Bank shares rally as Italy waters down windfall tax; UK heads towards five years of lost economic growth – as it happened

Time to wrap up – here are today’s main stories:

The UK’s FTSE 100 share index has closed 60 points higher tonight at 7587 points, up 0.8% today.

That’s its highest closing level in a week.

BP gained around 2.5%, lifted by the jump in oil prices today.

Italy’s FTSE MIB has gained around 1.3% today, as bank shares rallied after the new windfall tax was capped.

Here’s CMC Markets’ Michael Hewson on the European stock markets today:

European markets have been in a much more ebullient mood today despite further economic data from China that points to a weakening economy, after headline CPI fell into deflationary territory for the first time since early 2020.

While this comes across as encouraging for inflation trends in Europe, as well as the US, in that it could prompt the end to further rate hikes from central banks here, it does little to paint a positive outlook for a broader China recovery.

Nonetheless markets appear to be trading on the basis that price pressures are likely to ease further, although the best performing sectors are basic resources and energy, with oil prices rising to 9-month highs, and European natural gas prices rising sharply on the back of supply concerns and the prospect of worker strikes at Australian LNG facilities.

In the tech sector, Amazon is in talks to become an anchor investor in the upcoming stock market flotation of British microchip designer Arm.

Energy giant E.On has reported an €8bn (£6.9 billion) increase in its UK sales over the last six months.

PA Media reports:

Sales in the UK rose at breakneck speed, hitting a little under €21bn (£18.1bn), up from €12.8bn (£11bn) a year earlier, the business said.

Adjusted EBITDA – a measure of profit which strips out the impacts of tax and other items – more than doubled in the UK to €839m (£723m).

Across the group adjusted EBITDA was €5.7bn (£4.9bn).

We flagged earlier that UK mortgage rates had only dipped slightly this morning, despite hopes that inflation is easing.

Well, there may be larger moves tomorrow, as three large UK lenders have cut their mortgage costs today.

Nationwide, the second-largest mortgage lender, reduced prices on some fixed products by up to 0.55 percentage points.

HSBC trimmed its costs by as much 0.2 percentage points, while TSB lowered rates by up to 0.4 percentage points. The FT has more details here.

European gas markets have recorded their biggest surge in prices since Russia invaded Ukraine early last year, following a strike at two major gas export facilities in Australia.

The benchmark price for liquified natural gas cargoes jumped to more than €42 per megawatt hour for the first time since June, the biggest increase since March 2022.

The price surge was ignited after brokers at Chevron and Woodside Energy Group facilities in Australia voted in favour of industrial action.

Callum Macpherson, Head of Commodities at Investec, said:

“A fear that an outage in Australia could increase demand from Asia buyers for LNG that might otherwise come to Europe, has led to today’s spike in prices.

The day-ahead UK gas price has jumped by 25% to 91p per therm, up from 72p/therm yesterday.

A cautious start to trading in New York sees the Dow Jones industrial average dip by 28 points or 0.08% to 35,286 points.

9 Aug 202309.44 EDT

Wilko suspends home deliveries as it holds talks on rescue deal

Sarah Butler

The troubled UK budget retailer Wilko has stopped offering home deliveries for orders on its website as it holds last-ditch talks on a potential rescue deal.

The household and garden products retail chain, which has about 400 stores, warned last week that it was on the brink of collapse, with more than 12,000 jobs at risk.

Wilko and its adviser PricewaterhouseCoopers have until Monday to find new funding after filing a legal measure protecting it from creditors for 10 days on Thursday.

Parties potentially interested in a rescue are thought to include Gordon Brothers, which owns Laura Ashley, Hilco, which owns Homebase, and Alteri, the owner of Bensons for Beds, according to a report by Sky News

Rice prices have soared to the highest in almost 15 years in Asia on mounting concerns over global supplies.

Prices jumped as dry weather threatens production in Thailand and after top shipper India banned some exports.

Thai white rice 5% broken, an Asian benchmark, jumped to $648 a ton, the most expensive since October 2008, according to data from the Thai Rice Exporters Association on Wednesday. That brings the increase in prices to almost 50% in the past year, Bloomberg reports.

Don’t tell the Duke brothers, but orange juice futures are at fresh all time-highs this summer.

With supplies dwinding, the Intercontinental Exchange’s frozen concentrated orange juice (FCOJ) futures benchmark has risen to $3.00 a pound, up from $1.76 this time last year.

The FT has more details:

Orange juice futures have surged to fresh all time-highs as a series of hurricanes and the spread of an incurable disease have devastated thousands of acres of citrus crops in the US.

Overall orange juice production in the US is the lowest in “over 100 years”, said Matthew Joyner, chief executive of Florida Citrus Mutual, a trade association representing almost 2,000 growers. “Just over 20 years ago we were producing 240mn boxes, now we’re finishing this season at just under 18mn.”

Over in the US, mortgage demand has been hit by rising borrowing costs.

Mortgage applications dropped by 3.1% last week, new figures show as borrowers were deterred by higher rates.

CNBC has the details:

Mortgage interest rates soared across the board last week, with the rate on the government’s low down payment option increasing to the highest level in 21 years. That hit mortgage demand hard, with total application volume dropping 3.1% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.09% from 6.93%, with points rising to 0.70 from 0.68 (including the origination fee) for loans with a 20% down payment. The average rate for jumbo loans hit 7.04%.

More strike news… and train drivers at several rail companies have voted to continue industrial action in their long-running dispute over pay.

Aslef said the results of new ballots for strikes on passenger services in England and on London Underground showed continued support from drivers, PA Media report.

Mick Whelan, general secretary of Aslef, said:

“The results of these new ballots show the determination of our members to win this dispute.

That’s why I am calling on the train companies, and the Government that stands behind them, to do the right thing and return to the negotiating table with a new offer and prevent more disruption to passengers and businesses in Britain.”

Aslef members at Chiltern, East Midlands, Northern and TransPennine voted in favour of continuing with strikes after being reballoted after six months under employment law.

Drivers at c2c were balloted for the first time and also voted heavily in favour.

Drivers at freight operating company Direct Rail Services also voted in favour of industrial action in a separate dispute over pay.

London Underground drivers also backed industrial action in a reballot in another dispute over pay, pensions and conditions.

Finn Brennan, Aslef’s organiser on the Underground, said:

“These huge votes, from the high 90s to 100%, in favour of action, demonstrate just how determined our members are to protect their terms and conditions at work from the effects of the Government’s attack on TfL (Transport for London) funding.

As always, we are prepared to discuss and negotiate, but we will never accept detrimental changes being imposed on Aslef’s members.”