Yahoo Finance Rate cuts thrown into doubt amid rising wages and jump in US inflation
Workers’ wages are rising too fast to cut interest rates, the Bank of England’s chief economist has warned.
Huw Pill said pay growth remained “well above” a level that would suggest inflation was on track to fall to, and remain at, the Bank’s 2pc target.
Regular pay rose by 6.2pc in March compared to a year earlier, new figures published by the Office for National Statistics on Tuesday showed. Growth was led by a 6.8pc jump in the public sector.
Mr Pill, chief economist at the Bank, said: “Those types of numbers probably remain quite well above - given developments in productivity - what would be consistent with the 2pc inflation target being met on a lasting and sustainable basis.
“We still have some way to go” in the battle against inflation, he added, noting that “persistent” pressure from pay growth and rising services prices were proving tough to defeat.
His comments raise concerns that strong pay growth will delay cuts to interest rates.
Last week the Bank’s Monetary Policy Committee (MPC), led by Governor Andrew Bailey, voted to hold rates at 5.25pc.
Mr Pill said that inflation was moving in the right direction, having dropped from a peak of 11.1pc in October 2022 to 3.2pc in March. This will allow officials to start thinking about rate cuts.
Speaking at the Institute of Chartered Accountants in England and Wales, he said: “It is not unreasonable to believe that through the summer we will begin to see enough confidence in the decline in persistence that bank rate will come under consideration.”
However, he cautioned against cutting rates too soon, warning that inflation could become “embedded” if the Bank tolerates high wage growth and services sector price rises.
Mr Pill said: “While we are having an impact on inflation in the right direction through our restrictive stance of monetary policy, it is not that we can declare victory.
“If monetary policy were to lose that restrictive stance now, the danger would certainly be that these things would cease going in the right direction and they could arguably go in the wrong direction.
“That would be precisely the danger of allowing [the] persistent component [of inflation] just to get stuck, to become embedded, at levels which are not compatible with the target. That is the thing that absolutely the MPC cannot allow if it is to achieve its target.”
Workers’ regular pay rose 2.4pc in real terms over the first quarter of the year after accounting for inflation. It rose by 3pc in March alone, a rate not seen since the summer of 2021.
However, there are signs elsewhere that the jobs market is cooling, which should ease upward pressure on prices.
The number of payrolled employees fell by 5,000 in March and by an estimated 85,000 in April, the ONS said.
Overall employment fell by 178,000 in the first quarter to just below 33m, while unemployment rose by 166,000 to 1.49m.
That takes the unemployment rate up to 4.3pc, its highest since last summer.
The number of job vacancies dipped again to just under 900,000 in the three months to April.
A total of 9.38m people are now economically inactive - of working age but neither in work nor looking for work - with 2.82m of those long-term sick.
Tony Wilson, director of the Institute for Employment Studies, said: “Overall there are now 900,000 more people out of work than before the pandemic began, with virtually all of this due to higher economic inactivity.
“There appear to be three key reasons for this: fewer older people coming back to work, more young people in education or out of work, and more people off with long-term health conditions across all ages.”
Jeremy Hunt, the Chancellor, hailed the increase in pay. He said: “This is the 10th month in a row that wages have risen faster than inflation, which will help with the cost of living pressures on families.
“And while we are dealing with some challenges in our labour supply, including pandemic impacts, as our reforms on childcare, pensions tax reform and welfare come online I am confident we will start to increase the number of people in work.
It came as factory gate prices in the US rose by 0.5pc in April compared with a month earlier, higher than analysts had expected.
Prices charged at factory gates are seen as a leading indicator of inflation, fuelling concerns that interest rates could stay higher for longer.
Ryan Brandham from Validus Risk Management said the figures were “continuing the recent theme of slower growth but higher prices”.
Mr Brandham added: “Market anticipation of rate cuts has been building recently based on weaker-than-expected US labour market data, but if prices don’t follow suit, then rate-cut hopes will be dashed.”
Traders have had to temper hopes of rate cuts amid persistent inflation and are now only fully pricing in one. This is down from six at the start of the year.
Jerome Powell, chairman of the Federal Reserve, said on Tuesday that he believes inflation will continue to ease throughout the year.
However, he added: “I expect that inflation will move back down ... on a monthly basis to levels that were more like the lower readings that we were having last year. [But] I would say my confidence in that is not as high as it was.”
Speaking at a banking event in Amsterdam he reiterated that despite senior banking figures suggesting another rate hike was possible, he believed this was unlikely.
Mr Powell said: “It is more likely ... we hold the policy rate where it is.”
Read the latest updates below.
06:05 PM BST
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Thanks for joining us today. The Markets blog will be back in the morning, kicking off around 7am when Chris Price will bring you all the latest markets and business news.
05:44 PM BST
Christie’s forced to delay auction of Michael Schumacher’s watch after cyber attack
Christie’s was forced to delay an auction of rare watches owned by Formula 1 driver Michael Schumacher after it was hit by a cyber attack. James Warrington reports:
The auction house is attempting to sell works of art and other items worth $840m (£670m) in its spring auctions, which began on Friday.
But the sales, which account for nearly half of Christie’s annual revenues, have been hampered by an apparent cyber attack.
The company’s official website has been offline since late Thursday, threatening to derail online bidding.
The incident forced Christie’s to delay a Geneva auction of a collection of rare watches, including some owned by Mr Schumacher. The sale went ahead on Tuesday afternoon.
Christie’s has since directed customers to a separate website for online bidding, while it has said bids can still be placed over the phone and in person.
In a statement, the auction house said it had been targeted in a “technology security incident”.
It added: “Christie’s has in place well-established protocols and practices, which are regularly tested, to manage such incidents.”
The Only Watch charity auction went ahead on Friday without online bidding. It raised 28m Swiss francs (£25m) for muscular dystrophy research.
Other high-profile items going under the hammer include a Vincent van Gogh painting valued at $35m and a selection of fine wines and jewellery.
05:19 PM BST
Klarna ‘definitely ready’ for flotation
The buy-now-pay-later lender Klarna is ready for a flotation, its boss Sebastian Siemiatkowski said today.
He told Bloomberg Television that “we’re definitely ready”, and said it was even possible it could come before the first quarter of next year.
The most likely location for shares of the Swedish fintech company to be listed is thought to be the New York Stock Exchange, with the US being the company’s largest market.
Sky News reported today that it has won backing from its existing shareholders and regulators to establish a new UK-registered holding company.
The Telegraph has approached Klarna for comment.
04:59 PM BST
Boeing sales plunge after mid-flight incident
Boeing orders tumbled in April and were outnumbered by canceled sales in another sign of the crisis gripping the troubled aircraft manufacturer.
Boeing said today that it received orders for seven planes last month, an unusually small number. That was not enough to offset canceled sales covering 33 planes, 29 of which were related to the shutdown of Lynx Air, a Canadian discount airline that stopped flying in late February.
As expected, deliveries of new Boeing jet airliners were weak, at 24 in April.
The manufacturer has been in the spotlight since January when a plug door blew out of an Alaska Airlines 737 Max shortly after takeoff from Portland, Oregon.
Pilots were able to land the plane safely, but the incident attracted intense scrutiny from the US Federal Aviation Authority, which is limiting production of new Boeing 737 Max jets while the company tries to improve its manufacturing quality.
Last month, Boeing revealed that its revenues had dropped 8pc in the first quarter of the year.
Dave Calhoun, the company’s boss, said:
We will take the time necessary to strengthen our quality and safety management systems and this work will position us for a stronger and more stable future.
04:54 PM BST
Footsie closes up
The FTSE 100 edged up today by 0.2pc. The biggest riser was Ocado, up 8.1pc, followed by Vodafone, up 4.7pc. The biggest faller was Anglo American, down 3.2pc, followed by Irish conglomerate DCC, down 2.3pc.
Meanwhile, the FTSE 250 rose 0.3pc. The top riser was Currys, up 7.9pc, followed by commercial property company Tritax EuroBox, up 5.9pc. The biggest faller was Bank of Georgia, down 5pc, followed by CMC Markets, down 4.6pc.
04:48 PM BST
Greggs plots more stores in supermarkets and petrol stations
Greggs is to open more stores in petrol stations, airports and supermarkets amid a major expansion of the bakery chain’s business. Daniel Woolfson reports:
It has become a high street staple after opening hundreds of stores in the last decade and is currently pushing into areas where it has been less exposed.
Roisin Currie, the chief executive, said: “The areas where we’re underrepresented ... that is, places like retail parks, petrol forecourts, supermarkets and also transport locations ... airports, train stations, bus stations.”
Greggs has opened 64 new shops this year. It currently has around 2,500 across the UK.
Despite having thousands of shops, Ms Currie has said she believes Britain is nowhere near “peak Greggs” and that the company could eventually run more than 3,000 stores across the UK.
It plans new stores in parts of the country in which it has been less exposed, such as the South.
Greggs has also put together a small team within the business to explore whether it could open stores in other countries.
As well as opening new stores, the chain has mounted a challenge to the likes of Dominos by ramping up its focus on pizza slices and other dinner options during the cost of living crisis. A significant number of its stores now remain open well into the evening.
04:30 PM BST
Madrid approves sale of Vodafone’s Spanish unit
Spain’s government on Tuesday approved the sale of British mobile phone giant Vodafone’s Spanish division to investment fund Zegona for up to €5bn (£4.3bn).
Digital Transformation Minister Jose Luis Escriva said Madrid had given the green light because the London-based fund has committed to “a very substantial investment plan in the telecommunications sector over the medium term, in both fixed and mobile telephony”.
Vodafone announced in October that it had reached a deal to sell its Spanish business to Zegona, which was founded by two former Virgin Media executives, as part of its efforts to streamline its European operations under pressure from shareholders.
Under the terms of the deal the investment fund will pay Vodafone €4.1bn in cash, and up to 900 million shares in Zegona, which is listed in London.
04:28 PM BST
GameStop surge not related to the company’s fortunes, says analyst
The social media-fuelled surge in GameStop shares has nothing to do with the company’s fortunes, a leading analyst has said.
Myron Jobson, senior personal finance analyst at Interactive Investor, said:
The surge has nothing to do with a turnaround in the company’s fortunes and everything to do with the renaissance of the FOMO (fear of missing out) sentiment that saw the stock price of the video game retailer inexplicably spike, despite the company’s fundamentals painting a bleak picture.
Time will tell whether the latest uptick in GameStop’s stock price becomes the latest in a string of flash-in-the-pan moments the firm has experienced over the years.
GameStop shares were up more than 240pc for the past five days on Tuesday afternoon.
Neil Wilson, chief market analyst at Finalto, said on Tuesday afternoon that the so-called meme stock resurgence “shows no signs of cooling down”.
“This is wild; I didn’t think we’d see this again but retail clients are buzzing,” he said.
04:00 PM BST
Schools software provider under investigation by competition watchdog
An education software provider is being investigated by the competition watchdog over allegations that it tried to stop schools from switching to rivals.
The Competition and Markets Authority (CMA) said it suspects that Education Software Solutions (ESS) may have been abusing its dominant market position by making it difficult for schools to change providers ahead of contract renewals.
ESS is the UK’s largest provider of management information systems - used to handle student information such as attendance and safeguarding - with a share of around half of the market in England and even higher across Wales and Northern Ireland.
The CMA said schools have reported that ESS is warning them they would not be able to share a copy of their database with a new provider, claiming it would breach ESS’s intellectual property rights, despite being an established practice in the sector.
The regulator said:
While some means of switching are permitted by the company, they are reportedly complex, time consuming and error prone. Moreover, schools and competitors reported that ESS had objected to the alternative solutions put forward to enable the extraction of their data.
ESS said the CMA announcement over its latest probe “overlooks the fact that there are legitimate methods of migrating data ... to the systems provided by our competitors”.
A spokesman for the firm said:
Guidance on these methods has long been available and we have made multiple communications to competitors, customers (and their support providers) explaining this.
That some competitors have chosen to ignore these methods and have instead created a ‘workaround’ that accesses our core code, is the only abuse in this situation.
It simply cannot be correct that the only way to sustain a competitive market is for one organisation to be forced to allow its competitors open access to its core intellectual property, which it has invested large amounts of time and money in developing.
03:44 PM BST
Ozempic maker Novo Nordisk borrows to buy factories
Wegovy and Ozempic maker Novo Nordisk is selling €4.65bn (£4bn) in bonds as it races to increase its manufacturing capacity for its in-demand drugs.
Bloomberg said that the proceeds will help it finance its $11bn acquisition of factories from Catalent, citing a Novo spokesperson.
03:33 PM BST
British Airways boosted by demand for cargo in wake of Red Sea crisis
Attacks on ships in the Red Sea are prompting companies to send more goods by air, providing a surprise boost to British Airways. Christopher Jasper has the details:
Demand for cargo space on the airline’s services from the Far East has boomed since Houthi militants in Yemen began attacking the vital trade lane last October.
Since British Airways no longer operates dedicated freighter planes, the shipments are carried in the holds of passenger jets, boosting the viability of those flights even as Asian demand for travel struggles to recover to pre-Covid levels.
Other consignments from China, Japan and Korea are also being loaded onto London-bound BA planes in India and Dubai after beginning their journey to Europe by ship.
The sea-to-air transfers cut out the risk of Houthi missile strikes, while also avoiding the long delays that ships would face by taking the alternative 4,000-mile, 12-day diversion via the Cape of Good Hope.
Products being transferred from ship to plane tend to be of high value, given the higher cost of airborne deliveries.
In the past few months, products sent on BA planes have included mobile phones, computer equipment and microprocessing chips, and essential components for automobile production and the aerospace sector.
IAG Cargo has hubs at London Heathrow, Madrid, Dublin and Barcelona and employs more than 2,250 people. The division generated revenue of €1.15bn (£1bn) last year, up 3.5pc from pre-pandemic levels.
While demand has been boosted by importers looking for alternative trade roots, cargo revenue still slumped 12pc in the first three months of the year. It came as global supply chains continued to normalise, putting downward pressure on prices.
03:33 PM BST
Amazon cloud computing boss to step down
Amazon’s cloud computing boss will step down next month “to move onto his next challenge,” chief executive Andy Jassy has said.
Adam Selipsky, who has led Amazon Web Services since 2021, will be succeeded by Matt Garman, who is the unit’s top sales and marketing executive.
I will also take my leave for the day at this point and hand over the reins to Alex Singleton, who will keep the live updates coming.
03:19 PM BST
Powell: Wholesale inflation data ‘quite mixed’
Federal Reserve chairman Jerome Powell said it “may be” that “restrictive” interest rates will take longer to work.
He added it would be “more likely” that the Fed would hold interest rates at its next week rather than increase borrowing costs.
He said that the latest wholesale inflation data, released today, was “quite mixed” judging by the reaction on Wall Street.
03:11 PM BST
Powell: Fed needs to be patient with interest rates
Jerome Powell said the US economy has been performing well lately as he gives a speech in Amsterdam following disappointing inflation figures.
The chairman of the Federal Reserve - America’s equivalent of the Bank of England - said the US is still experiencing labour shortages in many industries but the workforce was gradually showing signs of cooling and rebalancing.
He said the first quarter had been notable for its lack of progress on inflation, which stands at 3.5pc.
Mr Powell said the data indicated that the Fed needs to be patient and allow its monetary policy to work.
US interest rates stand at 5.25pc to 5.5pc, their highest level since 2001.
03:02 PM BST
GameStop and AMC shares surge in memestock rally
The video games retailer GameStop’s shares jumped as much as 114pc as markets opened on Wall Street, triggering a pause in trading amid a surge in volatility.
Meanwhile, cinema chain AMC Entertainment rocketed by as much as 129pc, also causing a halt in trading, as the fear of missing out gripped retail investors swept up in the so-called memestock craze.
Excitement in the cult stocks has been triggered by the return to social media of Keith Gill, the man behind the 2021 squeeze on shortsellers portrayed in the film Dumb Money.
02:55 PM BST
Wall Street shrugs off inflation jump
Wall Street stocks edged higher in early trading, shrugging off disappointing US inflation data and fresh announcements of tariffs targeting China.
US wholesale prices jumped by 0.5pc in April, marking a sharp increase from a revised 0.1pc slowdown a month earlier, in a dynamic that could keep Federal Reserve interest rates higher for longer.
Meanwhile, the United States announced it is hiking tariffs on $18bn (£14,3bn) worth of Chinese imports, targeting strategic sectors like electric vehicles and steel - prompting a fiery response from Beijing.
The Dow Jones Industrial Average was up 0.1pc at 39,488.58. The broad-based S&P 500 also added 0.1pc at 5,226.43, while the tech-rich Nasdaq Composite Index advanced 0.2pc to 16,415.77.
02:38 PM BST
US stocks muted after wholesale inflation rises
Wall Street’s main indexes were little changed as investors assessed stronger-than-expected wholesale prices data and awaited a speech by Federal Reserve chairman Jerome Powell.
The S&P 500 opened flat at 5,221.10, while the Nasdaq Composite was also fairly static at 16,391.16 at the opening bell.
The Dow Jones Industrial Average rose 35.25 points, or 0.1pc, at the open to 39,466.76.
02:20 PM BST
Tesco chief’s pay more than doubles to £10m
Tesco boss Ken Murphy has seen his pay deal more than double to almost £10m for the past year.
The supermarket giant’s annual report revealed Mr Murphy has received a pay package worth £9.93m for the year to February.
It compared with a £4.44m total pay deal for the previous financial year.
Mr Murphy’s latest pay deal was driven by £4.91m from his performance share plan, on top of an annual salary of £1.64m and annual bonus of £3.38m.
Alison Platt, chair of the Tesco remuneration committee, said:
This pay award reflects the fact Tesco has delivered for all of its stakeholders over the last year - from its most competitive-ever customer offer, to its record investment in colleague pay.
It also recognises the strong performance of the business while at the same time reflecting the complexities of managing a business of the size and scale of Tesco.
Our remuneration policy is benchmarked against the policies offered by other FTSE 50 companies and comparable international roles.
02:10 PM BST
Russian oil being used in UK despite sanctions, MPs told
Russian oil is still ending up in the UK despite sanctions, MPs have been told.
The import, acquisition, and supply of Russian oil and oil products into the UK was banned in December 2022 following Vladimir Putin’s decision to invade Ukraine, with G7 countries also agreeing to cap the price of Russian oil and petroleum products.
Richard Bronze, head of geopolitics at Energy Aspects, a research company focused on global energy markets, gave evidence today about the success of the sanctions to the Treasury Select Committee.
He was asked if, despite the sanctions, it was likely Russian oil was still ending up in the UK.
“Once it has been processed, or transformed by a refinery, yes,” he said. Asked to estimate how much, he said:
Probably not significant, these refineries, particularly in India, are a long distance from UK markets.
So, just from an economic perspective, we import far more of our oil from European countries, far more from the US, so most of it will be going to other destinations.
It will probably be well below 5pc of our total imports, but there will be some.
01:58 PM BST
Gas prices rise as Europe restocks ahead of final ‘tricky winter’
Wholesale gas prices have risen as Europe restocks its storage sites as the continent continues its shift away from Russian energy.
Dutch front-month futures, the benchmark contract, rose as much as 2pc to hold near €30 per megawatt hour as traders prepared for the next cold season.
HSBC analyst Kim Fustier said:
Winter 2024/25 is the last potentially tricky winter before material new liquefied natural gas supply comes onstream in 2025-28, mostly from the US and Qatar.
Gas prices could rise modestly this winter, notably if Russian gas flows via Ukraine stop.
The UK equivalent contract also gained as much as 2pc to 73p per therm.
01:41 PM BST
US stocks fall after wholesale inflation rises
Wall Street’s main indexes turned lower in premarket trading after a stronger-than-expected producer inflation print dampened hopes of interest rate cuts from the Federal Reserve this year.
A Labor Department report showed the producer price index (PPI) rose 0.5oc month-on-month in April, compared with a 0.wpc increase expected by economists. Annually, it rose 2.2pc, in line with estimates.
The core figure, excluding volatile food and energy items, rose 0.5pc month-on-month, compared with an estimated 0.2pc increase. On an annual basis, it rose 2.4pc versus estimates of 2.3pc.
Ahead of the opening bell, the Dow Jones Industrial Average was down 39 points, or 0.1pc, S&P 500 was down 10 points, or 0.2pc, and Nasdaq 100 futures were down 61.5 points, or 0.3pc.
Futures red (but not that much) pic.twitter.com/rqFbxpJpWI
— Joe Weisenthal (@TheStalwart) May 14, 2024
01:35 PM BST
US wholesale inflation rises in blow to rate cut hopes
The rate of wholesale price inflation in the US rose sharply last month in a blow to hopes for interest rate cuts.
The producer prices index (PPI) rose by 0.5pc between April and March, which was higher than forecasts of 0.2pc. It stood at 0.2pc the previous month.
Meanwhile, PPI rose 2.2pc in the year to April, which was higher than 2.1pc the previous month but in line with analyst predictions.
Core producer prices, which exclude volatile food and energy costs, rose by 2.4pc, which was the same as the previous month and fractionally ahead of expectations.
U.S PPI (MOM) (APR) ACTUAL: 0.5% VS 0.2% PREVIOUS; EST 0.3%
futs down on this - hottest since Jan pic.twitter.com/tvE5WMuaDq— Neil Wilson (@marketsneil) May 14, 2024
01:22 PM BST
China tariffs will ‘severely affect’ relationship with US, says Beijing
Beijing has warned that new US tariffs on $18bn (£14.3bn) worth of imports from China would “severely affect” relations between the two countries.
China’s commerce ministry said in a statement: “This will severely affect the atmosphere for bilateral cooperation,”.
It called on the US to “immediately rectify its mistaken actions and cancel the additional tariff measures against China”.
The White House announced the tariffs as it accused China of “flooding global markets with artificially low-priced exports”.
01:07 PM BST
Scrap trading tax or more will follow us to New York, warns Paddy Power owner
Ministers should scrap the tax on share trading to boost Britain’s ailing public markets, the boss of Paddy Power owner Flutter has said.
Our senior business reporter Daniel Woolfson has the details:
Peter Jackson, chief executive of Flutter, said removing the 0.5pc stamp duty on the purchase of shares could help restore growth to the stock market, which has been struggling with an exodus of companies amid concerns about poor liquidity and low valuations.
His comments come as Flutter prepares to shift its main listing from London to New York at the end of the month.
Mr Jackson said: “There’s a simple change which the Government could make which will be to abolish stamp duty on share trading, which I think would have a big impact on the volume of shares that are traded.”
Read which companies have joined London’s stock market exodus.
12:54 PM BST
GameStop surges 120pc as memestock craze returns
GameStop shares have more than doubled in premarket trading after surging by nearly 75pc on Monday as the memestock craze returned.
The video game retailer’s stock jumped by more than 120pc ahead of the opening bell after the return to social media of Keith Gill, who rallied traders on Reddit to squeeze short sellers.
Myron Jobson, senior personal finance analyst at Interactive Investor, said:
The surprise return of a social media account that helped fuel the meteoric rise in GameStop’s share price back in 2021 has breathed new life into the meme stock, which had broadly been following a downward trend since its peak.
The surge has nothing to do with a turnaround in the company’s fortunes and everything to do with the renaissance of the FOMO (fear of missing out) sentiment that saw the stock price of the video game retailer inexplicably spike, despite the company’s fundamentals painting a bleak picture.
Mark Twain’s famous maxim, ‘History doesn’t repeat itself but it often rhymes,’ is worth remembering here.
Time will tell whether the latest uptick in GameStop’s stock price becomes the latest in a string of flash-in-the-pan moments the firm has experienced over the years.
One of the key takeaways from the meme stock saga is the importance of understanding investment risk. Risk is an inherent part of investing, but there are some investments that raise the stakes to levels akin to slot machines in a casino.
12:44 PM BST
Wall Street subdued ahead of wholesale inflation figures
US stock indexes lacked direction as investors awaited producer price inflation data and a speech by Federal Reserve chairman Jerome Powell.
The producer price index (PPI) for final demand is expected to have edged up 2.2pc in the year to April, up from 2.1pc in the prior month.
Sticky inflation and persistent strength in the jobs market have prompted investors and most economists to push back expectations for an initial Fed interest rate cut.
Traders now see a 49.6pc chance that the central bank will ease rates by a quarter of a percentage point in September, according to the CME FedWatch Tool, from 44pc last month.
At the start of the year, markets were expecting a first rate cut as early as March.
Still, stocks have rallied so far this year, with all three major US indexes hovering near fresh record highs, underpinned by better-than-expected earnings for the first quarter and hopes that the Fed will cut rates sometime this year.
Fed chairman Jerome Powell is due to speak at 3pm UK time.
In premarket trading, the Dow Jones Industrial Average was up 0.1pc, the S&P 500 was flat and the Nasdaq 100 had fallen 0.1pc.
12:15 PM BST
Opec nations produce more crude than expected
Oil prices held steady after data from the Opec cartel showed that nations were producing more oil than promised.
Countries participating in the most recent round of output cuts are exceeding their quotas, the report showed.
Eight countries collectively pumped out 31.1m barrels a day, which was 568,000 above the agreed limit designed to support prices.
Iraq and Russia flouted their targets by the largest amount.
Brent traded above $83 a barrel after rising 0.7pc Monday, with West Texas Intermediate near $79.
12:07 PM BST
Luxury and long-haul holidays booming, says On The Beach
Demand for luxury breaks and long-haul beach holidays is booming as middle-class consumers shrug off the higher cost of living and splash out on vacations, according to online travel agent On The Beach.
Our travel industry editor Christopher Jasper has the details:
Spending on five-star holidays surged 41pc in the six months through March, On The Beach reported.
The company said the surge came despite bookings for cheaper holidays advancing just 1pc as families feeling the pinch put spending on household bills and essentials ahead of a week on the Spanish costas.
The premium market has shown greater resilience to cost-of-living pressures, with demand stoked by slowing inflation, optimism over interest rate cuts and higher disposable income among older, mortgage-free travellers.
Chief executive Shaun Morton said: “Five-star short-haul has been doing really well with people prepared to pay for nicer hotels and attracted by perks such as airport lounge access and fast-track boarding. In the long-haul market Dubai has probably been most popular.”
Long-haul breaks in the Caribbean, Indian Ocean and Thailand are also drawing customers, with bookings up 61pc, according to the Manchester-based company. It estimates that the premium sector is similar in size to the value market but worth two and a half times as much.
Group revenue rose 11pc to £81m, while adjusted earnings almost doubled to £8.1m, driven by higher bookings and an increase in the average value of holidays sold. The shares fell as much as 12pc amid investor concerns about the weakness of the three-star value market.
11:49 AM BST
Revolution Bars reveals no offers to buy group
Troubled drinks venue company Revolution Bars said it has not yet had any viable offers to buy the group.
The owner of the Revolucion de Cuba and Peach Pubs brands launched a formal sale process last month amid efforts to stay afloat.
The company had also proposed a restructuring plan, which included a £12.5m fundraise and the closure of 18 venues.
However, the hospitality operator confirmed that although 32 parties agreed to take part in the process, it did not result in any proposals to buy the whole business.
Revolution said it did receive a “number of proposals” related to certain assets or certain subsidiaries, but none of these “would result in a financial return to shareholders”.
Its board said it will continue to explore a potential sale and M&A (merger and acquisition) process, as well as assessing other strategic options, including the proposed fundraising and restructuring.
The fundraising has been backed by Luke Johnson, the former chairman of restaurant chains Pizza Express and Giraffe, and a prominent hospitality investor.
11:29 AM BST
Oil prices flat ahead of Opec report
Oil prices were little changed ahead of the release of a report on the market outlook by the Opec cartel of oil-producing nations.
Brent traded above $83 a barrel after rising 0.7pc on Monday, with West Texas Intermediate over $79.
Opec’s report will come about two weeks before members meet to decide on policy, following cuts to supply announced earlier this year.
Crude has been on a downward trajectory since April, with the geopolitical risk from the Middle East considered to be easing.
In the US, meanwhile, producer price data later today, followed by a consumer inflation on Wednesday, will offer clues on whether the Federal Reserve has the leeway to reduce interest rates later in the year.
A weaker dollar boosts crude prices as it makes it cheaper to buy.
11:21 AM BST
Nuclear workers on verge of strike as pay talks break down
Negotiations are being held in a bid to avert a strike by workers at a nuclear company in a dispute over pay.
The GMB union said workers at the Urenco site in Capenhurst, Cheshire, backed industrial action after pay talks broke down.
It said it will now meet other unions representing workers at the company to discuss strike dates.
A company spokesman said:
Urenco is disappointed that negotiations with the trade unions have not managed to result in an agreement on pay, and there has been a vote to take industrial action at the Capenhurst site.
This follows the rejection of a 5.2pc pay increase offer which represented December’s RPI. In addition, employees received a 12.6pc increase last year.
Operational staff will continue to monitor the plants during any industrial action, as part of their contractual agreement.
Safety and security of the site will be maintained and we are confident that all commitments to our customers will be met.
11:01 AM BST
Sony profits fall as it keeps quiet on Paramount deal
Sony warned of falling profits this year as PlayStation 5 sales declined and declined to elaborate on a reported bid for Paramount.
The Japanese conglomerate has been in the spotlight after reports said it was working with Apollo Global Management on a potential $26bn (£20.7bn) takeover of US film and television giant Paramount Global.
Such a merger could strengthen Sony’s massive movie business behind the mega-grossing “Spider-Man” titles, including the Oscar-nominated “Across the Spider-Verse”.
As the company reported its earnings, Sony chief executive Hiroki Totoki declined to comment on any “specific deal”.
“Sony Pictures is a hub of generating synergy and as an entity it has an important position. Therefore, in this area, any good opportunity arises... we will consider the possibilities,” he told reporters.
The entertainment and electronics behemoth logged a net profit of 970.6bn yen (£4.9bn) for 2023-24 - down 3.5pc year-on-year but beating its forecast.
For the current financial year, Sony expects another decline in net profit to 925 billion yen.
10:41 AM BST
Pound falls as Pill says rate cuts to come ‘under consideration’
The value of the pound has edged lower after the Bank of England’s chief economist said that a summer interest rate cut will “come under consideration”.
Sterling was down 0.2pc against the dollar at $1.254 and admitted that services inflation “does seem to have peaked”.
The pound was down 0.2pc versus the euro, which is worth 86p.
After a brief rally, the bond market appears to have settled, with the yield on benchmark 10-year gilts down one basis point to 4.16pc.
10:25 AM BST
Biden imposes tariffs on $18bn of China imports
Joe Biden has increased tariffs on a range of Chinese imports as he seeks to bolster US manufacturing ahead of the presidential election.
The changes affecting $18bn (£14.6bn) of goods comes as the White House accused China of “flooding global markets with artificially low-priced exports”.
The measures impact a range of products including semiconductors, batteries, solar cells and minerals.
The move updates tariffs first imposed by Donald Trump. None of the former president’s tariffs will be reduced.
10:07 AM BST
Pictured: Farmers make hay at Downing Street summit
Ministers were given an unusual welcome as they arrived for the Cabinet meeting in Downing Street as tractor pulled up ahead of the Government’s second Farm to Fork Summit.
The Prime Minister will tell farmers at the gathering later that the UK needs to reduce its reliance on overseas fruit and vegetables and back British producers.
The first draft of what the Government is calling the UK Annual Food Security Index will set out how ministers, industry and farmers will monitor the impacts of external factors, such as Russia’s invasion of Ukraine or extreme adverse weather events.
09:52 AM BST
Cheaper energy deals for new customers poised to return
The ban on energy companies offering cheaper deals to new customers could be scrapped from October as the regulator clears the path back to competition between suppliers.
Ofgem has announced it is consulting on removing the ban on acquisition-only tariffs - or cheaper prices that are only for new customers in order to lure them away from their existing supplier.
The ban was introduced as a short-term measure in April 2022 to protect consumers during the energy crisis and was due to be lifted in March next year.
Now, the regulator has said that it is the right time to consider removing it as the energy market continues to stabilise.
It said the move would drive a faster return to competition and better price savings and service standards for consumers.
Martin Lewis, the founder and chairman of MoneySavingExpert.com, said: “The energy market is broken. We need anything possible right now to stimulate competition and bring prices down.”
Ofgem is to consult on ending the ban on acquisition only tariffs (new customer only deals), possibly by October. That's still too long away but better than nowt. Here's the official comment I've put out...
"The energy market is broken. We need anything possible right now to…— Martin Lewis (@MartinSLewis) May 14, 2024
09:40 AM BST
Still ‘some work to do’ before rate cuts, says Bank of England chief economist
There is “still some work to do” to squeeze inflation out of the system in Britain, the Bank of England’s chief economist has said, as jobs data showed real pay growing at its fastest pace in two years.
Huw Pill warned that persistent inflation is “still running at levels that mean we have some way to go” before policymakers can consider interest rate cuts.
It comes as total pay rose by 2.1pc in real terms in the first three months of the year, according to the Office for National Statistics, which was the highest since the three months to September 2021.
Speaking to the Institute of Chartered Accountants in England and Wales, Mr Pill said that wage growth is still “quite well above given developments in productivity, what would be consistent with the 2pc inflation target being met on a lasting and sustainable basis”.
However, he added that a summer interest rate cut will “come under consideration” and admitted that services inflation “does seem to have peaked”.
Services is the dominant sector in the UK economy, making its level of inflation a key consideration of the Bank of England.
09:12 AM BST
UK markets flat as hopes for rate cuts dampened
London stocks were virtually static in early trading as investors digested the labour market data that showed wages grew at a faster pace than expected.
The benchmark FTSE 100 and the midcap FTSE 250 index were both flat.
British wages excluding bonuses grew by a stronger-than-expected 6pc in the first three months of 2024 compared with the same period a year earlier.
The figures are in the sights of the Bank of England as it considers when to cut interest rates. Money markets see a 50-50 chance of a June rate cut.
In company news, Anglo American was down 1.1pc as it unveiled plans to sell off its diamond, platinum, and coal mining businesses following takeover attempts by the likes of BHP.
Currys rose 6.5pc to the top of FTSE 250 after the electricals retailer raised its annual profit forecast.
Vodafone was the top gainer on FTSE 100 as it rose as much as 3.8pc after the telecom operator met market forecasts for the year to end-March.
Flutter was the biggest drag on the benchmark index after the world’s largest online betting company reported its first quarter results. It was down 4.8pc.
09:01 AM BST
June rate cut hopes ‘dented’ by rising wages
A June interest rate cut is less likely after the latest jobs data, experts have warned, as they said it showed the impact of interest rates remaining at their highest since 2008, at 5.25pc.
Lindsay James, investment strategist at Quilter Investors, said the data showing real wages rising at their fastest pace in more than two years “could dent the chances of the first cut coming as early as June”.
Alice Haine, personal finance analyst at Bestinvest, said: “The likelihood of a summer rate cut, with many consumers pinning their hopes on a move as early next month, may be slightly dented by the better-than-expected pay growth data.”
However, Rob Wood, chief UK economist at Pantheon Macroeconomics, said he believed a rate cut in June was still “on track” despite the strong wages growth. He said:
That said, strong wage growth will likely stop the Monetary Policy Committee cutting bank rates quickly, so we look for them to reduce interest rates at alternate meetings after June - in September and December - and then four times in 2025.
08:47 AM BST
‘More job losses to come’ as UK stuck in ‘painful’ place, warns economist
The economy has turned a corner “in an unpleasant sense” with more job losses on the way, a former Bank of England policymaker has said.
Economist Michael Saunders, a former member of the Monetary Policy Committee which sets interest rates, said the rise in unemployment to 4.3pc in the three months to March “does not look like an economy which is improving”.
He suggested interest rates “will come down soon” but warned that policymakers want to see the figures for April pay and prices, which will include the increase in the National Living Wage.
He told BBC Radio 4’s Today programme:
They tell us that the economy is in a pretty painful position at the moment.
The number of people in work is falling, unemployment is rising, and the number of job openings - that is the number of vacancies - continues to fall.
To be sure, pay growth is still quite high - and a little too high for the Bank of England’s comfort - but the signs are that pay growth will slow further.
But there’s not much sign of an economic recovery in these figures. Really the labour market is starting to react to the sluggish growth that we’ve had in the economy in the last couple of years and I fear there are probably some more job losses to come.
08:29 AM BST
Greggs sales rise as it breaks 2,500 shop milestone
Bakery chain Greggs has cheered a strong start to the year after notching up a sales hike as its expansion continues across Britain’s high streets.
The firm reported a 7.4pc rise in like-for-like sales for the first 19 weeks of 2024.
It recently hit a milestone for 2,500 shops trading nationwide, having expanded the chain by 27 on a net basis - those opened less those closed - in the 19 weeks to May 11.
Greggs added that its new range of iced drinks was “performing well”, with plans to roll it out further from 300 shops now to up to 700 in the coming months.
08:24 AM BST
Regulator signals water company takeover on track for approval
A takeover of a rival by the owner of South West Water looks on track to be approved after regulators signalled they could wave through the deal.
Pennon announced in January its plans to splash out £380m to buy Sumisho Osaka Gas Water UK Limited, the parent company of Sutton and East Surrey Water (SES Water), including its £291m in debts.
Earlier this month, the Competition and Markets Authority (CMA) had warned that the tie-up could impact fellow regulator Ofwat’s ability to make comparisons between water companies.
However it said today “that there are reasonable grounds for believing” that undertakings offered Pennon “might be accepted by the CMA”.
08:06 AM BST
UK markets subdued amid rising wages
The FTSE 100 was little changed as trading began after figures showed strong wage growth in Britain, dampening hopes of an interest rate cut in June.
The UK’s blue chip index was flat at 8,414.09 while the midcap FTSE 250 was also static at 20,569.15.
08:05 AM BST
Anglo American eyes De Beers sale as it targets ‘simpler business’
Miner Anglo American said it plans to exit diamond, platinum, and coal mining as it accelerates plans to simplify the group and reward shareholders, a day after rejecting a mega takeover bid from Australian rival BHP.
Anglo American laid out a strategy update that includes exploring options for its steelmaking coal, nickel and platinum businesses.
The announcement comes a day after the London-listed miner rejected a raised offer from BHP, saying it continued to significantly undervalue the company and was “highly unattractive” for its shareholders.
In a statement, Anglo said it was going to divest its steelmaking coal assets, demerge its troubled platinum unit in South Africa, explore options for its nickel mines, and divest or demerge diamonds business De Beers.
Chief executive Duncan Wanblad said: “We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction.”
Its shares moved higher by 0.3pc as markets opened.
07:57 AM BST
Currys raises profit guidance after batting away foreign takeover bids
Currys has lifted profit guidance for the year as the electronics chain announced improving sales in recent months after shrugging off foreign takeover interest.
The group said pre-tax profit is expected to be at least £115m in the year ending April 27, versus £119m in the previous year.
It lifted guidance from previous analyst expectations of £105m, as the chain appeared to turn a corner following a period of underwhelming sales.
The retailer, which sells everything from TVs and mobile phones to kettles and dishwashers, has previously flagged that its customers were feeling the effects of the cost-of-living crisis.
Currys chief executive Alex Baldock said:
Our performance is strengthening, with good momentum in the UK and Ireland, and with the Nordics getting back on track.
Sales are now growing again, margins are benefiting from higher customer adoption of solutions and services, and cost discipline is good. All this means improved profits and, with our strong cash position, we’re well set up for the year ahead.
07:54 AM BST
Vodafone becoming ‘right size’ for growth, says boss
Vodafone’s boss insisted she made the mobile telecoms giant the “right-size” for growth after selling off its Spanish and Italian businesses.
The UK-listed company revealed an 11.3pc decline in underlying profits last year to €11bn (£9.5bn) and a 2.5pc fall in revenue to €36.7bn (£31.5bn).
It said revenues were hit by the disposals of Vantage Towers, Vodafone Hungary and Vodafone Ghana in the prior financial year and adverse exchange rate movements.
However, its German business returned to growth, with service revenue increasing by 0.2pc over the year.
Chief executive Margherita Della Valle, said:
A year ago, I set out my plans to transform Vodafone, including the need to right-size Europe for growth.
Since then, we have announced a series of transactions and we are now delivering growth in all of our markets across Europe and Africa.
07:38 AM BST
Hunt: Rising wages will help with cost of living
As real pay high its highest level in more than two years, Chancellor Jeremy Hunt said:
This is the 10th month in a row that wages have risen faster than inflation which will help with the cost of living pressures on families.
And while we are dealing with some challenges in our labour supply, including pandemic impacts, as our reforms on childcare, pensions tax reform and welfare come online I am confident we will start to increase the number of people in work.
07:36 AM BST
Not the type of data for a June rate cut, warn economists
The Bank of England is less likely to cut interest rates in June after the latest employment figures, economists have warned.
Ashley Webb, UK economist at Capital Economics, said:
While the further easing in regular private sector pay growth in March suggests that wage pressures faded a bit faster than the Bank of England expected, broader measures of wage growth are probably still a bit too strong for the Bank’s liking.
At the margin, this may make the Bank a bit more uneasy about first cutting interest rates in June.
Simon French, chief economist at Panmure Gordon, said:
Not the type of data you want to see from UK pay & wages to support a June interest rate cut. The official measure has moved higher to 5.7% YoY (5.6% prev.) whilst the timelier payroll data is up 7.0% YoY (median) in April; +4.9% (mean). Whilst this should moderate as one-off… pic.twitter.com/dhWkNXDT1l
— Simon French (@Frencheconomics) May 14, 2024
07:31 AM BST
Earnings growth in cash terms remains high, says ONS
The Office for National Statistics’ director of economic statistics Liz McKeown said:
We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.
At the same time the steady decline in the number of job vacancies has continued for a 22nd consecutive month, although numbers remain above pre-pandemic levels.
With unemployment also increasing, the number of unemployed people per vacancy has continued to rise, approaching levels last seen before the onset of Covid-19.
Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years.
07:23 AM BST
Wages grow faster than expected in blow to hopes for interest rate cuts
Wages in Britain have grown faster than expected, official figures show, in a blow to the Bank of England’s hopes to cut interest rates.
UK average regular earnings growth, which excludes bonuses, remained at 6pc in the three months to March, according to the Office for National Statistics, in line with the three months to February.
However, it grew faster than the 5.9pc expected by economists.
Real pay increased to 2.4pc after taking inflation into account, which was the highest since the three months to August 2021.
It comes after Andrew Bailey said interest rate cuts would be needed but said that the timing of the next move by the Bank of England would depend on the data between now and the next meeting in June.
Pay grew by 6.0% excluding bonuses, or 5.7% including bonuses, in the year to January to March 2024, remaining relatively strong.
Read Average weekly earnings in Great Britain ➡️ https://t.co/EeT6Xc2RIp pic.twitter.com/67q2XoBxTA— Office for National Statistics (ONS) (@ONS) May 14, 2024
07:19 AM BST
Good morning
Thanks for joining me. Average wages have grown faster than expected in a blow to hopes for interest rate cuts in June.
UK average regular earnings growth remained unchanged at 6pc in the three months to March, the Office for National Statistics said, which was higher than the 5.9pc expected by economists.
5 things to start your day
1) Police ‘not interested’ in dealing with shoplifting, says M&S chairman | Retailer being forced to spend ‘a lot of money’ to keep down crime amid wave of thefts
2) Anglesey nuclear plant risks saddling taxpayers with £20bn bill | Plans for a power station at Wylfa risk being derailed by government rules
3) UK pharma giants pledge £430m investment in France after Macron charm offensive | AstraZeneca and GSK vow to upgrade facilities as part of president’s new programme
4) ‘Elon Musk of Essex’ prepares to call in administrators | Tevva Motors seeks emergency rescue deal after failing to secure additional funding
5) Melinda Gates quits Gates Foundation after divorce from Microsoft billionaire | Co-chair to be handed £10bn to commit to work ‘on behalf of women and families’
What happened overnight
Asian shares were mixed in muted trading after US stock indexes were little changed ahead of the release of inflation data.
Japan’s benchmark Nikkei 225 lost early gains and was trading less than 0.1pc higher at 38,194.38.
Australia’s S&P/ASX 200 slipped 0.2pc to 7,731.40. South Korea’s Kospi was little changed, inching up less than 0.1pc to 2,726.76.
Hong Kong’s Hang Seng was up less than 0.1pc at 19,115.78, while the Shanghai Composite lost nearly 0.3pc to 3,139.89.
“Today marks a significant day for both Germany and the USA as they are set to unveil crucial economic data,” said Luca Santos, market analyst at ACY Securities, referring to consumer price data from Germany and producer costs in the US.
“Despite their different focuses, both indices offer insights into how inflation is shaping society,” he said.
US stock indexes hung near their record highs on Monday. The S&P 500 dipped by less than 0.1pc, to 5,221.42, after flipping between small gains and losses through the day. It remains within 0.6pc of its record set at the end of March.
The Dow Jones Industrial Average slipped 0.2%, to 39,431.51, and the Nasdaq Composite index rose 0.3pc, to 16,338.24.
In the bond market, US Treasury yields eased a bit. The yield on benchmark American 10-year bonds slipped to 4.48pc from 4.50pc late on Friday.
