Key events
FTSE 100 flat, oil prices fall
The FTSE 100 index has opened flat, with JD Sports leading gains, up nearly 5%, after a broker upgrade from Deutsche Bank. The German market is also flat while the French bourse has gained 0.5%.
Oil prices are falling again, with Brent crude down by 0.8% at $66.08 a barrel, reversing after a 1% gain yesterday as developing Ukraine talks increase the chances of an end to Russian crude sanctions, said Victoria Scholar, head of investment at interactive investor.
She added:
BHP Group reported annual profit of $10.16 billion down 26% year-on-year, hitting a five year low and falling short of analysts’ expectations on the back of weak iron ore prices which fell nearly 20% over the year. However the dividend came in a bit higher than anticipated, helping to support shares.
US-brokered peace negotiations to try to end the Russia-Ukraine war continue to dominate. It looks like talks are making progress after a constructive meeting between Trump and Zelensky which the President of Ukraine described as the ‘best’ so far. However so far, no peace deal or ceasefire has been agreed.
Trump said on Truth Social that he ‘began the arrangements’ for a summit with Zelensky and Putin. Meanwhile Ukraine reportedly offered a $100bn weapons deal to the US in return for security guarantees. European leaders have also been involved in talks in Washington but they have disagreed with Trump over the need for a ceasefire. However Trump suggested that the US might help with security guarantees for Ukraine.
US futures are pointing to a softer open as markets await a key gathering of central bankers at the Jackson Hole summit. It comes after US indices were broadly flat on Monday.
Sarah Butler
The report also showed that Lidl is set to overtake Morrisons to become the UK’s fifth biggest supermarket with sales growth ahead of all its major rivals over the summer as shoppers search for ways to offset higher bills.
The German-owned discounter increased sales by 10.7% in the three months to 11 August, according to the latest market share data from analysts at Worldpanel, formerly known as Kantar, more than double the pace of the wider market which rose 4.5%.
That put Lidl within 0.1 percentage points of matching Morrisons’ market share of 8.4% as the Bradford-based chain continued to struggle with sales up just 0.9%.
Morrisons is trying to turn around performance after building up debts in a £7bn takeover by US private equity firm Clayton Dubilier & Rice in 2021.
The UK’s number three chain, Asda also continues to have difficulties with sales down 2.6% despite efforts to turn around performance by chairman Allan Leighton. It is now in danger of being overtaken by discounter Aldi, which is just 1 percentage point behind it on market share with growth of 4.8%.
Both Aldi and Lidl continue to rapidly open stores, putting them on track to enter the top tier of British supermarkets and disrupt the traditional “big four”.
Both Asda and Morrisons’ growth is behind the 5% level of grocery inflation registered in August by Worldpanel suggesting the amount of items they sold has dropped.
Grocery price inflation in Britain eases slightly to 5%, survey shows
Grocery price inflation in Great Britain has eased slightly but remains high, according to a monthly survey.
Annual grocery price inflation slipped to 5% in the four weeks to 10 August, from 5.2% in July, said retail analysts Worldpanel by Numerator, formerly known as Kantar.
Prices are rising fastest for chocolate confectionery, fresh meat and coffee, and are falling fastest in champagne & sparkling wine, dog food and sugar confectionery.
The Bank of England expressed concerns around rising food prices, but still cut interest rates at its meeting on 7 August.
Fraser McKevitt, head of retail and consumer insight at Worldpanel, said:
We’ve seen a marginal drop in grocery price inflation this month, but we’re still well past the point at which price rises really start to bite and consumers are continuing to adapt their behaviour to make ends meet. What people pay for their supermarket shopping often impacts their spending across other parts of the high street too, including their eating and drinking habits out of the home.
Casual and fast service restaurants especially have seen a decline in visitors over the summer, with trips falling by 6% during the three months to mid-July – compared with last year. The outliers in this are coffee shops which have bucked the trend.
Introduction: SoftBank invests $2bn in Intel; proposed new UK property tax ‘could cut cost of buying expensive homes’
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Japan’s SoftBank has agreed to invest $2bn (£1.5bn) in Intel, the struggling US chip company, while the Trump administration is reportedly considering a 10% stake in the business by converting Chips Act subsidies into equity. That would make Washington Intel’s largest shareholder.
The Japanese technology investor announced its multi-billion dollar deal, amounting to a 2% stake in Intel, on Tuesday, describing Intel as a “trusted leader in innovation”. Intel shares fell by 5% while SoftBank shares were down 4%, retreating from all-time highs.
Masayoshi Son, SoftBank’s chairman and chief executive, said:
Semiconductors are the foundation of every industry. For more than 50 years, Intel has been a trusted leader in innovation. This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.
All eyes were on Washington yesterday, where Donald Trump met with Volodymyr Zelenskyy and seven European leaders to discuss a peace deal in Ukraine. According to Trump, Vladimir Putin wants to do face-to-face talks with the Ukrainian president, although Moscow has not confirmed the meeting. (Trump called Putin during his meeting with the Europeans, but some experts are sceptical.)
Traders are cautious, with most Asian stock markets slightly lower. Japan’s Nikkei fell by 0.4% while Hong Kong’s Hang Seng dropped by 0.3%.
Here’s some reaction to our scoop yesterday that the UK Treasury is considering a new tax on the sale of homes worth more than £500,000 as a step towards a radical overhaul of stamp duty and council tax.
David Fell from Hamptons told the Times:
Who is better off will come down to how closely the government chooses to follow any recommendations. But I think in response to the general principle, the shift would probably cut the cost of buying the most expensive homes, but add to the annual cost of ownership, particularly given the artificially low levels of council tax charged by many places that have the most expensive house prices.
The impact of a change to the system would probably depend on the level at which the rates were set, and the length of time it takes for the higher ownership charges to outweigh existing stamp duty and council tax bills.
The Agenda