Key eventsShow key events onlyPlease turn on JavaScript to use this featureClosing postTime to wrap up… here are today’s main stories:Tom AmbroseThe building products supplier Marshalls is cutting another 250 jobs and has issued a profits warning in the latest sign of the growing slump in the UK housebuilding market.The group, based in Elland, West Yorkshire, will also close a factory in Scotland and reduce shifts and production elsewhere in an attempt to save £9m a year.The latest job cuts comes after it said 150 roles would be axed at the end of last year, with the firm also aiming to restructure its commercial team. Marshalls said like-for-like sales slumped by 13% in the six months to 30 June, while it expects to report a 27% slump in interim underlying pre-tax profits, to about £33m.FTSE 100 ends at two-month highBritain’s blue-chip share index has closed at its highest level in two months.The FTSE 100 index has closed a modest 5 points higher at 7699 points, its highest close since 23rd May.This cements July as the best month for the Footsie since April, with the index up 2.2% this month.It’s been a decent session across Europe, after inflation dropped across the eurozone and the economy returned to growth, with Germany’s DAX hitting a record high.Michael Hewson of CMC Markets explains:
European markets have seen another positive session as we come to the end of a solid month of gains, with another new record high for the DAX today, while the CAC 40 has also seen a strong rebound after a sharp two day sell off just under a week ago.
The momentum appears to have been driven by strong gains in Chinese equity markets against a backdrop of strong indications from Chinese policymakers that they are looking at moves to boost the economy in the coming weeks.
Both the FTSE100 and FTSE250 have fared reasonably well, with the FTSE100 closing at a 2-month high, with house builders seeing a bit of a rebound this month as interest rate rise expectations eased back from the peaks of a few weeks ago.
The latest gauge of the US economy, the ISM’s Chicago PMI, has risen by less than exepcted this month.The index of activity in the Chicago region has risen to 42.8 in July, up from 41.5 in June, but lower than expected:July Chicago PMI posted its second increase in a row but remains at low levels. Index marked 42.8pts (est 43.4, last 41.5) and is still coincident with a bleak manufacturing scenario pic.twitter.com/XpSDhPmd5v— Mario Cavaggioni () July 31, 2023
In July's Chicago PMI, new orders improved to a three month high (admittedly only to 43.0) while the inventories sub-index plunged to 34.2, the lowest since the pandemic. This is not sustainable and implies that stronger production growth is on the horizon. pic.twitter.com/ntE31pI0co— RenMac: Renaissance Macro Research () July 31, 2023
Britain’s competition watchdog has ruled today that JD Sports and Leicester City Football Club Limited broke competition law by colluding to restrict competition in the sales of Leicester City-branded clothing, including replica kit, in the UK.Leicester City FC has been fined £880,000 by the UK’s competition watchdog after admitting restricting online sales of its football kit with JD Sports, as was announced early this month:The companies had a deal in which JD agreed not to sell Leicester kit for the 2018-19 season and then said it would apply a delivery charge to all orders of Leicester City-branded clothing for the following two seasons in order not to undercut the club’s own online store. During that period JD was offering free online delivery for all orders of more than £70.JD was not fined by the CMA as it reported the illegal conduct and admitted its participation.The UK’s FTSE 250 index of medium-sized companies is poised for its best monthly gain in six months.The FTSE 250 is up 4.25% during July, a gain of 782 points to 19,198 (with a little over two hours trading to go).Here’s our news story on the eurozone economy:In the City, the FTSE 100 is on track fot its best month since April.The blue-chip share index has gained 2.4%, or 182 points, during July, helped by signs that inflation is falling across the global economy.The US stock market ison track for its fifth consecutive month of gains amid optimism over corporate earnings and a resilient economy, Marketwatch reports.NASDAQ UP 25.65 POINTS, OR 0.18 PERCENT, AT 14,342.31 AFTER MARKET OPENS&P 500 UP 4.96 POINTS, OR 0.11 PERCENT, AT 4,587.19 AFTER MARKET OPENDOW JONES DOWN 12.60 POINTS, OR 0.04 PERCENT, AT 35,446.69 AFTER MARKET OPEN— First Squawk () July 31, 2023Updated at 14.55 BSTBeer producers Heineken has cut its annual profit forecast after drinkers have proved reluctant to swallow higher prices.Heinelen reported this morning that beer volume for the first half of 2023 fell by 5.6% versus last year, and accelerated through 2023.It admitted that price rises were partly to blame, saying:
The cumulative effect of pricing actions taken and a challenging economic backdrop led to a 7.6% organic decline in the second quarter.
The drop in sales was led by “a disappointing performance in Vietnam”, and “socio-economic volatility in Nigeria”, Heineken said.It also cited problems in Russia, where the company is trying to sell its operations following the Ukraine war.Heineken says:
We remain fully committed to leaving Russia, however the timing of our exit is not in our control.
In the commodity markets, copper has hit its highest price in a month.Benchmark copper hit $8,670 a metric ton on the London Metal Exchange, up 0.1%, which is its highest level since June 22.Copper is benefiting from hopes of further stimulus from China, which would bolster demand for raw materials, and on track for its best monthly performance since January.A new campaign encouraging UK borrowers who are struggling with their mortgage payments to contact their lender has been launched.The Reach Out campaign will be seen and heard on the radio, in print and online, with television advertising due to be launched in September, says UK Finance, the trade association representing the banking and finance industry.The campaign’s key message is to encourage people to reach out to their lender early on if they are worried about making their payments.Lenders have teams of experts ready to help anyone struggling with their mortgage payments.There are a range of options available for help, which will be tailored to each person’s circumstances.Like the US economy, the Eurozone has so far weathered the recent challenges “better than expected”, says Holger Schmieding, chief economist at Berenberg Bank, who explains:
Digesting the Putin shock of high energy and food prices, the Eurozone economy has regained a little momentum in the last few months.
After a marginal decline in GDP in Q4 2022 – when sky-high energy prices and concerns about gas shortages had depressed consumer confidence and hit the purchasing power of consumers – followed by stagnation in Q1 2023, the Eurozone economy expanded by 0.3% qoq in Q2, ahead of our call for a gain of just 0.1%.
Unfortunately, the good news will probably not extend into the second half of this year, Schmieding adds:
First of all, the 0.3% qoq gain in Eurozone Q2 GDP overstates the underlying trend due to volatile intellectual property transactions between the Irish subsidiaries of global tech behemoths and their US headquarters. After subtracting 0.1% from the qoq rate of Eurozone growth in early 2023, when Irish GDP fell by 2.8% qoq, the reversal of this effect (Irish GDP +3.3% qoq in Q2) now added 0.1ppt to Q2 growth.
More importantly, the weakness in US and Chinese industry, the inventory correction in global manufacturing and the drop in residential construction, caused partly by higher ECB rates, will likely offset the gradual increase in consumer demand in real terms, which we expect for the remainder of 2023 on the back of a rise in real disposable incomes.
Updated at 13.13 BSTThursday’s Bank of England interest rate decision will help determine the path of the UK property market.Currently, the BoE is expected to raise interest rate by a quarter of one percentage point, from 5% to 5.25%, which would be a 15-year high.A larger hike, of half a percentage point to 5.5%, is priced as a 30% chance today in the money markets, copared to 70% for the smaller increase.The increase in UK mortgage approvals in July will “no doubt” be driven by a demand for tracker products, predicts Nick Mendes, mortgages technical manager at John Charcoal.Mendes explains:
We have seen an uptick in the number of customers looking at trackers.
Now we are starting to see a shift in dynamic, where inflation is starting to ease, people are trying to hedge against where interest rates will go. Borrowers can see the implications of being tied into a fixed rate deal when rates could fall in the next six to twelve months.
City regulator urges NatWest to 'choose stability' amid Farage rowKalyeena MakortoffThe City regulator is not keen on further turmoil at the top of NatWest, as it grapples with an ongoing scandal over Nigel Farage’s bank accounts. Speaking to journalists during a press conference this morning, the watchdog’s director for consumers and competition, Sheldon Mills, said that while leadership decisions should be left to the bank’s board members and shareholders, he was urging both investors and directors to “choose stability”.He said having chairman Sir Howard Davies in place will help support that.The bank was left reeling after the shock resignation of chief executive Alison Rose last Wednesday, following late-night interventions by Downing Street, following her admission that she had discussed Farage’s account closure with a BBC journalist.The head of its private bank Coutts was pushed out two days later. And while Farage has called for more heads to roll, and suggested Davies should be next, the Financial Conduct Authority is calling for calm.Mills added that FCA had worked closely with NatWest throughout the scandal that unfolded in recent weeks, to ensure that it was stable, and had asked the bank to conduct an independent review, which is now underway.When asked whether the FCA was concerned about the potential breach of client confidentiality, Mills said the FCA would look “closely” at the matter once the findings of NatWest’s independent review were available.That review is expected to completed by the end of October.Last Friday, Davies said he intends to stay in his post to restore “stability” and ensure and “orderly transition”; before the Farage row, he had been planning to leave by July 2024.Today’s Money and Credit report from the Bank of England also shows that households deposited more cash into bank accounts last month as savings rates increased.People put an additional £3.4bn into banks and building societies, having withdrawn a net £3.1bn in May.It reflected an increase in people locking away cash into accounts where they can benefit from interest on their savings, as well as current accounts without interest.The Bank says:
This was mainly driven by net inflows of £6.6bn into interest-bearing time deposits, up from £5.1bn in May.
Similarly, households’ deposits into non-interest bearing sight accounts rose to £2.1bn in June after seven months of net withdrawals.
Updated at 11.53 BSTThe pick-up in UK mortgage approvals in June won’t stop house prices falling during 2023, predicts Benjamin Trevis, economist at the Centre for Economics and Business Research.Trevis says:
“The number of mortgage approvals for home purchases increased to 54,700 in June, up from 51,100 in May. Although today’s figures show some resilience in housing market activity, with approvals up to their highest level in eight months, demand remains notably below 2022’s average of 62,700.
We expect market activity to lag behind last year’s results as high mortgage rates continue to reduce affordability for households, leading to lower demand for home purchases. Resultingly, after two strong years of growth, Cebr expects a 1.8% contraction in average house prices in 2023.” -
Eurozone growth in the last quarter was slightly stronger than expected, reports Marc de Muizon, senior European analyst at Deutsche Bank Research:
“Q2-23 Euro area GDP has surprised slightly to the upside at 0.3% qoq while July flash inflation came in broadly in line with expectations at 5.3% yoy, with core at 5.5% yoy.
The apparent strength of the headline quarterly growth was driven by a few country idiosyncrasies and masks an underlying momentum that is likely much closer to stagnation, as revealed by domestic demand evolution across country releases.
On the inflation side, headline yoy% continued falling as expected while core remained stable at 5.5% yoy from its previous print. Goods prices continued to show a decelerating momentum. Services prices remained resilient, but arguably not as strong as may have been initially expected for the 2023 tourism season.
The ECB is now in full data-dependant mode and today’s data releases are unlikely to alter the messaging from last Thursday’s press conference.”
Updated at 11.09 BST