Pound on track for worst losses in nearly a year amid US recession fears
In This Article:
The pound is on track for its longest losing stretch in nearly a year as jitters about a US recession returned to financial markets.
Even after paring losses in a late uptick, sterling has fallen nearly 0.5pc so far this week to below $1.2750, putting it on course for a fourth consecutive weekly decline, its worst run since September.
The Bank of England’s knife-edge decision to cut interest rates for the first time in four years last week dented the pound.
But since then, concern about a hard landing for the US economy, among other factors, has triggered a sell-off in global stocks and currencies, sweeping sterling lower along with other markets worldwide.
It comes as the FTSE 100 has dropped as much as 1.2pc today, with major European markets also about 1pc lower, as Wall Street ramps up predictions of the US plunging into recession over the next year.
JP Morgan raised its chances of a recession in the world’s largest economy this year from 25pc to 35pc - and predicts there is a 45pc chance it will happen by the second half of 2025.
However, data today showed the number of Americans on unemployment benefits declined at its fastest pace in nearly a year in the week to August 3, calming some nerves about a US downturn.
The S&P 500 on Wall Street has gained 2.3pc while the FTSE 100 has reduced losses to 0.27pc.
Read the latest updates below.
06:12 PM BST
Signing off
That is all for today - we will be back again in the morning.
Thanks for reading, and have a good evening.
05:10 PM BST
Gas prices jump to highest since December
European wholesale gas prices are up another 4pc today, hitting more than €40 (￡34.21) per megawatt-hour, the highest price since December.
It means costs are up almost 30pc over the past month.
The surge has been attributed to Ukraine’s cross-border raid into Russia, which has traders on edge amid concerns for energy supplies.
It also bodes ill for household energy costs, as Britain’s energy price cap is set quarterly by Ofgem, the regulator, in part with reference to wholesale prices.
This week analysts at BFY Group predicted the headline price cap would rise by 10pc in October, taking it up by roughly ￡140 to around ￡1,700.
The cap refers to the expected annual bill for an average energy user, rather than reflecting a cap for each household.
04:19 PM BST
Repossessions jump as interest rates hammer mortgage borrowers
Repossessions are surging as a growing number of homeowners struggle to keep up with their mortgage repayments.
The number of mortgage possession claims, when lenders take action in court against borrowers to repossess their homes, jumped to 5,343 in the second quarter of the year.
That is up by just over one-third from 3,991 in the same period of 2023, according to the Ministry of Justice.
The number of repossessions by county court bailiffs jumped by 29pc on the year, from 660 to 854.
It marks a sharp turnaround from the pandemic era when lenders were advised by the Financial Conduct Authority to show more forbearance to borrowers. Claims fell into the hundreds per quarter.
Last year the Mortgage Charter was introduced alongside rising interest rates and the cost of living crisis. Under the agreement banks offered hard-pressed borrowers the option of taking six months of interest-only payments to reduce their monthly bills.
The Bank of England last week cut its base rate from 5.25pc to 5pc, marking the first cut in rates for four years.
However this is still far higher than the 0.1pc record low reached in the pandemic.
The typical new mortgage in June came with a rate of 4.82pc, the Bank said, up from an average of 1.5pc in November 2021, the month before it started raising rates.
Despite the increase in possession claims, the number of legal actions is still lower than it was pre-pandemic. In 2019, claims peaked at almost 7,000 per quarter.
At the worst moment of the financial crisis, there were more than 40,000 claims in the first quarter of 2008.
03:34 PM BST
Handing over
With that, I will head off for the day and leave you in the good hands of Tim Wallace, who will update you with the most important things happening in the markets into the evening.
With prices jumping up and down all over the place this week, it is sometimes easy to forget that these are the value attributed to real things.
Here is an image of the drying process which turns rice into bulgar in Mardin, Turkey (and just so you know, rice prices are down about 2pc so far this month).
03:19 PM BST
Barclays to scrap bonus cap for top bankers
Barclays been named as the latest lender to scrap its cap on banker and trader bonuses a year after the policy was scrapped by Rishi Sunak’s government.
Banks had been limited to handing out bonuses no more than two times the fixed pay of employees.
The two-to-one ratio was imposed by the European Union back in 2014 when the UK was a member.
However, Barclays will begin offering its risk takers a bonus as much as 10 times their base salary, according to documents seen by Bloomberg News.
The British bank joins Goldman Sachs and JP Morgan in ditching the cap in a bid to attract the best talent.
03:08 PM BST
Amazon investment in ChatGPT rival faces competition probe
Amazon’s $4bn (￡3.3bn) investment in a ChatGPT rival co-founded by a British former journalist faces a competition investigation.
The tech giant announced last year that is investing in Anthropic, a high-profile Silicon Valley lab formed by a team of researchers who quit OpenAI, the company behind ChatGPT.
They include Jack Clark, a former journalist who studied creative writing and worked as a reporter at technology news website The Register and Bloomberg, where he covered artificial intelligence, before joining OpenAI.
However, the Competition and Markets Authority has announced the launch of a merger inquiry and set itself a deadline of October 1 to decide whether the agreement with Amazon raises competition concerns.
02:55 PM BST
All carers to get paid time off under proposals considered by ministers
All workers with caring responsibilities will have to be given 10 paid days off under proposals considered by the Government.
Our employment editor Lucy Burton has the details:
Ministers are weighing up the introduction of so-called paid carers’ leave for people looking after elderly, sick or disabled loved ones.
Read how it aims to stop experienced staff from quitting their jobs.
02:40 PM BST
US stocks open higher as jobless claims fall
Wall Street’s main indexes opened higher as they were bolstered by better-than-expected jobs market data that eased worries of a slowdown in the world’s largest economy.
The Dow Jones Industrial Average rose 176.9 points, or 0.5pc, at the open to 38940.38.
The S&P 500 rose 53.1 points, or 1pc, to 5252.57​, while the Nasdaq Composite rose 212.5 points, or 1.3pc, to 16408.265.
02:24 PM BST
Weight-loss drugs maker surprises Wall Street with profit boost
Drugs maker Eli Lilly blew past its sales and profit expectations thanks to its diabetes treatment Mounjaro and weight loss counterpart Zepbound.
Lilly also raised its forecast for the year to well beyond Wall Street expectations as newer drugs built momentum.
The company’s shares soared before markets opened Thursday after Lilly detailed its quarterly results.
Mounjaro sales more than tripled in the quarter to nearly $3.1bn (￡2.4bn). Zepbound, which is made from the same molecule, brought in $1.2bn (￡950m) just two quarters after regulators approved the drug.
Sales of the breast cancer treatment Verzenio also climbed 44pc to $1.3bn.
Overall, Lilly’s profit rose 68pc to nearly $3bn. Revenue climbed 36pc to $11.3 billion.
02:00 PM BST
US jobless claims data ‘steadied some market nerves’
As jobless benefit claims fell at their fastest pace in nearly a year in the US, Michael Brown of Pepperstone said:
It’s only one datapoint, though this afternoon’s US jobless claims figures appear to have steadied some market nerves, with claims rising by just 233k in the week to 3rd August, considerably below both the consensus expectation, and prior print.
01:53 PM BST
Pound falls as US jobless claims fall at fastest pace in a year
The value of the pound dropped as the number of Americans claiming unemployment benefits dropped by the most in nearly a year, allaying concerns about a US recession.
Sterling was last down 0.1pc to $1.278 as jobless claims for the week of August 3 fell by 17,000 to 233,000, the Labor Department reported.
The yields of UK gilts and US Treasuries have risen as investors turned away from the safe havens of the bond market and tentatively put money back into stocks.
The 10-year US Treasury yield was up five basis points to 3.99pc while the 10-year UK gilt yield was up three basis points to 3.98pc.
The FTSE 100 reduced losses from 1.2pc to 0.7pc, with Wall Street stock indexes on track to open higher.
01:38 PM BST
Wall Street poised to jump amid ‘mildly reassuring’ jobless claims figures
US stock indexes turned sharply higher in premarket trading as a lower-than-expected reading of weekly jobless claims allayed fears of a recession in the world’s biggest economy.
A Labor Department report showed the number of Americans filing new applications for unemployment benefits came in at 233,000 for the week ended August 3, compared with an estimate of 240,000.
In premarket trading, the Dow Jones Industrial Average was up 135 points, or 0.4pc, the S&P 500 gained 31.75 points, or 0.6pc and Nasdaq 100 futures were up 144 points, or 0.8pc.
01:33 PM BST
US recession concerns eased by falling unemployment claims
The number of Americans on unemployment benefits fell by more than expected, official figures show, calming investors worrying that the US is heading for recession.
The number of initial jobless claims rose by 233,000 in the week to August 3, according to the Labor Department, which was lower than analysts had expected and down from an upwardly revised 250,000 the previous week.
Continuing claims for the previous week rose by 6,000 to 1.88m for the week of July 27. That is the most since the week of November 27, 2021.
The number of Americans filing new applications for jobless claims has been tracking consistently higher since May, and could be part of the equation the Federal Reserve uses to justify an interest rate cut when it meets in September.
01:19 PM BST
Boeing boss takes over with mission to ‘restore trust’
Boeing’s new boss Kelly Ortberg will meet factory workers near Seattle today as he faces the steep task of “restoring trust” in the struggling plane maker.
The former Rockwell Collins boss is taking over as head of the US aircraft manufacturer today as it bleeds cash and is beset by company-wide problems expected to take years to fix.
Mr Ortberg’s extensive to-do list includes mending relationships with airlines and employees, boosting output, repairing company finances and securing a labor deal to avoid a possible worker strike this year.
The 64-year-old, who came out of retirement to take the job, said he plans to be based in Seattle to be close to Boeing’s commercial airplane programs, according to a message to employees seen by Reuters.
Its struggling manufacturing units include the 737 MAX, whose production has slowed following a mid-air panel blowout on a near-new model in Januay this year.
Mr Ortberg wrote: “Because what we do is complex, I firmly believe that we need to get closer to the production lines and development programs across the company.
“In fact, I’ll be on the factory floor in Renton today, talking with employees and learning about challenges we need to overcome.”
01:06 PM BST
Octopus Energy extends winter fuel payments as government cuts support for pensioners
Octopus Energy will extend an energy bills support scheme for pensioners, after the Government removed winter fuel payments for millions of elderly people.
The energy supplier said it will continue its ￡30m assistance fund into this winter, and that pensioners who do not meet the new criteria for receiving state support will be eligible.
Labour said last month that it is changing the rules around the Government’s winter fuel payments scheme, so that it will no longer be universal for all pensioners in England and Wales.
Now, only pensioners on means-tested benefits will qualify for the help, which is estimated to take the payments away from about 10m people.
Chancellor Rachel Reeves has said making the scheme more targeted was a “difficult decision”. About 11.5m who previously received them.
The payments are devolved, meaning Scotland and Northern Ireland make their own rules.
Octopus, the UK’s largest energy supplier, said it will allow lower-income pension households who do not receive pension credit to claim from its so-called Octo Assist fund.
Discretionary credits of ￡50, ￡100 and ￡200 will be available to those who apply.
12:48 PM BST
End of TV looms as Warner Bros Discovery slashes value of channels by ￡7bn
Warner Bros Discovery has slashed the estimated value of its television channels by more than $9bn (￡7.1bn) in a sign of the looming death of traditional TV.
Our reporter James Warrington has the details:
The US media giant, which owns channels including CNN, Food Network and TNT Sports, said its network division was now worth $9bn less than previously thought.
Read what bosses blamed for the impairment.
Click here to view this content.
12:16 PM BST
Wall Street cautious ahead of US unemployment claims figures
US stock indexes lacked direction as investors were cautious ahead of another jobs report that could indicate the health of the American economy.
Megacap and growth stocks swung between gains and losses in premarket trading on Wall Street as global markets experience heightened volatility this week.
Poor economic reports coupled with unwinding of so-called “carry trades” in the Japanese yen higher have sent financial markets into turmoil.
It has increased the significance of weekly jobless claims data, which is expected to show a marginal dip the number of Americans claiming unemployment benefits in the week ended August 3.
Marc Ostwald, chief economist & global strategist at ADM Investor Services, said: “US weekly jobless claims will be very sensitive given the positions that have stacked up looking for the Fed to cut rates relatively aggressively by year end.”
Fed fund futures currently see an 80pc chance of a half a percentage point rate cut by the Fed in September, with at least another two cuts priced in by the end of 2024.
In premarket trading, the Dow Jones Industrial Average down 0.3pc, the S&P 500 was down 0.1pc and the Nasdaq 100 was flat.
11:54 AM BST
Pound on track for worst losses in nearly a year amid US recession fears
The pound edged back towards this week’s one-month lows against the dollar as jitters about a US recession returned to financial markets.
Sterling was last down 0.1pc on the day at $1.269 and remains on track for a fourth consecutive weekly decline, having fallen nearly 1pc so far this week, marking its longest stretch of weekly losses in almost a year.
The euro, which hit its highest against the pound since late April on Thursday, was up 0.1% at 86.1p.
The Bank of England’s knife-edge decision to cut interest rates last week dented the pound.
But since then, concern about a hard landing for the US economy, among other factors, has triggered a selloff in risk assets, sweeping sterling lower along with other global markets.
Traders are currently pricing in a full percentage point of cuts by the Federal Reserve this year, compared to possible two by the Bank of England, which in theory gives the pound an advantage.
Sterling is only down around 0.2pc this year, making it still the best performing major currency against the dollar, compared with a 1pc drop in the euro or the 6.4pc drop in the Norwegian krone.
11:36 AM BST
Twitter is no longer a platform to be proud of, says former UK director
X is no longer a platform to be proud of, a former director of the platform has said in the wake of accusations that it has fuelled the riots of the past week.
Our political correspondent Dominic Penna has the details:
David Wilding was in charge of planning at Twitter in the UK until November 2022, when he resigned after the social media site was taken over by Elon Musk and rebranded as X.
Read how he criticised Mr Musk for ‘amplifying’ tweets by far-Right activist Tommy Robinson.
11:17 AM BST
FTSE 100 falls as doubts remain over interest rate cuts
The FTSE 100 was last down 1pc as doubts remain about the Bank of England’s ability to cut interest rates and avoid a spike in inflation.
Money markets are pricing in a 48pc chance that UK policymakers will reduce borrowing costs by a quarter of a percentage point at their next meeting in September.
However, it comes as companies continued to raise permanent staff salaries, according to a jobs report by KPMG and REC, although vacancy numbers in the British labour market continued to decline during July, extending the current period of contraction to nine months.
The Bank of England has signalled that wage pressures are one of the key risks to inflation it will consider before cutting interest rates again, after reducing borrowing costs for the first time in four years earlier this month.
By contrast, an equivalent move is priced in for the US with a 63pc chance that the cut is by half a percentage point, as the Federal Reserve tries to catch up and avoid an American recession.
Jon Holt, chief executive of KPMG in the UK, said:
Despite the stability of a new Government and easing inflationary pressures, employer confidence to recruit has not yet returned, leading to delays with permanent hiring and even a small contraction in the temporary market as worker contracts are not renewed.
10:59 AM BST
Savills hails ‘early signs of market recovery’ amid rate cut hopes
Estate agency Savills has revealed a lift in revenues as it cheered “early signs of market recovery”.
Pre-tax profits jumped by 48pc to ￡8.9m in the first half of the year as the FTSE 250 company sought to bounce back from high interest rates, which have dampened the property market.
Savills reported that revenues grew by 5pc to ￡1.1bn over the first six months of 2024, compared to the same period last year.
The company said this represented an “improved performance driven by early signs of market recovery”.
It came amid a positive performance from its UK business, where total revenues grew by 6pc to ￡435.9m, as consumers looked forward to cuts in interest rates by the Bank of England.
However, shares were down 3.6pc as the group highlighted that some markets remained subdued with “very low transaction volumes”, including Germany, France and China.
The group said it saw 9pc growth in its transaction advisory business, while it also saw improvement in its property and facilities management arm.
Group chief executive Mark Ridley said: “Our improved performance in the first half reflects the positive effects of early recovery phases in a number of our markets, as well as the robust and growing earnings provided by our less transactional businesses.”
10:44 AM BST
BA cancels flights to Beijing over ban from Russian airspace
British Airways has announced it will cancel all flights to Beijing until November next year as the cost of having to avoid Russian airspace makes the route commercially unviable.
The UK’s flagship carrier said it would halt flights from October 26 and will offer customers affected options to rebook or a full refund.
Flight times have been made considerably longer after UK carriers were banned by Russia from its airspace after Vladimir Putin’s decision to invade Ukraine in 2022.
Virgin announced last month that it would pull out of flights to Shanghai in October, leaving it only operating flights to Hong Kong.
British Airways said it will continue to operate daily flights to Shanghai and Hong Kong.
It means the market for flights from Britain to Beijing will be dominated by the big three state-owned Chinese carriers, who have not been banned from flying on the shortest routes through Russia airspace, saving on time and fuel.
10:28 AM BST
Traders pricing in too many interest rate cuts, economists warn
Traders are pricing in too many interest rate cuts, economists have said, as financial markets readjust to the risk of a US recession.
Money markets indicate that the US Federal Reserve will cut interest rates at all of its three remaining meetings this year, with a 62pc chance that it wil cut borrowing costs by half a percentage point in September.
Bond market yields are falling as a result - sending government borrowing costs lower - as investors seek the safe haven of sovereign debt amid declining share prices.
Mohit Kumar, chief Europe economist at Jefferies, said:
We still think that the market is pricing in too much from the Fed in terms of rate cut expectations.
10:07 AM BST
Gold prices edge lower amid global downturn
Gold prices began falling again as investors resumed the sell-off in global markets - albeit at a much slower pace.
Bullion was down 0.1pc to $2,398.70, with silver also down 0.1pc to $26.92.
The price of gold has fallen 3pc since Friday, as even traditional safe havens were hit by the global rout in stocks and commodities.
Sharps Pixley said in its July Market Report: “Underlying factors remain supportive, but a broader market sell-off could drag gold prices down.
“As the US presidential election approaches, investors are expected to increase their demand for safe havens.”
09:41 AM BST
Oil prices edge down as stocks sell-off resumes
Oil prices have ended their brief rally as traders remain on edge about a potential US recession and wider conflict in the Middle East.
Brent crude, the international benchmark, slipped 0.2pc towards $78 a barrel after recording its biggest rise in a week on Wednesday.
US-produced West Texas Intermediate was down 0.1pc at nearly $75 after oil rebounded from a seven-month low on Monday amid a rout in global equity markets.
A halt to crude production from Libya’s biggest field has helped underpin the gains, as well as a rare cross-border attack by Ukrainian troops into Russia.
Tamas Varga, analyst at PVM Oil Associates, said:
No doubt, the upbeat performance was also aided by persistent Middle East tension and the Libyan force majeure declared on output in the Sharara oil field.”
09:19 AM BST
Gas prices rise amid fighting around key pipeline through Ukraine
European gas prices have resumed their gains amid concerns about the transit of Russian fuel across Ukraine.
Dutch front-month futures, the continent’s benchmark, rose as much as 2.6pc to near €39 a megawatt-hour, the highest since December.
Russia declared a state of emergency in the Kursk region on the border with Ukraine, as fighting continues in the area which hosts a key gas intake point.
For now, natural gas flows via Ukraine are continuing, albeit near the lowest levels so far this year.
Gas prices spiked on Thursday as conflict in the area risks output from the Sudzha station near the border, which is part of the last remaining pipeline route to Europe via Ukraine.
The UK’s equivalent gas contract was up as much as 2.7pc to 97p per therm - which is its highest price this year.
08:59 AM BST
Windfall tax keeps profits flat at North Sea’s biggest operator
The largest oil and gas driller in the North Sea revealed profits were flat in the first half of the year as it was hit heavily by the windfall tax.
Our energy editor Jonathan Leake has the latest:
Harbour Energy, the biggest producer of oil and gas in UK waters, was hit by an effective tax rate of 85pc in the first half of the year - handing $300m of its $400m pre-tax profits to the Treasury.
08:44 AM BST
UK stocks drop as US recession fears deepen
The FTSE 100 fell as it tracked global markets amid lingering concerns about a US recession.
The blue-chip index was down 1.1pc after its best day in more than four months on Wednesday, while the mid-cap FTSE 250 dropped by 1.2pc as JP Morgan increased its prediction for a downturn in the world’s largest economy.
Precious metal miners led declines, dropping 2.3pc despite an uptick in gold prices. The index was weighed down by Fresnillio, which traded without entitlement to its latest dividend payout.
Many top players like AstraZeneca, BP, Natwest and Standard Chartered also traded ex-dividend, pushing the heavyweights over 1pc lower each.
However, non-life insurers gained 2.5pc after a 10.4pc gain in Beazley, which topped the FTSE 100 as it upgraded its combined ratio forecast for 2024 after first-half pre-tax profit nearly doubled to $728.9m (￡574.3m).
TFI Fluid Systems gained 13pc after its half-yearly results, while Hikma Pharmaceuticals gained as much as 9.5pc after the company raised its annual group forecast.
British gambling group Entain climbed 9.4pc as it raised its annual net gaming revenue and earnings forecast after a better-than-expected second-quarter performance.
08:32 AM BST
Deliveroo orders rise amid ‘encouraging’ signs from customers
Deliveroo revealed its customers placed more orders in the first half of the year amid “encouraging early signs” that consumer behaviour is changing after the stress of high interest rates.
The takeaway delivery app revealed prders rose by 2pc to 147.4m while its gross transaction value was up 6pc to nearly ￡3.7bn.
Shares jumped 5.9pc in early trading as it said its adjusted earnings this year are expected to be in the upper half of the previously-guided range of ￡110m to ￡130m.
Founder and chief executive Will Shu said:
Looking ahead, while there is continued uncertainty in the external environment, I am encouraged by the inflection we are currently seeing in consumer behaviour in many of our markets.
08:11 AM BST
Persimmon expects to build 10,500 homes as interest rate cuts boost demand
Persimmon has said it is on track to build 10,500 homes this year, as the housing market begins to show signs of recovery.
Our business correspondent Pui-Guan Man has the details:
Persimmson sold 4,445 homes during the six months ending 30 June, at an average price of ￡263,288.
08:04 AM BST
UK markets slump as global sell-off resumes
The FTSE 100 fell at the open as the global sell-off in stocks resumed about persistent concerns that the US is heading for recession.
The blue-chip index was down 0.9pc to 8,096.36 after trading began while the midcap FTSE 250 dropped 0.6pc to 20,462.73.
07:55 AM BST
Ladbrokes owner cuts losses as turnaround plan ‘bearing fruit’
Ladbrokes and Coral owner Entain has slashed its losses and reported rising sales as the betting group said its work to turn around its financial performance was “bearing fruit”.
The group reported a pre-tax loss of ￡27.6m for the first half of the year, narrowed significantly from the hefty ￡448.1m loss reported the prior year.
Gaming revenues, at constant currency, were up 8pc to ￡2.6bn for the half-year.
Entain said it benefited from the Euro 2024 tournament, where sports betting results helped it generate more cash.
Interim chief executive Stella David said: “Entain’s first-half results are clear evidence that our hard work improving the Group’s operational performance is bearing fruit.”
07:46 AM BST
PageGroup cuts hundreds of jobs as employees reluctant to switch jobs
The recruitment consultancy PageGroup cut hundreds more jobs in the first half of the year as workers were reluctant to switch jobs amid economic uncertainty.
The FTSE 250 company axed 283 staff during the period, taking its total headcount to 7,576, as group operating profit plunged 55.5pc to ￡28.4m.
Revenue fell nearly 10pc to ￡898m but the company maintained its guidance of full year operating profit in the region of ￡60m.
Chief executive Nicholas Kirk said the company now aims to avoid any more cuts to fee-earning staff “to ensure we are well placed to take advantage of opportunities as sentiment and confidence improve”. He said:
The group experienced challenging market conditions across all regions in H1, with a softening in activity levels towards the end of the period, particularly in terms of new jobs registered and number of interviews undertaken.
07:29 AM BST
Housebuilders face competition investigation over ￡2.5bn tie-up
Two of Britain’s biggest housebuilders face an investigation by regulators after it was ruled thier ￡2.5bn merger raises competition concerns.
The Competition and Markets Authority said the tie-up between Barratt and rival Redrow Homes raises competition concerns in the local area around a Barratt development in Whitchurch, Shorpshire.
Regulators said that if the deal goes ahead, it could lead to higher prices and lower quality homes for homebuyers in the area because both developers currently hold a high combined share of land in the area.
It said Barratt and Redrow now have the opportunity to submit proposals which address the CMA’s concerns to avoid the takeover deal moving to an in-depth review.
Joel Bamford, executive director for mergers at the CMA, said:
Prospective homebuyers must not be disadvantaged as a result of deals like this one – with the potential loss of competition leading to even higher house prices or lower quality homes.
07:28 AM BST
US ‘has 45pc chance of recession’ as stocks fall again
Wall Street is ramping up predictions of the US plunging into recession over the next year as the global stocks rout lingers.
JP Morgan raised its chances of a recession in the world’s largest economy this year from 25pc to 35pc - and predicts there is a 45pc chance it will happen by the second half of 2025.
Economist Bruce Kasman said US news “hints at a sharper-than-expected weakening in labour demand and early signs of labour-shedding”.
It follows employment data last week showed the American economy added far fewer jobs than expected, with unemployment hitting a three-year high.
All the main stock indexes on Wall Street slumped on Wednesday and many Asian markets resumed losses overnight following the global rout that wiped billions off the value of stocks.
JP Morgan warned that about a quarter of the global carry trade that was partially behind the spiralling sell-off has yet to unwind.
Meanwhile, its chief executive Jamie Dimon said he is sceptical that inflation will return to the Federal Reserve’s 2pc target amid high deficit spending and the “remilitarisation of the world”, amid threats from China and Russia.
07:14 AM BST
Good morning
Thanks for joining me. We begin the day with the latest warning on the chances of a recession in the world’s largest economy as global shares resumed losses.
JP Morgan fears there is a 45pc chance of a recession in the US and ramped up bets on a downturn by the end of this year as it predicted a “ sharper-than-expected weakening” in the jobs market.
5 things to start your day
1) Cruise industry to launch monster ships eight times the size of the Titanic | Liners predicted to reach 345,000 tons by 2050 amid booming demand for luxury travel
2) Rachel Reeves has just exposed her own ignorance | The Chancellor has little idea of what drives a modern economy, let alone how to generate growth
3) Used electric car sales surge 50pc as drivers hunt for bargains | Demand for EVs aged three to five-years-old soars amid downturn in new car market
4) Mining giant abandons plan to ditch coal as boss admits ‘cash is king’ | Glencore will keep its coal operations after investors rejected spin off
5) Britain’s net zero crusade is leaving us vulnerable to blackouts | On a cold, still winter evening when we need a lot of power, wind and solar contribute the square root of sod all
What happened overnight
Asian shares were mixed after declines on Wall Street, as the gyrations that recently slammed global markets haunted investors.
Japan’s benchmark Nikkei 225 closed down 1pc at 34,727.86 while Australia’s S&P/ASX 200 shed 0.4pc to 7,673.10.
South Korea’s Kospi dropped 0.7pc to 2,551.36.
However, Hong Kong’s Hang Seng rose 0.8pc to 17,018.62. The Shanghai Composite picked up 0.3pc to 2,877.28.
Taiwan’s Taiex dropped 1.9pc as computer chip maker Taiwan Semiconductor Manufacturing Co. lost 2.5pc, tracking losses in the tech sector on Wall Street and elsewhere.
Some semiconductor equipment makers and related companies saw further losses. Advantest dropped 3.2pc and Disco sank 4pc.
However, Lasertec’s stock jumped 22.6pc after it reported a 28pc jump in its net profit for the fiscal year that ended June 30.
Wall Street stocks finished lower on Wednesday as a brief rally fizzled out amid lingering unease following recent turbulence.
The S&P 500 fell 40.53 points to 5,199.50. The Dow Jones Industrial Average dropped 234.21 to 38,763.45, and the Nasdaq composite fell 171.05 to 16,195.81.