Closing summary

Stock markets in Europe and the US are trading cautiously higher ahead of tonight’s US Federal Reserve meeting. Most Asian stocks fell for a fourth day, while Hong Kong’s Hang Seng rose 1.5%, following losses of more than 4% on both Monday and Tuesday – the worst two-day decline since the financial crisis in 2011.

The UK’s FTSE 100 index is back above 7,000, propped up by Barclays, whose shares have risen 3.8% after it unveiled a bounceback in profits.

Other corporate news covered in the blog earlier: Aston Martin sales trebled in the first half thanks to the success of its new DBX sports utility vehicle. Anglo-Australian miner Rio Tinto has more than doubled its profits for the first half of the year as soaring post-pandemic commodity prices unearthed record revenues of $12.3bn for the company. GIC, the Singapore sovereign wealth fund, has joined the consortium bidding for Morrisons. And GSK struck a deal with the EU to supply 220,000 doses of a monoclonal antibody drug as a Covid-19 treatment.

Our main stories today:

Barclays has increased the size of its banker bonus pool by more than a third to almost £1.1bn after a rebound in profits, amid an improving economic outlook as pandemic restrictions recede.

Wizz Air has said it expects passenger numbers to return to pre-pandemic levels in August amid a steady climb in summer holiday bookings despite Covid-19 pandemic restrictions across Europe.

The UK government has nationalised the defence manufacturer Sheffield Forgemasters to secure the supply of parts that are vital for the Royal Navy’s ships and submarines.

The Queen’s bank Coutts will offer carbon credits and green mortgages to its ultra-wealthy clients after becoming one of the largest UK banking brands to secure B Corp status.

ITV said it has put the worst of the coronavirus pandemic behind it, after the Euro 2020 football tournament and the easing of lockdown restrictions fuelled the largest June advertising revenues in its 66-year history.

Gender equality in UK music industry boardrooms has improved over the last year, with the boards of 12 major trade organisations now averaging at 42% female – a rise from 34% in 2020.

Many thanks for reading and your comments! ‘See you’ tomorrow. Bye, JK

Wall Street opens slightly higher

The opening bell has rung on Wall Street. The Nasdaq opened 0.4% higher at 14,725, a gain of 64 points, after strong results from Google parent Alphabet, Microsoft and Apple last night, but swiftly pared gains to 0.1%. The Dow Jones and S&P 500 also edged higher at the open, by 0.1% and 0.2% respectively.

European stock markets are still trading higher, following losses in recent days.

  • UK’s FTSE 100 up 0.3% at 7,014
  • Germany’s Dax up 0.2% at 15,548
  • France’s CAC up 0.8% at 6,583
  • Spain’s Ibex up 0.3%
  • Italy’s FTSE MiB up 0.6% at 25,236

US trade deficit widens in June

The US trade deficit widened in June as imports continued to climb, with the economy recovering from the pandemic slump.

The trade in goods gap rose 3.5% to $91.2bn last month, the US Commerce Department said. The figures were published ahead of tomorrow’s GDP data for the second quarter.

Economists polled by Reuters are predicting a robust 8.5% annualised rate for the April to June quarter, up from the first quarter’s 6.4% growth. This would be the fastest since 1983 and could mark the peak in the current cycle.

A bit more on GSK. The drugmaker made coronavirus-related revenues of £276m in the first half of the year, including £260m from supplying its adjuvant to Covid vaccine makers to enhance their immune response, and £16m from its coronavirus treatment sotrovimab.

Unlike UK rival AstraZeneca and US rival Pfizer, GSK has not developed its own Covid-19 vaccine. It is, however, providing its adjuvant to a jab that is being developed by France’s Sanofi, and is also working with German biotech CureVac on a new generation of mRNA vaccines that are effective against new Covid variants.

Canada’s annual inflation rate fell to 3.1% in June from 3.6% in May, according to official figures. This is still above the 2% rate targeted by the Bank of Canada.

Policymakers and investors around the world are closely watching growing inflation pressures, pushed up by rising commodity prices and worker shortages.

Walmsley said GSK is expecting the US to return to normal by the end of the year, although ovarian cancer diagnosis rates are still 20% below normal levels, as health systems around the world prioritise dealing with coronavirus patients. The company has high hopes for its shingles vaccine Shingrix – singles affects one in three people.

Asked about the “pingdemic,” she said that several members of her closest team had been pinged by NHS Test and Trace and gone into isolation, and there others had been pinged across the organisation in recent weeks, but she stressed the situation was manageable.

Hospitals, transport companies and supermarkets have all been affected by high numbers of people being pinged and having to isolate.

On a call with journalists, GSK chief executive Emma Walmsley said she and other executives have held more than 400 meetings with investors since April, including top shareholders.

She didn’t mention names, but presumably this includes the New York hedge fund Elliott, the activist investor that took a sizeable holding in GSK in April and has since been pushing for change, including an overhaul of the board and potentially a sale of the consumer health division.

She said “There is strong support for the strategic focus on innovation,” i.e. increasing research & development spending to develop new drugs. Overall, “a huge amount of support, including broad support for our separation”.

Many [shareholders] expressed a positive view on being owners of the new consumer health business [which will be spun off next summer via a demerger].

What they want us to focus on is execution. We are making good progress on that.

GSK recently appointed Brian McNamara, who joined from Novartis in 2015 as chief executive-designate of the new consumer healthcare business next year. The company has faced questions over why it has not run a similar selection process for the leadership of the pharmaceuticals and vaccines business, which Walmsley will lead.

Updated

GSK profits beat forecasts

GSK has beaten forecasts with second-quarter results, after hospital visits picked up as Covid-19 restrictions were eased, boosting vaccine sales.

This means its expected drop in 2021 profit will be smaller than thought.

Sales rose to £8.1bn between April and June, up 15% at constant exchange rates which strip out currency fluctuations. Pharmaceuticals posted 12% growth to £4.2bn while vaccines were 49% ahead at £1.6bn, and consumer healthcare contributed £2.3bn, up 3%. However, profits fell to £1.5bn from £2.6bn a year earlier.

Emma Walmsley, the chief executive, says:

GSK delivered an excellent performance in Q2. We expect this positive momentum to continue through the second half of the year driving us towards the better end of our earnings guidance range for 2021, and meaningful performance improvement in 2022. We continue to strengthen our pipeline and are advancing well towards separation.

The company, Britain’s second-biggest drugmaker by market value, plans to split off its consumer healthcare business next summer, leaving it with pharmaceuticals and vaccines.

Updated

Aston Martin sales treble due to DBX success

Meanwhile, Aston Martin’s sales to dealers more than trebled in the first half of 2021 compared to the pandemic-hit start of 2020, as revenues from its new DBX helped the struggling carmaker reduce its losses, reports Jasper Jolly.

The British carmaker sold 2,901 cars during the six months to June, up from 895 in the equivalent period in 2020. It expects to sell 6,000 cars this year, before expanding to 10,000 a year by 2025. Comparisons are skewed by the start of the coronavirus pandemic when car dealers and factories closed down across the world, but it still represented an improvement for the carmaker, which was rescued by fashion billionaire Lawrence Stroll at the start of 2020.

The venerable carmaker had appeared to be nearing its eighth bankruptcy even before the pandemic disrupted sales, after staking its future on the DBX, an SUV. The end of 2021 could also deliver it a marketing boost with the long-delayed release of the next James Bond film, No Time to Die, on 8 October. The film franchise will once more feature several Aston Martin cars.

Aston Martin cut its losses before tax to £91m in the first half, down from £227m in the year before. Its adjusted measure of profitability suggested it is now generating profits from its core operations. Stroll, who serves as executive chairman, says:

The demand we see for our products, the new product pipeline and the quality of the team we have in place to execute, gives me great confidence in our continued success as we progress towards achieving our medium-term targets of 10,000 units, £2bn revenue and £500m of adjusted EBITDA, as we transform Aston Martin to be one of the greatest ultra-luxury car brands in the world.

Updated

GSK to supply Covid drug to European Commission

GSK and San Francisco-based Vir Biotechnology have struck an agreement with the European Commission to supply up to 220,000 doses of their therapy sotrovimab as a Covid-19 treatment. It’s a monoclonal antibody and will be used to treat adults and teenagers from the age of 12. The announcement comes ahead of second-quarter results from GSK at noon.

The contract has been signed by 16 of the 27 EU states. The drug can be used to treat coronavirus patients with mild symptoms who don’t need oxygen.

George Katzourakis, senior vice president, Europe at GSK, says:

This agreement with the European Commission represents a crucial step forward for treating cases of Covid-19 in participating EU member states, as it enables access to sotrovimab for high-risk patients who have contracted the virus.

Updated

Rio tinto doubles profits on soaring commodity prices

Anglo-Australian miner Rio Tinto has more than doubled its profits for the first half of the year as soaring post-pandemic commodity prices unearthed record revenues of $12.3bn for the company, reports Jillian Ambrose.

The miner’s better than expected profits for the first six months of the year more than eclipsed the company’s profits over the whole of 2020, following a boom in the market price for iron ore. The cash flow deluge will also hand shareholders in Rio Tinto a windfall dividend of $9.1bn, or $5.61 a share after a year in which the company prompted outrage by destroying the sacred Juukan Gorge rock shelters in Western Australia.

Rio Tinto is one of the world’s biggest producers of iron ore, which is in high demand in China as the superpower ramps up its economic activity in the wake of the Covid-19 pandemic. Other mining giants - including Anglo American, BHP, Glencore and Vale - are also expected to report bumper profits when they reveal their results in the coming weeks.

Singapore sovereign wealth fund joins consortium bidding for Morrisons

Singapore’s sovereign wealth fund has joined a consortium bidding for the Morrisons supermarket group, reports our retail correspondent Sarah Butler.

GIC, which has previously invested in UK retail property assets including the Bluewater shopping centre, will invest equity in the £6.3bn Morrisons bid alongside the US investment fund Fortress, the billionaire Koch family and Canada Pension Plan Investment Board.

The group are also continuing talks with investment firm Apollo. The arrangement comes after Morrisons’ biggest shareholder, Silchester Asset Management indicated it would not back the Fortress bid, which has been recommended by Morrisons’ board, at a shareholder vote scheduled for 16 August.

Investors are waiting to see if a potential rival offer from private equity group Clayton Dubilier & Rice will emerge before its deadline of 9 August. Morrisons share price suggests investors are expecting a higher bid to emerge.

Updated

‘We have to pay the price’: Oslo’s plan to turn oil wealth into climate leadership – a feature from our energy correspondent Jillian Ambrose. She writes:

The city of Oslo was built on wealth generated by the North Sea, which for decades has produced billions of barrels of oil and gas. But Oslo now hopes to lead Norway’s transformation from one of the world’s largest exporters of fossil fuels to a global green pioneer.

For Raymond Johansen, Oslo’s governing mayor, helping to lead global efforts to tackle the climate crisis is both a pragmatic economic response to Norway’s declining fossil fuel industries, and a moral obligation to provide solutions for a crisis it helped to create.

At the heart of Johansen’s plan stands an otherwise unassuming industrial waste incinerator. The Oslo Varme plant, on the outskirts of the capital, generates heat and electricity by burning rubbish and is by far Oslo’s biggest carbon polluter. But the plant was shortlisted earlier this year among schemes competing for €1bn in support from the EU’s low-carbon innovation fund. Johansen says Oslo wants to turn the incinerator into a blueprint for how cities across Europe can cut carbon emissions while tackling their waste.

“It is one of my biggest ambitions as the leader of Oslo,” says Johansen. “We are small enough and big enough at the same time to provide a test bed for western Europe.”

UK financial watchdog sets diversity targets

Companies listed on Britain’s stock market should aim for women to make up at least 40% of their boards or explain why this hasn’t been achieved, the Financial Conduct Authority said today.

It has launched a consultation on its proposal until 22 October.

  • At least 40% of the board should be women (including those self-identifying as women).
  • At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Chief Financial Officer (CFO) or Senior Independent Director (SID) should be a woman (including individuals that self-identify as a woman.
  • At least one member of the board should be from a Non-White ethnic minority background (as defined by the Office for National Statistics).

Clare Cole, director of market oversight at the FCA, says:

There is a current lack of standardised and mandatory transparency about diversity on listed company boards, particularly outside the FTSE 350 who do not provide data to the voluntary initiatives in this area. But interest from investors is growing and companies are increasingly focusing on this topic due to ESG investing, as well as wider social and public policy concerns.

Our proposals are intended to increase transparency by establishing better, comparable information on the diversity of companies’ boards and executive committees. This will provide better data for companies and investors to assess progress in these areas and make investment decisions, reduce investor search costs, and inform shareholder engagement, enhancing market integrity.

Over time, we expect enhanced transparency may strengthen incentives for companies towards greater diversity on their boards and encourage a more strategic approach to diversity in their pipeline of talent. This may have broader benefits in terms of the quality of corporate governance and company performance in due course.

Unite’s assistant general secretary for manufacturing, Steve Turner, says this is the news “we’ve waited two years to hear,” after Unite had been locked in a long battle with the Ministry of Defence.

It brings to an end years of instability for this historic 215 year-old company, but is also a sign that government is maybe finally waking up to a crisis of its own making. Critical infrastructure industries like steel function better in public hands and advanced economies like our own need to have stable, secure domestic steel production capabilities to protect our national security interests as well as to compete in global markets.

But we only got to today’s good news because our members at Sheffield Forgemasters had the confidence and faith to invest in their plant’s future. We will now work with the government and company to ensure that those workers who put their hands in their own pockets to support the company do not lose out.

Sheffield Forgemasters nationalised

The UK government has nationalised defence manufacturer Sheffield Forgemasters to secure the supply of parts that are vital for the Royal Navy’s ships and submarines, reports my colleague Jasper Jolly.

The Ministry of Defence (MoD) will spend as much as £400m over 10 years to replace equipment and infrastructure that is needed for the company’s defence programmes.

It is the latest twist in the long history of one of Britain’s oldest companies. The company can trace its origins to the 1750s as a small blacksmith forge, before it was started as a commercial enterprise in 1805.

However, it has struggled in recent decades as the steel industry has come under intense pressure from cheaper competitors in countries such as China and India. The MoD spent only £2.6m to acquire its entire share capital.

Sheffield Forgemasters had focused in recent years on producing specialist forgings and castings for submarine platforms and surface vessels for big manufacturers including Rolls-Royce, BAE Systems and Babcock International. Those companies provided guarantees to support the financing of the company until the MoD provides it with cash to support its operations.

The deal will complete on 19 August, after the company’s shareholders agreed to sell. It will continue to be led by its existing management.

Union bosses welcomed the takeover. Steve Turner, Unite’s assistant general secretary for manufacturing, said: “It brings to an end years of instability for this historic 215 year-old company, but is also a sign that government is maybe finally waking up to a crisis of its own making.

Marston's sales at 90% of pre-pandemic levels

The pubs group Marston’s has joined others in the industry (Wetherspoons’s and the British Beer and Pub Association) to call on the UK government to make a coronavirus tax cut permanent, as the hospitality industry tries to recover from the pandemic.

The government cut VAT for cafes, restaurants and hotels to 5% from 20% in July 2020 as a temporary measure, and plans to raise this to 12.5% for six months from October, before VAT reverts to 20%.

Ralph Findlay, Marson’s chief executive, says:

The last 16 months have been extremely difficult, but we are delighted to be fully open again.

The tone of government messaging will be an important influence on consumer confidence. At present, the message is one of caution. We believe that a government review of the business rates system is long overdue and that VAT reduction should be permanent since the hospitality industry remains one of the most heavily taxed sectors. This would assist an industry that has been hit hard and aid hospitality’s employment and development of young workers which will be a key part of the UK’s economic recovery.

His comments came as the company said food and drink sales had returned to 90% of 2019 levels between 12 April (when pubs were allowed to reopen outdoors) and 24 July, boosted by warmer weather and the delayed Euro 2020 football tournament. Marston’s opened 70% of its 1,500 pubs on 12 April and all of them have been open since 17 May when government restrictions were eased further.

Here is our full story on ITV, which made the largest June advertising revenues in its 66-year history thanks to the Euro 2020 football tournament and the easing of lockdown restrictions.

Danni Hewson, financial analyst at the stockbroker AJ Bell, says:

A bullish set of results from ITV shouldn’t come as a surprise. The reopening of the economy is a natural driver for companies to increase advertising and so ITV’s associated revenue has grown by a decent rate.

It’s also helped that the company’s blockbuster show Love Island is back on the nation’s screens, which means another rush by advertisers to bag a slot in the commercial breaks. And let’s not forget the Euro football championship which brought another one-off boost to viewer figures and therefore advertising demand.

This is fine now, but ITV’s position longer term remains uncertain. There is structural shift of advertising away from TV and towards online channels. ITV may have done well in the past year thanks to people being at home during the pandemic and who, having exhausted everything on Netflix, found themselves watching traditional TV channels again.

However, there is a real risk that was a one-off event, and streaming programmes and films on-demand will rule once more. That places even more pressure on ITV to come up with must-watch shows. As such, it will have to plough significant amounts of money into the studios arm to enrich its content.

Advertising regulations continue to tighten, with a junk food ban pre-9pm on TV from 2023 likely to have a major impact on ITV’s earnings, given how that market is a key source of advertising income.

Updated

FTSE 100 back above 7,000, lifted by Barclays

And on the stock markets, the FTSE 100 index has turned positive, trading 0.2% higher at 7,011, a gain of 15 points that has taken it back above the 7,000 level.

The UK’s blue-chip index has been boosted by Barclays, whose shares are up 4.3% after it announced that it would hand more than £800m to shareholders from dividends and share buybacks after a rise in profits, as the UK economy recovers from the coronavirus pandemic.

Barclays is the first major UK bank to hand money back to investors since the Bank of England scrapped the remaining Covid restrictions on shareholder payouts, which were introduced by the central bank at the start of the pandemic last year.

Updated

Pound rises to highest rate vs euro since April

The pound has hit the highest rate against the euro since early April this morning at €1.18, as the government is set to approve changes today which will see the UK open its doors to double-vaccinated tourists from the EU and US.

Ian Strafford Taylor, CEO at travel money firm FairFX, says:

Despite taking a tumble at the end of last week and dropping to €1.15, the pound has made a rapid recovery and is hitting highs of €1.18 against the euro this morning – the best rate since April.

Following the news that the government is set to approve changes today which will see the UK reopen its doors to double-vaccinated tourists from the EU and US, the pound remains strong and is currently 10% higher against the euro compared to when the country first went into lockdown last year.

The US dollar edged slightly higher, as traders await the outcome of today’s US Federal Reserve meeting. The dollar index rose 0.1% to 92.5 after trading lower in Asian hours.

In Italy, business and consumer confidence improved in July, in contrast to France, where consumer sentiment worsened slightly, and Germany, where confidence held steady.

Italy 🇮🇹

|| Business Confidence Index (Jul) ||
115.7 (Actual)
115.4 (Forecast)
114.8 (Previous)

|| Consumer Confidence Index (Jul) ||
116.6 (Actual)
115.5 (Forecast)
115.1 (Previous)

— Your Trading Advisor (@YTradingAdvisor) July 28, 2021

#Italy Consumer confidence July 2021 116.6 vs 115.5 exp:
Pr 115.1.
Manufacturing conf 115.7 vs 115.4 exp. Pr 114.8.
Econ sent 116.3 vs 112.8 pr.
France cons conf out earlier at 101 vs 103 pr.$EUR

— ForexFlow (@forexflowlive) July 28, 2021

Here is some reaction to the UK house price figures from Nationwide building society.

Tom Bill, head of UK residential research at Knight Frank, says:

The UK housing market will continue to be underpinned by strong economic fundamentals but the distortive effects of the pandemic and stamp duty holiday are fading.

As supply picks up, double digit house price growth is likely to become single-digit growth by the end of the year. Demand remains strong despite the end of the stamp duty holiday, a fact that will be reinforced if Covid starts to move further into the rear-view mirror, which is something prospective sellers should be aware of ahead of the autumn market.

"House price growth probably now has peaked." @samueltombs on U.K. Nationwide House Prices, July #PantheonMacro

— Pantheon Macro (@PantheonMacro) July 28, 2021

The housing market is usually very seasonal and any house price growth during the calendar year end has typically happened by now.
Today's Nationwide data reports prices are up 6% since the start of the year and normally that's the level I'd now be expecting for the year end. pic.twitter.com/1Z7DxSuD0S

— Neal Hudson (@resi_analyst) July 28, 2021

Consumer confidence in France worsened slightly in July, according to the economic institute Insee. Its main sentiment indicator fell to 101 points from 103 points in June, but remains above its long-term average (100).

The share of households considering it is a suitable time to make major purchases has declined markedly, after a sharp increase in June. That indicator fell five points but remains above its long term average.

The households’ opinion balance related to their future financial situation has fallen by three points. The one related to their personal past financial situation has shed one point, but both balances stay well above their long-term averages.

Consumer Confidence in France decreased to 101 points in July from 103 points in June of 2021. https://t.co/D4ZREV5E7E pic.twitter.com/tLRBUzJnpW

— Trading Economics (@tEconomics) July 28, 2021

Wizz Air issued a positive outlook this morning, and will no doubt benefit from UK government plans to open up international travel.

This is good news for people wanting to enter Britain:

Plans to significantly open up international travel are expected to be announced on Wednesday, with UK ministers poised to let people who have been fully vaccinated in the US and EU avoid quarantine if arriving from amber list countries, reports The Guardian’s political correspondent Aubrey Allegretti.

The move would benefit millions of people by finally letting them be reunited with family and friends based in the UK, as well as businesses in the aviation and tourism sectors that have been hit hard by the pandemic.

In other banking news, the private bank Coutts will offer carbon credits and green mortgages to its ultra-wealthy clients after becoming one of the largest UK banking brands to secure B Corp status, writes Kalyeena Makortoff.

Coutts, known as the Queen’s bank for having served every member of the royal family since George IV, is trying to bolster its environmental and social reputation after being dogged by a series of scandals in recent years, including sexual harassment allegations against its former star banker Harry Keogh, who was sacked in 2018. The bank was also fined by Swiss regulators in 2017 over alleged money laundering and for illegally profiting from transactions associated with the 1MDB scandal.

The lender has now secured B Corp certification, which is meant to signal that a company upholds high standards in its dealings with staff, the community, customers and the environment.

It joins more than 500 other B Corps in the UK – including energy company Bulb, The Body Shop, and Jamie Oliver Group – which are required to value purpose as much as profit and commit to improving their performance every year. The Guardian’s publisher, Guardian Media Group, is also a B Corp.

Updated

FTSE falls at the open, Europe higher

Stock markets have started trading in Europe, and the FTSE 100 index in London has slipped 0.2%, or 16 points, to 6,980 at the open. Mainland indices have edged higher: Germany’s Dax is up 0.1% while France’s CAC and Spain’s Ibex have both gained 0.2%.

ITV enjoys record June

ITV said it has put the worst of the coronavirus pandemic behind it after the Euro football championships and the easing of English restrictions delivered its highest revenues ever for the month of June, reports my colleague Jasper Jolly.

The broadcaster on Wednesday reported total external revenues of £1.6bn for the first six months of 2021. That was a 27% increase on the £1.2bn it made in the same period in 2020, and 5% bigger than its 2019 performance, before the pandemic hit.

Broadcast revenues were hit hard at the start of the pandemic as big companies reined in their spending. However, the prospect of businesses reopening has meant advertisers are now jostling for position for the rapid economic recovery.

England’s run to the final of the delayed Euro 2020 tournament also helped. ITV broadcast England’s semi-final victory over Denmark in Euro 2020 to a peak of 27.6m people this month. The final defeat to Italy was watched by 31m at peak, making it one of the most watched events in UK television history. Although the majority of viewers were on the BBC, ITV still reported 6m plus another 4.2m online streaming requests.

However, ITV still warned of significant uncertainty ahead. There continues to be a high prevalence of the Delta variant of the coronavirus in the UK, although case numbers have fallen in the last week.

Barclays investors to get £800m payout

Barclays shareholders are in line for a payout of more than £800m, after profits rebounded in the second quarter, reports our banking correspondent Kalyeena Makortoff.

Barclays is the first major UK bank to hand more money back to investors since the Bank of England scrapped the remaining Covid restrictions on shareholder payouts, which were introduced by the central bank at the start of the pandemic last year.

It follows a strong second quarter, with pre-tax profits rising to £2.6bn over the three months to the end of June, up from £359m a year earlier. It also beat analysts’ forecasts for £1.7bn in profits for the period.

The bank benefited from improving economic forecasts following the lifting of most UK Covid restrictions, which meant it was able to release £1bn in bad debt provisions that it had put aside to cover potential defaults related to the pandemic. Barclays, which was forced to put aside £1.6bn during the same period last year, was expected to release £55m, according to consensus estimates.

However, Barclays warned that while the economic forecasts had improved, “the outlook remains uncertain and subject to change depending on the evolution and persistence of the Covid-19 pandemic.”

Updated

Introduction: UK house price growth cools, Asian shares fall for fourth day

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Annual house price growth in the UK has cooled but remains in double digits, according to Nationwide building society. Growth fell back to 10.5% in July from June’s 17-year high of 13.4%. The average price of a home fell 0.5% month on month to £244,229, following a 0.7% rise in June.

Robert Gardner, Nationwide’s chief economist, said:

The modest fallback in July was unsurprising given the significant gains recorded in recent months. Indeed, house prices increased by an average of 1.6% a month over the April to June period – more than six times the average monthly gain recorded in the five years before the pandemic.

The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market. The nil rate band threshold decreased from £500,000 to £250,000 at the end of June (it will revert to £125,000 at the end of September. This provided a strong incentive to complete house purchases before the end of June, especially for higher priced properties. For those purchasing a property above £250,000, the maximum stamp duty saving reduced from £15,000 to £2,500 after the end of June.

He said Land Registry data indicates that higher priced properties have been driving the strong housing market since the pandemic struck. Over the past six months the proportion of sales involving detached and semi-detached homes has gone up while that of flats has declined significantly, as people switched to working from home and sought out bigger properties.

German consumer confidence has held steady heading into August, with the GfK institute’s barometer unchanged at -0.3 points, while economists had expected an improvement to 1.0.

The survey of 2,000 people shows that Germans became more willing to spend, but took a less upbeat view on the economic outlook than a month earlier, amid rising numbers of Covid-19 infections. After more than two months of decline, cases have been rising again since early July, mainly because of the spread of the more infectious Delta variant. About 60% of Germans have had a first shot of a Covid-19 vaccine and half are fully vaccinated.

Wizz Air said it is starting to see a rise in passenger numbers and expects to be the first large European airline to return to pre-pandemic levels by August, but slumped to a deeper first-quarter loss of €114m after operating at 33% during the latest lockdowns.

Asian shares have suffered a fourth day of losses, as a sell-off in mainland China and Hong Kong rippled through the region following Beijing’s intensifying regulatory crackdown on technology and education companies. Japan’s Nikkei lost 1.4% (SoftBank, a major investor in Chinese tech, tumbled 4.7%) and the Australian market shed 0.7%.

As Chinese state-run financial media called for calm, stock markets in the country were volatile, with the Shanghai Composite Index falling as much as 2% before trimming losses to 0.46%. Hong Kong’s Hang Seng reversed earlier losses to stage a late rebound of 1.3%, following sharp declines of more than 4% on Monday and Tuesday. Shares of internet giant Tencent in Hong Kong dropped 3.5% and Alibaba lost 3%.

Analysts at Bespoke Investment Group noted that there had only been one other period in 2011 when the Hang Seng declined more than 7.5% for two days, CNBC reported. Since then, they wrote:

There hasn’t been a single two-day decline since the financial crisis that has exceeded the magnitude of the last two days.

US stocks posted big declines ahead of results from technology giants Google, Apple and Microsoft. They reported record-breaking quarterly sales and profits on Tuesday night as the firms continue to benefit from a pandemic that has created a “perfect positive storm” for big tech. European shares are expected to open slightly higher this morning.

Also coming up

The US Federal Reserve will announce its monthly policy decision at the end of its meeting tonight. Investors are looking for any clues as to how quickly America’s central bank intends to unwind its stimulus.

The Agenda

  • 7.45am BST: France Consumer confidence for July (forecast: 102)
  • 9am BST: Italy business and consumer confidence for July
  • 12pm BST: US MBA Mortgage applications for week of 23 July
  • 1.30pm BST: Canada inflation for June (forecast: 3.2%)
  • 1.30pm BST: US Trade in goods for June
  • 7pm BST: US Federal Reserve interest rate decision
  • 7.30pm BST: US Fed press conference

Updated

Contributors

Julia Kollewe

The GuardianTramp

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All the day’s economic and financial news, as shares rise in Europe after two days of heavy falls

Graeme Wearden (until 1.30pm) and Nick Fletcher

07, Feb, 2018 @6:21 PM

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Pound rises, European shares recover after two-day sell-off – as it happened
Beijing hits back after being branded a currency manipulator by Washington; yuan steadies, European shares stabilise

Julia Kollewe

06, Aug, 2019 @2:07 PM

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UK retail sales bounce back but economists fear grim autumn ahead – as it happened
Rolling live coverage of business, economics and financial markets as retail sales volumes rise by 0.8% in August

Jasper Jolly

18, Sep, 2020 @2:03 PM

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UK, eurozone factories bounce back; US-China tensions rise over TikTok – as it happened
UK factory output at three-year high, eurozone production highest since April 2018 – PMI surveys; TikTok reportedly relocating to London; gold hits new record high

Julia Kollewe

03, Aug, 2020 @2:05 PM

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US retail sales bounce back in February; producer prices rise more than expected – as it happened
US data dampens expectations of early interest rate cuts

Julia Kollewe

14, Mar, 2024 @3:03 PM

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GameStop shares surge in extended trading frenzy – as it happened
Rolling coverage of the latest economic and financial news as organised retail traders continue to cause mayhem for Wall Street

Kalyeena Makortoff

29, Jan, 2021 @3:26 PM

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Stocks bounce as UK awaits signs of border reopening with France – as it happened
Rolling coverage of the latest business and markets news, as borders continue to shut in response to the UK’s new Covid strain

Kalyeena Makortoff

22, Dec, 2020 @3:03 PM

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European stocks hit record high despite coronavirus outbreak – as it happened
Rolling coverage of economics, markets and business as Chinese tariff cuts on US goods help to stimulate markets to record highs

Kalyeena Makortoff (now) and Jasper Jolly (earlier)

06, Feb, 2020 @12:51 PM