Traders cut odds on summer interest rate cut amid ‘uncomfortable’ inflation

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Money markets indicated the chances of an interest rate cut in August were lower than 50pc – NEIL HALL/EPA-EFE/Shutterstock

Investors have slashed their bets on a summer rate cut after the Bank of England’s chief economist warned inflation remained uncomfortably high.

Huw Pill said cutting rates from their current level of 5.25pc was still a question of “when-rather-than-if” amid signs that price pressures were now “contained”.

However, Mr Pill warned that underlying inflation was proving “persistent” and possibly permanently harder to control following a series of post-pandemic economic shocks.

The pound rose against the dollar and investors briefly pared back bets on an August reduction to less than 50pc following his remarks, having previously assumed a reduction at the Monetary Policy Committee’s (MPC’s) next meeting in August was more likely than not.

It comes after inflation fell back to the Bank of England’s 2pc target in May.

The MPC’s nine rate setters voted 7-2 to keep interest rates at a 16-year high in June in what it described as a “finely balanced” decision.

But in a blow to Sir Keir Starmer’s hopes that borrowing costs will start falling before Autumn, Mr Pill said it had become harder to assess the strength of the economy in recent months, adding that price rises in Britain’s most dominant services sector were showing “uncomfortable strength”.

Catherine Mann, another top Bank official, also played down the prospect of an August cut as she warned pay rises remained too high.

Speaking at a separate conference, Ms Mann said the rising cost of services such as airfares and restaurant bills together with ongoing “labour market tightness” meant wages were still increasing at a pace that was not consistent with the Bank’s 2pc inflation target.

Ms Mann also described the drop in inflation back to 2pc in May as “touch and go” as she warned price rises were likely to climb again in the second half of the year.

“Until I see some sustained deceleration in services prices, I’m really not in a position [to cut rates],” she said.

Mr Pill said fresh jobs and prices data this month were likely to paint a clearer picture of the economic outlook.

Policymakers believe price rises will pick up again in the coming months as energy costs stabilise.

Services inflation, which measures the price of haircuts, airfares and concert tickets, is still rising at an annual rate of 5.7pc.

Speaking at Asia House in London, Mr Pill said: “It is hard to dispute the case that inflation persistence in the UK continues to prove – well – persistent.”

He added: “At annual rates still not far from 6pc, annual services price inflation and wage growth continue to point to an uncomfortable strength in those underlying inflation dynamics.

”But the latest data also remains consistent with the view that these inflationary pressures have now been contained, and may be starting to revert towards levels that are more consistent with the achievement of the inflation target.”

However, Mr Pill added: “This all said, in the absence of any big new shocks, the “when-rather-than-if” characterisation of prospective Bank Rate cuts still seems appropriate.”

Read the latest updates below.

06:19 PM BST

Britain to suffer world’s biggest exodus of millionaires as Labour takes power

Britain is poised to suffer the world’s worst exodus of millionaires amid fears Labour will increase wealth taxes. Eir Nolsøe reports:

The number of UK millionaires is expected to shrink by 17pc between 2023 and 2028, according to Swiss investment bank UBS, which published its research just days after Sir Keir Starmer’s landslide victory.

Its annual Global Wealth Report revealed that around 519,000 millionaires are expected to quit the UK over the period, which is the most pronounced drop of all the countries it tracks.

This will take the country’s total tally to 2.5 million.

The Netherlands is the only other country expected to post a decline, although its drop is much smaller at 4pc.

By contrast, countries like Taiwan, Indonesia and Thailand are among those with the sharpest rises.

The projection comes as Britain’s high earners fear a series of new wealth taxes under Labour, alongside a renewed crackdown on non-doms.

However, Paul Donovan, chief economist at UBS Global, said the reasons for the drop went beyond just higher taxes.

Read the full story…

Thanks for joining us today. We will be back in the morning from around 7am to cover the latest from the markets.

06:13 PM BST

Pay rises too high for interest rate cuts, says MPC member

Pay rises are too high to start cutting interest rates, according to a Bank of England rate-setter, as she played down the prospect of an August reduction. Szu Ping Chan reports:

Catherine Mann said the rising cost of services such as airfares and restaurant bills and ongoing “labour market tightness” meant wages were still rising at a pace that was not consistent with the Bank’s 2pc inflation target.

Ms Mann also described the drop in inflation back to 2pc in May as “touch and go” as she warned price rises were likely to climb again in the second half of the year.

“Until I see some sustained deceleration in services prices, I’m really not in a position [to cut rates],” she said.

Echoing comments made by Bank’s chief economist Huw Pill, Ms Mann highlighted that services prices were still rising by almost 6pc on an annual basis. “We have to see some discipline in service sector price growth,” she said.

“The 2pc that we have seen is touch and go, meaning we’re going to be above 2pc for the rest of the year, and that matters for my decision making.”

05:50 PM BST

European shares rise amid real estate boost

European shares advanced on Wednesday amid broad-based gains and upbeat corporate updates, while investors digested more comments from US Federal Reserve chairman Jerome Powell’s second day of testimony.

The pan-European Stoxx 600 gained 0.9pc, buoyed by a 2.1pc rise in real estate shares.

French stocks were also up nearly 0.9pc after falling yesterday, as markets assessed the turbulent political situation following Sunday’s legislative election.

Supporting share prices, the yield on government bonds across the euro zone fell in a sign of investors unwinding the political risk premium they had attached to the countries before the France’s parliamentary runoff vote.

Meanwhile, Jerome Powell said on his second day of congressional testimony he was not ready to conclude that inflation is moving sustainably down to 2pc though he had “some confidence of that”.

Markets are now awaiting June inflation data out of the US and Germany due on Thursday to gauge the timing of potential interest rate cuts.

05:46 PM BST

Ex-BBC boss wields the axe at CNN

The former head of the BBC is wielding the axe at CNN as the Left-leaning news channel grapples with a decline in traditional TV viewing. James Warrington reports:

Sir Mark Thompson, chief executive of CNN, has outlined plans to cut roughly 100 jobs as the company merges newsrooms across its digital and pay-TV operations.

In a memo to employees, the news chief said the cuts represented less than 3pc of CNN’s workforce of around 3,500 people.

Sir Mark, who served as director general of the BBC until 2012, was appointed to CNN last year to lead turnaround efforts at the struggling cable network as it tries to navigate the shift to streaming.

Alongside the job cuts, the broadcasting boss said CNN will launch a new digital subscription business before the end of the year.

He said this service will generate more than a billion dollars in revenue and help to “future-proof” the network.

CNN has struggled to embrace the shift to the streaming era, while the liberal channel also suffered a collapse in viewing figures following the election of US President Joe Biden.

The network launched the CNN+ streaming service in 2022, but this was quickly shut down following the merger that formed its new parent company Warner Bros Discovery.

Sir Mark Thompson speaking in May in New York – Dimitrios Kambouris/Getty Images for Warner Bros Discovery

05:42 PM BST

Powell signals that Fed is paying growing attention to jobs

Jerome Powell, the Federal Reserve chairman, reinforced a message that the US central bank is paying growing attention to a slowing job market and not only to taming inflation.

“We’re not just an inflation-targeting central bank,’’ Mr Powell told the House Financial Services Committee on the second of two days of testimony to the US Congress. “We also have an employment mandate.”

On Tuesday, when Mr Powell addressed the Senate Banking Committee, he suggested that the Fed had made “considerable progress” toward its goal of defeating the worst inflation spike in four decades and noted that cutting rates “too late or too little could unduly weaken economic activity and employment.”

The US Congress has given the Fed a dual mandate: to keep prices stable and to promote maximum employment.

“For a long time,” Mr Powell said Wednesday, “we’ve had to focus on the inflation mandate.” As the economy roared out of the pandemic recession, inflation reached a four-decade high in mid-2022. The Fed responded by raising its benchmark rate 11 times in 2022 and 2023. Inflation has plummeted from its 9.1pc peak to 3.3pc.

Powell told the House panel on Wednesday that, to avoid damaging the economy, the Fed likely wouldn’t wait until inflation reached its 2pc target before it would start cutting rates.

Jerome Powell speaks during a hearing today – Bonnie Cash/Getty Images

05:23 PM BST

Russian inflation accelerates as potato prices jump 34pc in a month

The pace of price rises across the Russian economy accelerated in June, official inflation data released today showed, increasing the chances of an interest rate hike later this month.

Annual inflation for June came in at 8.6pc, the state’s Rosstat statistics agency said Wednesday, up from 8.3pc in May.

That was the highest reading since February 2023.

Bloomberg reported that vegetables have gone up 19pc in a year, while prices for potatoes increased have increased by almost 34pc in just a month.

Moscow officially targets an inflation rate of 4pc and has already raised interest rates to 16pc in a bid to stop the economy further overheating.

Central Bank governor Elvira Nabiullina signalled last week a further rate rise was likely when the bank meets on July 26.

05:13 PM BST

British stocks finish higher on precious miners boost

London stocks closed higher on Wednesday thanks to a boost from precious metal miners, while hawkish comments by Bank of England chief economist Huw Pill eased bets on an interest rate cut in August.

The blue-chip FTSE 100 index closed 0.7pc higher, after logging its worst day in nearly a month on Tuesday.

Also capping gains for the dollar earners was a rise in the pound as Huw Pill focused on strong price pressures in the economy and the timing of a first interest rate cut was an “open question”, addressing a think tank in London.

The yield on Britain’s two-year gilt hit a session high of 4.125pc after the speech.

On Monday, outgoing BoE Monetary Policy Committee member Jonathan Haskel said he was not yet ready to vote for rate cuts.

Investors are also looking to Britain’s GDP numbers due tomorrow.

Precious metal miners advanced 3.2pc as gold prices steadied ahead of a crucial US inflation report later this week.

05:02 PM BST

Wall Street’s record-breaking rally keeps going as stocks tick higher

Most US stocks are ticking higher this afternoon to send Wall Street towards more records.

The S&P 500 is up 0.4pc and on track to set an all-time high for the 37th time this year. The Dow Jones Industrial Average is up 0.3pc, and the Nasdaq Composite is up 0.5pc, adding to its own record.

Big technology companies were leading the way, which has become the norm on Wall Street, and US-listed shares in Taiwan’s TSMC rose 2.7pc after it said its revenue climbed nearly 33pc in June from a year earlier.

TSMC makes chips for Nvidia and others that have been driving the business world’s rush into artificial-intelligence technology.

The promise of big profits in the future from AI has sent Nvidia in particular to breathtaking heights over the last year, and Nvidia rose another 2.2pc today to bring its gain for the year so far to 179pc. It was again the strongest single force pushing the S&P 500 upward.

04:58 PM BST

Footsie closes up

The Footsie had a strong day, with the index of the top 100 companies closing up 0.7pc. The biggest riser was Endeavour Mining, up 3.9pc, followed by fellow miner Fresnillo, up a similar amount. The biggest faller was accounting software company Sage, down 2pc, followed by advertising giant WPP, down 1.9pc.

Meanwhile, the mid-cap FTSE 250 rose 1.4pc. The top riser was Upper Crust owner SSP, up 10.4pc, followed by WAG Payments, up 7.3pc. The biggest faller was Hunting, down 4pc, followed by recruitment business SThree, down 2.9pc.

04:30 PM BST

Labour refuses to back four-day week in blow to campaigners

The Government has ruled out backing a four-day week in a blow to campaigners who had hoped, as we reported earlier, that the Labour Party might pave the way for a radical overhaul. Lucy Burton reports:

The 4 Day Week Campaign, which is urging bosses to sign up to its second nationwide trial later this year, said that “with a new Labour Government, change is in the air”.

However, Jonathan Reynolds, the Business Secretary, sought to distance himself from the idea on Wednesday, with a spokesman confirming that “this isn’t [the] Government’s planned policy”.

This is thought to be the first time that Labour has publicly set out its stance on the topic, after facing pressure from unions and activists to adopt a four-day working week as an official policy in the run-up to the election.

Read the full story…

04:27 PM BST

Payment problems stifle Russian imports of Chinese cars

Payment issues between Russia and China, caused by US sanctions, pose serious issues for Russian imports of Chinese cars that have supplied the domestic market over the last two years, the head of Russia’s car dealers’ association has said.

Moscow and Beijing have resorted to complex steps to try to avoid payment delays, including a workaround using small, regional Chinese banks, as the threat of secondary US sanctions on Chinese banks that facilitate trade with Russia deters larger lenders.

Alexei Podshchekoldin, president of the Association of Russian Automobile Dealers, said the problem was particularly serious for smaller importers, who had seen payments bounce.

The upshot is fewer exports for China, while Russian importers lose business and possibly face added costs.

Chinese carmakers have already seized more than half of Russia’s car market since Western competitors pulled out, taking their technology and know-how with them, after Moscow invaded Ukraine in February 2022.

China’s car exports to Russia were up 36pc year-on-year in money terms to $4.86bn (£3.78bn) in January-May, according to Chinese customs statistics.

04:23 PM BST

Labour plans for living wage could hinder interest rate cuts, warns broker

The Government’s plans to hike the living wage “could weigh on BOE [Bank of England’s] rate cut hopes”, a leading broker has claimed.

Kathleen Brooks, research director at XTB, said:

The Tory government raised the living wage by nearly 10pc in April, which was the largest increase since the Blair era. Labour have said that they could increase it even more.

Back in June, the BOE cautioned that the increase in the living wage could feed through to wage growth more broadly and lead to upward pressure on price growth, particularly core prices.

Thus, now that Labour have won the election and have said that they will focus on workers’ rights, the BOE may be more reluctant to cut rates until they know exactly how much upward pressure on wages could be coming down the pipeline.

We may not know the government’s plans for raising the living wage until we get the budget in the Autumn, thus a rate cut could be pushed further out to the latter part of [the year], especially if the new government’s policies lead to the BOE and the OBR [Office for Budget Responsibility] raising their UK growth forecasts.

04:20 PM BST

BP, Shell and Total take stake in UAE energy project

British energy giants BP and Shell, along with France’s TotalEnergies, will each take a 10pc stake in a liquefied natural gas project in the United Arab Emirates, state energy giant Adnoc has said.

Japanese trading company Mitsui will also acquire 10 percent of the Ruwais LNG plant, scheduled to come online in 2028, Adnoc said.

Adnoc, the UAE’s key revenue-earner, will retain a 60 percent majority stake.

The  plant, currently under development in Abu Dhabi, is expected to produce about 9.6m metric tonnes a year, more than doubling the company’s LNG production capacity in the UAE.

Gas is being touted as cleaner than other fossil fuels as countries around the world strive to reduce their emissions and slow global warming.

Demand for gas spiked following Russia’s invasion of Ukraine, with several Gulf countries looking to boost output.

Qatar this year announced new plans to expand output from the world’s biggest natural gas field, saying it will boost capacity to 142 million tonnes per year before 2030.

04:12 PM BST

Revolut backer raises £1.8bn to invest in UK tech businesses

Early Revolut-backer Index Ventures has raised a fresh $2.3bn (£1.8bn) to invest in fast-growing businesses as the firm hailed the prospects of the UK tech sector. Matt Field reports:

The venture capital fund, which recently expanded its London presence with a new office in Soho, said on Wednesday it had closed an $800m venture fund as well as a $1.5bn fund aimed at more established businesses.

The new funding comes as venture investors pile into artificial intelligence companies amid a groundswell of interest in the technology. Index has backed companies including Mistral, the French OpenAI rival, which was recently valued at $6bn.

Hannah Seal, a partner at Index, told The Telegraph: “The UK has always been a really important ecosystem for Index. We have invested £1bn into 144 UK start-ups.

“We expect that will continue. But also we are seeing incredible AI talent coming out of the UK.”

Lord Livermore, the Labour growth minister, said: “Boosting private investment into the UK economy is an urgent priority for our growth mission, so I very warmly welcome Index Ventures’ commitment to Britain and their vote of confidence in our VC sector.

“It’s great to see how private investment in the technologies of the future will create thousands of jobs so people across the UK can benefit.”

Ms Seal added: “Our incentives and our goals are aligned with the government – boost the productivity of the UK and make it a powerhouse for start-ups.”

04:05 PM BST

Oil hits two-week low amid worries about weak Chinese demand

Oil prices hit a two-week low today, before adding around 0.4pc today after a American Petroleum Institute report came out showing shrinking US investories.

Traders have been concerned about weak Chinese demand, and uncertainly over US interest rates has also been cited as contributing to the drop.

Chris Beauchamp, Chief Market Analyst at online trading platform IG.

Faced with underwhelming Chinese data, and expected supply increases thanks to Hurricane Beryl’s swerving of key production facilities, oil prices briefly hit a two-week low today.

The summer demand hopes that took prices to a one-month high have been swiftly replaced by worries about weak Chinese demand. Investors continue to watch the Middle East however, anxious about the lingering possibility of Israel widening its conflict to take on Hezbollah.

03:57 PM BST

US inflation rate will show ‘slow decrease’

The US releases new inflation data this week, which will give traders a clearer steer on the likely speed of interest rate cuts. The Consumer Price Index is due out on Thursday and the Producer Price Index report is expected on Friday.

Bets on a quarter point rate cut by September ticked up to 74pc, up from around 70pc on Tuesday and 45pc a month ago, according to CME’s FedWatch. It comes after Fed chairmanJerome Powell gave tesimony in the US Congress yesterday in which he said that there had been ‘considerable progress’ on inflation.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said:

Powell came in a little bit more dovish than we expected … he’s purposely trying to signal to markets that if there is a good inflation print this week, September is back on the table as a possibility for a rate cut.

Julien Lafargue, chief market strategist at Barclays Private Bank, said:

We expect to see a continued albeit slow decrease in the rate of inflation. In particular, price pressures should have stayed relatively elevated within services … The direction of travel remains unchanged and we continue to expect lower inflation ahead. As such and with increasing signs that the US economy is slowing down, we believe that the Fed could be in a position to lower interest rates in September.

03:47 PM BST

Chip giant AMD to buy AI startup in race against Nvidia

American chip giant Advanced Micro Devices (AMD) said today it will acquire Finnish artificial intelligence startup Silo AI for about $665m (£518m) in cash as the company tries to enhance its AI chip capabilities to compete against industry leader Nvidia.

Acquiring Silo AI will help AMD improve the development and deployment of AMD-powered AI models and help potential customers build complex AI models with the company’s chips, AMD said.

Silo AI will also strengthen AMD’s software development capabilities.

While the deal will not impact AMD’s financial performance, it “unlocks a significant amount of business moving forward,” AMD’s Vamsi Boppana said.

AMD declined to discuss how much business the acquisition would generate over time.

The acquisition marks the latest step from AMD in a series of moves aimed at expanding its footprint in the AI landscape. Last year, the company acquired AI software firms Mipsology and and has invested more than $125m across a dozen AI companies over the last 12 months.

An AMD graphics processing unit chip – Florence Lo/Reuters

03:42 PM BST

‘Ambitious targets’ for new homes sends construction shares higher

Investors sent shares higher in the British construction industry today. It adds to a push upwards that has occurred since Tuesday last week in anticipation of a Labour win.

The FTSE 350 Construction & Building Materials index is up 1.3pc today and up 8.4pc since Tuesday last week.

Mark Crouch, analyst at investment platform eToro, said:

Investors in UK housebuilders might be feeling a bit more optimistic following Labour’s election win.

Higher interest rates have caused the UK housing market to stall over the last couple of years, and although mortgage demand looks to be gradually picking up, the ambitious targets set by the new government could be exactly what is required to get the market moving.

03:32 PM BST

Gold prices rise amid bets on rate cuts

The price of gold and silver is on the rise amid increasing bets in the US on interest rate cuts in September.

Money markets are pricing in a more than 70pc chance of the Federal Reserve cutting interest rates at the meeting after its next gathering at the end of this month.

A rate cut is priced in by November, pushing the price of safe-haven precious metals higher as the rate of interest declines.

With that, I am heading off. I’ll leave you in the hands of Alex Singleton for the rest of the day.

03:25 PM BST

Consumers to find out likely water bill rises

Consumers in England and Wales are set to learn how much their water bills are likely to rise by over the next five years, and what firms will have to do to improve their services in return.

Regulator Ofwat will release its ‘draft determinations’ tomorrow, when it signs off on firms’ requests for bill rises based on their spending plans, ahead of a final decision at the end of the year.

Southern Water has requested the highest increase in bills among the utility companies of 73pc to £727 a year, while Wessex Water has requested a 36pc increase to £690 a year.

Thames Water, which has 16m customers in London and the Thames Valley region, put forward plans in April that would see spending rise to £19.8bn to update its infrastructure and reduce sewage spills.

However, that would also involve increasing customer bills by 44pc to £627, a figure which has prompted backlash from consumer groups.

The proposed bill increases come amid public fury around firms’ rampant polluting of waterways with sewage spills as they continue to hand dividends to shareholders, and bonuses to executives – something which Labour has pledged to clamp down on.

Sewage spills into England’s rivers and seas more than doubled in 2023.

‘Citizen’ scientists collect water samples from the Thames for daily E-coli testing – Vivian Wan/Bloomberg

03:05 PM BST

Wall Street hits new record amid clamour for AI stocks

Most US stocks are ticking higher and sending Wall Street toward more records as investment in the AI boom continued.

The S&P 500 was up 0.3pc in early trading and on track to set an all-time high for the 37th time this year.

The Dow Jones Industrial Average was flat and the tech-heavy Nasdaq Composite was adding 0.5pc to its own record.

Big technology companies were leading the way, which has become the norm on Wall Street, and Taiwan Semiconductor’s US-listed shares rose 1.8pc after it said its revenue climbed nearly 33pc in June from a year earlier.

Taiwan Semiconductor, or TSMC, makes the chips for Nvidia and others that have been driving the business world’s rush into artificial-intelligence technology.

The promise of big profits in the future from AI has sent Nvidia in particular to breathtaking heights over the last year, and Nvidia rose another 1.2pc to bring its gain for the year so far to 168.5pc.

02:58 PM BST

Traders cut odds of August interest rate cut

Traders have reduced their bets on interest rate cuts at the Bank of England’s next meeting after a speech by its chief economy.

Money markets indicated there was a less than 50pc chance of a reduction in borrowing costs in August, compared to bets of about 65pc before the Huw Pill’s comments.

Mr Pill said services inflation and wage rises continued to show “uncomfortable strength” despite the consumer prices index falling back to the Bank of England’s 2pc target.

The FTSE 100 has also begun to trim back its gains and was last up 0.4pc, having climbed as much as 0.7pc.

02:45 PM BST

Interest rate cuts are matter of when not if, says Bank of England economist

Interest rate cuts will be cut in the not too distant future, the Bank of England’s chief economist has said, despite wage growth and services inflation remaining at “uncomfortable” levels.

Huw Pill said the latest data indicates inflation has been “contained” after the consumer prices index fell back to the Bank’s 2pc target in May.

In a speech at Asia House in London, he acknowledged that interest rate cuts are a matter of “when rather than if” for policymakers.

He said:

At annual rates still not far from 6pc, annual services price inflation and wage growth continue to point to an uncomfortable strength in those underlying inflation dynamics.

But the latest data also remains consistent with the view that these inflationary pressures have now been contained, and may be starting to revert towards levels that are more consistent with the achievement of the inflation target.

He added: “This all said, in the absence of any big new shocks, the “when-rather-than-if” characterisation of prospective Bank Rate cuts still seems appropriate.”

Huw Pill said interest rate cuts are a matter of when rather than if – REUTERS/Suzanne Plunkett

02:24 PM BST

China launches tit-for-tat investigation into EU trade

China has announced it will launch an investigation into whether unfair trade practices were adopted by the European Union in its probe of Chinese companies.

It said the investigation will focus on wind power, photovoltaics, security equipment and others and will be completed before January 10, with a possible extension of three months to April.

The investigation was requested by China’s Chamber of Commerce for Import and Export of Machinery and Electronic Products.

The announcement is an apparent retaliation for recent pinvestigation by the EU of Chinese companies, launched earlier this year.

These include a probe into whether Chinese subsidies give wind turbine companies an unfair advantage in the competition for projects in five EU member countries, Spain, Greece, France, Romania and Bulgaria.

The EU also announced investigations into two Chinese solar panel makers bidding for a 455-megawatt solar park in Romania.

02:09 PM BST

Companies urged to trial four-day working week

UK businesses are being invited to take part in a major trial of a four-day working week, as campaigners hope to persuade the new Labour Government to back its ideas for a shift in how people work.

The six-month pilot will begin in November and also experiment with different forms of flexibility such as compressed hours.

The 4 Day Week Campaign calls for Britain to adopt a four-day working week and reduce maximum working hours from 48 hours to 32 hours per week.

Crucially, employers would have to make sure there was no reduction in wages for their employees.

Some 61 companies took part in one of the world’s biggest trials two years ago, with 54 keeping the shorter week once the scheme ended, the campaign group said.

This year’s pilot could target around 50 businesses, and will include those keen to try other forms of flexible working besides making the week shorter.

01:47 PM BST

Manchester United to put up ticket prices and cut jobs

Manchester United fell deeper into the red in its third financial quarter after a tough season, as the club confirmed an increase in ticket prices and job losses.

Net losses increased to £71.4m at Old Trafford for the first three months of the year, compared with a loss of £5.6m for the same period in 2023.

Player and staff wages in the third quarter rose 7.3pc, to £91.2m. Debt stood at $650m (£507.5m) at the end of March.

United have seen a raft of changes since British billionaire and Ineos boss Sir Jim Ratcliffe acquired a 27.7pc stake in the club earlier this year and took charge of its football operations.

The 20-time English champions finished in only eighth place in the Premier League and its management and owners have been reviewing all aspects of the club’s activities.

United plan to cut about 250 jobs as part of a club-wide redundancy programme. It will raise ticket prices by about 5pc for the upcoming season.

While Erik ten Hag will stay on as manager next season, the reshaped club has a new chief executive and finance chief, alongside a new sporting director and technical director, poaching many of them from rivals to drive change.

Tim Fidler, Portfolio Manager at Ariel Investments, third-largest investor in Manchester United’s publicly traded shares, said:

The club is undergoing a meaningful transition both on the pitch and off in the operations of the company, which should serve it well over the next few years.

Despite the disruption, we are optimistic that the club’s long-term prospects are in excellent health.

Manchester United won the FA Cup last season – Michael Regan – The FA/via Getty Images

01:33 PM BST

Rate cuts will not fix Germany property woes, say investors

Interest rate cuts by the European Central Bank (ECB) will not reverse the downward trend in Germany’s property sector, investors have warned.

June’s rate cut by the ECB from record highs of 4pc to 3.75pc had sparked hopes of a revival in the industry, but some executives are still cautious.

“Whether or not the ECB changes interest rates marginally will not reverse the trend for property,” said Matthias Danne, board member at Deka, one of Germany’s largest asset managers with €55bn (£46.5bn) in property investments.

He told Reuters that elevated rates will keep financing expensive, and a rebound in building sales has been “slower coming than expected”.

01:29 PM BST

End of the line for Royal Mail’s fleet of trains

Royal Mail will ditch its own fleet of trains as part of major changes to how it delivers post.

The postal service said that its almost 30-year-old freight trains are at the end of their operational lives and that it will not be buying new trains.

The company will instead use a combination of commercial rail services, its existing road network and reduced air services to transport mail.

It comes after Royal Mail announced plans over the weekend to halve the number of domestic flights it runs in a bid to cut carbon emissions and improve efficiency.

Only 3pc of mail is currently transported by rail and the additional driving workload will create more than 30 full-time driving jobs nationally, it added.

However, the decision to scrap the use of its own freight trains has raised questions on how the postal service will maintain demand by switching to road haulage while continuing to reduce its climate impact.

The move appears to be a change in direction from Royal Mail’s previous strategy to move away from planes and lorries in favour of the railways as part of net zero efforts.

Royal Mail will ditch its fleet of trains in a shake up of the way it delivers post – Leon Neal/Getty Images

01:15 PM BST

German landlords facing ‘extreme number of bankruptcies’

Germany’s property industry faces a “bitter” crisis that will see several companies go bust, the boss of the country’s largest landlord has warned.

Rolf Buch, chief executive of Vonovia, said Europe’s largest economy faces more years of pain ahead as higher interest rates hammer the sector.

Germany’s largest landlord, which has roughly 550,000 apartments, has slashed the value of its properties by almost €11bn (£9.3bn) in 2023, taking the group to a €6.7bn loss, its worst ever.

The European Central Bank swiftly raised interest rates to a record high of 4pc last year to bring down runaway inflation.

It ended a boom in Germany’s real estate sector as lending dried up and projects stalled, with many major developers going bust.

Until the series of interest rate rises, the country’s property sector was adding about €730bn (£617bn) a year to the nation’s economy – roughly a fifth of total output.

Mr Buch said: “We’re going to see an extreme number of bankruptcies over the next few months, maybe over the next few years.

“We’re already seeing them today. It is going to be bitter.”

Vonovia chief Rolf Buch has warned Germany’s property sector faces ‘extreme bankruptcies’ – REUTERS/Leon Kuegeler/File Photo

12:53 PM BST

Gym Group memberships rise as fitness lovers seek cheaper workouts

The Gym Group has revealed a jump in membership and said trading for the year is set to be at the “higher end” of targets as a result.

Shares in the 237-strong gym chain jumped 6pc as membership numbers grew to 905,000 at the end of June, from 850,000 at the end of last year.

Will Orr, boss of the company, said it benefited from gymgoers switching from more expensive rivals. He said:

There are a good amount of people joining us who are new to gyms, particularly when we open in a new location.

We’ve also seen some trading down from others in the market because of the consumer backdrop.

People see we are charging an average of about £20 and some people at mid-range gym operators can be paying £50 to £60.

I think many recognise that, given the quality of our offer, it is a really good way to spend your money.

The company revealed that revenues increased by 12pc to £112.1m for the half-year to June 30, compared with the same period a year earlier.

Gym goers are trading down their membership for cheaper alternatives, said Gym Group’s boss – FatCamera/E+

12:40 PM BST

Wall Street rises ahead of Powell hearing

The S&P 500 and the Nasdaq rose in premarket trading ahead of Federal Reserve chairman Jerome Powell’s second day of testimony in front of Congress.

Both indexes notched record high closes in the previous session, which was the fifth consecutive record high for the benchmark index and the sixth straight one for the Nasdaq.

AI-chip favourite Nvidia rose 1pc, while Tesla edged up 0.1pc in premarket trading after HSBC hiked its price target on the stock.

The electric vehicle maker clocked its 10th straight session of gains in the previous session.

Federal Reserve Chairman Jerome Powell said on Tuesday that the US was “no longer an overheated economy”, supporting hopes that the central bank could start cutting interest rates in September.

However, as expected, Powell refrained from committing to a timeline for rate cuts. He is slated to appear before the House Financial Services Committee later in the day for further questioning from lawmakers.

Ahead of the opening bell, the Dow Jones Industrial Average was flat and the S&P 500 was up 0.1pc. The Nasdaq 100 had gained 0.3pc.

11:55 AM BST

Traders price-in earlier interest rate cuts

Mortgage borrowers have been given fresh hopes as traders priced in a first interest rate cut by the Bank of England by September.

Money markets indicate there are increasing bets on an earlier rate cut, with about a 65pc chance of a quarter of a percentage point reduction happening in August.

A rate cut was briefly priced in to happen by September, compared to Tuesday’s betting indicating it was only certain by November.

Government borrowing costs have fallen across Britain and the eurozone today, with the yield on 10-year UK gilts – the return the government promises to pay buyers of its debt – down by more than six basis points to less than 4.1pc.

The Bank of England’s chief economist Huw Pill will speak later, as well as policymaker Catherine Mann.

Markets have been boosted after US Federal Reserve chairman Jerome Powell did not indicate any major shift in the outlook for US interest rates.

Traders think there is about a 70pc chance of a US rate cut in September after Mr Powell said rate setters want to see “more good data” showing inflation is coming down but refrained from harder rhetoric ahead of US inflation figures on Thursday.

11:42 AM BST

South East Water raises doubts about future without cash injection

South East Water has said it needs a cash injection from investors to stay afloat as it gears up for a key Ofwat ruling on its future spending plans.

The struggling water company, which serves 2.3 million people across Kent, Sussex and Surrey, said it is “in discussions with lenders and shareholders regarding additional liquidity”.

The talks are at an “advanced” stage and bosses “expect” to raise the extra funding, but the company has not struck a deal on the investment.

It said: “If it is not possible to raise the additional liquidity, the group and therefore company would not have sufficient liquidity for the going concern period.”

It added that “the risk that the funding will not be received constitutes a material uncertainty that may cast significant doubt on the ability of the group and company to continue as a going concern”.

South East Water is already on regulator Ofwat’s watch-list for financially at-risk companies, alongside Thames Water and other regional monopolies.

The company’s financial update will be followed on Thursday by a draft verdict from Ofwat on water companies’ five-year spending plans and bill increases to 2030.

11:10 AM BST

Upper Crust owner steams ahead as train strikes cancelled

Upper Crust owner SSP has said it saw “positive momentum” in the latest quarter as more people travelled for leisure and fewer train workers went on strike.

The company, which specialises in running food outlets at travel locations, said it is on track to meet financial targets for the year as a result, sending shares up 12pc to the top of the FTSE 250.

SSP, which employs 43,000 people globally, told shareholders on Wednesday: “The second half of the financial year has started well, with the positive momentum continuing into the third quarter, and our expectations for the full year remain unchanged.”

It said sales grew by 16pc in the third quarter, from April 1 to June 30, with growth accelerating from the previous quarter.

This included 6pc like-for-like growth, alongside boosts from new contract wins and acquisitions.

The company said it saw a strong sales performance across all regions driven by “an increasing demand for leisure travel”.

Sales grew by 27pc in North America on the back of a 14pc boost from its acquisitions of Midfield Concessions and Mack II in the US and ECG in Canada.

The UK was also strong, rising 12pc as like-for-like sales were driven higher by increased air passenger numbers and a reduction in train strikes compared with the previous year.

Upper Crust said sales are on track as the number of train strikes were reduced – REUTERS/Hannah McKay

10:54 AM BST

Pound rises amid hopes of US interest rate cuts

The pound has edged higher against the dollar after the Federal Reserve chairman did little to dampen hopes of interest rate cuts in the US during his testimony to Congress .

Sterling was 0.2pc higher versus the greenback at $1.281, close to a one-month high.

It came as the Fed chief Jerome Powell said policymakers want to see “more good data” before they can cut rates – which markets did not take as a sign that their attitude towards rate cuts had changed.

Money markets are predicting about a 70pc chance of an interest rate cut in the US in September.

The pound was also up 0.1pc against the euro, which is worth 84.5p, amid the ongoing political uncertainty caused by France’s parliamentary elections.

10:34 AM BST

China stocks slump as economy ‘at risk of deflation’

China stocks closed down after inflation missed expectations last month, raising the risk of deflation in the world’s second largest economy.

The consumer price index rose 0.2pc in the year to June, down from May’s 0.3pc and the fifth straight month in positive territory, the National Bureau of Statistics said.

At the end of 2023, China plunged into deflation for four months, with the sharpest contraction in consumer prices in 14 years in January.

The Shanghai Composite index was down 0.7pc at 2,939.36 while the blue-chip CSI300 index fell 0.3pc.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said: “The risk of deflation has not faded in China. Domestic demand remains weak.”

10:17 AM BST

Chinese carmaker to avoid paying tariffs on electric car exports to Britain

Chinese giant BYD will avoid paying tariffs on electric cars exported to Britain after announcing plans for a massive factory in Turkey.

Our industry editor Matt Oliver has the details:

The company is expected to invest $1bn (£780m) in the new facility, which will have the capacity to produce up to 150,000 electric and hybrid models each year.

BYD’s move comes after the European Union imposed provisional extra tariffs of 17pc on the car maker, on top of an existing 10pc tariff for vehicles imported from outside the bloc.

Other Chinese car makers face extra duties of up to 38pc.

But BYD’s new factory will allow it to circumvent these taxes, as Turkey shares a customs union with the EU. At the same time, the UK’s trade deal with Turkey – which covers the automotive sector – means exports to Britain are also tariff-free.

It comes as the new Labour government mulls whether to follow the EU and impose tariffs on Chinese electric car makers.

10:00 AM BST

Volkswagen mulls first factory closure in 36 years amid EV slump

Volkswagen is considering its first factory closure in decades after a slump in demand for electric vehicles.

The German carmaker could shut its Audi plant in Brussels after it revealed it had reduced its profit margin guidance from 7.5pc to as low as 6.5pc.

The company has not shut down a plant since it closed the Westmoreland site in Pennsylvania in 1988.

Audi’s management has been in discussions with the Belgian government about the future of its Brussels factory, which had no additional models planned beyond the Q8 e-tron.

Volkswagen said it expects to take a €2.6bn (£2.2bn) hit to its annual results after a series of unplanned expenses.

It warned: “The expenses expected as a result of alternative uses or a plant closure, which are expected to be accrued in the third quarter, in conjunction with the other unplanned expenses in the Volkswagen Group, will have a significant impact on the operating result of the Volkswagen Group in the 2024 financial year.”

The Audi factory in Brussels could be closed by Volkswagen – Bloomberg News/Landov

09:41 AM BST

Crest Nicholson investors to be given shares in Bellway under deal

Under the terms of Bellway’s new offer, Crest Nicholson shareholders would receive 0.099 shares in Bellway and a dividend of 4p for each share they own.

This would give the developer an implied value of 273p per share – or £701m – based on Bellway’s closing price of 2,718p on June 13, when it first made a takeover approach.

The new proposal, which was submitted on July 3, is 7.9pc above a previously rejected proposal at 253p per share.

Bellway has until August 8 to make a firm offer for Crest Nicholson, which would get the deal over the line subject to shareholder approval.

Crest Nicholson’s board said it is “minded to recommend unanimously” the deal.

09:26 AM BST

Bellway poised to buy rival housebuilder Crest Nicholson in £701m deal

Bellway is on track to buy rival housebuilder Crest Nicholson after its board said it would recommend a sweetened offer to shareholders.

The developer submitted a £2.73 per share offer to buy Crest Nicholson, valuing the company at £701m.

The deal represents a 28.3pc premium on Crest Nicholson’s closing price on June 13, before news of a first Bellway offer emerged.

The board said it “would be minded to recommend unanimously to Crest Nicholson’s shareholders” the terms of the deal.

It comes amid a broader slowdown in Britain’s housing sector, which has been hammered by high interest rates and soaring costs.

In its latest half-year results, Crest Nicholson posted a £31m loss in the six months to May, as it warned that profits for the year were set to be less than expected.

Bellway shares dipped 1.2pc while Crest Nicholson gained as much as 5.5pc.

09:06 AM BST

FTSE 100 rebounds amid rate cut hopes

UK stocks have rebounded as the chairman of the US Federal Reserve kept hopes alive of a September interest rate cut.

The FTSE 100 index was up 0.3pc after logging its worst day in nearly a month on Tuesday, while the FTSE 250 index was also up 0.3pc.

Fed chief Jerome Powell will appear for a second day of congressional testimony later, having stated on Tuesday that a rate cut would not be appropriate before the Fed sees “more good data” on inflation.

Money markets are still pricing in about a 70pc chance of a rate cut in September.

On a day with several corporate updates, Upper Crust owner SSP Group jumped 11.3pc to the top of the midcap index as it stuck to its fiscal year forecasts.

Precious metal miners advanced as much as 1.4pc as gold prices steadied ahead of a crucial US inflation report on Thursday.

Barratt Developments slumped 3pc to the bottom of the FTSE 100 index after forecasting an up to 7pc fall in its construction targets for next year. Homebuilders overall were down as much as 1.3pc.

Travis Perkins climbed 3.7pc after the construction supplier named former Taylor Wimpey boss Pete Redfern as its next chief executive.

IAG topped the FTSE 100, gaining 3.2pc, after Morgan Stanley upgraded the British Airways owner to “overweight” from “underweight”.

08:49 AM BST

Water investment held back by regulators, insists trade body

The head of the trade association for the water industry has defended asking customers to pay for what he described as “important” investment in the network.

Water UK chief executive David Henderson claimed that it was regulators who had held back investment in the water industry.

Companies have faced accusations of profiteering at the expense of investment in the creaking water system, with billions taken out in dividends despite sewage spills and leaks hitting record levels.

Mr Henderson was asked how water companies can justify rising bills, as Thames Water warned regulators this week they must allow it to raise charges or it will run out of money.

He told BBC Radio 4’s Today programme:

We have not built a reservoir in 30 years – even though our population has risen by 20pc in that time – and that’s because we’ve been blocked by regulators and planning officials around the country.

We need to increase our water supply and if we don’t make these investments we won’t get it.

Unfortunately the investment will paid for up front by the shareholders of the companies and then slowly recouped over time.

08:33 AM BST

Barratt to build fewer homes this year

Barratt revealed it expects to build fewer homes next year amid “a challenging macroeconomic backdrop”.

The developer said it expects to construct 14,004 properties in its 2024 financial year, down from 17,206 but slightly ahead of analyst estimates.

Adjusted profits are also expected to be slightly ahead of expectations, it said in a trading update.

However, shares fell 2.9pc in early trading as it forecast it would complete between 13,000 to 13,500 homes in 2025.

Chief executive David Thomas said the company had endured “another year of economic and political uncertainty”.

It is awaiting for competition regulators to give the go-ahead to its merger with housebuilder Redrow.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said:

Barratt’s full-year trading update showed that it’s hard to build momentum when the entire housing market has been on unstable ground.

The group completed around 14,000 new homes this year, which was towards the top end of group guidance, but still marks a big drop off from the prior year.

08:14 AM BST

Direct Line shares drop as it ends ban on comparison sites

Direct Line shares have fallen after the insurance brand ended its long-standing resistance to appearing on price comparison websites.

The insurer has long insisted customers come direct to its site to take advantage of its deals but it announced today that it will appear on comparison marketplaces for the first time soon.

Shares dropped by as much as 2.1pc as trading began.

Adam Winslow, chief executive of Direct Line Group, said:

Our presence on these platforms, alongside our powerful direct sales offering, will enable us to reach even more customers as we deliver the trusted protection and service that Direct Line is renowned for.

Putting our strongest brand, Direct Line, on price comparison websites where we know there is a receptive audience will see Direct Line shaking up the motor insurance market once again.

Direct Line shares have dropped as it revealed it will begin offering its products on comparison websites

08:03 AM BST

UK markets edge higher amid rate cut hopes

The FTSE 100 edged higher amid hopes for interest rate cuts, which also boosted Asian markets.

The UK’s blue-chip stock index gained 0.2pc to 8,156.00 after US Federal Reserve chairman Jerome Powell did little to quell hopes of a September interest rate cut when he appeared in front of the Senate Banking Committee on Tuesday.

The midcap FTSE 250 edged up 0.1pc to 20,659.82.

07:57 AM BST

Travis Perkins hires ex-Taylor Wimpey boss to rebuild

Building supplies company Travis Perkins has hired former Taylor Wimpey boss Pete Redfern as its chief executive.

Travis – which also owns the Toolstation chain – said Mr Redfern will take on the role on September 16, when incumbent Nick Roberts will also leave after five years in the post.

The group announced in March that Mr Roberts was standing down as it acknowledged the “under-performance” of the company amid tough trading that saw profits plummet in 2023.

Mr Redfern was previously group chief executive of Taylor Wimpey for 14 years until 2022.

His appointment will be followed soon after by the appointment of a new chairman, with Geoff Drabble set to lead the board in what will mark a clean sweep at the top.

Mr Drabble – currently chairman of plumbing supplies group Ferguson and former chief executive of equipment hire company Ashtead – will take over from interim chairman Jez Maiden, becoming chair-designate on October 1.

Travis Perkins

07:50 AM BST

Carney claims investments will not lead to big rises in energy bills

The former governor of the Bank of England has insisted that green energy investment will lead to lower energy bills towards the end of this decade, writes our economics editor Szu Ping Chan.

Mark Carney insisted the cost of renewable energy is lower, and said the Government would attract new investment into the sector if its initial investments are successful.

The Canadian former central bank chief has become a member of the new National Wealth Fund Taskforce which will invest £7.3bn on key projects.

He told BBC Radio 4’s Today programme:

As we’re looking towards the end of the decade, the marginal cost of renewable energy is lower.

You have better insulated homes, the cost of energy is lower.

Again, the cost of managing and running an electric vehicle is lower.

So there’s an initial investment clock cost, but then the actual cost, the actual household bills that we pay, go down as we move towards the end of this decade.

Former Bank of England governor Mark Carney is a member of the National Wealth Fund Taskforce – JUSTIN TALLIS/Pool via REUTERS

07:39 AM BST

Thames Water should be nationalised, say Lib Dems

Thames Water should be brought into public ownership, according to Liberal Democrat environment spokesman Tim Farron.

The utility company’s chief executive defended his bonus package this week despite its sewage spills more than doubling last year.

The company is currently battling to stave off special administration after it said on Tuesday that it risked running out of cash in less than a year amid an increase in its debt pile.

Speaking to the BBC Radio 4’s Today programme, former Lib Dem leader Mr Farron said:

Thames Water is a special case.

I think they are the most egregious offender, if you like, and the simple answer is Thames Water should be taken back into administration and directly run by the Government for the time being.

07:34 AM BST

Wetherspoon sales at ‘record levels with fewer pubs’

JD Wetherspoon has revealed “record sales at fewer pubs” as the Euros ensured football fans kept drinking despite bad weather.

The pub giant reported that life-for-like sales increased by 5.8pc in the 10 weeks to July 7, despite unseasonably wet weather.

Like-for-like sale increased by 7.7pc over the year to date.

In the year to date, Wetherspoons has opened two pubs but sold or surrendered the lease on 26 sites.

It added that a further 10 trading pubs are either on the market or under offer.

Tim Martin, chairman of JD Wetherspoon, said:

The gradual recovery in sales and profits, following the pandemic, has continued in the current financial year. Total sales are, again, at record levels, with fewer pubs.

Sales per pub are approximately 21pc higher than pre-pandemic levels, which has helped to compensate for the very substantial increase in costs.

For example, compared to the 2019 financial year, labour in this financial year has increased by approximately £164m, energy by £28m, repairs (also affected by labour costs) by £38m and interest (excluding IFRS 16 interest) by £16m.

07:31 AM BST

Microsoft quits board of ChatGPT owner amid fears of crackdown

Microsoft has given up its seat as an observer on the board of ChatGPT-owner OpenAI amid fears of a crackdown by competition regulators.

The US tech giant, which has invested $13bn in the company, said in a letter to OpenAI that it would withdraw from the board “effective immediately,” according to the Financial Times.

Apple had been expected to take up a similar role as part of a landmark agreement to add ChatGPT to hundreds of millions of iPhones.

However, the world’s most-valuable company is also not expected to do so, the FT said.

It comes amid mounting pressure from competition regulators about the development of AI, which they fear could be concentrated in the hands of a few hugely wealthy companies.

European regulators said last month that they would talk to Microsoft’s rivals about OpenAI’s exclusive use of its technology.

Microsoft has quit its observer role on the board of OpenAI, led by chief executive Sam Altman – JOHN G MABANGLO/EPA-EFE/Shutterstock

07:25 AM BST

Good morning

Thanks for joining me. Microsoft will quit is observer role on the board of the maker of ChatGPT amid concerns of an interventions by competition regulators.

The US-tech giant said it would resign its role at OpenAI “effective immediately,” while Apple is also expected to decline a similar position despite its agreement to put the company’s technology into its iPhones, according to the Financial Times.

5 things to start your day

1) Treasury raked in £9bn from non-doms last year | Experts warn that Labour’s tax plans risk wrecking a crucial revenue stream

2) Thames Water boss defends his bonus after surge in sewage spills | Troubled utility giant was responsible for 16,990 sewage discharges in 2023, and risks running out of cash in less than a year

3) Facebook to block posts attacking Jews as ‘Zionists’ | Debate around Zionism as a political movement will still be permitted on the site

4) Ambrose Evans-Pritchard: France has ended up with a socio-political Frankenstein | Deformed French election lets the Corbynista Left win a victory against nature

5) Jeremy Warner: Tony Blair is right about two crucial things – but Labour is in denial | The need for radical public sector reform has been glaringly obvious for decades

What happened overnight

Japan’s Nikkei 225 share index closed Wednesday at another record high, gaining 0.6pc to end trading at 41,831,99.

That followed a record close on Tuesday, as world markets tracked gains on Wall Street.

In Hong Kong, the Hang Seng index gained 0.4pc to 17,587.16, while the Shanghai Composite index gave up 0.3pc to 2,949.60.

China reported that its consumer price index slipped to 0.2pc in June from 0.3pc in May, below expectations largely due to declines in prices for foods other than pork.

Lynn Song of ING Economics said: “Weak consumer confidence continues to drive consumption in the direction of seeking better value-for-money purchases, and competition in the EV sector continues to drive prices down, suppressing overall inflation.”

Australia’s S&P/ASX 200 was 0.3pc lower, at 7,806.30.

In Seoul, the Kospi fell 0.2pc to 2,862.89. Taiwan’s Taiex and India’s Sensex both were up 0.2pc.

On Tuesday, the S&P 500 and Nasdaq composite each rose 0.1pc, enough to bump up the indexes to all-time highs for the second time this week.

All told, the S&P 500 rose 4.13 points to 5,576.98. The Nasdaq added 25.55 points to close at 18,429.29. The Dow fell 0.1pc to 39,291.97.

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