British Airways has stopped short-haul bookings from Heathrow for another week, amid warnings they may be halted for the rest of the summer.
The carrier warned on Monday that it would stop taking new bookings for domestic and western European flights until August 8. On Tuesday this was extended, blocking new bookings on flights before August 16.
Long-haul routes could be disrupted next, insiders warned, as Heathrow Airport’s cap on passenger numbers to 100,000 a day forces airlines to withhold tickets and fly planes with thousands of empty seats.
BA said the block on new short-haul bookings would allow it to comply with Heathrow’s passenger cap that had been “imposed” on airlines.
It is understood that the airline is keeping passenger numbers under review on an ongoing basis and long-haul routes could also be subject to a reduction in tickets.
A source said the airline also needed to keep seats free on some flights to have capacity to deal with other cancellations and unexpected disruption.
The halt on ticket sales prompted a jump in ticket prices over the next fortnight as the supply of short-haul fares fell.
Holidaymakers looking for a last-minute getaway faced xx% surges in fares, with the average price from Heathrow to Europe on some routes having already jumped, according to data from Google Flights.
Passengers looking to pay less were urged to depart from a different airport to avoid soaring fares.
Guy Hobbs, editor of Which? Travel, said: “With further ticket sale suspensions possible, people should consider booking as early as possible to avoid last-minute disappointment and inflated fares. They should also consider alternative airports and airlines where possible.
“Airports and airlines need to be held to account for the unacceptable disruption travellers are currently experiencing, and the government must act to ensure the Civil Aviation Authority has the power to hit operators with substantial fines in instances where they flout the rules.”
There are fears the disruption will last for the rest of the summer, hitting those hoping for a last-minute cheap getaway over the August Bank Holiday weekend.
Rob Burgess, editor of frequent flyer website headforpoint.com, said: “Since the Heathrow capacity cap will exist until at least 11th September – and we believe it will be pushed out further – it seems likely that BA will have to keep capacity caps in place until the end of the school holidays, given the upcoming Bank Holiday at the end of August. “I therefore expect the block on sales to keep rolling over, until at least Bank Holiday Monday 29th August as BA is already over its daily passenger cap on many dates based on existing ticket sales.”
Mr Burgess said the changes would not impact those who had already booked tickets, aside from those who may be looking to arrange a last-minute connecting flight. He added: “The real losers are people expecting to get a cheap last minute August Bank Holiday break – it’s not happening – or those who may need to fly at short notice for personal reasons.”
John Strickland, an airlines analyst, however said the impact on fares would only be “marginal”.
Analysts suggested that the decision would cost British Airways some of its share in the short-haul market because rivals such as Jet2 and Ryanair, which largely operate out of other airports, would not have to cancel flights.
However, according to Alexander Paterson, an analyst at Peel Hunt, the financial hit to BA will be limited as increased fares will “largely mitigate” the fall in capacity. Short-haul is the least profitable kind of flight, he said.
“All the same, it is quite something when BA has to suspend sales and cancel flights because Heathrow is not resourced to be able to handle even 104,000 passengers per day in peak summer,” he added.
Heathrow said earlier this summer that it would cap passenger numbers at 100,000 per day until September 11, forcing airlines to cancel 1,000 flights. The airport said a lack of ground crew and overbooking by airlines was leading to huge delays and last minute cancellations.
Airlines reacted with fury. Gulf carrier Emirates accused Heathrow of chosing “not to plan, not to invest” in capacity, while Ryanair also attacked planning at the airport. Airport workers union Unite, meanwhile, accused Heathrow on Tuesday of having “cut staffing to the bone”. Heathrow, however, has hit back at what it called “bizarre” criticism, arguing airlines are responsible for providing ground staff.
John Grant, an airlines analyst at OAG, said British Airways would fly around 20,000 empty seats per day as a result of the decision to halt sales.
Mr Grant said: “Take a low-ball average fare for this time of year of £100 each way and it’s a £12.5m hit to revenues at least, probably more since there will be passengers who would have booked long haul flights off the back of a connecting short-haul service and they have now gone as well.”
A British Airways spokesman said: “We took pre-emptive action to reduce our schedule this summer to give customers certainty about their travel plans and to build more resilience into our operation given the ongoing challenges facing the entire aviation industry.
“When Heathrow introduced its passenger cap, we took a small number of additional flights from our schedule and to continue to comply with the cap, we’ve been taking responsible action by limiting sales or all the available fares on some of our Heathrow services to ensure more seats are available to rebook customers.
“We’ll continue to manage bookings to be within the Heathrow imposed cap so we can get our customers away as planned this summer.”
A Heathrow spokesman said: “Acting in the best interests of passengers, we introduced a cap on departing numbers at Heathrow in order to provide better, more reliable journeys this summer. We are pleased to see action from British Airways, acting responsibly and also putting the passenger first.”
That’s all from us today, thank you for reading! Before you go, check out the latest stories from our reporters:
Stephen King testifies against $2bn Penguin merger
Best-selling horror author Stephen King testified against Penguin Random House’s proposed $2.9bn (£1.8bn) acquisition of Simon & Schuster, saying it would weaken competition in the publishing industry.
The “Carrie” and “It” author took the stand as a government witness in the Justice Department’s antitrust suit seeking to block the deal. He said consolidation in the publishing industry over the course of his career has led to lower pay for authors.
“It becomes tougher and tougher for writers to find enough money to live on,” King testified in federal court in Washington.
If completed, the deal would see Penguin, the largest book publisher and a unit of Bertelsmann, take over Simon & Schuster, the fourth biggest. The government argues the combination will lead to lower advances for authors and fewer choices for consumers.
FTSE 100 ends in the red
The FTSE 100 has ended slightly lower after US-China tensions flared up and tumbling homebuilder stocks countered strong results from oil major BP.
The index slipped 0.1pc to close out a choppy session dominated by concerns that US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan would worsen Beijing-Washington relations.
Investors sought safer assets after China threatened repercussions if Pelosi visited the self-ruled island, which Beijing claims as its territory.
“The move by the Biden administration makes things a little more complicated in regards to its economic relationship with China,” said David Madden, market analyst at Equiti Capital.
“It is worth nothing that US equities have enjoyed a bullish run recently, so this mild bout of selling started from a high point.”
Oxford nuclear fusion spin-out raising £400m after energy breakthrough
An Oxford start-up that claimed a major breakthrough in the quest for nuclear fusion is seeking £400m to fund the next stage of its research. Howard Mustoe writes:
First Light Fusion made headlines in April when it said it had achieved the reaction using its method of firing projectiles at fuel.
It now needs cash to get to the next stage of development: a “gain” experiment, where more energy is produced than put in. This is an important step towards commercialising the technology.
Aviva boss joins BP board
The chief executive of insurance giant Aviva has joined the board of oil giant BP.
Alongside her job at Aviva, Amanda Blanc is co-chair of the Government’s UK Transition Plan Taskforce, which is working to decide what standards companies should be held to when transitioning to a post-emissions world.
The investment wing of Aviva was involved in the plans to design BP’s 2019 pledge to become a net zero company by 2050. Earlier this year it said that it would vote to remove board members from companies that have failed to meet their environmental pledges.
Debt-laden Domino’s at risk as UK heads into recession, warn analysts
Domino’s Pizza has been criticised for embarking on a £20m share buyback programme as its debt pile swells and the UK hurtles toward a “major” recession. Helen Cahill writes:
Analysts warned that the delivery company’s bid to purchase £20m of its own shares will increase its financial risk in a downturn after its debt pile hit £236m.
Liberum analyst Wayne Brown said: “At a time when debt is now up to £236m, and we are about to head into a major recession, the group is ploughing on with a further £20m share buyback programme increasing the financial risk.”
It came as Domino’s posted a 16pc fall in pre-tax profits of £51m for the 26 weeks ended 26 June as the business struggled with rising costs. Group revenue was flat at £278.3m despite efforts to offset rising ingredient prices and other cost pressures, including the launch of a delivery fee of between 99p and £2.50 in March.
US job openings fall to nine-month low
US job openings fell in June to a nine-month low, suggesting tightness in the labour market is easing somewhat amid growing economic pressures.
The number of available positions decreased to 10.7m in the month from 11.3m in May, according to data from the Labor Department’s Job Openings and Labor Turnover Survey. The 605,000 decline was the biggest since April 2020.
“Fewer openings likely mean the froth is being blown off inflated listings for openings as the economy slows down, not that demand for workers is dropping,” said Robert Frick, corporate economist at Navy Federal Credit Union.
That’s all from me for today – thanks for following! Giulia Bottaro will take over from here.
Global supply chain chaos to continue for months, warns shipping giant
Chaos in global supply chains will continue for several more months, one of the world’s biggest shipping companies has warned.
Louis Ashworth has more:
An “exceptional market” for transport companies including sky-high container rates will result in further bumper profits and will not ease until late 2022, Danish shipper Maersk said on Tuesday.
Maersk, which handles about a sixth of the global container trade, said its full-year underlying earnings before tax will be around $31bn (£25bn), versus a previous estimate of $24bn. It is the second upgrade to its profit forecast this year.
“The strong result is driven by the continuation of the exceptional market situation within [ocean freight],” it said in a trading update on Tuesday.
“Congestion in global supply chains leading to higher freight rates has continued longer than initially anticipated.”
Maersk said its forecasts are based on a “gradual normalisation” across ocean freight taking place in the final quarter of this year. It will publish full results for the second quarter on Wednesday.
More than 1,400 London bus drivers to vote on strike
More than 1,400 Arriva bus drivers will ballot over a potential strike.
The Unite union said the ballot, which will run from August 5 to August 26, was being called because of the “lack of a pay offer” from Arriva.
If workers vote in favour of industrial action, the strikes will begin in September.
Britain sanctions two former Rosneft board members
The UK has sanctioned two former board members of oil company Rosneft in the latest tightening of penalties against Russia’s elite.
Didier Casimiro and Zeljko Runje are both now subject to an asset freeze for “obtaining a benefit from or supporting the government of Russia by working as a manager of a government of Russia-affiliated entity”, according to a statement.
BP is in the process of selling its near-20pc stake in Rosneft – a move it said will cost up to $25bn.
Wall Street opens lower on growing US-China tensions
Wall Street has opened lower on concerns that a planned visit by US Speaker Nancy Pelosi to Taiwan could worsen tensions between the US and China.
The S&P 500 fell 0.4pc while the Dow Jones was down 0.3pc. The tech-heavy Nasdaq shed 0.7pc.
Direct Line to raise insurance premiums after profits halve
Direct Line has seen profits almost halve and warned that insurance premiums will be increased to match the soaring cost of claims.
The insurer said supply chain disruption and unusually high used car prices have pushed up claims costs for breakdowns, but premiums have not increased accordingly.
It therefore raised its prices by 15pc during the first half of the year and said it will take action to bring premiums in line with claims costs.
The company saw its operating profit plunge 47pc to £195.5m in the six months to June 30.
The fall in earnings was expected as the group issued a profit warning in July, causing shares to plummet.
Chief executive Penny James said:
Uniquely complex motor market conditions during the first half, due to significant regulatory changes, heightened claims inflation and macroeconomic uncertainty, have challenged our short-term profitability.
Insolvencies surge to highest since 2009
The number of companies filing for insolvency has surged, hitting the highest since the aftermath of the financial crisis, as pandemic-era support for businesses falls away.
There were 5,629 company insolvencies registered in the UK in the most recent quarter, the highest since 2009 and an 81pc increase on the same period a year earlier, according to the by Insolvency Service.
Samantha Keen, a partner at EY-Parthenon, said:
The record levels of CVLs are the first tranche of insolvencies we expected to see involving companies that have struggled to stay viable without the lifeline of government support provided over the pandemic… We expect further insolvencies in the year ahead among larger businesses who are struggling to adapt to challenging trading conditions, tighter capital, and increased market volatility.
Wall Street set to fall amid Pelosi worries
US stocks are expected to make a sharp drop at the open, amid concerns top Democrat Nancy Pelosi’s expected visit to Taiwan will spark tensions with China.
The S&P 500, the benchmark of US stocks, is expected to fall 0.6pc at the bell in a bit over an hour.
Truss ditches plan for regional pay cuts after backlash
Liz Truss, the frontrunner to become Britain’s next PM, has backtracked on a plan to align public sector pay with regional living costs after sparking a backlash from Tories who said it went against the principles of levelling up.
The foreign secretary said the plan would save as much as £8.8bn a year. Her campaign said there would be regional pay boards to ensure remuneration of public sector workers “accurately reflects where they work”.
But in a statement today, her team said:
There will be no proposal taken forward on regional pay boards for civil servants or public sector workers. Current levels of public sector pay will absolutely be maintained.
Uber beats estimates as demand defies inflation
Uber has beaten estimates for revenue in the second quarter as customers continued to hail rides and order takeaways despite the impact of soaring inflation.
Video: LVMH Sees Sales Surge on Luxury Market Resilience (Bloomberg)
Revenue more than doubled to $8.1bn (£6.6bn) as its gross bookings – which includes ride hailing, food delivery and freight – rose by a third to an all-time high of $29.1bn.
Uber reported that 122m used the platform monthly, surpassing analyst estimates of 120.5m. It said the number of customers and riders using Uber are both now at a record.
It comes despite the impact of surging inflation and the spectre of recession that could hit demand. Shares in Uber rose as much as 11pc in pre-market trading.
Dara Khosrowshahi, chief executive of Uber, said:
Last quarter I challenged our team to meet our profitability commitments even faster than planned – and they delivered.
JD Sports names former B&Q executive as new boss
JD Sports has hired former B&Q executive Regis Schultz as its new boss following the sportswear company’s boardroom overhaul.
The retail group named Mr Schultz as chief executive a month after appointing a new chairman following the abrupt exit of long-standing former executive chairman Peter Cowgill.
Mr Schultz will join JD in September from Dubai-based Al-Futtaim Group.
The French executive has been president of retail at the company, which has operated partner stores for brands including Ikea, Zara and M&S in the Middle East, Asia and north Africa, since 2019.
Previously he also led French grocery chain Monoprix and had a number of senior roles at DIY group Kingfisher, including chief operating officer at B&Q.
It comes a day after JD Sports sold Footasylum for £37.5m, racking up a loss of more than £50m after the competition watchdog forced it to offload the business.
US futures drop as China tensions mount
Wall Street looks set to open in the red this afternoon amid escalating US-China tensions over Taiwan and deepening worries about a global economic slowdown.
US House Speaker Nancy Pelosi is set to land in Taiwan today and would be the highest-ranking American politician to visit in 25 years. China views the island as its territory and has vowed an unspecified military response to any Pelosi visit.
Futures tracking the S&P 500 fell 0.6pc, while the Dow Jones was down 0.5pc. The tech-heavy Nasdaq lost 0.8pc.
Domino’s costs take bite out of profits
Domino’s Pizza has reported a slump in half-year profits after taking a hit from soaring costs despite raising prices for franchisees and introducing a delivery fee.
The UK pizza delivery chain reported a 16.3pc drop in underlying pre-tax profits to £50.9m for the six months to June 26.
This comes in spite of moves to offset rising ingredient prices and other cost pressures, including the launch in March of a delivery fee of between 99p and £2.50.
The company said it increased prices for its franchisees but this was on a “lagged basis”, meaning that the full benefit will not be felt until the final six months of the year.
The group is expecting profits to be weighted towards the end of the year and kept its full-year guidance unchanged.
Domino’s said it is boosting marketing spend “significantly” to attract more customers, having seen like-for-like sales excluding so-called split territories drop 6.4pc due to the increase in the VAT rate.
Instagram chief relocates to London as Meta scrambles to counter TikTok
The head of Instagram is moving to London and hiring more developers in the city amid intense competition for users between the photo sharing app and TikTok.
Gareth Corfield reports:
Adam Mosseri will set up his new base in the King’s Cross offices of Instagram parent company Meta, the Financial Times reported.
Mr Mosseri will look to expand Instagram’s workforce in London, swelling the 4,000-strong ranks of Meta’s UK workforce.
One person familiar with Instagram’s operations suggested to the FT the move was a cost-saving measure, with software engineers in the UK cheaper to employ than counterparts in San Francisco, where Instagram’s global HQ is currently based.
The UK’s research and development tax credit regime may have also played a role in the decision. Meta has been asked for comment.
Mr Mosseri’s relocation comes amid fierce competition between Instagram and video sharing app TikTok to win over audiences. TikTok, which launched in 2016, has grown rapidly in recent years and become hugely popular with Gen Z. Despite being just six years old, a recent survey found TikTok is now beating the BBC as a primary source of news videos for teenagers.
Housebuilders slide amid fears property boom is over
Housebuilders have gone into decline this morning amid fears the property market boom has come to an end.
UK house prices grew just 0.1pc in July from the previous month – the weakest reading for a year, according to Nationwide.
There were losses across the board for major UK householders.
Crest Nicholson fell 4.2pc, Bellway and Barratt lost 3.9pc, Taylor Wimpey fell 3.8pc, Berkeley was down 3.7pc and Vistry shed 3.2pc.
Virgin Money gets profit boost from higher interest rates
Virgin Money has said there are no signs of financial stress among its customers as higher interest rates drove up profit margins for the lender.
The bank said it saw a rise in customers opening new accounts, with particular growth in demand for credit cards.
It reported a 45pc rise in personal and business accounts compared to last year, and said 160,000 new credit cards were opened in the three months to the end of June.
The business said its margins were boosted by higher interest rates, prompting an increase in its net interest margin forecast for the full financial year.
However, ongoing competition in the mortgage market offset returns somewhat as buyers shopped around for the best deal.
Unsecured lending grew 3.8pc in the latest quarter to reach £6bn, which the lender said was driven by high-quality credit card balances from strong new bank accounts.
Meanwhile, business lending rose slightly by 0.3pc to total £8.3bn, despite a drop in government support for business lending and a more subdued market.
Greenpeace: Energy giants ‘laughing all the way to the bank’
There’s a robust response from Doug Parr, chief scientist for Greenpeace UK, after BP’s latest bumper profits:
While households are being plunged into poverty with knock-on impacts for the whole economy, fossil fuel companies are laughing all the way to the bank.
The Government is failing the UK and the climate in its hour of need.
Government must bring in a proper windfall tax on these monster profits and stop giving companies massive tax breaks on destructive new fossil fuel investments.
This could unlock billions of pounds to alleviate household bills and fund a nationwide roll-out of home insulation which would keep bills low for good and get our UK fossil gas use under control.
EasyJet poaches Asos executive after boardroom exit
EasyJet has poached a top Asos executive to the new role of chief customer and marketing officer following the abrupt departure of its operations chief.
The budget airline said Robert Birge will join later this month.
It comes after easyJet’s operations head Peter Bellew stepped down amid widespread cancellations and strikes that are dogging the airline.
Mr Bellow, previously a top executive at Ryanair, reportedly left following a difference of opinion over how best to handle clashes with unions over pay.
Pound slides as US-China tensions mount
Sterling has lost ground against the dollar as investors flock to safe haven assets amid renewed geopolitical tensions.
Market sentiment has taken a downward turn amid an expected visit by US Speaker Nancy Pelosi to Taiwan – a move that’s attracted ire from China.
Closer to home, focus remains on the Bank of England’s interest rate decision later this week.
The pound fell 0.4pc against the dollar to $1.2199. Against the euro it dipped 0.1pc to 83.81p.
Ecotricity boss: It’s hard to have sympathy for BP
The founder of green energy supplier Ecotricity founder has said it’s “hard to have sympathy for BP”, adding that the company was “holding a shedload of money that simply is coming from hard-pressed bill-payers”.
Speaking to BBC Radio 4, Dale Vince said he thought it was time to increase the windfall tax:
Clearly there are exceptional windfall profits in the oil and gas sector, and clearly there’s a problem in the energy market, and we should fix one with the other.
Asked how worried he is about the number of customers who will struggle to pay their bills, Mr Vince said:
It’s an exceptional problem. And this is why I think the Government should step in, like they did with the pandemic.
We spent £400bn as a country to get ourselves through the pandemic more or less whole.
We need to spend a tenth of that to get millions of families through this winter against exceptional energy prices which will have tripled in just 12 months.
If you’re on a salary of around £20,000 you need a 10pc pay rise just to pay for the increase in energy bills, just for that.
World Bank: Global hunger levels ‘alarmingly high’
Global hunger levels “remain alarmingly high” nearly six months on from the invasion of Ukraine, the World Bank has warned.
Louis Ashworth has more:
The conflict and the fallout from the pandemic have created an entrenched supply chain crisis “that will drive millions more into extreme poverty, magnifying hunger and malnutrition, while threatening to erase hard-won gains in development”, the Washington, D.C.-based organisation said.
Its analysts warned the multi-headed crisis is “reversing years of development gains” and threatens to hit low- and middle-income countries particularly hard.
They warned seven countries – Afghanistan, Eritrea, Mauritania, Somalia, Sudan, Tajikistan, and Yemen – have been put at the greatest risk of facing “overlapping” food and debt crises thanks to the war.
“For poor countries that depend on food imports from Russia and Ukraine, many of which are in Africa, finding alternative food sources in the short term is difficult with low regional supply and limited transport and storage infrastructure,” the analysts said.
Monday saw the first voyage of a Ukrainian grain ship through the Black Sea since Russia invaded Ukraine in late February.
Man Group assets decline for first time in two years
Man Group’s assets under management dropped in the second quarter, marking the first decline in more than two fears.
Assets fell to $142.3bn (£116.6bn) in the three months to the end of June from $151.4bn at the end of March.
Investment performance knocked $4.6bn off the total, with most of the losses coming from the firm’s long-only strategies. Its alternative strategies saw client inflows and positive investment performance in the period.
Shares in Man Group tumbled almost 6pc following the update.
West End sales back above pre-pandemic levels, says Capco
Sales at stores around Covent Garden have bounced back above pre-pandemic levels, according to West End landlord Capital & Counties.
The company signed 25 new leases in the first half of the year at rents that were 9pc ahead of the levels expected in December. That helped lift the value of its portfolio by 5pc to £1.8bn.
Capco said the performance reflected the continued popularity of the West End among domestic and international visistors.
This helped to offset a fall in the value of its luxury residential project in Earl’s Court and the value of its stake in rival Shaftesbury, with which it’s in the process of merging.
Ian Hawksworth, chief executive of Capco, said:
The progress reflects the continued attraction of London’s West End to domestic and a growing number of international visitors, with customer sales in aggregate ahead of 2019.
Whilst the broader macroeconomic and political outlook remains uncertain, Capco is very well positioned with a strong balance sheet, low leverage and high liquidity.
Travis Perkins slumps as DIY boom fades
Travis Perkins has slumped to the bottom of the mid-cap index this morning after it felt the impact of weaker DIY demand.
Britain’s biggest seller of building materials dropped as much as 11pc – the biggest fall since March 2020 – with analysts at Citi branding its first-half figures “slightly weaker than expected”.
Travis Perkins’ overall revenue grew 10pc to £2.5bn, with performance in its merchanting division meeting expectations.
But its Toolstation division lost ground and swung to a loss due to lower demand for DIY equipment after the pandemic boom.
FTSE risers and fallers
The FTSE 100 has slipped into the red this morning as risk aversion hit investors amid renewed tensions between the US and China.
The blue-chip index fell as much as 0.3pc, echoing the mood across global markets ahead of a potential visit by US Speaker Nancy Pelosi to Taiwan amid warnings from China.
BP helped to limit losses, climbing 3.7pc after it posted its biggest profits in 14 years.
HSBC was the biggest drag, shedding more than 2pc after strong results drove gains of 6pc yesterday. Fresnillo dropped 3.3pc after its first-half numbers missed estimates.
The domestically-focused FTSE 250 was down 0.9pc. Travis Perkins dropped 10pc after downbeat results.
Inflation takes a bite out of profits at Greggs
Elsewhere, Greggs has said sales are growing above pre-pandemic levels as cash-strapped consumers grab cheap lunches, but profits are flat as inflation continues to mount.
The bakery chain, known for its sausage rolls and steak bakes, said first-half sales were 12pc higher than in 2019, even thought footfall to its stores was lower.
But its costs are rising “significantly”, with the company forecasting overall cost inflation to be 9pc this year.
Greggs raised its prices by between 5p and 10p earlier this year to cover rising costs of ingredients and labour.
The company said it’s made some further small price increases, though they haven’t impacted sales figures.
Rees-Mogg hits back over more windfall taxes
Unsurprisingly, there’s a different view from Jacob Rees-Mogg, who has voiced opposition to a fresh windfall tax after BP’s profits soared.
He told LBC radio:
I’m not in favour of windfall taxes. The energy industry is enormously cyclical. You need to have a profitable oil sector so it can invest in extracting energy.
Labour: Energy profits are ‘eye-watering’
As expected, BP’s figures have drawn criticism as households continue to battle soaring bills.
Shadow Chancellor Rachel Reeves brands the numbers “eye-watering” and criticises the Tories for “handing billions of pounds back to producers in tax breaks”.
🧵People are worried sick about energy prices rising again in the autumn, but yet again we see eye-watering profits for oil and gas producers. (1/3) https://t.co/f2vssfdIJx
— Rachel Reeves (@RachelReevesMP) August 2, 2022
FTSE opens lower
The FTSE 100 has started the day on the back foot as investors pore over another wave of company results.
The blue-chip index fell 0.2pc to 7,400 points.
House price growth stalls as cost-of-living crisis takes its toll
UK house prices barely rose in July, the latest indication that the property market is finally cooling in response to the deepening cost-of-living crisis.
The 0.1pc increase from June was the weakest reading for a year. Prices rose 11pc from a year earlier to £271,209, according to the latest figures from Nationwide.
The housing market enjoying a booming during the pandemic, with a shortage of homes helping to drive the longest run of price gains for eight years.
However, surging inflation and rising interest rates are starting to take their toll. Figures from the Bank of England last week showed mortgage approvals fell further below their pre-pandemic levels.
Robert Gardner, chief economist at Nationwide, said:
We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year.
Energy bills to hit £3,600 this winter
While the likes of BP are cashing in on higher energy prices, it’s a different story for households.
The oil giant’s figures come alongside more dire forecasts showing that bills will top £3,600 this winter.
The latest numbers from consultancy Cornwall Insight suggest the average annual bill will hit £3,615 in the new year as the price cap rises again.
That’s likely to prompt calls for more support for families.
In May, the Government said it would give each household £400 to help with bills. But that was based on predications that the price cap would rise to just £2,800 in October.
Dr Craig Lowrey, principal consultant at Cornwall Insight, told the BBC:
While the government has pledged some support for October’s energy rise, our cap forecast has increased by over £500 since the funding was proposed, and the truth is the £400 pledged will only scratch the surface of this problem.
BP boss: We perform while transforming
Here’s what Bernard Looney, chief executive of BP, has to say about the figures:
Today’s results show that BP continues to perform while transforming.
Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy.
We do this by providing the oil and gas the world needs today – while at the same time, investing to accelerate the energy transition.
BP enjoys energy windfall
BP’s latest numbers are likely to fuel further controversy about massive profits for energy firms, after rival Shell and British Gas owner Centrica also delivered huge earnings.
Underlying replacement cost profits – the company’s preferred measure – jumped to $8.5bn (£6.9bn) for the three months to June 30, up from $2.8bn a year ago.
However, BP’s half-year figures were dragged down by a massive $24.4bn hit from the company’s move to ditch its near-20pc stake in Russian oil producer Rosneft.
That charge was booked in the first quarter and left it with bottom line replacement cost losses of $15.4bn for the first half of the year.
BP profits triple as energy bills climb
BP has followed in the footsteps of its Big Oil rivals by delivering a massive increase in profits.
The FTSE 100 company said profits tripled to $8.5bn (£6.9bn) in the second quarter – the highest since 2008.
Like its rivals, BP has cashed in on surging energy prices amid Russia’s war in Ukraine, and is sharing the spoils with investors.
The company increased its dividend by 10pc and announced a $3.5bn share buyback programme over the next three months. That follows the $3.8bn it bought back in the first half.
Meanwhile, household energy bills are expected to hit £3,615 in the new year, according to the latest forecasts from Cornwall Insight. That’s hundreds of pounds higher than previous predictions.
5 things to start your day
1) Electric Jaguars will be tested to prevent them disrupting household appliances The memory of a passing car turning a TV to static may be a distant one, but it risks returning with electric vehicles
2) Tax burden under Sunak to remain at 70-year high – even after his promised income tax cut IFS warns that former Chancellor’s planned reductions will not undo damage from his previous National Insurance and corporation tax raids
3) How HSBC wound up on the front line in a new Cold War Bank attacks Chinese bid to muscle into its boardroom
4) Military told to scrub security clearances from LinkedIn due to spying fears Recruiters appear to have contacted defence staff advertising their top secret level access amid China espionage risk
5) One in three chance of New Zealand entering recession, warn economists Goldman Sachs say economy has yet to recover from Jacinda Ardern’s strict lockdowns
What happened overnight
Asia stocks continued a decline from Wall Street this morning, and US long-term Treasury yields sank to a four-month low, pulling the US dollar down against the yen and other currencies as investors worried about the risk of global recession.
Australian equities declined amid an uncertain outlook for commodity demand – which also weighed on crude oil prices – while the local dollar hovered near its highest versus its US counterpart since mid-June with the central bank widely expected to deliver a third consecutive half-point interest rate hike later in the day.
The Australian and South Korean equity benchmarks suffered losses of about 0.3pc each, while Japan’s Nikkei tumbled 1.17pc.
Chinese blue chips dropped 1.06pc and Hong Kong’s Hang Seng lost 1.1pc. Taiwan’s stock index slid 1.68pc.
MSCI’s broadest index of Asia-Pacific shares retreated 0.8pc.
Coming up today
- Corporate: BP, Capital & Counties Properties, Coats Group, Direct Line, Domino’s Pizza, Elementis, Fresnillo, Greggs, Man Group Rotork, Synthomer, Travis Perkins (interims); Sage Group (trading update)
- Economics: Nationwide house price index (UK)