Closing post
Time for a recap.
The chairman of Britain’s largest supermarket group has urged the government to implement a windfall tax on energy giants, to help fund more support for struggling families.
In a notable intervention, Tesco chairman John Allan said there was an “overwhelming case” for a windfall tax on the earnings of energy firms, who have benefitted from the surge in oil and gas prices.
Allan also warned that the UK is now seeing “We are seeing real food poverty for the first time in a generation”.
Allan’s comments came as British Gas said it hiring more people to deal with a rise in the number of distressed customers who are struggling to cope with soaring energy bills.
But its owner, Centrica, also predicted annual profits this year will hit the top end of expectations.
The UK’s soaring cost of living and last month’s record increase in household energy bills have slammed the brakes on consumer spending, retail sector figures show.
Stock markets have rebounded from their worst session in almost two years yesterday.
In London, the FTSE 100 index has recovered almost half of Monday’s losses, up 70 points at 7208 points, while Wall Street has also rebounded.
Tuesdays apparently auspicious days for the S&P 500. Bespoke Investment Group: 'On average, SPY has gained 0.52% on the trading day after 3%+ drops. Tuesdays have seen by far the biggest upside response with an average gain of 1.86%. Fortunately for bulls, today is Tuesday.'
— Naomi Rovnick 歐蜜 (@naomi_rovnick) May 10, 2022
It follows a heavy tumble on Monday, in which stocks, bonds, industrial and precious metals, oil and crypto currences had all fallen.
Elswhere....
Heathrow has lifted its forecast for passenger growth this year by 16% after a rise in holidaymakers over Easter. The airport now expects 53 million passengers this year, up from 45.5m, following an increase in passengers in April due to “outbound leisure travellers and Brits cashing in airline travel vouchers”.
Shares in Peloton have dropped 12% in early trading to around $12.36, after the home exercise equipment firm reported a larger loss than expected.
The chief executive of Stellantis, one of the world’s biggest carmakers, has warned battery shortages could affect the industry as soon as 2025 as the transition towards electric vehicles accelerates.
The warning comes as UK secondhand electric car sales more than double, as demand surges.
Tesla has halted most of its production at its Shanghai plant because of problems securing parts for its electric vehicles.
Big high street pharmacy chains including Boots and Superdrug have run out of some hay fever medicines, with the manufacturer, GlaxoSmithKline, blaming temporary supply issues.
And Sanjeev Gupta’s GFG Alliance faces a fight against insolvency for some of its key companies after Credit Suisse withdrew from a long negotiation over debts.
Bundesbank boss urges ECB to raise rates in July
Germany’s central bank boss has called for eurozone interest rates to rise in July.
Joachim Nagel said in a speech there was a growing risk that policymakers act too late, as consumers and businesses’ inflation expectations rise.
Nagel fears that central bankers could be forced into “strong and abrupt” increases in borrowing costs, as occured in the US under Paul Volcker.
As central banks consider how to bring inflation back down to target, it is worth recalling the conditions under which the last, most prominent disinflation episode – the Volcker disinflation at the end of the 1970s – played out. Over the course of this policy, nominal interest rates in the US rose above 20%.
Of course, at that time the situation was different in many respects. Debt ratios were much lower than they are today, for both public and private debt. Inflation had already been higher in the 1960s and early 1970s. And arguably, before this episode, the Fed may have been less independent and less focused on inflation than it is today.
There is one lesson I would draw from this: Delaying a monetary policy turnaround is a risky strategy. The more inflationary pressures spread, the greater the need for a very strong and abrupt interest rate hike.
Bundesbank President #JoachimNagel on #monetarypolicy in the #euroarea at the International Economic Symposium co-hosted by Bundesbank and @business_econ #inflation #interestrates #ECB https://t.co/cu3nNuZHDz pic.twitter.com/QNg5Hln93k
— Deutsche Bundesbank (@bundesbank) May 10, 2022
