‘Overpriced’ US tech stocks plunge ahead of interest rate cuts
In This Article:
Tech stocks have fallen today as expectations of rate cuts fuel interest in so-called small cap companies.
Chip giant Nvidia dropped 4.1pc, Tesla lost 6.9pc, Apple fell 2.4pc, Facebook owner Meta declined 3.8pc and Microsoft dropped 2.8pc amid concerns that US tech giants are overpriced.
The sheer size of Big Tech companies caused the S&P 500 to fall 0.9pc, even though four out of five S&P 500 companies have risen in trading today.
Meanwhile, the main US index of small-cap business, the Russell 2000, jumped 3.2pc.
The boost to the small-cap index, which has risen a scant 0.3pc this year, comes after the S&P 500, which is comprised of larger companies, piled on 17.7pc since January.
Market watchers point to lofty US interest rates - at 22-year highs - as one factor behind the yawning gulf in fortunes, given that smaller companies typically borrow more than larger peers relevative to their size.
Sam Burns, chief strategist at Mill Street Research, believes that smaller equities “tend to get hurt more by the higher rates. I think it’s causing a big divergence in earnings, which then shows up in the relative returns.”
But that dynamic also means that small cap equities could be poised to prosper if the US Federal Reserve pulls the trigger and cuts interest rates soon.
A Fed interest rate cut in September could be the “first catalyst” for small caps to take off, said Art Hogan of B. Riley Wealth Management.
Britain’s Aim 100 index of small companies rose 1.4pc today.
Read our latest updates below...
06:07 PM BST
Signing off...
Thanks for joining us this afternoon.
We will be back as usual tomorrow morning to live blog the markets from around 7am.
In the meantime, I’ll leave you with this picture of Microsoft co-founder Bill Gates, who was spotted at the annual Sun Valley Media and Technology Conference in Idaho, run by boutique investment bank Allen and Co.
06:02 PM BST
Tesla to delay unveiling of robotaxi to give developers more time
Tesla is delaying an event to unveil its robotaxi, which had been planned for August 8, to allow those working on the project extra time to build additional prototypes, Bloomberg has reported.
Tesla boss Elon Musk had reportedly set the launch date months ago, but it is now planned for October.
Earlier this year, The Telegraph reported that it could be several years before the robotaxi makes it on to roads, in part because Tesla has no licence to operate fully driverless cars.
Telsa has been approached for comment.
05:49 PM BST
European stocks rise as cooling US inflation boosts rate cut hopes
European stocks markets rose today as cooling US inflation data bolstered interest rate cut hopes.
The French Cac 40 indes closed up 0.7pc, as did Germany’s Dax. The pan-European Stoxx 600 rose 4.3pc.
In Britain, official data showing the UK economy has grown faster than thought boosted the pound, with analysts saying it could force the Bank of England to delay cutting its interest rates until September.
An upbeat mood filtered through to Asia earlier, where Hong Kong stocks jumped two percent and Tokyo, Shanghai and Sydney all rose.
05:42 PM BST
Vegans snap up diet supplements as health concerns grow
Vegans are racing to buy diet supplements amid growing concerns that the lifestyle can cause health problems, a senior retailer has said. Hannah Boland reports:
Alex Gourley, the chairman of Holland & Barrett, said people on vegan diets were starting to be “much more aware of the supplements” they needed to take when only eating plant-based food.
05:12 PM BST
Investors turn to small caps amid rising confidence of US rate cuts
Investors have been putting money into America’s small cap companies today, pushing an index of small cap companies by 3.2pc today.
The boost to the Russell 2000 index, which has risen a scant 0.3pc this year, comes after the S&P 500, which is comprised of larger companies, piled on 17.7pc since January.
Market watchers point to lofty US interest rates - at 22-year highs - as one factor behind the yawning gulf in fortunes, given that smaller companies typically borrow more than larger peers because they are less profitable.
Sam Burns, chief strategist at Mill Street, believes that smaller equities “tend to get hurt more by the higher rates. I think it’s causing a big divergence in earnings, which then shows up in the relative returns.”
But that dynamic also means that small cap equities could be poised to prosper if the US Federal Reserve pulls the trigger and cuts interest rates soon.
A Fed interest rate cut in September could be the “first catalyst” for small caps to take off, said Art Hogan of B. Riley Wealth Management.
Britain’s Aim 100 index of smaller companies rose 1.4pc today.
05:01 PM BST
Pfizer pushes ahead with once-a-day weight-loss pill
Pfizer is pushing ahead with trials for a once-a-day weight loss pill as drug makers race to develop obesity treatments that are easier to take. Hannah Boland reports:
The US pharmaceutical company said it was planning to start studies to test different doses of the experimental treatment later this year.
04:53 PM BST
Footsie closes up
The FTSE 100 closed up 0.4pc. The top riser was water company Severn Trent, up 3.7pc, followed by Rightmove, up 3.5pc. The biggest faller is Vodafone, down 1.7pc, followed by business information group Relx, down 1.5pc.
Meanwhile, the mid-cap FTSE 250 rose 1.3pc. Water company Pennon rose 9.7pc to lead the market, followed by components supplier RS Group, which rose a similar amount. Bytes Technology Group fell the most, down 6.1pc, and was followed by Trustpilot, down 5.5pc.
04:50 PM BST
Cuba ratchets up pressure on private business as economic crisis deepens
Cuba is tightening regulations on fledgling private businesses, reining in profits and beefing up oversight as the government wrestles with how best to manage fast-growing private enterprise in the communist-run country.
Two years ago, Cuban authorities lifted a ban on private companies, in place since early in former leader Fidel Castro`s 1959 revolution. But the government now says some of those businesses have gotten out of hand, contributing to snowballing inflation and economic crisis.
Cuba’s Council of Ministers, the highest administrative body on the island, held an “extraordinary” session this week during which it proposed six decrees aimed at “bringing order” to the country`s growing private sector, state-run media reported late on Wednesday.
A spate of new regulations and enforcement actions signal growing tensions between privately held businesses and state-run companies that have long held monopolies across the economy.
Earlier this week, the Ministry of Finance and Pricing capped prices on six key goods imported by private businesses - chicken, vegetable oil, powdered milk, laundry detergent, pasta and sausages - in a bid to slow soaring inflation.
A government resolution issued Monday also capped profits on those goods at 30 percent, a move officials said was necessary to contain prices but which some outside economists believe could lead businesses unhappy with such limits to stop selling those products.
Authorities on Wednesday conducted 1,079 on-site inspections countrywide to enforce the new caps, and said 393 companies, or 36pc, were in violation of regulations.
Tax authorities separately said they had shuttered 15 private businesses for accounting irregularities and had identified 600 more suspected of “possible fiscal evasion.”
04:42 PM BST
Germany to ban Chinese telecom giants from core 5G network
Germany said it will phase out the use of components from Chinese telecom giants Huawei and ZTE in its 5G networks in the coming years due to national security concerns.
Parts from the firms will no longer be used in “core” 5G mobile networks by the end of 2026 at the latest, the interior ministry said.
In 5G access and transmission infrastructure, the systems of the telecom firms must be replaced by the end of 2029.
Nancy Faeser, the German interior minister, said:
We are protecting the central nervous systems of Germany as a business location - and we are protecting the communication of citizens, companies and the state.
The ministry said that 5G networks form part of Germany’s “critical infrastructure” and are important for the functioning of sectors ranging from health to transport and energy.
China and Germany have long had close economic ties.
But Berlin has been seeking to reduce its economic dependency on China, particularly since the war in Ukraine and subsequent energy crisis exposed an over-reliance on Russia.
The decision comes four years after the UK Government ordered telecoms businesses to remove all Huawei equipment from the UK’s 5G networks by 2027.
The British Government’s National Cyber Security Centre (NCSC) told telecoms providers in 2018 that the use of ZTE’s kit could pose a national security risk.
The Telegraph has approached Huawei and ZTE for comment.
04:38 PM BST
King Charles visits Sony’s production line in Wales
King Charles has been visiting the Sony UK Technology Centre - where the Raspberry Pi computer is manufactured - during a visit to mark 50 years of Sony in Bridgend in south Wales.
04:35 PM BST
Four out of five S&P 500 stocks are up, even as index drops
Most US stocks are rising this afternoon after the latest update on inflation bolstered Wall Street’s belief that relief on interest rates may come as soon as September.
Four out of every five stocks in the S&P 500 index were climbing, though pullbacks for Microsoft, Nvidia and some other influential companies masked that underlying strength.
These stocks have surged amid a frenzy around artificial-intelligence technology, causing critics to say they have become too pricey, and they helped drag the S&P 500 down 0.7pc from its all-time high set a day before.
The dips for Big Tech stocks also pulled the Nasdaq Composite down 1.6pc from its own record, while the Dow Jones Industrial Average was 0.3pc higher.
Still, the direction was decidedly upward for the majority of stocks on Wall Street, particularly housing-related companies, real-estate owners and others that tend to benefit the most from easier interest rates.
Smaller companies that have been lagging behind the market’s behemoths for a while were also strong, and the Russell 2000 index of smaller stocks leaped 3.4pc to lead the market decisively.
04:09 PM BST
Vivendi mulls London IPO of Canal+
French media giant Vivendi is considering floating Canal+, its pay-TV operator, on the London Stock Exchange.
Bloomberg said that the French company is working with advisers including BNP Paribas on a spin-off, which could occur by the end of the year.
The Telegraph has approached Vivendi and BNP Paribas for comment.
04:02 PM BST
Tech firms slump despite interest rate hopes
Softer US inflation data has helped lift global share prices but tech firms have seemingly not benefited, with the Nasdaq falling. Investor darling Nvdia is down 3.8pc today.
Chris Beauchamp, chief market analyst at online trading platform IG, suggests this is because investors are looking for other opportunities outside “overstreched tech stocks”. He said:
For the tech sector, which has already enjoyed a strong period this month, there was little extra good news in the US inflation print.
03:57 PM BST
US small cap companies jump 3.1pc on hopes of rate cuts
Global equity markets are mostly up today but Wall Street’s main stock indexes struggled for direction as investors favoured rate-sensitive small-cap stocks over expensive megacaps after a softer-than-expected inflation reading bolstered hopes for interest rate cuts in September.
The inflation data is a welcome sign for Federal Reserve policymakers looking for evidence that inflation is back on track to their 2pc goal, leading traders to increase bets on a September rate cut.
The Russell 2000 index of small-cap American listed companies is up 3.1pc today. Meanwhile, the S&P 500 is down 0.4pc, the Nasdaq is down 0.9pc, and the Dow Jones is up 0.2pc. The pan-European Stoxx 600 index is up 0.5pc and the FTSE 100 is up 0.3pc. Britain’s small-cap Aim 100 index rose 1.3pc.
03:50 PM BST
Biden awards $1.7bn to boost electric vehicle manufacturing
The Biden administration is awarding nearly $2bn in grants to General Motors, Fiat Chrysler and other carmakers to help restart or expand electric vehicle manufacturing and assembly sites in eight states, including the presidential battlegrounds of Michigan, Pennsylvania and Georgia.
The US Energy Department will issue grants totaling $1.7bn to create or retain thousands of union jobs and support auto-based communities that have long driven the US economy, the White House said today. Besides the three battleground states, grants also will go to EV facilities in Ohio, Illinois, Indiana, Maryland and Virginia.
The grants cover a broad range of the automotive supply chain, including parts for electric motorcycles and school buses, hybrid powertrains, heavy-duty commercial truck batteries and electric SUVs, the White House said.
The grant announcement comes as Biden rejects calls to step aside after a disastrous debate performance last month. Mr Biden, 81, has acknowledged his poor performance but has brushed it off as a “bad night”, even as many congressional Democrats, including former House Speaker Nancy Pelosi, have declined to give him a full vote of confidence.
03:45 PM BST
Japan warns over sharp declines in the yen
A Japanese minister has said today that he is concerned about recent exchange rate moves that have become dominated by speculation and were out of line with fundamentals, Japan’s Jiji news agency reported.
Mr Kanda also said foreign exchange moves since the beginning of the year have been “very big” and were affecting households, according to Jiji.
The remarks were the strongest to date from Japanese authorities warning against the yen’s recent sharp declines against the dollar.
Kanda, who is vice finance minister for international affairs, said he was not in a position to comment on whether authorities had intervened in the market, Jiji reported.
The comments came after the dollar fell as much as 2.5pc against the yen following weaker-than-expected US CPI data.
The yen has fallen 11pc against the dollar since the start of the year.
03:37 PM BST
Poundland owner says summer stock hit by Red Sea shipping delays
Poundland owner Pepco has revealed a sales slump over the latest quarter, partly driven by delays in summer stock reaching its stores due to Red Sea shipping disruption.
The retail group, which also runs the Pepco and Dealz brands across Europe, is among retailers that have been hampered by volatility in the region, with many shipping firms having to redirect cargo around the foot of Africa following attacks by Houthi rebels.
It said this contributed to a delay in “summer stock hitting store shelves” in the quarter to June 30.
The company added: “The group remains confident that availability issues that have impacted LFL sales will ease through the fourth quarter, as we mitigate the Red Sea impact by shipping product earlier and channelling stock through different shipping routes.”
It came as Pepco reported that group like-for-like sales dropped by 4.3pc over the quarter.
The sales slump was even greater across its Poundland stores, which reported a 6.9pc drop in like-for-like sales.
The company said this was largely due to challenges linked to the launch of new clothing and general merchandise ranges from its Pepco business, which are “being addressed”.
Nevertheless, overall group revenues were up 8pc year-on-year to €1.48bn (￡1.25bn) as it was buoyed by a raft of new store openings.
03:36 PM BST
Water firms sign up to reforms amid pressure over bills and sewage
Water bosses have signed up to “initial” reforms set out by the Government to clean up England’s waters as pressure mounts over rising bills and the sewage scandal.
The companies, which are facing a public outcry over dividends and bonuses, rising bills, and sewage spills that are polluting rivers, lakes and seas, met new Environment Secretary Steve Reed in London on Thursday.
After the meeting, it was announced they had agreed to what Mr Reed described as an initial package of reforms, including ringfencing funding for infrastructure investment and prioritising customers and the environment.
Under the reforms, consumers will also gain new powers to hold water company bosses to account through new customer panels, while there will be more compensation when things go wrong, the Environment Department (Defra) said.
The meeting came as regulator Ofwat set out its draft proposals for how much water firms will be able to raise consumer bills over the next five years, and how much they can invest in upgrading infrastructure.
The proposed bill hikes provoked an angry reaction from campaigners, who attacked water companies for demanding more money from households during a cost-of-living crisis while failing to curb sewage pollution, and were labelled a “bitter pill” by Chancellor Rachel Reeves.
03:29 PM BST
Pound nears ‘key psychological level’
The pound is close to a “key psychological level”, a leading broker has said. Kathleen Brooks, research director at XTB said:
The pound has been a big winner this week and is now less than 75 points away from $1.30, a key psychological level.
03:11 PM BST
Record outflows from UK equity funds in May, according to trade body
Customers pulled a record ￡1.8bn out of UK equity funds in May heaping further woes on the London market’s depressed share prices.
Fresh figures from trade body the Investment Association show that UK stock funds bore the brunt of retail outflows, with investors looking elsewhere like Europe and America for better opportunities.
The exodus of cash builds on a long running trend of armchair investors snubbing the British stock market, with ￡13.6bn withdrawn in 2023, and ￡12.0bn leaving in 2022.
AJ Bell’s Laith Khalaf said: “May was the worst month on record for UK equity fund flows, quite the accomplishment for a sector that has been in outflow for eight years.”
02:47 PM BST
Holidaymakers waiting until last minute before booking trips
Holidaymakers are waiting until the last minute before booking trips abroad, according to travel company Jet2.
The group, which caters to nearly 18m passengers, said the trend meant the company had to keep on its toes on pricing.
“Passengers are currently booking much closer to departure and therefore, pricing for our flight-only and package holiday products must remain attractive,” the group said alongside full year results.
Sales rose 24pc to ￡6.5bn and profits rose 43pc to ￡529m.
The company said package holidays “remain high on the priority list” for customers despite the cost of living crisis.
01:51 PM BST
US inflation drop triggers hopes of early rate cut
US inflation fell faster than expected last month in a boost for hopes of a US rate cut.
The Consumer Prices Index fell to 3pc in June, down from 3.3pc in May.
The drop was better than expected, with markets penciling in inflation at 3.1pc for the month.
Markets were boosted by expectations the lower reading will force the Federal Reserve to cut interest rates faster than expected.
Fed chair Jerome Powell recently said he did not think inflation had been beaten and that “more good data” would be need to boost the case for a rate cut.
Traders are hoping for a possible rate cut in September.
01:34 PM BST
Worldline apologises after card payments refused across the UK
French payments giant Worldline said its processing services were disrupted earlier today, as card payments went down across several British supermarket chain.
Worldline, which offers important payment infrastructure for the likes of M&S, said it experienced disruption which meant some retailers struggled to process payments between 9am and 10am.
It said the service had been fully restored.
“Operating conditions were swiftly restored and Worldline’s teams are fully mobilized to monitor the normalised situation. Worldline regrets the situation and any potential inconvenience,” a spokeswoman said.
Card payments went offline at branches of Sainsbury’s and M&S this morning, forcing people to use cash.
Visa and Mastercard investigated the incident but could not detect any issues with their systems.
Mastercard said: “We can confirm that the Mastercard network has been operating normally and that this morning’s issues were not related to our systems.”
Visa said: “We are aware that a merchant payment provider reported issues this morning that impacted some cardholders. It has been reported that this issue is now resolved. Visa’s systems continue to operate normally.”
01:17 PM BST
“Green” fund shake-up could trigger $30bn sell-off, Barclays say
A crackdown on so-called “green” funds risks triggering a $30bn stock and bonds sell-off, Barclays said
Funds which invest according to environmental, social and governance (ESG) rules are facing new EU rules putting more restrictions on what stocks and bonds they can hold in their portfolios to qualify for the “green” label.
To comply with the new labelling rules, fund managers could offload $30bn worth of stocks and bonds to comply with the rules and maintain their ESG labels, Barclays’ analysts said.
Companies which could face the biggest sell-off include oil giants like Shell and Exxon Mobil.
“We do expect most managers to choose to retain their name, and therefore sell excluded holdings,” Barclays said.
Active funds are “typically marketed with a sustainable name in order to attract a certain group of investors,” it added.
12:42 PM BST
Supermarkets under fire over card glitch
Supermarkets have come under fire after some customers were left unable to pay with their cards at tills.
Visa and Mastercard have started an investigation into the incident after “nationwide” issues with their card technology was reported.
Sainsbury’s and M&S have faced questions from customers after many were left unable to pay for their shopping this morning.
Some supermarkets were forced to accept “cash only” during the outages.
11:48 AM BST
Card payments refused across the UK in “nationwide” issue
Card payments have been refused across the country in a “nationwide issue” affecting supermarkets and other retailers.
Supermarkets such as Sainsbury’s were forced to issue warnings to customers that they are temporarily “cash only” earlier today while they attempted to solve the issue.
Downdetector, which measures online outages from customers, had more than 600 reports of issues with Visa while there were 100 reports of problems with Mastercard by 10am.
Sainsbury’s said on social media it was aware of a “nationwide issue” with card payments and was told issue “has now been resolved”.
A spokesperson for the supermarket group said contactless payments had now resumed having been “briefly unavailable” earlier today.
“We’re accepting all payments as usual and continue to monitor the situation. We’re sorry for any inconvenience this may have caused,” it said.
Visa said it was investigating while Mastercard said there was “no current indication” any of the issues were related to its own network.
11:34 AM BST
Severn Trent and Pennon surge after Ofwat “outstanding” rating
It’s not all bad news for water companies after this morning’s price crackdown by regulator Ofwat.
Two of the largest water groups, Severn Trent and Pennon, have seen shares surge this morning after their five-year business plans were rated “outstanding” by the regulator
Severn Trent, which is led by Liv Garfield (pictured), saw shares hit a 2024 high of ￡27.03 while Pennon leapt nearly 8pc to their highest in more than six months.
An “outstanding” rating means the two companies will be allowed to generate higher returns for shareholders.
Ofwat said Severn Trent could increase customer bills by ￡93 to ￡496 while Pennon, which owns South West Water, can put them up by ￡64 to ￡561.
11:11 AM BST
BHP to shutter Aussie nickel business until 2027 after price crash
Miner BHP is closing its Australian nickel business for the next two years because of a global slump in prices of the key metal, which is used in EVs.
The company will temporarily mothball the business, known as Nickel West, until February 2027 after a global supply glut prompted nickel prices to crash.
A ramp up in production by Indonesia and less demand for a more sophisticated type of nickel used in EVs has prompted the recent price spiral.
BHP’s new nickel mine, the West Musgrave, will also be halted.
“The decision to temporarily suspend Western Australia Nickel follows oversupply in the global nickel market. Forward consensus nickel prices over the next half of the decade have fallen sharply reflecting strong growth of alternative low-cost nickel supply,” the company said.
BHP has spent $3bn since 2020 to keep the Australian nickel afloat as it pivoted to producing nickel used in the battery and EV market.
10:52 AM BST
Heathrow passengers to pay less after watchdog slashes charges cap
Passengers will pay less for flights in and out of Heathrow after the aviation watchdog ordered the airport to cut the fees it charges airlines, our industry editor Matt Oliver writes.
On Thursday, the Civil Aviation Authority (CAA) confirmed the new cap on Heathrow’s charges will fall to ￡23.73 per passenger in 2025 and ￡23.71 in 2026.
That compares to previously proposed caps of ￡25.24 and ￡25.28 respectively.
The reductions will benefit passengers because in practice the fees are passed on to consumers through air fares.
It comes after both Heathrow and some airlines challenged the previous cap decision last year, forcing the Competition and Markets Authority to rule on the issue.
Heathrow previously argued for a higher rate of ￡42 per passenger, while airlines insisted it should be lower than ￡20.
10:18 AM BST
Wood Group results could raise prospects of Dubai takeover
Wood Group has published fresh half-year results that raise the likelihood of a deal that could see it taken over by Dubai-based Sidara.
The Aberdeen-based engineering group has rebuffed three offers from Sidara, formerly known as Dar Al-Handasah.
Wood yesterday faced a downgrade by Barclays with warnings that its share price, pushed up by the bid, would fall sharply if the bid failed.
Sidara has proposed an indicative bid of ￡1.6bn for the group and has until 31 July to make a firm offer.
Wood’s adjusted earnings rose 4pc to $210m (￡163m) and its profits margins also improved.
09:23 AM BST
Infrastructure giant Galliford pleases with higher profits
Construction giant Galliford Try delivered an upbeat trading update and signaled it could reap the benefits of UK infrastructure spending.
The company, which helps build homes, roads and hospitals across the UK, said annual revenues would be nearer forecasts of ￡1.6bn in a trading update this morning, ahead of full year results later this year.
The new Labour government has made infrastructure a key plank of its policy regime, pledging to build 1.5m new homes.
Galliford did not mention the new government by name, but signaled it was “well positioned” to advantage of rising spending commitments.
“We operate across the UK and are well positioned to deliver on local and national commitments to improve the UK’s economic and social infrastructure,” it said.
Galliford, led by construction veteran Bill Hocking, employs 3,900 workers, making it one of the largest construction companies in the UK.
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08:59 AM BST
Dr. Martens reassures investors after steady start
Dr. Martens’ shares jumped after enjoying a trouble-free start to the year, reassuring shareholders bruised by a recent share plunge.
The bootmaker, popular with goth and ska subcultures, said trading for the first quarter had been in line with expectations.
Shares were up 4.6pc in early trading as shareholders breathed a heavy sigh of relief.
The first three months are typically quieter for the company owing to the end of the spring and summer season, when business generally booms.
It said the upcoming autumn and winter period would be a “key focus” for the group and results would be heavily weighted to the second half.
Shares plunged earlier this year after a shock profit warning.
08:27 AM BST
Recruitment sector still struggling despite growth picking up
Recruiter Hays this morning showed net fees in the UK and Ireland plunged 17pc in the quarter to June. It comes as unemployment has been edging up and vacancies falling, as the job market buckles under high interest rates.
The firm said the election had made firms put hiring plans on ice until the outcome was clear.
It has slashed the number of consultants globally by nearly a fifth year on year, while other staff numbers also fell by 9pc. In addition, Hays closed or merged 12 offices around the world.
08:08 AM BST
Boost to London stockmarket from signs of economic recovery
The FTSE 100 Index rose by as much as 0.25pc upon opening after it emerged that the British economy’s recovery is gathering momentum.
Similar gains were made by the FTSE 250.
08:03 AM BST
Pound hits four-month high after strong growth figures
Sterling has risen to its highest level against the dollar since early March, hitting $1.2856 on Thursday morning.
It comes after figures showed the UK economy grew faster than expected in May, tempering hopes of an August rate cut.
Traders are also awaiting US inflation figures later today.
07:43 AM BST
Londoners to face ￡99 rise in water bills
Beleaguered water company Thames Water has been granted approval from the regulator to hike water bills by ￡99 on average per household, half the increase requested by the firm.
Michael Bow has the full story:
Ofwat said in a draft ruling on Thames plans that it would accept a rise of only 22pc, just half the 44pc increase Thames had requested as it battles to shore up its finances.
Read it here
07:39 AM BST
Economic recovery starting to ‘put down roots’
The Confederation for British Industry said the positive growth figures, which show all sectors growing, point to a wider recovery gaining momentum.
CBI Economist Ben Jones said:
“The latest data shows that the UK’s economic recovery is starting to put down roots. While growth in May was driven by a rebound in sectors such as retail and construction, which were hit by poor weather earlier in the spring, recent months have seen activity creeping up across a wide range of sectors.”
07:31 AM BST
Strong growth could derail August rate cut, warns ICAEW
Borrowers hoping for the first interest rate cut next month may be disappointed after data showing the economy growing faster than predicted in May, the Institute of Chartered Accountants in England and Wales has warned.
Economics director Suren Thiru said:
“These GDP figures may make an August rate cut less likely by providing those rate setters, who are concerned about underlying price pressures, with sufficient confidence about the UK’s economic recovery to continue putting off loosening policy.”
07:28 AM BST
Outlook continues to brighten for UK economy say economists
Economists reacting to the better-than-expected growth figures said they underline a strong recovery after last year’s recession.
Yael Selfin at KPMG said:
“The near-term outlook for the UK economy has continued to improve, and we now expect growth to reach 0.8pc this year and 1pc in 2025. Consumer spending is set to be the main driver of activity in the second half of the year, underpinned by stronger consumer sentiment and improving household incomes.”
Hailey Low from the National Institute of Economic and Social Research said:
“Today’s GDP figures signal that growth remains on the path to recovery against a muted start to the second quarter of the year last month.”
07:23 AM BST
Economy grows at fastest pace in two years
The economy in the past three months grew at the fastest pace in more than two years, the Office for National Statistics has said. It expanded by 0.9pc in the three months to May.
07:16 AM BST
No time to waste on growth says Chancellor Reeves
Responding to the better-than-expected growth figures, Chancellor Rachel Reeves, said:
“Delivering economic growth is our national mission, and we don’t have a minute to waste. That is why this week I have already taken the urgent action necessary to fix the foundations of our economy to rebuild Britain and make every part of Britain better off. A decade of national renewal has begun, and we are just getting started.”
07:14 AM BST
Essential reading to start your day
5 things to start your day
1) Labour launches crackdown on water companies | Bill payers to get more compensation and the power to hold bosses to account
2) Tycoon nears deal for The Body Shop | Mike Jatania moves ahead in race to rescue high street chain’s remaining 100 shops
3) Sadiq Khan charges drivers ￡8 a day to use Blackwall Tunnel | Those failing to pay the mayor’s latest motoring charge face fines of ￡180
4) Britain to suffer world’s biggest exodus of millionaires as Labour takes power | Number of high-earners to shrink by 17pc between 2023 and 2028
5) Jeremy Warner: Labour’s honeymoon period will be short-lived | Britain’s new-found political stability won’t last while the Left yearns for redistribution
What happened overnight
On Wall Street, the Dow Jones Industrial Average of 30 leading US companies rose 1.1pc, closing at 39,721.36. The S&P 500 gained 1pc, closing at 5,633.91, and the Nasdaq Composite index gained 1.2pc, reaching 18,647.45.
For the S&P 500, Wednesday marked its sixth straight record high close and the Nasdaq’s record closing high was its seventh in a row.
Fed chairman Jerome Powell’s dovish-leaning comments this week sent yields of benchmark 10-year US Treasury bonds lower. A solid $39bn (￡30bn) auction of Treasury bonds also marginally weighed on yields as well.
The yield on those 10-year bonds fell to 4.282pc from 4.3pc late on Tuesday.
Asian equities advanced after a rally in the world’s largest tech stocks lifted global shares to new highs ahead of US inflation data due later Thursday.
Equities in Japan, Australia and China rose, following a bullish session on Wall Street Wednesday. The Australian and New Zealand dollars, and most Asian currencies, rose against the greenback.