F rench President Emmanuel Macron has accused Russia of using energy as a "weapon of war" as the chief executive of oil and gas giant Shell warned gas rationing in Europe this winter was possible.
Mr Macron yesterday told citizens to “prepare for a scenario where we have to manage completely without Russian gas.”
“The summer, early autumn will be very hard,” he said. “Russia is using energy, like it is using food, as a weapon of war.”
He said the government would prepare a “sobriety plan” to conserve energy, which would start with turning off public lights at night when they aren’t useful.
“We need a general mobilisation,” Mr Macron said in a televised address for Bastille Day.
Ben van Beurden, chief executive of Shell, echoed the French president's remarks, saying Russia had shown it is "able and willing to weaponise energy supplies."
Mr van Beurden said Moscow had "surprised" the market and told governments to be prepared for the Kremlin to restrict gas further.
"For a long time we thought this was not in Russia’s interest to cut off their largest market and to make the European market forever distrustful of Russian supplies," he told the Aurora Spring Conference in Oxford on Thursday.
"I think it [Europe] will be best advised to take very significant contingency plans into account. It [would] be imprudent in my mind for governments to just wait for the eleventh hour to prepare for that."
Countries including Germany and the Netherlands have already began activating early stages of emergency plans meant to reduce energy consumption and talks are taking place at the highest level within the EU about efforts to reduce demand over winter.
Mr van Beurden siad: "Some companies will fare better than others, but I think we will all be facing very significantly escalating pricing. So there will be a lot of pressure in industry, and therefore, there’ll be a lot of pressure on the price.
"And in the worst case we will be in a situation where we have to ration."
At the same event, Kwasi Kwarteng, the UK's business secretary, urged households to use "common sense" when it comes to energy usage.
Europe typically gets about 40pc of its gas from Russia but the Kremlin has restricted sales to several European buyers in retaliation to sanctions on Moscow after it invaded Ukraine.
There is mounting concern Vladimir Putin will go further with supply cuts in an effort to prevent Europe from filling up vital gas storage supplies ahead of winter.
The Nord Stream 1 pipeline, which brings in up to 10pc of Europe's gas under the Baltic Sea from Russia to Germany, is currently shut for maintenance and European governments are worried Russia will find a pretext not to re-open it.
Paolo Gentiloni, European economic commissioner, warned on Thursday that a "severe" situation in which Moscow turns off the taps has become "more than just a hypothetical".
A cut-off "would bring the EU economy into recession over the second half of this year and further depress economic activity next year", Mr Gentiloni added.
Gazprom, Russia's state gas company, on Wednesday claimed it could not guarantee the safe operation of the pipeline due to doubts over the return of a turbine held in Canada under sanctions. Canada says it is allowing the turbine to be returned.
Russia's foreign ministry spokeswoman Maria Zakharova said on Thursday the pipeline's future would depend on gas demand in Europe and Western sanctions against Russia.
The UK gets less than 4pc of its supply directly from Russia but is exposed to knock-on effects from the European market, namely soaring prices.
Mr Kwarteng has been preparing contingency plans for tight energy supplies over the winter, including keeping coal-fired power plants online for back-up.
His comments on "common sense" mark a shift in tone from the UK Government which has been at pains to avoid recommending energy-saving measures recommended in the EU such as turning down thermostats or driving less.
He said he did not see people using more electricity than they needed in any case, adding: "When you look back 30 years we all used electricity far more in those days than we do now.”
The EU's exposure to Russian gas supplies was "far greater" he added.
Shell had a major presence in Russia until the war, including a stake in a liquified natural gas project in the far east and petrol stations, but is now exiting the country.
Mr van Beurden said Mr Putin had "shown that we should take him seriously when he makes threats."
T hat’s all from us today, we shall see you tomorrow for the last instalment of the week! Before you go, have a look at the latest stories from our reporters:
- Italian markets rocked as Mario Draghi's government on the brink of collapse
- Mike Ashley's Frasers bans working from home as staff caught slacking on social media
- Banks cut mortgage lending at fastest rate since lockdown
- Train drivers announce fresh rail strike for July 30
- Bank was not ageist for sacking 'old' dealmaker
Payments firm Stripe cuts valuation by nearly a third
P ayments firm Stripe has told staff that its internal valuation is $29 (£24.60) per share, compared to earlier estimates of $40, the Wall Street Journal has revealed.
It means the start-up is now worth $74bn from $95bn previously.
Solar panel owners paid just a fraction of what their power is worth
H omeowners with solar panels are missing out on hundreds of pounds due to rules that let energy companies underpay them for power. Matt Oliver writes:
After months of rocketing electricity prices, a three-bedroom household with solar panels should now be able to make more than £400 a year by selling spare solar power to the grid.
But under the export tariffs offered by some energy companies, they would receive as little as £22, analysis shows.
FTSE 100 closes in the red
B ritish stocks fell today as investors worried about the prospect of a more aggressive stance by major central banks to curb inflation, with a slew of worrying forecasts from companies and weak commodity prices also hurting sentiment.
The blue-chip FTSE 100 slid 1.6pc, while the domestically oriented FTSE 250 index declined 1.2pc.
Dan Boardman-Weston, chief investment officer at BRI Wealth Management, said: “There is a possibility that it could cause the Bank of England to speed up.
“Clearly inflation is historic but commodity prices have fallen a long way in the recent weeks, and that should start having a downward pressure on certain parts of the inflation basket. The BoE is still going to be relatively hawkish but they will be thinking very carefully about how quickly they will raise rates.”
Zara billionaire buys New York luxury building for $500m
A mancio Ortega, the billionaire founder of the Zara clothing chain, has agreed to buy New York's 19 Dutch apartment building.
Ortega's holding firm Pontegadea has reached an accord to acquire the 64-floor luxury apartment complex for about $500m (£422m), according to trade publication The Real Deal. The building was sold by Carmel Partners.
Pontegadea channels the dividends Ortega, 86, receives from his 59pc stake in fast-fashion giant Inditex to a portfolio focused on premium commercial and residential real estate in cities from Seattle and Toronto to London and Barcelona. Inditex owns several brands, including Zara.
Earlier this year, Pontegadea bought an office building in Glasgow for about £200m, as well as the Royal Bank Plaza in Toronto for C$1.2bn (£770m).
Ofcom lumbered with extra staff with Online Safety Bill in doubt
O fcom risks being left hugely overstaffed after vowing to press ahead with hiring plans linked to the now uncertain Online Safety Bill. Ben Woods reports:
The broadcasting regulator is advancing plans to hire 150 staff to help it police the internet, despite delays to the new Online Safety Bill and pledges by Tory leadership candidates to scrap it. The watchdog said it was “not taking its foot off the accelerator”.
The controversial Online Safety Bill to tackle harmful and illegal content online has become shrouded in uncertainty after ministers scrapped plans to pass the bill next week, in favour of delaying the final decision until the Autumn.
The bill’s future now lies in the hands of a new prime minister and culture secretary, if Nadine Dorries is replaced.
Dr Martens continues “strong recovery”
B oots maker Dr Martens said trading in stores has continued its “strong recovery” over its first quarter, while online sales have remained in line with the previous three months.
The group said the price hikes announced last December to offset rising inflation had now all been pushed through, as of this month. It has also recently opened 10 new stores.
City broker Peel Hunt said wholesale sales are down in the first quarter, but it will likely post strong year-on-year growth in the second quarter.
Analysts said: “The timing is broadly irrelevant to the bigger picture, with Docs wholesale revenues on track to deliver double-digit growth this year, with the order already 85pc covered for financial year 2023 overall.”
T hat’s all from me today – thanks for following! Handing over to Giulia Bottaro now.
Monzo loses another £119m as anti-money laundering probe drags on
D igital bank Monzo burned through a further £119m last year as an anti-money laundering investigation into the challenger dragged into its second year.
Matthew Field reports:
The Financial Conduct Authority is investigating potential breaches of anti-money laundering and financial crime controls at the company between October 2018 and April 2021.
The bank said the investigation, which was launched in 2021, was still ongoing. Monzo said: "This ongoing investigation is looking into both potential civil and criminal liability. We will continue to cooperate with the FCA throughout their investigation."
Monzo, which was recently valued at $4.5bn despite losing money every year since it was founded in 2015, increased revenues to £154m in the 12 months ending in February, up 92pc on the prior year.
The bank's accounts were the first since 2019 where its auditors, EY, did not warn of a "material uncertainty" over its future. Monzo, known for its coral coloured bank cards, raised £450m in December last year from Abu Dhabi’s sovereign wealth fund before a tech downturn that has seen valuations plummet across fintech companies and forced rivals to slash jobs.
Monzo was able to narrow its losses from £131m to £119m over the year and said it had added a million customers to its app.
Mike Ashley's Frasers bans WFH as staff caught slacking on social media
M ike Ashley's Frasers has banned staff from working from home on Fridays after some employees were caught posting too often on social media.
Laura Onita has more:
The retailer, which owns Sports Direct and House of Fraser, has ended its flexible Friday policy and asked staff to be in the office all week.
An internal memo, sent by the company's operating chief, said "Frasers Friday" had become "an unproductive day of the week", the Sun first reported.
David Al-Mudallal wrote that there were "too many examples of people or teams not being contactable when they need to be… and colleagues who via their social media profiles are demonstrating they're not treating Friday as a working day".
The "Frasers Friday" policy was first introduced at the end of 2020 after lockdowns forced millions of people to work remotely for the first time.
Uber sued by more than 500 women over sexual assault claims
U ber is being sued by more than 500 women across the US who claim to have been assaulted by drivers on the platform.
The complaint, filed by Slater Slater Schulman in San Francisco, alleges that women were "kidnapped, sexually assaulted, sexually battered, raped, falsely imprisoned, stalked, harassed or otherwise attacked" in their rides.
It claims Uber has known about the sexual misconduct by some of the drivers, including rape, since 2014, Bloomberg reports.
Adam Slater, a partner at Slater Slater Schulman, said: "While the company has acknowledged this crisis of sexual assault in recent years, its actual response has been slow and inadequate, with horrific consequences.
"There is so much more that Uber can be doing to protect riders: adding cameras to deter assaults, performing more robust background checks on drivers, creating a warning system when drivers don't stay on a path to a destination."
The law firm has about 550 clients with claims against Uber and is investigating at least 150 more cases.
Uber said in a statement: "Sexual assault is a horrific crime and we take every single report seriously. There is nothing more important than safety, which is why Uber has built new safety features, established survivor-centric policies, and been more transparent about serious incidents.
"While we can't comment on pending litigation, we will continue to keep safety at the heart of our work."
Asda chair throws weight behind Sunak
R etail grandee Lord Rose has backed Rishi Sunak to be the next Prime Minister, writes Laura Onita .
Asda's chairman said that the former Chancellor "is competent" and has "a big brain", before adding: "He does understand the need for us to get our economy back on track."
Lord Rose, who previously headed up Marks & Spencer and chaired Ocado, warned that the UK was "in a bit of a jam and a pickle" as the economy shrinks and inflation surges.
"We have to make sure that we choose very carefully who we’re going to have to be our next Prime Minister," he told LBC.
"We need a leader, in my view, who is competent. We need a leader who can be a leader, who can stand up and be there and unite the whole of the UK plc and take it forward.
"We also, in my view, need a Conservative, because I am a Conservative, and we need somebody who’s a fiscally competent, compassionate middle of the road Conservative."
Morgan Stanley hit by banking slump amid recession fears
T his afternoon’s other big banking results come from Morgan Stanley, which said revenue from investment banking plummeted as capital markets seized up.
The Wall Street giant’s investment banking group posted $1.07bn in revenue, down 55pc from a year earlier and a bigger drop than analysts had predicted.
The bank also reported an additional $413m hit driven by mark-to-market losses on corporate loans held for sale as credit spreads widened.
Morgan Stanley's trading unit helped pick up the slack as fixed-income revenue surged amid heightened volatility and clients scrambled to reposition their books.
The figures underline a slow quarter for Wall Street as a dour outlook for the economy muddles the path forward. JP Morgan also reported a sharp fall in profits this afternoon.
Wall Street falls as US earnings disappoint
W all Street’s main indices have opened lower as downbeat earnings from big US banks JP Morgan and Morgan Stanley underscored concerns about an economic downturn.
The S&P 500 and Dow Jones both dropped 1pc, while the tech-heavy Nasdaq lost 0.9pc.
Italian markets rocked as Mario Draghi's government on the brink of collapse
M ario Draghi's national unity government in Italy is on the brink of collapse, roiling markets as a period of relative calm in Rome comes to an end.
Tom Rees reports:
Milan's stock market tumbled and Italian borrowing costs jumped after demands by the populist Five Star Movement threatened to bring down the coalition and force early elections.
Mr Draghi, the former ECB president, is leading a technocratic government formed during the Covid crisis with the backing of Italy's major parties excluding the far-right Brothers of Italy. However, his plans to shock Italy's economy back into life after decades of stagnation could be at risk as turmoil hits Rome.
The yield on Italy's 10-year government debt jumped more than 20 basis points to hit 3.35pc, stoking mounting concerns over soaring debt costs for Rome. The FTSE MIB, Milan's blue-chip stock index, slumped as much as 2.4pc to near its lowest level since November 2020.
US producer prices top forecasts as energy costs surge
P rices paid to US producers rose in June by more than forecast in a further sign of the inflationary pressures gripping the economy.
The producer price index increased 11.3pc last month, according to Labor Department data, following upward revisions to the May figures.
Three-quarters of the advance last month was due to goods, particularly energy.
Excluding the volatile food and energy components, the so-called core PPI climbed 8.2pc from a year ago.
While the figures show persistent cost pressures, producers are starting to find some relief as commodities prices come off the boil on concerns about the demand outlook. Over the last several weeks, measures of food, raw industrial materials and crude oil all fell sharply.
Still, it will probably take months before inflation moderates for households after the consumer price index surged 9.1pc in June.
Twitter down for thousands of users
T witter has gone down for thousands of users across the globe – its first such outage since February.
There were more than 27,000 incidents of people reporting issues with Twitter in the US, according to the Down Detector website.
Users in the UK and other countries including Mexico, Brazil and Italy also reported Twitter not working.
It was not clear what caused the outage. Twitter did not immediately respond to a request for comment.
Twitter in February suffered an outage that had disrupted services for several thousands of its users. Later, it said it fixed a software glitch on its platform.
It comes a day after Twitter sued Elon Musk after the world’s richest person abandoned his $44bn takeover of the company.
Grant Shapps blasts ‘cynical’ strike plans
T here’s an instant response from Transport Secretary Grant Shapps to the latest strikes:
It's incredibly disappointing that, just three days after their ballots closed, Aslef bosses have already opted for destructive strike action, instead of engaging in constructive talks.
Not only that but, by cynically orchestrating strike dates with the Commonwealth Games, it's clear union bosses are determined to cause as much misery as possible and derail an event the whole country is looking forward to.
Train drivers, such as those Aslef represent, earn, on average, just under £60,000 – more than twice the UK average and significantly more than the very workers who will be most impacted by these strikes despite stumping up £600 per household to keep the railway running throughout the pandemic.
Our railway is in desperate need of modernisation to make it work better for passengers and be financially sustainable for the long term.
I urge union bosses to reconsider this divisive action and instead work worth their employers, not against them, to agree a new way forward.
Second rail strike announced in July
T he summer travel chaos just keeps coming with another rail strike to come at the end of the month
Train drivers at eight rail companies will strike on July 30 in a dispute over pay, according to union Aslef.
The union announced the industrial action after talks broke down over a pay offer. It comes a day after the RMT said it will walk out on July 27.
Mick Whelan, Aslef eneral secretary, said:
We don't want to go on strike – strikes are the result of a failure of negotiation – and this union, since I was elected GS in 2011, has only ever been on strike, until this year, for a handful of days.
We don't want to inconvenience passengers – not least because our friends and families use public transport, too, and we believe in building trust in the railways in Britain – and we don't want to lose money by going on strike.
But we've been forced into this position by the train companies, driven by the Tory government. The drivers at the companies where we are striking have had a real terms pay cut over the last three years – since April 2019.
Russia says future gas supplies will depend on sanctions
T he Kremlin has warned the future of gas supplies through the Nord Stream pipeline will depend on demand in Europe and western sanctions against Russia.
The pipeline from Russia to Germany is undergoing annual maintenance but European governments are worried that Moscow won’t fully restart flows, putting plans to build up storage for winter under threat.
Kremlin-controlled energy giant Gazprom said yesterday it could not guarantee the safe operation of a critical part of Nord Stream because of doubt over the return of a turbine from Canada, which had imposed sanctions against the company.
Maria Zakharova, Russian foreign ministry spokesman, said: “As far as the gas pipeline’s work in future is concerned, a lot will depend on our partners in terms of gas demand and illegitimate sanctions, as happened with the turbines in Canada.”
Ms Zakharova also warned that attempts by the G7 to cap oil prices may in fact cause them to rise.
JP Morgan sounds the alarm as profits fall
J P Morgan has reported a fall in profits over the second quarter as it set aside more money to cover potential losses amid growing risks of recession.
America’s largest bank recorded $1.1bn (£900m) in loan loss provisions. That’s compared to last year, when it released $3bn from its reserves.
The four biggest US banks are expected to record $3.5bn of loss provisions as they brace for a sharp economic slowdown as the Federal Reserve raises interest rates to tackle inflation.
Meanwhile, JP Morgan posted a profit of $8.6bn for the three months to the end of June, down from $11.9bn a year earlier.
Jamie Dimon, chief executive of JPMorgan, warned that a combination of geopolitical tension, high inflation, waning consumer confidence, rapid interest rate rises and the war in Ukraine were “very likely to have negative consequences on the global economy sometime down the road”.
US futures fall amid rate hike bets
W all Street looks set for a negative start to trading as rocketing US inflation hardened bets on more Federal Reserve interest rate rises.
Futures tracking the S&P 500 fell 1.3pc, while the Dow Jones and tech-heavy Nasdaq both shed 1.2pc.
Bank was not ageist for sacking 'old' dealmaker
C itigroup was not ageist for laying off a 55-year-old banker who was called "old" by his boss as the US bank went on to promote a colleague only slightly younger than him, a court has ruled.
Lucy Burton has the story:
London-based Niels Kirk, who worked on energy deals for the Wall Street giant, was awarded £2.7m ($3.2m) for unfair dismissal in 2020 after his lawyers argued that he was a victim of ageism because one of his bosses told him he was "too old and set in his ways".
Mr Kirk, who had been at the bank for 26 years and took home £937,000 in 2014 before his salary later dropped to £534,000, said the decision to dismiss him was based on a perception that he was "old" rather than being "agile" and "flexible".
However, the bank appealed the decision, arguing that he could not have been discriminated against based on age because the restructuring that led to the loss of his job also resulted in the promotion of a 51-year-old female colleague to head of department.
"An emphasis on 'agility' could be a conscious or unconscious device by which to favour a younger candidate over an older one. However, it would be odd, in our judgment, to consider that the term was being used here to favour a 51-year old over a 55-year old because of the difference in age," the judgment said.
Oil and gas firms calls for support as windfall tax comes into law
T he UK's main lobby group for the oil and gas industry has urged ministers to work with the sector to minimise the the impact of a new windfall tax, which came into force today.
Offshore Energies UK warned the profits levy risked starving the North Sea of tens of billions of pounds of investment.
The Government announced the tax in May as a way to fund support for Britons hit by soaring inflation and energy bills.
The levy, which is expected to raise £5bn, increases taxation from from 40pc to 65pc.
Deirdre Michie, head of OEUK, said: "Exploring for oil and gas and then bringing it to shore is inherently a risky and expensive business, so our members need the UK's fiscal rules and other regulations to be stable and predictable before they consider investing the hundreds of millions of pounds needed for such projects."
Speaking at a conference today, Shell chief executive Ben van Beurden said it was "inevitable" that the industry would invest less in oil and gas because of the tax.
MPs demand answers from Visa and Mastercard over fee hikes
M Ps have written to Visa and Mastercard to demand to know why they have increased fees nearly sixfold when Britons shop with European businesses.
The Treasury Select Committee said fees have risen from 0.2pc to 1.15pc when a UK customer uses their Visa or Mastercard debit card to buy something from Europe.
So far, the companies have not explained the reason for the hike, the payments watchdog and MPs said. The rise, rolled out in October, came alongside a jump in credit card fees from 0.3pc to 1.5pc.
The companies have already attracted attention from the Payment Systems Regulator (PSR), which is probing the fees.
In a letter to the committee, the PSR expressed concern the market is “not working well”, with the fee spikes a symptom.
It warned that while sellers pay the fee, the end result could be higher prices for UK consumers.
What is Heathrow demanding?
I CYMI – Heathrow is forcing airlines to cancel more than 1,000 flights this summer as it grapples with chronic staff shortages.
The airport has set a cap of 100,000 people per day allowed to fly from today until Sept 11.
It follows a similar move earlier this summer by Gatwick to cap the number of flights it can operate.
Emirates starts row with Heathrow over summer cancellations
E mirates has hit back at Heathrow over its demand for summer flight cancellations – a move that could prompt other airlines to take a stand.
Here’s more from my colleague Oliver Gill :
John Holland-Kaye, Heathrow chief executive said earlier this week that the passenger restrictions were necessary because the airport was "still significantly under-resourced".
He added: "They are doing the very best they can with the resources available and we are giving them as much support as possible, but this is a significant constraint to the airport’s overall capacity."
The rejection from Emirates, meanwhile, risks flaring geopolitical tensions.
Emirates is wholly owned by the government of Dubai. The Gulf State has endured turbulent relationships with neighbouring Qatar in recent years. It cut diplomatic relations between June 2017 and January 2021 – but tensions have eased since.
One of Heathrow's biggest shareholders, meanwhile, is the government of Qatar.
Sir Tim, knighted for services to aviation in 2014, has worked for Emirates for 34 years and is widely credited with masterminding the success of the airline.
In an interview with The Telegraph earlier this year, Sir Tim said that Heathrow should have forged ahead with the building of its third runway and said he could have run British Airways better if the UK's airport strategy had been better handled.
Oil prices slump to lowest since March
O il prices have slumped to their lowest level since the early days of Russia’s war in Ukraine after the latest US inflation figures fuelled fears of more interest rate rises.
Benchmark Brent crude tumbled as much as 2.4pc to just over $97 a barrel – its lowest since early March – while West Texas Intermediate also fell.
Concerns about soaring inflation and an economic downturn are denting oil prices, while the strong dollar has also weakened commodities.
Travel chaos boosts Upper Crust owner
T he owner of Upper Crust has cashed in on travel chaos as lengthy delays at airports gave passengers more time to stock up on sandwiches.
SSP said the rapid recovery in travel meant sales and profit margins would be at the upper end of forecasts of between £2bn and £2.1bn and 6pc respectively.
However, the snack chain warned inflationary pressures and supply chain troubles would last into next year. Shares fell over 5pc in early trading.
SSP said: “We are well-positioned to benefit from the continued recovery of the travel sector, notwithstanding the current challenges of airport disruption, labour shortages and industrial action across certain air and rail markets.”
Bus workers suspend strikes after new pay offer
T here could be at least some reprieve in this summer’s travel chaos as planned strikes by hundreds of bus workers have been suspended while a ballot is held on a new pay offer.
Members of Unite at Stagecoach Merseyside were due to walk out on Friday and next Monday.
But following extensive talks, a new pay offer has been agreed between Stagecoach’s management and Unite, the union said.
Regional officer Dave Roberts said: “Following a significantly improved offer from Stagecoach, Unite has suspended the two forthcoming one-day strikes in order to ballot its members on the new offer.”
If workers reject the deal, a planned all-out strike due to begin on July 20 will go ahead.
Pound falls as investors flock to dollar
S terling has lost ground this morning as another wave of inflation fears sent investors fleeing to the safe-haven dollar.
The pound fell 0.3pc against the dollar to $1.1856 – just above the more than two-year low hit earlier this year. Against the euro it was unchanged at 84.61p.
Sterling has fallen sharply this year, largely due to strength in the pound amid surging inflation and Fed interest rate rises. This was compounded by yesterday’s hotter-than-expected US CPI figures.
Traders are also worried about the outlook for the UK economy, as well as political chaos in Westminster.
Cash crunch boosts Poundland
P oundland has enjoyed a rise in sales due to surging demand for cash-strapped shoppers during the cost-of-living crisis.
Parent company Pepco said sales rose 2pc on a like-for-like basis in the three months to the end of June, with revenues up 3.8pc at €507m (£429m).
Poundland sales jumped 5.6pc compared to pre-pandemic levels three years ago.
Pepco – which has nearly 900 stores across the UK and Ireland and also owns the Pepco and Dealz brands in Europe – has pledged to keep a tight lid on its own business costs to help keep prices low and maintain its discount offering despite soaring inflation.
With inflationary pressures continuing across the wider market, the group is committed to investing in its price proposition and maintaining its market-leading variety discount offering.
The group’s continued focus on reducing the cost of operations is enabling us to maintain our price leadership.
China mulls end to Australia coal ban amid Russia supply fears
C hina is said to be proposing to end a two-year ban on Australian coal amid concerns supplies will tighten once western sanctions on Russian energy kick in.
The proposal will be submitted to senior leaders, with a recommendation that Beijing resumes Australian imports due to worries about increased competition for coal from China's main suppliers like Indonesia, Bloomberg reports.
Officials are said to be looking to boost fuel supplies to avoid a repeat of last year's power disruptions, particularly ahead of a key party congress.
China – which used to be a major consumer of Australian coal — implemented an unofficial ban in late 2020 as hostilities between Canberra and Beijing escalated over a decision to bar Huawei from its 5G networks, and after then-Prime Minister Scott Morrison led calls for an independent probe into the origins of Covid.
But top officials held their first talks since 2019 last week in a sign tensions are easing.
Hays posts record fees as wages rise
R ecruiter Hays has posted record fees in more than a dozen countries as it cashes in on higher wages.
In the three months to the end of June, Hays made record fees in 15 of the countries, including Germany, where it makes more money than anywhere else.
Fees in Germany rose 29pc, while it also reported rises of 22pc in the UK and Ireland, 12pc in Australia and New Zealand, and 24pc in the rest of the world.
However, Hays suffered a fall in fees in China due to ongoing Covid restrictions.
Chief executive Alistair Cox said:
While macroeconomic uncertainties are increasing, we have a clear strategy and our key markets continue to be characterised by skill shortages.
Our fee growth is also supported by improved margins and wage inflation globally.
Uniqlo owner raises forecasts as yen flounders
T he owner of Uniqlo has lifted its full-year forecasts after strong trading and a weaker yen boosted its third-quarter results.
Fast Retailing raised its full-year operating forecast to 290bn yen (£1.8bn), up from its earlier estimate of 270bn. That came after operating profit beat expectations to hit 81.8bn in the three months to the end of May.
The yen, which is trading around the weakest against the dollar since 1998, is helping the Asian retailer’s bottom line.
The currency movements also prompted Fast Retailing to announce its fleece and down jackets would see their first price hike in years last month, due to the rising costs of transport and materials, exacerbated by a weaker yen that makes imported goods more expensive.
Trading in the third quarter was driven by robust performance at Uniqlo in south and southeast Asia, North America and Europe, excluding Russia.
At the same time, the greater China region reported large declines in revenue and profit due to Covid restrictions.
First cost-of-living payments start hitting bank accounts
T he first £326 of the UK’s cost-of-living support will start hitting bank accounts from today as the Government steps up efforts to help Britons cope with soaring bills.
More than 8m households on means-tested benefits are eligible for the payment, which was announced in response to surging energy costs.
The energy price cap is set to rise to around £3,000 in October, while inflation is expected to peak above 11pc.
The support was the centrepiece of then-Chancellor Rishi Sunak’s response to the cost-of-living crisis in May.
The second £324 will be paid this autumn, bringing the total to £650. Pensioners will get an extra £300 this winter and disabled people £150.
Meanwhile, all households will also get a £400 discount applied to their energy bill.
Sunak: Inflation is priority, not tax cuts
R ishi Sunak has said his first economic priority if he becomes prime minister will be tackling inflation, not the tax cuts pledged by some of his rivals.
The former Chancellor told the BBC: “I think our number one economic priority is to tackle inflation and not make it worse.
“I will get taxes down in this parliament but I’m going to do so responsibly, because I don’t cut taxes to win elections, I win elections to cut taxes.”
FTSE risers and fallers
T he FTSE 100 has edged lower in early trading as investors worry about the prospect of more interest rate rises to tackle surging inflation.
The blue-chip index dipped 0.1pc a day after figures showed US inflation jumped to a hotter-than-expected 9.1pc in June.
Barratt Developments dropped as much as 3.8pc to the bottom of the index after it said build cost inflation had hit 10pc.
Shares of rival housebuilders Taylor Wimpey and Berkeley Group were also dragged into the red.
British Gas owner Centrica bucked the trend, rising 2.5pc.
The domestically-focused FTSE 250 was also down 0.1pc, with Playtech slumping more than 18pc after suitor TTB Partners pulled out of a potential takeover deal.
Barratt warns on soaring building costs
H ousebuilder Barratt Developments has said its build costs are surging by as much as 10pc as higher energy bills and inflation take their toll.
The FTSE 100 company said build cost inflation stood at around 6pc in the year to the end of June, but that it’s now facing price rises of between 9pc and 10pc.
Despite this, Barratt said full-year underlying profits for the year to the end of June will be better than expected as house completions bounced back to levels seen before the pandemic.
It’s also benefited from the house price boom as average private selling prices rose to £341,000 from £325,500 and the group said it saw annual house price inflation of around 8pc on private reservations.
The group now expects pre-tax profits of between £1.05bn and £1.06bn for the year, which is slightly ahead of forecasts, and expects to grow house sales by between 3pc and 5pc in the coming year.
Chief executive David Thomas said: “While there are clearly macroeconomic uncertainties ahead, the housing market remains robust, our forward order book is strong and we have the resilience and flexibility to react to changes in the operating environment.”
FTSE 100 falters at the open
T he FTSE 100 is treading water at the open as traders digest the latest signs of inflation and slowing economic growth.
The blue-chip index slipped fractionally into the red at 7,155 points.
EU raises inflation forecasts to 7.6pc
T he EU has ramped up its inflation forecasts and slashed predictions for economic growth as it grapples with the fallout from Russia’s war in Ukraine.
Draft projections by the European Commission show that inflation, which is already at four times the 2pc target, will average 7.6pc in 2022. That’s up from previous forecasts of 6.1pc.
Inflation is then expected to fall to 4pc next year – higher than the 2.7pc previously predicted.
As surging prices dampen demand and the threat of energy shortages weighs, forecasts for economic growth have also been tempered, according to the drafts seen by Bloomberg.
GDP is expected to grow 2.6pc this year and 1.4pc in 2023 – down from predictions of 2.7pc and 2.3pc.
Playtech suitor abandons takeover plans
T he suitor eyeing up a potential multi-million-pound bid for gambling software firm Playtech has walked away from the deal as market turmoil continues to take its toll.
TTB Partners said it won’t bid for Playtech, months after showing interest, due to “challenging unerlying market conditions”.
It said: “TTB remains supportive of the board, the executive management team, their strategy for Playtech and the prospects for the business.”
No figure had been put on the potential deal, but it was expected to be ahead of a failed £2.7bn approach by an Australian slot machine company earlier this year.
In response, Playtech said it had an “excellent” first half and would continue to consider options for the business.
Crypto lender Celsius goes bust
G ood morning.
The crypto winter just got a little bit chillier as lender Celsius Network filed for Chapter 11 bankruptcy protection in New York.
The crypto lender said it took the step to stabilise its business and work out a restructuring. Last month it halted all withdrawals amid a run on deposits.
Celsius, which has more than 100,000 creditors, said it has assets and liabilities anywhere between $1bn and $10bn.
It’s the latest victim of a $2 trillion crypto crash that has wiped out some of the sector’s biggest names and exposed hundreds of thousands of investors to heavy losses.
5 things to start your day
1) Billions invested in green energy technology favoured by Boris Johnson $2.8bn has been invested in nuclear fusion in the past 12 months
2) Red Wall voters £340 worse off than those in south Inflation in northern towns is up to a third quicker than price rises in London
3) Netflix strikes deal with Microsoft to introduce advertising breaks Streaming giant to launch cheaper subscription in attempt to offset loss in customers
4) Titanic shipyard awarded crucial defence contract after HMRC row This marks the shipyard's first defence contract in its 161-year history
5) Scramble for solar panels saves households £600m on their energy bills Number of installations surges to seven-year high amid cost of living crisis
What happened overnight
Hong Kong stocks rose slightly this morning, with the Hang Seng Index inching up 0.1pc.
The Shanghai Composite Index slipped 0.2pc, while the Shenzhen Composite Index on China’s second exchange also dropped 0.2pc.
Tokyo stocks opened lower following moderate losses on Wall Street. The benchmark Nikkei 225 index dwindled 0.6pc in early trade, while the broader Topix index lost 0.7pc.
Coming up today
- Economics: Jobless claims (US), producer price index (US)
- Corporate: Ashmore Group, Barratt Developments, Dr Martens, Experian, Hays, Rio Tinto, Severn Trent (trading update)
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