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Business Recorder
3 hours ago
- Business
- Business Recorder
European shares edge up as US stalls its Middle East moves
European stocks snapped a three-day losing streak and closed higher on Friday, as investors' nerves eased following a stall in U.S. involvement in Middle East tensions. The pan-European STOXX 600 closed 0.1% higher. As Israel and Iran's air conflict entered its second week, European officials worked to bring Tehran back to diplomatic negotiations as Iranian Foreign Minister Abbas Araqchi arrived in Geneva for talks. The White House signalled President Donald Trump will decide within two weeks whether to throw U.S. support behind Israel in the ongoing conflict, a move that buoyed market sentiment and reignited some appetite for risk assets, which had been battered earlier in the week amid uncertainty over the conflict's duration. Despite Friday's modest gains, European stocks logged a second consecutive week of losses, as investors continued to fret over the potential global fallout from unrest in the Middle East. 'The uncertainty around the conflict means the risk of energy prices being higher,' said Franziska Palmas, senior Europe economist at Capital Economics. She added that higher energy prices could prompt the European Central Bank 'to keep rates at their current level rather than cutting them further.' European shares dive as Mideast tensions, US involvement fears weigh With the July 8 U.S. tariff-pause deadline looming, movement on trade deals with Washington has shown little progress, save for a formal agreement reached with London. European Commission President Ursula von der Leyen remains hopeful for a broader deal by July 9. Meanwhile, BofA Global Research raised its year-end target for the STOXX 600 to 530 from 500 on resilience in global growth following a U.S.-China trade deal. Travel and leisure stocks were up nearly 1%, led by a 6.5% gain in Europe's largest travel operator TUI after Barclays upgraded the stock to 'overweight'from 'underweight'. Energy shares lagged 0.6% as oil prices retreated, though the sector was the week's second-biggest gainer due to Middle East tensions that had boosted crude prices earlier. On the day, the insurance sector emerged as the top sectoral gainer, up 1.3%. Among other stocks, London's Berkeley was the biggest percentage decliner, down 8.1%. The homebuilder named current finance chief Richard Stearn as its new CEO, but reported an annual pre-tax profit slightly ahead of market expectations. Stora Enso jumped 14.7% to the top of the STOXX 600 after the Finnish forestry group announced a strategic review of its Swedish forest assets worth EUR 5.8 billion, including potential separation and public listing. Markets in Sweden and Finland were closed for a public holiday.
Zawya
11 hours ago
- Business
- Zawya
UAE, Saudi Arabia to see higher economic growth
The UAE and Saudi Arabia are expected to experience stronger economic growth, even as the ongoing Israel-Iran conflict introduces an element of uncertainty in the region, according to an analysis released on Friday. 'The UAE's economy is set to maintain its strong growth momentum, driven by rising oil output and robust activity in the non-oil sector, which is being supported by a loose fiscal stance,' said James Swanston, MENA economist at Capital Economics. In early June, Saudi Arabia urged OPEC+ to increase oil production, reversing voluntary cuts that had been in place over the past five years to support prices. Swanston noted that while the kingdom's higher oil output will likely boost GDP growth, it may also 'mask a slowdown in the non-oil sector as harsher fiscal consolidation measures take effect.' Saudi Arabia's non-oil GDP has averaged around 7% in recent years. The report added that higher oil output and prices could accelerate GDP growth across Gulf economies. However, for oil-importing countries in the MENA region, such as Jordan and several North African nations, an escalation in the conflict and a further spike in oil prices could strain their balance of payments. Oil prices have surged by more than $10 over the past week due to heightened geopolitical risks. (Writing by Brinda Darasha; editing by Daniel Luiz)
Yahoo
11 hours ago
- Business
- Yahoo
UK retail sales record biggest monthly drop since 2023
By David Milliken LONDON (Reuters) -British retail sales volumes recorded their sharpest drop since December 2023 last month, as demand fell after shoppers splurged on food, summer clothes and home improvements the month before, official figures showed on Friday. Retail sales volumes dropped by 2.7% in May, the Office for National Statistics said, a much sharper decline than the median forecast of 0.5% in a Reuters poll. Sales volumes were also 1.3% lower than a year earlier, the biggest annual drop since April 2024 and well below a Reuters poll forecast for 1.7% annual sales growth. The monthly decline was mainly due to what ONS statistician Hannah Finselbach described as a "dismal month for food retailers" with lower spending on alcohol and tobacco, as well as reduced footfall at clothing stores and less demand for DIY items as dry weather had allowed work to be done earlier. "The sharp 2.7% m/m drop back in retail sales volumes in May adds to other evidence that the burst of economic growth in Q1 is over. That said, consumer spending may still outperform other areas of the economy this year," Capital Economics' Chief UK Economist Paul Dales said. Sterling dropped by about a quarter of a cent against the U.S. dollar after the data, which came alongside government borrowing figures which showed a slightly larger than expected budget deficit of 17.7 billion pounds ($23.85 billion) for May. Britain's economy grew a faster-than-expected 0.7% in the first quarter of 2025 but shrank in April - due to the end of a property tax break and an initial hit from U.S. tariffs - and the Bank of England forecasts overall growth of 1% for 2025. April's retail data had shown robust 1.3% sales growth after demand was boosted by unusually sunny weather for the time of year and GfK consumer sentiment data for June, released earlier on Friday, showed the highest sentiment so far this year. However, reports from retailers have been more mixed. The British Retail Consortium said earlier this month that sales growth slowed sharply in May as shoppers had done much of their summer purchases a month earlier. Updates this month from major British retailers have been mixed. Tesco, the country's biggest food retailer, beat expectations for first quarter sales, despite what it called an "intensely competitive" market. However, struggling discounter Poundland said it plans to close 68 stores. ($1 = 0.7422 pounds)
France 24
a day ago
- Business
- France 24
Swiss central bank cuts interest rates to zero percent
The SNB, however, held off a decision to return to its era of negative rates -- a policy that helped to curb the Swiss franc's rise but was unpopular among pension funds and other investors. The franc's movement is also under scrutiny in the United States, as the US Treasury Department added Switzerland to its watch list of countries likely to manipulate their currencies earlier this month. The SNB says its interventions in the foreign exchange market aim to ensure price stability, not unduly increase the Swiss economy's competitiveness. The Swiss currency is a safe haven investment that has climbed against the dollar since US President Donald Trump launched his tariff blitz in April. In Thursday's statement, the SNB -- which has denied manipulating the franc -- said it "remains willing to be active in the foreign exchange market as necessary". The SNB cited easing inflationary pressure in its decision to cut rates by a quarter point, but it also pointed to a gloomy economic forecast. "The global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions," the central bank said, adding that the outlook for Switzerland remained uncertain. "Developments abroad continue to represent the main risk," it said, expecting growth in the global economy to weaken over the coming quarters. Cooling inflation The SNB said Swiss gross domestic product growth was strong in the first quarter of the year -- largely due to exports to the United States being brought forward ahead of Trump's tariff manoeuvres. But stripping that factor out, growth was more moderate, and is likely to slow again and remain subdued for the rest of the year, the SNB said. The SNB expects GDP growth of one percent to 1.5 percent for 2025, and for 2026 too. It said Swiss unemployment was likely to continue to rise slightly. The bank lowered its inflation forecast for 2025 from 0.4 percent to 0.2 percent, and for 2026 from 0.8 percent to 0.5 percent. The consumer price index even fell into negative territory in May, at minus 0.1 percent. Negative rates Between 2015 and 2022, the SNB's monetary policy was based on a negative interest rate of minus 0.75 percent -- which increased the cost of deposits held by banks and financial institutions relative to the amounts they were required to entrust to the central bank. Those seven years left a bitter memory for major savers, who bore the brunt in fees, while pension funds were forced into riskier investments. Negative rates make the Swiss franc less attractive to investors as it reduces returns on investments. Thursday's decision was widely expected by analysts. Adrian Prettejohn, Europe economist at the London-based research group Capital Economics, said the SNB is expected to move rates to negative 0.25 percent at its September meeting due to deflation. "There are also significant downside risks to inflation from trade tensions as well as heightened geopolitical uncertainty, which could push up the value of the franc further," he said. He said the central bank's language on currency interventions "supports our view that the SNB is not planning to use foreign exchange interventions as its main tool for loosening monetary policy anytime soon".
Yahoo
2 days ago
- Business
- Yahoo
Chocolate prices soar as UK inflation stays at highest in over a year
Chocolate prices in the UK rose at the fastest pace on record in May as the overall cost of food continued to climb, official figures suggest. The main rate of inflation remained at 3.4% in the year to May, the highest for more than a year. However, food prices grew for the third month in a row, as some economists speculated that businesses were passing on recent increases in employer National Insurance payments to customers. The rise, along with a higher minimum wage, came into effect in April, after Chancellor Rachel Reeves announced the increases in last October's Budget aimed at raising £25bn. Food prices have risen for three months in a row and, at 4.4% in May, are the highest since February last year. Ruth Gregory, deputy chief economist at Capital Economics, suggested that the increase "perhaps provides a tentative sign that firms are passing on more of April's rise in National Insurance Contributions in their selling prices". The overall pace of price rises in May was the same as in April, following a revision by the Office for National Statistics (ONS). Inflation is above the Bank of England's target rate of 2% but it is not expected to cut interest rates from 4.25% when it meets on Thursday. ONS data revealed that chocolate prices rose by 17.7% in the year to May - the sharpest increase since 2016 when its records began. Bad weather in cocoa-producing regions such as Ghana and Ivory Coast have hit harvests. "These two countries produce well over half of all the cocoa in the world," said Jonathan Parkman, head of agriculture at Marex, a commodities broker. He added that problems in Ghana and Ivory Coast also included long-term government mismanagement of the cocoa sector and a surge in disease. "There is little chance of a fall in chocolate prices this side of Christmas," he said. Rising food inflation was partially offset by cheaper travel prices in May. Air fares fell by 5% between April and May this year compared to a 14.9% rise in the period last year. The ONS said that the cost of plane tickets fell compared with the large rise last year "as the timing of Easter and school holidays affected pricing". Easter fell at the end of March last year but in 2025, Easter Sunday was on 20 April. UK inflation rate: How quickly are prices rising? When will interest rates go down again? Commenting on the inflation rate, Chancellor Rachel Reeves said: "This government is investing in Britain's renewal to make working people better off." But shadow chancellor Mel Stride called the latest inflation figures "deeply worrying for families". "Labour's choices to tax jobs and ramp up borrowing are killing growth and stoking inflation - making everyday essentials more expensive," he said. Kris Hamer, director of insight at the British Retail Consortium, which represents the sector, said: "Since October, retailers have warned that the costs from the chancellor's Budget could not be fully absorbed and would inevitably lead to higher prices for shoppers." John Roberts, chief executive of AO World, the electrical goods retailer, told the BBC's Today programme on Wednesday: "If you put taxes on businesses and you put taxes on employment that isn't a growth engine, it's as simple as that for me." Zayna Omer, owner of coffee stand Harbour Grind in Whitstable told the BBC that business is "good" but she has noticed consumers' budget are squeezed. Customers are not buying as much food from her, opting instead to bring packed lunches when they take a day trip to the Kent seaside town. "Most people here are retirees, so they have income," Ms Omer said. "But the young families, you do notice with them they will price check first or compare prices along the strip, and then come back." Ms Omer said hidden costs - such as card machine fees which cost her about 10p extra per coffee sold - have led to her offering cash customers a small discount. For now, she will keep her prices as they are. "I'd go out of business if I increase my prices," she said. There is concern that inflation could rise if oil prices increase due to the conflict between Israel and Iran. Disruption to the Strait of Hormuz could lead to "surging oil and shipping costs", said David Bharier, head of research at the British Chambers of Commerce. The Strait of Hormuz in southern Iran is an important sea passage for oil shipments from the Gulf. A fifth of the world's oil consumption passes through the area every day and any hint that Iran might block the seaway would send crude prices soaring. "Many smaller businesses will have little capacity to absorb these pressures," Mr Bharier said. UK inflation number too high after data blunder Mortgages under 4% are back but dangers lurk for borrowers Meat costs have rocketed, say food business owners
