Today’s top stories
The expansion of the Ulez clean air scheme to cover the entire UK capital can go ahead after the High Court dismissed a legal challenge brought by five of London’s 33 local boroughs.
British Airways owner IAG and Air France-KLM have reported record profits. IAG’s second quarter operating profit is €1.25bn, more than quadruple the €295mn a year earlier.
Donald Trump has been accused of attempting to have surveillance video footage at his Mar-a-Lago estate deleted ahead of an FBI search, according to an expanded indictment.
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Good evening.
The Bank of Japan has eased controls on its government bond market, prompting a surge in the country’s benchmark bond yields to the highest level in nine years.
The central bank said it would offer to buy 10-year Japanese government bonds at 1 per cent in fixed-rate operations, widening the trading band on long-term yields. BoJ governor Kazuo Ueda said in a briefing on Friday that the central bank was “not ready” to allow yields to move freely, saying this would amount to abandoning its longstanding bond-buying policy to depress yields, known as yield curve control.
European stocks and bonds fell after the BoJ’s decision. The region-wide Stoxx Europe 600 lost 0.4 per cent in early trade, having hit its highest level in more than a year in the previous session. France’s Cac 40 fell 0.5 per cent and Germany’s Dax gave up 0.3 per cent.
It came after the European Central Bank raised interest rates back to their record high on Thursday. This ninth consecutive rise by a quarter-percentage point to 3.75 per cent, which matches a high last reached in 2001, could be the ECB’s last, according to the central bank’s president Christine Lagarde.
“It’s a decisive maybe,” Lagarde said, adding that the ECB could pause or raise rates at its next policy meeting in September.
The hope of a peak to rate rises is also fed by falling French inflation which was reported to have slowed to its lowest annual rate for 16 months on Friday, as lower energy costs reduced consumer price growth in the eurozone’s second-largest economy to 5 per cent in June.
Economic growth in the US was stronger than expected in the second quarter of 2023 despite the Federal Reserve’s campaign of aggressive interest rate rises. According to preliminary figures released by the Department of Commerce on Thursday, the world’s largest economy grew 2.4 per cent on an annualised basis between April and June, better than economists’ predictions for a 1.8 per cent rate.
Strong business investment in inventories and fixed assets offset a drop in consumer spending growth. This data came after the Fed raised its benchmark interest rate to the highest level in 22 years on Wednesday to help tame US inflation.
Need to know: UK and Europe economy
In the property market, soaring interest rates and falling house prices are prompting buyers to make lower offers or pull out of purchases completely. Many buyers simply cannot afford mortgage rates that are now at their highest levels since the 2008 financial crisis.
However, three of the UK’s largest lenders cut their mortgage rates on Thursday after a better than expected drop in inflation. Nationwide, Barclays and TSB followed in the footsteps of HSBC which on Wednesday cut the cost of 100 of its products.
Players and investors have flocked to tennis’s new rival padel, building courts and opening clubs to cash in on its surging popularity. It is now the second most popular participation sport in Spain after football. The number of courts worldwide is expected to more than double to 84,000 by 2026.
Three new deputy governors have been appointed to the Turkish central bank by president Recep Tayyip Erdoğan, including a former New York Federal Reserve official. This comes after Turkish inflation was forecast on Thursday to soar to almost 60 per cent by year-end.
Need to know: Global economy
Brazil is set to launch an ambitious green transition plan worth hundreds of billions of dollars in public and private investments, which officials hope will become the signature policy of leftwing president Luiz Inácio Lula de Silva’s third term. The package will encompass about 100 initiatives including carbon trading, the bioeconomy and infrastructure adaptation.
Mongolia is attempting to win over western investors by making sweeping reforms and cutting its reliance on China and Russia. China currently accounts for 84 per cent of Mongolian exports, such as copper and coal, and Russia provides about 30 per cent of its imports, including all its petroleum products.
HP, the world’s second-biggest PC maker, is working with suppliers to shift production of millions of consumer and commercial laptops to Thailand and Mexico this year. This follows moves by other computer companies, notably Dell and Apple, to diversify their supply chains beyond China.
Need to know: business
Rising interest rates and strong trading performance propelled Standard Chartered to a better than expected second quarter with pre-tax profit up 27 per cent at $1.6bn, beating analysts’ expectations of $1.4bn. The London-based bank also announced a $1bn share buyback scheme, adding to an existing programme of the same size, and boosted its dividend.
Amsterdam-based online travel group Booking Holdings, which trades as booking.com, has offered concessions to the EU to win approval for its €1.6bn purchase of Sweden’s Etraveli. Booking announced plans to buy CVC-owned Etraveli, which runs brands such as Gotogate and Mytrip, in November 2021.
Profits at ExxonMobil have taken a tumble as oil prices return to “normal”. America’s biggest oil company posted net income of $7.9bn for the second quarter, less than half the unprecedented haul of $17.9bn it reported during the same period in 2022. Shell and TotalEnergies also reported shrinking profits on Thursday.
EU regulators have opened a formal investigation into claims that Microsoft is unfairly bundling its Teams video conferencing app with its popular Office software as Brussels intensifies its scrutiny of big technology groups.
An investment by Volkswagen in Chinese rival Xpeng boosted shares in Chinese electric-vehicle makers on Thursday. Xpeng’s Hong Kong-listed shares climbed more than 33 per cent while those of domestic peers Nio and Li Auto rose 12 per cent and 4.2 per cent respectively.
Shares in Meta rose after it reported its first double-digit revenue growth since 2021 as its AI bet began to pay off. Chief executive Mark Zuckerberg said: “It’s really good to see the decisions and investments we made start to play out.” This comes after a significant restructuring in recent months, which included cutting 20,000 jobs.
Science round up
Health officials have “virtually” eliminated HIV transmission in parts of Sydney that were once the centre of the Australian Aids epidemic. The results add to evidence that prevention strategies, including testing and pre-exposure drugs, are highly effective when implemented correctly.
Commentator Anjana Ahuja says the UK’s dithering over rejoining the EU’s Horizon research programme is already damaging universities. “The future of UK science now lies in the hands of a weakened government inclined to prioritise symbolism over strategic thinking,” she writes.
Science editor Clive Cookson discusses the risks of a nuclear disaster at Ukraine’s Zaporizhzhia plant.
A Big Read examines the works of the Google research scientists who pioneered an AI revolution by producing an architecture for processing language, known simply as the “transformer”.
The ocean circulation in the north Atlantic is likely to collapse sooner than expected as a result of climate change, causing further upheaval in weather patterns around the globe, according to new analysis.
The July heatwaves in North America and Europe would have been “virtually impossible without climate change”, said researchers who stressed that extreme weather events would occur with greater frequency. The World Weather Attribution group, an academic collaboration, added that human-induced warming made the recent extreme heat in China “at least 50 times more likely”.
Something for the weekend
Try your hand at the range of FT Weekend and daily cryptic crosswords.
Some good news
The fossilised remains of a flying reptile from the late Jurassic period have been nicknamed ‘Elvis’ as a result of a quiff-like bony crest that resembled the haircut donned by the King of Rock and Roll. The pterosaur, which was found in a German rock quarry, had a wingspan of two metres and a long jaw with many small teeth to snap up shrimp and other small fish.
Source: Economy - ft.com
