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Global economy faces 'huge' risks as banking crisis fears grow - latest updates
Markets were jittery early on Wednesday, as growing fears over a US banking crisis added to wider concerns over the "huge risks" to the global economy.
Stocks in Europe followed Wall Street lower amid mounting fears over a banking crisis. Yesterday, shares in First Republic plunged, after it said it was exploring an asset sale of up to $100bn of long-dated mortgages and securities as part of a rescue plan.
It raised fresh concerns over the health of the US banking sector.
Clifford Bennett, chief economist at ACY Securities, said a banking crisis was "still hovering just beneath the surface", which was added "to the realization Russia has long-range missiles that are incredibly accurate that no one has the capacity to stop, to the sharply higher China-US tensions, more sanctions against both Russia and China, and the likely further unravelling of global trade and the reemergence of higher inflation, [meaning that] risks are huge".
John Woods, Asia Pacific chief investment officer at Credit Suisse Group AG, said on Bloomberg that the markets may be "possibly overlooking the weight of economic deceleration that is playing through right now, particularly in the United States".
The FTSE 100 slipped by 0.37pc in early trading on Wednesday, whilst the CAC 40, the DAX and the Euro Stoxx 50 were all in the red.
It comes ahead of comments from ECB policymakers later today for insight over how far the central bank will go in its monetary tightening push.
Read the latest updates below.
09:22 AM
Puma posts first sales growth in China in two years
Puma has reported its first sales growth in China for two years, after the end of Covid restrictions in the country spurred shoppers back into stores.
Puma posted a 14pc rise in sales in the first quarter of the year, as a stronger performance in China offset a downturn in North America. The sportswear seller is attempting to shift excess stock in the US, where it had built up huge inventory in low-price trainers and clothes.
Puma said it was "cautiously optimistic" over further growth in China, after years of savings by households in the country when they were locked down during its zero-Covid policy.
It is expecting trading across its regions to be a little slower this quarter, but to accelerate in the summer and autumn.
09:00 AM
Pret a Manger raises prices of coffee subscription
Pret A Manger has raised the price of its subscription scheme by 20pc as the café chain’s costs soar.
As Daniel Woolfson reports:
The sandwich seller’s current offer gives shoppers five barista-made coffees a day for a fee of £25 a month, but that price will now increase to £30.
Pret will sweeten the deal by giving members a 10pc discount on its food, as well as non-coffee drinks and snacks, however. It will also rename the service “Club Pret”.
Pano Christou, the chain’s chief executive, said: “Pret is not bulletproof to things such as inflation.
“We've invested a huge amount in our teams, almost a 20pc pay increase in the last year. Food costs are still a challenge to work through. And energy costs, we had a 200pc increase in energy this year.”
08:24 AM
Persimmon built much less new homes in latest quarter after slump in demand
The number of new homes built by London-listed Persimmon slumped by more than 40pc in the first three months of 2023, following a slip in demand amid soaring mortgage rates.
Persimmon built 1,136 new homes in the first quarter of the year, compared to 1,950 the same period a year earlier, citing the challenging trading environment in the second half of 202, which led to lower sales.
Experts have said the new build sector “almost went into a deep freeze” in the wake of the mini-Budget last autumn, which pushed mortgage rates above 6pc. It has hit the number of sales.
However, Persimmon chief executive Dean Finch suggested there had been some green shoots since the end of the quarter.
"Trading over recent weeks has offered some signs of encouragement, with visitor numbers up, cancellation levels normalising, and sales rates continuing the steady improvement evident since the start of the year," he said.
"If sales rates continue at the levels seen year to date, we would expect full year 2023 volumes to be toward the top end of the previously indicated range of 8,000 to 9,000 completions."
07:57 AM
'Unnecessary' strikes will not hit travellers, Heathrow insists
Passengers will be able to travel "as normal" over the coming weeks, Heathrow Airport insists, despite further planned walkouts by staff.
Heathrow Airport said it had put in place "robust contingency plans kept the airport running smoothly" in the face of strikes by members of Unite union.
Passenger numbers are currently up by 74pc compared to last year's levels, when Covid restrictions were still lifting and people more cautious about travelling abroad.
It comes ahead of eight strikes by about 1,400 airport security guards at the airport, one of which is due to take place during the coronation of the King.
Heathrow said: "Passengers can expect to travel as normal during the coronation and half term peaks, regardless of further unnecessary strike action by Unite."
This week Heathrow chief executive John Holland-Kaye joined calls for the UK to reverse its decision to axe VAT-free shopping, telling the Telegraph:
“Having a proper tax-free shopping incentive for visitors is about how much of the international tourist spend Britain wants to capture. Every other country in Europe is eating Britain's lunch.
“Right now a 20pc ‘sale’ sign flies over Europe while the tourist tax hangs over the UK. Ministers should even the playing field with Europe, recapturing the UK's fair share of tourist spend to drive growth and create jobs across Britain.”
07:46 AM
Amazon could be forced to recognise UK union for first time
Amazon could be forced to recognise a trade union in the UK for the first time, after GMB claimed that it had enrolled enough workers in Coventry to pass the threshold.
Almost 700 workers at the Amazon warehouse in Coventry are now members of the GMB, it said, equal to more than half of those working at the site.
The GMB has written to Amazon requesting recognition, it said.
It comes after mounting tensions at the warehouse, with workers walking out for two weeks in a row over pay.
Amanda Gearing, GMB senior organiser, said: "GMB members have been crystal clear since the start of their campaign; they will not accept a pay rise of pennies from one of the world's wealthiest corporations.
"After weeks of campaigning and 14 strike days, they've built the power of their union on site and are now in a position to file for recognition.
"Amazon top brass has refused to negotiate and now their own workers have forced them to the table."
Amazon did not immediately respond to requests for comment.
07:39 AM
Danone raises forecasts after price jumps
The world's largest yoghurt maker Danone has raised its sales forecasts after upping prices in the face of high raw materials and energy costs.
Danone, which makes Activia yoghurt and Evian water, said sales were now expected to rise by between 4pc and 6pc, compared to earlier forecasts of between 3-5pc growth.
Danone has increased its prices by 10.3pc during the latest quarter, it said, helping to drive 10.5pc like-for-like sales growth. This was its fastest quarterly growth rate in a decade.
It said it expects a gradual slowdown in inflation this year. Dairy products, such as milk, have recently seen falls in their wholesale prices, prompting all the major supermarkets to cut prices earlier this month.
07:24 AM
Electric buses and trucks to follow soon
The International Energy Agency executive director Fatih Birol said of the figures:
“Electric vehicles are one of the driving forces in the new global energy economy that is rapidly emerging – and they are bringing about a historic transformation of the car manufacturing industry worldwide.
“The trends we are witnessing have significant implications for global oil demand. The internal combustion engine has gone unrivalled for over a century, but electric vehicles are changing the status quo. By 2030, they will avoid the need for at least 5 million barrels a day of oil. Cars are just the first wave: electric buses and trucks will follow soon.”
07:21 AM
Good morning
China is leading a boom in sales of electric cars, according to new figures out this morning. The International Energy Agency revealed that around 10 million electric vehicles had been sold worldwide in 2022, of which 60pc were in China.
The IEA ranked the UK fifth in electric car takeup as a percentage of sales with 23pc opting for electric, following Norway at 88pc, Sweden at 54pc, the Netherlands at 35pc and Germany at 31pc. In volume terms, the UK is second only to Germany - the two nations are the biggest car buyers in Europe.
5 things to start your day
1) Tax raid costs Britain more than £3bn as tourists flock to France | Rivals are 'eating Britain's lunch' as visitor spending lags far behind rest of Europe
2) People need to accept they are poorer, says Bank of England | Unwillingness to recognise Britain’s decline is fuelling inflation, says Huw Pill
3) Scramble to stabilise US lender First Republic after shares plunge | Shares in the ailing lender almost halved amid fears over a flight by depositors
4) Google beats tech downturn after mass lay-offs | The new race for AI chatbots also boosted rival Microsoft
5) JP Morgan using me as ‘public relations shield’ in Epstein case, says Jes Staley | Recent court filing asks judge to dismiss the lawsuit against former Barclays boss
What happened overnight
Wall Street stocks plummeted as First Republic Bank's share price almost halved amid fears over a flight by depositors.
Investors have been eyeing the performance of regional lenders since the dramatic failures of Silicon Valley Bank and Signature Bank last month, which sparked fears of contagion.
The Dow Jones Industrial Average slumped 1pc to 33,530.83, while the broad-based S&P 500 fell 1.6pc to 4,071.63. The tech-heavy Nasdaq Composite Index plunged 2pc to 11,799.16.
In the bond market, the benchmark yield on the 10-year Treasury fell to 3.39pc from 3.50pc late Monday.
The policy sensitive two-year yield fell to 3.95pc from 4.11pc.