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| Brexit fears drive London stock market down to three-month low - live | Brexit fears drive London stock market down to three-month low - live |
| (35 minutes later) | |
| 2.50pm BST | |
| 14:50 | |
| The US stock market has opened calmly, bring some order to proceedings after a volatile European session. | |
| The Dow Jones industrial average has dipped by 0.1%, or 15 points, while the Nasdaq index of tech stocks is up 0.2%. | |
| Investors may be keen to sit sight until the UK’s referendum has been cleared up; and few believe the Federal Reserve could raise interest rates at this week’s two-day meeting (which finishes tomorrow). | |
| Christopher Vecchio, currency analyst at DailyFX, says: | |
| With all the attention on the Brexit, the central bank meetings this week have seemed to take a back seat. This makes sense, though. If the Fed hikes, and there is a Brexit? The Fed will have to backtrack, which will cost them credibility | |
| 2.31pm BST | |
| 14:31 | |
| Pro-Brexit economist Dr Gerard Lyons has written a piece for us, arguing that UK manufacturing could thrive outside the EU. | |
| Here’s a flavour: | |
| In the future we can craft policy to suit domestic needs, not least the possibility of an industrial policy if we wanted it. | |
| We could directly help sectors. The US, never accused of not being free market, directly targets help to strategic sectors, like autos. So too could we if we wished. EU state aid rules prevent the ability to selectively help areas or sectors. Add in the need to abide by EU regional development criteria, and our hands are tied on regional policy too. | |
| More here: | |
| My piece in The Guardian "Brexit would help UK manufacturing survive in a global market" https://t.co/AhOZi24MlC | |
| 2.22pm BST | |
| 14:22 | |
| Our economics editor, Larry Elliott, says the Bank of England will be delighted that UK inflation remained at 0.3% last month. | |
| He explains: | |
| For the Bank of England, lower than expected inflation is a double bonus. On the one hand, it increases the spending power of households and so boosts growth. On the other, it provides greater wriggle room before the government’s 2% inflation target comes under serious threat. | |
| With the referendum making the outlook so uncertain, the extra leeway will be extremely welcome in Threadneedle Street. | |
| Here’s Larry’s analysis: | |
| Related: Inflationary pressures building despite stable May data | |
| 1.43pm BST | 1.43pm BST |
| 13:43 | 13:43 |
| Here comes the US retail sales figures for May.... | Here comes the US retail sales figures for May.... |
| ...and they’ve beaten expectations, with sales growing by 0.5% during the month. | ...and they’ve beaten expectations, with sales growing by 0.5% during the month. |
| That suggests American consumers are continuing to spend, and haven’t been spooked by the latest twists in the race to succeed president Obama, or by the Brexit campaign. | That suggests American consumers are continuing to spend, and haven’t been spooked by the latest twists in the race to succeed president Obama, or by the Brexit campaign. |
| Solid beat. Retail sales control group rises 0.4% (vs. 0.3% expected). And last month revised from 0.9% to 1.0%. | Solid beat. Retail sales control group rises 0.4% (vs. 0.3% expected). And last month revised from 0.9% to 1.0%. |
| However.... it’s partly due to more expensive gasoline; fuel spending jumped by 2.1%, reflecting higher price at the pumps | However.... it’s partly due to more expensive gasoline; fuel spending jumped by 2.1%, reflecting higher price at the pumps |
| 1.18pm BST | 1.18pm BST |
| 13:18 | 13:18 |
| The boss of French insurance group Axa has gone public with his concerns about next week’s referendum. | The boss of French insurance group Axa has gone public with his concerns about next week’s referendum. |
| Axa CEO Henri de Castries told a conference in Paris that the chances of Brexit are now “extremely high”. It would leave investors strugging to navigate “a true landscape of uncertainties”, he warned. | Axa CEO Henri de Castries told a conference in Paris that the chances of Brexit are now “extremely high”. It would leave investors strugging to navigate “a true landscape of uncertainties”, he warned. |
| De Castries added that the future is uncertain, even if Britain votes to stay in the EU (via Bloomberg): | De Castries added that the future is uncertain, even if Britain votes to stay in the EU (via Bloomberg): |
| “If they remain, the situation isn’t simple either, and this is underestimated by lots of people.” | “If they remain, the situation isn’t simple either, and this is underestimated by lots of people.” |
| Axa CEO Warns There’s an ‘Extremely High’ Probability of #Brexit https://t.co/ap4bYvDGem via @business #eureferendum | Axa CEO Warns There’s an ‘Extremely High’ Probability of #Brexit https://t.co/ap4bYvDGem via @business #eureferendum |
| 1.08pm BST | 1.08pm BST |
| 13:08 | 13:08 |
| Stresses in the financial markets have jumped to their highest level since late February: | Stresses in the financial markets have jumped to their highest level since late February: |
| BofA's measure of global financial market stress is surging. https://t.co/YSjU3HOvxN via @cecileva pic.twitter.com/wdnbp4fnDT | BofA's measure of global financial market stress is surging. https://t.co/YSjU3HOvxN via @cecileva pic.twitter.com/wdnbp4fnDT |
| 12.45pm BST | 12.45pm BST |
| 12:45 | 12:45 |
| Times City hack Simon English highlights how the mood has changed: | Times City hack Simon English highlights how the mood has changed: |
| Just 1 in 10 bets taken in past 48 hours are backing Remain. Top stat from Sporting Index. | Just 1 in 10 bets taken in past 48 hours are backing Remain. Top stat from Sporting Index. |
| 12.10pm BST | 12.10pm BST |
| 12:10 | 12:10 |
| UK borrowing costs keep falling | UK borrowing costs keep falling |
| Britain’s borrowing costs are also hitting fresh all-time lows today. | Britain’s borrowing costs are also hitting fresh all-time lows today. |
| The yield on UK 10-year gilts has slid to just 1.15% – which is the lowest borrowing rate on record. | The yield on UK 10-year gilts has slid to just 1.15% – which is the lowest borrowing rate on record. |
| That’s a sharp fall from the 1.21% yield yesterday. [yields, or interest rates, fall when the price of a bond rises] | That’s a sharp fall from the 1.21% yield yesterday. [yields, or interest rates, fall when the price of a bond rises] |
| At the start of 2015, Britain was paying 2% to borrow for a decade. | At the start of 2015, Britain was paying 2% to borrow for a decade. |
| Leave campaigner Douglas Carswell claims that this shows that investors are relaxed about the prospect of Britain quitting the EU.... | Leave campaigner Douglas Carswell claims that this shows that investors are relaxed about the prospect of Britain quitting the EU.... |
| Bond markets looking good. Lot of international investors happy to buy UK gilts ahead of Brexit | Bond markets looking good. Lot of international investors happy to buy UK gilts ahead of Brexit |
| However, falling bond yields is usually a sign that the City is worried – buying bonds as a way of protecting their cash. | However, falling bond yields is usually a sign that the City is worried – buying bonds as a way of protecting their cash. |
| David Miller, investment director at fund manager Quilter Cheviot, says the markets are worried about the referendum , rather than “looking good”.... | David Miller, investment director at fund manager Quilter Cheviot, says the markets are worried about the referendum , rather than “looking good”.... |
| Markets are in a strange state. Gilt yields are lower than any time since records began in 1729 and companies are issuing huge amounts of corporate debt in order to take advantage of low interest rates. Short term traders and long term investors are on the sidelines waiting for the referendum result. | Markets are in a strange state. Gilt yields are lower than any time since records began in 1729 and companies are issuing huge amounts of corporate debt in order to take advantage of low interest rates. Short term traders and long term investors are on the sidelines waiting for the referendum result. |
| Referendum uncertainty is damaging confidence and there is evidence of a slowdown in economic activity. Markets and social media amplify the daily headlines created by the politicians. | Referendum uncertainty is damaging confidence and there is evidence of a slowdown in economic activity. Markets and social media amplify the daily headlines created by the politicians. |
| 11.38am BST | 11.38am BST |
| 11:38 | 11:38 |
| Brexit panic drives London stock market to three-month lows | Brexit panic drives London stock market to three-month lows |
| London’s stock market is plumbing new lows as traders continue to quake in the shadow of the EU vote. | London’s stock market is plumbing new lows as traders continue to quake in the shadow of the EU vote. |
| The FTSE 100 has shed 77 points, or 1.3%, to 5967 – falling through the 6,000 point mark for the first time since late February. | The FTSE 100 has shed 77 points, or 1.3%, to 5967 – falling through the 6,000 point mark for the first time since late February. |
| Mike van Dulken of Accendo Markets says stock market bulls are racing to the exits, before the UK makes its own exit decision: | Mike van Dulken of Accendo Markets says stock market bulls are racing to the exits, before the UK makes its own exit decision: |
| “Equity indices are extending their losses, fearful of a now heightened prospect that the UK votes to leave the European Union, worsening an already fragile global growth situation by delivering an economic and political blow to a struggling Eurozone. | “Equity indices are extending their losses, fearful of a now heightened prospect that the UK votes to leave the European Union, worsening an already fragile global growth situation by delivering an economic and political blow to a struggling Eurozone. |
| And Chris Beauchamp of IG says traders are reacting to the latest polls, and the Sun newspaper’s decision to back the Leave campaign. | And Chris Beauchamp of IG says traders are reacting to the latest polls, and the Sun newspaper’s decision to back the Leave campaign. |
| Panic appears to be gripping markets as the headlines fill up with references to a possible Brexit, with the Sun’s declaration for Brexit emblematic of the worry that the Remain campaign has lost a crucial segment of the population.... | Panic appears to be gripping markets as the headlines fill up with references to a possible Brexit, with the Sun’s declaration for Brexit emblematic of the worry that the Remain campaign has lost a crucial segment of the population.... |
| The move in the polls has been matched by a noticeable shift in the IG Brexit binary, with clients now thinking that the chance of the UK voting to leave has now hit 40.5%, up from the low 30s yesterday. | The move in the polls has been matched by a noticeable shift in the IG Brexit binary, with clients now thinking that the chance of the UK voting to leave has now hit 40.5%, up from the low 30s yesterday. |
| A Brexit isn’t fully priced in, though, Beauchamp adds: | A Brexit isn’t fully priced in, though, Beauchamp adds: |
| What is interesting is, despite the sharp selloff in sterling in recent days, the pound is still holding on above $1.41.. Either this is a symptom of limited volumes as traders abandon the field, or a sign that the market still thinks the status quo will win out in the end. | What is interesting is, despite the sharp selloff in sterling in recent days, the pound is still holding on above $1.41.. Either this is a symptom of limited volumes as traders abandon the field, or a sign that the market still thinks the status quo will win out in the end. |
| European stock markets are also deep in the red. | European stock markets are also deep in the red. |
| France’s CAC is down 1.2%, while the German DAX is down 0.7%, as traders continue to dump shares and buy bonds (which is why German 10-year bond yields are now negative) | France’s CAC is down 1.2%, while the German DAX is down 0.7%, as traders continue to dump shares and buy bonds (which is why German 10-year bond yields are now negative) |
| This chart shows why Brexit would have such an impact on the European political landscape: | This chart shows why Brexit would have such an impact on the European political landscape: |
| 4 new polls suggest Britain will back #Brexit. Here's how the first 100 days would look https://t.co/p0QIyU6t5l pic.twitter.com/5btVpEGcD7 | 4 new polls suggest Britain will back #Brexit. Here's how the first 100 days would look https://t.co/p0QIyU6t5l pic.twitter.com/5btVpEGcD7 |
| Updated | Updated |
| at 11.40am BST | at 11.40am BST |
| 10.56am BST | 10.56am BST |
| 10:56 | 10:56 |
| Bank of England pumps £2.5bn into City to fight Brexit fears | Bank of England pumps £2.5bn into City to fight Brexit fears |
| Breaking: The Bank of England had allocated almost £2.5bn of cash to City firms to help them handle any Brexit-related panic. | Breaking: The Bank of England had allocated almost £2.5bn of cash to City firms to help them handle any Brexit-related panic. |
| This is the result of the first special liquidity operation run by the BoE, ahead of next week’s EU referendum. | This is the result of the first special liquidity operation run by the BoE, ahead of next week’s EU referendum. |
| The auction was designed to prevent the money markets running dry, if panic broke out over the referendum. Banks can swap assets for ready cash, and only have to repay the funds in six months. | The auction was designed to prevent the money markets running dry, if panic broke out over the referendum. Banks can swap assets for ready cash, and only have to repay the funds in six months. |
| But the take-up is actually quite modest, and the lowest for any such market operation since February. Last week, for example, firms took around £3.2bn of liquidity via a regular operation. | But the take-up is actually quite modest, and the lowest for any such market operation since February. Last week, for example, firms took around £3.2bn of liquidity via a regular operation. |
| Reuters has the details: | Reuters has the details: |
| So, this suggests the City is still operating as normal, despite the recent tumble in the pound and in share prices. | So, this suggests the City is still operating as normal, despite the recent tumble in the pound and in share prices. |
| Here’s some instant reaction, from Sky News’s Ed Conway: | Here’s some instant reaction, from Sky News’s Ed Conway: |
| The @bankofengland just did first of its #EURef related liquidity operations. Pumped £2.5bn into market. Bit lower than previous repos | The @bankofengland just did first of its #EURef related liquidity operations. Pumped £2.5bn into market. Bit lower than previous repos |
| And from private equity firm Pegasus: | And from private equity firm Pegasus: |
| Bank of England allotted £2.5bn of 6 month repo to UK Banks this morning....Brexit related liquidity push kicking in. | Bank of England allotted £2.5bn of 6 month repo to UK Banks this morning....Brexit related liquidity push kicking in. |
| Updated | Updated |
| at 11.01am BST | at 11.01am BST |
| 10.32am BST | 10.32am BST |
| 10:32 | 10:32 |
| The inflation report didn’t have much impact on the pound, which is still down around 1% against the US dollar. | The inflation report didn’t have much impact on the pound, which is still down around 1% against the US dollar. |
| Joshua Raymond of City broker XTB.com says next week’s EU referendum is still dominating the markets. | Joshua Raymond of City broker XTB.com says next week’s EU referendum is still dominating the markets. |
| May’s inflation reading is unlikely to have any impact at the Bank of England, who remain expected to keep interest rates on hold for the remainder of the year. | May’s inflation reading is unlikely to have any impact at the Bank of England, who remain expected to keep interest rates on hold for the remainder of the year. |
| As such, the reaction to this data in the pound was minimal, and the main driver for pound buyers or sellers right now continues to be the uncertainty over a potential Brexit, with the latest polls showing a strengthening in popularity for the leave camp. | As such, the reaction to this data in the pound was minimal, and the main driver for pound buyers or sellers right now continues to be the uncertainty over a potential Brexit, with the latest polls showing a strengthening in popularity for the leave camp. |
| 10.16am BST | 10.16am BST |
| 10:16 | 10:16 |
| With inflation this low, there’s no chance that the Bank of England will raise interest rates when policymakers meet on Thursday. | With inflation this low, there’s no chance that the Bank of England will raise interest rates when policymakers meet on Thursday. |
| Ian Stewart, chief economist at Deloitte, reckons borrowing costs will remain extremely low for many months: | Ian Stewart, chief economist at Deloitte, reckons borrowing costs will remain extremely low for many months: |
| “Inflation is up from its all-time lows but is still way too low. | “Inflation is up from its all-time lows but is still way too low. |
| The fight against low inflation continues. The era of ultra-low interest rates has much further to run. | The fight against low inflation continues. The era of ultra-low interest rates has much further to run. |
| 10.11am BST | 10.11am BST |
| 10:11 | 10:11 |
| Maike Currie, investment director for personal investing at Fidelity International, has summed up today’s inflation data: | Maike Currie, investment director for personal investing at Fidelity International, has summed up today’s inflation data: |
| “After falling to 0.3% in April, inflation remains unchanged in May, below the 15-month peak of 0.5% recorded in March this year. Rising oil prices pushing up the cost of filling up your petrol tank coupled with eating out at restaurants and the price of smartphone services were the main upward drivers. | “After falling to 0.3% in April, inflation remains unchanged in May, below the 15-month peak of 0.5% recorded in March this year. Rising oil prices pushing up the cost of filling up your petrol tank coupled with eating out at restaurants and the price of smartphone services were the main upward drivers. |
| This was offset by falls in clothing and food prices. Since the beginning of the year, the pound has been markedly weaker, which is also likely to have pushed up prices. | This was offset by falls in clothing and food prices. Since the beginning of the year, the pound has been markedly weaker, which is also likely to have pushed up prices. |
| 10.01am BST | 10.01am BST |
| 10:01 | 10:01 |
| UK house price inflation cools | UK house price inflation cools |
| UK house price inflation has also slowed down, perhaps reflecting economic uncertainty ahead of the EU referendum. | UK house price inflation has also slowed down, perhaps reflecting economic uncertainty ahead of the EU referendum. |
| The ONS reports that the cost of average house rose by 8.2% annually in April, down from 8.5% in March. | The ONS reports that the cost of average house rose by 8.2% annually in April, down from 8.5% in March. |
| Prices rose fastest in London (+14.5%) and the East of England (13.6%), but only rose by 0.1% in the North East. | Prices rose fastest in London (+14.5%) and the East of England (13.6%), but only rose by 0.1% in the North East. |
| And there are some stark regional differences, with the Welsh town of Merthyr Tydfil suffering the biggest fall in house prices. | And there are some stark regional differences, with the Welsh town of Merthyr Tydfil suffering the biggest fall in house prices. |
| Annual house price inflation hits 27.3% in the City of London. And -11.1% in Merthyr Tydfil. @ONS: pic.twitter.com/JNATVa11Qd | Annual house price inflation hits 27.3% in the City of London. And -11.1% in Merthyr Tydfil. @ONS: pic.twitter.com/JNATVa11Qd |
| 9.55am BST | 9.55am BST |
| 09:55 | 09:55 |
| The inflation report also shows that UK consumers have been hit by the recent recovery in the oil price. | The inflation report also shows that UK consumers have been hit by the recent recovery in the oil price. |
| Transport costs climbed 0.9% in May, partly due to a 3p rise in a litre of diesel. Rising sea fares also had an upward impact, picking up slightly in 2016 after falling a year ago. | Transport costs climbed 0.9% in May, partly due to a 3p rise in a litre of diesel. Rising sea fares also had an upward impact, picking up slightly in 2016 after falling a year ago. |
| 9.42am BST | 9.42am BST |
| 09:42 | 09:42 |
| Why UK inflation stayed low | Why UK inflation stayed low |
| Clothing and footwear prices fell by 0.2% between April and May this year, helping to keep the cost of living low. | Clothing and footwear prices fell by 0.2% between April and May this year, helping to keep the cost of living low. |
| The downward contribution came from a variety of clothing but particularly children’s outerwear. | The downward contribution came from a variety of clothing but particularly children’s outerwear. |
| Food and non-alcoholic beverage prices fell by 0.4% between April and May 2016. | Food and non-alcoholic beverage prices fell by 0.4% between April and May 2016. |
| The downward contribution came from a variety of food product groups, most notably vegetables and confectionery. | The downward contribution came from a variety of food product groups, most notably vegetables and confectionery. |
| Recreation and culture prices, fell by 0.4%: | Recreation and culture prices, fell by 0.4%: |
| The downward contribution came mainly from games, toys and hobbies (particularly computer games) with prices falling between April and May 2016 compared with a rise last year. | The downward contribution came mainly from games, toys and hobbies (particularly computer games) with prices falling between April and May 2016 compared with a rise last year. |
| 9.37am BST | 9.37am BST |
| 09:37 | 09:37 |
| At just 0.3%, Britain’s inflation rate remains stubbornly low below the Bank of England’s 2% target. | At just 0.3%, Britain’s inflation rate remains stubbornly low below the Bank of England’s 2% target. |
| Just in case you were getting your hopes up that we might see a bit more of it. UK inflation unchanged at 0.3%. pic.twitter.com/gNLAJ3rinz | Just in case you were getting your hopes up that we might see a bit more of it. UK inflation unchanged at 0.3%. pic.twitter.com/gNLAJ3rinz |