The chairman of the US Federal Reserve has paved the way for a pre-election rate cut in a sign that the era of high borrowing costs around the world is coming to an end.
The Fed on Wednesday held interest rates unchanged but signalled that the central bank will cut rates in September if inflation continues to ease.
US stock markets rose after Jerome Powell said the economy had made “considerable progress” in getting inflation back down to its 2pc target, ahead of a similar rate decision by the Bank of England today [THURS] that rests on a knife edge.
Speaking after the Fed held borrowing costs in a range of between 5.25pc and 5.5pc for the eighth time, Mr Powell said: “The broad sense of the committee is that the economy is moving closer to the point at which it would be appropriate to reduce our policy rate.”
Investors have fully priced in a September rate cut, which will be the final meeting before November’s US presidential election.
Markets also now believe there is a 60pc chance the Bank of England will reduce rates on Thursday. The Bank will decide whether to lower interest rates from a 16-year high of 5.25pc, with Governor Andrew Bailey expected to have the deciding vote on a divided nine-person committee.
Speaking on Wednesday evening, Mr Powell said a rate cut in the US would depend on “the totality of the data [being] consistent with rising confidence on inflation and maintaining a solid labour market,” with two official inflation readings expected before the September meeting.
“If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” he said.
Mr Powell noted that the Fed’s favoured measure of inflation had “eased substantially” from its peak of 5.6pc in 2022 to 2.6pc today. He added that consumer spending had “slowed”, while the jobs market remained “strong but not overheated” and similar to pre-pandemic levels.
“As the labour market has cooled and inflation has declined, the risks to achieving our employment and inflation goals continue to move into better balance,” said Mr Powell.
In the UK, analysts at Bank of America believe the Monetary Policy Committee (MPC) will narrowly vote to reduce borrowing costs to 5pc, though they added that the cut was unlikely to be the beginning of a campaign of rate cuts.
While inflation in the UK has already dropped back to the Bank’s 2pc target, many analysts remain concerned about the strength of services inflation, which remains stubbornly high.
Analysts at Bank of America said in a note: “While we are concerned about inflation persistence in the UK and think that the data doesn’t provide clear signals that inflation persistence is beaten, we also think that the Bank could be willing to tolerate and explain away some upside strength to justify a cut.”
Benjamin Nabarro, chief UK economist at Citi, added: “The risks of course remain skewed towards a delay, with even a cut, if delivered, likely to be presented only as a modest adjustment, rather than marking a definitive cycle.”
The decision by the Fed came just hours after data showed the US jobs market was continuing to cool, which should ease inflationary pressure within the economy.
The ADP employment report showed private sector employment grew by 122,000 in July, which was down from the upwardly revised figure of 155,000 the previous month.
It was also lower than the 150,000 expected by economists.
Meanwhile, pay growth as measured by the government’s Employment Cost Index rose by 0.9pc in the second quarter, down from a 1.2pc increase in the first three months of the year, according to the Labor Department.
Compensation growth was 4.1pc on an annual basis, a slight drop from 4.2pc in the first quarter.
ADP chief economist Nela Richardson said: “With wage growth abating, the labour market is playing along with the Federal Reserve’s effort to slow inflation.”
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the Fed was already behind the curve.
He said: “Our view remains that the Fed is recognising too slowly that the labour market is cooling and that high inflation is yesterday’s problem.”
Mr Shepherdson said the Fed was likely to pick up the pace of rate cuts “much faster than markets currently anticipate if, as we expect, the labour market data continue to weaken and inflation prints remain benign”, with rates down to 4pc by the end of the year “as the Fed scrambles to get ahead of the developing slowdown”.
However, Paul Ashworth at Capital Economics said a Donald Trump presidency could keep inflation and interest rates higher for longer, as he predicted just two rate cuts this year.
Mr Ashworth said: “With Donald Trump still the favourite to win this November’s election… ushering in an inflationary policy mix, we’re happy with that positioning.”
Read the latest updates below.
Thanks for joining us today on the Markets blog. We’ll be back at around 7am tomorrow to cover the latest from the worlds of finance and business.
Mark Zuckerberg has said Meta’s artificial intelligence assistant will overtake the likes of ChatGPT to become the world’s most popular AI system by the end of the year. James Titcomb reports:
Big technology stocks bounced back today and drove a rally for American indexes, as Wall Street grew even more convinced long-sought cuts to interest rates will be arriving soon.
The S&P 500 jumped 1.6pc for its best day since February. The Dow Jones Industrial Average rose 0.2pc, and the tech-heavy Nasdaq Composite soared 2.6pc.
The widespread gains came as Treasury yields eased in the bond market after the Federal Reserve gave the clearest indication yet that it could begin lowering interest rates in September.
Fed chairman Jerome Powell said policy makers are “getting closer to the point” of comfort about inflation where they could cut rates for the first time since Covid crashed the economy.
“We think that the time is approaching,” Mr Powell said. “And if we do get the data that we hope we get, then a reduction in our policy rate could be on the table at the September meeting.”
After the Fed voted to keep interest rates steady on Wednesday, as was widely expected, Powell spent much of an ensuing press conference discussing the risks of both moving too early or too late with rate cuts. One could allow inflation to reaccelerate, while the other could cause unnecessary pain for the economy and ultimately throw Americans out of their jobs.
After keeping its main interest rate at a two-decade high for roughly a year, speculation may rise that the Fed waited too long. That “has the potential to add to the stock market’s choppiness as we head toward what is historically its most volatile period,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.
For Wednesday, though, the dominant mood on Wall Street was jubilance.
Shares in British chip giant Arm are down 7.3pc in after-hours trading despite beating quarterly forecasts.
Investors are said to be concerned that the chip designer did not increase its annual forcast.
It maintained its sales prediction for its financial year at £3.95bn, below the $4bn analysts have been predicting.
Chip designer Arm Holdings this evening reported a stronger-than-expected 39pc surge in quarterly revenue.
Arm’s revenue rose $939m (£730m), exceeding analyst estimates of $902.7m.
The UK chip designer reported quarterly earnings of 40 cents per share. Analysts expected earnings of 34 cents a share.
For its current quarter, Arm forecast revenue in a range between $780m and $830m, compared with an average analyst estimate of $804.1 million, according to LSEG data.
Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology.
Arm’s designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets.
Bets that Arm will benefit from a surge in artificial-intelligence computing have nearly tripled the chip designer’s share price since its initial public offering last September, giving it market value of about $140bn.
Although Arm’s designs are found adjacent to chips that power AI applications, the company’s revenue and profit have not benefited from AI to the same degree as Nvidia’s.
The US central bank could make its first post-pandemic interest rate cut “as soon as” in September, said Federal Reserve Chair Jerome Powell on Wednesday.
“The broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate,” he told a press briefing, adding that inflation has eased “notably” in recent years.
The S&P 500 and Nasdaq held onto afternoon gains this evening after the Fed left US interest rates unchanged but indicated it will likely begin easing monetary policy in September as inflation cools.
All 11 sectors of the benchmark S&P 500 advanced, led by technology and consumer discretionary stocks. The Nasdaq and the blue-chip Dow also rose.
The Fed kept its benchmark overnight interest rate in the 5.25pc-5.50pc range as its two-day policymaking meeting ended on Wednesday, but kept open the door to a cut in September, seven weeks shy of the November US elections.
Jake Dollarhide, chief executive of Longbow Asset Management, said:
Facebook owner Meta’s share price has risen 2.3pc today as investors await their quarterly results, expected after Wall Street trading closes at 9pm.
Investors have been less than enthusiastic about Big Tech results since Tesla and Alphabet reported last week. Yesterday’s results from Microsoft prompted a 1.2pc decline in the software giant’s shares today.
Investors are worried about the high level of investment companies are making to secure their futures in AI, and about how long this will take to pay off.
Denny Fish, who manages the Janus Henderson Global Technology and Innovation Fund, told Bloomberg:
Traders kept bets that the Fed will start dialing back on its restrictive policy in September, with the futures market reflecting expectations the first move will be a quarter point cut, followed by two more such reductions at the meetings in November and December.
Omair Sharif, president of Inflation Insights, said:
The central bank uses the personal consumption expenditures price index for its 2pc annual inflation target. The PCE price index rose 2.5pc in June after exceeding 7pc in 2022.
The yield on benchmark 10-year US Treasury bonds has risen in the immediate aftermath of the Fed’s interest rate decision. It has gained back much of the fall experienced today.
The yield is now 4.13pc, down a wisker from 4.14pc yesterday.
The Federal Reserve has announced tonight it will hold interest rates steady, it it needs greater confidence over inflation.
It said: “Recent indicators suggest that economic activity has continued to expand at a solid pace.
“Job gains have moderated, and the unemployment rate has moved up but remains low. Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective.”
However, it added: “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent … The Committee is strongly committed to returning inflation to its 2 percent objective.”
Traders are, however, almost fully pricing in a September cut.
Another top executive is leaving the Post Office as the embattled business prepares for the final stage of the Horizon inquiry. Matt Oliver reports:
Read the full story…
The City and Wall Street are waiting for the Federal Reserve’s decision on interst rates, expected from 7pm this evening. The US central bank is expected to hold rates steady and open the door for a September rate cut.
With traders fully pricing in a September cut, according to CME’s FedWatch, any disappointment on this front could amplify the recent stock selloff, analysts fear.
US inflation has been falling steadily closer to the Fed’s 2pc target for several months. At the same time, the job market has cooled, with the unemployment rate rising about a half a percentage point this year to 4.1pc.
Fed officials have said that they are seeking to balance the need to keep rates high enough to control inflation without keeping them too high for too long and causing a recession.
Rate cuts could help the Fed achieve a “soft landing”, in which high inflation is defeated without an economic downturn. Such an outcome might also affect this year’s presidential race, as Republicans have sought to tie Vice President Kamala Harris to the inflation spike of the past three years. Former President Donald Trump said the Fed shouldn’t cut rates before the election.
Christopher Waller, a member of the Fed’s governing board, said earlier this month: “While I don’t believe we have reached our final destination, I do believe we are getting closer to the time when a cut in the policy rate is warranted.”
TalkTalk is likely to default on its debts, one of the world’s leading ratings agencies has warned, as Sir Charles Dunstone attempts to secure a rescue deal. Michael Bow reports:
Read the full story…
The top 30 American chip stocks are on track for their biggest one-day gain since May 2023, with the Philadelphia Semiconductor index, which they form, rising 5.6pc.
They are, however, also on track for their worst month since October 2023 after a recent rout.
Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest, said:
Meanwhile, Microsoft lost 1.9pc as investors chewed over its plans to spend more this fiscal year to build its AI infrastructure – another sign that the payoff from hefty investments in the technology could take longer than hoped.
European shares rose today, with Dutch chip equipment manufacturer ASML jumping on a report that it would be exempted from many of the new US restrictions on foreign chip equipment exports to China. ASML shares jumped 7.2pc.
Gains were also fuelled by a range of positive company earnings being announced.
Airbus climbed 4.8pc after the world’s largest planemaker published better than expected second quarter results.
Meanwhile, HSBC gained 4pc after the lender announced a share buyback and upgraded its outlook.
The pan-European Stoxx 600 index finished 0.8pc higher, touching an over two-week high earlier during trading and clocking a monthly advance of over 1pc.
France’s blue chip Cac 40 index closed up 0.8pc, while Germany’s Dax closed up 0.5pc.
Uber plans to deploy Chinese driverless cars on its service as part of a deal with BYD, the country’s biggest electric vehicle manufacturer. James Titcomb reports:
Read the full story…
The FTSE 100 rose 1.1pc, with mining company Antofagasta leading the index by rising 4.6pc. The second-biggest riser was HSBC, up 4pc.
At the other end of the blue-chip index was InterContinental Hotels Group, which fell 3pc, while drug giant GSK fell 2pc.
The mid-cap FTSE 250 also drove higher, with the index up by 0.8pc. The top riser was wealth manager Rathbones, up 7.5pc, followed by Essentra, a supplier of plastic and fibre products, which rose 6.6pc.
Park Plaza operator PPHE Hotel Group was the biggest faller, down 2.3pc, followed by car dealer Inchape, down 1.9pc.
European stocks are trading higher on hopes that the US Federal Reserve will seem supportive of interest rate cuts in comments due this evening.
France’s Cac 40 is up 0.8pc, while Germany’s Dax is up 0.4pc. The pan-European Stoxx 600, which includes some British giants, has risen 0.8pc.
The Fed will need to “thread a needle” in its comments due this evening on interest rates, a financial markets economist has said.
Thierry Wizman, of investment firm Macquarie in New York, told Bloomberg:
The S&P 500 is up 1.7pc in trading this afternoon, while the technology-focused Nasdaq Composite index is up 2.5pc. The Dow Jones, which includes 30 leading US companies, is up 0.6pc.
In the bond market, US Treasury yields were easing ahead of a decision on rates by the Federal Reserve coming this evening.
Virtually no one expects it to make a move, but a batch of economic reports released during the morning strengthened expectations that a cut to interest rates will come at the Fed’s next meeting in September.
The yield of benchmark 10-year US Treasury bonds is 4.11pc, down from 4.14pc yesterday.
German 10-year yields dropped to 2.31pc from 2.34pc yesterday, while France’s yields dropped to 3.02pc from 3.06pc yesterday. The German bonds are seen as a benchmark for the euro zone.
The UK 10-year gilt is 3.99pc, down from 4.05pc yesterday.
Oil prices and hopes for China’s economy have boosted the FTSE 100, an analyst has said.
Chris Beauchamp, of online trading platform IG, said:
The FTSE 100 is up 0.9pc, while the FTSE 250 is up 0.6pc.
Oil prices have today jumped their most since June 10. The move came, as we reported earlier, after Hamas said Israel killed Ismail Haniyeh, its top political leader in Tehran.
Israel has not directly commented on the strike.
The price of oil, according to the global Brent crude benchmark, is up 2.39pc at $80.51 a barrel.
Meanwhile, West Texas Intermediate, a significant measure in the US, is up 2.58pc.
The Nasdaq is currently up 2.4pc, after chip giant Advanced Micro Devices (AMD) lifted its 2024 forecast for AI-chip sales
AMD shares soared by over 10pc at their peak this afternoon, and are currently up by more 6.3pc.
The cheer spread to AI darling Nvidia, which is up 10.8pc.
The broader Philadelphia Semiconductor index, of 30 top US chip companies, is up 5pc.
However, Microsoft is down 1.7pc after releasing its quarterly results last night. It plans to spend more this financial year to build its AI infrastructure, even as growth in its cloud business slowed – another sign that the payoff from hefty investments in the technology could take longer than hoped.
Sam Stovall, chief investment strategist at CFRA Research, said:
Other Big Tech firms also rose, with Apple gaining 2.1pc, Meta adding 2.2pc and Amazon up 2.8pc ahead of their quarterly results, due this week.
Tech and chip stocks have taken a hit this month, after prompting a record-breaking Wall Street run this year on enthusiasm surrounding AI adoption and the prospect of early rate cuts from the US Federal Reserve.
Results from Alphabet, Tesla and Microsoft failed to thrill and investors are moving to underperforming sectors, questioning if the AI-driven rally has run its course.
The small-caps Russell 2000 index and the blue-chip Dow Jones Industrial Average are on track for their best month this year.
With markets on Wall Street surging, I will hand over the reins to my colleague Alex Singleton, who will guide you through the Federal Reserve interest rate decision and press conference later, as well as Facebook-owner Meta’s latest results.
It looks like the Fed rate decision will be announced against a backdrop of surging markets:
US stock markets have surged as investors bet that the US Federal Reserve will signal that lower interest rates are on the way.
All three major US stock indexes were higher in opening deals, with the tech-heavy Nasdaq leading the way as traders were also swept up in fresh excitement about AI companies.
The Nasdaq Composite was up 2.3pc, while the S&P 500 had gained 1.3pc as AI-darling Nvidia was 10.7pc higher a day after it lost 7pc.
The surge was triggered by Advanced Micro Devices, which rallied 7.5pc after reporting better profit and revenue for the latest quarter than analysts expected, thanks in part to accelerating artificial-intelligence business.
Federal Reserve policy makers are expected to keep their interest rates at a two-decade high at their meeting later today.
However, traders have priced in that the Fed will cut interest rates from their 23-year highs in September and will watch for hints about such a move during the press conference following the meeting.
David Morrison, analyst at Trade Nation, said: “Tonight’s press conference from Fed Chair Jerome Powell may provide a catalyst for the next move.”
Julien Lafargue, chief market strategist at Barclays Private Bank, said: “We expect the US Federal Reserve to open the door to a first interest rate cut in September.”
The publisher of the Express and Mirror newspapers said it has benefited from a more news-heavy year as it covered the general election, Euros football tournament and Taylor Swift tour.
Reach, which also owns the Daily Star and regional newspapers across the UK, said its digital sales returned to growth in recent months despite battling a “tough” backdrop for the industry.
Revenues across its online platforms grew by 6.7pc between April and June, compared with the same period a year ago.
It marks a turnaround in performance after seeing its digital sales drop in previous quarters.
However, the volume of page views plunged by a quarter over the period, which Reach blamed on the ongoing impact of news being “deprioritised” by major technology platforms.
Facebook owner Meta moved last year to prioritise user-generated content above news on their social media sites, which has rocked traditional media groups.
Furthermore, sales from its physical newspapers dropped by 6.2pc over the latest period.
The Nasdaq and the S&P 500 opened sharply higher after a bullish forecast from AMD boosted struggling chip stocks.
The S&P 500 rose 69.2 points, or 1.3pc, at the open to 5,505.59​, while the Nasdaq Composite rose 351.8 points, or 2.1pc, to 17,499.231 ahead of an interest-rate decision from the Federal Reserve.
The Dow Jones Industrial Average rose 25.5 points, or 0.1pc, at the open to 40,768.88 as Microsoft faltered after disappointing results on Tuesday.
HSBC’s outgoing chief executive has declared “the worst is behind us” on China’s property crisis as the bank handed shareholders a $3bn (£2.3bn) dividend.
Our reporter Michael Bow has the details:
Read how the property crisis put financial strain on HSBC.
Government borrowing costs have fallen to their lowest level since April as bond markets rallied ahead of interest rate decisions by the US Federal Reserve and the Bank of England.
The yield on 10-year UK gilts – the return the government promises to pay buyers of its debt – has fallen by about five basis points to 3.99pc.
It comes as money markets price in interest rate cuts in both the US and UK in September, with traders betting there is a 62pc chance that the Bank of England will cut interest rates from their 16-year highs tomorrow.
In the eurozone, Germany’s 10-year bond yield fell as low as 2.31pc, its lowest since April 2.
The US 10-year Treasury bond yield dropped to 4.11pc ahead of the Federal Reserve’s decision this evening, when it is expected to hold borrowing costs at their highest level since 2001 but signal rate cuts are on the way.
Julien Lafargue, chief market strategist at Barclays Private Bank, said:
Pay and benefits for America’s workers grew more slowly in the three months to June in a further sign that price pressures could be kept in check.
Compensation as measured by the government’s Employment Cost Index rose 0.9pc in the second quarter, down from a 1.2pc increase in the first three months of the year, according to the Labor Department.
Compared with the same quarter a year earlier, compensation growth was 4.1pc, a slight drop from 4.2pc in the first quarter.
Higher wages and benefits are good for employees, but slower pay growth will likely reassure Fed officials that inflation is steadily falling back to their 2pc target.
Rapid wage growth can lead many businesses to raise their prices to offset the higher labour costs.
US companies added fewer jobs than expected over the last month in a boost to hopes that the US Federal Reserve will begin cutting interest rates in September.
The ADP Employment Report showed private sector employment increased by 122,000 jobs in July, which was down from the upwardly revised 155,000 the previous month.
It was also lower than than the 150,000 figure expected by economists, indicating that the US jobs market is slowing down.
ADP chief economist Nela Richardson said:
Oil has extended its gains amid concerns about conflict in the Middle East after Hamas said Israel killed its political leader.
Brent crude, the international benchmark, was up 2.8pc to more than $80 a barrel after Hamas said that Ismail Haniyeh was killed in an airstrike in Iran.
It followed an earlier attack by Israel on Beirut that killed a senior Hezbollah commander.
ING analysts Ewa Manthey and Warren Patterson said: “The details are still emerging from Iran with the market allocating a higher risk premium for oil.”
Brent is still on track to end the month down almost 7pc.
US-produced West Texas Intermediate was up 3.4pc to more than $77 after the American Petroleum Institute said crude inventories fell by 4.5m barrels last week.
Robert Kelly Ortberg faces a big challenge as he comes out of retirement to lead troubled manufacturer Boeing.
The company agreed earlier this month to plead guilty to a criminal fraud conspiracy charge to resolve an investigation linked to two 737 MAX fatal crashes that killed 346 people.
Meanwhile, the Federal Aviation Administration has increased its oversight of the company following mistakes including the blowout of a panel on an Alaska Airlines jet.
It is also pushing back against whistleblower allegations of manufacturing shortcuts that crimp on safety.
The plane maker revealed it lost more than $1.4bn (£1.1bn) in the second quarter.
Boeing has named an aerospace veteran as its new president and chief executive as it battles to turn around its fortunes after the crisis triggered by the midair blowout over the US earlier this year.
Kelly Ortberg, a former boss of Rockwell Collins, will come out of retirement to take over on August 8 from Dave Calhoun, who announced in March that he would quit the beleaguered plane manufacturer.
The announcement came as Boeing revealed deepening losses at its troubled defence and space business, which has been under pressure since part of the fuselage of an Alaska Airlines flight broke away mid flight in January.
Boeing made a second-quarter net loss of $1.4bn (£1.1bn), compared with $149m (£116m) a year ago.
Mr Ortberg, 64, helped lead Rockwell Collins and integrate it into United Technology to create super-supplier RTX prior to his retirement in 2021.
Boeing chairman Steve Mollenkopf told staff that Mr Ortberg “is an experienced leader who is deeply respected in the aerospace industry”.
He said: “We look forward to working with Kelly as he leads Boeing through this consequential period in our long history.”
Samsung reported a 15-fold increase in operating profit for the second quarter this year, largely thanks to a strong demand for memory chips amid the expansion of artificial intelligence technologies.
The South Korean semiconductor and smartphone giant said that its operating profit for the three months to June stood at 10.4 trillion won (£5.9bn), up from 670 billion won (£380m) reported in the same period last year.
Samsung said its consolidated revenues rose by about 23pc to 74 trillion won as favourable market conditions drove higher average sales prices, while robust sales of organic light-emitting diode (OLED) panels also contributed to the stronger results.
Samsung said: “This increased demand is a result of the continued AI investments by cloud service providers and growing demand for AI from businesses for their on-premise servers.”
In the second half of this year, Samsung said that AI servers are expected to take up a larger portion of the market as major cloud service providers and enterprises expand their AI investments.
Samsung shares gained 3.6pc in South Korea.
The Nasdaq and S&P 500 are poised to surge when trading begins on Wall Street following a strong forecast for artificial intelligence chip maker Advanced Micro Devices (AMD).
Chip stocks such as AI favourite Nvidia, Intel, Marvell Technology, Qualcomm, Broadcom and Arm jumped between 2pc and 5.2pc in premarket trading.
It comes after AMD soared 9.2pc as it increased its 2024 forecast for AI chip sales.
Megacap tech and chip stocks have taken a hit this month, after steering the US stock market to record highs in 2024 amid euphoria around AI.
Markets have also been driven higher by the prospect of interest rate cuts from the US Federal Reserve. The central bank announces its latest decision at 7pm UK time.
Meta will report its latest earnings after markets close, while results for Apple and Amazon are due on Thursday.
In premarket trading, the Dow Jones Industrial Average was up 0.3pc, the S&P 500 had gained 1pc and the Nasdaq 100 was 1.5pc higher.
Sales have slipped at home improvements retailer Wickes as Britons continue to hold back on big ticket purchases.
The retail group said a sharp slump in trading in its design and installation business weighed on trading over the past half-year.
David Wood, chief executive of Wickes, said the company has nevertheless grown volumes in its retail business despite a “challenging trading backdrop”.
Total revenues dipped by 3.4pc to £799.9m over the six months to June 29, with like-for-like revenues down 3.9pc.
The fall was driven by weakness in its design and installation arm, where revenues dropped by 17pc to £166.7m.
The company linked this drop to “the continued soft consumer appetite for larger ticket purchases”, but highlighted stronger sales across its lower-priced kitchens during the period.
Elsewhere, retail revenues grew by 1pc to £633.2m for the six-month period.
Wickes hailed “resilient” retail demand, as higher volumes offset price deflation of around 3pc. Shares were up as much as 3.5pc.
Natural gas prices rose after the killing of the political leader of Hamas in Iran, raising concerns about a potential war in the Middle East.
Dutch front-month futures, Europe’s benchmark, gained as much as 4.8pc to €36 per megawatt hour, which is higher than usual for summer.
It comes after Iran’s supreme leader vowed “severe punishment” for Israel for the killing of Ismail Haniyeh, Hamas’s top political leader, in Tehran.
Florence Schmit, an energy strategist at Rabobank, said: “Further escalations in the Middle East show how quickly the TTF (European gas) can jump in a day.”
The UK equivalent contract has gained as much as 8.4pc.
Microsoft has revealed the service outage which affected some of its apps and features on Tuesday was sparked by an attempted cyber attack.
The US technology giant said initial problems on its Azure cloud platform had been triggered by a distributed denial-of-service (DDoS) attack, where bad actors try and knock a platform offline by flooding it with traffic until it can no longer cope.
The issue has been resolved, Microsoft said, but the company confirmed its initial investigations had found that an error in the rollout of its own defences to prevent the attack “amplified the impact of the attack rather than mitigating it”.
In an update posted to its Azure status website, Microsoft said an “unexpected usage spike” had caused performance issues on parts of its Azure platform, for which the company said the “initial trigger event” had been the DDoS attack that “activated our DDoS protection mechanisms”.
However, these protections had initially made things worse, before the company made “network configuration changes” to relieve and eventually help solve the issue.
The incident on Tuesday saw thousands of users report issues accessing a range of Microsoft services, with service status website DownDetector reporting user-flagged issues with Microsoft Teams, Xbox Live and other services.
The outage came shortly before a sharp drop in Microsoft’s share price after it reported disappointing results that deepened investors’ fears about the artificial intelligence boom.
Wine tycoon Richard Balfour-Lynn has been ordered to pay millions of pounds in compensation over claims he misled investors via a “web of sham transactions and false trails”.
Our retail editor Hannah Boland has the details:
Read how Mr Balfour-Lynn and two other executives were alleged to have concealed the extent of his shareholding of MWB from the market.
Kyle Chapman, FX markets analyst at Ballinger Group, said that although eurozone inflation was “hotter than the forecasts” it has not rocked the boat in terms of interest rate expectations.
He said:
Money markets still indicate that the European Central Bank will cut interest rates from 3.75pc to 3.5pc in September.
Traders are betting there is a 95pc chance that the eurozone’s central bank will cut borrowing costs for the second time this year at its next meeting.
Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said the figures were “not much to worry about, but will keep the ECB on the cautious side”.
The euro has strengthened against the pound after inflation across the single currency bloc was higher than expected over the last month.
The single currency was up 0.2pc to 84.4p and rose 0.1pc against the dollar to $1.083 after the consumer prices index rose unexpectedly to 2.6pc.
The uptick in inflation comes after the European Central Bank cut interest rates in June from their record highs of 4pc to 3.75pc.
The rate of inflation rose by more than expected in the eurozone, preliminary estimates show, in a warning to the European Central Bank.
The consumer prices index rose by 2.6pc in July, statistics agency Eurostat said, which was higher than the 2.5pc recorded in June and faster than economists estimates for levels to remain unchanged.
Core inflation, which strips out volatile food and energy prices, held at 2.9pc for the third straight month.
The rise in inflation comes after the European Central Bank cut interest rates for the first time in five years in June.
Just Eat notched its best UK sales performance for three years as Britons were prepared to splash out more on takeaways.
The takeaway delivery giant said UK and Ireland sales by gross transaction value (GTV) rose by 9pc, or 6pc on a constant currency basis, to €3.4bn (£2.9bn) in the first half of 2024.
It marked Just East Takeaway.com’s best performance in the region since 2021, although some of it was driven by higher food price inflation, with its average order value rising to €29.71 (£25.03) from €28.57 (£24.07) a year ago.
This helped offset a slip dip in order numbers, to 120m in the first half from 121m a year earlier, while lower delivery costs per order also helped underlying earnings in the UK and Ireland jump 64pc to €92m (£78m).
Just Eat had seen UK and Ireland order numbers return to growth in the first quarter.
Order numbers have been under pressure as customer demand for takeaways has pulled back significantly since the pandemic.
The UK and Ireland business outshone the group’s other global divisions, with more difficult trading in North America and Europe impacting group revenues.
Overall, total revenues edged 1pc lower to €2.6bn (£2.2bn), but Just Eat saw a 42pc hike in underlying earnings to €203m (£171m).
The Bank of Japan increased interest rates for only the second time in 17 years today to 0.25pc – and economists think it will not be long before it does so again.
The yen jumped in the wake of comments from Governor Kazuo Ueda at a press conference, where he left the door open to further rate rises and said the central bank did not see the 0.5pc level “as any key barrier”.
The yen strengthened more than 1pc to 150.61 per dollar, its strongest level since March.
Marcel Thieliant, head of Asia-Pacific at Capital Economics, said:
The pound has fallen to a three-week low against the dollar ahead of the Federal Reserve’s interest rate decision later.
Sterling has slipped 0.1pc today to $1.283 as money markets indicate policymakers will keep borrowing costs at their 23-year highs in the US.
Meanwhile, traders bet there is a 60pc chance that the Bank of England will cut interest rates for the first time in four years tomorrow, with a reduction in borrowing costs priced in by September.
The pound was down 0.1pc against the euro, which is worth 84.3p.
Taylor Wimpey has ramped up its land buying plans and says it is ready to build houses for Labour.
Our economics reporter Melissa Lawford has the details:
The FTSE 100 was lifted by energy stocks as investors also eagerly awaited the US Federal Reserve’s interest rate decision later today.
The blue-chip FTSE 100 index gained 1.3pc, after it logged its worst day in a week on Tuesday. The mid-cap FTSE 250 index has added 1pc.
Both indexes are set to log monthly gains, with the FTSE 250 eyeing its best this year.
The Fed’s monetary policy decision could influence the outlook on rate cuts globally.
Although it is widely expected to hold rates, markets are anticipating hints for a September cut, after recent data indicated inflation easing in the economy,
In London, energy shares rose as much as 2.5pc to lead gains, with top players like BP and Shell up as much as 2.4pc each after the killing of Hamas’ leader ratcheted up tensions in the Middle East and pushed up oil prices.
Meanwhile, HSBC climbed 2.8pc after the bank pledged to buy back $3bn in shares, and reported stable first-half profit that beat estimates.
GSK slipped 2.7pc to the bottom of the FTSE 100 despite a higher annual profits and sales forecasts and second-quarter results that beat market expectations.
Europe’s main stock markets opened sharply higher, as they were boosted by growing hopes that the Federal Reserve may later signal that US interest rate cuts are on the way.
London’s FTSE 100 index – already buoyed by rising oil prices – gained 1.1pc to 8,362.70 points on the eve of a possible rate reduction from the Bank of England.
In the eurozone, where the European Central Bank has already started to cut borrowing costs, the Paris Cac 40 rose 1.2pc to 7,565.74 points and Frankfurt’s Dax rose 0.7pc to 18,543.75.
Later today, the Fed is highly unlikely to waver from its position of holding US interest rates at a two-decade high – but could drop hints about a September start to rate cuts.
Rabobank analyst Jane Foley said: “There is no real incentive for the Fed to surprise the market at this juncture, particularly with the US election nearing, so a moderately dovish tone from the Fed will be sufficient to signal to signal to the market that expectations are on the right track.”
It has been a strong start to the day for energy heavyweights on the FTSE 100, which have a major impact on the performance of the index.
Shell – the second largest company on the UK’s blue chip stock index – rose 2.3pc while BP began the day up 2pc.
The energy heavy FTSE 100 leapt higher as trading began as oil prices were pushed higher following the assassination of the political leader of Hamas.
The UK’s flagship stock index, which features heavyweights like Shell and BP, jumped 1pc to 8,353.79 while the midcap FTSE 250 rose 0.4pc to 21,510.28.
Metro Bank cut its losses in the first half of the year and said it expects to return to profitability after it scrapped seven-day branch opening times and cut back hours after shedding 1,000 jobs.
The challenger bank reduced its pre-tax losses from £33m in the first half of last year to £26.8m.
The high street lender, which was rescued in an emergency fundraising last October, upgraded its forecast for return on tangible equity from 2025 onwards and said it expects to return to profit in the fourth quarter of this year.
It announced in March that it would no longer open on Sundays as part of a £80m cost-cutting drive.
Chief executive Daniel Frumkin said the bank looked “to the future with renewed confidence”, adding:
Drugs maker GSK (GlaxoSmithKline) has lifted its profits and sales growth targets for the year after a boost from cancer and HIV treatments.
The pharmaceutical giant told shareholders that sales grew by 13pc to £7.9bn for the second quarter of 2024.
It said this was supported by a 22pc increase in speciality medicine sales, a 13pc rise in HIV treatment sales, and oncology sales more than doubled.
Emma Walmsley, chief executive officer of GSK, said:
The Bank of Japan further unwound its massive monetary easing programme by raising interest rates for only the second time in 17 years and indicating plans for more if the economy performs as officials expect.
The institution’s long-standing ultra-loose policies have made it an outlier among central banks in recent years and driven down the value of the yen against the dollar.
After a two-day policy meeting, the BoJ set an interest rate of 0.25pc, a notch up from the previous rate of around zero to 0.1pc.
It raised interest rates in March for the first time since 2007, finally ditching a maverick negative-rate policy aimed at boosting growth in the world’s fourth largest economy.
Today’s decision, which also included a pledge to cut its government bond-purchases, caused the yen to surge briefly before returning to morning levels of around 152.80 per dollar.
“The bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation” if the Japanese economy moves in line with predictions, the BoJ said.
Analysts had been divided on whether the BoJ would hike rates, with some predicting policymakers would wait until the autumn because of sluggish consumption in Japan.
Attention now turns to the US, where the Federal Reserve is widely expected to hold interest rates steady but signal the potential for a cut in September.
Noel Quinn signed off his final quarter as boss of HSBC by doubling down on the bank’s efforts to return value to shareholders.
The lender announcing a further three-month share buyback plan of up to $3bn, following the completed $3bn repurchase announced last quarter.
The bank recorded pre-tax profit of $21.6bn (£16.8bn) for the first half of 2024 in what it called a “stable” result after it reported a mammoth $21.7bn in pre-tax profit in the first half of last year.
Operating expenses of $16.3bn (£12.6bn) were 5pc higher than in the first half of 2023, driven primarily by higher technology spend and investment, inflationary pressures, and an increase in the performance-related pay accrual.
HSBC announced earlier this month that its chief financial officer, Georges Elhedery, will step into the chief executive role in September.
Mr Quinn, 62, in his last interim report, “place on record what an enormous privilege it has been to lead this great institution”, where he had a 37-year career.
Group chief executive Mr Quinn said: “After delivering record profits in 2023, we had another strong profit performance in the first half of 2024, which is further evidence that our strategy is working.
He has overseen a transformation of the London-headquartered lender during almost five years in charge, helping to drive profits off the back of cost-cutting and soaring interest rates.
Chancellor Rachel Reeves should offer major tax breaks to businesses if they invest in keeping their staff happy and healthy, a left-leaning think tank has urged.
Our deputy economics editor Tim Wallace has the latest:
Oil prices have risen after the political leader of Hamas was killed in Iran, raising fears about an all-out war in the Middle East.
Brent crude, the international benchmark, rose 1.7pc to nearly $80 a barrel after Hamas said Israel killed Ismail Haniyeh.
US-produced West Texas Intermediate crude was up 1.9pc to more than $76 after the killing, which followed an earlier attack by Israel in Lebanon which killed a senior Hezbollah commander.
Brent had tumbled 4.5pc over the previous three days to seven-week lows but has bounced back amid concerns that an escalation in the conflict could lead to more attacks on ships travelling through the Red Sea or impact exports from Iran.
Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova, said the attack “obviously strips away the hopes of ceasefire”.
She said: “Since it happened in Tehran, it’s plausible that it can trigger a wider conflict and we may witness involvement from other countries.”
Thanks for joining me. The price of oil has risen following the assassination of the political leader of Hamas in Tehran.
Brent crude climbed 1.7pc to nearly $80 a barrel as the death of Ismail Haniyeh raised concerns about the impact of a wider conflict in the Middle East.
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The Bank of Japan raised interest rates and projected inflation to stay around its 2pc target in coming years, signalling its resolve to steadily unwind a decade of massive monetary stimulus.
The nine-member board decided to hike the overnight call rate target at 0.25pc from 0pc to 0.1pc by a 7-2 vote.
The yen rose against the dollar after the Bank of Japan hiked interest rates for the second time in 17 years.
Stock markets in Asia rose amid growing hopes for a cut in US borrowing costs.
Hong Kong, Shanghai, Sydney, Seoul, Singapore, Mumbai, Wellington, Bangkok, Manila and Jakarta all advanced as dealers brushed off a sell-off in Big Tech after Microsoft revealed results that showed its key cloud computing unit fell short of expectations.
That came after results last week from Tesla and Alphabet missed forecasts, fuelling concerns about the titan tech firms that have led a rally in markets this year.
On Wall Street, the Dow Jones Industrial Average rose 0.5pc, to 40,743.33, the S&P 500 lost 0.5pc, to 5,436.44, and the Nasdaq Composite lost 1.4pc, to 17,147.42.
The yield on benchmark 10-year US Treasury bonds was at 4.17pc, where it was late on Monday and down from 4.70pc in April.