Sterling has slumped to below $1.19 as traders assess the Tory leadership candidates against a backdrop of surging inflation and a slowing economy.
The pound dropped more than 1pc against a stronger dollar to as low as $.1898 – a whisker above the lowest level since March 2020 hit last week. Against the euro, the pound was broadly steady at 84.53p.
Boris Johnson’s resignation adds to uncertainty swirling around the economy, which is already grappling with sky-high inflation and the growing risk of a recession.
Leadership hopefuls including Chancellor Nadhim Zahawi and Jeremy Hunt are focusing on major fiscal pledges including tax cuts and extra spending, which could reduce the risk of recession but add to inflationary pressures.
It comes ahead of GDP data due on Wednesday, which is expected to show that the UK economy stalled in May, reinforcing expectations of a contraction in the second quarter.
US stocks fall on earnings jitters
Wall Street’s main indices have opened lower as investors brace for the start of earning season, with worries that surging inflation could dent profits.
The S&P 500 fell 0.5pc at the open, while the Dow Jones was down 0.2pc. The tech-heavy Nasdaq dropped 1pc.
Euro plunges even closer to parity
It’s not just the pound having a tough time today – the euro is also plumbing new lows.
The common currency sank as much as 1.3pc to $1.005, eclipsing last week’s decline and hitting its lowest level since 2002.
The euro has suffered a brutal decline as Russia’s energy cuts threaten to push the eurozone into recession, while aggressive interest rate rises by the Federal Reserve have driven up the dollar.
Bernie Ecclestone charged with fraud over assets worth £400m
Former Formula One boss Bernie Ecclestone has been charged with fraud over a failure to declare more than £400mn assets he held overseas.
The Crown Prosecution Service said Mr Ecclestone, 91, faced one count of fraud by false representation.
Simon York, director at the Fraud Investigation Service of HMRC, said: “This follows a complex and worldwide criminal investigation by HMRC’s Fraud Investigation Service.”
The first hearing in the case is due to be heard on August 22 at Westminster Magistrates Court.
UK asks for more details on Drahi’s BT stake
The UK is stepping up its investigation into French billionaire Patrick Drahi’s stake-building in BT under a new law that could let officials impose conditions or even block the tycoon.
The Government, which had initially set a deadline of last week for the investigation, has paused the process to request more information about the BT deal, Bloomberg reports.
The precise reasons and length of time required for the information notice couldn’t be immediately discovered.
Drahi’s move to take an 18pc stake in the telecoms giant is being scrutinised under the National Security and Investment Act, which came into effect in January and gives ministers the options of clearing or blocking deals, imposing conditions or even unpicking them retrospectively.
Oxford Nanopore sells HQ amid Covid slowdown
Oxford Nanopore, a former favourite of disgraced stock picker Neil Woodford, has sold its headquarters as it battles dwindling demand for its Covid-19 mutation-tracking technology.
Hannah Boland has the story:
The company, which floated in London last year, said it had sold its interest in the Gosling Building, Oxford, for £42.5m. The property has been sold to the Oxford Science Park where the property is located. Nanopore has agreed to lease the site for ten years at an annual cost of £1.8m.
Tim Cowper, chief financial officer, said proceeds from the sale would be “used for continued development of our core business.”
It comes amid spiralling losses after a sales bump from Covid-19 testing came to an end. Losses came in at £168m last year, compared to £61m a year earlier.
In March, Oxford Nanopore warned of a “significant decline in Covid-19 sequencing revenue in 2022”, and said that “no further sales or LamPORE or PCR tests are anticipated”
London bears brunt of post-pandemic working shifts
Brits have changed their working and commuting habits as a result of the pandemic, and London is bearing the brunt of the shift.
That’s according to new figures from the ONS, which showed the number of people commuting into London or working from offices fell by over 30pc in the first quarter compared to the previous three months.
The figure is well above the 19.7pc decline seen across the UK as a whole, while regional commuters into London fell 367,000 over the same period.
London also has the highest percentage of workers classifying the home as their main place of work at 37pc, with the UK more widely standing at 30.6pc.
Nearly a quarter of London respondents reported hybrid work and said they spend at least one day per week working from home – the most nationwide.
The desirability of working from home has continued to increase as the cost-of-living crisis bites. An ONS survey earlier this year found 46pc of those working from home spent less.
The Pret Index also highlighted the decline of people willing to commute into London, with transactions in West End and city worker categories at 94pc and 86pc of pre-pandemic levels as of the week ending June 30.
By contrast, the suburban category is above its pre-pandemic level at 123pc.
Belgian Ryanair pilots to join French strike
The travel chaos just keeps coming today, with Ryanair now bracing for an even bigger walkout later this month.
Belgian pilots at the budget airline will join the strike planned by their French counterparts on July 23 and 24, according to local media reports.
Dider Lebbe, permanent secretary of the CNE union, said cabin crew members were demanding compliance with Belgian labour and a guaranteed minimum salary for all.
Wall Street set to drop
Wall Street looks set to follow the FTSE 100 into the red this afternoon as traders gear up for earnings season for signs on how companies are weathering the inflation storm.
Futures tracking the S&P 500 fell 0.6pc, while the Dow Jones was down 0.5pc. The tech-heavy Nasdaq shed 0.8pc.
Twitter was the biggest loser, dropping more than 5pc in pre-market trading after Elon Musk pulled out of his $44bn takeover.
UK won’t extend windfall tax to electricity firms
The Government isn’t planning to extend the windfall tax on oil and gas companies to electricity generators.
The Prime Minister’s spokesman confirmed the verdict this morning, saying it was in line with policy not to make any major fiscal decisions until a successor to Boris Johnson is in place.
He said: “There’s no plans to do that in line with convention, so we will continue to evaluate the scale of the profits and take appropriate steps – but we have no plans to introduce or extend that to that group.”
Shares in British Gas owner Centrica rose 2.7pc, while Drax and SSE gained 6pc and 3.5pc respectively.
Mercedes sales slump as supply troubles bite
Sales at Mercedes dropped 16pc in the second quarter as continued Covid lockdowns and semiconductor shortages took their toll on production.
Deliveries to China, the world’s largest car market, dropped 25pc, while sales to Europe were down 10pc.
Ongoing supply chain disruption could hurt Mercedes’ plans to cut back on entry-level vehicles in order to focus on higher-end cars that deliver bigger profits.
The German brand said a dearth of chips contributed to a 16pc decline in sales for the top-end luxury category.
However, electric cars sales were a bright spot for Mercedes, with sales of its EQ range nearly doubling to 23,500 units compared to the same period last year.
The first half of the year saw the brand’s EV sales rising to 45,400 units – an increase of 134pc.
Go-Ahead bidder ‘assessing options’ as bus passengers return
A rival bidder in the race to buy transport group Go-Ahead has said it is still assessing its options as the business said some of its buses are as busy as they were before the pandemic.
Kelsian said it has until August 1 to make a firm offer for Newcastle-based Go-Ahead, which operates the Govia Thameslink rail franchise, or walk away.
It is considering whether to muscle in on Go-Ahead’s £650m agreement to be bought by Australian bus operator Kinetic and Globalvia.
The company said: “Kelsian continues to carefully assess all its options in relation to the opportunity and accordingly continues to urge Go-Ahead shareholders to take no action at this time.”
Meanwhile, in a trading update Go-Ahead said it had increased profit guidance for its regional bus division.
The business now expects operating profit before exceptional items to beat the last two years.
Benetton family to sell Autogrill to duty free giant Dufry
The billionaire Benetton family have inked a deal to sell their controlling stake in motorway restaurant operator Autogrill to duty free specialist Dufry.
The deal will create a $6bn player in the travel retail market, with the Benettons taking control of as much as 25pc of Dufry, which is in turn set to bid for the remaining stake of the Autogrill.
The merger comes after the Benettons agreed a deal with Blackstone to take motorway operator Atlantia private.
Alessandro Benetton, son of founder Luciano, is carrying out a shake-up of the family’s holding company Edizione in the wake of the deadly 2018 bridge collapse in Genoa on a section of the road managed by its Autostrade company.
The Benettons eventually sold Autostrade to end a stand-off with the Government over the disaster.
Oil slumps as China’s Covid cases climb
Oil dropped again this morning as a fresh surge in Covid cases in China reignited worries about demand.
Benchmark Brent crude shed 2pc to trade just under $105 a barrel, while West Texas Intermediate was just above $102.
Virus cases continued to climb in cities including Shanghai, with new sub-variants posing a challenge to the country’s zero-Covid strategy.
Oil also fell on a stronger dollar, and on the cancellation of a court order halting loadings from a key Russian terminal.
Oil prices dipped below $100 last week, then rebounded as the market grappled with competing supply and demand outlooks.
US President Joe Biden is scheduled to visit Saudi Arabia in the coming days during a tour of the Middle East as he seeks to tame rising energy prices that are weighing on the global economy.
Zahawi offers tax cuts if departments slash costs
Over in Westminster, the Tory leadership hopefuls are setting out their stalls – and tax is one of the key issues.
Chancellor Nadhim Zawahi this morning pledged to cut taxes if Government departments can reduce spending by 20pc.
He told Sky News: “That’s what I want to make sure we get to. That will give me the headroom for tax cuts.”
Zahawi didn’t give a time frame for his plans and a spokesman later said he was talking about reducing civil service headcount by 20pc – a plan already announced by Boris Johnson – rather than overall costs.
Meanwhile, rival Jeremy Hunt said he wants to “all taxes” if he wins the Tory leadership race and replaces Boris Johnson in No 10.
Tom Tugendhat, another Tory leadership contender, hinted this morning that he would reduce income tax before the next general election.
Russia cuts gas flows to Italy by a third
Russia will cut gas supplies to Italy by a further third, threatening to derail the country’s efforts to refill storage sites ahead of winter.
Kremlin-controlled Gazprom said it will supply Italian energy giant Eni with around 21m cubic metres of natural gas per day, down from an average of about 32m cbm per day over the last few days.
The fresh cut will further reduce gas supply that has already been curtailed by as much as a half since mid June. It comes as Italy battles with drought and a heatwave that are hitting power generation and as the country struggles to fill storages for the winter.
Italy’s gas storage sites are now about 60pc full and the Government has introduced measures, including a €4bn loan, to speed up the filling process.
It comes as Russian gas flows to Germany via the Nord Stream pipeline were halted this morning due to planned maintenance, but European leaders have warned that Putin could turn off the taps completely.
Activist investor tells Purplebricks chairman to resign
An activist investor who’s built up a stake in Purplebricks has called on the company’s chairman to resign after a catastrophic fall in its share price.
Adam Smith has taken a 4pc stake in the online estate agent, which has seen its shares plunge 80pc since listing in 2015 amid a series of profit warnings.
A letter to chairman Paul Pindar on behalf of Mr Smith’s investment vehicle Lecram Holdings said “urgent action is now essential” to restore the credibility of the company with investors.
Shareholders with a stake of at least 5pc can request the board convene an extraordinary general meeting to discuss urgent matters.
The letter, seen by The Times, urges Mr Pindar to step down in favour of a “replacement with necessary experience and skills to address urgently the company’s continuing cash burn and operating performance within the residential estate agency sector”.
A Purplebricks spokesman said: “We sought to meet with Lecram Holdings to discuss their concerns. They declined. It’s disappointing that they chose to go to the media instead rather than engage with us.
“The board is well aware of the urgent need to turn around the performance of the business and become cash flow positive in the near term. We have already implemented a number of initiatives to achieve this under the new leadership of Helena Marston and look forward to setting out our plans in detail as part of our results announcement in early August.”
Things heat up at Stansted
Heathrow isn’t the only airport feeling the heat this morning.
Passengers waiting for delayed flights at Stansted have been herded into a satellite terminal to help ease congestion.
The upstairs floor has no windows or air conditioning, leaving disgruntled travellers somewhat sticky as the UK swelters in a new heatwave.
Gas prices fall as Canada returns key pipeline part
Natural gas prices fell this morning after Canada said it would return a stranded turbine for a key Russian pipeline, raising hopes for an easing of tensions over energy supplies.
Gazprom has been operating the Nord Stream pipeline at just 40pc of capacity since the turbine was sent to Canada for maintenance and wasn’t returned because of sanctions against Russia.
The move will come as a relief to Germany and Europe more widely as countries race to refill storage sites ahead of winter.
Planned maintenance work on the Nord Stream link began today. The real test will come when the work is completed next week, with concerns mounting that Russia may never fully resume supplies.
Benchmark European gas prices and the UK equivalent both dropped as much as 12pc this morning.
Twitter shares slump after Musk walks away
Twitter shares have tumbled in pre-market trading after Elon Musk walked away from a $44bn takeover.
Shares fell as much as 7.8pc this morning, meaning the company is on track to lose $2.2bn in market value when markets open.
Musk backed out of his agreement to buy Twitter over the weekend, setting the scene for a disruptive legal battle.
The world’s richest person has accused Twitter of misrepresenting data on how many spam bots there are on the platform – something the company has denied.
But the complaints were widely seen as an attempt by Musk to reduce the price tag or pull out of the deal completely.
Read more: Why Elon Musk walked away from Twitter
Pound falls ahead of Bailey speech
Sterling slid against a stronger dollar this morning as the risk of more Covid curbs in China exacerbated concerns about the global economic outlook.
Traders will also be turning their attention to Andrew Bailey’s appearance in front of the Treasury Select Committee amid surging inflation and spending pledges by Tory leadership contenders.
The pound fell 0.6pc against a strengthening dollar to $1.1956. Against the euro it edged 0.1pc higher to 84.54p.
Joules calls in advisers to shore up finances
Fashion retailer Joules has confirmed it’s called in advisers to look at bolstering its finances as soaring costs and waning consumer confidence take their toll.
The chain said it’s hired KPMG to help with plans to boost profits and shore up its balance sheet amid reports the company is considering a fresh capital raise.
Joules announced in May that its boss, Nick Jones, would step down in the first half of its next financial year while warning of the impact on profits of the cost-of-living crisis.
Its share price has plummeted by nearly 90pc over the past year, with declines compounded by the profit alert and cash crunch worries.
Joules said it “continues to focus on improving profitability, cash generation and liquidity headroom” and had hired KPMG to assist with this process.
But the company insisted debt levels remain within its banking agreements and as expected by management.
Strikes halt production at Shell’s Australian LNG plant
Shell is said to be shutting down production at its Prelude liquefied natural gas plant in Australia due to strikes.
The oil giant will begin shutdown procedures tonight and evacuate most staff from the offshore facility, Bloomberg reports.
The measures come as storage tanks got too full after a strike prevented loadings. The strike began on June 10 and was expected to last until July 21.
It’s another setback for the Prelude plant, which only resumed exports in April after a fire forced it to shut last year.
It also poses fresh supply troubles as countries around the world try to refill storage sites ahead of winter amid concerns that Putin will turn off the taps.
FTSE risers and fallers
The FTSE 100 has dropped in early trading as worries about China’s Covid restrictions and Europe’s energy crisis take hold once again.
The blue-chip index dropped as much as 1.3pc, before paring losses to a fall of 0.9pc.
Major miners were the biggest drag on the index, with Anglo American, Antofagasta and Glencore all down as much as 5.3pc.
Meanwhile, European markets remained on edge after the biggest single pipeline carrying Russian gas to Germany started annual maintenance amid worries the shutdown might be extended due to war in Ukraine.
The domestically-focused FTSE 250 shed 0.8pc, with Wizz Air slumping 5.6pc after announcing plans to cut 5pc of flights this summer.
Tory ministers held secret meetings with Uber
At least six Conservative ministers including then-chancellor George Osborne and future health secretary Matt Hancock held secret meetings at which they were lobbied by Uber.
Leaked files reveal that Uber lobbyists met the ministers between 2014 and 2016 as the ride-hailing service was battling to win access to the lucrative British market.
A secret meeting with Mr Osborne in California was also attended by senior executives at Google.
The disclosures form part of the Uber files, a massive trove of confidential documents leaked to the Guardian.
Heathrow passengers hit by more delays
Heathrow may have apologised for recent travel chaos this morning, but it’s unlikely to bring much comfort to passengers heading to the airport this morning.
One Twitter users has posted a picture of security queues snaking outside Terminal 2.
Wizz Air slashes 5pc of summer flights
Hot on the heels of Heathrow’s warning, Wizz Air has announced its own flight cuts.
The budget airline said its slashing 5pc of its capacity over the peak summer period in a bid to reduce the impact of staff shortages.
It came as Wizz Air reported a €450m (£381m) loss for the first quarter, driven in part by recent disruption.
However, it expects to post a “material operational profit” in the three months to the end of September thanks to a surge in ticket prices.
Wizz Air’s load factors are now topping 90pc and it expects higher fleet utilisation to help improve costs.
Shares in Wizz Air dropped 5pc in early trading.
FTSE 100 drops at the open
The FTSE 100 has started the week firmly on the back foot as investors turn their attention back to the dual risks of inflation and an economic slowdown.
The blue-chip index fell 1.2pc to 7,106 points.
More strike threats as train drivers vote on walkout
Things could get worse today as we await the results for a strike vote by UK train drivers.
The Aslef union is expected to post results of a vote of more than 21,000 members for a possible walkout over a pay dispute.
Union bosses have said they’re likely to coordinate across the country to maximise chaos for passengers.
A decision to strike would herald a new wave of turmoil on the railways. The so-called summer of discontent also deepened this week with both criminal barristers and post office workers staging strikes.
Heathrow: Rebuilding capacity is ‘very challenging’
Heathrow said rebuilding capacity has been “very challenging”, pointing the finger at other airport delays and airspace congestion as well as its own staff shortages.
Last month, the Government and Civil Aviation Authority asked the sector to review summer schedules, including a slot amnesty to encourage airlines to remove flights without facing a charge.
British Airways and other airlines have cancelled hundreds of flights to try to minimise disruption for passengers.
John Holland-Kaye, chief executive of Heathrow, said: “We will review the schedule changes that airlines have submitted in response to the government’s requirement to minimise disruption for passengers this summer and will ask them to take further action if necessary.”
The airport, which was criticised by International Air Transport Association (IATA) boss Willie Walsh yesterday for not preparing better for the surge in demand, said the entire aviation supply chain faced challenges.
It said it started recruiting in November, and it would be back to pre-pandemic levels in security staff by the end of July.
Heathrow warns of more flight cuts
There could be even more misery ahead for British holidaymakers as Heathrow warned it could tell airlines to cut more flights.
The airport said it would review recent schedule changes and ask carriers to take further action if necessary.
It came as Heathrow apologised for the recent chaotic scenes in the travel hub, saying: “Despite our best efforts there have been periods in recent weeks, where service levels have not been acceptable, with long queue times, delays for passengers with reduced mobility, bags not travelling with passengers or arriving late, and we want to apologise to any passengers who have been affected by this.”
Heathrow said nearly 6m passengers passed through the airport in June, taking the total for the first six months of the year to 25m. That’s equivalent to 40 years of passenger growth in just four months.
5 things to start your day
1) Putin ‘most likely’ to cut gas supplies to Europe – Brace for rationing and blackouts, warns French economy minister Bruno Le Maire
2) Space entrepreneurs to oversee British satellite launches from the sofa – Lockheed Martin to open remotely accessed mission control centre in Oxfordshire
3) Hydrogen-powered jet engines to be mass produced at British factory – Start-up ZeroAvia wants to launch zero-carbon emissions flights by 2024
4) Macron held ‘spectacular’ meeting with Uber as it lobbied to rewrite taxi laws – Leaks suggest French president had close relationship with company’s then-boss Travis Kalanick when serving as economy minister
5) The unlikely London suburb where fleeing Hongkongers are starting new lives – Foxtons has set up a special Asia Pacific helpdesk to meet the huge demand from expats
What happened overnight
Tokyo stocks opened higher after Japan’s Liberal Democratic Party secured a strong win in Sunday’s upper house election.
The benchmark Nikkei 225 index rose 1.6pc, while the broader Topix index climbed 1.4pc.
Hong Kong stocks fell more than 1pc at the start of business. The Hang Seng Index dropped 1.2pc, the Shanghai Composite Index dipped 0.5pc and the Shenzhen Composite Index on China’s second exchange eased 0.4pc
Coming up today
Corporate: No major scheduled updates
Economics: Monthly budget statement (US); Eurogroup meeting (EU)