Closing summary
Time to recap.
Calls for a bigger, bolder windfall tax on UK oil and gas firms are growing after BP racked up another massive quarterly profit.
The energy giant made profits of $8.2bn (£7bn) in the third quarter of the year, even more than expected, thanks to ‘exceptional’ trading by its gas division as the Ukraine war drove up prices.
BP says it expects to pay $800m this year under the current windfall tax, but Friends of the Earth said chancellor Jeremy Hunt should remove the loophole that lets producers avoid the tax if they spend more on oil and gas production.
BP is also planning to buy back even more of its own stock, with a new $2.5bn share buyback announced today.
Hunt has also been urged to allow the energy price cap to run beyond the existing six-month deadline to act as a “shock absorber” that would reduce inflation.
UK house prices have been knocked by the turmoil following September’s mini-budget fiasco.
The average price fell by around £5,000, or 0.9%, in October, as buyers were hit by a surge in mortgage rates, on top of the squeeze on their incomes.
Economists predicted that the housing market would continue to slow in the coming quarters, as borrowers face higher interest rates.
Nationwide's data brings the first hard evidence that U.K. house prices can't withstand both the surge in mortgage rates and the squeeze on real disposable incomes. Prices fell 0.9% m/m in October: pic.twitter.com/vlyENgLTAY
— Samuel Tombs (@samueltombs) November 1, 2022
Supermarket chain Morrisons has warned that 1,300 staff at the McColl’s convenience store chain are at risk, as it plans to shut 132 loss-making stores.
The supermarket group said 55 of the 132 stores earmarked for closure include Post Office counters and will therefore shut next year, following their busy Christmas period.
The overhaul plan will see Morrisons convert McColl’s stores to its own Morrisons Daily brand.
Uber is to pay £615m payment to the UK taxman to resolve a legal demand that the company should have charged VAT on fares.
The payment follows a High Court ruling that its business model was unlawful, and that its drivers should be classed as employees. This means Uber must now charge VAT on service fees.
In other news….
The Bank of England has begun to unwind its quantitative easing programme, by selling £750m of shorter-dated bonds to investors today.
Pfizer has lifted its earnings forecast, and predicted it will make $2bn more than expected on Covid-19 vaccine sales this year.
Britain’s factories suffered their biggest drop in activity since the 2020 pandemic lockdowns, as manufacturers were hit by falling orders and weak export demand.
America’s factories also slowed, while manufacturers across Asia also reported falling output.
The online furniture retailer Made.com is planning to call in administrators after talks to find a buyer failed and it stopped taking customer orders last week.
Shares in Ocado have now surged almost 40% today, after it struck a deal to build robotic warehouses for South Korean retailer Lotte Shopping.
Hopes that America’s central bank might ease the pace of its interest rate hikes have taken a knock today, after data showed a jump in job vacancies in September.
Stronger-than-expected U.S. economic data:
— Jamie McGeever (@ReutersJamie) November 1, 2022
- Manufacturing ISM 50.2 vs 50.0 forecast
- JOLTS job openings 10.7 mln vs 10.0 mln forecast
These numbers lean towards more aggressive rate hikes, Wall Street gives back early gains to trade in the red.
Bank of England begins QT
The Bank of England has just made a little bit of history – by starting to sell off some of its huge store of UK government bonds.
The Bank successfully auctioned £750m of shorter-dated bonds today, as it began its quantitative tightening (QT) programme.
The sale of bonds, with a remaining maturity of between three and seven years, saw solid demand from investors, who bid for over three times the amount available.
The launch of QT was delayed from last month, following the market mayhem unleased by the government’s mini-budget. The BoE plans to sell £80bn in total, out of its stock of £838bn of government debt which it began buying in 2009, in the financial crisis.
The Bank has also decided not to sell long-dated bonds yet, to avoid adding to pressures on pension funds who risked a ‘doom-loop’ when 30-year gilt prices crumbled.
It’s an important moment for the markets, as Sky’s Ed Conway explains:
Now, for all the fears abt market’s ability to digest bond sales, worth noting the quantum is considerably lower than in your typical gilt auction (750m vs c.2,000m or more).
— Ed Conway (@EdConwaySky) November 1, 2022
Even so. It’s a watershed moment.
The single biggest buyer of govt bonds is about to become a big seller.
Quantitative Easing was arguably the most consequential economic policy of the past decade and a bit.
— Ed Conway (@EdConwaySky) November 1, 2022
Its impact trickled into every area of policymaking.
It pumped up asset prices, widened inequality, and also helped protect govts from the kind of crisis which did for @trussliz
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