Sterling weakness continued today after the currency reached its lowest level versus the US dollar since March 2020.

The pound stood at just above $1.17, driven by the deteriorating UK economic outlook and expectations for another big rise in US interest rates next month.

The US dollar has also set new 20-year peaks against the euro, having crossed the parity threshold on the back of recession fears in Europe.

US private sector activity down for a second time

15:56 , Simon Hunt

US private sector activity has shrunk for a second consecutive month in August to reach its lowest level in 18 months, data from S&P Global shows, as fears of an economic downturn mount.

The decline came as a result of “material shortages, delivery delays, hikes in interest rates and strong inflationary pressures [which] all served to dampen customer demands,” according to the S&P report.

The announcement follows comparable reports this morning showing a drop in business activity across France, Germany and the UK, as soaring energy prices push up production costs and erode profit margins.

FTSE 100 falls as worries on growth and inflation hit stocks

15:33 , Michael Hunter

London’s FTSE 100 was down over 50 points at 7482.91, a drop of 0.7% as concern about the outlook for growth in the UK and Europe hobbled stocks.

High energy prices and weakening economic indicators set a glum tone to trade, hitting industrial and retail stocks. Ocado, the online supermarket and technology group, was among the biggest fallers, down 3% at 815p. B&M, the discount retail chain, fell 2.1% to 400p.

The overall decline was offset by resource stocks. Miner Anglo American topped the leaderboard, up 2.7% at 2930p. Chilean copper producer Antofagasta was up 2.6% at 1155p. Shell rose 2.5% to 2299p.

New York stocks hold steady as investors wait for rate clues

14:57 , Michael Hunter

Wall Street’s S&P 500 stayed in neutral gear in opening trade, with investors across global stock markets in cautious mood ahead of this week’s meeting of central bankers which could define expectations on the pace of US interest rate rises.

New York’s broad index slipped 5 points to 4132.30 in muted trade, with bigger moves across currency and bond markets, where the euro hit its lowest level against the dollar in two decades on worries about the impact of inflation on the currency area’s economy. A series of purchasing managers’ index data painted a bleak picture of the slowdown across the bloc.

Jay Powell, the chairman of the Federal Reserve, is due to speak at the Jackson Hole symposium of central bankers on Friday, when it is thought likely he will set out his thinking on US policymakers options in their fight against inflation.

In the meantime, investor seemed content to tread water, with Jackson Hole shaping up to be a strong test of sentiment.

“Investors are becoming increasingly concerned that the Federal Reserve may well not pivot on monetary policy next year,” said Michael Hewson, chief market analyst at CMC Markets UK. “Markets appear to be starting to price in the prospect that inflation may well be higher for longer.”

Macy’s cuts forecasts amid high street retail woes

14:21 , Simon Hunt

US department store Macy’s has cut its sales forecast for the year amid continued gloom for high street retailers.

The company said it was cutting prices on some of its seasonal goods as it faced an excess of unsold inventory after second-quarter sales fall 5% online and 1.5% in-store. Overall sales dropped 1% to $5.6 billion (£4.8 billion).

The firm cut the upper end of its earnings per share target by 15% and reduced its sales expectations by around $120 million. Shares climbed 2% in pre-market trade dip, as investors had anticipated a deeper sales drop.

Chinese lockdowns help JD beat revenue estimates

13:45 , Simon Hunt

Shares in Beijing-based e-commerce business JD rose 7% in pre-market trading on Wall Street after the firm posted revenues that beat analyst expectations.

The firm posted revenues of 268 billion yuan (£33 billion) in the three months to June, led by a 21% jump in logistics and marketing sales as the firm was aided by a dearth of high street retail competition amid ongoing coronavirus restrictions in China.

The firm says it now offers its next day delivery service to 94% of China’s counties and has plans for overseas expansion, with the launch of its first automated warehouse in the US in June.

Nissan cuts cylinder production at Sunderland plant

13:09 , Simon Hunt

Japanese carmaker Nissan is to cease production of cylinder heads at its plant in Sunderland in 2024 after 30 years as the car industry shifts its focus towards electric vehicle production.

The closure coincides with the conclusion of a contract with Renault to make cylinder heads for its petrol and diesel engines.

Nissan said they did not expect the decision to result in job losses, with existing staff being redeployed into other lines of work at the Sunderland site, which employs around 6,000 people.

Gatwick to scrap passenger cap after hiring extra staff

12:40 , Simon Hunt

Gatwick is to drop its summer limit on capacity at the end of the month after hiring 400 extra security staff to handle “unprecedented” passenger growth.

The Sussex airport said there was “no need” for an extension of the cap as it was capable of handling up to 850 aircraft movements a day. Heathrow last week extended its 100,000 passengers-a-day limit Gatwick to scrap passenger cap after hiring extra staff until October 29, a period that covers autumn half term.

Gatwick chief executive Stewart Wingate said passenger numbers were climbing back towards pre-Covid norms, with demand at 75 per cent of 2019 levels in the second quarter, rising to 80 per cent in July and about 83 per cent so far in August.

The airport has upgraded its forecast for passenger volumes for the year from 30.6 million to 32.6 million. Gatwick revealed it was back in profit in the first half of the year after more than £800 million of losses in the era of Covid travel curbs. It made a post tax profit of £50.6 million on revenue of £291.5 million.Mr Wingate said there were “short term operational issues in June” but “we are now very much operating business as usual”.

Profits fall at oil services firm Wood

12:02 , Simon Hunt

Oilfield and energy services firm John Wood Group says it has seen few signs in the industry of a spending bonanza despite soaring wholesale prices.

Operating profit at the Aberdeen-based engineer fell nearly 9% to $41 million before exceptional items for the first half of the year, from revenue of $2.6 billion, which slipped 0.4%. Its order book rose almost 5% to $6.4 billion.

Chief executive Ken Gilmartin, who took over in July, said there was “a lot more to do on cash generation and this is our top priority”. Shares fell 11 per cent to 131p in early trading in London.

Read more here

Mulberry chairman Davis to be replaced by non-exec Roberts

11:10 , Simon Hunt

Godfrey Davis, the chairman of high end fashion label Mulberry, is to step down at the end of September to be replaced by Chris Roberts.

In results reported last month, the business revealed that revenues rose 23% to reach £152.4 million, indicating that the well-heeled have flocked back to luxury brands post-pandemic, including the company’s iconic handbags.

Roberts was appointed to the board of Mulberry in June as non-executive director and is managing director of Como Holdings, the hotel group.

Read more here

Tech firm RM falls 32% after warning on tight school budgets

11:00 , Simon Hunt

Shares in educational IT provider RM plummeted 32% this morning after it sounded the alarm on squeezed school budgets.

“Although school funding is increasing in the UK, the backdrop with regard to salaries, energy costs and inflation create headwinds that will impact school budgets and will need to be monitored carefully over the next 18 months,” the Oxfordshire-based company said in a trading update.

RM posted a £7.2 million loss in the six months to May, despite a 4% uptick in sales as the company wrestled with unforeseen challenges to the rollout of its new IT programme alongside delayed product shipments and inflationary pressures.

Founder boosts On The Beach, FTSE 100 lower

10:32 , Graeme Evans

On The Beach shares are up 11% after the package holiday firm’s founder spent £2 million on increasing his stake.

The disclosure of the investment involving Simon Cooper, who is also chief executive having set up the business in 2004, helped the shares to jump 13p to 127.8p.

Cooper’s purchase took place on Friday at a price of 129.5p and means he now holds a stake of 5.6% in the online travel specialist.

The shares were above 300p in February but weakened to the brink of 100p earlier this month as investors continue to worry that soaring energy bills will mean households have to sacrifice their getaway plans.

On The Beach last provided an update on trading in May, when it said bookings had been resilient and that it was making progress attracting more premium segment customers.

The company, which joined the stock market in 2015 and later enjoyed a spell in the FTSE 250 index, was the stand-out performer in the FTSE All-Share index today.

It was joined on the risers board by fellow travel stocks TUI and Wizz Air, which recovered some of their recent losses to climb 3.2p to 132.5p and 70p to 2170p.

Shares in IAG remained under pressure, however, after the British Airways owner disclosed plans last night to cut 10,000 flights from its winter schedule. The FTSE 100-listed stock fell by 4% yesterday amid the weaker consumer outlook and was down by another 0.2p to 107.2p today.

The FTSE 100 index fell 31.59 points to 7502.20, with warehouse automation company Ocado under pressure once again. Its shares retreated 24.6p to 816.4p as sentiment towards growth and technology stocks is weakened by the outlook for further interest rate rises.

Today’s session saw a decline for previously resilient defensive stocks including British American Tobacco, which dropped by around 1.5%.

Heavyweights Vodafone and London Stock Exchange also lost more than 1% as the FTSE 100’s recent record of outperformance against European markets came to an end.

The FTSE 250 was down 36.32 points at 19,463.02, but cyber security firm Darktrace rallied 18p to 540.4p amid ongoing takeover speculation.

Drahi’s 18% BT stake gets clearance

09:05 , Graeme Evans

BT shares have risen 2% or 3.7p to 160p after the government said it would take “no further action” over the 18% stake built by French billionaire Patrick Drahi.

Drahi’s Altice group took a 12% stake in the telecom giant a while ago, and has increased it since.

While City insiders think he is friendly to BT and its management, led by chief executive Philip Jansen, the notion that Altice might own such a crucial business caused concern at high levels.

Today the government had said it was not investigating further, but might if Altice increases its stake once more.

Read more on today’s BT developments

Defensive stocks weaken FTSE 100

08:56 , Graeme Evans

A retreat for previously resilient defensive stocks including British American Tobacco and United Utilities meant the FTSE 100 index fell 34.75 points to 7499.04 today.

BAT and United’s shares were nearly 2% lower, while heavyweights Vodafone and London Stock Exchange lost more than 1%.

The defensive weakness ended the FTSE 100’s recent outperformance, with European markets all trading in positive territory.

BT shares rose 2.3p to 158.6p after the government said it would take no action on the 18% stake built by French billionaire Patrick Drahi.

IAG shares were close to their opening mark at 107.5p, having announced plans last night to cut 10,000 flights from its winter schedule. The stock lost 4.5% yesterday on fears over weaker consumer demand.

The FTSE 250 index was down 63.45 points at 19,435.89, with engineering group Wood down 4.1p to 145.9p after its half-year results.

Nasdaq down 2.5%, FTSE 100 holds firm

07:51 , Graeme Evans

The tech-focused Nasdaq closed more than 2.5% lower last night as worries about further aggressive interest rate rises hobbled stocks including Apple and Tesla.

The slide came ahead of this week’s Jackson Hole economic symposium in Wyoming, where Federal Reserve chairman Jerome Powell is expected to reiterate the central bank’s focus on getting inflation back towards 2%.

The S&P 500 and Dow Jones Industrial Average dropped 2% but futures markets are pointing to a positive start when trading resumes later.

Asian markets tracked Wall Street lower this morning, but CMC Markets expects the resilience of the FTSE 100 to continue after forecasting a decline of just 11 points to 7522.

The top flight fell by a marginal 0.2% yesterday, which reflected support from defensive stocks and the benefit of the dollar’s strength for overseas earning stocks.

The pound is at its weakest level since March 2020 at below $1.18, driven by the deteriorating economic outlook as energy prices rise and the dollar’s momentum as traders forecast at least another 0.5% rise in interest rates next month.

Oil prices fell by as much as 4.5% yesterday on the potential return of Iran output but later recovered to near $97 a barrel after Saudi Arabia said the disconnect between volatile markets and underlying fundamentals may force OPEC+ to cut production.