Closing post
Time to wrap up… here’s today’s main stories so far:
Stocks have pushed higher in New York, as investors await Wednesday’s interest rate decision from the US Federal Reserve.
The Dow Jones industrial average, of 30 large US stocks, has gained 0.5% while the tech-focused Nasdaq compositive is up 1.5%.
Megacap tech stocks are strengthening, with Google owner Alphabet up 6.5%.
Tata Steel to stop operating coke ovens at Port Talbot plant
In the UK manufacturing sector, India’s Tata Steel said today it has decided to cease operations of coke ovens at the Port Talbot plant, in Wales, following a “deterioration of operational stability”.
In a statement, Tata says:
“Tata Steel UK will increase imports of coke to offset the impact of the coke oven closures.”
Coke ovens are used to make coking coal, a key raw material in steelmaking.
Back in January, Tata announced that the blast furnaces and coke ovens at Port Talbot woud shut, at the cost of around 3,000 jobs.
It is moving to greener, cheaper steelmaking, by installing an electric arc furnace which will melt and reuse steel rather than creating new steel.
Looking back at the UK housing market, Rightmove’s monthly report show how mortgage affordability remains an issue, especially for first-time buyers.
FT: Deloitte plans biggest reorganisation in a decade to cut costs
Staff at professional services giant Deloitte are facing a shake-up as the company’s bosses try to cut costs.
The Financial Times reports that Deloittehas launched “the biggest overhaul of its global operations in a decade”, as it reacts to an expected market slowdown.
Under the plan, Deloitte’s main business units will be cut from five to four — audit and assurance; strategy, risk and transactions; technology and transformation; and tax and legal.
The goal is to cut complexity, and free up staff to work with clients rather than manage colleagues internally, an email sent to Deloitte’s partners explains.
More here.
Breaking news: Deloitte has launched the biggest overhaul of its global operations in a decade as the Big Four firm seeks to cut costs https://t.co/2fjCnQ66Kl pic.twitter.com/FTrM2ePygC
— Financial Times (@FT) March 18, 2024
Catherine Mann reappointed to Bank of England's monetary policy committee
One of the Bank of England’s most hawkish policymakers has been handed another three year term setting UK interest rates.
Catherine Mann has been reappointed as an external member to the Monetary Policy Committee (MPC), the Chancellor of the Exchequer, Jeremy Hunt, has announced.
Mann’s current three-year term ends on 31 August 2024, but she will now remain on the MPC until the end of August 2027.
From 2014 to 2017, Mann was chief economist at the Organisation for Economic Co-operation and Development (OECD). She also worked at Citigroup, and was a White House advisor.
The Treasury says:
Reappointments are not automatic and each case is considered on its own merits. Dr. Catherine L Mann was reappointed to the MPC following consideration by the Chancellor of a number of factors including the diversity of the current committee and its balance of skills and experience.
The MPC is on track to become majority female for the first time in July, when Clare Lombardelli joins as deputy governor.
Last month, Mann was one of two MPC members who voted to raise UK interest rates – but were outvoted by six who voted to leave rates on hold (while one wanted to cut rates).
Bloomberg: World’s top solar firm Longi plans thousands of job cuts
A major solar panel manufacturer is reportedly planning to cut almost one-third of its staff.
Bloomberg reports that China’s Longi Green Technology Energy is planning to reduce its headcount by 30% to slash costs, as the industry struggles with overcapacity and fierce competition.
Last year, Longi employed about 80,000 people.
It is thought to be the the world’s largest solar manufacturer, with around 20 per cent of the global market for photovoltaic modules, according to the FT.
Bloomberg adds:
The move signals an acceleration of job cuts that Longi began in November, when it started laying off thousands of people who were mostly management trainees and factory hires — a reversal after years of breakneck expansion across the global solar industry.
It isn’t clear how many employees had been dismissed before this latest decision.
Last month, Longi’s vice-president warned Europe and the US against restricting Chinese companies from their renewable energy supply chains, saying this would slow the decarbonisation of their economies.
A Californian man has described how he held on “for dear life” as he sat on an Alaska Airlines flight after a door-sized panel blew off the Boeing-manufactured plane mid-flight.
Cuong Tran told the BBC his seat belt saved him as his phone, socks and shoes were ripped off by an uncontrolled decompression 16,000ft above Portland.
Tran, 40, said it happened soon after take-off when he would usually be getting ready to doze off.
“The captain said we had passed 10,000 feet. Then the hole blew out on us and I remember my body getting lifted up. Then my whole lower body got sucked down by the howling wind.”
He is among seven passengers to have filed a lawsuit against Boeing, Alaska Airlines and Spirit AeroSystems.
As reported last week, the suit was filed on Thursday in Washington’s King county superior court.
Eurozone inflation down to 2.6%
The rise in oil prices could lift inflation in the coming months, stymieing hopes that interest rates will be cut repeatedly this year.
But the latest news is that inflation across the eurozone dipped last month.
The euro area annual inflation rate was 2.6% in February 2024, down from 2.8% in January, statistics body Eurostat has reported.
That confirms the ‘flash’ reading, at the end of last month, and is the lowest annual inflation reading since last November.
Inflation for food, alcohol & tobacco slowed to 3.9% from 5.6% in January.
But the annual rate of energy inflation rose to -3.7% in February, from -6.1% the previous month, with prices picking up during the month.
Euro area annual #inflation at 2.6% in February 2024, down from 2.8% in January 2024 https://t.co/9rRXztYUlF pic.twitter.com/mlgMawkWpz
— EU_Eurostat (@EU_Eurostat) March 18, 2024
The lowest annual rates were registered in Latvia, Denmark (both 0.6%) and Italy (0.8%). The highest annual rates were recorded in Romania (7.1%), Croatia (4.8%) and Estonia (4.4%).
Updated
Oil at four-month high
The oil price has hit its highest level in over four months this morning.
Brent crude has gained 1% to $86.16 per barrel, while US crude has reached $81.86, both the highest since the first week of November.
This morning’s data from China, showing a pick-up in factory output and investment, could indicate energy demand will be higher than expected.
Ricardo Evangelista, senior analyst at ActivTrades, says anxiety about supply disruption have risen too:
Traders’ concerns about supply have intensified, propelling March gains to almost 5%. Ongoing tensions in the Middle East persist as a significant worry, with potential escalations threatening to disrupt crude supply from the Gulf and crucial shipping routes.
Supply anxieties were exacerbated over the weekend following additional attacks on Russian refineries, resulting in an estimated 7% reduction in the country’s output.
On Saturday, a Ukrainian drone attack caused a fire at a Russian oil refinery that burned for hours.
UK firms warned to improve debt collection practices
UK regulators have issued a joint warning to companies to improve their debt collection practices, as the cost of living crisis drives customers into arrears.
The Financial Conduct Authority (FCA), which is the City watchdog, says it has joined with energy regulatar Ofgem, water regulator Ofwat and communications watchdog Ofcom to “set out our expectations across markets”.
The quartet are urging firms to:
make sure customers in debt do not receive excessive communication
use supportive language
clearly signpost free debt advice
make it easy for debt advisers to contact them on behalf of clients
The FCA says it will take “robust action” if firms fail to meet the high standards expected. In 2020, the FCA fined firms £90m for failures in how they treat customers in arrears, with firms paying over £570m in compensation to customers.
Earlier today, a survey showed that a record 6.7 million people in Britain are in financial difficulty, as more households struggle.
Bad debts in the energy sector have hit record levels, following the jump in prices in the last couple of years.
UK heat pump rollout "too slow"
In the energy sector, Britain’s public spending watchdog has criticised the slow pace of the government’s heat pump rollout.
A report by the National Audit Office (NAO) has found that heat pump installations would need to accelerate 11-fold if the government is to reach its target for 600,000 heat pumps installed in homes every year by 2028.
The report comes just a few days after ministers postponed an important scheme designed to increase the rate of installations.
More here:
Updated
Currys raises profit outlook after bidding battle ends
Fresh from rebuffing a takeover offer, electricals retailer Currys has lifted its profit forecasts.
Currys told the City that sales have been stronger than expected since early January, meaning it now expects to make adjusted pre-tax profits of at least £115m (up from previous expectations of £105-115m).
Alex Baldock, Curry’s chief executive, explains:
“We’ve been working to get the Nordics back on track, while keeping up the UK&I’s encouraging momentum.
Both are progressing well, despite still-challenging markets, and we now feel confident to raise this year’s profit expectations to at least the top of our previous guidance. Stronger trading, selling more of the solutions and services that boost margins and build customers for life, and strong cost discipline have all been important.
The trading update comes a week after US investment group Elliott ended its bid to buy Currys, after its offers were rejected. China’s JD.com revealed on Friday it will not make a bid, having earlier said it was considering making an offer.
Retail analyst Nick Bubb says:
Well, it is not clear why the Chinese giant JD.com decided not to make a bid for Currys, despite its need for Overseas growth, but if it was worried about weak trading for the business in the UK and the Nordics then the company has been able to reassure investors with an upbeat update this morning.
Updated
Building supplier Marshalls cuts revenue forecast, blaming subdued market
UK building products supplier Marshalls has warned that the construction market remains weak.
It has cut its sales and profit forecast for this year – a sign that the spring revival in house prices hasn’t, yet, resulted in higher demand in the building sector.
Marshalls, which supplies products such as bricks, paving and drains to builders, reported a 40% drop in pre-tax profits last year, down from £37.2m in 2022 to £22.2m in 2023, due to “challenging end market conditions”.
It warns shareholders that revenue in the first two months of the year have been lower than a year ago, and expects a slower recovery.
Marshalls, which announced 250 job cuts last summer, told the City:
In line with recent sentiment of UK economic and industry forecasts, the Board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves.
The start of this recovery is now expected to be slower and more modest than previously assumed. Therefore the Board believes that revenues in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023.
Shares in Marshalls have dropped 10% in early trading.
Although China’s property market is struggling, the rest of its economy seems to be doing better.
China’s National Bureau of Statistics reported that industrial output rose 7% from a year earlier in January-February, beating forecasts.
Fixed-asset investment, or spending on factories and equipment, was up 4.2% year-on-year, while retail sales grew 5.5%.
This data indicates that “the Chinese economy is performing better than expected helped by extra demand during the Lunar New Year period”, says Jim Reid, strategist at Deutsche Bank.
Those who overprice their homes risk being dragged into a long selling period, and could be forced to cut prices to find a buyer, warns Emma Fildes, founder of the buying agency Brick Weaver.
She says today’s Rightmove data shows owners of larger properties are particularly optimistic about getting a high price – but this can backfire.
Fildes explains:
Sellers misinterpret a 13% increase in sales and renewed buyer interest, up 8% on last year, by applying an average 1.5% increase on newly marketed asking prices in March 2024.
Optimism is highest amongst those with bigger properties, who hope to regain some of the value promised in 2022 after 2023 rates chipped away at their price. Sellers in this bracket increased their initial asking price by 2.9% on February listings. This misplaced confidence could lead to a drawn out marketing period, with numerous price reductions, before securing a buyer. This is demonstrated in the average time to agree a sale, currently sitting at 73 days in London and 71 out of the Capital.
For those looking to move, realism is best applied to asking prices when hoping to secure a buyer.
Based on @rightmove House Price Index. Sellers misinterpret a 13% increase in sales and renewed buyer interest, up 8% on last year, by applying an average 1.5% increase on newly marketed asking prices in March 2024.
— Emma Fildes (@emmafildes) March 18, 2024
Optimism is highest amongst those with bigger properties, who… pic.twitter.com/hFoNxSg3wH
China's property sector is still in the doldrums
Conditions continue to look shakier in China’s property market.
New official data shows that property investment in China fell 9.0% year-on-year in the first two months of 2024.
National Bureau of Statistics spokesperson Liu Aihua told reporters that the property market is “still in a state of adjustment and transition” but policies outlined at China’s annual legislative session earlier this month will promote “stable and healthy development.”
This drop is actually an improvement on the end of last year; real estate investment in China fell by 24.0% in December 2023.
🇨🇳⚠️ICYMI: The real estate crisis in China is far from over. #MM pic.twitter.com/uFkE1Edp2d
— MacroMicro (@MacroMicroMe) March 18, 2024
China’s property sector has, understandably, struggled as authorities moved to curb excess borrowing by property developers.
This led to turmoil in China’s property sector, with suppliers unpaid and homebuyers left without apartments – prompting mortgage boycotts in hundreds of cities.
Last month, major developer Country Garden Holdings was hit with a liquidation petition from a creditor over a loan non-repayment.
Introduction: Signs of spring revival in UK housing market
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Spring has sprung in the City of London this morning, and there are signs of green shoots in the housing market too.
House sellers lifted their asking prices by the largest amount in 10 months in March, new data from Rightmove shows, as demand from buyers picked up in the traditionally busier spring selling season.
The average price of newly marketed properties on the market rose by 1.5%, or £5,279, this month to £368,118.
This rise in asking prices suggests the property market is heating up after a slow 2023, with the number of sales being agreed now 13% higher than a year ago.
Buyer demand is now 8% above last year, Rightmove reports, led by the larger homes sector and London, which are less mortgage-rate-sensitive than the rest of the market.
Indeed, asking prices for “Top of the ladder” properties rose almost 3% this month.
Confidence is seeping back into the housing market, reports Tim Bannister of Rightmove:
“March is typically a strong month for asking price growth, as both buyer and seller activity levels rise and the spring selling season gets underway.
However, the stronger than usual price growth this March indicates that new sellers are feeling much more confident, with some perhaps being over-optimistic, that there is enough buyer activity and affordability in their local market to achieve a higher price.
Buyers’ affordability has increased since mortgage rates began to fall back from their peak last summer.
But, asking prices are still £4,776 below their peak in May 2023; some sellers realise they need to be realistic with their pricing, given mortgage rates are still much higher than a couple of years ago.
Bannister adds:
For those who can afford to buy and have yet to take action to move this year, this may provide a window of opportunity to buy as we now seem to be past the bottom of the market.
Rightmove adds that the “lacklustre Spring Budget” didn’t help the market, as there was no direct help for first-time buyers or mortgage market innovations.
Matt Thompson, head of sales at Chestertons, says:
“In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. As this wasn’t the case, the majority of these buyers have since begun resuming their property search.
As a result, we expect for March to conclude the first quarter of the year with a busy property market – particularly in the capital where demand continues to outstrip supply.”
The Times reports today that OnTheMarket, Rightmove’s smaller rival, has found that 65 per cent of active buyers were confident they would buy a property within the next three months.
Its latest survey also found a rise in sellers’ confidence, with 60% expecting to sell within three months, up from 57% in January.
This comes at the start of a busy week for the world’s central bankers; the Bank of England is widely expected to leave interest rates on hold on Thursday, after its next meeting.
Also coming up today
Prime minister Rishi Sunak is promising to create up to 20,000 more apprenticeships as part of a series of reforms to support small businesses.
Sunak is expected to announce £60m of new government funding, to pay the full cost of apprenticeships for people aged 21 or under at small firms from 1 April.
The government is also pledging to cut red tape for small businesses, and shaking up the apprenticeship levy. That levy makes large organisations set aside 0.5% of their payroll for apprenticeships; from April, firms will be able to pass on 50% of their unused funds, up from 25% today.
And one of the UK’s most successful tech entrepreneurs will go on trial in San Francisco later today, over what US prosecutors have called “the largest fraud in the history” of Silicon Valley.
Mike Lynch, once dubbed “Britain’s Bill Gates”, is accused of artificially inflating the sales of his software company Autonomy before its takeover by Hewlett-Packard in 2011, and misleading auditors, analysts and regulators. Lynch, who has always denied the allegations of wrongdoing, was extradited from the UK last year after a five-year battle.
The agenda
10am GMT: Eurozone inflation report (final reading) for February
2pm GMT: NAHB/Wells Fargo index of US housing market
Updated
