Wall Street was fairly lacklustre on Wednesday as the Organisation for Economic Co-operation and Development (OECD) raised its world economic forecast for this year as inflation eases and central banks cut interest rates.
The Paris-based organisation said global gross domestic product (GDP) would expand by 3.2%, compared to 3.1% in its previous estimation.
It raised the outlook for the UK, as well as for Brazil, Russia, Saudi Arabia and Spain.
Traders were also subdued amid caution over the outlook for interest rate cuts, while US mortgage applications rose again last week, continuing the rebound seen in recent weeks.
Applications jumped by 11% in the week to 20 September, following a 14.2% increase in the previous week, the Mortgage Bankers Association said.
It comes as the Federal Reserve lowered interest rates for the first twice in four years last week.
Meanwhile the FTSE 100 (^FTSE) and European stocks headed into the red as Beijing's announcement of a flurry of measures aimed at reviving the housing market after a prolonged downturn began to wear off.
London’s benchmark index (^FTSE) was 0.32% down by the end of the session.
Germany's DAX (^GDAXI) slumped 0.5% as the country's economic growth outlook was downgraded by the OECD as confidence among its exporters goes into “freefall”. The CAC (^FCHI) in Paris headed 0.6% into the red.
The pan-European STOXX 600 (^STOXX) was 0.2% lower.
Wall Street was muted with the Dow Jones Industrial Average (^DJI), the S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC) making minimal moves.
The pound was slightly down against the US dollar (GBPUSD=X) at 1.3399.
Well that's all we have time for today, thank you for following along.
Be sure to join us again tomorrow when we'll be back for more of the latest markets news and all that's happening across the global economy.
Until then, have a great evening!
LaToya Harding
High-speed Paris-to-Berlin train to launch in December
A new high-speed train linking Paris and Berlin is to launch in December.
The Guardian has the details...
The daytime service will complement a popular night train route between the two capital cities that relaunched last year to much fanfare but has since been beset by technical problems.
The daytime train service, which has been delayed by logistical issues and will take an hour longer than originally announced, will run between Berlin Hauptbahnhof and Paris Gare de L’Est, stopping in Strasbourg, Karlsruhe, and Frankfurt Süd, and will take about eight hours.
The fastest train journey now running between the French and German capitals takes just under nine hours, but requires two or three changes, making for a clunky and often unreliable experience.
LaToya Harding
US mortgage applications rise
US mortgage applications rose again last week, according to the latest data, continuing the rebound seen in recent weeks. It comes as the Federal Reserve lowered interest rates for the first twice in four years last week.
Applications jumped by 11% in the week to 20 September, following a 14.2% increase in the previous week, the Mortgage Bankers Association said.
Sainsbury’s has agreed to offload its ATM machines to operator NoteMachine which will take over the management of some 1,370 ATMs across the UK by May next year.
The machines will remain open meaning people will still access the free-to-use cash service outside Sainsbury’s supermarkets and local stores.
It comes as Sainsbury's aims to focus on its retail business after offloading its main banking arm.
Its banking division now consists of its commission income businesses including insurance and cash money.
LaToya Harding
UK petrol prices hit a three-year low
File photo dated 02/09/21 of E10 petrol pumps at a Petrol Station in Liverpool. Petrol prices have reached a three-year low, the RAC said, and the average price of a litre of the fuel at UK forecourts on Tuesday was 135.7p. Issue date: Wednesday September 25, 2024. (Peter Byrne, PA Images)
Petrol and diesel prices have hit a three-year low thanks to lower oil prices and a stronger pound.
The average unleaded price was 135.87p on Tuesday, according to the RAC motoring group.
Simon Williams, RAC fuel spokesperson, said:
"To see pump prices drop to this level is really positive news, both for households who depend on their vehicles for getting about, and for the wider economy – as there’s a clear link between the cost of fuel and the headline rate of inflation.
"Depending on where drivers fill up, they can be paying as little as £1.26 for a litre of unleaded – making the cost of refuelling a typical family car come in at under £70.
"We believe there is scope for pump prices to come down further in the next few weeks to reflect the lower wholesale costs retailers are paying when they buy fresh fuel stocks.
"We continue to look forward to the new government proceeding with its plans to introduce greater pump price transparency with the Pumpwatch scheme, along with an official monitoring function that can help ensure drivers are charged a fair price every time they fill up."
LaToya Harding
Commodities update: Gold prices and Brent crude oil
As European trading is underway, gold prices have retreated from the all-time high reached earlier in the session. Meanwhile, Brent oil prices pulled back, giving up some of their recent gains.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“The precious metal continues to find support, driven by expectations of lower US interest rates, which have weakened the dollar and softened treasury yields—favourable conditions for non-yielding assets like gold.”
Traders are now focused on three key risk events: tomorrow’s US GDP release, Jerome Powell’s forthcoming speech, and the PCE data expected on Friday.”
“These events have the potential to impact the markets significantly.”
He adds:
“The emerging consensus is that China's stimulus may fall short of boosting oil demand to levels that would justify sustained higher prices.”
“As a result, traders are increasingly cautious, recognising that further stimulus might be necessary to restore market confidence in China's ability, as the world's second-largest economy, to drive global oil demand.”
LaToya Harding
OECD raises world growth forecast
Despite the downgrade to German growth, the OECD did raise its world economic forecast for this year as inflation eases and central banks cut interest rates.
The Paris-based organisation said global gross domestic product (GDP) would expand by 3.2%, compared to 3.1% in its previous estimation.
As mentioned below, it raised the outlook for the UK, but also for Brazil, Russia, Saudi Arabia and Spain.
LaToya Harding
German economic growth downgraded
Germany's economic growth outlook has been downgraded by the OECD as confidence among its exporters goes into “freefall”.
Europe’s largest economy had its GDP predictions reduced by 0.1 percentage points for both this year and 2025 amid high savings rates and an industrial downturn.
The OECD said the country's economy would manage just 0.1% growth in 2024, followed by 1% next year.
Meanwhile the UK’s growth outlook was revised upwards by 0.7 percentage points to 1.1% this year and by 0.2 percentage points to 1.2% for 2025.
The OECD said growth had been “soft” in Germany, where it estimated inflation will stand at 2.4% this year and 2% next year.
It said: “There have been less favourable recent outcomes in some other advanced economies, notably Germany, where weak sentiment has contributed to elevated saving rates in both the household and corporate sectors and industrial activity has been weak.”
LaToya Harding
Co-op suffers £40m hit from shoplifting
Co-op sign in rural setting ,UK (kevin walsh)
Co-op revealed on Wednesday that it has suffered a near £40m hit from shoplifting across its retail stores.
It took a hit of £39.5m from theft and fraud in its shops, up 19% compared to a year earlier, despite ramping up campaigning on the issue.
It comes as the retail-to-funerals business reported pre-tax profits of £58m for the first six months of 2024, against losses of £33m a year ago.
Food sales rose 3.2% across its retail stores, helping drive a 10% increase in underlying earnings at the division to £85m.
The group’s food arm also saw its wage costs jump £39m as it hiked pay to match April’s 9.8pc rise in the National Living Wage.
Shirine Khoury-Haq, chief executive of the Co-op, said:
“Although the external environment remains challenging, it is testament to the underlying strength of our Co-op that we have outperformed in all our markets while significantly increasing our investments in our colleagues, pricing and in the growth of our businesses.
“While there is much more for us to achieve, we are on track to reach our goal of eight million Co-op member owners by 2030.”
LaToya Harding
Britain’s busiest city for renting revealed
Wrexham has been revealed as the busiest rental market in Britain, with letting agents in the city receiving an average of 54 enquiries per available property, significantly higher than the national average of 19.
Glasgow and Bristol follow closely behind, with 52 and 51 enquiries per rental property, respectively, according to Rightmove’s (RMV.L) Demand Tracker, which analyses millions of local data points across more than 250 local authorities.
The surge in demand comes as average advertised rents outside London hit a record £1,349 per calendar month (pcm), marking a 5% increase compared to last year. While rents are still climbing, this is the slowest pace of growth since 2021, down from the peak 12% annual increase seen in 2022. Rightmove’s forecast for 5% rent growth this year appears on target.
In Wrexham the average advertised rent was £967, lower than Glasgow's £1,078 or Bristol's £1,658. Blackpool is the cheapest place to rent on the list, at £805.
As we approach noon, here's a quick look at what's happening in the markets:
EasyJet (EZJ.L) flew higher as JPMorgan Cazenove highlighted the stock as "a high conviction" 'overweight' in the low-cost carrier space, "where the shares are flat this year despite more resilient pricing (and earnings) than peers". JPM said it currently sees a "cleaner" pathway to high earnings growth in September 2025.
Property platform Rightmove (RMV.L) was little changed after saying it had rejected a third, £6.1bn takeover offer from Australian outfit REA Group, saying it "materially undervalues the company and its future prospects". REA's latest cash-and-shares proposal, equivalent to an offer price of 759p, was a 37% premium to Rightmove's share price on 30 August, the day before the first offer.
Outside the FTSE 350, DFS Furniture (DFS.L) lost ground after saying it swung to a full-year loss in an "extremely challenging" market.
LaToya Harding
Pound touches $1.34 as dollar weakens
Sterling (GBPUSD=X) hit $1.34 for the first time since 2022 against a weakened dollar as Chinese monetary stimulus coursed through commodity markets and gave several currencies a lift.
"The jury is out on whether this China stimulus story is an enduring one for global currencies. However, evidence of a US slowdown continues to accrue and investors do seem to have shifted to a sell-dollar mindset," ING analysts said.
The pound has been rallying against the dollar in the past few days, amid growing expectations that the Bank of England (BoE) will run a slower rate-cutting cycle than the US Federal Reserve. During the Asia session, the sterling advanced to its highest level since March 2022, hitting $.13430 before coming back down to $1.3389 at the time of writing.
According to the CME Group's FedWatch Tool, the markets are currently pricing in over a 75% chance that the Federal Reserve will cut interest rates by another 50 basis points in November.
Andrew Bailey said this week that the UK will cut interest rates “gradually” and warned consumers not to expect them to return to “near zero” levels.
Against the euro, the pound (GBPEUR=X) was lower but traders are ramping up bets that the currency will outperform its European counterpart and other major currencies as the UK economy is expected to come out stronger from the inflation crisis.
Ray Attrill, head of FX strategy at National Australia Bank, said:
“With the Bank of England lagging the developed market central bank easing cycle and the incoming UK data for the most part holding up quite well, at least on a relative basis, expressing a bearish dollar or euro view via sterling makes sense.”
LaToya Harding
Electric car switch is a ‘grave crisis’ for Europe
P.Spiro
Italy’s industry minister has warned that the EU’s impending ban on petrol cars has created a “grave crisis” for the continent’s vehicle manufacturers.
Adolfo Urso, a member of prime minister Giorgia Meloni’s Brothers of Italy party, said the path to the ban was “not sustainable” and has called for an urgent review of the plan to ban sales by 2035.
He added that hundreds of thousands of jobs would be put at risk unless Brussels reviews its target to ban combustion engines by 2035.
He is set to hold meetings in Brussels this week to demand an urgent review of the emissions rules, which he said should be delayed and eased.
Speaking to the Financial Times, Urso said:
“The road map of the Green Deal, as it was designed, has already demonstrated its contradictions with the collapse of the European electric vehicle market and the grave crisis of European carmakers."
“The data speaks for itself. It’s already clear the road map . . . is not sustainable.”
LaToya Harding
We could see demand for longer-term fixed deals spike
With Nationwide extending its maximum LTI from 5.5x to 6x, brokers were asked if we are likely to see more high street lenders follow suit.
“House prices are still rising and the loan to income ratio gap will continue to stretch as time goes on. Higher LTI products are very popular with first-time buyers and it is no suprise to see other lenders joining the party with enhanced LTIs. Lenders are looking for more business and realise they can open the door for many other first-time buyers with these changes.”
“We could see demand for longer-term fixed deals spike when people feel that interest rates are towards the bottom of the cycle, as they want to lock in for as long as possible at a low rate, before they jump up.”
Mark Eaton, COO at April Mortgages, also welcomed the Nationwide move:
“It’s great to see more lenders increasing their maximum loan to incomes. This is the flexibility that longer term lenders can offer and a flexibility that is helping more homeowners onto the property ladder. House prices are high but longer term fixed rates can mean higher maximum loan to incomes, which means more help for more borrowers. The high street is slowly shifting towards longer term fixed rates, which are an increasingly popular proposition in today’s market.”
“There might be some customers that will use these longer-term products, but let's be honest: rate is still king when it comes to making decisions."
LaToya Harding
Rightmove rejects £6.1bn takeover by Rupert Murdoch’s REA group
Yui Mok, PA Images
Rightmove (RMV.L) has rejected a £6.1bn takeover deal from Rupert Murdoch’s REA Group.
The Australian suitor, which is majority-owned by the tycoon’s News Corp group, tabled its third approach for the London-listed online property platform business on Monday.
The deal saw it put forward a 770p-a-share proposal, having seen its initial move, valuing the company at about £5.6bn, rejected earlier in the month.
On Wednesday, Rightmove bosses unanimously rejected the latest approach.
REA urged Rightmove shareholders to encourage the board “to engage in constructive discussions with REA to work towards a recommended transaction” ahead of a deadline on September 30.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
"Rightmove is playing hard to get and Rupert Murdoch’s REA Group is going to have to up its game again if it has a chance of winning over the board to accept a takeover offer.
"The bids so far have been rejected out of hand, and even the improved latest offer is considered to materially undervalue the company and its future prospects.
"With the UK government pledging to build 1.5 million new homes, interest rate cuts eyed and the property market springing into life again, Rightmove clearly sees significant growth opportunities ahead."
LaToya Harding
Sweden cuts interest rates to 3.25%
Sweden’s central bank has cut interest rates and signalled further reductions in the coming months and early next year. It comes as inflation has fallen below the central bank’s target.
Riksbank has reduced borrowing costs by a quarter of a percentage point to 3.25% and said a half a point reduction is possible at one of its final two meetings in 2024.
It now predicts that inflation will fall from 2.7% by the end of this year to 0.4% in 2025.
Riksbank said:
"If the outlook for inflation and economic activity remains unchanged, the policy rate may also be cut at the two remaining monetary policy meetings this year. A cut of 0.5 percentage points is possible at one of these meetings.
Moreover, the forecast indicates one or two further rate cuts during the first half of 2025.
"The policy rate is thus expected to be cut at a clearly faster pace than was previously communicated, which contributes to stronger economic activity and an inflation rate close to the target."
LaToya Harding
More than 6,000 UK bank branches closed
Closed branch of Barclays Bank in Helmsley, North Yorkshire, England, UK. (Washington Imaging)
The UK has lost over 6,000 bank branches in the last nine years, with Yorkshire residents having to share their local branch with 22,557 others.
Yorkshire and the Humber now has the worst ratio of bank branches to population in the UK, according to research by consumer group Which?. The region, home to 5.6 million people, has just 248 branches left, equating to 4.4 branches per 100,000 residents.
This means each branch serves an average of 22,557 people.
The situation has deteriorated since January 2015, when Yorkshire and the Humber had 728 branches in total, or 13 per 100,000 residents. Since then, 480 branches — two-thirds of the total — have closed.
Chinese stocks jumped higher again overnight as a rally pushed into a second day after Beijing announced a flurry of measures aimed at reviving the housing market after a prolonged downturn.
The Shanghai Composite (000001.SS) was 1.2% up by the end of the session following a 4.3% jump in the previous day.
Meanwhile, the Nikkei (^N225) slid 0.2% in Japan after deeper losses earlier in the day, and the Hang Seng (^HSI) rose 0.5% in Hong Kong. Tokyo stocks were buoyed mainly by a stabilisation in the yen exchange rate and Wall Street’s rise to new record highs overnight.
The dollar dipped to a two-and-a-half-year low against the pound after weak US macroeconomic data overnight boosted the case for a second super-sized interest rate cut at the Federal Reserve’s next meeting. Gold renewed an all-time peak.
The Dow Jones Industrial Average (^DJI) rose 0.2%, to 42,208.22, the S&P 500 (^GSPC) rose 0.3%, to 5,732.93, and the Nasdaq Composite (^IXIC) rose 0.6%, to 18,074.52.
In the bond market, the yield on benchmark 10-year US Treasury notes was down at 3.73% from 3.76% late on Monday.
LaToya Harding
Coming up...
Good morning, and welcome back to our live markets blog. As usual we will be taking a deep dive into what's moving markets today, and all that's happening across the global economy.
Here's a quick look at what's on the agenda for today:
7am: Trading updates: On the Beach Everyman Media
8.30am: Sweden Riskbank interest rate decision
12pm: US MBA mortgage applications
3pm: US new home sales for August
3.30pm: US Crude oil inventories
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