Global stocks surge as US expected to avoid recession
In This Article:
Global stocks surged after US retail sales data indicated the world’s largest economy is not heading towards a recession.
The FTSE 100 closed up 0.8pc, while Wall Street indexes gained as much as 2.1pc after figures indicated American consumers are holding up well despite interest rates that remain at 23-year highs.
US retail sales rose by 1pc in July to $709.7bn (￡553.2bn), which was well ahead of economist estimates of growth of 0.4pc.
Bond yields moved higher as traders cut bets on the Federal Reserve announcing a bumper interest rate cut at its next meeting in September.
Money markets also indicate the chances of a rate cut by the Bank of England at its next meeting have fallen from 41pc on Wednesday to 34pc.
Billions were wiped off global markets in a huge sell-off last week amid fears that the US economy was heading for recession.
Yet stocks have bounced back as separate data showed that the number of Americans applying for unemployment benefits fell last week.
The consultancy Capital Economics said in a note to clients: “Don’t bet against the American consumer.”
Read the latest updates below.
06:13 PM BST
Tesla and other Big Tech giants rise in strong day for Nasdaq
This afternoon has been good for the share prices of Big Tech firms and America’s chip industry.
The Nasdaq, which is tech heavy, is up 2.1pc, while the Philadelphia semiconductor index, made up of 30 top chip companies, is up 4.8pc.
Among so-called “magnificent seven” stocks, Tesla surged 6.1pc, Amazon rose 3.7pc, Nvidia added 3.4pc, Meta added 2.1pc, Apple rise 1.2pc, Microsoft increased by 0.8pc, Alphabet added 0.4pc.
Thanks for joining us today on the Markets blog. We’ll be back in morning, before London’s markets open, to cover the latest from the world of finance and business.
06:01 PM BST
Nike shares jump after hedge fund billionaire invests
Nike shares have risen 4.2pc this afternoon after a hedge fund run by billionaire Bill Ackman returned as a shareholder
Investors hope Mr Ackman could spark a turnaround at the sportswear giant that has been battling with strategy missteps and tough competition.
Mr Ackman’s Pershing Square Capital Management now owns roughly 3m shares of Nike, amounting to a stake of about 0.2pc, a filing showed on Wednesday. He has not revealed any plans for the investment yet.
Brian Mulberry, of Nike investor Zacks Investment Management, said:
He’s going to have the ear of the executives at Nike and be able to lend some influence on maybe how to get the ship righted, as it were, for Nike at this point in time to try and find their way back home.
The stock has lost nearly a third of its value this year and the company has forecast a drop in annual sales for the 2025 financial year, leading some Wall Street analysts and investors to raise the possibility of a management shake-up.
05:34 PM BST
Israel’s El Al orders dozens of 737 Max planes in boost for Boeing
Israeli flag carrier El Al has finalised orders for up to 31 Boeing 737 Max aircraft as it looks to modernise its fleet.
The orders mark El Al’s “largest airplane purchase in its 76-year history”, Boeing said, adding that they came on top of existing orders from its 787 range of aircraft.
El Al had held discussions with Boeing and its European competitor Airbus for over a year before entering into exclusive talks with the Seattle-based group for a deal.
The Israeli firm said in June that its deal with Boeing would be worth between $2bn and $2.5bn (￡1.6bn and ￡1.9bn), with deliveries scheduled from 2027.
05:26 PM BST
There are ‘no scary monsters’ as stock markets push higher
Top European share indices enjoyed a jump today after a range of positive economic data, especially in the US.
While the FTSE 100 closed up 0.8pc, Germany’s Dax surged 1.7pc and France’s Cac 40 rose 1.2pc.
The pan-European Stoxx 600 rose 1.2pc.
Patrick O’Hare, an analyst at Briefing.com, said:
Today’s news has been like turning on the light in a dark bedroom to discover that there are no scary monsters under the bed after all.
Concerns that the US Federal Reserve had waited too long to begin cutting interest rates have seen speculation rise that it could cut even deeper than a quarter-point reduction at its next meeting in September.
But economist Michael Pearce of Oxford Economics said the today’s US retail sales data “signal continued resilience” and would keep the Federal Reserve on a path of gradual rate cuts “because fears about the health of the economy that could justify a larger cut appear unfounded”.
05:04 PM BST
Wall Street roars closer to its records as US shoppers help drive the economy
Wall Street is rallying closer to its records this afternoon following signals the US economy is holding up better than expected, with particular credit going to the country’s shoppers.
The S&P 500 is up 1.4pc and on track for a sixth day of gains in a row.
The Dow Jones Industrial Average is up 1.1pc, and the Nasdaq Composite is 2.1pc higher as Big Tech stocks recover more of their recent stumbles.
Treasury yields leaped in the bond market following the encouraging economic data. One report said US shoppers increased their spending at retailers last month by much more than economists expected, while another said fewer US workers applied for unemployment benefits.
Walmart added to the optimism after it delivered a bigger profit for the spring than analysts expected, and its shares climbed 6.6pc. The retail giant also raised its forecast for sales for the full year, indicating US shoppers would keep up strong spending.
04:53 PM BST
FTSE closes up
The FTSE 100 closed up 0.8pc.
The top riser was insurer Admiral, up 6.5pc, followed by banking group Standard Chartered, which rose 3.7pc.
At the other end of the index, mining company Rio Tinto fell 2.1pc, while housebuilder Barrett was down 1.4pc.
Meanwhile, the FTSE 250 ended the day up 0.7pc.
The top riser was investment business Foresight, who rose 5.8pc, followed by Bank of Georgia, up 5.6pc.
THe biggest fallers were mortgage lender OSB, down 18.8pc, followed by Wizz Air, down 5.8pc.
04:47 PM BST
EV maker switches production from China to US to avoid tariffs
Electric vehicle maker Polestar moved one step further in avoiding major tariffs imposed on Chinese-made cars on Wednesday when the automaker said it began production of its Polestar 3 SUV in the United States.
Steep tariffs recently imposed by US and Europe on cars made in China have prompted many carmakers to speed up plans to move parts of their production to other countries.
The Swedish-headquartered company, majority owned by China’s Geely, has been manufacturing its vehicles in China and exporting to overseas markets. The Polestar 3, made in Volvo’s US plant in South Carolina, will be sold to customers in the US and Europe.
04:36 PM BST
Chinese ecommerce giant drops as China battles sluggish consumption
Shares in China’s Alibaba fell after the Chinese e-commerce giant reported lower than expected quarterly sales.
Its Hong Kong listed shares fell 2.4pc, and its New York-listed shares are currently down 0.4pc.
Alibaba runs some of China’s most popular e-commerce apps and its performance is widely considered an indicator of broader economic trends.
It is battling sluggish consumption during an economic slowdown in the Asian economy.
Investors are also worried that Alibaba will continue to be hit by increased competition from rivals Temu, JD.com and ByteDance-owned Douyin.
Chinese e-commerce giants have had to resort to heavy discounting and promotions to attract shoppers, pressuring margins across the retail sector.
04:15 PM BST
Google is suffering for letting staff go home early, says former boss
Google lost ground to rivals by letting staff leave the office early and work from home, the company’s former chief executive has said. Matthew Field reports:
Eric Schmidt, who led Google until 2011 and was its chairman until 2015, told students at Stanford University in April that the company was struggling against new rivals such as OpenAI because of its work culture.
04:02 PM BST
Stock markets push higher across the planet
Stock market indexes around the globe are mostly up today after a flurry of positive economic data.
Axel Rudolph, senior technical analyst at online trading platform IG, said:
Solid growth data out of Japan and the UK, followed by strong US retail sales, helped stock indices to their third straight day of gains ...
The FTSE 100 is up 0.8pc and the FTSE 250 is up 0.7pc. On Wall Street, the S&P 500 is up 1.2pc. The Nasdaq Composite jumped 1.8pc and the Dow Jones Industrial Average of 30 leading US companies is up 1pc.
Stocks moved upwards in Japan and continental Europe as well. Nikkei 225 rose 0.8pc today (and 6.5pc over five days) in a boost to the index which has fallen 11pc over the past month. The pan-European Stoxx 600 index is up 1.2pc.
03:44 PM BST
Traders push US bond yields higher after strong retail figures
The yields on US government bonds rose today as traders lower their expectations of fervent interest rate cuts by the Fed.
Benchmark 10-year US Treasury bonds rose to 3.934pc from 3.828pc yesterday. New figures showed that Americans stepped up their spending at retailers last month by the most in a year and a half, easing concerns that the world’s largest economy might be weakening under the pressure of higher prices and elevated interest rates.
Other economic data released today was also mostly positive, including a report on first-time applications for unemployment benefits. The figures show that businesses are mainly holding onto their workers and not increasing redunancies.
With Americans spending more, economists at Morgan Stanley have boosted their forecast for growth in the July-September quarter to a 2.3pc annual rate, from an earlier estimate of 2.1pc. The economy expanded at a healthy 2.8pc rate in the April-June quarter.
03:35 PM BST
Orsted triples losses as it abandons green projects
Renewable energy giant ?rsted revealed losses tripled in the second quarter as projects were abandoned or delayed.
Shares in the Danish company tumbled as much as 9.3pc after it said losses grew to 1.7bn Danish kroner (￡192m) in the three months to June, compared to a net loss of 538m kroner (￡61.6m) a year earlier.
Earlier this month it revealed it had scrapped its flagship green fuel factory.
It halted on the FlagshipONE project, a proposed e-methanol plant in the Swedish town of ?rnsk?ldsvik, meant to supply container ships as part of the battle to reach net zero.
With that, I am heading off for the day. Alex Singleton will keep you up to speed with what is happening for the rest of the day.
03:11 PM BST
Global stocks surge as US expected to avoid recession
Global stocks surged after US retail sales data indicated the world’s largest economy is not heading towards a recession.
The FTSE 100 jumped 1pc and the Wall Street indexes gained as much as 1.5pc after figures indicated American consumers are holding up well despite interest rates that remain at 23-year highs.
US retail sales rose by 1pc in July to $709.7bn (￡553.2bn), which was well ahead of economist estimates of growth of 0.4pc.
Bond yields moved higher as traders cut bets on the Federal Reserve announcing a bumper interest rate cut at its next meeting in September.
Money markets also indicate the chances of a rate cut by the Bank of England at its next meeting have fallen from 41pc on Wednesday to 34pc.
Billions were wiped off global markets in a huge sell-off last week amid fears that the US economy was heading for recession.
Yet stocks have bounced back as separate data showed that the number of Americans applying for unemployment benefits fell last week.
The consultancy Capital Economics said in a note to clients: “Don’t bet against the American consumer.”
02:54 PM BST
Starbucks’ new boss awarded $113m hiring package
The incoming chief executive of Starbucks stands to $113m (￡88.1m) in one of the largest hiring packages in US corporate history.
Brian Nichol will become one of America’s highest paid executives if his package is paid out in full after he starts his new job next month, regulatory filings show.
Starbucks shares jumped 25pc on Tuesday after it announced Mr Nichol would leave Chipotle Mexican Grill to replace Laxman Narasimhan, who left with immediate effect after less than two years in the role.
Mr Narasimhan will leave with a payout likely to be worth about $10m.
Mr Nichol will receive $10m upfront as a cash bonus when he takes up the role, as well as $75m in stocks to compensate him for bonuses and stocks lost after leaving Chipotle.
02:37 PM BST
Wall Street surges after US retail sales boost
The main US indexes leapt higher as retail sales data for July indicated American consumer spending remains strong despite high interest rates, allaying fears of an imminent recession in the world’s largest economy.
The Dow Jones Industrial Average leapt 509.5 points, or 1.3pc, after the open to 40,517.85.
The S&P 500 rose 56.7 points, or 1pc, at the open to 5,511.93​, while the Nasdaq Composite rose 202.9 points, or 1.2pc, to 17,395.52.
02:17 PM BST
Traders cut bets on interest rate rise after US retail sales shock
Traders are reducing bets on the Bank of England raising interest rates next month after US retail sales were much stronger than expected.
Money markets indicate there is a 33pc chance of a September rate cut, down from 41pc at the start of the day.
US consumption has remained resilient despite high interest rates, with retail sales jump 1pc in July compared to expectations of a 0.4pc rise.
Traders are still pricing in a quarter of a point rate cut by the Fed in September but have reduced the chances of a half a point cut to 14pc.
02:09 PM BST
FTSE 100 jumps after US retail surprise
The FTSE 100 has risen after US retail sales accelerated faster than analysts had predicted last month.
The UK’s blue chip index was up 0.8pc to 8,349.34 having been up 0.1pc on the day before the retail figures were published.
In July, overall retail sales came in at $709.7 billion, up 1pc from June’s figure, according to the Department of Commerce, and ahead of predictions of a rise of 0.4pc.
01:52 PM BST
Wall Street poised to surge as after better-than-expected retail sales
US stock markets are on track to rise at the opening bell as retail sales data for July indicated consumers are holding up in the face of interest rates at 23-year spending, allaying fears of an imminent recession in the world’s biggest economy.
A Commerce Department report showed retail sales rose 1pc in July, compared with 0.3 growth expected by economists polled by Reuters.
Separately, a Labor Department report showed the number of Americans filing new applications for unemployment benefits came in at 227,000 for the week ended Aug. 10, compared with an estimate of 235,000.
In premarket trading, the Dow Jones Industrial Average was up 0.8pc, the S&P 500 gained 0.8pc and the Nasdaq 100 was up nearly 1pc.
01:43 PM BST
Fewer Americans claim unemployment benefits
The number of Americans applying for unemployment benefits fell last week in another sign that the job market remains resilient in the face of high interest rates.
Jobless claims dropped by 7,000 to 227,000 last week, the Labor Department reported, while the four-week average of claims, which smooths out week-to-week ups and downs, fell by 4,500 to 236,500.
In the week that ended August 3, 1.86 million Americans were collecting jobless benefits, down by 7,000 from the week before.
Weekly filings for unemployment benefits, which are a proxy for layoffs, remain low by historic standards. But they started rising in May, adding to evidence that high interest rates are taking a toll on the U.S. job market.
The Federal Reserve, fighting inflation that hit a four-decade just over two years ago, raised its benchmark interest rate 11 times in 2022 and 2023, taking it to a 23-year high.
Inflation has come down steadily — from 9.1pc in June 2022 to a three-year low of 2.9pc last month.
01:39 PM BST
US retail sales rise more than expected
US retail sales rose by more than expected last month in a sign that the American economy is not heading towards a recession.
Retail and food services sales for July hit $709.7bn (￡553.2bn), an increase of 1pc from June, according to the US Census Bureau.
The rise was well ahead of economists’ estimates of a rise of 0.4pc.
It indicates the economy bounced back from a downwardly-revised monthly fall of 0.2pc between May and June.
01:12 PM BST
Reeves faces ‘obstacles’ to growth as UK productivity falls
Although the economy grew by 0.6pc, separate data from the ONS today show the Chancellor faces a challenge getting the most out of the UK’s workforce.
Output per hour worked - a measure of productivity - decreased by 0.1pc during the three months to June compared to the same period last year.
The preliminary estimates based on the Labour Force Survey also showed the cumulative annual growth rate for output per hour was relatively low at 0.5pc from 2019 - before the pandemic - and the second quarter of the year.
However, output per worker increased by 1.1pc in the three months to June.
Dan Pell, vice president of UKI at Workday, said:
Today’s productivity flash report spotlights the deep challenges that continue to affect UK productivity.
Neil Rudge, chief banking officer at Shawbrook, said: “The latest productivity figures from the ONS show that while the UK is benefiting from increased economic and political certainty, there are still obstacles to overcome to reach our full-potential.”
12:55 PM BST
Economic growth ‘is not Labour’s’
Telegraph readers fear it will not take the Prime Minister and the Chancellor long to undo progress made on the economy by Rishi Sunak’s government.
Here is a selection of some views from the comment section below and you can join the debate.
12:44 PM BST
Mecca Bingo owner boosted by club nights for under-35s
The owner of Mecca Bingo and Grosvenor Casinos has returned to profit as it enjoyed more tourists and targeted under-35s with club nights and cheaper drinks.
Rank Group said it was doing much better after a difficult few years impacted by the pandemic and cost-of-living squeeze.
The group, whose shares listed on the London stock market, reported a pre-tax profit of ￡15.5m for the year to the end of June, compared to a hefty loss of ￡123m the prior year.
It was driven by a 9pc increase in net gaming revenues - meaning the total amount of cash pocketed after paying out winnings to punters - compared with the prior year, totalling ￡734m.
There were 9pc more visitors to Grosvenor casinos and 2pc more to Mecca bingo halls than the previous year.
Some 44pc of the 187,000 new Mecca customers during the year were under 35-years-old, the group said.
John O’Reilly, Rank’s chief executive, said people were increasingly attracted to a “great value night out in what is quite an expensive world”, and said its customers were “much younger and more vibrant” than is typically assumed.
“We are increasingly making it more experiential,” he said.
12:00 PM BST
US stocks poised for gains after inflation falls
Wall Street is expected to show gains when trading begins later after US inflation fell to its lowest level since March 2021.
Most megacap and growth stocks were up in premarket trading. Nvidia was an outlier with a 0.5pc decline.
The S&P 500 on Wednesday extended its winning streak to five sessions, boosted by the lower-than-expected inflation data, but the Nasdaq barely scraped into positive territory as Alphabet and some megacap stocks weighed.
The eagerly awaited US consumer price index (CPI) figures showed a 2.9pc rise in inflation compared to the same month last year, setting the stage for the Federal Reserve to start cutting interest rates.
Before markets open, the US will publish retail sales figures and its latest initial jobless claims, which are forecast to increase marginally to 235,000 from 233,000 a week earlier.
In premarket trading, the Dow Jones Industrial Average was up 0.2pc, the S&P 500 was flat and the Nasdaq 100 was up 0.1pc.
11:53 AM BST
Train driver pay off is ‘good deal for taxpayers’, says minister
A new pay offer for train drivers is a “good deal for the taxpayer” because it will end strikes, a Treasury minister has said amid opposition claims it will result in higher fares or tax hikes.
The deal, which is to be voted on by the Aslef union, would include a backdated 5pc increase for 2019 to 2022, 4.75pc for 2022 to 2024 and a further 4.5pc for 2024 to 2025.
Aslef and the Government have hailed the offer as a major breakthrough as Labour seeks to prevent further industrial action by public sector workers, but the Tories have insisted it shows ministers have “caved to the unions”.
Drivers are being encouraged to accept the offer, which would end a two-year dispute, during which they have taken 18 days of strike action and refused to work non-contractual overtime, causing huge disruption to passengers.
Chief Secretary to the Treasury Darren Jones told broadcasters:
Resetting the relationship between Government and public sector workers in this instance is a good deal for the taxpayer because we are preventing strikes from happening.
11:38 AM BST
Gas prices rise amid fighting near transit point
European natural gas prices have edged higher today amid the continuing threat of supply disruptions from the war in Ukraine.
Dutch front-month futures were up as much as 1.2pc today to around €39 per megawatt hour amid the incursion by Ukraine into Russia’s Kursk region.
Fighting near the Sudzha gas-intake station has raised concerns about potential disruptions to supplies to Europe.
While Europe has made efforts to wean itself off Russia’s piped gas since the country’s invasion of Ukraine, a supply cutoff in the coming months would still be a shock, pushing up prices for consumers and industry.
It would particularly affect those in Austria and Slovakia, which continue to rely on Russian fuel.
Indeed, demand for gas shows little sign of abating despite claims of a push towards renewable sources of energy:
11:08 AM BST
Pound strengthens as analysts doubt chances of back-to-back rate cuts
The pound has risen as analysts predicted the Bank of England is unlikely to make back-to-back interest rate cuts after the economy grew ‘strongly’ in the second quarter.
Sterling was last up 0.2pc on the dollar at $1.286, and also strengthened versus the euro, which dipped 0.2pc to 85.7p.
The economy grew by 0.6pc in the second quarter of 2024 and money markets indicate there is a 39pc chance that the Bank of England will announce its second rate cut in four years in September.
Matthew Ryan, head of market strategy at Ebury, said: “Sterling looks set to remain well supported against its major peers, as investors and economists once again shift upwards their forecasts for UK growth, and price in a much faster pace of expansion in 2024 than had previously been anticipated.
“Near-term challenges remain, however, notably the uncertainty surrounding the timetable for interest rate cuts, and the market’s confidence in the new Labour government, which has experienced a relatively shaky start to its time in office.”
Analysts noted that growth in government spending contributed to the increase in UK GDP, while private consumption growth was fairly lacklustre.
Jane Foley, head of FX strategy at Rabobank, said: “What we really want to see is an increase in consumer spending, and from that point of view I think the gains in the pound could fade as it leaves the door open to further Bank of England rate cuts.”
She added: “We don’t think there is enough evidence for the bank to go back to back, with services inflation still at 5.2pc.”
10:51 AM BST
China property crisis deepens as prices slump
China’s new home prices fell at their fastest pace in nine years in July, as a slew of support policies failed to stabilise prices and restore confidence in the struggling property sector.
The prolonged housing market slump has weighed heavily on the world’s second-largest economy and its consumers, with analysts saying Beijing’s 5pc GDP target for 2024 may be too ambitious even as other economic gauges have steadied.
New home prices fell 4.9pc from a year earlier - the sharpest drop since June 2015 and deeper than a 4.5pc slide in June, according to Reuters calculations based on National Bureau of Statistics (NBS) data.
“It is increasingly looking like the property market will continue to need more policy support to establish a bottom,” analysts at ING said in a note.
Beijing has been intensifying efforts to support the sector, which at its peak accounted for a quarter of the economy, including reducing mortgage rates and lowering home buying costs.
10:36 AM BST
Oil edges up despite fears over China demand
Oil prices steadied after a two-day drop as the market was gripped by uncertainty from the Middle East and China.
Brent crude, the international benchmark, has risen 0.6pc today to more than $80 a barrel after falling by 3.1pc over the previous two days.
US-produced West Texas Intermediate gained 0.6pc to more than $77 amid concerns over how Iran might attack Israel over the killing of Hamas’ political leader on its soil.
However, prices have been kept in check by data from China showing oil demand fell 8pc from a year ago in July, with its economic recovery hit by slowing growth in industrial production and rising unemployment.
Warren Patterson, head of commodities strategy for ING, said:
The data doesn’t look great.
10:20 AM BST
Aldi to end click and collect service as competition intensifies
Aldi will end its click and collect service that was introduced at the height of the pandemic as it battles to retain its market share amid rising competition.
Britain’s fourth largest supermarket launched the service in September 2020 in response to the online grocery shopping boom that was fuelled by the Covid lockdowns.
It is currently available in 174 stores out of Aldi’s UK total of 1,020, but the service will end on Sunday, as first reported by The Grocer.
Unlike its traditional supermarket rivals — market leader Tesco, Sainsbury’s, Asda and Morrisons — Aldi does not offer a home delivery service.
Online’s share of Britain’s total grocery market was about 7pc before the onset of the pandemic in 2020. It peaked at about 15pc during the pandemic, and is currently just under 13pc, according to industry data.
German-owned Aldi and fellow discounter Lidl have expanded rapidly over the past two decades, transforming the UK supermarket sector and forcing traditional players to compete more aggressively.
However, recent industry data showed Aldi’s UK market share has edged lower. It was 10.pc in the 12 weeks to August 4, down 20 basis points on the year, according to data published on Tuesday from market researcher Kantar.
10:05 AM BST
Emerging market stocks mixed as China’s recovery disappoints
Emerging market stock indexes were mixed after economic data in China cast doubt on a recovery in the world’s second-largest economy.
Closely watched June factory output data in China slowed for a third straight month, below analysts’ forecasts while separate data showed July new home prices fell at the fastest pace in nine years. However, July retail sales quickened more than expected.
Mainland China stocks ended higher as they were buoyed by hopes for more stimulus, while Hong Kong closed largely flat despite US inflation data reinforcing bets the Federal Reserve will start cutting rates in September.
At the close, the Shanghai Composite index was up 0.9pc at 2,877.36 points and the blue-chip CSI300 index was up 1pc.
The Hang Seng index was flat at 17,109.14. Other emerging market equity indexes were mixed, with Turkey’s Bist 100 down 0.2pc, South African stocks up 0.7pc and the PX Prague Index up 0.2pc.
09:54 AM BST
China’s unemployment rises as recovery drags
A continued property crisis and weak consumption dragged on China’s economic recovery in July, official figures showed.
Unemployment rose for the first time since February, clocking in at 5.2pc, compared to 5pc in June, according to the National Bureau of Statistics.
Industrial production also rose more slowly than the previous month, showing a 5.1pc year-on-year increase in July, compared to a 5.3pc rise in June.
Retail sales grew slightly more than analysts had expected, rising 2.7pc in July, compared to 2pc in June.
Statistics bureau spokesperson Liu Aihua said the recovery in consumption will be further consolidated given recent government policies to boost consumer spending.
Beijing announced plans last month to use 150 billion yuan (￡16.3bn) in government debt to finance trade-ins for consumer goods such as appliances and cars to stimulate spending.
09:28 AM BST
Admiral attracts more customers with lower insurance premiums
Admiral shares jumped as it reported soaring profits for the first half of the year after it attracted more customers with lower premiums.
The London-listed insurer saw profits rise to ￡309.8m in the six months to June, up 32pc on the same period last year, while revenue was up 43pc at ￡3.2bn.
The increases were mainly driven by a 12pc jump in customer numbers, to more than 10.5m.
Through 2022 and 2023, Admiral hiked insurance premiums in response to “elevated claims inflation”.
Then, at the start of 2024, it decreased its premiums, “leading to an improved competitive position and significant growth in UK motor customer numbers”.
The group hailed a “record 5.5m vehicles on cover in the UK and nearly half a million more customers across other product lines in the UK”.
Admiral shares jumped as much as 11.8pc in early trading.
09:10 AM BST
Norway to keep interest rates steady ‘for some time’
Norges Bank has kept interest rates at 4.5pc and warned it will likely stay there “for some time” amid fears over lowering rates prematurely.
Norway’s central bank has held interest rates at 16-year highs since December after inflation rose to a high of 7.5pc in October 2022, its steepest level since 1987.
Inflation has since fallen back to 2.8pc in July, although this was up from 2.6pc the previous month.
Governor Ida Wolden Bache said: “Based on our current assessment of the outlook, the policy rate will likely be kept at the current level for some time ahead.”
Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, warned that Norges Bank was putting itself “at risk of falling behind the curve” on interest rate cuts. He said:
On a comparable measure, core inflation in Norway is similar to that in the euro-zone and Sweden, and lower than that in the UK, yet those other economies’ central banks have already started cutting interest rates and seem likely to reduce them further in the coming months.
08:51 AM BST
FTSE 100 held back by ‘ex-dividend’ trading
The FTSE 100 edged higher despite figures showing the economy grew ‘strongly’ in the second quarter as several companies traded without entitlement to their latest dividend payouts.
The blue-chip index was up 0.1pc after logging four sessions of gains, while the midcap FTSE 250 was down 0.3pc.
Britain’s economy grew 0.6pc in the second quarter, in line with economists’ expectations and building on a rapid 0.7pc recovery in the first quarter of the year after a shallow recession in the second half of 2023.
The pound was higher against the dollar and money markets still see a 40pc chance of Bank of England cutting interest rates in September.
Investors remained subdued after the benign US consumer inflation data on Wednesday, which reinforced bets for the Federal Reserve to start cutting interest rates next month.
Rio Tinto, Anglo American, HSBC, Barclays, and Entain were among the bottom performers on the FTSE 100 as the companies traded without entitlement to their latest dividend payouts.
Admiral Group jumped as much as 11.8pc to the top of the FTSE 100 after the motor and home insurer posted a forecast-beating 32pc rise in pre-tax profit for the first half of the year, and said it would pay a special dividend.
AstraZeneca was up 1pc after the US Food and Drug Administration (FDA) granted its blockbuster cancer drug Imfinzi a priority review for patients with limited-stage small cell lung cancer in the United States.
08:35 AM BST
William Hill owner’s profits plunge 67pc
In corporate news, the owner of William Hill and 888 said profits plummeted 67pc in the first half of the year in a results statement it called “disappointing and behind our initial plan”.
Evoke, which was rebranded from 888 earlier this year, made core earnings of ￡43.8m for the six months to June, down from ￡130.8m this time last year.
Revenue slumped 2pc to ￡862m as it continued with a turnaround plan launched in March.
The company has been rejigging the geographical focus of the business to focus on its core markets as well as what products it prioritises, which it said contributed to the losses.
That has included selling its consumer-facing 888 gambling business in the US to gaming and betting company Hard Rock Digital.
It also spent ￡16 million more on marketing and said earlier this year that it would invest in artificial intelligence to make the business more efficient.
Shares were up as much as 4.7pc as chief executive Per Widerstrom said the “underlying health of the business is continually getting stronger”.
He said: “The corrective actions we have already taken give us even more confidence that our strategic approach is sound and that we will achieve sustainable success.”
08:28 AM BST
Strong growth will not last, economists warn
The strong economic growth in the first half of this year is unlikely to be replicated in the second half of 2024, economists have warned.
Sanjay Raja, UK chief economist at Deutsche Bank Research, said:
The good news is that this should lift the overall size of the economy, leaving the Chancellor with a slightly better near-term outlook than what the OBR presented in March.
George Lagarias, chief economist at Mazars, added: “Global economic headwinds have been picking up. A potential modest slowdown in the next couple of quarters should not alarm investors, as it would be mostly externally driven and cyclical.”
08:19 AM BST
UK borrowing costs edge higher as economy grows
UK bond yields have edged higher after official figures showed the economy grew by 0.6pc in the second quarter.
The 10-year UK gilt yield was up one basis point to 3.84pc after falling on Wednesday in the wake of Britain’s smaller than expected rise in inflation.
The two-year bond yield, which is more sensitive to changes in the outlook for interest rates, also edged up to 3.54pc.
Eurozone bonds struggled for direction after mild readings of US inflation cleared the runway for the Federal Reserve to cut interest rates next month, but possibly not enough for a jumbo half a percentage point reduction.
Germany’s 10-year bond yield, the benchmark for the eurozone, was last up less than one basis point at 2.19pc. Bonds yields move inversely with prices.
08:05 AM BST
UK markets flat as economy grows ‘strongly’
Stock markets were little changed at the open in London after official figures showed the economy grew by 0.6pc in the three months to June - exactly as had been expected by analysts.
The FTSE 100 began the day up 0.1pc to 8,285.26 while the midcap FTSE 250 was flat at 20,955.92.
08:02 AM BST
Interest rates to be cut twice this year amid slightly weaker growth
The slight slowdown in growth in the second quarter will give the Bank of England confidence to cut interest rates twice more by the end of the year, according to economists.
GDP expanded by 0.6pc in the three months to June, down from 0.7pc growth in the first quarter of 2024 and slightly weaker than the Bank’s own forecast of 0.7pc.
Ashley Webb, UK economist at Capital Economics, said:
Today’s release, together with fading services inflation in July, lends support to our view that interest rates will be cut from 5pc now to 3pc by the end of next year.
ICAEW economics director Suren Thiru added:
The UK’s strong second quarter owes more to temporary momentum from the large recent falls in inflation and a boost to consumer spending from events like Euro 2024 than from a meaningful improvement in the UK’s underlying growth trajectory.
07:51 AM BST
UK economy outperforms European rivals
Britain’s economy outperformed its European rivals during the final months of Rishi Sunak’s government, official figures show.
Our economics editor Szu Ping Chan has the latest:
Today’s figures mean the economy continued to outperform France, Germany and Italy in the second quarter.
07:45 AM BST
Britain’s economy enjoys ‘another gangbusters quarter’
Britain’s economy enjoyed “another gangbusters quarter”, economists have said, as the UK firmly moved past its recession at the end of last year.
Yael Selfin, chief economist at KPMG UK, said:
Growth was boosted by a rise in government spending and investment, with somewhat weaker growth in consumer spending compared to the previous quarter.
Other economists were also in positive mood:
07:34 AM BST
Pound rises as Britain’s economy ‘in good health’
The pound has strengthened after Britain’s economy grew for a second consecutive quarter in the three months to June.
Sterling was up 0.1pc against the dollar at $1.285 and was 0.1pc stronger versus the euro, which is worth 85.7p.
Neil Birrell, chief investment officer at Premier Miton, said:
The second quarter seems like a long time ago, but the GDP data confirms that the UK economy is in good health.
07:26 AM BST
Government must ‘lock in growth’ with pledges for business, say bosses
Rachel Reeves must not take for granted the growth in the economy, bosses have warned, as they called for “concrete action” for businesses in the Budget in October.
Mike Randall, chief executive at Simply Asset Finance, said:
A rise in GDP is an encouraging sign that business confidence is starting to filter through into the wider market, and should give Westminster reason to focus on future outcomes.
Professor Joe Nellis, economic adviser to MHA, added: “Real growth will require private sector investment and quickly which is why the Chancellor needs to tread a careful line in October between raising revenues and deterring would be investors.”
07:16 AM BST
Growth flat in June as health and retail struggle
Although the economy grew 0.6pc during the second quarter, the ONS said GDP showed no growth at all during the final month of that period.
The 0pc expansion in June follows growth of 0.4pc in May.
ONS director of economic statistics Liz McKeown said: “In June growth was flat with services falling, due to a weak month for health, retailing and wholesaling, offset by widespread growth in manufacturing.”
07:10 AM BST
Reeves warns of tax rises despite surging growth
Rachel Reeves has signalled she will still hike taxes in October despite a strong expansion in the economy in the three months to June.
The UK economy grew by 0.6pc in the second quarter, according to the Office for National Statistics (ONS), in a boost for the Chancellor.
The rise was in line with economists’ expectations and follows growth of 0.7pc in the first three months of the year.
Despite the good news, the Chancellor hinted tax rises were on the way in her maiden Budget on October 30.
Ms Reeves said:
The new Government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth and a ￡22bn black hole in the public finances.
07:08 AM BST
Services sector leads growth in UK economy
After Britain’s economy expanded by 0.6pc in the second quarter of the year, ONS director of economic statistics Liz McKeown said:
The UK has now grown strongly for two quarters, following the weakness we saw in the second half of last year.
07:04 AM BST
UK economy grows by 0.6pc
Britain’s economy grew for the second consecutive quarter in a boost to Sir Keir Starmer after his first month in power.
Gross domestic product (GDP) expanded by 0.6pc in the three months to June, according to the Office for National Statistics.
Growth was down slightly from the 0.7pc expansion recorded in the first three months of the year but in line with economists’ estimates.
It shows Britain’s economy is moving past the recession suffered at the end of last year, with data this week also showing inflation remaining in check and real wages at their highest level in three years.
07:02 AM BST
Good morning
Thanks for joining me. Today starts with the latest growth figures from the Office for National Statistics, showing Britain’s economy grew by 0.6pc in the second quarter of the year.
It was just as economists expected and follows growth of 0.7pc in the first three months of 2024 after last year’s recession.
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3) Crucial economic data under threat from civil service home working row | ONS employees risk delaying time-sensitive publications after refusing to work overtime
4) John Lewis to overhaul staff roles in bid for ‘Selfridges-style’ customer service | Shake-up on shop floors to lead to 153 job cuts as retailer races to win back sales
5) Annabel Denham: Entitlement and laziness are crushing the life out of Britain | A devastating cultural shift during Covid has left too many believing that the world – or the taxpayer – owes them a living
What happened overnight
Asian markets mostly mirrored positive strides on Wall Street overnight, as easing US consumer inflation buoyed hopes that a big interest rate cut was around the corner and economic growth in Japan outpaced expectations.
Japan’s benchmark Nikkei 225 jumped 1pc to 36,808.75. Australia’s S&P/ASX 200 rose 0.3pc to 7,871.90.
Hong Kong’s Hang Seng added 0.5pc to 17,198.86, while the Shanghai Composite surged 1pc to 2,879.03. Trading was closed in South Korea for Liberation Day, a national holiday.
On Wall Street, the S&P 500 closed up 0.4pc at at 5,455.21. The Nasdaq Composite index, which heavily represents tech companies, closed almost flat at 17,192.60, while the Dow Jones Industrial Average of 30 leading US companies closed up 0.6pc at 40,008.39.
The yield on benchmark 10-year US Treasury bonds eased to 3.83pc from 3.85pc late on Tuesday. It has been coming down since topping 4.70pc in April, as expectations have built for coming cuts to interest rates.