Britons expect inflation to remain above target in five years, says Bank of England survey Business

Thanks for joining me. The price of oil is on track for its worst slump in five years in a sign that petrol prices should be falling.

Brent crude is on track for a seventh consecutive weekly decline, its worst run since 2018, amid concerns about global demand and doubts over the commitment to supply cuts by members of the Opec+ cartel.

5 things to start your day 

1) Hunt and Sunak are to blame for forecasting errors, says OBR chief | Economic predictions could be off by as much as £30bn, warns Richard Hughes

2) Labour recruits City grandees as it declares it is ‘no longer sneering at business’ | Move aims to erase the anti-business era and shore up support in the Square Mile

3) Hunt’s Edinburgh Reforms are a ‘damp squib’, say MPs | Chancellor’s efforts to champion post-Brexit regulatory reforms remain ‘unconvincing’

4) Saudi Arabia turns to British expertise as it seeks to turn oil rich Kingdom into the next Dubai | The Gulf state races to build the infrastructure and attractions needed to draw visitors

5) Half of first-time buyers in their 20s get help from Bank of Mum and Dad | Young people getting on the property ladder are being gifted an average of £25,000

What happened overnight 

Asian shares were mostly higher on Friday ahead of a US government jobs report, after Wall Street rose Thursday to snap its first three-day losing streak since Halloween.

In Tokyo, the benchmark Nikkei 225 index closed down 1.7pc, or 550.45 points, to 32,307.86, as investors speculated that the Bank of Japan may end its negative interest rate policy.

Before meeting Thursday with Prime Minister Fumio Kishida, Bank of Japan Governor Kazuo Ueda told parliament the central bank would face an “even more challenging” situation at the year’s end and in early 2024. 

The pound has fallen 0.2pc to 181 Japanese yen. It was trading above 188 yen in late November.

Updated data showed Japan’s economy shrank by 2.9pc year-on-year in the July-September quarter, worse than estimated earlier.

Hong Kong’s Hang Seng index rose 0.3pc to 16,394.90 and the Shanghai Composite index was up 0.4pc at 2,977.83. 

The Kospi in Seoul gained 1pc to 2,519.07. Australia’s S&P/ASX 200 edged up 0.2pc to 7190.70. India’s Sensex added 0.4pc and Bangkok’s SET gained 0.2pc.

In the US, the S&P 500 rose 0.8pc to 4,585.59, while the Dow Jones Industrial Average of 30 leading American companies rose 0.17pc to 36,117.38. The technology-focused Nasdaq Composite index rose 1.37pc to 14,339.99.

The yield on 10-year US Treasury bonds rose to around 4.15pc, up three basis points. This came amid snetiment on Wall Street that the market had given too much credence to the idea that major central banks are gearing up to cut rates. This was fuelled by comments by Bank of Japan Governor Kazuo Ueda, who gave an indication that Japan could raise rates on December 19.

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This notice was published: 2023-12-08 10:04:39


Australia’s biggest oil companies plot £42bn megamerger Business

Thanks for joining me. House prices rose for a second month in a row as more affordable mortgage rates helped buyers chase a smaller number of homes for sale. 

House prices rose by 0.5pc in November compared to October, according to the Halifax house price index.

5 things to start your day 

1) World in new era of low growth and high interest rates, says BlackRock | Significant shift means inflation will be far more volatile than in recent years

2) How Britain and Germany teamed up to defeat France on electric car tariffs | Relaxation of negotiated Brexit trade terms marks a setback for Paris

3) Homeowners should have less power to object to new housing, says Lord Wolfson | Next boss urges ministers to overhaul Britain’s antiquated planning system

4) Blackstone Mortgage Trust at risk of ‘liquidity crisis’, says hedge fund boss | Souring commercial loans could trigger a cash crunch, warns Muddy Waters chief

5) Matthew Lynn: Furlough has turned Britain into a nation of scroungers | What’s left of our country’s working culture has been trashed by the £70bn handout

What happened overnight 

Shares fell after a retreat on Wall Street as crude oil prices slipped on expectations that supply might outpace demand.

Stock markets fell more than 1pc in Tokyo and Hong Kong. On Wednesday, the S&P 500 fell 0.4pc in its third straight loss though the index remains near its best level in 20 months.

Brent crude, the international standard, fell 3.8pc to $74.30 per barrel and US crude tumbled roughly 4pc on Wednesday as expectations built that the world has too much oil available for the slowing global economy’s demand. US crude sank below $70, down more than $20 since September. 

In trading overnight, US crude was up 29 cents at $69.67 per barrel. Brent crude rose 31 cents to $74.61 per barrel.

China reported that its exports rose 0.5pc in November, the first year-on-year month of increase since April, but imports fell.

Tokyo’s Nikkei 225 index fell 1.8pc to close at 32,858.31. South Korea’s Kospi edged 0.1pc lower to 2,491.64.

The Hang Seng in Hong Kong fell 1pc to 16,295.83 on renewed heavy selling of technology and property shares. The Shanghai Composite index dropped was flat at 2,969.49.

Australia’s S&P/ASX 200 slipped 0.1pc to 7,173.30. Bangkok’s SET lost 0.6pc and the Sensex in India fell 0.1pc.

In the United States, signs of a cooling jobs market dampened market confidence. The Dow Jones Industrial Average of 30 leading companies drop 0.2pc to 36,054.43. The broader S&P 500 fell 0.4pc to 4,549.34, while the Nasdaq Composite index, which is technology-heavy, fell 0.6pc to 14,146.71.

The yield on the benchmark 10-year US Treasury bonds  fell 6 basis points to 4.112pc after hitting a fresh 3-month low of 4.106pc, suggesting the bond market is anticipating a weak jobs report on Friday.

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This notice was published: 2023-12-07 09:32:01


German factory orders unexpectedly fall as Europe’s largest economy struggles Business

Thanks for joining me. Tui is considering delisting from the London Stock Exchange and moving its shares to Germany after concerns were raised by shareholders about where they could get the highest returns.

The announcement comes a day after Frankfurt’s Dax market hit a new record high.

5 things to start your day 

1) Record share of first-time buyers take out 35-year mortgages | More borrowers aim to get on the property ladder by signing up for a lifetime of debt

2) UAE invests in UK’s struggling wind farm market | Masdar snaps up 49pc stake in one of Britain’s largest renewables sites

3) China’s great wall of debt sparks credit rating outlook downgrade | Ratings agency warns a third of the country’s debt could be at risk of default

4) German carmakers accused of supplying Putin’s Russia through the back door | Exports of vehicle parts to Kyrgyzstan reportedly surge by 5,500pc despite sanctions

5) Jeremy Warner: The debt curse that is destroying corporate Britain | Taxman’s incentivisation of leveraged borrowing can have disastrous consequences

What happened overnight 

Asian stocks gained as traders increased bets that interest rates have peaked among major central banks globally, pushing down bond yields.

Benchmark 10-year Japanese government bond yields dipped to their lowest since mid-August at 0.62pc, tracking an overnight slide for equivalent US Treasury yields as cooling job vacancy data indicated that the Federal Reserve has finished raising rates.

US 10-year yields touched a three-month trough of 4.16pc on Tuesday before ticking up slightly to nearly 4.2pc in the latest session. Bets on a first Fed cut coming by March now stand at about 64pc, according to the CME Group’s FedWatch tool.

Lower borrowing costs boosted equity markets, with big tech a particular beneficiary.

The benchmark Nikkei 225 index was up 2pc, or 670.08 points, to end at 33,445.90, while the broader Topix index added 1.9pc, or 44.51 points, to 2,387.20.

Australia’s S&P/ASX 200 rose 1.7pc, Hong Kong’s Hang Seng rose 1.3pc and the Shanghai Composite rose 0.2pc.

The S&P 500 was nearly unchanged, dropping 0.1pc on Tuesday to 4,567.18, while the Dow Jones Industrial Average of 30 leading American companies was down 0.2pc to 36,124.56. 

The technology-heavy Nasdaq Composite rose 0.33pc to 14,229.91.

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This notice was published: 2023-12-06 09:11:23


FTSE trading down as London Stock Exchange hit by ‘incident’ Business

Thanks for joining me. Thames Water suffered a 54pc decline in its pre-tax profits  to £246.4m as its debts mounted.

The utility company’s results come days after it emerged that Thames Water’s parent company was warned by its auditors that it could run out of money by next April if its shareholders don’t inject more equity into the utility business. 

5 things to start your day 

1) Qatar slashes stake in Barclays amid turnaround push at the bank | Lender’s second largest shareholder plans to raise £510m through the sale of shares

2) Weak Christmas sales risk high street ‘casualties’ | Black Friday deals have failed to reinvigorate sluggish spending

3) Sellafield nuclear site under ‘robust scrutiny’ over cybersecurity fears | Regulator denies claims the site suffered a security breach at the hands of hackers

4) Lidl forced to rename bread in ‘fake’ sourdough row | Retailer’s use of additional yeast leads campaigners to label crusty loaf ‘sourfaux’

5) Ben Marlow: Spotify is unwrapping the Christmas present of nightmares | The streaming giant’s overambition is finally crashing back down to Earth

What happened overnight 

Asian stocks slipped and Hong Kong’s unloved Hang Seng index slumped to a one-year low as investors tempered expectations for cuts to interest rates and waited on US jobs data.

The Australian dollar fell 0.6pc after the central bank left interest rates on hold, as expected, and emphasised that the future direction rates would depend on data.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1pc in late afternoon trade, with Hong Kong doing most of the dragging with a 1.6pc fall.

The Hang Seng is down more than 17pc for the year so far, while world stocks are up almost 15pc, as investors have streamed out of Chinese assets while the economy stumbles.

Japan’s Nikkei was 1.4pc lower at three-week trough, mostly thanks to falling chipmaking stocks. 

Gold hung on above $2,000 after a wild session on Monday, when it hit a record high in Asia before recoiling sharply lower.

In the United States, the S&P 500 dropped 0.5pc to 4,569.78, while the Dow Jones Industrial Average of 30 leading American companies dropped 0.1pc to 36,204.44. The Nasdaq Composite index, which contains a lot of technology businesses, dropped 0.8pc to 14,185.49.

The yield on the 10-year Treasury bonds, rose to 4.25pc from 4.21pc on Friday.

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This notice was published: 2023-12-05 09:38:01


Bitcoin hits highest level in 19 months amid hopes for wider trading Business

The value of gold hit a new record as markets increasingly bet that interest rates will be cut early next year.

Gold rose above $2,111 an ounce for the first time in Asian trading hours, before falling back to $2,086.

There was no obvious catalyst for the move, leaving dealers suspecting that some traders were jumping onto the bandwagon after the precious metal broke $2,107 last week.

Global central banks also bought a net 800 metric tons of gold in the year to September, a record for the period, with many expecting the price to top $2,240 or $2,400.

Markets are pricing in aggressive interest rate cuts next year, which is also delivering a boost to gold, which is considered a safety net against inflation.

Traders are betting there is a 59pc chance of a US interest rate cut as early as March, up from 20pc a week ago.

Gold surged more than 3pc in early trading before paring much of those gains. 

The precious metal hit new highs for a second consecutive session after breaking its record on Friday, which passed its previous all-time high it set in August 2020.

Chris Weston, head of research at Pepperstone Group, said there’s been “a big momentum shift” on gold. 

Shares of gold miners were also up. Newmont rose as much as 3.6pc in Sydney, while Northern Star Resources climbed as much as 5.3pc. Zijin Mining Group jumped as much 6.4pc in Hong Kong.

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This notice was published: 2023-12-04 09:36:04


Metro Bank to cut hundreds of jobs after £925m rescue deal approved Business

Thanks for joining me. New experimental data from the Office for National Statistics indicates that unemployment may have been as low as 3.5pc in the three months to May.

The data, which statistician said is “very early” and “only indicative”, would put the percentage of jobseekers at the same levels as the lows of the 1970s.

5 things to start your day 

1) Selfridges shareholder Signa files for insolvency | Questions over department store ownership as cash crunch topples Rene Benko’s empire

2) Ottolenghi forced to cut restaurant opening hours amid chef shortage | Chain admits struggles hiring talented staff in wake of Covid and Brexit

3) Inside the scramble to save Saga from sinking under a mountain of debt | Chief executive Euan Sutherland’s departure comes at a crucial juncture for the business

4) Tom Stevenson: With a turbulent year ahead, investors can’t afford to sit on the fence | We indulge in scenario analysis without the benefit of a crystal ball

5) Why Sunak’s national security tsar Oliver Dowden may be the man to decide The Telegraph’s fate | Tory MPs are pressing the Deputy Prime Minister to intervene in Abu Dhabi’s takeover of this newspaper

What happened overnight 

Asian shares were mostly higher ahead of an update on US consumer inflation and a meeting of the Opec+ oil producers in Vienna.

Tokyo’s Nikkei 225 closed up 0.5pc, or 165.67 points, to end at 33,486.89, while the broader Topix index climbed 0.4pc, or 10.43 points, to 2,374.93.

The Hang Seng in Hong Kong was up 0.2pc at 17,024.43. The Shanghai Composite index added 0.2pc to 3,026.43.

South Korea’s Kospi was flat at 2,520.14. In Australia, the S&P/ASX 200 advanced 0.4pc to 7,062.90. In Bangkok, the SET fell 0.4pc. India’s Sensex lost 0.3pc and Taiwan’s Taiex edged 0.1pc higher.

The members of OPEC+, whose oil income props up their economies, are due today to try to forge a consensus on production cuts after postponing a meeting originally set for Sunday.

The Dow Jones Industrial Average of 30 leading American businesses rose 0.04pc on Thursday to 35,430.42, while broader S&P 500 lost 0.1pc to close at 4,550.58. The Nasdaq Composite index, which heavily features technology companies, dropped 0.2pc to 14,258.49.

The yield on benchmark 10-year US Treasury bonds was down six basis points to 4.278pc, from 4.336pc late on Tuesday.

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This notice was published: 2023-11-30 07:36:58


Our expert answers your questions Business

Jane Pourtney’s question is:To what extent are A level and university essay questions being redesigned to overcome AI assistance?”

Here’s what our experts says:

“One of the first clear impacts of ChatGPT has been a cheating epidemic. Thousands of students have turned in essays and homework generated by the system, leading some schools and universities to ban the software. 

“Others have turned to anti-cheating tools designed to check if something has been written by AI, although many produce errors, leading students who have written their own work being falsely accused of cheating.

“Teachers seem to be gradually adapting, rather than resisting, however. Some are moving essay writing to the classroom, where students cannot use ChatGPT. Others are allowing students to use the software, but adding interviews to show that students understand the subject. 

“The latter might prove more useful: like calculators and spell check, students are likely to continue using AI in the world of work.”

Another reader, Charlie Jones, asks:If you were a teenager soon to be making choices for university and future career, what would you seek or avoid with AI in mind?”

James replies: 

“This is a great question. The instinctual answer is computer science or maths: if AI is going to replace jobs, it seems a safe bet that at least the people developing it will be in employment. 

“Any skilled physical job is likely to be in demand for some time: while software has come on in leaps and bounds, robots remain a challenge. Lawyers will have no shortage of work either, judging by the frequent lawsuits against AI companies from people who say they have been libelled or had their data stolen.

“With some exceptions, however, many of today’s jobs are still likely to exist, just in different forms. AI is a tool that still requires human intervention.”

A question from Joe Jackson:Should we consider films based on tech, such as Will Smith in I, Robot being a very possible reality within the next 50 years?”

James answers: 

“Probably not. Hollywood movies such as The Terminator have done a good job of entertaining us but a pretty poor job of educating us about an AI future. For example, they often give AI human qualities – a lust for power – that we have no evidence they possess.

“50 years is a long time frame, and AI will undoubtedly make huge advances over the decades. 

“We should certainly be wary of the risks – but the most risky scenarios to do with AI are probably about humans incorrectly deploying them in areas like weapons systems than the typical Hollywood examples of a race of robots enslaving humans.”

Peter Mitchell asks: “Will AI be able to replace customer service operators?”

Our expert replies:

“This is something that is already happening. Go on many websites today and you’ll find yourself talking to an AI bot, rather than a human operator. Energy provider Octopus, for example, says that customers actually prefer communicating with AI than staff.

“AI is unlikely to be able to answer all queries for many years, but the number of cases it can deal with are likely to gradually increase until it is handling the majority of customer service issues. 

“For now, AI is better at answering chats and emails than phone calls, but voice recognition and replication technology means that is changing too, although some people may find it uncanny.”

Finally, reader Peo Rakata would like some advice: “As a finance and banking professional, how can one adapt to the new AI environment to avoid retrenchment?”

In response, James says:

“It is hard to predict, but the white collar jobs that are probably most at risk from artificial intelligence are those in repetitive or data-intensive tasks: data entry and analysis, compliance, and so on. Those that involve a lot of personal interaction are less likely to be affected. That is probably the case from finance to a lot of other office-based jobs.

“These changes tend to happen relatively gradually though, and employers often find new jobs for their workers. Computers and the internet have changed offices hugely, but we still have just as many people employed in them, even though we have fewer typists and secretaries.”

Do you have a question about AI? Please leave it in the comments section

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This notice was published: 2023-11-01 10:44:51


I am just being real about the economy, says Andrew Bailey Business

Thanks for joining me. Saudi Arabia will own 10pc of Heathrow after Spanish infrastructure giant Ferrovial announced it was offloading its 25pc stake in Europe’s busiest airport.

Ferrovial, which was the transport hub’s largest shareholder, said it has reached a £2.4bn deal to sell its remaining shares to the Saudi Public Investment Fund (PIF) and Paris-based Ardian, which will take a 15pc holding.

The deal brings to an end Heathrow’s long association with Spanish company, which began with controversy in 2006 when Ferrovial launched a successful hostile bid for BAA, the UK airports operator.

The sale, first mooted in August last year, comes after Heathrow said it recorded its highest-ever September passenger numbers of more than seven million, which also marked the first time it exceeded pre-pandemic traffic figures.

Saudi Arabia’s PIF has become a major investing force around the world as part of Crown Prince Mohammed bin Salman’s efforts to diversify’s the Gulf state’s economy away from oil. It aims to hold $2trillion (£1.6trn) in assets by 2030.

Luke Bugeja, head of Ferrovial’s airports business, said: “Over the last 17 years, we have been contributing to Heathrow’s transformation, together with our fellow shareholders, achieving some excellent milestones throughout our long-term role as investor.

“We are very pleased to have made Heathrow one of the world’s most connected airports and the busiest airport in Europe.”

5 things to start your day 

1) Downturn in tech and construction make London redundancy capital of Britain | One in six companies planning to cut staff as hiring sentiment among employers plunges

2) Taxi war cools as black cabs return to Uber for first time in six years | Taxi union says its drivers are unlikely to sign up due to company’s track record

3) Why the Bank of England’s doom mongers are a thorn in Rishi Sunak’s side | Growing divisions spell trouble for the Prime Minister gearing up for a difficult election

4) Warren Buffett’s right-hand man Charlie Munger dies aged 99 | The duo were famed for their long run of outperforming the American stock market

5) Jeremy Warner: The Brexit betrayal is complete: surging migration is becoming an economic burden | Without the promise to take back control of Britain’s borders, Leave would not have won

What happened overnight 

The S&P 500 index of 500 listed American companies was up 0.098pc yesterday at 4,554.89. The Dow Jones Industrial Average of 30 leading US companies rose 0.24pc to 35,416.98, while the Nasdaq Composite index, which is skewed towards technology businesses, rose 0.29pc to 14,281.76.

The yield on 10-year US Treasury bonds declined five basis points to 4.33pc after comments by US Federal Reserve Governor Christopher Waller, who votes on US interest rates. He said: “I am encouraged by what we have learned in the past few weeks – something appears to be giving, and it’s the pace of the economy.” Economic data from October “are consistent with the kind of moderating demand and easing price pressure that will help move inflation back to 2pc”, he told a conference.

Asian stocks briefly made one-week highs on Wednesday, bonds rallied and the dollar sank on new hints at US interest rate cuts.

In New Zealand, the dollar jumped after its central bank said another hike may be necessary if inflation proves stubborn. The New Zealand dollar was last up 1.1pc at a four-month high of $0.6207, having blown past resistance.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5pc in early trade before weakness in Hong Kong tech shares dragged it back to flat. Japan’s Nikkei fell 0.2pc. 

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This notice was published: 2023-11-29 09:17:05


UK inflation ‘becoming more home grown’ warns Bank of England deputy governor Business

Thanks for joining us. The Chancellor’s Autumn Statement has imposed measures which could increase food price inflation, retail chiefs have warned.

Helen Dickinson, chief executive of the British Retail Consortium (BRC), said changes to pay and taxes introduced by Jeremy Hunt in the Autumn Statement risk sending prices higher.

She pointed to increases in the minimum wage and business rates for supermarkets, which will increase costs for the businesses.

5 things to start your day 

1) Central bank spending is like ‘heroin’ for households, says Jamie Dimon | JP Morgan boss says US economy is addicted to debt

2) Twitter loses 3 million monthly UK visitors after Musk takeover | Users switch to rival platforms amid concerns over looser moderation and falling quality

3) Sunak’s net zero backsliding ‘deeply damaging’ for Britain, warns Lord Stern | Interview: Former chief economist on why the PM’s climate policy is a diplomatic disaster

4) The OpenAI soap opera is a lesson in why greed is good | The ChatGPT creator’s radical experiment in corporate governance has unambiguously failed

5) Crazy environmental standards risk turning Britain into a nation of green ghost towns | Heavy-handed regulation is accelerating a downturn in commercial property

What happened overnight 

Shares were mixed in Asia after Wall Street benchmarks edged lower as investors waited for updates on inflation and how American consumers are feeling about the economy.

Tokyo and Hong Kong fell while Shanghai, Seoul and Sydney gained.

Later, the Conference Board will issue its latest report on consumer confidence, which has remained solid throughout the year. Economists polled by FactSet expect another solid reading for the October report.

The Hang Seng in Hong Kong slipped 0.6pc to 17,419.42. Sensetime’s shares sank 5.6pc, having fallen as much as 9pc, after short-seller Grizzly Research accused the artificial intelligence software company of inflating its revenue figures. 

In a notice to the Hong Kong Stock Exchange, Sensetime said the allegations were “without merit” and showed a lack of understanding of the company’s business and its financial reporting.

Elsewhere, Japan’s benchmark Nikkei 225 index closed down 0.1pc at 33,408.39, while the broader Topix index slipped 0.2pc to 2,376.71.

South Korea’s Kospi jumped 0.8pd to 2,514.45 and the Shanghai Composite index edged 0.1pc higher, to 3,034.80.

Australia’s S&P/ASX 200 added 0.3pc to 7,011.10 and India’s Sensex was up just 18 points at 65,980.48. Bangkok’s SET gained 0.4pc.

The Dow Jones Industrial Average of 30 leading American companies dropped 0.2pc on Monday to 35,333.47. The S&P 500 – much loved by index fund investors looking for a broad base of American companies – dipped 0.2pc to 4,550.43, while the Nasdaq Composite index, which is heavily skewed towards technology companies, dropped 0.1pc to 14,241.02.

The benchmark 10-year US Treasury bonds were down nine basis points to 4.394pc.

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This notice was published: 2023-11-28 09:10:06