￡1bn wiped off BT’s value after Sky strikes deal with rival
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Roughly ￡1bn has been wiped off BT’s market value after Sky struck a broadband deal with one of the telecoms giant’s biggest rivals.
The Telegraph revealed on Tuesday that Sky has inked an agreement with CityFibre to launch broadband services on the provider’s network from next year.
The deal comes as a blow to BT, which currently hosts Sky customers on its Openreach network.
Shares tumbled as much as 8.2pc, closing down 6.4pc.
Analysts at Citi, however, said they believed the commercial impact for BT was manageable, noting that Sky would maintain its long-term relationship with BT’s Openreach given the significantly larger size of its network.
Openreach said the move was expected as Britain’s fibre broadband market becomes ever more competitive.
“We’re building fibre faster, more efficiently and providing better customer experience than anyone” with more than 15m premises reached, and an ambition of up to 30m by the end of the decade, an Openreach spokesperson said.
CityFibre, which is the UK’s largest so-called “alt net” broadband provider, has a broadband network that currently passes 3.8m homes but it plans to expand to 8m premises, challenging the dominance of both BT’s Openreach network and Virgin Media.
Sky is expected to use the deal to reach remote rural areas that are not covered by BT’s network.
The deal could also pave the way for further consolidation among “alt nets” as rivalry heats up in the full-fibre broadband market.
Greg Mesch, chief executive at CityFibre said: “This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform.
“With demand for digital connectivity continuing to grow, CityFibre’s network can provide the quality and reliability that people need and the infrastructure competition the UK deserves.”
Read the latest updates below.
06:03 PM BST
Signing off...
Thanks for joining us today. We’ll be back in the morning to cover the latest from the markets.
Today, the main direction of travel in global stock markets has been a slight decrease, but the FTSE 100 lost 1pc.
It was pushed down by sharp falls across constituents including BT, plus energy giants Shell and BP.
BT shares fell 6.4pc after Sky struck a broadband deal with CityFibre, one of the telecoms giant’s biggest rivals.
Meanwhile, a drop in the price of oil caused BP and Shell to lose ground on Tuesday, falling 2.76pc and 2.84pc respectively.
Danni Hewson, head of financial analysis at AJ Bell, said the FTSE 100 was pulled down by its “heavy weighting towards oil stocks”.
She said: “Hopes of a ceasefire in Gaza and continuing concerns about Chinese demand combined to drive oil prices to their lowest levels since the beginning of August and that put index heavyweights BP and Shell under pressure.”
05:44 PM BST
Brussels bows to Musk by slashing tariffs on China-made Teslas
Our senior technology report Matthew Field has more on the news that Teslas made in China will face lower EU tariffs than rivals after Brussels bowed to pressure from Elon Musk’s car company:
Electric cars made at Tesla’s Shanghai plant will be subjected to a 9pc import tariff, European Commission officials confirmed. That is less than half the import tax of 20.8pc that was initially proposed.
05:25 PM BST
Wall Street dips as traders look towards central banker summit
Wall Street’s main indexes slipped in volatile trading on Tuesday, ahead of a symposium at Jackson Hole later this week and minutes from the Federal Reserve’s meeting last month which could offer clues on a September interest rate cut.
Seven of the 11 major S&P sectors were trading lower, with energy taking the worst hit, down 2.2pc. Chip stocks too came under pressure with the Philadelphia Semiconductor index down 1.5pc.
Traders are looking forward to any hints from Fed chairman Jerome Powell of a rate cut at the upcoming Fed meeting in September when he delivers his speech at the annual economic symposium in Jackson Hole on Friday.
Win Thin, at investment firm Brown Brothers Harriman, said:
We expect Powell to set the table for a cut next month whilst stressing the data-dependent nature of the Fed’s monetary policy decisions and pushing back against any sort of pre-commitment to an aggressive easing path.
The S&P 500 and Dow Jones are down 0.2pc, while the Nasdaq Composite is down 0.3pc.
05:01 PM BST
Pawnbroking chain bolstered as more people seek quick loans
Pawnbrokers chain H&T has reported higher profits as it said more people were looking for alternative ways to source a small loan amid a lack of short-term credit options.
The company, which has more than 280 shops across the UK, also benefited from increased demand for foreign currency and stronger gold prices.
It reported a pre-tax profit of ￡9.9m for the six months to the end of June, 12.5pc higher than the same period a year ago.
This was largely driven by an increase in pledge lending, which grew by 14pc to ￡146m year on year.
The service enables people to take out a loan against the value of a piece of jewellery, a watch or a handbag.
Borrowers pay an annual interest rate of 165.5pc on the loan, and if the loan is not repaid then their pawned item is sold to pay the debt.
H&T said strong demand for pawnbroking was partly due to wider economic conditions as well as a shortage of regulated small-sum, short-term credit.
Chris Gillespie, H&T’s chief executive, said:
Our core pawnbroking business continues to attract increasing numbers of new and returning customers, for whom alternative sources of small sum regulated lending are much constrained.
04:58 PM BST
Footsie closes down
The FTSE 100 closed down 1pc today. The biggest riser was easyJet, up 1.3pc, followed by Endeavour Mining, up 1.2pc.
At the other end of the index, BT Group slumped 6.4pc, while JD Sports lost 4.4pc.
Meanwhile, the FTSE 250 fell 0.8pc.
The top riser on the mid-cap index was investment manager Baillie Gifford, up 2.3pc, followed by St James’s Place, up 2pc. Ocado was the biggest faller, down 6pc, followed by venture capital firm Molton Ventures, down 4.2pc.
04:55 PM BST
North Sea oil engineer reveals widening losses and costs of abandoned takeover
North Sea engineering firm John Wood Group has revealed it slumped to a near $1bn (￡770 million) half-year loss just weeks after a Dubai suitor walked away from a ￡1.56bn proposed takeover.
The FTSE 250 firm, which provides oilfield and engineering services, reported pre-tax losses of $961.7m against losses of $26m a year ago.
Wood Group’s losses came as it booked hefty one-off costs and an $815m write-down on the value of past acquisitions.
The Scottish firm also said it will face costs of around $11m related to the proposed takeover attempts by Dubai-based rival Sidara.
Sidara walked away from a deal two weeks ago blaming global market turmoil and geopolitical risks, having put forward four takeover proposals.
In its half-year results, Wood Group said:
We do not believe that those geopolitical risks pose a material risk to Wood, nor the long-term value of the group.
Sidara’s decision to abandon any deal sent Wood Group’s shares plunging, dealing a blow to investors who have suffered a languishing share price and a number of failed takeover attempts for the company.
Shares rose 1.4pc today.
04:24 PM BST
Pound hits highest level in more than a year after dollar drop
Sterling continued to push higher today after it hit a one-year high against a weakening dollar.
The pound climbed by as much as 0.5pc in trading to 1.3052 against the dollar.
It is now at around $1.3020, its highest level since July 17 this year.
The greenback hit a seven-month low yesterday, with traders waiting for clues about the speed of the Fed monetary easing cycle.
Investors are awaiting business activity figures on Thursday and for possible comments at a meeting of central bankers at Jackson Hole on Friday.
Citi said it would be focused on Bank of England boss Andrew Bailey’s comments on Friday, and in particular, “whether he will double down on suggestions that monetary policy transmission is largely already worked through”.
04:04 PM BST
Germany seizes ￡21m in cash in crypto cash machine sting
German authorities have seized almost €25 million euros (￡21m) in cash in a nationwide operation targeting cryptocurrency cash machines, the country’s financial regulator BaFin said.
Authorities seized 13 machines that had been operating without the necessary permits, posing a risk of money-laundering, according to the regulator.
The cash machines had been used to trade bitcoin and other cryptocurrencies and were located in 35 different locations.
04:01 PM BST
Dollar falls to lowest level this year as traders wait on new data
The dollar continued to slide today - after reaching its lowest level since January yesterday - as investors awaited revisions to US payrolls data on Wednesday and Federal Reserve chairman Jerome Powell’s speech to the Jackson Hole economic conference in Wyoming later in the week.
Traders are speculating the revisions to the U.S. government’s jobs data could show that between 600,000 and a million fewer jobs were created from April 2023 to March 2024.
A downward revision of 1m jobs would reduce employment creation to 1.6m jobs for the year, from 2.6m, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
He added:
That’s why I think that the market is still pricing in about a 25pc chance of a [half a percentage point] cut in September. People thought the Fed was behind the curve in raising rates, and now many people think the Fed is behind the curve in cutting rates.
Data showing the job market was weaker than previously thought could increase concerns the US economy is facing a potentially worse downturn than the current expectation for a “soft landing” in which inflation is tamed without a recession.
Traders will focus on comments by Powell on Friday at the Jackson Hole economic symposium for any new clues on the likely size of a rate cut next month, and whether reductions in borrowing costs are likely to happen at each subsequent Fed meeting.
With the government due to release the August employment report and key inflation data before the Fed’s next meeting, Mr Powell may be reluctant on Friday to offer much clarity on the outlook for rates.
03:53 PM BST
Global stock rally ‘taking a breather’, says analyst
The global stock rally is “taking a breather” today, according to Axel Rudolph, Senior Technical Analyst at online trading platform IG. He said:
The near two-week-long stock index rally on both side of the Atlantic is taking a breather ahead of Wednesday’s July [Federal Reserve] minutes.
03:50 PM BST
Iraq to share profits with BP in push to lure back Western oil giants
Iraq will share profits with BP from developing its giant Kirkuk oil and gas fields, two officials reportedly told Reuters, as the country moves away from low-margin service contracts to speed up production growth and lure back Western majors.
Several oil majors, including BP, in recent years turned to other countries offering better terms. They complained the traditional oil service contracts in Iraq that paid a flat rate for every barrel of oil produced after reimbursing costs, prevented them benefiting from rising oil prices.
Iraq and BP, which is returning after a nearly five-year absence, signed a preliminary agreement earlier this month to develop four oil and gas fields in northern Iraq’s Kirkuk. BP has estimated the Kirkuk field holds about 9bn barrels of recoverable oil.
The two oil ministry officials told Reuters the contracts with BP to develop the Kirkuk, Bai Hasan, Jambour and Khabbaz fields would be on a profit-sharing model.
A final agreement is expected by the end of this year, the officials told Reuters. BP had said it expected negotiations over the preliminary agreement to be complete early in 2025.
BP has been approached for comment.
03:43 PM BST
Taiwan’s chip giant TSMC breaks ground on first European plant
Taiwanese semiconductor giant TSMC broke ground today on its first European factory in Dresden as the EU looks to shift key supply chains onto the continent.
German chancellor Olaf Scholz and European Commission president Ursula von der Leyen attended the ceremony to mark the beginning of construction work along with TSMC’s top brass, with von der Leyen hailing it as “an endorsement for Europe as a global innovation powerhouse”.
Semiconductors have become indispensable in an array of industries, from electronics to wind turbines and even missiles.
TSMC is investing some €3.5 billion euros (￡3bn) in the Dresden project and will own 70pc of the plant, with Dutch chipmaker NXP, Germany’s Infineon and Bosch owning 10pc each.
The Dresden facility will be specialised in the production of semiconductors for Germany’s flagship automotive industry, currently in the throes of transitioning to electric vehicle production.
Some €10bn has been ploughed into the flagship project in the “Silicon Saxony” region, which has an industrial heritage dating back to the communist era.
The German government is supporting the Dresden plant with €5bn of public funds, and received an exemption from EU state aid rules to do so.
The facility is set to provide some 2,000 jobs and start production before the end of 2027.
03:29 PM BST
Euro zone yields tick down as traders await central bankers’ meeting
Euro zone bond yields inched lower on Tuesday as investors waited for fresh economic data on Thursday and a meeting of the world’s central bankers later in the week.
A wave of calm has swept over markets after a bout of volatility earlier this month, with strong US economic data soothing fears that the world’s biggest economy could be heading for a recession.
Germany’s 10-year bond yield, the benchmark for the euro zone, was 2.22pc, fown from 2.25pc yesterday, little changed from the start of the week
After a slow start to the week investors will have more to ponder on Thursday when purchasing managers’ index surveys - gauges of the health of the private sector - are released for the euro zone, Britain and the United States.
The US Federal Reserve’s annual gathering of the world’s central bankers at Jackson Hole in Wyoming also kicks off on Thursday.
Investors will listen closely for any notes of concern about the US economy or hints about the size of a potential rate cut in September.
Traders almost fully priced in a half a percentage point September rate cut early in August after a weaker-than-expected jobs report. But data since then has reined in those bets, with markets now seeing a 22pc chance of a half point reduction.
03:24 PM BST
Mixed picture in stocks ahead of Powell
Thanks for joining us on The Telegraph’s live blog covering the markets this afternoon. I’m Alex Singleton and I will be will you until early evening covering what’s happening in the worlds of finance and business.
Stock markets are a mixed picture this afternoon, with the FTSE 100 down 0.9pc and the mid-cap FTSE 250 down 0.4pc.
Paris’s Cac 40 index is flat, having been higher this morning, while Berlin’s Dax is down by less than 0.1pc. The pan-European Stoxx 600 is down 0.2pc.
In America, the S&P 500 is down 0.1pc, having been mostly in postive territory since New York opened. The Dow Jones is down 0.2pc, as is the Nasdaq Composite.
The Nikkei 225, however, rose 1.8pc, and the Australian ASX 200 index rose 0.2pc.
Traders are looking forward to any hints from US Fed boss Jerome Powell of a rate cut at the upcoming central banker meeting in September when he delivers a speech at the annual economic symposium in Jackson Hole on Friday.
02:52 PM BST
Wall Street breaks winning streak
After eight consecutive days of gains - the longest winning streak of the year - Wall Street indices have opened down.
The Dow Jones Industrial Average is down around 0.12pc at 40,847 while the S&P is just about even having opened slightly down.
Both are trading close to all-time highs having recovered from a short-lived crash earlier in August.
Traders are looking ahead to Fed chair Jerome Powell’s speech at the annual Jackson Hole symposium on Friday afternoon.
02:02 PM BST
Gold rushes to all-time high
The price of gold is continuing to climb, hitting a new record this afternoon.
According to Bloomberg, bullion climbed to as high as $2,528.72 an ounce on Tuesday. It means its price has risen by more than 22pc this year.
It compares to around $275 an ounce at which Gordon Brown sold the UK’s gold reserves between 1999 and 2002.
The price of a gold bar has now climbed above $1m for the first time.
12:59 PM BST
Chinese industry responds with fury at EU tariffs
A Chinese business group has hit out at the European Commission’s plans to hit Chinese car makers with tariffs of up to 36.3pc.
The Chinese Chamber of Commerce to the EU said it “expresses its strong dissatisfaction and firm opposition to the EC’s protectionist approach,”
It added: ““The EC’s unfair use of trade tools to hinder free trade in electric vehicles, along with this protectionist approach, will ultimately weaken the resilience of the European electric vehicle industry.
“It will exacerbate trade tensions between China and the EU, sending a profoundly negative signal to global cooperation and green development.”
12:13 PM BST
Company insolvencies rise in July
Company insolvencies jumped by 16pc year-on-year in July as more construction firms and hotels went under.
Last month 2,191 firms across England and Wales became unable to pay their debts, 300 more than in July 2023, but down by 7pc since June, official data shows.
The number of compulsory liquidations, meaning companies have received court orders forcing them to close down, hit 320, the highest monthly total since before the pandemic.
Companies have been grappling with high borrowing costs and sluggish demand in the wake of the cost of living crisis, problems which have hit builders and accommodation services particularly hard.
In the 12 months to June, 4,303 construction companies became insolvent, making up more than one in six of all insolvencies, while accommodation and food services companies accounted for one in seven.
Patricia McGirr, founder at Repossession Rescue Network, warned that the high levels of insolvencies would bring job losses further down the line.
Ms McGirr said: “Company insolvencies are more than just a business problem, they’re a ticking time bomb for jobs and household finances.”
11:32 AM BST
EU cuts China tariffs on Tesla cars
The European Commission has slashed a proposed tariff on imports of Tesla cars from China in a boost for Elon Musk’s electric car company.
The Commission has proposed a rate of 9pc, lower than the 20.8pc it had said last month.
This comes in addition to an existing 10pc levy, bringing Tesla’s rate up to 19pc.
It said Tesla had requested an “individual examination” to determine what the tariff should be, based on the specific subsidies the company received from the Chinese.
Other car companies face rates between 17pc and 36.3pc, on top of the existing 10pc levy.
10:27 AM BST
Eurozone inflation rises but rate cut still on
Inflation in the eurozone ticked up in July, though investors are still betting the European Central Bank (ECB) will cut interest rates next month.
Prices in the single currency area rose 2.6pc in the year to July, according to Eurostat. This was up from 2.5pc in the year to June but in line with expectations.
Core inflation, which strips out volatile movements in food and energy costs, remained steady at 2.9pc.
In June, the ECB became one of the first major central banks to cut interest rates, trimming the deposit rate to 3.75pc, from 4pc.
Traders have fully priced in another quarter point cut to 3.5pc in September and see at least one more move down before the end of the year.
Policymakers have become increasingly concerned about supporting growth in the bloc. The UK economy has consistently outperformed the rest of Europe since the start of the year.
Olli Rehn, FInland’s central bank governor, signalled that the ECB was on course to cut rates at its next meeting on September 12.
He told an audience in New York: “The recent increase in negative growth risks in the euro area has reinforced the case for a rate cut at the next ECB monetary policy meeting in September, provided that disinflation is indeed on track.”
10:04 AM BST
BT down 6pc as it extends fall
BT’s share price is continuing its fall after The Telegraph’s report that Sky is poised to strike a deal with rival broadband provider CityFibre.
Shares are currently down 6pc, with more than ￡800m wiped off the company’s value.
Here’s more from James Warrington’s story:
The tie-up will come as a blow to BT, which currently hosts all of Sky’s roughly 5.7m broadband customers on its Openreach network.
However, Matt Britzman, senior equity analyst at Hargreaves Lansdown, says concerns may be overblown:
“There are genuine concerns about its reliance on a single customer, but a deal with CityFibre is unlikely to have a major impact on the current relationship. CityFibre is a struggling business, desperate to show its lenders that it has something tangible in the works, it’s also more focused on rural areas where the likes of Openreach aren’t building out fibre networks – so there’s likely limited cannibalisation of Openreach’s existing business with Sky.”
08:54 AM BST
Darktrace ‘incredibly saddened’ by death of Lynch co-defendant
Darktrace, the UK-listed cybersecurity company, has released a statement after the death of Stephen Chamberlain, the former Autonomy executive and Mike Lynch’s co-defendant in his recent US trial.
Last night it emerged that Mr Chamberlain, formerly Darktrace’s chief operating officer, was killed after being hit by a car while out running on Saturday.
The news came just hours after we learned that Mike Lynch, one of Britain’s top tech entrepreneurs, was missing after his yacht capsized off Sicily.
Darktrace said:
“We are incredibly saddened to hear of the tragic death of Steve Chamberlain, Darktrace’s former Chief Operating Officer and a substantial contributor to the team in its early years. Steve was much loved by his colleagues and leaves many friends at Darktrace. We extend our deepest condolences to his wife, Karen, and the rest of his family who are very much in our thoughts at this challenging time.”
08:21 AM BST
FTSE falls on opening as oil majors decline
The FTSE 100 is trading at 8,332.16, down around 0.3pc from yesterday’s close of 8,356.94.
Meanwhile, the FTSE 250 is marginally up, at 21,171.23.
The biggest climbers among the blue chips are British Airways owner IAG, up 1pc. Among the fallers are BP and Shell. All three moves are likely to be in response to falling oil prices.
However, the biggest faller on the FTSE 100 today is BT, which is down 4.2pc. It comes after James Warrington revealed that Sky was set to sign a broadband tie-up with rival supplier CityFibre
07:58 AM BST
Canadian oil company to snap up North Sea producer i3 Energy
Overnight, Calgary-based oil company Gran Tierra said it had agreed a ￡174m takeover with UK-listed i3 Energy, which has assets in the North Sea and in Western Canada.
The deal is worth 13.92p per i3 Energy share and comes largely in cash with i3 shareholders also receiving shares in Gran Tierra.
In an announcement, Gran Tierra says it was largely interested in i3’s assets in the Western Canadian Sedimentary Basin.
i3 has confirmed this morning that it is in “advanced discussions”.
07:47 AM BST
Pound rises but FTSE likely to fall
The pound is close to hitting $1.30 this morning amid growing hopes of that the Federal Reserve will cut interest rates next month.
Sterling is at $1.2999, continuing a recent winning streak and at its highest point in a month.
Meanwhile, FTSE 100 futures contracts are pointing to a fall at the open, despite global stocks rising as traders grow more confident that the Fed will cut. Futures are down around 0.3pc
Stock markets in Asia rose this morning as yesterday’s market gains on Wall Street filter through.
07:22 AM BST
Oil falls below $77 a barrel
Good morning
Thanks for joining me.
Oil prices have fallen close to their lowest level this year amid growing hopes about a ceasefire proposal in Gaza that could ease tensions in the Middle East.
Brent Crude dipped below $77 a barrel on Tuesday morning. This was its lowest level since the start of August and down from more than $82 just a week ago.
Oil briefly dipped below $76 three weeks ago but has not consistently traded this low since January.
On Monday, US Secretary of State Anthony Blinken said Israel had accepted a “bridging proposal” towards a ceasefire deal in Gaza.
Meanwhile, continuing concerns about the health of the Chinese economy are also weighing on oil demand.
“Lingering Chinese demand concerns have been the key driver weighing on sentiment,” Warren Patterson, head of commodities strategy for ING Group in Singapore told Bloomberg. “Now the potential for an Israel-Hamas ceasefire has only provided further downward pressure.”
Petrol is still around 5p a litre more expensive at the pump than it was in January, according to the RAC
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What happened overnight
On Wall Street, stocks added to their recent gains amid expectations the American. economy will dodge a recession and that cooling inflation will spur interest rate cuts.
The Dow Jones Industrial Average rose 0.6pc, reaching 40,896, the S&P 500 gained 1pc, closing at 5,608, and the Nasdaq Composite gained 1.4pc, closing at 17,876.
In the debt market, the yield on benchmark 10-year US Treasury bonds dipped to 3.87pc from 3.88pc late on Friday.
Asian investors trod carefully Tuesday after the latest bounce in optimism fuelled by hopes Federal Reserve boss Jerome Powell will signal an interest rate cut in a highly anticipated speech to top central bankers this week.
Tokyo rallied 1.7pc, clawing back almost all of Monday’s losses, while Sydney, Seoul, Singapore, Taipei, Manila and Jakarta were also up.
However, Hong Kong and Shanghai struggled to build on their recent advances, while Wellington also dipped.