Oil prices have tumbled sharply as disappointing data from China stoked fears of a global economic slowdown.
Benchmark Brent crude extended recent losses, shedding more than $5 – or 5pc – to trade just above $93 a barrel. West Texas Intermediate lost a similar amount, falling to almost $87.
It comes after China’s central bank unexpectedly slashed key interest rates as a raft of data showed weakness in the world’s second-largest economy amid ongoing Covid restrictions and a property crisis.
In turn, that fuelled concerns of falling demand from China – the world’s biggest oil consumer.
In further relief for prices, Iran’s foreign minister said Tehran will deliver its “final” proposal later today amid talks to revive its 2015 nuclear deal.
A deal would mean that Iran’s crude output of 2.5m barrels per day would no longer be under international sanctions, helping to ease supply concerns.
Wall Street slips after weak China data
Wall Street’s three main indices have opened in the red after weak data from China stoked fears of an economic slowdown.
The S&P 500 fell 0.3pc at the open, while the Dow Jones was down 0.2pc. The tech-heavy Nasdaq shed 0.4pc.
UK worker shortages leave £60m of food to rot in fields
Tens of millions of pounds worth of fresh produce is being left to rot in UK fields because farmers can’t attract enough workers.
Around £22m of fruit and vegetables were wasted in the first half of the year due to labour shortages, according to a National Farmers Union survey.
As the survey represents only a third of the horticulture sector, the overall figure likely top £60m.
While many parts of the economy are struggling with staff shortages, the farming industry has found it particularly difficult to lure workers as jobs are seasonal and can mean long hours of labour at low pay. Brexit has also complicated hiring from the EU.
The waste comes at a time when supermarket prices are rising at an almost record pace, adding to the cost-of-living crisis for British families.
Keir Starmer is taking a dangerous bet on the energy market
Sir Keir Starmer has laid out Labour’s plans to tackle soaring energy bills by freezing the price cap at its current level of £1,971 a year for six months from October.
The Labour leader said the £29bn proposal would bring inflation down, which he said “benefits everybody”. A typical family would save around £1,000 from the freeze, he claimed.
However, the Labour leader risks committing to an increasingly expensive policy if natural gas prices continue to creep higher.
Labour’s intervention raises the pressure on Liz Truss and Rishi Sunak – the two Conservative leadership candidates – to flesh out their own plans.
Louis Ashworth analyses how the policy would be paid for, and what effect it could have. Read his full piece here.
UK approves first ever Omicron Covid vaccine
Britain was the first country to approve a Covid-19 vaccine back in 2020, and now it’s become the first to approve a jab that targets both the original and the Omicron variant of the virus.
The Medicines and Healthcare products Regulatory Agency (MHRA) has given the green light to a so-called bivalent booster vaccine for adults made by Moderna.
The vaccine targets two strains – half of the dose works against the original version of Covid, while the other half protects against an early version of the Omicron variant.
The Joint Committee on Vaccination and Immunisation (JCVI) is expected to issue a recommendation soon on how the vaccine should be deployed.
Nationwide hands cost-of-living bonus to staff
Nationwide Building Society has become the latest lender to announce one-off payments to staff to help them cope with the cost of living crisis, writes Patrick Mulholland.
Workers at Nationwide who earn £35,000 or less per year will receive a payment of £1,200 in the coming weeks. The measure will cover around 11,000 employees – about 61pc of the lender’s workforce.
“This payment is in addition to the annual pay review earlier this year, which gave all colleagues a 4pc pay rise,” said Nationwide.
Earlier this year, the UK’s largest high street banks – Barclays, HSBC, Lloyds and NatWest – all raised base pay for staff by around 4pc.
Since then, several banks have made further unscheduled payments – typically in the range of £1,000 to £1,500 – to low-earning staff.
Challenger banks have also handed unscheduled bonuses to employees to help them cope with rising costs. TSB and Virgin Money have both handed £1,000 to staff.
Oil prices slump 5pc on China demand fears
Oil prices have fallen even further this morning, extending losses to around 5pc as traders fret about subdued demand from China.
China’s central bank slashed key interest rates in a surprise move as a raft of data showed weakness in the world’s second-largest economy amid ongoing Covid restrictions and a property crisis.
In turn, that fuelled concerns of falling demand from the world’s biggest oil consumer.
Benchmark Brent crude dropped around 5pc to just over $93 a barrel, while West Texas Intermediate was trading below $88.
US futures fall after weak China data
US futures dropped this morning, taking their cue from global markets after weak data from China stoked fears of an economic slowdown.
Tech giants such as Apple and Amazon slid 0.5pc in pre-market trading, while banks also edged lower after posting six straight weeks of gains.
Energy stocks including Exxon Mobil and Chevron also dropped as oil prices tumbled further on worries about demand from China.
Futures tracking the S&P 500 and Dow Jones fell 0.5pc, while the Nasdaq lost 0.4pc.
Pubs and restaurants warn of winter closures as energy bills soar 300pc
Pub, restaurant and hotel chiefs have warned the industry could face mass closure this winter without “urgent” support from the Government.
Hannah Boland has the story:
In a joint letter to Boris Johnson, Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng, seen by The Telegraph, the UK’s leading hospitality groups said the situation was “no less of a threat” than the drought hitting Britain.
UK Hospitality called for “urgent action” to help with bills, saying the Government should not “allow the stasis of party politics to stifle the urgent delivery of action on energy”.
The sector is calling for a cut to VAT or an energy price cap, such as that in place for customers.
It comes as pubs and restaurants prepare to sign new energy deals as old tariffs expire this autumn. Businesses are facing average increases of 300pc under new deals being offered.
The letter, signed by groups representing tens of thousands of hospitality venues across the country, warned the Prime Minister that “not all businesses will be able to survive this onslaught”.
Germany sets new gas levy for households as prices surge
German households will have to pay an extra 2.419 cents per kilowatt hour for gas as the country tries to spread the impact of higher costs among consumers.
The levy, which could amount to an extra €500 for a family of four, will kick in from October, Trading Hub Europe said in a statement.
Germany had been trying to avoid making consumer pay for higher energy costs in the wake of Russia’s invasion of Ukraine. But uncertainties over gas supplies have forced Berlin into action.
Christian Lindner, German finance minister, has said he’ll look at ways of exempting the levy from sales tax in an effort to at least partially ease the impact on consumers.
Rio Tinto’s $2.7bn copper mine offer rebuffed
Rio Tinto’s $2.7bn (£2.2bn) offer to buy out Turquoise Hill Resources has been rejected, derailing its efforts to gain greater control of a huge copper mine it’s developing in Mongolia.
The Canadian company said Rio’s offer didn’t “fairly reflect the fundamental and long-term strategic value” of its majority ownership of the Oyu Tolgoi project.
It’s a setback for Rio chief executive Jakob Stausholm, who is trying to rebuild the company’s reputation after a series of scandals. Rio owns 51pc of Turquoise Hill, which in turn holds a two-thirds stake in Oyu Tolgoi.
Rio said it was disappointed by the decision and insisted its offer would deliver “compelling value” for minority investors.
Pound falls as focus turns to inflation data
Sterling has lost ground against the dollar at the start of a busy week for economic data that will give more indications of price pressures and the strength of the labour market.
Traders are focusing on employment data due tomorrow and inflation figures on Wednesday, which could give hints about whether the Bank of England will raise interest rates by 50 basis points again at its next meeting.
The consumer price index is expected to hit 9.8pc for July, with markets pricing in around an 85pc chance of an aggressive 50 basis-point interest rate hike.
The pound fell 0.6pc against a stronger dollar to $1.2071. Against the euro it was little changed at 84.56p.
Barclays pulls financial safety net amid cost-of-living crisis
Barclays customers have claimed they’re losing a vital financial safety net after the bank abruptly withdrew their unused overdraft facilities.
The bank has written to a number of current account holders saying their overdraft limit will be removed with a month’s notice because they have not used it for a year, the Guardian reports.
The move could be a major blow for customers relying on their overdraft in case soaring bills push them into the red. They now face paying higher interest rates and charges if they are forced into using an unauthorised overdraft.
A Barclays spokesman said:
We review all personal arranged overdraft limits at least once a year, taking into account all the financial information we have about each customer.
Where this suggests that a personal arranged overdraft limit may be too high, we will plan to reduce it to a lower limit, taking into account how much of the overdraft has been used over the past 12 months. If the overdraft hasn’t been used at all for a long time, we may remove it.
Gas prices rises amid heatwave and dry rivers
Natural gas prices rose again this morning as scorching temperatures dry up rivers and boost demand at a time when supplies are already under pressure.
Very low water levels in rivers including the Rhine are making it difficult for fuel supplies to be transported, meaning gas demand could rise.
That’s on top of higher cooling demand, while markets are still grappling with the impact of Putin’s supply cuts.
Benchmark European prices increased as much as 2.5pc this morning, while the UK equivalent was up 2.3pc.
Joules hires former Compare The Market chief as new boss
Joules has hired the former chief executive of Compare The Market as its new boss.
Jonathon Brown will take over the top job from Nick Jones, who announced plans to leave the business in May.
The reshuffle comes after a torrid start to the year for the upmarket retailer, which has issued several profit warnings in the face of surging inflation and waning consumer confidence. Shares have dropped more than 80pc over the last 12 months.
Joules also confirmed last week it’s in talks to sell a minority stake to Next for as much as £15m.
Mr Brown will join the company on September 7 for a handover period, before taking the reins fully at the end of the month.
He was most recently chief executive of Compare The Market, before which he led MandM Direct. He also previously held director roles at B&Q owner Kingfisher and John Lewis.
Saudi Aramco rakes in record £40bn profit
ICYMI – Saudi Aramco has announced the biggest quarterly profit of any public company in history thanks to surging oil prices and demand.
Laura Onita reports:
The state-controlled fossil fuel giant made a profit of $48.4bn in the three months to the end of June, up 90pc on the same period a year earlier and equivalent to around half a billion dollars of profit every day.
Aramco’s haul almost equalled the combined profits of the five biggest Western oil companies during the same period. BP, Shell, ExxonMobil, Chevron and TotalEnergies made a combined $51bn in the second quarter, breaking their own profit records in the process.
The Saudi profits also comfortably eclipsed Apple’s best ever quarter. The iPhone maker, which recently overtook Aramco as the world’s biggest company by market capitalisation, made $34bn in the first three months of the year.
Oil companies have been boosted by soaring demand and escalating prices since Russia’s invasion of Ukraine. The war has disrupted supplies and prompted Western sanctions on Vladimir Putin’s oil, which has restricted global supply.
Oil extends losses as China outlook darkens
Oil prices have fallen further at the start of the week as traders weighed up concerns about falling demand from China.
Benchmark Brent crude dropped 1.7pc to below $96.50 a barrel, while West Texas Intermediate was trading under $91.
Markets were rattled by China’s unexpected decision to cut lending rates as it boosts support for an economy hit by lockdowns and property woes. The country’s apparent oil demand was about 10pc lower in July than last year.
But traders also have an eye on the prospect of more supply from Iran amid signs of progress in efforts to revive a nuclear deal.
FTSE risers and fallers
The FTSE 100 has gained ground in early trading as investors look ahead to inflation data due later this week.
The blue-chip index rose as much as 0.4pc, before paring gains to just 0.1pc.
AstraZeneca was the biggest boost to the index, rising 2pc after it reported positive results from its phase 3 trial of breast cancer drug Enhertu.
Electronics group RS Group was the biggest riser, up as much as 5.5pc amid reports its preparing to bolster its defences against a possible takeover bid.
Housebuilders including Berkeley, Barratt and Taylor Wimpey and miners Anglo American and Rio Tino slipped into the red.
The domestically-focused FTSE 250 lost 0.1pc, with Trainline down as much as 3.5pc.
Property asking prices fall by most in two years
Property asking prices have tumbled at the sharpest pace in almost two-and-a-half years as a traditional summer lull was compounded by a slowdown in the market.
The cost of new homes listed for sale fell 1.3pc in August, reducing the annual rate of growth to 8.2pc from 9.3pc, according to data from Rightmove.
The biggest drop was felt in the country’s most expensive homes, while London was the region with the largest decline.
Rightmove said prices typically fall in August as buyers go on holiday and gear up for the return to school. But separate figures suggest higher interest rates and a deepening cost-of-living crisis are starting to weigh on the property market.
Tim Bannister at Rightmove said:
Several indicators point to activity in the market continuing to cool from the lofty heights of the last two years. It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year.
Insurer Phoenix Group posts record first half
Phoenix Group has hailed a strong start to the year despite a “challenging” economic backdrop.
The FTSE 100 life insurance group struck an upbeat tone on the outlook after cash generation jumped 8.9pc to a record £950m in the six months to the end of June.
It added that cash generation was expected to be at the top end of its target range of between £1.3bn and £1.4bn for the full year.
Phoenix said trading was boosted by new business, with cash generated by new clients more than doubling to £430m over the half year.
It comes a week after the company continued its recent acquisition spree with a £248m takeover of Sun Life UK.
Shares ticked up 0.8pc in early trading.
FTSE 100 opens higher
The FTSE 100 has started the week in positive territory, with traders looking ahead to inflation figures due on Wednesday.
The blue-chip index rose 0.4pc to 7,531 points.
China shocks with rate cut amid economic slowdown
China has cut a key lending rate in a bid to shore up its economy after new data showed its slowdown deepened in July due to a worsening property slump and continued Covid lockdowns.
The People’s Bank of China cut its policy rates, bringing its seven-day reverse repurchase rate – a key rate at which the central bank provides short-term liquidity to banks – to a new low.
It also cut its one-year medium-term lending facility, surprising analysts.
It came after retail sales, industrial output and investment all slowed in July, while the unemployment rate for those aged 16-24 hit a record high.
The figures highlight a crisis of confidence among Chinese businesses and households, adding another threat to the world economy as global demand falters.
Russia resumes bond trading for ‘friendly’ nations
Russia has taken a step towards reopening its markets – but only for countries it deems “friendly”.
Bond trading will resume on the Moscow Exchange today for investors from “countries that are not hostile” – meaning those that haven’t targeted Russia with sanctions.
China and Turkey are likely to be included in that group. But the move excludes countries such as EU states, Canada and Japan, which together made up 90pc of investments in Russia last year.
It marks the end of a near six-month shutdown, with Putin halting bond and stock markets in the wake of his invasion of Ukraine in late February.
5 things to start your day
1) Saudi Aramco books record profit as oil demand soars: State-owned giant makes record $48.4bn in second quarter.
2) Nine in 10 Bank of England staff handed bonuses as inflation soars: More than 300 employees received a bonus of between £10,000 and £15,000.
3) Pubs and restaurants warn of winter closures as energy bills soar 300pc: Industry pushes for consumer-style price cap and says crisis ‘no less of a threat’ than drought hitting Britain
4) UK’s first four-day week trial battles staff confusion and rota chaos: Companies involved say the policy may not survive beyond the ‘bumpy’ experiment
5) The Peckham Thatcherite who ‘straightened out’ Stormzy: Carpet tycoon Lord Harris has won praise from the rapper for his commitment to education
What happened overnight
Tokyo shares opened higher this morning following gains on Wall Street. The benchmark Nikkei 225 index rose 0.6pc, while the broader Topix index climbed 0.2pc.
Meanwhile, Hong Kong stocks dropped at the open, with the Hang Seng Index plummeting 0.7pc. The Shanghai Composite Index dipped 0.3pc and the Shenzhen Composite Index on China’s second exchange slipped 0.2pc.
Coming up today
Corporate: Phoenix Group (Interim results)
Economics: GDP (Japan); industrial production, retail sales (China); public holiday (Germany/France/Spain)
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