Apple loses more than $200bn of its value in market rout

More than $200bn has been wiped off the value of Apple after China said it widened a ban on the use of iPhones to state employees
More than $200bn has been wiped off the value of Apple after China said it widened a ban on the use of iPhones to state employees Credit: REUTERS/Mike Segar

More than $200bn (£160bn) has been wiped off the value of Apple following reports that China has banned government officials from using iPhones at work.

Apple’s share price dropped more than 3pc on Thursday, marking a second day of sharp falls after the Wall Street Journal reported that Chinese authorities had banned officials from using the company’s smartphones.

The California-headquartered company’s share price has now fallen 7.3pc since Tuesday, wiping more than $200bn from its market value.

Restrictions on using iPhones within the Chinese government follows years of tightening trade sanctions and bans from the United States and its allies, including the UK, on the use of Chinese technology amid national security concerns.

US Representative Mike Gallagher accused China of unfairly punishing Western businesses in an effort to promote local competitors.

He said: “This is textbook Chinese Communist Party (CCP) behaviour - promote PRC national champions in telecommunications, and slowly squeeze Western companies’ market access.

”American tech companies seeking to cosy up to the CCP must realise the clock is ticking,” he told Reuters.

The crackdown threatens to hit Apple’s wider business, which generates 19pc of its annual revenue from China.

Curbs come as global demand for new smartphones slumps. Sales have dropped to their lowest point in a decade as China’s stalling economy has hit consumer spending.

Apple is also facing its longest smartphone sales slump since 2016. The company is hoping to revive demand with the launch of its new iPhone 15 next week.

Signing off

That’s all from us today. I’ll leave you with all the latest about next week’s iPhone 15 launch, which Apple is hoping will revive demand as it faces its longest smartphone sales slump since 2016.

Dunhill cigarette maker BAT sells Russian business to local management

British American Tobacco (BAT) has agreed to sell its Russian and Belarusian businesses amid mounting criticism of Western companies continuing to do business there.

Senior reporter Daniel Woolfson reports:

The maker of Dunhill, Lucky Strike and Vogue cigarettes has agreed to sell the division to the Russian business’ management team. The operations will be renamed ITMS Group once the deal completes.

BAT has a head office in Moscow, 75 regional offices and a factory in St. Petersburg, as well as an office in Belarus. Its operations in two countries account for almost 3pc of its revenues.

It comes 18 months after BAT said it would leave Russia. Since announcing its intention to leave Ukraine, BAT has faced criticism for maintaining a presence in the country.

B4Ukraine, a campaign group made up of Ukrainian and international civil liberties groups, wrote to BAT’s chief executive Tadeu Marroco in July this year, requesting “an urgent dialogue… to discuss the company’s ongoing activities and relationships in Russia.”

BAT said on Thursday: “Upon completion, BAT will no longer have a presence in Russia or Belarus and will receive no financial gain from ongoing sales in these markets.”

Playmobil profits slump as squeezed parents cut back on toys

Profits have tanked at German toy maker Playmobil as parents cut spending during the cost of living crisis.

Senior reporter Daniel Woolfson has the story:

The company’s sales surged during the pandemic as locked-down shoppers spent more on toys, but they declined as the pandemic faded.

Sales at Playmobil’s UK subsidiary fell from £25.8m last year to £18.3m this year, while profits were sliced in half, dropping from £1.1m to £536k over the year to March 31, company accounts show.

It comes as bosses at the toymaker’s headquarters in Zirndorf, Germany, have enlisted consultants at McKinsey to help turn the business around, according to reports in German newspaper Nürnberger Nachrichten.

Playmobil director René Feser said: “Driven by high inflation (in food and energy prices in particular) which has not been matched by wage increases, industrial unrest and generally-suppressed consumer sentiment, a large proportion of households are having to reduce their spending in non-essential areas such as toys.”

It marks the second year in a row that Playmobil’s sales have plunged since the highs of the pandemic. This time last year they had dropped £6m, down from £31.4m in 2021, which it blamed on “an increased focus on out-of-home entertainment and socialising”.

People had continued to seek out “alternative forms of amusement” instead of toys, Mr Freser said. “Playmobil sales have declined further and even the market overall.”

He added that the new toys - or “novelties” - launched over the last year had fallen flat with shoppers. “Customer and consumer reactions to the novelties in the range have characterised it as relatively unattractive compared to previous years.”

The Telegraph has approached Playmobil for further comment.

Founded in 1974 by Hans Beck, Playmobil is one of the world’s best known toy brands. It has reportedly sold more than 3bn figurines across the world.

Like its main rival, Lego, Playmobil has launched a vast range of different characters and sets over the years, spanning everything from construction workers and paramedics to historical knights, fantasy characters and animals.

However this has, on occasion, landed the company in hot water. It has previously been criticised for selling play sets depicting bank robberies, as well as medical emergencies such as bike crashes.

A spokesman for the company told the Daily Mail in 2014: “One thing our customer feedback tells us is that it is important that children can be taught, through play, the importance of recognising good from evil and ‘baddies’ from ‘goodies’, as well as understanding scenes from real life, such as accidents and emergencies.”

It marks the second year in a row that Playmobil’s sales have plunged since the highs of the pandemic. Credit: JOEL SAGET

London Stock Exchange to lose £9bn packaging giant in latest blow to City

The London Stock Exchange (LSE) is poised to lose a £9bn packaging giant to New York in the latest blow to the Square Mile.

Smurfit Kappa, the Irish paper and packaging producer, is in discussions to merge with US rival WestRock, which will result in the company cancelling its premium London listing if a deal is agreed.

The combined group, which is expected to be named Smurfit WestRock, would have its global headquarters in Dublin and would list on the New York Stock Exchange.

Banking and financial services correspondent Simon Foy has the full story...

FTSE 100 snaps three-day losing streak

The FTSE 100 closed higher on Thursday, snapping a three-day losing streak. 

The blue-chip index closed 0.21pc higher at 7,441.72, as aerospace supplier Melrose Industries surged 5.5pc on an upbeat profit outlook. 

The aerospace and defence index added 2.8pc to reach an all-time high.

However, commodity-related stocks tumbled after new data showed China’s exports and imports sanks last month amid weaker consumer spending. 

The FTSE 250 midcap index dropped 0.4pc to 18,383.85.

Period-tracking apps investigated over fears of data harvesting

The privacy watchdog has launched a review into fertility apps amid concerns that they may be misusing womens’ personal data.

The Information Commissioner’s Office (ICO) said more than half of women had concerns about the security of period-tracking and fertility apps.

Such apps are commonly used by women who are looking to see when they are most likely to conceive.

In a survey, the data watchdog found 54pc of women reported seeing more adverts related to babies or pregnancy after signing up for a fertility app.

Senior technology reporter Matthew Field has more...

Handing over

That’s all from me for today but you will be kept up to speed by my colleague Adam Mawardi into the evening.

I will leave you with the latest on bond markets, where UK 10-year gilt yields have fallen five basis points today to 4.48pc.

Britain’s borrowing costs remain well ahead of European rivals but, as ever, there is more to the story:

Pound falls to lowest level since June as markets cut interest rate bets

The pound has slumped to its lowest level since June as money markets cut bets on the peak for interest rates.

Sterling has dropped a further 0.3pc today to head in the direction of $1.24 after the Governor of the Bank of England cast doubt on the need for more interest rate rises.

Andrew Bailey told MPs that Britain is likely “near the top of the cycle” on interest rates, which have risen for 14 consecutive meetings to 5.25pc.

Since then the pound has dropped by 0.8pc as traders reduced bets on the peak of interest rates, which money markets had predicted would be 5.75pc on Wednesday.

Such a move is no longer priced in, with traders also no longer 100pc expecting rates to increase to 5.5pc at the next meeting of the Monetary Policy Committee later this month.

The pound has also come under pressure from a stronger dollar, which has risen after strong services data indicated inflation could remain sticky and force interest rates to stay higher for longer.

The dollar remains on track for an eighth consecutive week of gains, which would be the longest run of increases since 2005.

Grindr loses nearly half its staff after ordering return to the office

Gay dating app Grindr has fired nearly half its staff after ordering employees back to the office and threatening to sack those who refused.

My colleague Matthew Field reports:

The LGBT app has lost 80 people out of a total workforce of 178 after the business demanded they return to the office twice a week.

Staff were asked to resign or be fired if they refused to return to the workplace, the Communications Workers of America (CWA) said.

The return to office order came shortly after staff at the California-based company announced they were joining a union.

The CWA claimed the return to office mandate was an attempt to “silence workers from speaking out about their working conditions”. Wired first reported the job cuts.

Erick Cortez, a union organiser at Grindr, told Bloomberg: “These decisions have left Grindr dangerously understaffed and raises questions about the safety, security and stability of the app for users.”

“It is clear Grindr wants workers to be silenced and deterred from exercising our right to organise, regardless of the expense.”

Grindr did not immediately respond to a request for comment.

The company told staff in June it planned to end its remote work first policy, before warning them in August they had to pledge to come in twice a week as of October or face being sacked.

Companies have been ramping up pressure on staff to return to the office in recent months, with senior leaders increasingly concerned about the impact of remote work on productivity and creativity.

Amazon’s chief executive Andy Jassy has warned staff that those who do not come into the office at least three times a week may not have a future at the company.

Facebook has ordered staff back into offices three days per week from September.

Staff were asked to resign or be fired if they refused to return to the workplace Credit: Aly Song

Apple slumps amid China ban fears

Apple and other tech shares were under pressure in early trading, as Wall Street stocks opened mostly lower amid worries over further interest rate hikes.

Shares of Apple fell more than 3pc following a big drop Wednesday after a Wall Street Journal report that the Chinese government was barring the use of iPhones in government offices. analyst Patrick O’Hare said the episode has added to worries that “if China purposely chooses to make business difficult for a company like Apple... then it can do so for a lot of other US companies doing business in China.”

The Dow Jones Industrial Average was last flat, while the broad-based S&P 500 shed 0.5pc. The tech-rich Nasdaq Composite dropped 1.6pc.

Stocks have fallen the last two days amid a jump in crude prices and inflationary headwinds that could prompt the US Federal Reserve to increase interest rates further, or keep them elevated for longer.

China’s currency falls to 16-year low after exports tumble

China’s currency tumbled to a 16-year low after exports fell for the fourth consecutive month, deepening concerns over the outlook for the world’s second-largest economy.

Our senior economics reporter Eir Nolsøe has the latest:

The renminbi slid to its lowest level against the dollar since 2007, after official figures showed exports fell by 8.8pc in August compared with a year earlier.

The issues point to mounting economic troubles for Beijing as a much-anticipated rebound after the end of its zero-Covid policies has failed to materialise, raising pressure on President Xi to ramp up stimulus.

The currency fell by 0.1pc to a low of Rmb7.3259 per dollar.

This chart shows the currency’s fall.

US markets slump after weak unemployment figures

Wall Street’s main indexes fell at open as weaker-than-expected jobless claims data added to concerns about sticky inflation.

The Dow Jones Industrial Average fell 92.01 points, or 0.3pc, at the open to 34,351.18.

The S&P 500 opened lower by 30.93 points, or 0.7pc, at 4,434.55, while the Nasdaq Composite dropped 197.37 points, or 1.4pc, to 13,675.11 at the opening bell.

US unemployment claims at lowest level in six months

US jobless claims fell to their lowest level since February raising further concerns that the American economy remains too hot.

Initial unemployment claims decreased by 13,000 to 216,000 last week, Labor Department data showed.

Continuing claims, which is used to measure the number of people on unemployment benefits, dropped to 1.68m in the week ended August 26, which was the lowest level since July.

The data comes after the US services sector in August had its strongest month since February, bolstering bets that the Federal Reserve could lift interest rates again before the end of the year.

An alternative view is that the labour market remains strong despite falling inflation, indicating the US will be able to avoid a recession despite high interest rates.

B&M accused of 'cynical' deal to buy Wilko stores without staff

A union has slammed B&M over its move to buy 51 Wilko stores but leave the future of workers in the balance.

Around 1,000 jobs are at risk at shops bought by B&M in a deal earlier this week, according to the PA news agency.

On Tuesday, PwC, which was hired to oversee the insolvency last month, said it agreed to sell up to 51 Wilko shops to the rival discount retailer for up £13m.

But the deal only included Wilko’s properties and will not transfer workers currently based at these sites.

The GMB union, which represents more than 3,000 Wilko staff, called on B&M to explain why it has opted against saving the jobs of workers at those shops.

Andy Prendergast, GMB national officer, said: 

The fact the deal with B&M is for physical stores only is frankly baffling. The company really needs to be explain why they are unwilling to transfer in the able, experienced retail staff they will obviously need.

It looks like a cynical attempt to ditch liabilities and reinforces the view people are treated as the least important part of in this process. Frankly, the workforce deserve better.

B&M has been contacted for comment. PwC declined to comment.

Oil falls back as dollar strengthens further

Oil has edged lower after the longest run of gains in more than four years following the announcement of supply cuts by Saudi Arabia and Russia.

Brent crude, the international benchmark, has slumped 0.6pc today but held above $90 a barrel, while West Texas Intermediate fell 0.6pc toward $87 after posting nine daily gains, the longest stretch of advances since January 2019. 

Oil prices have risen after Saudi Arabia and Russia said they would extend reductions in supply until the end of the year.

However, crude faces headwinds from wider markets, with the dollar on track for an eighth consecutive week of gains, which would be the longest run of increases in data going back to 2005. A stronger dollar weakens the price of commodities priced using the currency.

RBC analysts including Michael Tran and Helima Croft said: “While some can argue that messaging from the kingdom earlier this week is a stark reminder to short sellers to not position against the central bank of oil, some may argue that the recent physical market tightness is artificial rather than organic market forces at work.”

ChatGPT pioneer launches ‘biological software’ company

One of the inventors of the technology behind ChatGPT plans to use artificial intelligence to discover new types of medicine after raising $100m (£80m) from investors including the chip giant Nvidia.

Our technology editor James Titcomb has the details:

Jakob Uszkoreit, one of a team of former Google scientists who developed the AI breakthrough in 2017, is raising the funds to develop “biological software” that could lead to new treatments.

His low-profile company, Inceptive, is one of a number of start-ups hoping to use generative AI to invent new types of drugs. The company designs new types of molecules and then works with major pharmaceutical companies to test them.

Nvidia’s venture capital arm, the Silicon Valley investor Andreessen Horowitz, and Obvious Ventures, a prolific San Francisco venture capital firm, are among those investing, according to the Financial Times, which revealed the fundraising.

Take part in our poll on whether artificial intelligence is developing too fast.

Aldi aims to overtake Sainsbury's as it raises store target

Aldi aims to have more stores than Sainsbury’s across the UK as part of a new ambitious expansion plan which will see it target Londoners and Home Counties shoppers. 

Our retail editor Hannah Boland has the details:

The German discounter said it was now planning to have 1,500 shops across the UK, compared to 1,000 currently. 

The new target is up from its earlier goal of 1,200 stores, which it was aiming to hit by 2025. 

Aldi did not say when it hopes to hit 1,500 stores, but said it was looking to open the stores as quickly as possible. It opened its 1,000th store today in Woking. 

The 1,500-store plan would mean that Aldi would have more UK shops than Sainsbury’s, suggesting a major ambition to propel itself up the ranks of the largest grocers in Britain. 

Sainsbury’s - Britain’s second biggest supermarket by market share - has 600 supermarkets and around 800 convenience stores. Aldi is currently the fourth largest grocer in the UK, with a 10.2pc market share, behind Asda which holds 13.7pc of the market. 

Aldi aims to open 1,500 stores across Britain, which would overtake Sainsbury's Credit: Peter Byrne/PA Wire

Wall Street poised to open lower amid inflation fears

The S&P 500 and Nasdaq are expected to fall when markets open later in the US amid persistent inflationary pressures.

Wall Street’s three major stock indexes closed lower on Wednesday, including a 1pc loss for the Nasdaq, after stronger-than-expected services sector data fuel’ed concerns that sticky inflation could lead to interest rates staying higher for longer.

Apple dropped 2.8pc in premarket trading on a report that China was seeking to broaden iPhone ban to state firms and agencies, a day after losses in its shares weighed down all three major indexes.

Traders have also been spooked by data showing China’s exports and imports fell in August, with sagging overseas demand and weak consumer spending hitting businesses in the world’s second-largest economy.

In pre-market trading, the Dow Jones Industrial Average was flat, with the S&P 500 down 0.3pc and the Nasdaq 100 falling 0.6pc.

'We've got tasty low fares,' say Ryanair as O'Leary pied

Ryanair quickly responded to the attack on its chief executive, tweeting: 

Ryanair boss pelted with cream pie as he arrives in Brussels

Michael O’Leary has been attacked with a cream pie as he arrived at the European Parliament to deliver a petition to Ursula von der Leyen.

The Ryanair boss was hit in the face by activists as he appeared in Brussels over his campaign to protect so-called “overflights” in Europe during air traffic control disruption.

Michael O'Leary was hit with a pie as he arrived in Brussels Credit: EPA/OLIVIER HOSLET

Poland cuts interest rates in 'risky move'

As Britain and the ECB fret over whether interest rates have reached their peak, the central bank in Poland is pushing ahead with “bazooka” cuts to borrowing costs.

Poland’s main opposition party leader Donald Tusk slammed the surprisingly steep interest-rate cut as risky and said there was no doubt central bank Governor Adam Glapinski was taking part in the ruling party’s pre-election campaign.

The former president of the European Council, who gained notoriety in Britain during the Brexit negotiations, said: 

There is no doubt that Glapinski took a decision which could make loan-holders happy and the scale is surprising ahead of the election. 

Everybody knows this is a very risky step.

Poland’s central bank took the markets by surprise on Wednesday with a “bazooka” rate cut, slashing the borrowing costs by three quarters of a percentage point — the most since the fallout from the great financial crisis in 2009.

Mr Tusk added: “The result might be inflation, while the task for the MPC and Glapinski is to fight inflation.”

Donald Tusk is the leader of Poland's main opposition party Civic Platform Credit: REUTERS/Kacper Pempel

Lloyd's of London talks with UN raise hopes of new Black Sea gain deal

Lloyd’s of London is in talks with the United Nations over providing insurance cover for Ukrainian grain shipments if a new Black Sea corridor deal can be reached.

Nato member Turkey is seeking to convince Russia to return to the so-called UN-brokered Black Sea Grain Initiative after Moscow withdrew in July, ending a year of protected exports from Ukrainian ports amid the war.

Lloyd’s of London chief executive John Neal told Reuters:

Are we happy and able to continue to provide insurances in the event that a corridor can be re-operated and can be re-established? The answer to that is yes.

We are in active discussions with the UN about how that might happen.

He added that those conversations included the possibility that cover may need to be structured differently than before.

Securing insurance cover is crucial for shipments leaving Ukraine.

Pound slides after Bailey hints interest rates near peak

The pound has fallen below $1.25 after the Governor of the Bank of England indicated interest rates may be at the “top of the cycle”.

Sterling has continued its fall today, dropping by 0.3pc to its lowest level against the greenback since June, after Andrew Bailey indicated to MPs that interest rates may be nearing their peak.

The pound has also come under pressure from data indicating the US services sector grew by more than expected, raising concerns that the Federal Reserve may yet have to increase American interest rates again to slow down its economy.

It has also fallen 0.2pc against the euro, which is worth just under 86p, after the eurozone economy grew by just 0.1pc in the three months to June ahead of a much-anticipated interest rate decision next week.

Eurozone 'will slip into recession,' warn economists

The eurozone will likely fall into recession in the second half of the year, economists have warned, after data showed the economy grew by just 0.1pc in the second quarter.

Andrew Kenningham, chief Europe economist at Capital Economics, said: “With business surveys having turned down sharply in July and August, construction and industry struggling and the labour market easing, we suspect that the economy will slip into recession in the second half of the year.”

Charlotte de Montpellier, an analyst at ING, said: “The European economy is generally stagnating. It is suffering from high interest rates, energy prices and the global slowdown.”

Germany and Italy drag down eurozone

The European Central Bank (ECB) has been given more food for thought as its policymakers ponder whether to increase interest rates next week.

The eurozone economy managed growth of just 0.1pc in the three months to June, as both Germany and Italy battle what could well be recessions in manufacturing. 

Italy, the eurozone’s third largest economy, even experienced a 0.4pc contraction in GDP during the second quarter. The eurozone’s largest economy Germany stagnated in the three months to June.

The figures could see its previous 0.9pc growth projection for the year revised downwards when it releases its next forecasts on September 14.

Another increase in borrowing costs by the ECB would take interest rates to a record 4pc.

ECB president Christine Lagarde Credit: RONALD WITTEK/EPA-EFE/Shutterstock

Eurozone economy records slight growth

The eurozone economy eked out marginal growth in the second quarter of the year after dismal exports.

Gross domestic product (GDP) rose 0.1pc in the three months to June, according to the Eurostat statistics office, down from a previous estimates of 0.3pc.

It compares to a 0.5pc increase in GDP across the US economy over the same period and 0.2pc in the UK between April and June. 

Bosses cut expectations for price rises next year

Bosses have their lowest expectation for how much they will raise prices since the Bank of England began raising interest rates nearly two years ago, a survey has shown.

Our deputy economics editor Tim Wallace has the latest:

Businesses expect to raise their prices by 4.4pc over the next year, the smallest expected increase since November 2021 when the Bank of England began raising interest rates.

Bosses on the Bank of England’s Decision Maker Panel - a group of chief financial offers - reported the sharpest monthly drop in expected inflation since the survey began in 2017.

Expected wage growth remained the same at 5pc in August for this time next year, while the three-month moving average decreased slightly by 0.1 percentage points to 5.1pc. 

This is lower than realised wage growth, which was at 6.9pc in both the single month data and the three months to August.

It comes as the Governor of the Bank of England, Andrew Bailey, suggested that interest rates may be nearing their peak as he gave evidence to MPs on Wednesday.

Climate change fears are boosting demand for insurance, says Lloyds of London boss

Climate change fears are boosting demand for insurance, the boss of Lloyd’s of London has said.

Banking correspondent Simon Foy has the story:

John Neal, chief executive of the world’s largest insurance market, said that climate concerns, inflationary pressures and geopolitical tensions are pushing more businesses and households to take out insurance.

He said customers are increasingly wanting to buy protection amid extreme weather events, such as recent wildfires in Hawaii and Europe and tropical storms in the Caribbean.

The surge in demand comes despite rising insurance prices, which Mr Neal said he expects to increase in Europe over the next 12 months.

His comments came as pre-tax profits at Lloyd’s of London doubled during the first six months of the year to £3.9bn, up from £1.8bn during the same period last year.

This year natural disasters struck large parts of the globe, including the February earthquake in Turkey and Syria which killed more than 55,000 people.

However, other disasters, such as recent flooding in Spain and wildfires in Greece, largely occurred after the half-year reporting period had ended.

Lloyd’s said that its underwriting profit came in at £2.5bn, up from £1.2bn a year earlier.

Mr Neal said: “We’re pleased to be reporting a strong set of results for the year so far - with profitability in both our underwriting and investments; a leading combined ratio, strong premium growth and a bulletproof balance sheet that means we can support customers through a range of shocks and scenarios.

“Combined with the market’s progress in driving sustainable performance, digitalisation and showing leadership from climate transition to culture change - these results set us up to deliver on our positive financial outlook for 2023.”

Mr Neal said Lloyd’s was still in talks to remain at its listed headquarters in the heart of the City after 2031 when its current lease expires.

The Telegraph previously reported that the world’s largest insurance market, which has been based at the “inside-out” building at One Lime Street since 1986, was in discussions with the Chinese owner of the property about extending its lease well beyond 2031.

Mr Neal said the talks were “productive”, adding: “It is our intention to stay.”

Pet shares drop as regulators announced vet sector investigation

Pet stocks have slumped after regulators launched a review of the vet sector amid concerns that consumers are not getting value for money.

Shares in Pets at Home have plunged as much as 13pc while veterinary services company CVS Group has tumbled as much as 35pc as the Competition and Markets Authority said it would examine the £2bn industry.

Regulators said they are concerned that pet owners may not find it easy to access information about prices and treatment options.

Sarah Cardell, chief executive of the CMA, said:

Caring for an ill pet can create real financial pressure, particularly alongside other cost of living concerns. It’s really important that people get clear information and pricing to help them make the right choices.

There has been a lot of consolidation in the vet industry in recent years, so now is the right time to take a look at how the market is working.

When a pet is unwell, they often need urgent treatment, which means that pet owners may not shop around for the best deal, like they do with other services. This means they may not have the relevant information to make informed decisions at what can be a distressing time. We want to hear from pet owners and people who work in the sector about their experiences.

Lauren Shirreff reports...

Direct Line surges after commercial insurance business sale

Direct Line shares have jumped as much as 18pc in early trading to take it to the top of the FTSE 250.

The rise, which is the highest on record for the company, comes after it agreed to sell its brokered commercial insurance business to RSA in a deal worth up to £550m.

The stock is down 23pc this year but Alexander Evans, an analyst at Citi, said deal has “completely removed” any risk of an equity raise, which would have diluted the value of its shares.

British American Tobacco sells Russian business 18 months after Ukraine invasion

Lucky Strike cigarette maker British American Tobacco (BAT) has signed a deal to withdraw from Russia, 561 days after the country launched its full-scale invasion of Ukraine.

The company, which also makes Dunhill, Kent and Pall Mall, said it has “entered into an agreement to sell its Russian and Belarusian business”, adding that the deal complies with both local and international laws.

It promised to not receive any “financial gain from ongoing sales in these markets”.

The company said: “The buyer is a consortium led by members of BAT Russia’s management team which, upon completion, will wholly own both businesses.”

Employees will be kept on terms “comparable to their existing BAT terms for at least two years post-completion”, the business added.

The deal is expected to complete within a month and the new owners will rename the business ITMS Group.

BAT has a head office in Moscow, 75 regional offices and a factory in St Petersburg. It also has an office in Belarus.

Credit: Nick Ansell/PA Wire

FTSE 100 falls as US and China give opposite signals

The FTSE 100 opened lower after stronger-than-expected US economic data rekindled concerns that interest rates would stay higher for longer.

The blue-chip index index has fallen 0.5pc in early trading, while the mid-cap FTSE 250 index has also slipped 0.5pc.

Wall Street’s main indexes tumbled on Wednesday after data showed the US services sector unexpectedly gained steam in August, indicating sticky price pressures.

The exporter-heavy FTSE 100 has also been weighed down by data today showing China’s exports and imports fell in August as the twin pressures of sagging overseas demand and weak consumer spending squeezed businesses in the world’s second-largest economy.

Commodity-related stocks fell, with industrial metal miners shedding 1.6pc to lead sectoral declines.

Cardboard maker DS Smith and insurers Admiral and Prudential fell between 1.4pc and 1.8pc as they traded ex-dividend.

Melrose Industries jumped 7.9pc to top the FTSE 100 after the company raised its annual profit expectations on the back of higher-than-anticipated margins at its engines division.

China trade shrinks as economy slows

China’s exports and imports both fell in August from a year earlier, reflecting tepid global demand that is adding to pressures on its slowing economy.

Customs data showed exports for August slumped 8.8pc to $284.9bn (£228.3bn) in the fourth straight month of decline. Imports slid 7.3pc to $216.5bn.

The total trade surplus fell to $68.4bn from $80.6bn in July.

Chinese leaders have in rolled out various policy measures to shore up the economy after the country’s rebound from the pandemic fizzled earlier than expected.

The People’s Bank of China has eased borrowing rules and and cut mortgage rates for first-time home buyers while providing some tax relief measures for small businesses.

Demand for Chinese exports weakened after the Federal Reserve and central banks in Europe and Asia began raising interest rates last year to cool inflation.

German industrial output falls again

German industrial production fell for a third straight month in July, official data showed, adding to fears of a prolonged downturn in Europe’s largest economy.

Output fell by 0.8pc compared with the month before, according to seasonally adjusted figures from statistics agency Destatis, following a 1.4pc drop in June.

Analysts surveyed by FactSet had forecast a smaller decline of 0.4pc.

Germany’s crucial industrial sector has been facing a series of headwinds in recent months, as inflation and high energy prices combined with a weakening Chinese economy take their toll on the export powerhouse.

The German economy slipped into a recession at the turn of the year and stagnated in the second quarter.

The International Monetary Fund has forecast that Germany will be the only major advanced economy to shrink in 2023.

The July industrial output reading comes a day after figures released by Destatis showed a steeper-than-expected plunge in industrial orders for July.

UK markets fall amid US interest rate worries

The FTSE 100 slumped at the open amid a global stocks selloff over concerns that the US Federal Reserve could lift interest rates again.

The UK’s blue chip index fell 0.3pc to 7,394.52 after the open to while the midcap FTSE 250 dropped 0.3pc to 18,389.41 after the US services sector grew at a faster pace than economists expected in August. .

Direct Line sells commercial insurance business as it falls to loss

Direct Line has agreed to sell its brokered commercial insurance business as it revealed deepening losses in the first half of the year.

The company said the deal with RSA could be worth up to £550m and that the sale could release capital of up to £270m.

It comes as the company revealed it made a pre-tax loss of £76.3m in the first half of the year amid higher motor insurance claims, even as gross written premiums increased by 9.8pc to £1.6bn.

Acting chief executive Jon Greenwood said the sale of its commercial insurance business “focuses the group fully on retail personal and direct small business commercial lines insurance customers”.

He added: “The value created for shareholders will allow the group to improve its capital resilience and provides a platform for improved performance.”

Credit: Jason Alden/Bloomberg

Britain rejoins EU's Horizon science research programme

The UK is to return to the European Union’s £85bn Horizon science research programme following months of negotiations.

The Government confirmed that a “bespoke” new agreement has been signed off with the EU, with UK researchers able to apply for grants and take part in Horizon projects.

Prime Minister Rishi Sunak said: “We have worked with our EU partners to make sure that this is right deal for the UK, unlocking unparalleled research opportunities, and also the right deal for British taxpayers.”

Britain continued to participate under the post-Brexit trade deal brokered with Brussels but was frozen out in a tit-for-tat retaliation in a dispute over Northern Ireland arrangements.

The move was immediately welcomed by scientists, after years of warnings that UK researchers have been missing out on collaboration with colleagues in the EU.

Jet2 landed with £13m bill from Greek wildfires and air traffic control chaos

Holiday group Jet2 has revealed a hit of around £13m from the recent air traffic control (ATC) disruption and wildfires in Rhodes.

But the low-cost airline said that, despite the impact of the extra costs and lost profit margin, it was on track to beat results forecasts for the year to the end of next March.

Jet2 is now expecting annual group pre-tax profits on a constant currency basis of between £480m to £520m.

Credit: Urbanandsport/NurPhoto via Getty Images

Currys highlights Greek sales as it battles 'challenging environment'

Currys has said that its Greek sales grew 3pc on a like-for-like basis in the 17 weeks to the end of August despite the impact of wildfires.

It was the only place where sales grew during the period, the electronics retailer said. Its UK and Ireland business shrunk by 2pc over the same four months, while the Nordics arm saw sales drop 8pc.

Currys said that in Greece “trading continues to be robust despite short-term impact from wildfires on customer footfall during August”.

Chief executive Alex Baldock said:

Our priorities this year are simple: to keep the UK&I’s encouraging momentum going, and to get the Nordics back on track. 

We’re making good progress on both, in what continues to be a challenging economic environment.

We remain confident that we’re building a stronger business that’s resilient today and fit to prosper in the longer term.

Credit: REUTERS/Peter Nicholls

House prices to fall by another 5.5pc, warn economists

Higher mortgage rates will last for another year doing further damage to house prices, economists have warned.

Imogen Pattison, assistant economist at Capital Economics, said:

If we are right to think that mortgage rates will remain around current levels (5.5pc to 6pc) for the next 12 months, demand will remain weak which we think will cause a further 5.5pc drop in house prices.

The fall in both the Halifax and Nationwide house price indices in August is unlikely to be the last. 

High mortgage rates will mean demand remains very weak while previously tight supply of second-hand homes on the market is easing. 

As a result, we anticipate house prices to continue to drop until mid-2024 and by 10.5pc from their August 2022 peak in total.

Mortgage brokers grapple with slowest August 'for a long time'

Mortgage brokers placed the blame for falling house prices squarely on higher borrowing costs caused by rising interest rates.

Ranald Mitchell, director of Charwin Private Clients, said: “The effects of the increases in borrowing costs are now very apparent, with property sales harder to achieve and sellers being tempted by lower offers so they can move on.”

Rohit Kohli, director at Romsey-based mortgage broker, The Mortgage Stop: “Based on this evidence, buyers are a long way from being comfortable with mortgage costs and house prices are suffering as a result.”

Charles Breen, director of Wellingborough-based mortgage broker, Montgomery Financial: “The impact higher mortgage rates are having on the property market is now crystal clear. This was a seasonal lull and then some.”

Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages, said: “This August has been the slowest for a long time and that is evident in the 1.9pc drop in prices.”

South East suffers steepest fall in house prices

House prices fell across every nation in the UK and across nine English regions over the last year.

Northern locations generally proved to be more resilient than areas in the South, the Halifax house price index showed. 

The South East is experiencing the biggest drop, with house prices down 5pc on an annual basis, leaving the average house price at £379,565 as buyers battle to raise larger deposits and fund bigger monthly repayments. 

Wales, which recorded some of the biggest gains in property prices during the pandemic-driven race for space, has seen property prices fall by 4.7pc over the last year. 

In Northern Ireland property prices have fallen by 1.5pc annually and in Scotland property prices fell by just 0.6pc over the last year, the slowest pace of decline in the UK. 

London remains the most expensive place in the UK to purchase a home, with an average property price of £529,814. However with prices down by -4.1pc over the last year and it has seen the biggest fall of any region in cash terms, down £22,777. 

House prices face 'downward pressure' into next year, says Halifax

House prices have further to fall, the Halifax has warned.

Mortgages director Kim Kinnaird said:

We do expect further downward pressure on property prices through to the end of this year and into next, in line with previous forecasts. 

While any drop won’t be welcomed by current homeowners, it’s important to remember that prices remain some £40,000 (17pc) above pre-pandemic levels. 

It may also come as some relief to those looking to get onto the property ladder. 

Income growth has remained strong over recent months, which has seen the house price to income ratio for first-time buyers fall from a peak of 5.8 in June last year to now 5.1. 

This is the most affordable level since June 2020, and will be partially offsetting the impact of higher mortgage costs.

Mortgage squeeze sends house prices plummeting

House prices fell last month by the most in 14-years as buyers grappled with increasingly unaffordable mortgage costs.

The average cost of a property declined by 4.6pc in the year to August, according to the Halifax house price index, having dropped by 2.4 in July.

It was the worst decline since 2009 and means a typical home is worth £279,569. This is down from £285,044 the previous month and around £14,000 lower than a year ago. 

Prices fell 1.9pc in August, marking the fifth consecutive monthly decline and the worst fall since November last year.

Halifax Mortgages director Kim Kinnaird said: “There is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices.”

It comes as a separate survey also suggested the drop in house prices last month left the market at its weakest since 2009 amid plummeting mortgage approvals.

Homeowners saw the value of their bricks and mortar drop by 5.3pc in the year to August, according to the Nationwide house price index, wiping £14,600 off their value over the last year.

Ms Kinnaird said:

On an annual basis prices fell by 4.6pc, the biggest year-on-year decrease since 2009, though it should be noted that this is relative to the record-high property prices seen last summer. 

Market activity levels slowed during August, and while there is always a seasonality effect at this time of year, it also isn’t surprising given the pace of mortgage rate increases over June and July.

While these did ease last month, rates remain much higher compared to recent years. 

This may well have prompted prospective buyers to defer transactions in the hope of some stability, and greater clarity on the future direction of rates in the coming months. 

The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years.

Good morning

Thanks for joining me. House prices slumped by 4.6pc in the year to August in their steepest decline since 2009, according to the Halifax house price index.

Property values dropped to an average of £279,569, down from £285,044 in July.

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What happened overnight 

Asian stocks sank in an extension of global declines in stocks amid new signs of sustained inflationary pressures in the United States.

The US dollar hung close to the highest since mid-March against major peers, and touched a fresh 10-month high to the yen. 

Brent crude stayed above $90 amid tightening supply, adding to inflation worries.

MSCI’s broadest index of Asia-Pacific shares slid 0.5pc, following declines on Wall Street and in Europe.

Hong Kong’s Hang Seng dropped nearly 1pc. Mainland Chinese blue chips sank 0.8pc. Australia’s benchmark lost 1.1pc.

Japan’s Nikkei sagged a milder 0.2pc, although that put it at risk of snapping an eight-session win streak.

Wall Street stocks declined on Wednesday, while Treasury yields advanced after fresh data showed the US sector services grew quicker-than-expected last month.

The S&P 500 fell 0.7pc to 4,465.48. The Dow Jones Industrial Average sank 0.6pc to 34,443.19. The Nasdaq composite dropped 1.1pc to 13,872.47.

The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 4.3pc from about 4.25pc just prior to the report’s release.