Closing summary
European stock markets are rallying and Italian, Spanish and Greek bond yields fell sharply, as the European Central Bank announced it would skew reinvestments of maturing debt to help more indebted countries. It will also devise a new instrument to tackle “fragmentation” of the bond market.
Wall Street also opened higher, ahead of the eagerly-awaited rate decision from the US Federal Reserve at 7pm BST, followed by a press conference with Fed president Jerome Powell. America’s central bank is expected to raise rates from 1% by at least 0.50 percentage points, or even 0.75 percentage points (which would be the biggest rate hike since 1994), to tackle soaring inflation, although there are also fears that the economy could tip into recession.
Today’s other main stories:
Network Rail said there was “no real hope” of avoiding the biggest railway strike in 30 years next week, as it told passengers to plan ahead and only travel if necessary.
The full timetable will be published on Friday but operators including Southern, Northern, TransPennine and Transport for Wales have already told passengers not to attempt to travel on strike days.
The Japanese owner of the British chip designer Arm is reportedly planning to float some of the company’s shares in London, in a sign the government’s efforts to lobby for a UK listing of the Cambridge-based company may have succeeded.
SoftBank, which bought the chip company for $32bn in 2016, is said to be reconsidering earlier plans to only list shares on the US market.
The “bloodbath” in the cryptocurrency sector may claim another victim, with the co-founder of multibillion dollar hedge fund Three Arrows Capital using Twitter in an attempt to battle rumours that the company is insolvent following the market collapse.
Customers of the collapsed fast fashion retailer Missguided will not receive refunds for returns, administrators of the business have confirmed.
It comes after the Manchester-based company fell into insolvency last month after racking up millions of pounds in outstanding payments to creditors.
Bloomsbury has reported a record year for sales, as the Harry Potter publisher said the increase in reading during the pandemic had become “permanent” after lockdowns eased.
The company benefited substantially from Covid restrictions when homebound consumers turned to new hobbies, including reading, to pass the time.
Moments after he was announced as the government’s new “cost of living business tsar”, David Buttress, the multimillionaire co-founder and former chief executive of takeaway app company Just Eat, went out into his garden and inspected one of his chickens’ bottom.
“Long busy day with some great meetings,” Buttress tweeted on Monday night. “But always great to get home to the real world and ‘dad the chicken isn’t well can you go and check it’s [sic] bum’… keeping it real.”
Australia’s main wholesale electricity market has been suspended by regulators in the latest sign that the crisis threatening the stability of energy supplies is deepening.
The Australian Energy Market Operator (Aemo) took the drastic step of suspending the entire national electricity market for the first time in its history on Wednesday.
Temporary silos will be built along the Ukraine border, including in Poland, in an attempt to help export more grain from the country and avert a global food crisis, Joe Biden has announced.
The US president told a Philadelphia union convention on Tuesday that he was working with European governments on the plan “to help bring down food prices”.
Global fossil fuel company BP has bought 40.5% of a renewable energy hub in the Pilbara, billed as having potential to become one of the biggest suppliers of green hydrogen in the world.
The company will also operate the Asian Renewable Energy Hub, which has plans to generate up to 26GW of wind and solar energy – about a third of the electricity generated in Australia today.
My colleague in the US, Dominic Rushe, will cover the US rate decision tonight. Thank you for reading. We’ll be back tomorrow. Bye!
Here’s some reaction to the surprise 0.3% drop in US retail sales in May.
Andrew Hunter, senior US economist at Capital Economics, said:
The 0.3% m/m fall in retail sales in May and downward revisions to previous months’ gains suggest that surging prices might finally be taking their toll on real consumption. But with the latter still on course for solid growth of 3% annualised in the second quarter, that won’t stop the Fed from accelerating the pace of policy tightening later today.
Headline retail sales were dragged lower by a 3.5% m/m slump in auto sales last month, but that drop reflects the impact of China’s zero-covid lockdowns on Asian manufacturers rather than weakening demand. That decline was partly offset by the price-related 4% rise in nominal gasoline station sales.
Factoring in the surge in prices last month, the data suggest that overall real consumption edged slightly lower in May and, with prices likely to see another strong rise in June, a rebound in real spending looks unlikely.
That suggests second-quarter real consumption growth will be closer to 3% annualised, rather than the 4% we had previously pencilled in. But 3% real growth is still a respectable performance, and a long way from the collapse being predicted by the usual bearish suspects. The upshot is that there is little to stop the Fed taking more aggressive action to tackle rampant inflation over the next few months.
