after adverse weather conditions last year.
The nation’s wine industry is expected to produce 37.5m hectolitres, down from 39.3m forecast last month and down 22pc from last year.
The revised forecast, based on the latest harvest results, was 15pc below the five-year average of 44.2m hectolitres.
A hectolitre is the equivalent of 100 litres, or 133 standard wine bottles.
09:44 AM BST
Senior to cut jobs as Boeing strikes hit wider industry
Aerospace parts maker Senior has revealed it is slashing its global workforce and furloughing staff in the face of Boeing’s ongoing industrial action in the US and Airbus production delays.
The group, which is headquartered in Hertfordshire, said the job cuts are part of cost saving actions being made in response to difficult trading in its aerospace division.
Senior said it is making permanent job cuts and furloughing staff on a temporary basis, but it did not disclose how many workers are affected.
It is understood the production sites impacted by the cuts are largely in the US.
Senior employs nearly 6,700 staff worldwide, of which around 43pc are based in the US, 35pc in the UK and Europe and the remainder across Asia and Africa.
It comes in response to strikes at Boeing in America, which are now entering a fourth week, while the aerospace giant - a major customer of Senior’s - is also under pressure from restricted production rates of its 737 MAX, which is under oversight by regulators in the US after a door panel blowout on a commercial flight in January.
Airbus - another major Senior customer - is also being impacted by supply chain challenges due to a shortage of parts.
Shares in FTSE 250-listed Senior slumped as much as 18.3pc as it warned the woes will hit the performance of its aerospace arm in the second half, although it still expects year-on-year growth from the division.
09:26 AM BST
Electric vehicle battery maker’s subsidiary files for bankruptcy
Electric battery maker Northvolt has revealed that one of its subsidiaries has filed for bankruptcy after its key project was cancelled.
The Swedish company had planned to triple capacity at its gigafactory in Skellefte? but its board scrapped the scheme managed by its Ett Expansion business last month.
It said: “All contacts with Ett Expansion AB will from now on be managed by the bankruptcy trustee.”
It added: “Northvolt Group continues to be in dialogue with stakeholders for continued cooperation within Northvolt Group’s ongoing operations.”
Northvolt, which has raised more than ￡10bn to take on China, has hinted that it could delay new factories in Germany, Canada and Sweden.
It has been trying to raise more money to fund its expensive ramp-up.
09:11 AM BST
Vistry shares hit lowest point this year
Vistry shares are by far the worst performer on the FTSE 100 and have wiped out all their gains in 2024.
The plunge by as much as 36pc briefly sent shares to their lowest point since December.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said:
Vistry announced its first major misstep this morning since changing its strategy away from traditional housebuilding.
08:50 AM BST
FTSE drops sharply as China worries deepen
The UK’s main stock indexes fell after China failed to specify how it will stimulate its ailing economy.
The blue-chip index FTSE 100 was down 1.1pc, while the midcap index FTSE 250 fell 0.6pc.
All sectors in the FTSE 350 were trading in the red, driven by a 4pc drop in industrial metal miners after prices of base metals fell as fears about demand from China deepened.
Beijing officials disappointed markets by providing few details on plans to bolster China’s slowing economy in a major press conference.
Shares of Vistry plummeted by as much as 36pc after it cut its profit outlook by ￡80m after underestimating building costs at nine developments by 10pc.
The homebuilder dragged the household goods and home construction sector down by nearly 7pc to a three-month low and the index was on track to log its biggest single-day percentage fall in two years.
Imperial Brands was the top percentage gainer on the FTSE 100, jumping as much as 4.8pc as it forecast a growth of 20pc to 30pc in its current financial year and announced shareholder returns of ￡2.8bn.
08:28 AM BST
￡1.5bn wiped off UK housebuilder as it underestimates building costs
More than ￡1.5bn has been wiped off the value of housebuilder Vistry in early trading after the company underestimated the cost of building nine developments.
Shares in the company plunged 36pc in early trading after it issued a profit warning that it said would impact earnings for the next three years.
The group said it has “recently become aware” that costs for nine out of 46 developments in its southern division, including some large scale schemes, have been understated by around 10pc.
It is set to leave this year’s underlying pre-tax profits around ￡80m lower than expected, at about ￡350m - a 16pc drop on the ￡419.1m reported for 2023.
It will also impact profits for the next two years, with the group forecasting a hit of around ￡30m in 2025 and ￡5m in 2026.
Vistry - formerly known as Bovis Homes - said it has launched an independent review into the issue, adding that it is overhauling management in its southern division following the revelation.
08:20 AM BST
UK borrowing costs edge lower at start of trading
The cost of government borrowing has eased slightly this morning as Rachel Reeves prepares to deliver her Budget later this month.
The yield on benchmark 10-year UK bonds - known as gilts - has fallen by about three basis points to 4.18pc.
The yield on bonds is the return the government offers to buyers of its debt.
Of late, this has posed a headache for the Chancellor as she ponders how to fill a ￡22bn “black hole” in the public finances.
The UK’s 10-year gilt yield has climbed from 3.75pc in mid-September to 4.21pc on Monday.
08:11 AM BST
Households turn to supermarket promotions as grocery inflation picks up
Households snapped up items on offer in supermarkets as grocery price inflation edged up again in September.
Supermarket prices are now 2pc more expensive than a year ago, up from August’s 1.7pc, according to data from analysts Kantar.
Households responded by sending sales of promoted items up by 7.4pc over the month, while full price sales rose by just 0.3pc. Overall take-home sales across the grocers rose by 2pc over the same period.
Prices are rising fastest in chilled soft drinks, chocolate confectionery and skin care, while the average price paid for toilet and kitchen roll is 6pc lower year-on-year, and dog and cat food are 4pc and 3pc cheaper respectively, Kantar found.
Fraser McKevitt, head of retail and consumer insight at Kantar, said:
In the fiercely competitive retail sector, the battle for value is on.
08:06 AM BST
UK markets fall at the open amid China disappointment
Stock markets in London dropped as trading began after a rally in Chinese indexes was weaker than expected after a long holiday break.
The FTSE 100 fell 0.9pc to 8,230.20 while the midcap FTSE 250 was down 0.5pc to 20,754.47.
Investors had been hoping for a roaring restart to China’s stock rally, after the mainland’s week-long holiday.
However, they were disappointed today when Beijing policymakers offered little detail about stimulus plans at a high-profile press conference.
08:02 AM BST
German industrial production rebounds
Germany’s industrial output bounced back in August, official data show, as Europe’s largest economy battles to avoid a recession.
Production increased by 2.9pc compared to July, according to statistics office Destatis, which was ahead of estimates of 0.8pc.
It comes as Germany struggles for growth, particularly in its car industry, with its economy contracting by 0.1pc in the second quarter, leaving it at risk of a recession.
Its flagship carmaker Volkswagen is considering closing German factories for the first time, putting tens of thousands of jobs at risk.
Destatis said: “Currently, production in the automotive industry fluctuates considerably from month to month and this has an impact on the monthly development of production in industry as a whole.”
07:56 AM BST
Water companies ordered to pay back ￡158m to customers
Water companies have been ordered to return ￡158m to households as they were rebuked over their poor performance.
Customers will see a reduction in their water bills in 2025/26, the watchdog said.
Ofwat warned that its assessment of the sector released this morning was “disappointing”, and companies had fallen further behind on key targets on issues like pollution.
It said that record investment alone over the next five-year period would not be enough to restore public trust.
Read how the head of the regulator described water companies’ actions.
07:47 AM BST
Supermarket spending slows ahead of Budget
Uncertainty over the Budget is also starting to dampen spending in supermarkets.
Simon Roberts, the Sainsbury’s chief executive, last week said a lack of clarity on fiscal decisions was scaring off customers, with many shoppers delaying big ticket purchases.
Figures released today from the British Retail Consortium revealed there had been a slowdown in grocery spending.
In the three months to September 28, food sales were up 3.1pc, below the average of 4.4pc over the past year. It was also down from 7.4pc in September 2023.
Sarah Bradbury, chief executive of grocery insight firm IGD, said: “Growth in the grocery retail market slackened with the arrival of autumn.
“September’s sales were still ahead year-on-year, but the pace of increase was down versus August, no doubt depressed by the wet weather as well as cautionary economic messages from the Government.”
07:42 AM BST
Vistry issues profit warning after underestimating building costs
Housebuilder Vistry has issued a profit warning after it revealed it had underestimated the cost of building nine housing developments.
The group said costs for nine out of 46 developments in its southern division have been understated by around 10pc.
This is set to leave this year’s underlying pre-tax profits around ￡80m lower than expected, at about ￡350m.
It will also affect profits for the next two years, with the group forecasting a hit of around ￡30m in 2025 and ￡5m in 2026.
Vistry said it has launched an independent review into the issue, adding that it is making “changes to the management team” in its south division following the revelation.
07:28 AM BST
Water companies ‘blame outside causes’ rather than fixing problems, says Ofwat boss
Water companies are too quick to blame outside factors rather than fixing the root causes of their problems, the head of Ofwat has said as the regulator imposed a ￡157.6m penalty on suppliers for missing targets.
Not one company achieved the regulator’s top category of “leading” while Anglian Water, Welsh Water and Southern Water fell into the lowest category of “lagging” while the remaining 10 were rated “average”.
Ofwat judges the performance of water companies in England and Wales each year against the “stretching” targets they set in 2019 for a five-year period until 2025.
If they fail to meet these, Ofwat restricts the amount of money they can take from customers. Ofwat said the figures are provisional until it completes a review process.
David Black, chief executive of Ofwat, told BBC Radio 4’s Today programme:
We see inconsistent performance across the board in our assessment today and that underlines the need to see culture change, a sharper focus on performance alongside a big increase in vestment that will take place from next year.
07:17 AM BST
Water companies fined ￡158m over sewage spills and supply failures
Water companies will have to pay a ￡157.6m penalty after missing key targets on reducing pollution, leaks and supply interruptions, the industry regulator has said.
Ofwat said customers’ bills will be reduced in 2025-26 to reflect the penalties.
In its annual water company performance report, the watchdog said that even record investment in the next five-year period would not deliver the sustained improvements to services.
Chief executive David Black said:
This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.
07:12 AM BST
Retailers ‘hold their breath’ for Budget as Reeves gloom hits food sales
Retail bosses are “holding their breath” ahead of the Budget, a top industry chief has warned, as gloomy forecasts from Rachel Reeves weigh on supermarket sales.
The chief of Britain’s biggest retail group, the British Retail Consortium, said high street leaders were wary of investing because they faced “weak consumer confidence and the continued high burden of business rates”.
Helen Dickinson said: “As a result, retailers are holding their breath ahead of the Budget as they work out their investment strategies for the coming year.”
She said “decisive action” was needed by the Chancellor to spur investment and economic growth.
It comes amid nervousness over what fiscal decisions will be made in the Budget later this month.
Retail bosses have recently been pushing for more support from the Government, writing to the Chancellor last week urging her to cut their tax bills.
However, so far, ministers have maintained that the Budget will be “painful”. Ms Reeves said tax rises will be needed to plug the ￡22bn black hole in the public finances she claims to have uncovered.
She has warned that “difficult decisions” will need to be made on taxes.
07:08 AM BST
Good morning
Thanks for joining us. We start with a look at retail, where bosses are “holding their breath” as they wait to see what tax raising measures Rachel Reeves will announce in her Budget.
The British Retail Consortium said companies are holding off investment ahead of the Chancellor’s speech on October 30.
5 things to start your day
1) Britain to suffer biggest exodus of millionaires in the world | High taxes and changes to non-dom rules driving away wealthy, warns think tank
2) Saudi Arabia hoovers up 40pc stake in Selfridges | Sovereign wealth fund PIF adds department store to stakes in Newcastle United and Heathrow Airport
3) Southern Water plans to pay out ￡275m in dividends despite rising debt pressures | Utilities company to reward shareholders as debt pile expected to grow to ￡8bn
4) Electric car makers and heat pump companies ‘deserve net zero tax break’ | Confederation of British Industry urges Reeves to introduce green innovation credit
5) Britain’s employers and staff pay more tax on earnings than Germany | Stealth raids leave tax burden higher than at any point since at least 1990
What happened overnight
Mainland Chinese stocks had a roaring start after an extended break but were well off their morning highs.
The optimism did not spill into regional markets as Beijing fell short on delivering more details of its massive stimulus.
Hong Kong stocks, in particular, tumbled on Tuesday, reversing some of the rally they enjoyed while China’s markets were closed for the week-long National Day holiday.
China’s CSI300 blue-chip index surged 10pc in early trade to its strongest since July 2022, while the Shanghai Composite Index jumped roughly the same amount to its highest mark since December 2021.
But Hong Kong’s Hang Seng Index slid 7.6pc, with the Hang Seng Mainland Properties Index falling more than 10pc.
The big losses in Hong Kong led the rest of Asia lower with Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Manila and Mumbai all in the red.
In the US, the Dow Jones Industrial Average fell 0.9pc, to 41,954.24, the S&P 500 lost 1pc, to 5,695.94, and the Nasdaq Composite lost 1.12pc, to 17,923.90.
In the bond market, the yield on 10-year US Treasury bonds rose to 4.03pc from 3.97pc late on Friday.