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Fed makes progress towards normalising policy

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·49 min read
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Jerome Powell
Jerome Powell

Jerome Powell warned supply disruptions could lead to more persistent high inflation, as the Federal Reserve said the US economy was making progress towards a situation where ultra-loose monetary policy could be eased.

The Fed chairman said “bottleneck” effects leading to soaring freight costs risked driving sustained price rises.

“As the reopening continues, other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect,” he said.

As expected, the Federal Open Market Committee unanimously voted to keep interest rates unchanged at a record low of 0.25pc, but ratesetters said “progress” had been made towards the conditions needed to dial back its asset purchases.

Most economists expect policy will remain unchanged until early 2022 at the earliest.

“The path of the economy continues to depend on the course of the virus,” the FOMC said. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”

Mr Powell said “substantial further progress” was still needed in areas including employment.

“We have some ground to cover,” he said, adding: “I would like to see some stronger job numbers.”

America’s labour market has not fully recovered from the pandemic, with total employment 6.7m below pre-pandemic levels in May, and unemployment claims figures showing continued high levels of churn.

US consumer prices were 5.4pc higher in June than a year earlier, the steepest climb since August 2008. With the volatile elements of food and energy taken out, prices were 4.5pc higher – the biggest climb in 30 years. Both are well above the Fed’s 2pc target.

The Fed and many economists expect high inflation to be temporary, pointing to the effects of reopening and a drive in exceptional price increases across certain categories such as used vehicles.

The IMF predicts the US economy will grow more than 7pc this year, the fastest rate among developing nations.

06:41 PM

Wrapping up

That is all from us today - here are some of our top stories:

Thank you for following along!

06:32 PM

S&P rises on Fed announcement

It seems as though the Fed's decision to keep rates unchanged, and its (vague) signal that a tapering decision will be closer to when economic progress is made, has proved some boost to Wall Street.

The benchmark S&P 500, which was in the red prior to the announcement, is now on the rise. It is currently up a slight 0.05pc by mid afternoon New York time.

The Dow Jones, however, remains in the red. The index is currently down 0.3pc.

06:24 PM

Expert reaction: Fed must communicate when tightening might take place

Hinesh Patel, portfolio manager at Quilter Investors said:

“With the economic recovery playing out and inflation continuing to rise, it would be thought the Federal Reserve would have no choice but to act sooner or later.

"But Jerome Powell and co. like where the economy is heading and seem content to wait until the data becomes even clearer and as such will continue to sit on their hands for just a while longer yet.

“Unfortunately for them there is very little they can do just now. The effects of this pandemic, and the subsequent recovery, have been felt very differently by varying groups of the population.

"With so many still relying on government support and not yet back in work or seeking employment, Powell will keep the spending taps on to support the wider economy.

“However, a time will come when the market will need to see a clearer plan for the reduction in quantitative easing. Inflation is a beast that can quickly get out of control and if the Fed has to act harsher than it would have done if it did so previously volatility would ensue.

“Powell obviously doesn’t want to act too early or make a misstep, but communicating further under what conditions tightening would take place may go some way to placating markets that are worried about price rises getting out of control.”

06:17 PM

Expert reaction: US economy can withstand tighter monetary policy

Richard Flynn, UK Director at financial services firm Charles Schwab, said:

“As expected, the Federal Open Market Committee made no formal change to its interest rate. Weak economic data in 2020 implied easier monetary policy and acted as a boon to stocks, as investors began to price in a turnaround.

"But, today, strong data may suggest tighter policy is forthcoming. This will likely begin to weigh on stocks and investors will likely begin to expect an eventual downturn.

“The US economy can withstand tighter monetary policy and continue to produce solid growth after achieving “escape velocity”. So, it may no longer need the boost from the Fed’s extraordinary stimulus.

"But, in the near-term, it is possible that good economic data, especially on jobs could be interpreted as bad news for the US stock market if it prompts the Fed to unwind earlier and faster.”

06:15 PM

The tapering decision

For more background, the Fed had set the amount of its monthly purchases of Treasuries at $80bn since last September, and of mortgage-backed securities at $40bn in order to boost the economy in its recovery from the pandemic.

Chairman Jerome Powell has said the Fed would begin talking about when and how to taper its bond purchases at this meeting. He has also said there will be an advanced warning before any decision is made on scaling them back.

Some officials have said they would like to taper sooner rather than later on concerns of financial stability including the steep rise in house prices.

The next FOMC gathering is September 21-22.

06:10 PM

Fed keeps rates unchanged until 'further progress'

The Fed has said it will keep rates unchanged and maintain easy money policies until "further progress" is achieves.

The central bank kept the target range for its benchmark policy rate unchanged at zero to 0.25pc. It also adjusted language to say that it had pledged in December to continue asset purchases at a $120bn monthly pace until “substantial further progress” had been made on employment and inflation.

In a statement the Fed Open Market Committee (FOMC) said: “The economy has made progress toward these goals, and the committee will continue to assess progress in coming meetings".

They repeated language that inflation had run persistently below the Fed's long-run 2pc goal.

Officials indicated they have begun discussing when to tap the brakes on their robust support for the US economy amid an inflation surge, even as the delta variant of the coronavirus poses a increasing threat to growth.

05:55 PM

ICYMI: Second shareholder comes out against Morrisons takeover


ICYMI, my colleagues Oliver Gill and Laura Onita have a fresh story about the Morrisons' takeover saga.

Fortress, the US private equity firm seeking to take over Morrisons, was fighting a rearguard action after top ten investor JO Hambro was the second shareholder to come out against its £9.5bn bid.

JO Hambro said its 254p a share offer was too low, a day after Morrsions' biggest shareholder Silchester said it was opposed to the deal.

Read the full story here.

05:49 PM

Wall Street mixed ahead of Fed decision

US equities are mixed today as investors assessed some stellar earnings from some of the biggest tech firms ahead of the Fed’s rate decision which will come after 7pm UK time this evening. Officials are expected to discuss how and when to taper stimulus.

Strong earnings have been boosting confidence in the economic and corporate recovery, but investors remain nervous about the threat to global growth from the Delta variant and the potential for tighter monetary policy.

The S&P 500 and Dow Jones indices are both down, but the Nasdaq is up following strong earnings from Google-parent Alphabet, Microsoft and Apple.

05:35 PM

Trump's son-in-law to open investment firm with Israel office


Donald Trump's son-in-law Jared Kushner is planning to open a Miami-based investment firm with an office in Israel later this year, reported Bloomberg.

He is in the final stages of starting the investment office, called Affinity Partners, according to other reports. There are no details on potential investors yet.

The Israel office will pursue regional investments to connect its economy to India, North Africa and the Gulf, reported Reuters. Mr Kushner brokered a deal between Israel and several Middle Eastern countries in his last year in the White House.

Since leaving the White House, Mr Kushner has moved to Miami with wife Ivanka Trump and has been working on a book which is scheduled to come out early next year.

05:22 PM

Google staff must have vaccination to return to office

Google has said it will ask staff who are coming back to its offices to have had coronavirus jabs. The online giant will also push back its return-to-office date from September to mid-October, as cases of the Delta variant rise.

Chief executive of parent company Alphabet, Sundar Pichai, was expected to announce the news this morning (US time) in a note to employees, which was reviewed by The New York Times.

In it, he wrote: “Getting vaccinated is one of the most important ways to keep ourselves and our communities healthy in the months ahead", adding that the rule would apply to US offices “in the coming weeks” and to other regions “in the coming months.”

Mr Pichai said it was “encouraging to see very high vaccination rates” among staff in places where vaccines were widely available.

05:04 PM

NHS appoints first female chief executive

Amanda Pritchard is to become the new head of the NHS in England.

Ms Pritchard, who has worked as chief operating officer under outgoing boss Lord Stevens, will take up her new role on Sunday.

She has held a number of roles across the health service since joining via the grad scheme in 1997, including running the London trust of Guy's and St Thomas' and chief executive of NHS Improvement. As COO of NHS England she was in charge of operational performance and implementation of service transformation and improvements in patient care.

Ms Pritchard ssaid in a statement: "I am honoured to lead the NHS, particularly as the first woman chief executive of an organisation whose staff are more than three-quarters female.

"I have always been incredibly proud to work in the health service but never more so than over the last 18 months as nurses, doctors, therapists, paramedics, pharmacists, porters, cleaners and other staff have responded so magnificently to the Covid pandemic.

"There are big challenges ahead as NHS staff continue to deal with significant pressures while maintaining the rollout of the hugely successful NHS vaccination programme and tackle backlogs that have inevitably built up in the face of rising Covid infections.

"However the skill, determination and 'can do' spirit that NHS staff have shown in the face of the greatest challenge in the health service's history means we face the future with confidence."

04:43 PM

Duolingo soars on debut


Shares in language learning app Duolingo rose nearly 39pc in their Wall Street debut today, giving it a valuatino of $6.5bn (£4.7bn).

Duolingo's stock opened at $141.4 per share, far higher than the listing price of $102 per share, which was already at the top end of its target range.

It raised nearly $521m by selling about 5.1m shares. Around 1.4m of those were sold by stockholders and the proceeds will not go to thePennsylvania-based app.

Earlier this week Duolingo raised its price target range to between $95 and $100 per share, up from earlier aims of between $85 and $95 per share.

04:20 PM

US senators reach agreement on infrastructure deal plan

A bipartisan group of US senators has reached an agreement on a broad infrastructure deal, paving the way for a procedural vote on the measure later today.

Bloomberg has more:

“We now have an agreement on the major issues,” said Ohio Republican Senator Rob Portman after meeting with Senate Minority Leader Mitch McConnell.

“Senators continue to make good progress on both tracks of legislation,” said Majority Leader Chuck Schumer of New York, referring to the infrastructure package and a separate, Democrats-only budget bill that incorporates much of President Joe Biden’s social-spending agenda.

“Members should be prepared to vote again on cloture on the motion to proceed to the bipartisan infrastructure bill as early as tonight.”

Utah Republican Senator Mitt Romney said he is “confident we will be able to get this across the finish line.”

The Senate this week also has to deal with a more than $2bn emergency spending bill to pay for security costs at the US Capitol stemming from the Ja. 6 riot by supporters of former President Donald Trump, and resettling Afghan nationals who assisted American forces.

It has to pass the House and Senate by the end of the week to prevent cutbacks for both the Capitol Police and the National Guard. It would take just one senator’s objection to slow down consideration of the bill for days, however.

03:52 PM

FTSE 100 back above 7,000

The FTSE 100's 0.4pc rise by close today has propelled London's benchmark back above the psychologically significant level of 7,000.

It dipped below the marker two weeks ago, before rising above it late last week. Losses yesterday, however, meant it slipped below the marker once again until today. The index has consistently been above the level since late May - earlier that month the FTSE 100 breached it for the first time since before the pandemic.

Rises today were helped by travel and leisure stocks after it was confirmed the UK will exempt fully vaccinated travellers from the EU and US from quarantining from August 2nd. Strong earnings are also helping, while falling Covid cases are boosting optimism.

03:27 PM

MusicMagpie shares drop as reseller posts half year loss

Tech resale site musicMagpie said British shoppers are adapting to a circular economy and boosting the company's sales.

UK revenue grew 6.8pc in the year's first half however the company still reported a £17.7m pre-tax loss compared to a profit of £2.6m a year earlier.

Much of this was costs surrounding shares and the £4.1m price tag the company paid to list.

The company's shares dropped 2.9pc.

Chief executive Steve Oliver said:

This has been a landmark period for musicMagpie, and we are very pleased with the performance of the business as it has adapted quickly to life as a public company.

We are seeing strong and growing demand for our unique circular economy model, as consumers continue to realise the benefits of buying and renting refurbished consumer technology products.

Read more about musicMagpie's IPO here.

03:11 PM

ITV shares drop

ITV shares are now down 2.5pc.

The stock initially lifted this morning, after the broadcaster said the worst of the pandemic was over and revealed a strong advertising rebound.

However shares slid throughout the day as investors probed the company's half-year report in more detail.

"Despite ITV’s rosy outlook and improved numbers, it looks like the lack of an interim dividend has negated any positive reaction from investors," said Chris Beauchamp, chief market analyst at IG.

"ITV’s position was similar to banks, where strong share price gains since October had been chipped away in recent weeks, but a return to dividends and buybacks has helped prop up sentiment. ITV’s numbers today lacked this piece of good news, putting them on a back foot and leaving the short-term bearish trend intact."

02:59 PM

Porsche family backs German rocket firm in bid to rival Elon Musk

Jeff Bezos, Wally Funk, Oliver Daemen, and Mark Bezos walk near the Blue Origin booster after flying into space in the Blue Origin New Shepard rocket - Joe Raedle /Getty Images North America 
Jeff Bezos, Wally Funk, Oliver Daemen, and Mark Bezos walk near the Blue Origin booster after flying into space in the Blue Origin New Shepard rocket - Joe Raedle /Getty Images North America

A German rocket company has secured backing from the family behind sports car maker Porsche as the country seeks to build a homegrown rival to Elon Musk’s SpaceX, reports my colleague Matthew Field.

He writes:

Isar Aerospace secured $75m (£54m) in a funding round supported by investors including Porsche, which is still owned by the eponymous Porsche dynasty.

Isar, a company spun out of Munich Technical University, is building a lightweight rocket designed for small satellites, aiming to provide cheaper and more flexible launches than current leaders.

The new investment brings the total funding in Isar to $180m, with further backing from existing investors Airbus Ventures and Lakestar.

The investment comes a week after Amazon founder, Jeff Bezos, successfully flew to the edge of space aboard his company Blue Origin’s New Shepard rocket.

Read Matthew's full story here.

02:54 PM

FTSE 250 peaks at new high

The FTSE 250 has reached a new record high today, after the mid cap index was boosted by travel stocks including food-on-the-go group SPP, airline Wizz Air and Easyjet.

The index has lifted 0.6pc to reach 23011.03 points.

The FTSE 100 however is more than 600 points away from its 2017 all time high of 7,687.77. It is currently trading at 7,014.47.

02:42 PM

Expert reaction: Travel stocks boosted by new travel rules

A man wearing a protective mask walks past an Upper Crust at Victoria Station in London - HANNAH MCKAY /Reuters 
A man wearing a protective mask walks past an Upper Crust at Victoria Station in London - HANNAH MCKAY /Reuters

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, comments:

A big sigh of relief has rippled through the travel and aviation sector with the confirmation from the UK Transport Secretary that double jabbed arrivals from the US and the European Union will no longer have to isolate.

Speculation that a decision was imminent had pushed up shares in British Airways owner IAG which is heavily reliant on transatlantic bookings. Rolls Royce was also among the FTSE 100 risers, given that the group’s bread and butter comes from servicing and delivering wide body aircraft engines, which are used primarily for long-haul flights. There are higher hopes its recovery will materialise more quickly with normality beginning to return for the airline industry.

But questions remain about just how many tourists will come flocking, given that travel to the UK still isn’t advised for US tourists. But it is another hurdle knocked over in the attempt to offer the industry some semblance of a summer season.

In the FTSE 250, EasyJet, Ryanair and Wizz Air maintained their higher trajectory with investors hopeful that EU travellers might now widen their travel plans, which have been largely limited to inside the block. Ryanair took delivery of its first batch of “Gamechanger” aircraft just days after Portugal was removed from the green list, so a reopening of routes for vaccinated tourists will be particularly reassuring.

The relaxation of the rules for double jabbed tourists is the comfort blanket caterer SSP has longed for, and it was one of the top risers on the FTSE 250. It relies on travellers to pick up snacks from its Upper Crust kiosks, Ritazza cafes and other franchise outlets. Investors are clearly hoping that now the stage is set for tourists to return, footfall will finally rebound across its airport and train station network, where the chain runs concessions.

02:23 PM

More on GSK's earnings

General view outside GlaxoSmithKline (GSK) headquarters in Brentford - Matthew Childs /REUTERS
General view outside GlaxoSmithKline (GSK) headquarters in Brentford - Matthew Childs /REUTERS

GlaxoSmithKline has brushed off pressure from activist Elliott Management as it beat earnings forecasts and struck a new deal with the EU for its experimental Covid-19 drug, writes Hannah Boland.

Britain's second largest pharmaceutical company said it was now expecting to record 2021 earnings at the better end of its guidance, after reporting revenue of £8.1bn for the second quarter, a 6pc rise on last year and 7pc ahead of analyst forecasts. It had previously forecast earnings would slip by a mid-to-high single-digit percentage, excluding any contribution from its Covid-19 work.

Boss Dame Emma Walmsley said the results, together with a deal struck with the European Union for 200,000 doses of its Covid-19 antibody therapy, were all positives for the company following months of pressure from Elliott. The therapy could be used to treat high-risk patients with coronavirus who are suffering from mild symptoms.

Dame Emma said: "We listen to all of our shareholders, we talk to them, and what they are telling us matters is that we are focusing on delivery and execution."

She said the updates were "a building block in getting where we want to be".

GSK's shares ticked up 0.4pc on the updates, following months of decline, with 12.5pc having been wiped off GSK's market capitalisation over the past year.

02:19 PM

Reaction: Quarantine-free travel back for EU and US citizens

Tom Thackray, CBI's Director of Infrastructure, commented:

Restriction-free international travel will be a vital piece of the recovery jigsaw, and ending quarantine requirements for fully-vaccinated arrivals from the US and EU is a huge step towards that goal.

The news will come as a significant boost to the beleaguered travel industry, while also restoring important business links with key trading partners.

The task now is to implement these changes as rapidly and smoothly as possible, which should include an efficient pre-travel system of assessing passengers’ Covid-status to prevent congestion at airports.

02:10 PM

Airline stocks rise

British Airways aeroplane comes in to land at Heathrow Airport during the Cherry Red Records Combined Counties Football League Division One match between Bedfont & Feltham - Catherine Ivill /Getty Images Europe 
British Airways aeroplane comes in to land at Heathrow Airport during the Cherry Red Records Combined Counties Football League Division One match between Bedfont & Feltham - Catherine Ivill /Getty Images Europe

Airline stocks have continued their ascent today, after ministers decided double jabbed EU and US citizens will be allowed to enter England without having to quarantine from August 2.

Engine maker Rolls Royce is up 4.4pc, British Airways owner IAG is up 3.8pc, Wizz Air is up 6pc and Easyjet is up 5.2pc.

01:43 PM

US stocks boosted by Google

The Nasdaq rose this morning in New York, as record quarterly earnings from Google-parent Alphabet helped heavyweight technology stocks steady after their worst sell-off in more than two months yesterday.

The Nasdaq Composite rose 55.1 points or 0.38pc to 14,715.664 at the opening bell

The Dow Jones Industrial Average rose 51.4 points or 0.15pc at the open to 35,109.95 while the S&P 500 rose 1.5 points or 0.03pc at the open to 4,402.95​.

01:38 PM

Spinnaker becomes London's first Spac listing this year

The London Stock Exchange finally has its first Spac listing of 2021, one day after UK regulators introduced new rules to encourage blank cheque firms to list in the UK.

Spinnaker Acquisitions Plc surged as much as 25pc today after raising £2m.

Special purpose acquisition companies sell shares to raise money before deciding on a takeover target. They can offer private companies a path to markets without the rigorous scrutiny of a traditional initial public offering.

One of the key changes to the UK's Spac rules was that firms that raise at least £100m at listing no longer will be required to suspend trading when they reveal plans for an acquisition. The cutoff is down from £200m pounds.

01:29 PM

Double vaccinated EU and US citizens to enter England without quarantine from August 2

Double jabbed EU and US citizens will be allowed to enter England without having to quarantine from August 2, ministers have decided, my colleague Charles Hymas reports.

He writes:

The Cabinet’s Covid-O committee agreed on Wednesday to open the borders from next month to double jabbed citizens from the US and EU countries, most of which are on the amber list.

The move follows warnings from industry that the UK risked falling behind the EU which has already largely opened up to citizens from both the US and other countries.

Research from the World Travel and Tourism Council suggests the economy is losing £639m a day because of the squeeze on inbound tourism.

The current exemptions from quarantine for double jabbed travellers from amber list countries currently only cover Britons who have been vaccinated by the NHS.

Read the full story here.

01:25 PM

Boeing to cut 10,000 fewer jobs

Technical staff members prepare one of the Rolls-Royce Holdings Plc engines of a Boeing Co. 787 Dreamliner aircraft  - Toru Hanai /Bloomberg 
Technical staff members prepare one of the Rolls-Royce Holdings Plc engines of a Boeing Co. 787 Dreamliner aircraft - Toru Hanai /Bloomberg

My colleague Alan Tovey has more on the Boeing's earnings report:

Global aviation markets’ strengthening recovery means US aerospace giant Boeing is cutting 10,000 fewer jobs than it warned it would be forced to axe because of the pandemic.

Posting second-quarter results on Wednesday, Boeing reported its first profit since the end of 2019 as the company went into a tailspin because of the 737 Max grounding after two fatal crashes.

Revealing it made a quarterly profit of $587m on revenues 44pc higher at $17bn, against a $2.4bn loss in the same period a year ago as the pandemic hammered the aerospace industry, Boeing said it would not be making the harsh cutbacks it predicted in October.

Boeing now expects to cut about 20,000 jobs, taking its workforce down to 140,000, rather than the 130,000 it had signalled.

In a letter to staff David Calhoun, chief executive, said: “We’re now seeing more stability in our staffing levels, as the commercial market recovery accelerates, our defence and government services business target growth opportunities, and we increase investments to further strengthen engineering.”

Despite the positive results, there are still worries about Boeing’s dominant commercial aerospace business which makes up the bulk of its sales.

Boeing recently halted deliveries of its 787 wide-body jets because they need “reworking” to solve manufacturing problems.

China, the world’s fastest growing region for airliner sales, has still not recertified Boeing’s bestselling 737 Max small airliner despite work to rectify faults which led to its crashes and subsequent grounding.

01:20 PM

Oil rises as US stockpiles decline

Oil prices are rising today after an industry report pointed to a decline in US fuel and crude stockpiles, compounding signs that demand is tightening global markets.

Brent added 0.5pc to $74.82 while West Texas Intermediate futures added 0.7pc to trade above $72 a barrel.

The American Petroleum Institute reported a 6.23m-barrel weekly drop in gasoline inventories, according to people familiar with the figures. That would be the biggest draw in motor fuel stockpiles since March if confirmed by government data later today.

Global inventories are expected to tighten through the rest of the year as key energy consumers continue to rebound from the pandemic. But at the same time, the latest Covid-19 resurgence is raising concerns about the short-term demand outlook.

“Pricing pressures have been temporarily put on hold amid the ongoing tug-of-war between delta variant concerns and expectations of crude deficits,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

01:07 PM

Surprise profit for Boeing

In this file photo a Boeing 777X airplane takes off on its inaugural flight at Paine Field in Everett, Washington - JASON REDMOND /AFP
In this file photo a Boeing 777X airplane takes off on its inaugural flight at Paine Field in Everett, Washington - JASON REDMOND /AFP

Planemaker Boeing has made its first profit in nearly two years, the company said in its second quarter earnings report.

The Chicago based aviation giant reported a second-quarter profit of $587m, compared with a loss of $2.4bn in the same three months of 2020 at the height of the pandemic.

Revenue rose 44pc to $17bn, surprising analysts who had expected another loss.

12:50 PM

Singapore joins Fortress bid for Morrisons

Singapore's sovereign wealth fund (GIC) has joined the Fortress-led private equity consortium seeking to buy Morrisons, reports Laura Onita.

She writes:

SoftBank-backed Fortress said GIC would provide £100m of funding, giving it more firepower to potentially increase its £6.3bn offer after Morrisons' largest shareholder came out against the bid on Tuesday.

Earlier this month, rival investment firm Apollo also said it was in talks to join the Fortress bid and would not make a separate offer for Britain’s fourth-largest grocer after an unsuccessful tilt at Asda.

The Fortress-led bid is already backed by a Canadian pension fund and the real estate arm of US oil billionaire Charles Koch.

Read Laura's full story here.

12:41 PM

Spotify says user growth is slowing

Daniel Ek, CEO of Swedish music streaming service Spotify - TORU YAMANAKA /AFP 
Daniel Ek, CEO of Swedish music streaming service Spotify - TORU YAMANAKA /AFP

Swedish music streaming company Spotify has warned user growth has slowed as listeners switch off as lockdowns end, reports Matthew Field.

The US-listed company said its total monthly active users, a key metric for how many people are using its app, increased to 365m, up around 9m or 3pc. Paying customers were up 4pc to 165m and it reported revenues of €2.3bn.

Daniel Ek, Spotify chief executive, said Spotify had experienced an "exceptional 2020" for growth that had been hard to match. "I am comfortable of 1bn plus users when it comes to Spotify," he said.

Spotify said monthly user performance was "slower than expected due primarily to lighter user intake during the first half of the quarter. COVID-19 continued to weigh on our performance in several markets, and, in some instances, we paused marketing campaigns due to the severity of the pandemic."

The company said it is facing increasing pressure from Apple Music and has complained to regulators around the iPhone-maker's "walled garden" and app store fees.

Spotify said that revenue from podcasting revenues increased more than 600pc as the Swedish firm invests aggressively in long-form listening and podcast creators. It also launched Spotify Greenroom, a live music and talk show experience, in June.

Shares in Spotify fell 1.5pc in early trading.

12:36 PM

Bitcoin passes $40,000

Bitcoin has crossed the $40,000 threshold again, as the world's most popular cryptocurrency recovers from a rout earlier this month.

It’s advanced for eight straight days, its longest winning streak since December.

There has been a resurgence in enthusiasm for Bitcoin since Amazon posted a job advert for a digital currency and blockchain product lead. Although a company spokesperson denied the token will be accepted for payments this year, the coin has held onto its gains and remains 17pc up compared to the start of the week.

“The current momentum is strong” and $45,000 is in sight but a conclusive break above $50,000 “will take some doing,” Pankaj Balani, chief executive officer of crypto derivatives exchange Delta Exchange, wrote in a note Tuesday.

The coin is up 7pc compared to yesterday's close and is currently at $40,750.

12:22 PM

Pfizer doubles Q2 revenue

Coronavirus vaccine sales helped US drugmaker Pfizer nearly double its second-quarter revenue and boost its profit 59pc.

During the pandemic, the company's Covid-19 vaccine has become its top seller, bringing in $7.84bn from direct sales and revenue split with German partner BioNTech.

Pfizer said in a presentation accompanying its earnings release that emerging real-world data “suggests immunity against infection and symptomatic disease may wane,” meaning there could be a wide demand for boosters.

The company now anticipates revenue from the vaccine this year to reach $33.5bn (£24.1bn) for the 2.1bn doses it's contracted to provide by year end.

12:12 PM

GSK shares slide

Operating profit at pharmaceutical giant GlaxoSmithKline increased 23pc to £2.1bn in the second quarter, as the firm's vaccine arm saw turnover increase by 39pc to £1.57bn.

However that growth was not replicated in the company's other divisions. GSK's pharmaceutical business reported a 4pc increase while consumer healthcare reported a 3pc decline.

GSK is working on a Covid vaccine in partnership with Sanofi. The companies said in May the vaccine had entered phase 3 trials.

The company's shares dropped 0.4pc.

Emma Walmsley, chief executive officer at GSK, said:

We expect this positive momentum to continue through the second half of the year, driving us towards the better end of our earnings guidance range for 2021, and meaningful performance improvement in 2022.

Our clear priority is to focus on execution, unlocking the value of consumer healthcare and delivering the step-change in growth and performance we now see for GSK.

11:54 AM

US stock futures cautiously rise

US futures have edged marginally higher ahead of this evening's Federal Reserve’s policy meeting, where officials are expected to discuss how and when to taper stimulus.

Futures tied to the Dow crept 0.01pc higher and S&P 500 futures lifted 0.12pc.

Nasdaq futures rose 0.3pc after big tech companies reported earnings way above analyst expectations.

While strong earnings are boosting confidence in the corporate recovery, this week’s China selloff added to investor worries about the threat to global growth from the delta variant and the potential for tighter policy.

“Investors appear to be grappling with the diverging risks of a slowing of the global economy, due to rising infection rates, against the risks of rising prices,” said Michael Hewson, chief market analyst at CMC Markets.

While the Fed meeting is “unlikely to change the overall narrative when it comes to the timing of a taper,” it may offer an insight into whether the recent hawkishness from Fed officials such as James Bullard and Raphael Bostic is starting to spread to other members, he added.

11:44 AM

Santander to close banks due to pingdemic staff shortages

U.K. Banks Ahead of High Street Branch Closures  - Jason Alden /262714271
U.K. Banks Ahead of High Street Branch Closures - Jason Alden /262714271

Santander said it has closed around 25 bank branches due to staff shortages caused by the "pingdemic".

UK outgoing chief executive Nathan Bostock said between 3pc and 5pc of the bank's 465 branches are being closed for around a week because staff are having to self-isolate.

Rival lender Metro Bank also said separately earlier today that it was suffering operational difficulties from staff self-isolating, which was causing a slowdown in customer activity this month.

Today, Spanish-owned Santander's half-year results showed rocketing mortgage lending helped the group's pre-tax profits jump more than five fold to £751m in the six months to June 30.

Net mortgage lending grew by £3.6bn, with demand spiking ahead of the end of full stamp duty relief on June 30.

The group said £4.6bn of gross lending was made just in June, with half of what was normally seen in an average month last year being lent in the final five days of June alone. It also hailed a £3.3bn increase in customer deposits, with retail customers having saved more amid the pandemic.

Figures were also boosted as the group cut its credit provisions for debts expected to turn sour due to the pandemic by £104m.

The UK's strong mortgage lending performance helped the wider Banco Santander group post a net profit of €2bn (£1.7bn) for the three months to June, against losses of more than €11bn (£9.4bn) a year ago.

11:30 AM

Women should make up at least 40pc of UK boards, says watchdog

Women should make up at least 40pc of the boards of all listed companies and the UK's financial watchdog said today.

The Financial Conduct Authority added that at least one of the senior board positions - chair, chief executive officer, chief financial officer or senior independent director - should be a woman and boards should include at least one non-white ethnic minority director,

The changes to the FCA's listing rules are expected to take effect in late 2021 after a public consultation on the proposals that would affect 1,106 companies.

UK and overseas companies listed in London would have to comply with the targets or explain to shareholders in their annual reports why they have fallen short.

"The Listing Rule diversity targets are not mandatory for companies to meet, so the FCA is not setting ‘quotas’, but providing a positive benchmark for issuers to report against," the watchdog said.

11:12 AM

House prices slip as stamp duty holiday winds down

A couple standing outside an estate agent's window - Tim Ireland /PA
A couple standing outside an estate agent's window - Tim Ireland /PA

The winding down of the stamp duty holiday triggered the biggest fall in house prices in more than a year in July, report Tim Wallace and Rachel Mortimer.

They write:

Average prices slipped 0.5pc compared to the previous month to £244,229 as the red-hot property market started to cool, according to Nationwide Building Society’s monthly report.

The fall in prices from record highs was the sharpest drop since June 2020 when the first lockdown pulled down prices. Annual growth eased off the 17-year high of 13.4pc in June but remained elevated at 10.5pc.

The stamp duty holiday has protected the property market from the blow of the pandemic, fuelling a surge in prices despite the biggest recession in 300 years. Nationwide said shifting housing preferences has also been key to driving activity as homeowners reconsider their location in the wake of the pandemic.

Read their full story here.

10:48 AM

Lockdown savings boost UK funds

The UK's largest wealth manager, St James's Place is still the top riser on the FTSE 100 this morning, after it said its first half was boosted by a jump in household savings during coronavirus lockdowns.

The asset manager said it attracted £5.5bn in net inflows in the first half, prompting its shares to jump more than 6pc.

FTSE 250 listed Man Group and Rathbone Brothers both increased their interim dividends after reporting their funds also swelled.

Total funds under management and administration at Rathbone Brothers jumped 8.2pc to £59.2bn, while Man Group said its fund under management rose 1.6pc to $135.3bn (£97.5bn).

Both companies increased their interim dividend.

10:22 AM

Marston's boss calls for permanent VAT cut to aid pub sector recovery

Marston's has joined an industry push for taxes to be permanently slashed for pub groups in a bid to aid ailing operators which have taken a heavy hit from the pandemic, reports my colleague Hannah Boland.

Ralph Findlay, the chief executive of Marston's, which operates around 1,500 pubs across the UK, said the outlook for the sector remained "uncertain and operationally disrupted" in the immediate short term.

"The tone of Government messaging will be an important influence on consumer confidence. At present, the message is one of caution."

Mr Findlay branded a government review of the business rates system as "long overdue" and said he believed "that VAT reduction should be permanent since the hospitality industry remains one of the most heavily taxed sectors".

"This would assist an industry that has been hit hard and aid hospitality’s employment and development of young workers which will be a key part of the UK’s economic recovery."

His comments come weeks after Wetherspoon warned that an increase in VAT risked leading to higher prices in pubs. The tax is due to increase in September, and then return to normal levels within the next year. "The VAT rise will make the entire hospitality industry less competitive vis a vis powerful supermarkets," Wetherspoons said.

The latest move to pile pressure on the Government to halt tax increases came as Marston's issued a trading update in which it said trading had significantly improved since the middle of May, when sites were able to start trading indoors again.

The company said between May 17 and July 24, sales had been at around 92pc of 2019 levels, better than it had expected.

10:06 AM

Aluminium prices leap as shortages loom

Aluminium drinks cans being manufactured  - Chris Ratcliffe /Bloomberg News 
Aluminium drinks cans being manufactured - Chris Ratcliffe /Bloomberg News

Aluminum is heading for a seismic shift as a long-running supply glut starts to fade, setting the stage for shortages and a price rally that could run for years.

Bloomberg has more details:

Demand is set to surge on the back of climate-change investment, and mega-producer China - which accounts for more than half of global output - is cracking down on smelting to reduce pollution and meet green targets.

Those combined forces mean the oversupply that’s dominated the market and restrained prices for more than a decade is on the way out, leaving buyers bracing for a new era of scarcity and higher costs.

With aluminum a feature of everyday items, from food packaging and beer cans to iPhones and cars, what’s playing out in markets has implications for inflation and consumers’ pockets.

It’s already jumped 27pc to about $2,500 a ton this year, the second-best performer after tin on the London Metal Exchange. Goldman Sachs Group Inc. is among those seeing more gains ahead, forecasting record prices above $3,000 by late next year.

For those counting on market dislocations proving temporary, lumber offers some hope. Having rallied to a record in May on the back of a U.S. homebuilding boom, prices are now fast tumbling back toward pre-pandemic levels.

09:53 AM

Expert reaction: FTSE rises tentatively higher

Joshua Mahony, Senior Market Analyst at IG, comments;

European markets are making tentative gains in early trade today, with a wave of earnings from US tech giants Apple, Alphabet, AMD, and Microsoft doing little to steer sentiment despite some pretty impressive figures.

[...] Travel stocks are leading the way higher for the FTSE today, with First Group, Wizz Air, easyJet, and IAG forming the leading pack within the sector. Plans for the UK to allow double-jabbed visitors from the EU and US without the need to quarantine marks a welcome albeit belated boost for the travel and tourism sector.

With summer in full swing, the airlines will hope that this measure drives a swift and sharp rise in bookings as they aim to make up for an incredibly tough period.

[...] Banking stocks are enjoying a boost today, with Barclays seeing their profits almost triple over the first half of the year. Understandably the reliance upon their investment banking division does highlight why we are likely to continue seeing underperformance for the UK banks compared with their US counterparts.

However, with the government mitigating much of the economic fallout of the pandemic, and spending likely to gradually increase, banking stocks remain a strong pro-cyclical pick going forward.

09:49 AM

Metro Bank boss blames 'pingdemic' for activity slow down

Metro Bank boss, Daniel Frumkin, has said the post-lockdown activity increase at the bank has been interrupted by staff being forced to self-isolate by the "pingdemic".

"We have definitely seen a pickup in activity in the economy since it started to reopen, our stores are a bit busier. We actually saw a pretty good FX (currency exchange) volume in the month of May and again a bit in June," he said.

"The pingdemic in July has kind of slowed things down. Even from an operational perspective, managing through the number of people who have to self-isolate, including myself, over the last few weeks, has been a challenge."

The bank slashed its pre-tax losses by around £100m to just under £139m in the opening six months of the year.

"So we're already starting to see a reduction in the losses. Now I accept the losses are still significant, I'm not making light of them, we have a lot of work to do," Mr Frumkin added.

Shailesh Raikundlia, an analyst at Liberum, said: "Overall, a decent quarter with revenue benefiting from non-lending assets than our forecasts, but we continue to expect the bank to be loss-making for the foreseeable future."

09:35 AM

Money round-up

Here's the day's best stories from The Telegraph's Money team:

09:21 AM

St James's Place rises 6pc

Shares of St James's Place have reached an all time high of £15.92 after the wealth management business reported a sharp increase in its funds under management.

For the six months to June 30, the asset manager said funds under management jumped 11.3pc compared to the previous year to a record £143.8bn.

Andrew Croft, Chief Executive Officer, commented:

During the first half, the Partnership attracted £9.2bn of new client investments, with strong flows reflecting a combination of factors including improving client sentiment, a sharp increase in household savings rates, and high levels of client engagement.

The company's shares were the top riser on the FTSE 100 today, up 5.7pc.

09:11 AM

Fresnillo lifts 4.5pc

Fresnillo shares lifted 4.5pc, after the precious metals miner said first half silver production rose 2.7pc while quarterly gold output climbed 12.3pc.

Chief executive Octavio Alvídrez said: "We remain on track to meet our full-year targets and our production guidance for 2021 is unchanged, though we remain vigilant around the continued evolution of the pandemic and its potential future effect on our operations, in particular the implementation of any future new work restrictions."

08:54 AM

Key event today: US Fed meeting

Fed Chair Powell Testifies Before Senate Banking Committee  - Al Drago /Bloomberg
Fed Chair Powell Testifies Before Senate Banking Committee - Al Drago /Bloomberg

One of the key events for markets today is the US Federal Reserve meeting, with a statement expected at 7pm UK time and a news conference by Chairman Jerome Powell expected half an hour later.

Investors will be looking out for clues on when the central bank will start reducing its purchases of government bonds and any fresh insight into its views on inflation.

Economists are not expecting strong guidance about when the bank’s asset purchases will wind down. However they will look for clues about whether a consensus is emerging among Fed officials.

So far, rhetoric hints at a split between central bankers on the timing, pace and composition of tapering as US consumer price inflation accelerates.

08:36 AM

Travel rebound hopes push up airlines

08:25 AM

Airline stocks rise

Wizz Air is not the only airline stock rising this morning.

British Airways owner IAG is up 3.3pc, EasyJet is up 4.2pc and RyanAir is up 2pc as Britain is set to exempt fully vaccinated travellers from EU and US from quarantine in the coming days.

My colleagues Ben Riley-Smith and Charles Hymas report:

Boris Johnson has decided that, from August 16, those who have been fully vaccinated will not be required to take a test if they come into contact with someone with Covid unless they have symptoms.

It had previously been reported that workers would only be released from self-isolation after a negative test, and health officials had been planning for a major new system of compulsory testing to free people from isolating.

With Covid cases falling for a seventh successive day, Mr Johnson has also decided to reopen the country to foreign tourists from the EU and North America who have been fully vaccinated. Travel to the UK was previously only possible without quarantine from a handful of green list countries.

Read the full story here: Freedom for double jabbed as UK opens to world

08:19 AM

Wizz Air expects summer travel rush

Wizz Air shares rose 4.1pc after the FTSE 250 listed airline said it expected capacity to ramp up to between 90pc and 100pc of pre-pandemic levels in July and August.

"We have now entered a busy part of the summer, ramping up our operations to meet increased demand whilst maintaining operational flexibility to deal with evolving travel restrictions as a result of Covid-19 developments, particularly with respect to new variants," said chief executive József Váradi.

He added the company had recruited 600 new crew members but said he could not give guidance beyond August as changing restrictions are too difficult to predict.

For the three months to the end of June, Wizz's first quarter period, the company flew only 33pc of its pre-pandemic capacity, a total of 2.95m people.

The company reported an underlying net loss of €118.7m and liquidity of €1.7bn.

08:08 AM

Aston Martin’s new SUV helps carmaker quadruple revenue

Prince Charles, Prince of Wales leaves the new Aston Martin DBX during a visit to the new Aston Martin Lagonda factory in Barry, Wales - REBECCA NADEN /AFP
Prince Charles, Prince of Wales leaves the new Aston Martin DBX during a visit to the new Aston Martin Lagonda factory in Barry, Wales - REBECCA NADEN /AFP

Aston Martin more than quadrupled revenue last quarter, thanks to sales of the carmaker's first-ever SUV

The $180,000 DBX made up more than half of Aston Martin’s deliveries in the first half, fuelling a revenue resurgence to £274.4m from £57.2m a year ago.

Aston Martin racked up losses and debt after going public in 2018 and has spent the last year restructuring after a rescue by Canadian billionaire Lawrence Stroll.

The former fashion has been credited with injecting much-needed cash, paring bloated vehicle inventory and forging closer ties with Daimler AG’s Mercedes-Benz, after luring away the head of performance division AMG..

Laura Hoy, equity analyst at Hargreaves Lansdown, commented on the results:

After what can only be described as a car-crash stock market debut in 2018, it seems Aston Martin has turned a corner. The group’s on track to deliver on its full year target to sell 6,000 vehicles. With dealer supply chains now rebalanced, the average selling price is starting to creep upward and more profitable Specials sales are on the rise. The group’s Project Horizon cost savings programme is also starting to bear fruit.

All told, it was a solid six months for the luxury car-maker, but the group’s far from being able to set the cruise control. Aston Martin’s undoubtedly behind the curve with its electric vehicle strategy, a market that will likely become a much bigger piece of the puzzle as time goes on. We’re encouraged by the partnership with Mercedes to bring EVs to market, but it’s unclear whether a dressed-up Merc engine will be enough to wow potential buyers.

07:53 AM

ITV profits from advertising rebound

Broadcaster ITV reported pre-tax profits jumped to £133m from £15m a year ago, driven partly by a rebound in advertising.

"Our half-year results demonstrate that ITV is emerging from the worst effects of the pandemic," chief executive Carolyn McCall, said:

"We are optimistic about the future, despite the ongoing pandemic risk on our advertising and ITV Studios revenues."

The group behind hit shows including I'm A Celebrity... Get Me Out Of Here! and Love Island said external revenues rose 27pc to £1.5bn and total advertising revenues rose 29pc to £866m in the six months to June 30.

Pre-tax profits more than doubled on an underlying basis to £301m from £143m.

The group pledged to restart shareholder dividends with plans for a 3.3p-a-share final payout at the 2021 full-year results.

07:42 AM

FTSE torn between bank rises and falling miners

The FTSE 100 is treading water this morning, as gains by banks and housebuilders are countered by losses in the mining sector.

Lender Barclays was up 4pc after first-half profit nearly quadrupled as it followed Wall Street rivals in reaping bumper investment banking fees from frenzied dealmaking.

Homebuilders were also among the top gainers, up 1.4pc, after British house prices rose 10.5pc in July compared with the same month last year - although prices fell by 0.5pc from June.

Miners BHP Group , Rio Tinto and Anglo American were among top drags despite Rio Tinto reporting its highest-ever interim profit this morning.

07:28 AM

E-cigarette users push up revenue at British American Tobacco

A vapor cloud produced by a man with an e-cigarette in London - Yui Mok /PA 
A vapor cloud produced by a man with an e-cigarette in London - Yui Mok /PA

Another company beating analysts estimates this morning is British American Tobacco, which said revenue for the first half of the year had been boosted by its vaping products.

The London-listed company said it added 2.6m more customers in the first half, bringing its total user base of non-combustible products to 16.1m - a new record.

Those new customers helped push total adjusted revenue for this year's first half to £12.18bn, beyond the £12.02bn analysts had expected.

Adjusted earnings per share for the first half came in at 154.2p, ahead of the 151.5p average estimate.

The company also kept its full-year forecast for over 5pc sales growth.

07:16 AM

Big tech soars beyond expectations

Big tech profits soared way beyond analysts expectations last night, with Microsoft, Alphabet and Apple reported around $57bn in combined profit in a record-busting quarter,

  • Microsoft topped analyst expectations by around $2bn

  • Google parent Alphabet beat analyst expectations by close to $6bn

  • And Apple beat revenue expectations by $8bn

My colleagues James Titcomb and Io Dodds have more on this story here.

07:07 AM

FTSE 100 falls as mid-caps edge higher

The FTSE 100 opened 0.1pc or 6.96 points lower than yesterday's close at 6,989.13.

The FTSE 250 opened 79.16 points or 0.4pc higher at 22,956.17.

07:05 AM

Rio Tinto reports record results

Miner Rio Tinto has reported its highest-ever interim profit this morning, as the company cashes in on this year’s commodities rally.

Rio's underlying earnings more than doubled to $12.2bn from the same period last year, with the company adding it will pay $9.1bn in dividends as a result - a regular interim dividend of $6.1bn and a special dividend of $3bn.

Rio's results kick off a reporting season that is expected to see some of the world's largest mining companies report record results across the board.

The mining sector has been one of the biggest beneficiaries from the world’s efforts to emerge from the pandemic. The trillions of dollars poured into recovery packages have ignited demand for commodities like steel, iron ore and aluminum, driving prices sharply higher and sending inflation pressures rippling through the global economy.

“Government stimulus in response to ongoing Covid-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices,” chief executive Jakob Stausholm said.

06:54 AM

Barclays profits exceed analyst expectations

Jes Staley, chief executive officer of Barclays - Simon Dawson /Bloomberg 
Jes Staley, chief executive officer of Barclays - Simon Dawson /Bloomberg

Barclays profits exceed analysts expectations in the first six months of the year, after the FTSE 100 listed bank released money it had set aside to cover the cost of bad loans.

The bank said pre-tax profits soared to £5bn, far outstripping analyst forecasts of £4.1bn and a four-fold increase from the same period last year when it had taken £3.7bn of impairment charges linked to the pandemic.

But today, bosses said the improving economic outlook will allow the bank to free up £742m from the impairment pot.

As a result, Barclays unveiled a 2p-per-share dividend, higher than the 1.8p that had been expected.

Chief executive Jes Staley said:

This has been a strong first half, clearly demonstrating the benefits of our resilient and diversified universal bank in supporting the growth of capital markets, our corporate clients and retail customers.

Our investment banking fees and equities businesses have delivered record income, and we are seeing encouraging signs of recovery in consumer banking.

Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders.

06:43 AM

FTSE to slide lower

Good morning. FTSE 100 futures are pointing 0.3pc lower this morning, after Asian markets mostly sank again as fears over China's regulatory crackdown continued to reverberate through the region.

Barclays is the first in a series of blue-chip banks reporting half-year results this week. The bank said pre-tax profits soared to £5bn, compared with the £4.1bn that analysts had forecast.

The nearly four-fold increase from the same period last year came as Barclays released impairment cash - money it had reserved during last year's uncertainty to cover the costs of loans that might turn bad.

5 things to start your day

1) Morrisons' biggest investor will not support takeover deal: Silchester says there is 'little in the recommended offer that could not be achieved by Morrisons as a listed company'.

2) Apple, Google and Microsoft post another quarter of record profits: Apple’s net income came in at $21.7bn for the three months to the end of June, almost double the figure from the same quarter a year earlier.

3) Cobham offers separate US-UK boards to win control of Ultra Electronics: Creating two management structures expected to ease national security concerns about £2.6bn deal masterminded by US private equity firm.

4) Guardian owner to pump more money into private equity: Scott Trust says the overall value of its assets increased by almost a fifth to £1.1bn for the year to March.

5) Black British Business Awards announce 2021 finalists: The annual event, in its eighth year, celebrates the achievements of some of the UK's top corporate bosses and entrepreneurs.

What happened overnight

Asian stock markets declined on Wednesday after Wall Street pulled back from a record as investors awaited a Federal Reserve report for signs of when US stimulus might be withdrawn.

Investors also were uncertain how much farther China will go with a regulatory crackdown that set off a slide in its internet share prices.

Shanghai, Tokyo and Sydney retreated while Hong Kong advanced.

The Shanghai Composite Index lost 0.6pc to 3,363.00, declining for a third day, while the Nikkei 225 in Tokyo fell 1.5pc to 27,561.50. The Hang Seng in Hong Kong shed 0.2pc to 25,027.16.

The Kospi in Seoul lost 0.4pc to 3,220.17, while Sydney's S&P-ASX 200 gave up 0.8pc to 7,369.70. New Zealand and Southeast Asian markets declined.

Coming up today

  • Corporate: Aston Martin Lagonda, Barclays, British American Tobacco, Dignity, Foxtons, GlaxoSmithKline, ITV, Man Group, Metro Bank, Rio Tinto, St James's Place, Smurfit Kappa, Rathbone Brothers, Primary Health Properties, FDM Group (Interim)

  • Economics: Consumer confidence (Germany), trade balance (US)