House purchases delayed by ‘global payments issue’
House purchases have been delayed by a glitch with a global payment system that left banks unable to transfer large sums of money.
The Bank of England said on Thursday it had suffered a temporary outage to its CHAPS interbank payment system, which handles more than £360bn on an average day.
The Clearing House Automated Payment System - CHAPS - is used for processing large payments, typically the completion of home sales but also more exotic transactions such as football player purchases or art deals.
Banks also use it to send money between each other when settling foreign exchange transactions or other deals. While the public typically does not deal with CHAPS, payments over the network account for 90pc by value of all sterling transfers each day.
The Bank of England warned that issues with the system on Thursday had delayed some home purchases, without providing numbers.
A spokesman said: “A global payments issue is affecting the Bank’s CHAPS service and delaying some high value and time-sensitive payments, including some house purchases.”
Brokers warned that homebuyers faced a potential “nightmare scenario”. Hannah Bashford, director of Model Financial Solutions, said anyone looking to complete home purchases “may be left high and dry with nowhere to move to if funds aren’t passed through the system in time to complete”.
The CHAPS outage was understood to be related to Swift, a messaging platform used by financial companies around the world to communicate with each other. Banks use the network to tell each other how much to send and to what accounts.
A source close to Swift said the payments outage was not the result of a cyber attack and the issue was resolved by mid-afternoon.
This is the third time since 2014 that the Bank of England has reported an issue with the service. It last went down in August last year.
A Bank of England spokesman said: “We are pleased to confirm that the third party supplier has restored service following their earlier issues, and CHAPS payments are settling as normal.”
A spokesman for Swift said: “Swift takes any operational incident extremely seriously, is conducting a full investigation and apologises for the disruption caused.”
Tony Craddock, director general of The Payments Association, which represents companies in the sector, said: “Thankfully problems like today’s are extremely rare. We understand the public’s frustration.”
Read the latest updates below. Have you been affected by the payment outage? Write to money@telegraph.co.uk
06:06 PM BST
Profits at SSE ‘will likely be volatile’ after renewables push, claims broker
Profits at SSE could take at hit, a broker has said, after the energy giant said that its renewables output had jumped 60pc as part of a major programme to help Britain reach net zero.
Mark Crouch, analyst at investment platform eToro, said:
The UK’s determination to move away from fossil fuels has moved into overdrive following Labour’s election win, and SSE is moving in tandem with the new government to embrace the transition.
In its latest trading update, SSE confirmed performance in line with expectations, with renewables output for the quarter up 60pc year-on-year.
SSE has already made significant investment to improve their electric power infrastructure and is committing a further £20.5bn to its investment programme, including what will be the world’s largest wind farm, Dogger Bank, off the coast of England, capable of powering six million homes.
Projects like this though have come at the expense of shareholder dividends, dividends that in the past have been synonymous with utility stocks. And the glaring risk is that renewable energy methods are unreliable, thus profits will likely be volatile.
However, the company believes that with the business continually expanding its high-quality asset base, shareholders stand to reap the rewards over the long term.
SSE’s shares rose 1.6pc today.
Thanks for joining us today. We will be back in the morning to cover the latest from the markets.
05:40 PM BST
Tech investors have made ‘massive overreaction’, says JPMorgan analyst
The market correction yesterday in which US tech shares experienced their biggest drop since 2022 was a “massive overreaction” caused by geopolitical fears, a leading analyst has said.
Andrew Tyler, JPMorgan’s head of US market intelligence, suggested that while the fears are pushing the market lower, he suggested there the market could rebound over the next couple of weeks.
05:35 PM BST
US chip stocks volatile amid worries of a trade war
Trading in US chip stocks was choppy this afternoon after a massive sell-off on Wednesday and a tumble in chip stocks in Asia. It came after a report that the United States was considering tighter curbs on exports of advanced chip technology to China - a move that could provoke a trade war.
Semiconductor stocks took a dive Wednesday after Bloomberg reported that Joe Biden’s administration was weighing a measure called the foreign direct product rule that would allows the US government to stop a product from being sold if it was made using American technology.
The reported US move, if it happens, would potentially mean restrictions on companies such as Tokyo Electron and the Netherlands’ ASML.
The Global X Asia Semiconductor exchange-traded fund closed down 1.74pc earlier today, with declines in major holdings including Tokyo Electron, Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics.
The Philadelphia Semiconductor index of 30 top US chip companies is down 0.4pc currently, following a 6.8pc sell-off on Wednesday. This was its biggest one-day drop since March 2020.
Nonetheless, there are some big gainers in the US index today. Intel is up 3.9pc, GlobalFoundries is up 2.8pc and NXP Semiconductor is up 1.4pc. Artificial intelligence poster-child Nvidia is up 1.2pc.
05:27 PM BST
Tech giant Meta mulls investment in owner of Ray-Ban
The Italian-French company that owns Ray-Ban jumped 1.5pc today after a Bloomberg report that Facebook owner Meta is considering taking a stake in the glasses giant.
The proposed investment in EssilorLuxottica - thought to involve taking a small stake - comes as Meta attempts to ramp up its plans to develop so-called smart glasses.
The two companies have already collaborated on a pair of smart glasses called the Ray-Ban Meta.
Meta declined to comment. EssilorLuxottica has been approached for comment.
05:19 PM BST
Apple in talks to buy more Hollywood films
Apple is in talks to license more films from Hollywood studios to boost its streaming portfolio, Bloomberg has reported.
Streaming platforms have been looking to grow their library of offerings by spending millions on licensing for movies and live sports programming to attract users in a competitive industry.
Apple’s successful deal to license around 50 movies from Hollywood studios earlier this year has encouraged it to pursue more content, the report said.
The Apple TV+ streaming service, known for its original series like Ted Lasso, The Morning Show and Slow Horses, has so far differentiated itself in the streaming landscape with a focus on in-house content, while most rival platforms also offer users older movies and TV shows from other studios.
The strategy has garnered Apple TV+ 72 Emmy Award nominations across various categories.
Apple TV+, however, is among the streaming platforms with the highest number of customers cancelling a subscription, while Netflix has the lowest, according to market research firm Antenna.
Apple has been approached for comment.
05:10 PM BST
European shares end lower as tech sell-off stymies advances
Shares on the Continent ended lower this afternoon despite some positive company updates.
The pan-European Stoxx 600, which includes some of Britain’s largest companies, closed 0.2pc lower, extending losses to a fourth day on the trot. Germany’s Dax dropped 0.4pc, but France’s blue-chip Cac 40 rose 0.2pc.
Yields on government bonds across the continent eased, while the euro fell 0.2pc against the dollar.
05:06 PM BST
Asda: No ‘quick fix’ after petrol leaks into Surrey water
The chairman of Asda has admitted to Surrey villagers there is “no quick fix” for a devastating petrol station leak, amid fears it could take as long as a year to resolve. Matt Oliver reports:
Lord Rose promised the supermarket chain was committed to the environmental clean-up in Bramley, near Guildford, where residents were unable to drink tap water for almost six weeks after fuel seeped into the ground from the company’s forecourt.
But the peer also warned that removing all the petrol was “not an easy job”.
He came to address villagers at a meeting on Tuesday after The Telegraph highlighted the dire situation at the end of June.
Frustrated residents – some of whom had reported fumes and smells as far back as 2021 – have been calling on local authorities, utility providers and government agencies to set out a clear plan for tackling the spill, with many regarding the response so far as lacking leadership and transparency.
At the meeting in Bramley, Lord Rose told a packed village hall: “I know there’s a problem here.
“But I want to just say, on behalf of Asda and certainly on behalf of the board and myself, that we are absolutely committed to getting this sorted out.”
04:55 PM BST
Footsie closes up
The FTSE 100 closed up 0.2pc today. The top riser was Sports Direct owner Frasers Group, which rose 9.2pc. Schroders was the second-biggest riser, up 4.9pc. At the other end of the index, mining company Antofagasta fell 4.9pc, followed by aerospace giant Melrose, down 3.8pc.
Meanwhile, the mid-cap FTSE 250 rose 0.7pc. The top riser was Ocado, up 9.8pc, followed by Dunelm, up 8.5pc. Investment manager Ninety One fell 3.8pc, followed by Allianz Technology Trust, down 3.1pc.
04:49 PM BST
Technology powering house payments ‘no longer fit for purpose’, claims tech firm
A tech firm that claims to have worked with the Bank of England on a payment system for the housing market says it’s time for an alternative to CHAPS. Joe Pepper, UK chief executive of Pexa, said:
Home buyers having a payment ‘glitch’ hold their transactions up is yet another proof point that the technology and infrastructure supporting the market is no longer fit for purpose. It is creaking at the seams.
Buying a home is a stressful and laborious enough experience as it is for consumers without it being compounded by payments falling through or getting held up.
Digitisation cannot come soon enough. With new regulation putting consumer outcomes front and centre, it is imperative that we see the adoption of new, reliable technology that improves the experience for home movers and remortgagers, speeding up transaction processes from days to minutes.
04:42 PM BST
German government bond yields drop after ECB meeting
German government bond yields hit multi-week lows today as European Central Bank remarks backed investors’ expectations for a rate cut in September.
The ECB did not provide clear indications on future rate moves, with its president Christine Lagarde saying September’s decision was “wide open”.
The 10-year German government yield, the benchmark for the euro zone bloc, was down at 2.414pc, from 2.423pc yesterday.
Money markets were pricing in around a 75pc chance of a quarter point rate cut in September.
Nicolas Forest, chief investment officer at Candriam, said:
The market anticipates two additional cuts before the end of the year. This aligns with our expectations, as inflation dynamics should continue to support further easing.
04:32 PM BST
Bank of England confirms end of outage
The CHAPS payments outage is over, the Bank of England has said. A spokesman said:
We are pleased to confirm that the third party supplier has restored service following their earlier issues, and CHAPS payments are settling as normal.
We expect that all payments received by the Bank today will be settled by the end of the day.
If you are concerned about a CHAPS payment you plan to make or receive today, please contact your bank, or other payment service provider.
04:29 PM BST
Chinese pledge to prevent ‘ideological risks’ in new tech policy
China’s ruling Communist Party wrapped up a top-level meeting today by endorsing policies aimed at advancing the country’s technological power as part of “building a modern socialist country”.
“The current and future period is a critical time for comprehensively promoting the construction of a strong country and the great cause of national rejuvenation using Chinese-style modernisation,” a Chinese government statement said.
The statement said it is necessary to coordinate development and security, a nod to concern that expanding national security enforcement is weighing on the economy.
But it stressed that “national security is an important foundation for the steady and long-term development of Chinese-style modernisation,” noting that the “leadership of the party is the fundamental guarantee” for achieving that goal.
The meeting also endorsed leader Xi Jinping’s repeated calls for “high-quality development,” signaling Beijing will continue to prioritise investing in technologies and encouraging companies to upgrade their equipment and knowhow at a time when China faces tightening restrictions on access to Western advanced technology, such as leading-edge computer chips and artificial intelligence.
Chinese leaders have repeatedly said the country will remain open to foreign investment and improve the business environment, despite ever-extending Communist Party controls over companies, social media, financial regulators and other aspects of life.
Thursday’s statement repeatedly reiterated the need for openness and open markets, but also said the party must prevent any “ideological risks.”
The meetings are unlikely to make a major change in policies, Julian Evans-Pritchard of Capital Economics said in a commentary.
He said: “There still appears to be a tension between policies aimed at boosting economic security and expanding the supply-side of the economy, and those aimed at giving market forces a greater role and rebalancing growth toward consumption.”
04:23 PM BST
Labour’s ‘fiscal lock’ is a ‘rather theatrical way of promising’ not to copy Truss
A new law designed to ensure that no future Government can sideline the Office for Budget Responsibility is a “theatrical” promise not to copy the mini-Budget from Liz Truss’s administration, a leading think tank has said.
Ben Zaranko, senior research economist at the Institute for Fiscal Studies, said:
The new government’s ‘fiscal lock’ is broadly sensible but largely performative. It is, in effect, a rather theatrical way of promising not to do another Mini Budget – or at least not to do another Mini Budget without some accompanying independent analysis from the Office for Budget Responsibility
This Chancellor could make and keep to that promise without any need for primary legislation, and some future Chancellor determined to misbehave could almost certainly find a way to get around it, but it nonetheless serves as a welcome commitment to fiscal transparency.
The main impact of the bill, if there is one, will be to modestly increase the powers of the OBR vis-à-vis the Treasury.
04:15 PM BST
US stock markets fall amid worries about tech giants
The main US stock indexes are down in trading after worst day for big technology stocks since 2022.
The S&P 500 is down 0.2pc, while the Dow Jones Industrial Average is down very slighly at under 0.1pc. The tech-dominated Nasdaq Composite is down 0.2pc.
Much of yesterday’s pain centered on stocks of chip companies, hurt by possible trade tensions with China and other worries.
Big technology stocks had been screaming higher, in large part because of a frenzy around artificial intelligence technology. That helped a handful of Big Tech stocks drive to towering heights, as well as criticism they had grown too costly.
Even after Wednesday’s drops, chip companies and tech stocks broadly remain much higher for the year so far. Nvidia is still up 145pc, for example.
Intel, which manufactures a lot of its chips in the US, Costa Rica, Europe and Israel, is up 4.2pc today.
03:57 PM BST
‘Hundreds’ of home buyers hit by payments outage
Hundreds of home buyers could be left unable to get the keys to their news homes as a result of the “global payments issue” reported by the Bank of England.
Anthony Codling, managing director of RBC Capital Markets, said:
The Chaps collapse could leave hundreds of homebuyers out in the cold.
The breakdown of the payments system is impacting high value transactions such as house purchases, on average there are around 4,000 housing transactions a day.
If conveyancers don’t get the money, they can’t release the keys, and the completion delays don’t just impact the buyer but also all those in the chain.
Those caught out in the cold will hope that the sunny warm weathers will last longer than forecast.
03:47 PM BST
Customers can still use cashpoints and car payments during outage
The Bank of England’s Chaps payment system processes hundreds of billions of pounds worth of transactions a day, including banks paying one another large sums.
The Bank said:
If you are concerned about a Chaps payment you plan to make or receive today, please contact your bank, or other payment service provider.
Retail payment systems are unaffected so people and businesses can continue to use cash points, card payments and bank transfers as normal.
03:39 PM BST
Home buyers risk being left ‘waiting outside their new property’
House buyers could be left waiting outside a new property unable to complete their purchases as a result of the global payments outage, estate agents have warned.
Toby Leek, the head of the estate agent association Propertymark, said:
Completing on a property can be extremely stressful even without technical issues, however it is important to remember that should systems ever cause unexpected problems at a vital moment within the transactional process these issues do tend to be fixed quickly.
The flipside is in the short term, this can have the potential to leave people waiting outside their new property with a removal van full of their belongings in very extreme cases.
03:32 PM BST
Homebuyers left in ‘nightmare scenario’
The outage of the Bank of England’s high-value payment system risks leaving homebuyers in “a nightmare scenario” with nowhere to go, brokers have warned.
Our senior economics reporter Eir Nolsøe has the latest:
Hannah Bashford, director of Model Financial Solutions, said anyone looking to complete on a house purchase today “may be left high and dry with nowhere to move to if funds aren’t passed through the system in time to complete.”
Andrew Montlake, managing director at Coreco, said: “This has the potential to be a nightmare scenario for home buyers on the day of completion, potentially leaving them and their removal vans all packed up with nowhere to go.”
Chris Barry from Thomas Legal said while completions tend to happen in the morning, some would still occur between the issue being announced and the 4pm cut-off.
Mr Barry said: “Most contracts have a 12 or 1pm hard time embedded so if the payment is being made now they are technically in breach of contract.”
03:25 PM BST
Payments outage ‘not a cyber attack’
Sources at the Bank of England have said the “global issue” with the payments is as a result of an issue with Swift technology, a global payments technology company.
A source close to Swift said the payments outage which is holding up house purchases across Britain is not the result of a cyber attack.
03:08 PM BST
House purchases hit by delays, Bank of England warns
House purchases and other high-value transactions are at risk of delay, the Bank of England has warned.
Our senior economics reporter Eir Nolsøe has the latest:
The system for processing large payments used for football player purchases, art deals and home completions is experiencing a ‘global payments issue’, it said.
The Bank said: “‘A global payments issue is affecting the Bank’s CHAPS service and delaying some high value and time-sensitive payments, including some house purchases.”
Threadneedle Street said it was “working closely with a third party supplier, industry and other authorities to resolve the issue as promptly as possible.”
The Bank added that anyone affected should contact their lender.
03:07 PM BST
House payments delayed weeks after banking glitch
The delays affecting house purchases comes weeks after customers were left without their salaries on payday last month after a payments system outage affecting major banks.
Customers were left unable to pay bills following an issue with the faster payment system in June, which is run by Pay.uk.
HSBC, Nationwide, Barclays and Virgin Money all said they were working through problems with their mobile banking apps on the final working day of the month, when typically salaries are paid.
The faster payment system was created in 2008 to support personal and business customers day and night, 365 days per year, according to Pay.uk, which runs the UK’s retail payments operations, including Bacs, the faster payment system and the image clearing system.
02:55 PM BST
House purchases delayed by ‘global payments issue’
House buyers are having their purchases of new homes held up by a glitch with a global payment system, the Bank of England has said.
Officials said that a “global payments issue is affecting the Bank’s CHAPS service” was impacting “some high value and time-sensitive payments, including some house purchases”.
The Clearing House Automated Payment System - known as CHAPS - is a real-time gross settlement payment system used for sterling transactions in Britain.
The Bank of England said:
A global payments issue is affecting the Bank’s CHAPS service and delaying some high value and time-sensitive payments, including some house purchases.
We are mindful of the impact this is likely to have and are working closely with a third party supplier, industry and other authorities to resolve the issue as promptly as possible.
If you are concerned about a CHAPS payment you plan to make or receive today, please contact your bank, or other payment service provider.
Retail payment systems are unaffected so people and businesses can continue to use cash points, card payments and bank transfers as normal.
02:38 PM BST
Wall Street rebounds amid fresh AI boom hopes
The Nasdaq and the S&P 500 rose at the open on Wall Street as megacaps rebounded after an upbeat forecast from Taiwan Semiconductor Manufacturing Company (TSMC).
The Nasdaq Composite gained 122.23 points, or 0.7pc, to 18,119.15 at the opening bell amid renewed hopes that the AI boom will continue.
The S&P 500 opened higher by 20.29 points, or 0.4pc, at 5,608.56, while the Dow Jones Industrial Average fell 41.52 points, or 0.1pc, to 41,156.56.
02:29 PM BST
IMF tells Biden to put up taxes to tackle ballooning debt
The International Monetary Fund has urged Joe Biden to raise taxes to tackle the growing federal debt problem in the US as it carried out a healthcheck on the American economy.
The IMF said the government should even raise taxes on households earning less than the President’s $400,000-a-year threshold.
US debt stands at a record high of $34.9 trillion.
The fund also urged the Federal Reserve - the US equivalent of the Bank of England - to resist cutting interest rates until “late 2024” amid fears that a strong jobs market could lead to a rebound in inflation.
The prescriptions came in the detailed staff report from the IMF’s annual “Article IV” review of US economic policies.
The fund has been emphasising in recent weeks the need for more fiscal prudence as US deficits continue to grow despite robust economic growth.
It comes as Republicans and Democrats formulate tax and spending proposals ahead of November’s presidential election.
IMF chief economist Pierre-Olivier Gourinchas told Reuters that the Fed could afford to wait longer to start easing monetary policy due to a strong jobs market.
He said: “Given salient upside risks to inflation — brought into stark relief by data outturns earlier this year — it would be prudent to lower the policy rate only after there is clearer evidence in the data that inflation is sustainably returning to the [Federal Reserve’s] 2pc goal.”
02:12 PM BST
Lagarde: September interest rate decision ‘wide open’
The European Central Bank’s next interest rate decision is “wide open” according to President Christine Lagarde.
The head of the eurozone’s central bank said its Governing Council had been unanimous in holding borrowing costs at 3.75pc.
She said that the “question of September and what we do in September is wide open,” adding that her fellow policymakers “fully endorsed” its approach to be data dependent.
She clarified also that being data dependent does not mean being “data-point dependent,” indicating the Governing Council will not necessarily wait for inflation to fall to its 2pc target before cutting interest rates again.
02:00 PM BST
Eurozone faces economic growth risk, warns Lagarde
Christine Lagarde has said the risks to economic growth in the eurozone are “tilted to the downside” as the European Central Bank held interest rates at 3.75pc.
The ECB president warned that the cost of labour will remain elevated in the near term but insisted that longer-term inflation expectations are broadly stable.
She said that the rate of inflation will fluctuate around current levels for the rest of this year.
She said wage growth will moderate for the rest of the year as companies gradually reduce the number of job vacancies from high levels.
Ms Lagarde said:
The risks to economic growth are tilted to the downside. A weaker world economy or an escalation in trade tensions between major economies would weigh on euro area growth.
Russia’s unjustified war against Ukraine and the tragic conflict in the Middle East are major sources of geopolitical risk.
This may result in firms and households becoming less confident about the future and global trade being disrupted.
01:54 PM BST
Unemployment benefit claims rise in US
Over in the US, the number of people applying for unemployment benefits rose again last week and appear to be settling consistently at a slightly higher level.
Jobless claims for the week ending July 13 rose by 20,000 to 243,000 from 223,000 the previous week, the Labor Department reported.
It is the eighth straight week claims came in above 220,000. Before that stretch, claims had been below that level in all but three weeks so far in 2024.
The total number of Americans collecting unemployment benefits rose after declining last week for the first time in 10 weeks.
About 1.87 million Americans were collecting jobless benefits for the week of July 6, around 20,000 more than the previous week. That’s the most since November of 2021.
Weekly unemployment claims are widely considered as representative of layoffs.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in an attempt to extinguish the four-decade high inflation that shook the economy after it rebounded from the Covid recession of 2020.
The Fed’s intention was to cool off a red-hot jobs market and slow wage growth, which it says can fuel inflation.
Claims:
1/ Initial claims rose back to elevated levels (243K). pic.twitter.com/7OHtGaFdP0— Guy Berger (@EconBerger) July 18, 2024
01:43 PM BST
Eurozone interest rate cut in September ‘more likely than not’
Economists think the European Central Bank will cut interest rates in September despite policymakers offering no guidance on the timing of the next reduction in borrowing costs.
Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said:
Some lines [in the ECB’s statement] were arguably a touch on the dovish side. Domestic price pressures are described as “still high” (previously “strong”), and it says that most measures of underlying inflation were “either stable or edged down in June”.
It also notes that the effect of high wage growth is being partly offset by narrower profit margins.
At the press conference, we think President Lagarde will give little away and will certainly not pre-commit to any further rate cuts.
Policymakers will understandably be concerned at the persistent strength in indicators of domestically-generated inflation, which have stopped falling since the start of the year.
There will be two more inflation releases before the September meeting, and we suspect that they will show enough evidence of easing underlying price pressure to encourage the Bank to cut at that meeting.
But the risks are skewed towards the ECB extending its pause in September and interest rates coming down more slowly than we are forecasting.
01:32 PM BST
ECB ‘in no rush’ to lower interest rates
The European Central Bank is “in no rush” to lower interest rates further, according to analysts, despite expectations from traders of more cuts later in the year
Forecasters suggested expectations for interest rate cuts have “gone too far” as policymakers held the eurozone’s deposit rate at 3.75pc.
Money markets are still pricing in at least one more cut by the ECB this year and an 83pc chance of an additional reduction by the end of the year.
Policy implication: the ECB is in no rush to ease again and wont' pre-commit to a particular rate path, but recent data points haven't materially changed the outlook.
The ECB remains on track to cut rates at a quarterly pace.— Frederik Ducrozet (@fwred) July 18, 2024
"some measures of underlying infl ticked up in May owing to one-off factors, most measures were either stable or edged down in June"
"domestic price pressures are still high, services infl is elevated and headline infl is likely to remain above the target well into next year"2/2— Piet Haines Christiansen (@pietphc) July 18, 2024
#ECB leaves all rates unchg as expected. Main Refi at 4.25%, deposit rate at 3.75%. Guidance on interest rates also stays unchanged: Not pre-committing to particular path. ECB to follow data-dependent, meeting-by-meeting approach. pic.twitter.com/jZJwRt5qQd
— Holger Zschaepitz (@Schuldensuehner) July 18, 2024
01:23 PM BST
Eurozone inflation to remain above 2pc ‘well into next year’
The European Central Bank warned that inflation is expected to remain above its 2pc target “well into next year” as it held interest rates at 3.75pc.
Its statement said:
While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.
In line with expectations, the inflationary impact of high wage growth has been buffered by profits.
Monetary policy is keeping financing conditions restrictive.
At the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.
01:19 PM BST
ECB ‘not pre-committing’ to path for interest rates
Policymakers at the European Central Bank said they are “not pre-committing to a particular rate path” as they held borrowing costs steady at 3.75pc.
In the statement alongside its decision, it said:
The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.
In particular, its interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
The Governing Council is not pre-committing to a particular rate path.
Some analysts criticised the ECB for backing itself into a corner in June, when it cut interest rates.
Policymakers had signalled a June interest cut was on the way before inflation figures proved to be higher than hoped.
01:15 PM BST
Eurozone interest rates held at 3.75pc
The European Central Bank has held interest rates at 3.75pc as expected after data showed stubbornly high domestic inflation and wage growth.
The eurozone’s central bank lowered rates from record highs if 4pc last month in a move some policymakers considered rushed.
The euro area annual inflation rate was 2.5pc in June, down from 2.6pc in May.
01:00 PM BST
Wall Street on track to rise in tech rebound
Technology stocks are on track to rise on Wall Street after Taiwan’s chip maker TSMC revealed an upbeat profit forecast as it capitalised on the AI boom.
U.S.-listed shares of Taiwan Semiconductor Manufacturing Company rose 1.5pc in premarket trading after the world’s largest contract chipmaker raised its full-year revenue forecast on surging demand for AI chips.
Apple and Nvidia, both TSMC customers, climbed 0.6pc and 2.5pc, respectively. Other chipmakers including Advanced Micro Devices, Intel, Marvell Technology and Arm Holdings rose over 1pc each.
Barring Intel, chip stocks lost over $500bn in market value in Wednesday’s session following a report that the US was considering tighter restrictions on exports of advanced semiconductor technology to China.
Comments on Taiwan from Republican presidential candidate Donald Trump also drove losses.
Futures tracking the small-cap Russell 2000 index edged 0.1pc lower. The index closed down 1pc in the previous session, snapping a five-day winning streak.
In premarket trading, the Dow Jones Industrial Average was down 0.1pc, the S&P 500 was up 0.2pc and the Nasdaq 100 had gained 0.5pc.
12:47 PM BST
Reeves: Government faces ‘difficult decisions’ in next Budget
Rachel Reeves has warned the Government will have to make “difficult decisions” when she unveils her first Budget in the autumn.
The Chancellor said there are no plans she drew up in the Treasury will work without “business buy-in,” adding that Labour’s manifesto plans and its announcements in office so far “have the fingerprints of business all over them”.
Asked if she would announce tax breaks to boost pension savings or make UK investments more attractive, she told Bloomberg TV:
I’m not going to announce any tax breaks or tax changes without saying where the money is going to come from and we will have a Budget later this year.
But I also need to be clear and honest about the scale of the challenge that we have inherited with the public finances.
We’re going to have to make difficult decisions. We need to fix the foundations before we can start rebuilding things in Britain.
But unlike the previous government I am going to be honest about the scale of the challenge, I’m going to level with people and together we’re going to rebuild our country based on that private sector business investment to get our economy going.
12:31 PM BST
Chunks to be cut out of HSBC skyscraper in Canary Wharf overhaul
Huge slices are to be cut out of the HSBC skyscraper in Canary Wharf under plans to turn it into a tourist hub instead of an office block.
Our employment editor Lucy Burton has the details:
A radical redevelopment of the 1.1m sq ft tower, nicknamed the “Tower of Doom” by some HSBC staff, will turn the bank’s sprawling headquarters into a “unique destination” aimed at attracting visitors.
The first images of the building reveal a plan to remove large chunks of the building to create terraces where visitors can enjoy “outstanding views” of London. The lower levels will link directly to the Elizabeth Line.
The overhaul will happen when HSBC leaves in 2027, after the bank decided to end its lease in the era of home working.
Read what attractions will be put in place of the trading floors.
11:58 AM BST
Gas prices steady despite impending heatwave
In the commodities markets, wholesale gas prices have steadied ahead of a heatwave this weekend that is expected to increase demand.
European prices actually slumped on Wednesday despite the expected increase in demand as stockpiles reached more than 80pc of capacity, which is higher than normal for the time of year.
Steady flows from Norway, the continent’s top gas producer, have mitigated any concerns about supplies, with poor factory output figures also indicating demand has been subdued from industry.
Dutch front-month futures, the European benchmark, were last up 0.3pc to €32 per megawatt hour. The UK equivalent contract was up 0.3pc to 74p per therm.
11:40 AM BST
Eurozone borrowing costs edge higher ahead of interest rate decision
The bond market in the eurozone was steady ahead of the latest interest rate decision by the European Central Bank (ECB).
Policymakers are expected to leave borrowing costs unchanged later today at 3.75pc after cutting from a record 4pc at their meeting in June.
German 10-year bond yields - the return the government promises to pay buyers of its debt - edged up to 2.44pc after hitting a three-week low on Wednesday.
ING analysts said: “Our baseline remains an ECB that reiterates a data-dependent approach, which means no forward guidance for a September cut.”
Money markets have priced in around a 75pc chance that the ECB will cut interest rates again by a quarter of a percentage point in September.
11:35 AM BST
Tenants ‘too squeezed to save money’ as rents rise
Nearly one in three (32pc) private sector tenants who have recently experienced a rent increase are too financially squeezed to be able to put anything away in savings, a survey has found.
The proportion of those who are struggling to save following rental hikes has tripled from 11pc a year ago, according to the research published by First Direct.
Of those still able to save, nearly two-thirds (62pc) are putting aside £100 or less each month.
The research also found that 62pc have dipped into what savings they do have to cover living expenses at least once in the last two years.
Those who can save are also putting aside £50 less each month to offset the cost of their accommodation - as their tenancy costs have increased by more than £100 on average.
Office for National Statistics (ONS) figures released on Wednesday showed that average private rents across the UK increased by 8.6pc in the 12 months to June, edging down from 8.7pc in the 12 months to May.
11:11 AM BST
Worklessness figures ‘truly dire,’ says minister
Britain’s worklessness crisis is “truly dire,” the Work and Pensions Secretary has said, as Labour faces the challenge of kick starting Britain’s employment market.
Liz Kendall blasted the latest jobs figures from the Office for National Statistics, which showed that nearly 9.4m people were classed as economically inactive in the three months to May.
Of those, more than 2.8m people remained out of work due to long-term sickness.
Both figures are close to record highs, while Britain’s unemployment rate remained at 4.4pc, its highest level in three years.
Ms Kendall said the UK was “standing alone as the only G7 country where the employment rate is still not back to pre-pandemic levels”. She said:
This is a truly dire inheritance which the Government is determined to tackle.
Behind these statistics are real people, who have for too long been ignored and denied the support they need to get into work and get on at work.
It’s time for change - in every corner of the country.
That is why we are taking immediate actions to deliver on our growth mission, and spread jobs, prosperity and opportunity to everyone, wherever they live.
10:54 AM BST
William Hill owner issues profit warning as online revenue disappoints
The owner of William Hill and 888 said it has fallen behind profit targets after a “disappointing” first half of 2024.
Evoke, which was rebranded from 888 earlier this year, saw shares slide 7pc as it told shareholders its adjusted earnings for the first half of the year are between £35m and £40m below its expectations.
The group, which also owns the Mr Green brand, said this came after weaker than expected online revenue growth.
UK online revenues grew by 3pc, driven by a 6pc rise in its gaming business.
However, it said online sports betting was knocked by changes to its operations from last year and weaker-than-predicted returns from its marketing and promotions at the start of the year.
Meanwhile, its UK retail business, which includes William Hill shops, saw revenues drop 8pc over the six months to June 30, compared with the same period last year.
Evoke has said it hopes to see growth improve on the back of a new strategy launched in March, which will see it focus more on core markets and invest in AI to help drive efficiencies across the business.
10:32 AM BST
Why Amazon workers rejected the trade unions
Amazon workers in Coventry have rejected a landmark deal to form a trade union, in a blow to campaigners who called for the tech giant to recognise collective bargaining rights in the UK.
Our senior technology reporter Matthew Field analyses why workers shunned the union plan:
Of those who voted, 49.5pc of votes were in favour of a proposal put forward by the GMB Union, which has vowed to launch a legal challenge against the result. This was below the 50pc threshold to pass.
Union officials accused the US company of “union-busting” activities in the run up to the poll, claiming bosses had targeted workers with an “unrelenting campaign” of anti-union messaging. According to one source, the union lost by a margin of just 28 votes.
For months, Amazon’s Coventry warehouse has been the site of a bitter campaign between unions and bosses, with 3,000 workers at its fulfilment centre caught in the middle.
Read how Amazon faces accusations of ‘union-busting’ in the wake of crucial vote.
10:08 AM BST
Banks told to treat politicians better after Farage debanking scandal
The UK’s financial watchdog has said it is calling on banks and financial firms to improve how they treat political figures, after a lengthy review into the issue of debanking which came to the fore last year.
The Financial Conduct Authority (FCA) said it found most businesses it scrutinised did not subject so-called politically exposed persons to excessive checks or deny them an account based on their status.
But most companies could improve the way they treat politicians and their families, the regulator concluded.
The regulator began its review after the Nigel Farage debanking scandal, which saw the Reform UK leader lose his account with private bank Coutts over his political views.
Sarah Pritchard, the FCA’s executive director of markets and international, said:
Most firms try to get it right but there is more they can do.
We’re following up with those firms that were getting the balance wrong to ensure they make changes.
09:49 AM BST
Billionaire Ken Griffin buys stegosaurus for £34m
Citadel hedge fund founder Ken Griffin has bought the complete fossilised remains of a stegosaurus at auction for a record $44.6m (£34.3m).
The fossil, dubbed “Apex,” is considered to be among the most complete ever found, according to auction house Sotheby’s.
The price blew past a pre-sale estimate of $4m to $6m and past a prior auction record for dinosaur fossils.
A Tyrannosaurus rex nicknamed Stan was sold for $31.8m (£24.5m) in 2020.
Although the buyer’s name was not disclosed by Sotheby’s, people close to Mr Griffin confirmed to the Financial Times that he was the successful bidder.
Sotheby’s confirmed that the buyer is American and intends to look into loaning Apex to an institution in the US.
American billionaire Mr Griffin was among the potential suitors to buy The Telegraph along with his investment partner Sir Paul Marshall, the co-founder of hedge fund Marshall Wace and a joint-owner of GB News.
09:36 AM BST
TSMC profits surge amid global AI boom
TSMC, the world’s largest contract chipmaker, has forecast that its revenue in the current quarter will increase by as much as 34pc amid robust demand for semiconductors used in artificial intelligence.
Taiwan Semiconductor Manufacturing Co (TSMC), a major supplier to Apple and Nvidia, also posted a second-quarter profit that beat market expectations.
The bellwether for the chip industry has benefited from a surge in adoption of AI that has helped it weather the tapering off of pandemic-led electronics demand.
TSMC’s April-June net profit climbed to T$247.8bn (£5.8bn) from T$181.8bn (£4.3bn) a year earlier.
The profit beat a T$238.8bn estimate by analysts for the quarter ended June 30.
Chief financial officer Wendell Huang said: “Moving into the third quarter of 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies.”
However, the company’s shares closed down 2.4pc on Thursday as fears of a China-US trade war triggered a tech sell-off.
09:12 AM BST
Frasers predicts rising profits after takeovers
Mike Ashley’s Frasers Group is leading gains on the FTSE 100 after it said it expects higher profits this year following a series of acquisitions.
The Sports Direct and House of Fraser owner gained as much as 11pc after it said it expects adjusted pre-tax profits to rise to between £575m to £625m.
It follows a rise of 13.1pc in its adjusted earnings to £544.8m for the year to the end of April, revealed in its annual results today, following acquisitions in recent years of brands like Jack Wills and Evans Cycles.
Chief executive Michael Murray, the son-in-law of its billionaire founder Mike Ashley, said:
This has been a break-out year for building Frasers’ future growth. As well as delivering a strong trading performance, particularly from Sports Direct, we made significant progress with our Elevation Strategy.
We expanded our retail ecosystem, establishing valuable partnerships with new brands. Our brand relationships have never been stronger, giving us invaluable support as we continue the international expansion of our business.
We invested in group-wide operational efficiencies in warehouse automation and digital infrastructure, which we expect to yield a tangible impact as early as FY25.
And we generated new growth opportunities with the rollout of Frasers Plus, including recently signing our first third party partner in THG.
08:54 AM BST
FTSE 100 jumps as traders bet on interest rate cuts
UK stock markets have risen as traders increased bets on interest rate cuts after figures showed growth in wages slowed.
The blue-chip FTSE 100 index was up 0.6pc, while the mid-cap FTSE 250 index gained 0.1pc.
As average weekly earnings excluding bonuses grew by 5.7pc, money markets raised the odds of an interest rate cut next month to 45pc from 38pc.
Heavyweight energy shares tracked oil prices higher to be among the top gainers in London, rising as much as 1.7pc.
Frasers jumped 8.4pc to top the FTSE 100 after the British sportswear and apparel retailer reported a 13.1pc rise in annual profit and forecast more growth in its new financial year. It boosted the retail sector, which gained nearly 1.4pc.
Diploma was the biggest loser on FTSE 100 with a decline of as much as 3.7pc after the technical products and services provider kept its full-year outlook unchanged.
Dunelm Group jumped 7.9pc to the top of the FTSE 250 after the homewares retailer forecast its annual profit to be slightly higher than market consensus.
AJ Bell gained 3.3pc after the investment platform reported a 20pc rise in its third-quarter assets under administration for its Platform business.
08:34 AM BST
Pound edges down amid rate cut hopes
The pound has inched down against the dollar as figures showing a slowdown in wage growth raised hopes of interest rate cuts.
Sterling was down 0.1pc versus the greenback at just under $1.30, and was flat against the euro, which is worth 84.1p.
08:29 AM BST
Rising real wages ‘complicate’ timing of rate cuts
Real wages are growing at their fastest rate outside of the pandemic in over a decade, official figures show, but this “complicates” the timing of interest rate cuts, a think tank has warned.
Real pay grew by 3.2pc in the three months to June, according to the Office for National Statistics, which was its fastest pace since the three months to August 2021, shortly before Britain’s inflation crisis took hold.
Greg Thwaites, research director at the Resolution Foundation, said:
Pay packets are proving mightily resilient amid a cooling labour market – growing at their fastest rate outside the pandemic since 2002.
“Rising real wages are good news for workers coming out of the cost-of-living crisis.
But the Bank of England will be concerned that because these are not productivity-enhanced pay rises, they could turn out to be inflation-generating ones.
The high-strength pay data, and low-quality jobs data, further complicate plans to cut interest rates.
08:10 AM BST
Traders bet on interest rate cuts as wage growth hits two-year low
Traders are increasing their bets on an August interest rate cut after official figures showed a slowdown in wage growth.
Money markets indicate there is a 45pc chance of the Bank of England lowering borrowing costs next month.
The chances dropped to as low as 25pc on Wednesday after inflation came in higher than expected in June.
08:09 AM BST
UK markets jump amid renewed bets on summer rate cuts
UK markets have jumped at the start of trading as the latest jobs figures boosted hopes for a summer interest rate cut.
The FTSE 100 began the day 0.9pc higher at 8,259.27 while the midcap FTSE 250 rose 0.2pc to 21,139.33.
07:59 AM BST
More than 2.8m out of work due to long-term sickness
More than 2.8m people remained out of work due to long-term sickness, official figures show, outlining the challenge facing Labour to get people back into work.
Brett Hill of consultancy Broadstone said:
As a new Labour government takes power, bringing down economic inactivity due to chronic illness must be one of their highest priorities.
The record numbers out of the workforce due to ill health are piling pressure on our ailing public health services and limiting the economic growth potential of the country.
Widespread difficulties in accessing primary care and mental health services are fuelling the crisis, and our struggling public healthcare system is all too often unable to diagnose and treat conditions at an early stage.
Instead, many health problems go untreated for too long, developing into more serious conditions that ultimately require more complex treatments that take longer, cost more and may well be less successful than early intervention would have been.
07:53 AM BST
General election boosts Royal Mail sales as board recommends takeover
Royal Mail has seen its sales rise by more than a 10th in recent months, as its owner said it was urging shareholders to accept the offer to be bought by Czech billionaire Daniel Kretinsky.
The postal company generated £2bn in revenues in the three months to June, up from £1.8bn a year earlier.
The volume of total parcels delivered jumped by 11pc to 315m year-on-year.
International Distribution Services, which owns Royal Mail and European parcel group GLS, said revenues from letters had increased due to post from the General Election and because of price rises.
It also said it was “unanimously recommending shareholders accept the offer” from Mr Kretinsky’s EP Group, after agreeing to a £3.6bn takeover deal.
07:46 AM BST
Companies face ‘increased difficulties’ hiring staff as worklessness holds near record
Worklessness remained close to record levels, the ONS figures show, with nearly 9.4m adults neither in a job nor looking for one.
However, the number of job vacancies in the three months to June fell by 30,000 to 889,000.
Jane Gratton deputy director of public policy at the British Chambers of Commerce, said:
The labour market is continuing to cool but high wage growth is still bearing down heavily on businesses. Our research shows labour costs are the main external pressure on firms forcing them to put up prices and hold back on investment.
Our latest survey on recruitment, published earlier this week, shows firms across all industries are facing increased difficulties hiring staff. Better skills planning is crucial to tackling these problems, both for individual firms and the wider economy.
It was encouraging to see a focus on skills in yesterday’s King’s Speech. Plans to create a national skills plan for England, to underpin an industrial strategy, are welcome. Meanwhile, reforming the apprenticeship levy is long overdue.
Policymakers across the UK need to prioritise helping more people back into work and making sure they have the skills they need to thrive.
There were 889,000 job vacancies in April to June 2024, down 30,000 on the quarter. The number has now been falling continuously for two years.
Read Vacancies and jobs in the UK ➡️ https://t.co/FtJm1Zt11D pic.twitter.com/djo5nuggnP— Office for National Statistics (ONS) (@ONS) July 18, 2024
07:36 AM BST
Wage figures ‘most awkward for the Bank of England’
Jake Finney, economist at PwC, said that the latest labour market data “continues to be more awkward for the Bank of England than the inflation data”. He said:
The labour market is clearly cooling - with unemployment rising and vacancies falling - but pay growth still remains elevated at 5.7pc, way in excess of the circa 3pc level that is considered to be consistent with the 2pc inflation target.
This still remains one of the largest potential barriers to an August rate cut.
Michael Brown, senior research strategist at Pepperstone, added: “This morning’s UK labour market data further muddies the waters ahead of the August Bank of England decision in two weeks’ time, after yesterday’s hotter-than-expected inflation figures, with the labour market continuing to show some signs of slack, as earnings pressures ease somewhat, despite remaining incompatible with a return to the 2pc inflation target.”
Simon French of Panmure Gordon said:
Big base effects in the latest RTI on PAYE data slowing June (median) UK pay inflation to just 3.6% YoY. Another challenge for the BoE to appraise - base effects from high summer 2023 wage settlements. How much of this will be sustained as these effects unwind. pic.twitter.com/SWZzszgA7T
— Simon French (@Frencheconomics) July 18, 2024
On the more stable 3m/3m annual pay rates all three main measures hovering in the 5%-6% range which remains - absent a productivity growth pick up - inconsistent with stable 2% inflation https://t.co/m8SH2PvLiG pic.twitter.com/picQ6sWDl1
— Simon French (@Frencheconomics) July 18, 2024
07:25 AM BST
The jobs market is cooling, says ONS
The jobs market is cooling, the ONS has said, in a boost to hopes for interest rate cuts in the coming months.
Director of economic statistics Liz McKeown said:
Earnings growth in cash terms, while remaining relatively strong, is showing signs of slowing again.
However, with inflation falling, in real terms it is at its highest rate in over two and a half years.
We continue to see overall some signs of a cooling in the labour market, with the growth in the number of employees on the payroll weakening over the medium term and unemployment gradually increasing.
The number of job vacancies is down across most sectors, led by retail and hospitality.
The total has now been falling for a full two years, though it remains above pre-pandemic levels.
07:19 AM BST
Wage growth falls to two-year low amid hopes of rate cut
Wages grew at their slowest pace in two years, official figures show, in a boost to hopes for interest rate cuts.
Average regular earnings growth dropped from 6pc to 5.7pc in the three months to May, according to the Office for National Statistics (ONS).
The figure was the lowest since the three months to August 2022, and was in line with economists estimates.
Total pay growth, which includes bonuses, also fell from 5.9pc to 5.7pc.
When the cost of living is taken into account, real pay grew by 3.2pc according to the Office for National Statistics, which was its fastest pace since the three months to August 2021, shortly before Britain’s inflation crisis took hold.
The Bank of England has pointed to wage growth as a risk to inflation, which would delay the timing of when it could begin cutting interest rates from their 16-year highs of 5.25pc.
The rate of UK unemployment remained unchanged at 4.4pc.
Pay grew by 5.7% in the year to March to May 2024, whether including or excluding bonuses, remaining relatively strong.
Read Average weekly earnings in Great Britain ➡️ https://t.co/E2o4UY58Ha pic.twitter.com/bKdgVxCNxX— Office for National Statistics (ONS) (@ONS) July 18, 2024
07:14 AM BST
Good morning
Thanks for joining me. The prospect of a summer interest rate cut has been kept alive after official figures showed the pace of wage growth has slowed to its lowest level in two years.
Average regular earnings dropped from 6pc to 5.7pc in the three months to May, according to the Office for National Statistics.
5 things to start your day
1) OBR overhaul will not prevent Liz Truss-style crisis, Reeves warned | Former official says Chancellor’s ‘fiscal lock’ would fail to stop future reckless spending
2) Labour to launch state-owned Great British Energy in £8.3bn market intervention | Labour uses King’s Speech to launch state energy company and its plan for nationalised Great British Railways
3) How the West’s big bet on hydrogen fell apart | Hopes of a seamless transition to the clean fuel are crashing into economic reality
4) Why Amazon workers rejected the trade unions | Tech giant faces accusations of ‘union-busting’ in the wake of crucial vote
5) Tom Stevenson: Why the UK is the holy grail for investors | Britain is currently among the most undervalued stock markets in the world
What happened overnight
Asian equities slid as investors fret over the prospect of escalating trade tensions between the US and China.
Meanwhile the yen was firm after scaling a six-week high following suspected interventions by Tokyo.
The US dollar loitered closed to its weakest in four months against a basket of currencies as comments from Federal Reserve officials bolstered the case for a cut in September, keeping gold near record highs.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6pc, with a sub-index of IT stocks down 2.5pc. Tech-heavy South Korean shares fell 1.5pc, while Taiwan stocks were down 2pc.
The yen’s strength and the sharp drop in chip stocks took Japan’s Nikkei down more than 2pc.
A report that the United States was considering tighter curbs on exports of advanced semiconductor technology to China triggered a sharp sell-off in chip stocks, with the Nasdaq tumbling overnight.
On Wednesday, the S&P 500 lost 1.4pc, closing at 5,588.27, and the tech-heavy Nasdaq Composite index lost 2.8pc, closing at 17,996.93.
The Dow Jones Industrial Average, which has underperformed the other two major US stock indexes this year, ended 0.6pc higher and notched its third record-closing high in a row.
The yield on benchmark 10-year US Treasury bonds dropped to 4.152pc on Wednesday, down from 4.167pc late on Tuesday. During trading yesterday, the yield hit 4.146pc, its lowest since March 13.