Wall Street climbs despite fall in US job openings, FTSE and Europe dip

Live23 updates

• Wed 4 September 2024 at 5:32 pm CEST

  Blog close

  Well that’s all from us today, thanks for following along. Be sure to join us again tomorrow when we’ll be back for more of the latest market news and all that’s happening across the global economy.

  Until then…

  … have a good evening.

• Wed 4 September 2024 at 5:24 pm CEST

  Chancellor ditches UK ISA plans

  

  The UK government has dropped plans for a British ISA that would have channelled savers’ cash into London-listed stocks. It was scrapped over concerns that it would “complicate” the investment market for individuals.

  The proposed UK ISA would have handed savers an additional £5,000 of tax-free investing allowance on top of their usual £20,000 ISA allowance.

  “We are not planning to complicate the Isa landscape even further,” one government figure told the Financial Times.

  Michael Summersgill, AJ Bell CEO, said:

  “The UK ISA was a political gimmick that was doomed to fail in its objective of boosting investment in UK Plc. The new government deserves huge credit for consigning this ill-conceived idea to the policy dustbin and will hopefully now take a more sensible, long-term approach to ISA reform than their predecessors, focused on simplification for the benefit of consumers.

  “Merging Cash and Stocks and Shares ISAs is the obvious starting point, a reform that would make life easier for investors and would-be investors and could provide a significant boost to UK capital markets into the bargain. Over the longer-term, the government should consider whether the best features of the current ISA regime can be combined into a single ISA product.

  “The benefits of simplification for consumers and the UK economy could be substantial. In particular, merging Cash ISAs and Stocks and Shares ISAs – the two most popular ISA products in the UK – would make it easier for those holding money in Cash ISAs to transition towards long-term investing.

  “HMRC data suggests there are around 3 million people in the UK with £20,000 or more invested in Cash ISAs and no money invested in Stocks and Shares ISAs. If just half of that money was invested for the long term, an additional £30 billion of investment would be unlocked. That is a conservative estimate and the actual figure may be far higher, given that HMRC’s data indicates many of those individuals hold a Cash ISA balance far in excess of £20,000.

  “Given around half of ISA assets on AJ Bell’s platform are invested in UK companies or UK-focused funds, UK-based firms should disproportionately benefit as a result. From this basis, further reforms aimed at encouraging money to flow to UK business can be considered when economic circumstances allow.

  “Increasing the overall ISA allowance from £20,000 to £25,000 should naturally drive more money towards UK plc, while creating a genuine incentive to invest in UK assets, such as by scrapping stamp duty on UK investments, would also help achieve this aim.”

• Wed 4 September 2024 at 5:11 pm CEST

  US job openings fall

  The number of job vacancies at US companies has fallen to 7.673m on the last business day of July, the US Bureau of Labour Statistics said. This is down from a downwardly-revised 7.9 million at the end of June.

  It came in below expectations as economists had expected around 8.1 million vacancies.

• Wed 4 September 2024 at 4:55 pm CEST

  Gold continues fall

  Gold edged lower for a fourth day as investors took stock following a broad sell-off that rattled equity and commodity markets on Tuesday, with the weakness stoked by concerns about economic growth.

  Bloomberg has the details…

  Bullion was down 0.3% after posting a similar decline in the previous session as a gauge of the US dollar — a go-to asset at a time of market stress — rose for a fifth day.

  The ructions will spur additional interest in payrolls data due Friday. Any signs of labour-sector weakening are likely to support a more aggressive pivot to easing by the Federal Reserve, potentially aiding gold.

  It comes as Gold has rallied by more than a fifth this year, supported by growing optimism that the Fed will start cutting rates from this month. Lower borrowing costs typically benefit the metal, which doesn’t pay interest. Robust over-the-counter purchases and haven demand have also underpinned the advance.

• Wed 4 September 2024 at 4:38 pm CEST

  US trade deficit swells

  US trade deficit jumped in July, new figures from the Bureau of Economic Analysis and the Census Bureau show.

  The deficit increased to $78.8bn, from $73.0bn in June, as imports increased more than exports.

  The US goods deficit increased $5.6bn in July to $103.1bn, while America’s surplus in services decreased $0.2bn to $24.3bn.

  The US ran its largest deficit with China, and followed by the EU and Mexico.

  • The deficit with China increased $4.9bn to $27.2bn in July. Exports decreased $1.0bn to $11.5bn and imports increased $3.9 billion to $38.7bn.

  • The deficit with Canada increased $3.0bn to $7.6bn in July. Exports decreased $1.4bn to $27.3bn and imports increased $1.7bn to $35.0bn.

  • The deficit with Vietnam decreased $1.4bn to $9.5bn in July. Exports increased $1.0bn to $2.1bn and imports decreased $0.3bn to $11.6bn.

  The US goods and services trade deficit was $78.8 billion in July 2024, an increase of $5.8 billion from June 2024’s revised deficit of $73.0 billion. pic.twitter.com/fdWfe5Xpt7

  — Econoday, Inc. (@Econoday) September 4, 2024

• Wed 4 September 2024 at 3:31 pm CEST

  UK household finances continue to gradually improve

  UK Finance has released its latest Household Finance Review for Q2 2024, exploring trends across household spending, saving, and borrowing.

  Here are the facts and figures:

  • Mortgage borrowing in Q2 was up by 19% for first-time buyers (FTBs) and 15% for movers when compared with the same period last year, although this is still below 2022 levels and applications have since tailed off.

  • Many borrowers are still taking out mortgages with longer terms than in the past, with more than one in five taking out loans with terms of 36 to 40 years in Q2.

  • The payment shock for customers reaching the end of their fixed rate deals and looking to refinance appears to have peaked at the end of last year.

  • Consumer spending continued to be weak, apart from travel, while household savings levels started to rise again. There were still few signs of an increased reliance on overdraft and credit card debt to meet outgoings.

  • Arrears numbers have stabilised, falling slightly compared to the previous quarter. For those households who are worried about their mortgage payments, help is available from their lender.

• Wed 4 September 2024 at 3:17 pm CEST

  Amazon announces pay rise after worker strikes

  

  Amazon announced today that it will increase the minimum starting pay for workers. It comes as members at Amazon Coventry have taken almost 40 days of strike action in their fight for £15 per hour and union recognition.

  The online retailer said the increase would lift minimum pay rates by 9.8% to between £13.50 and £14.50 an hour, depending on location. Staff with at least three years’ service will receive a minimum of between £13.75 and £14.75 an hour.

  The pay rise will apply to thousands of Amazon staff from 29 September, including delivery drivers and those employed in the retailer’s UK fulfilment centres.

  Rachel Fagan, GMB organiser, said:

  “This is too little, too late from Amazon bosses who have been forced to act by worker’s industrial action.

  “Amazon’s reputation is in the gutter over its treatment of its own workers, and now company bosses are trying to plaster over the facts.

  “Unsafe working conditions, low pay and excessive surveillance blight the lives of Amazon workers every single day”.

• Wed 4 September 2024 at 2:59 pm CEST

  Chapel Down sparkling wine sales lose fizz

  Profits at Chapel Down (CDGP.L) slumped in the first half of the year with group sales down 12% to £7.4m in the six months to end June.

  Pre-tax profits for the half year collapsed 98% from £2.4m to just £40,000 amid weak sales of sparkling wine as well as the absence of a major national event to drive demand in the year that followed the King’s coronation.

  It comes as the English sparkling wine maker is also losing its chief executive Andrew Carter, who quit to take up a new role at brewer Timothy Taylor next year.

  Shares fell by almost a fifth in London on the back of the news.

• Wed 4 September 2024 at 2:48 pm CEST

  Fraud and scam complaints reach record high

  Fraud complaints have hit a record high, according to the latest figures, thanks to online bank transfer scams.

  The Financial Ombudsman Service received more than 8,7000 complaints about fraud and scams between April and June, up 43% on the previous year. This was the highest ever quarterly level on record, it said.

  More than half of the complaints were from victims of “authorised push payment” fraud, where individuals are convinced to willingly send money from their bank account to the scammer.

  The Ombudsman attributed the surge to the increase of people inadvertently using their credit or debit cards to pay fraudsters.

  The government is aiming to hand banks new powers to block large payments for four days under new fraud prevent rules, giving lenders an extra 72 hours to investigate suspected fraud or dishonesty.

  Regulators are reportedly planning to reduce the maximum fraud payout that banks must pay to victims from £415,000 to £85,000 after facing pressure from ministers and payment firms.

  Pat Hurley, the Ombudsman’s director for banking, said:

  “Fraudsters’ methods are always evolving, and we continue to see that reflected in the complaints brought to our service.

  “We are currently receiving – and resolving – around 500 fraud and scam complaints a week.

  “In all the cases we receive, we’ll look at the individual circumstances and investigate whether a business did everything it was required to do.

  “When we do uphold complaints, we expect firms to learn from our findings and apply them to any future interactions with their customers.

• Wed 4 September 2024 at 2:20 pm CEST

  Triple Point Venture VCT launches £30m fundraise

  The Triple Point VCT has announced an offer for up to £30m (£10m plus a £20m over-allotment). The VCT has total net assets of £62.2m and a portfolio of 48 companies.

  • The VCT is focused on B2B companies and tends to invest at an earlier stage than many other VCTs, when valuations are typically lower.

  • Over the five years to June 2024 the VCT has delivered a NAV total return of 15.7%.

  • The VCT targets a dividend of 5p per annum.

  Nicholas Hyett, investment manager at Wealth Club, said:

  “Triple Point’s willingness to back young businesses far earlier than most VCTs is probably its defining feature.

  Making many, smaller investments means the VCT is well diversified and has the potential for substantial uplifts over time. The VCT has already reported its first cash exit — delivering a 5.2x return on the sale of Credit Kudos to Apple — which means dividends are flowing. All in all, a very promising start for a VCT which is only a little over five years old.

  We see the VCT as one of the most promising to be launched after the Patient Capital Review – meaning it has always been focussed exclusively on growth capital investments. That has been a challenging place to be recently. But despite that headwind the VCT has delivered a positive return for investors, and with the VCT now at a decent scale the future looks bright.

  For VCT watchers, Triple Point is one to keep an eye on.”

• Wed 4 September 2024 at 1:40 pm CEST

  Market movers at midday

  

  London stocks were still weaker by midday on Wednesday as poor US manufacturing data reignited fears about the country’s economy. Here’s some of the movers today:

  • Housebuilder Barratt Developments (BDEV.L) was down as it reported a sharp fall in annual profit, citing cost of living pressures, higher mortgage rates and limited consumer confidence. The company said pre-tax profit slumped to £170.5m from £705m, with completions down 18.6% to 14,000.

  • Segro (SGRO.L) declined after agreeing to buy rival Tritax EuroBox in a deal with an implied enterprise value of around £1.1bn including debt.

  • Hilton Food (HFG.L) also fell despite posting a jump in interim adjusted operating profit, while Direct Line nudged lower as the insurer’s half-year operating profit missed expectations.

  • Airtel Africa (AAF.L) tumbled after a downgrade to ‘neutral’ by JPMorgan, while British Gas owner Centrica lost ground after a cut to ‘hold’ at HSBC.

  • Packaging firm DS Smith (SMDS.L) was hit by a downgrade to ‘hold’ by Stifel, but Compass Group was a little firmer after an upgrade to ‘outperform’ by BNP Paribas Exane.

  • Balanced Commercial Property Trust (BCPT.L) jumped after agreeing to be bought by private investment firm Starwood Capital for £673.5m.

• Wed 4 September 2024 at 1:16 pm CEST

  Is the hotel sector poised for an investment boom?

  The latest analysis by specialist lending experts, Rangewell, suggests that funding for the hotel sector has bounced back dramatically since the dark days of the pandemic and that the hotel sector is poised for a sustained boom period with demand for domestic hotel accommodation continuing to climb.

  It’s been a tricky few years for the UK hospitality industry, as businesses across the sector have struggled to overcome the downturn caused by the COVID-19 pandemic.

  Analysis of the latest industry data by Rangewell shows that despite the complications caused by the pandemic, the sector saw two years of positive post-pandemic growth.

  The current estimated market size of the UK hotel sector (2024) sits at £24.3 bn — down marginally by 1.7% when compared to 2023, with a similar rate of decline anticipated in 2025.

  Additional data from Cushman and Wakefield suggests that this reduction in market size is down to a notable decline in investment into the sector.

  In 2021, following the pandemic, investment into UK hotel real estate bounced back by 126% when compared to 2020. However, this level of investment has been in steady decline since, first falling by 21% in 2022 and then by a further 29% in 2023.

  Despite this downward trend, there are some early signs that suggest an investment boom could be on the cards as the figures from Cushman and Wakefield show that during the first half of 2024, £3.9bn was invested into UK hotel real estate based on transaction volumes.

• Wed 4 September 2024 at 1:01 pm CEST

  Eurozone economy grows at fastest pace in three months

  The latest survey of eurozone purchasing managers has revealed that the euro area economy grew at the fastest pace in three months in August.

  This was thanks to a strong performance by France, which hosted the 2024 Olympics, where private sector output rose at the quickest rate since May 2022.

  However, new orders, employment and business confidence across the eurozone fell last month.

  The HCOB Eurozone Composite PMI Output Index increased for the first time since May to a three-month high of 51.0 in August, from 50.2 in July. Any reading over 50 signals an expansion.

• Wed 4 September 2024 at 12:45 pm CEST

  

  The recent market selloff has also hit crypto assets today, with bitcoin (BTC-USD) hitting a four-week low of $55,575 early this morning.

  The largest digital asset slid more than 4% at one point on Wednesday before paring back some of the losses. Most other major tokens such as Ether also were in the red.

  It comes amid a wider retreat from riskier investments in global markets due to fears about the economic outlook.

  Sean McNulty, director of trading at liquidity provider Arbelos Markets, said:

  “We’ve seen renewed downside buying interest in Bitcoin options, especially for post-payroll strikes at $55,000 and lower.”

• Wed 4 September 2024 at 12:12 pm CEST

  Segro buys rival in £552m agreement

  British warehouse developer Segro (SGRO.L) has agreed a deal to buy its rival Tritax EuroBox (BOXE.L).

  The companies agreed to an all-share takeover bid which values the company’s share at 68.4p each, representing a premium of around 27% on the closing price of the stock price on 31 May.

  The deal values Tritax at £552m, which increases to £1.1bn when including the company’s debt.

  David Sleath, chief executive of Segro, said the move provides an opportunity to buy a portfolio of big box warehouses across Europe.

• Wed 4 September 2024 at 11:53 am CEST

  Shoppers’ favourite products hit by ‘double-dip shrinkflation’

  Shoppers are starting to notice that certain products have repeatedly been made smaller without a reduction in prices, according to research, in what has been called “double-dip shrinkflation”.

  As manufacturers have grappled with inflationary pressures in recent years, it appears that this cost burden has increasingly been passed onto consumers in a stealthier way, by making products smaller but not lowering prices.

  As a result, the term “shrinkflation” has made headlines, but Barclays’ (BARC.L) latest consumer spending report highlighted that shoppers are now noticing an acceleration of this trend — “double-dip shrinkflation” — whereby products have been made smaller two or more times, without a corresponding reduction in price.

  A quarter of the 2,000 respondents to a survey used for Barclays research, released on Tuesday, said that they had started to spot “double-dip shrinkflation”.

  Chocolate was the item that was most frequently cited by UK consumers as being hit by “double-dip shrinkflation”, with more than half (57%) said they noticed this type of product getting repeatedly smaller without a reduction in price.

  That was followed by crisps, with 44% saying they had noticed reductions in size but not price, while 41% said they had spotted this trend with biscuits. Other products consumers frequently cited included snack bars, sweets, cereal and toilet paper.

  Read more here

• Wed 4 September 2024 at 11:31 am CEST

  Barratt Developments profits slump 57%

  

  Profits at Barratt Developments (BDEV.L) plunged 57% to £385m after the number of completed houses fell last year.

  Turnover also fell 22% to £4.17bn as it blamed a “challenging” backdrop in which high interest rates have depressed the housing market, while inflation pushed up costs for builders.

  It said the collapse in profit was down to “lower home completions and average selling prices, reduced margin due to site-based fixed cost levels and build cost inflation”.

  Barrett, which is Britain’s biggest housebuilder, expects completions to fall further this coming year, with guidance coming in between 13,000 and 13,500. It also confirmed its previously reported figure of 14,004 home completions for the year ending June 30.

  The company added that its balance sheet remains strong, with a net cash position of £868.5 million, down from £1.07 billion last year.

  Barratt’s takeover of fellow housebuilder Redrow remains on ice while it continues to seek a competition licence for the deal, it said.

  Chief executive David Thomas said:

  “We are pleased to have delivered total home completions at the upper end of our expectations for the year, despite the challenging backdrop.

  “I am grateful to our skilled and dedicated teams of employees, sub-contractors and suppliers for continuing to deliver high-quality homes that people want to live in.

  “We welcome the Government’s proposed reforms of the planning system as one of the key levers to increase housebuilding, drive economic growth and tackle the chronic undersupply of high-quality, sustainable homes.

  “We were delighted to complete the acquisition of Redrow plc in August and are now working constructively with the CMA (Competition and Markets Authority) to finalise competition clearance so that we can begin the integration process.

  “Whilst demand continues to be sensitive to mortgage affordability, and reduced land buying activity during the past two years has had a near-term impact on the number of outlets we are operating from, we are well-positioned to meet the strong underlying demand for new homes of all tenures in the UK.

  “We welcome the Government’s proposed reforms of the planning system as one of the key levers to increase housebuilding, drive economic growth and tackle the chronic undersupply of high-quality, sustainable homes.”

• Wed 4 September 2024 at 11:08 am CEST

  UK cities with the most competitive job markets in 2024

  For nearly four years, job seekers had the upper hand post-pandemic, but as the labour market cools and remote work expands, job competition is intensifying — so where in the UK is it toughest?

  Following up with their 2023 analysis, Resume.io’s latest report analyses over 100,000 global job postings to reveal the UK cities with the most applicants per job on average.

  

• Wed 4 September 2024 at 10:52 am CEST

  Nvidia loses almost 10% in single day

  Nvidia (NVDA) shares fell almost 10% last night, erasing $278.9bn in value — the biggest single-day loss ever for a US stock­.

  Over the past three sessions, the chipmaker is now down 14% after earnings that fell short of lofty expectations.

  ​It came as the entire Philadelphia Semiconductor Index sank on Tuesday, with every member falling by at least 5.4%.

  Nigel Green, CEO of deVere Group, said:

  “Nvidia faced further pressure as the US Justice Department issued subpoenas in an antitrust investigation, sending its stock down another 2% in late trading.

  ​“As concerns grow that AI’s promised revolution might take longer than anticipated, some investors are rethinking the high valuations. But this is no time to write off Nvidia.”

  “Nvidia is still up 118% for the year. The market may be reacting to short-term concerns, but Nvidia’s role in the future of AI remains solid. This dip should be viewed as a temporary setback, not a sign of declining relevance.

  “Nvidia’s sharp drop offers an attractive entry point into a company that continues to lead in the AI sector.

  ​“The company’s fundamentals remain strong, and this correction provides a chance to accumulate shares at a discount.”

• Wed 4 September 2024 at 10:40 am CEST

  Pension savings needed to retire jumps amid cost of living crisis

  The average pension pot needed to meet basic needs in retirement has increased by 60% to nearly £110,000 amid the cost of living crisis.

  The study by the Resolution Foundation, commissioned by the Living Wage Foundation, reveals that the average pension pot necessary to secure a basic retirement income has jumped from £68,300 in 2021-22 to £107,800 in 2023-24. This sharp increase is largely attributed to the ongoing cost-of-living crisis, which has driven up the costs associated with maintaining an adequate income during retirement.

  The research found that an average retiree requires an income of £19,300 per year to meet basic living standards. However, this figure varies depending on factors such as relationship status and housing tenure, ranging from £13,500 to £28,400 annually.

  Single pensioners who own their homes need £258 per week, or £13,500 annually, to cover basic costs. For pensioner couples who own their homes, this requirement increases to £395 per week, or £20,600 annually. Those without homeownership face even higher financial demands, with single pensioners in the private rental sector needing an additional £6,900 annually – bringing their required income to £20,400 per year.

  Read the full article here