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| Oil hits three-week high after Iran shoots down US drone - business live | Oil hits three-week high after Iran shoots down US drone - business live |
| (32 minutes later) | |
| Economist Alastair Ross suggests markets are taking the drone shooting quite well: | |
| Oil markets seem remarkably unfazed by fireworks in the Gulf, with prices blipping up by just a couple of percent after US drone is downed.ref https://t.co/7xY8CevIDb #oilandgas #iran #geopolitics pic.twitter.com/U7238QkROm | |
| However, that could change if America takes a robust response to this latest incident (Donald Trump hasn’t tweeted yet today....) | |
| Iran’s foreign ministry has now weighed in, criticising America for illegally (it claims) violating its airspace. | Iran’s foreign ministry has now weighed in, criticising America for illegally (it claims) violating its airspace. |
| Ministry spokesman Abbas Mousavi says: | Ministry spokesman Abbas Mousavi says: |
| “Any such violations of Iran’s borders are strongly condemned ... We warn of the consequences of such illegal and provocative measures.” | “Any such violations of Iran’s borders are strongly condemned ... We warn of the consequences of such illegal and provocative measures.” |
| There’s another reason oil is rising -- yesterday a rocket hit an Iraqi compound housing several international oil companies, including the US multinational ExxonMobil. | There’s another reason oil is rising -- yesterday a rocket hit an Iraqi compound housing several international oil companies, including the US multinational ExxonMobil. |
| That has heightened concerns that oil shipments from the Middle East could be disrupted. | That has heightened concerns that oil shipments from the Middle East could be disrupted. |
| Multiple rocket attacks in Iraq on US assets and international oil companies, reports that a US drone was taken out by a surface-to-air missile, meanwhile Yemen’s Houthi rebels vow to strike airports across Saudi Arabia...never a dull moment @cnbcinternational @dan_murphy pic.twitter.com/CZ0x3dyM3p | Multiple rocket attacks in Iraq on US assets and international oil companies, reports that a US drone was taken out by a surface-to-air missile, meanwhile Yemen’s Houthi rebels vow to strike airports across Saudi Arabia...never a dull moment @cnbcinternational @dan_murphy pic.twitter.com/CZ0x3dyM3p |
| Crude oil prices have jumped sharply after Iran shot down a US spy drone, further straining relations between the two countries. | Crude oil prices have jumped sharply after Iran shot down a US spy drone, further straining relations between the two countries. |
| US crude oil has surged by around 3% today to $55.53 per barrel, its highest level since the end of May. | US crude oil has surged by around 3% today to $55.53 per barrel, its highest level since the end of May. |
| Brent crude, sourced from the North Sea, has also rallied, touching $63.88 per barrel for the first time since 10th June. | Brent crude, sourced from the North Sea, has also rallied, touching $63.88 per barrel for the first time since 10th June. |
| The rally comes as Iran accused Washington of breaching its national sovereignty, after shooting down an unmanned US drone. According to the Iranian Revolutionary Guard, the drone was flying in Iranian airspace, near Kuhmobarak in the southern province of Hormozgan, when it was shot. | The rally comes as Iran accused Washington of breaching its national sovereignty, after shooting down an unmanned US drone. According to the Iranian Revolutionary Guard, the drone was flying in Iranian airspace, near Kuhmobarak in the southern province of Hormozgan, when it was shot. |
| The US military, though, says its drone was in international airspace over the Strait of Hormuz at the time. | The US military, though, says its drone was in international airspace over the Strait of Hormuz at the time. |
| This incident comes just a week after the US accused Iran of attacking two tankers in the nearby Gulf of Oman, | This incident comes just a week after the US accused Iran of attacking two tankers in the nearby Gulf of Oman, |
| Our diplomatic editor Patrick Wintour expains: | Our diplomatic editor Patrick Wintour expains: |
| Both Washington and Tehran insist they are intent on avoiding a war as tensions build over the consequences of the US withdrawal from the Iran nuclear deal in May 2018, but fears that an accidental chain of events will lead to escalation and finally a military confrontation are growing. | Both Washington and Tehran insist they are intent on avoiding a war as tensions build over the consequences of the US withdrawal from the Iran nuclear deal in May 2018, but fears that an accidental chain of events will lead to escalation and finally a military confrontation are growing. |
| The shooting down of the drone came as the US president, Donald Trump, was briefed on the details of a separate incident: a further missile strike in Saudi Arabia that appeared to come from Iran-backed Houthi rebels in Yemen. | The shooting down of the drone came as the US president, Donald Trump, was briefed on the details of a separate incident: a further missile strike in Saudi Arabia that appeared to come from Iran-backed Houthi rebels in Yemen. |
| The White House spokeswoman, Sarah Sanders, said on Wednesday in relation to the Saudi missile strike: “We are closely monitoring the situation and continuing to consult with our partners and allies.” | The White House spokeswoman, Sarah Sanders, said on Wednesday in relation to the Saudi missile strike: “We are closely monitoring the situation and continuing to consult with our partners and allies.” |
| More here: | More here: |
| Iran shoots down US drone | Iran shoots down US drone |
| Just in: UK retail sales fell in May, as the poor weather deterred people from buying new clothes. | Just in: UK retail sales fell in May, as the poor weather deterred people from buying new clothes. |
| Shoppers bought 0.5% less stuff in May than in April, the Office for National Statistics reports, with the amount spent dropping by 0.3%. | Shoppers bought 0.5% less stuff in May than in April, the Office for National Statistics reports, with the amount spent dropping by 0.3%. |
| Britain suffered some rather cold weather last month, with the May Bank Holiday particularly inclement. This appears to have hit clothing sales, which slumped by 4.5% month-on-month, the ninth monthly decline in a row. | Britain suffered some rather cold weather last month, with the May Bank Holiday particularly inclement. This appears to have hit clothing sales, which slumped by 4.5% month-on-month, the ninth monthly decline in a row. |
| The ONS says: | The ONS says: |
| Evidence from retailers suggested that the poor weather may have delayed the sales for summer ranges. | Evidence from retailers suggested that the poor weather may have delayed the sales for summer ranges. |
| Department stores are also struggling, with sales down again. | Department stores are also struggling, with sales down again. |
| Some traders reckon America’s central bank could pull out its bazooka next month, and slash US interest rates by a chunky 50 basis points. | Some traders reckon America’s central bank could pull out its bazooka next month, and slash US interest rates by a chunky 50 basis points. |
| That would be a serious reversal of its recent policy of raising interest rates, and suggest it is worried about growth prospects. | That would be a serious reversal of its recent policy of raising interest rates, and suggest it is worried about growth prospects. |
| Fed Funds futures are now pricing in a 100% probability of a July 31 US rate cut with a 50 bp cut currently gaining some traction. #FOMC #FedFunds pic.twitter.com/3c4G1CPjKh | Fed Funds futures are now pricing in a 100% probability of a July 31 US rate cut with a 50 bp cut currently gaining some traction. #FOMC #FedFunds pic.twitter.com/3c4G1CPjKh |
| Newsflash: Norway’s central bank has defied the prevailing mood by raising interest rates. | Newsflash: Norway’s central bank has defied the prevailing mood by raising interest rates. |
| The Norges Bank voted to hike borrowing costs from 1% to 1.25%, in response to rising underlying inflation and solid growth. | The Norges Bank voted to hike borrowing costs from 1% to 1.25%, in response to rising underlying inflation and solid growth. |
| But.... it also acknowledges that other central banks are moving towards cutting rates. | But.... it also acknowledges that other central banks are moving towards cutting rates. |
| The upturn in the Norwegian economy appears to be a little stronger the coming year than projected earlier. | The upturn in the Norwegian economy appears to be a little stronger the coming year than projected earlier. |
| On the other hand, there are prospects for weaker external growth and lower foreign interest rates. | On the other hand, there are prospects for weaker external growth and lower foreign interest rates. |
| #Norway Norges Bank #InterestRate Decison at 1.25% https://t.co/RAO8lhjMAC pic.twitter.com/LNWTvIhxPc | #Norway Norges Bank #InterestRate Decison at 1.25% https://t.co/RAO8lhjMAC pic.twitter.com/LNWTvIhxPc |
| Retail analyst Patrick O’Brien of GlobalData says Dixons Carphone isn’t keeping up with a fast-moving mobile market: | Retail analyst Patrick O’Brien of GlobalData says Dixons Carphone isn’t keeping up with a fast-moving mobile market: |
| Dixons Carphone results show a heavy deterioration in the mobile business, down 16% in the second half, or 8% on an l-f-l basis. While Alex Baldock acted fast upon arrival, can't help think that the 92 store closure plan was too timid | Dixons Carphone results show a heavy deterioration in the mobile business, down 16% in the second half, or 8% on an l-f-l basis. While Alex Baldock acted fast upon arrival, can't help think that the 92 store closure plan was too timid |
| The move to sim-free phone buying and keeping phones for longer is a trend that's been here a while now, but it seems that Dixons Carphone hasn't been agile enough to adapt, perhaps due to legacy carrier contracts | The move to sim-free phone buying and keeping phones for longer is a trend that's been here a while now, but it seems that Dixons Carphone hasn't been agile enough to adapt, perhaps due to legacy carrier contracts |
| The FT’s Cat Rutter Pooley says the company has disappointed the City: | The FT’s Cat Rutter Pooley says the company has disappointed the City: |
| Far more galling for investors is the downgrade to expectations for the coming year. While the statutory pre-tax loss for the year to April was £259m, its “headline” pre-tax number was a profit of £298m. | Far more galling for investors is the downgrade to expectations for the coming year. While the statutory pre-tax loss for the year to April was £259m, its “headline” pre-tax number was a profit of £298m. |
| In the new financial year, headline pre-tax profits are set to dip to £210m. Analysts had expected them to hold flat. | In the new financial year, headline pre-tax profits are set to dip to £210m. Analysts had expected them to hold flat. |
| Richard Hunter, head of markets at interactive investor, says the mobile phone division is dragging the rest of Dixons Carphone back: | Richard Hunter, head of markets at interactive investor, says the mobile phone division is dragging the rest of Dixons Carphone back: |
| The mobile business in particular is on life support, draining capital and resources prior to its integration with the electricals business. The rapidly evolving nature of this segment has threatened to leave Dixons behind and thus, as a matter of urgency, the company has renegotiated its network contracts, although such benefits will take time to wash through. Elsewhere, tepid group revenue growth, lower free cash flow, higher net debt and a previously slashed dividend are far from being cause for celebration. | The mobile business in particular is on life support, draining capital and resources prior to its integration with the electricals business. The rapidly evolving nature of this segment has threatened to leave Dixons behind and thus, as a matter of urgency, the company has renegotiated its network contracts, although such benefits will take time to wash through. Elsewhere, tepid group revenue growth, lower free cash flow, higher net debt and a previously slashed dividend are far from being cause for celebration. |
| There are some glimmers of hope, however. The electricals part of the business, particularly in the UK and Ireland, is holding its own in terms of revenue and is also seeing market share growth. | There are some glimmers of hope, however. The electricals part of the business, particularly in the UK and Ireland, is holding its own in terms of revenue and is also seeing market share growth. |
| Ouch! Shares in UK electronics retailer Dixons Carphone have plunged by a quarter in early trading. | Ouch! Shares in UK electronics retailer Dixons Carphone have plunged by a quarter in early trading. |
| Dixons Carphone has shocked the City by warning that its UK mobile business will be “significantly loss making this year”, as it struggles to persuade customers to upgrade their phones. | Dixons Carphone has shocked the City by warning that its UK mobile business will be “significantly loss making this year”, as it struggles to persuade customers to upgrade their phones. |
| It also posted a statutory pre-tax loss of £259m for the last financial year, down from a profit of £289m in 2017-18. | It also posted a statutory pre-tax loss of £259m for the last financial year, down from a profit of £289m in 2017-18. |
| Alarmingly for investors, the firm only expects to post profits of around £210m this financial year; analysts had been expecting a figure of about £296m. | Alarmingly for investors, the firm only expects to post profits of around £210m this financial year; analysts had been expecting a figure of about £296m. |
| Mobile is a major part of the company’s business, but it could take two years before it breaks even! | Mobile is a major part of the company’s business, but it could take two years before it breaks even! |
| CEO Alex Baldock warned: | CEO Alex Baldock warned: |
| In UK mobile, the market is changing in the way we described in December, but doing so faster. So, we’re moving faster to respond: we’ve renegotiated all our legacy network contracts, we’re developing our new customer offer, and are accelerating the integration of Mobile and Electricals into one business. | In UK mobile, the market is changing in the way we described in December, but doing so faster. So, we’re moving faster to respond: we’ve renegotiated all our legacy network contracts, we’re developing our new customer offer, and are accelerating the integration of Mobile and Electricals into one business. |
| This means taking more pain in the coming year, when Mobile will make a significant loss. | This means taking more pain in the coming year, when Mobile will make a significant loss. |
| Dixons Carphone reveals big losses at mobile phone shops https://t.co/9KeFPamkuR | Dixons Carphone reveals big losses at mobile phone shops https://t.co/9KeFPamkuR |
| Stock markets around the globe are also rallying today, thanks to the prospect that America’s interest rates could be cut next month. | Stock markets around the globe are also rallying today, thanks to the prospect that America’s interest rates could be cut next month. |
| In London, the FTSE 100 index has jumped by 30 points, or 0.4%, with European indices also rallying. | In London, the FTSE 100 index has jumped by 30 points, or 0.4%, with European indices also rallying. |
| That follows a strong session in Asia, where China’s CSI 300 surged by 3% and Japan’s Nikkei gained 0.6%. | That follows a strong session in Asia, where China’s CSI 300 surged by 3% and Japan’s Nikkei gained 0.6%. |
| Naeem Aslam of Think Markets says the Fed’s dovish twist is driving shares up. | Naeem Aslam of Think Markets says the Fed’s dovish twist is driving shares up. |
| We all know that central banks have been data dependent, but it is only now that they have started to acknowledge the weakness in the economic numbers. | We all know that central banks have been data dependent, but it is only now that they have started to acknowledge the weakness in the economic numbers. |
| Last night, the Fed lowered its inflation forecast from 1.8% to 1.5% but , there wasn’t any change in the growth forecast. The reason that the event was dovish came from fact that the Fed’s outlook of the economy isn’t positive; they said the global uncertainties are increasing. They feel it is time to shift the needle of the their monetary policy to spur the growth again or at least not letting the global economy go off the rails. | Last night, the Fed lowered its inflation forecast from 1.8% to 1.5% but , there wasn’t any change in the growth forecast. The reason that the event was dovish came from fact that the Fed’s outlook of the economy isn’t positive; they said the global uncertainties are increasing. They feel it is time to shift the needle of the their monetary policy to spur the growth again or at least not letting the global economy go off the rails. |
| The tantalising scent of a US rate cut is lifting the pound away from the five-month low of $1.2504 struck on Tuesday. | The tantalising scent of a US rate cut is lifting the pound away from the five-month low of $1.2504 struck on Tuesday. |
| Neil Wilson of Markets.com says it’s “quite a chunky move”, helped by the prospect that UK interest rates could be raised in the coming months: | Neil Wilson of Markets.com says it’s “quite a chunky move”, helped by the prospect that UK interest rates could be raised in the coming months: |
| Maybe the prospect of a more hawkish Bank of England is helping the pound. | Maybe the prospect of a more hawkish Bank of England is helping the pound. |
| At least Mark Carney doesn’t have to deal with a political leader on his case… | At least Mark Carney doesn’t have to deal with a political leader on his case… |
| Well, not yet anyway. Even so, political uncertainty is still weighing on sterling, Wilson adds: | Well, not yet anyway. Even so, political uncertainty is still weighing on sterling, Wilson adds: |
| The prospect of Boris Johnson taking Britain out of the EU come October 31st is a risk. There’s now talk of a possible general election if he gets in – risky, we know what happened to Theresa May. | The prospect of Boris Johnson taking Britain out of the EU come October 31st is a risk. There’s now talk of a possible general election if he gets in – risky, we know what happened to Theresa May. |
| The prospect of a general election would not do anything to remove uncertainty around UK assets. Zero clarity still. | The prospect of a general election would not do anything to remove uncertainty around UK assets. Zero clarity still. |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| The US dollar is weakening this morning after America’s central bankers dropped a loud hint that they will cut interest rates soon. | The US dollar is weakening this morning after America’s central bankers dropped a loud hint that they will cut interest rates soon. |
| Last night the Federal Reserve left borrowing costs unchanged, but also revealed that almost every policymaker expects at least one rate cut before the end of 2019. | Last night the Federal Reserve left borrowing costs unchanged, but also revealed that almost every policymaker expects at least one rate cut before the end of 2019. |
| With inflation low, growth slowing, and Donald Trump dropping loud and unsubtle hints, the Fed is now preparing to reverse some of last year’s rate hikes. | With inflation low, growth slowing, and Donald Trump dropping loud and unsubtle hints, the Fed is now preparing to reverse some of last year’s rate hikes. |
| It adjusted its guidance to the markets, dropping its promise to be patient. Instead, the Fed will “act as appropriate to sustain the expansion” and to “closely monitor the implications of incoming information for the economic outlook. | It adjusted its guidance to the markets, dropping its promise to be patient. Instead, the Fed will “act as appropriate to sustain the expansion” and to “closely monitor the implications of incoming information for the economic outlook. |
| Federal Reserve chair Jerome Powell told reporters that his FOMC committee wanted a bit more information before acting. | Federal Reserve chair Jerome Powell told reporters that his FOMC committee wanted a bit more information before acting. |
| He told a press conference: | He told a press conference: |
| “We’d like to see if these risks continue to weigh on the outlook. | “We’d like to see if these risks continue to weigh on the outlook. |
| We want to see and we want to react to trends that are sustained, that are genuine.” | We want to see and we want to react to trends that are sustained, that are genuine.” |
| The markets now reckon this means the Fed is certain to cut its benchmark rate, currently 2.25%-2.5%, at its next meeting in late July. | The markets now reckon this means the Fed is certain to cut its benchmark rate, currently 2.25%-2.5%, at its next meeting in late July. |
| Cut Probabilities 100% after the FOMC statement.July is 76% for a 25 bps cut, 24% for a 50 bps cut.If they don't cut 50 in July, the "second" 25 cut in Sept to 1.875% is 87% (67.1% + 19.9%)Cannot find an example of 100% probability and the Fed failed to deliver. pic.twitter.com/37mSu9ta1C | Cut Probabilities 100% after the FOMC statement.July is 76% for a 25 bps cut, 24% for a 50 bps cut.If they don't cut 50 in July, the "second" 25 cut in Sept to 1.875% is 87% (67.1% + 19.9%)Cannot find an example of 100% probability and the Fed failed to deliver. pic.twitter.com/37mSu9ta1C |
| BOOM! The implied probability of a July #FederalReserve rate cut is now 100%. So that means it's now officially priced in! pic.twitter.com/Eqp4Bx8lKB | BOOM! The implied probability of a July #FederalReserve rate cut is now 100%. So that means it's now officially priced in! pic.twitter.com/Eqp4Bx8lKB |
| This has, predictably, hurt the US dollar. This has lifted the pound back over $1.27 for the first time in a week, reversing this week’s Brexit-induced losses. | This has, predictably, hurt the US dollar. This has lifted the pound back over $1.27 for the first time in a week, reversing this week’s Brexit-induced losses. |
| Also coming up today | Also coming up today |
| Two other central banks will seize the limelight from the Fed. The European Central Bank releases its latest economic bulletin, two days after its president, Mario Draghi, hinted that it implement more stimulus measures. | Two other central banks will seize the limelight from the Fed. The European Central Bank releases its latest economic bulletin, two days after its president, Mario Draghi, hinted that it implement more stimulus measures. |
| Then at noon UK time, the Bank of England will set interest rates. We’re not expecting any changes, but the minutes of this week’s meeting will show the BoE’s thinking. | Then at noon UK time, the Bank of England will set interest rates. We’re not expecting any changes, but the minutes of this week’s meeting will show the BoE’s thinking. |
| The agenda | The agenda |
| 9am BST: European Central Bank economic bulletin | 9am BST: European Central Bank economic bulletin |
| 9.30am BST: UK retail sales for May | 9.30am BST: UK retail sales for May |
| 12pm BST: Bank of England interest rate decision | 12pm BST: Bank of England interest rate decision |