Business live blog, Tuesday July 15 — as it happened

The annual rate of US inflation increased for the second month in a row to 2.7 per cent in June.

This is the highest level since February and up from 2.4 per cent in May, but was in line with expectations.

On a monthly basis, consumer price inflation edged up 0.3 per cent, up from a 0.1 per cent rise in May and the largest increase in five months. The biggest upward pressure came from the cost of housing and petrol.

Core inflation, which excludes volatile food and energy prices, rose 2.9 per cent year on year following three consecutive months at 2.8 per cent (which was the lowest annual rate since 2021). However, it was below forecasts of 3 per cent.

Monthly core CPI also rose by 0.2 per cent, which was less than expected. Economists had forecast a rise of 0.3 per cent.

US stock index futures extended gains as the reading was in line with expectations, easing investor concerns about price pressures from President Trump’s tariffs.

Citigroup’s profit rose in the second quarter as its traders benefited from turbulent markets.

The third-largest US lender’s net income was $4 billion in the three months ended June 30, up 25 per cent from a year earlier. Revenue rose 8 per cent to $21.7 billion with second-quarter records for its services, wealth and US personal banking businesses.

Volatility caused by President Trump’s tariffs helped trading desks as clients rushed to adjust their portfolios. Markets revenue jumped 16 per cent to $5.9 billion.

Economic uncertainty left investment banking subdued for most of the quarter but activity rebounded with the $1.05 billion IPO of the stablecoin issuer Circle and the $650 million listing of the retail trading platform eToro.

Investment banking fees climbed 13 per cent in the second quarter. The bank also advised Charter Communications on its $21.9 billion deal to buy Cox Communications.

Declining demand from pension funds for government bonds risks adding tens of billions of pounds to the UK’s borrowing costs, the Office for Budget Responsibility has warned.

David Miles, a member of the OBR’s budget responsibility committee, told MPs the UK was facing a “worrisome” future where “one of the strong buyers of UK government debt over decades is declining”.

“You’ve got to find people and induce them to hold bonds. That means you’ve got to offer them a better deal,” he said.

The fiscal watchdog has said there will be at least a £20 billion hit to long-term borrowing costs over the coming decades from the falling ownership of gilts among defined benefit pension schemes. The OBR calculates a 0.8 percentage point rise in longer-term gilts on the existing levels of debt, adding £22 billion to debt servicing costs.

• Read in full: Falling demand for bonds may add £20bn to UK borrowing costs

Jerome Powell has clashed with President Trump over interest rates

OLIVIER DOULIERY/BLOOMBERG/GETTY IMAGES

It’s been the usual bruising week for Jerome Powell, chairman of the US Federal Reserve.

First, President Trump called him a “knucklehead”, adding to his list of insults for the man who is refusing to cut rates as fast as Trump would like. Now, the US treasury secretary Scott Bessent has said “a formal process” is already under way to identify Powell’s eventual successor.

Bessent told Bloomberg: “Well, look, there’s a formal process that’s already starting. There are a lot of great candidates and we’ll see how rapidly it progresses. It’s President Trump’s decision and it will move at his speed.”

Powell’s term as Fed chair ends in May next year and he could remain on the Fed board till 2028 when his tenure as governor expires. However, Bessent said it would be “confusing” for Powell to remain at the Fed after his term as chair ends.

Oliver Holbourn, the former chief executive of RBS International, has been appointed chief executive of the National Wealth Fund, formerly the UK Infrastructure Bank.

The purpose of the fund is to invest alongside the private sector in projects within the UK with the aim, says the government, of delivering on its growth and clean energy missions.

The bank was launched in October last year and since then has committed £2.5 billion, which the government claims supports 10,700 jobs, while it also has an additional £5.8 billion of capital to deploy.

Among its priorities are to expand into new sectors and trial new partnerships with mayors to develop regional investment.

Holbourn is also former chief executive of UK Financial Investments, where he managed the government’s shareholdings in RBS, Lloyds and UK Asset Resolution.

JOHANNES EISELE/AFP/GETTY IMAGES

Strong investment banking and trading at JP Morgan Chase helped the bank to report better-than-expected second-quarter net income of $15 billion.

While the figure was 17 per cent down on the previous year, when profits at America’s biggest bank were boosted by a $8 billion gain from its stake in Visa, it beat analysts’ forecasts of profit of $12.6 billion.

Investment banking fees rose 7 per cent, boosted by strong trading in equities and bonds in volatile market conditions at the beginning of the quarter. Analysts had expected a 14 per cent decline.

Jamie Dimon, chairman and chief executive, said: “The US economy remained resilient in the quarter … However, significant risks persist — including from tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits and elevated asset prices. As always, we hope for the best but prepare the firm for a wide range of scenarios.”

At midday the FTSE 100 was down slightly from its 9,000-point high to 8,992.67, while the FTSE 250 was up 0.5 per cent on the day to 21,836.29.

Investors are absorbing news of reforms aimed at revitalising the stock market and are waiting for speeches by the chancellor Rachel Reeves and Bank of England governor Andrew Bailey at the Mansion House tonight.

• FCA cuts fundraising red tape before Rachel Reeves speech

Reeves is expected to say that her overhaul places financial services “at the heart of the government’s growth mission”. Bailey is expected to reiterate his comments to The Times this week that faster rate cuts are possible if the labour market deteriorates.

The pound was up slightly against the dollar at $1.345 and was also up against the euro at €1.1518.

Sterling is up 7.6 per cent against the dollar this year but down 5 per cent against the euro, with losses accelerating in recent weeks.

Sir Adrian Montague

AVIVA/PA

Sir Adrian Montague, the chairman of Thames Water, has apologised to MPs after the company was recalled to appear in front of the environment, food and rural affairs select committee.

Montague told the committee chair Alistair Carmichael this morning: “I’m making an apology. It’s rare, as you said yourself, for water companies or any company to be recalled to the committee. We regret that we have made that necessary.”

Thames Water is appearing again because of Montague’s admission that he had “mis-spoken” in the previous hearing when he told MPs that large bonuses for senior bosses, which were to be paid from an emergency £3 billion loan, had been insisted upon by creditors.

The Guardian subsequently reported that the decision to pay the bonuses was agreed to by creditors but not necessarily proposed by them.

This morning Carmichael said MPs had only received a list of the company’s senior creditors at 5.20pm yesterday and accused the company of “game-playing”.

• Thames Water reports £1.65bn loss as debts and spills rise

Larry Fink, BlackRock chairman and CEO

BRENDAN MCDERMID/REUTERS

The world’s largest asset manager, BlackRock, has reported second-quarter assets under management reached $12.53 trillion, an 18 per cent year-on-year increase and well ahead of forecasts.

The figure for the quarter ended June 30 was up from $10.65 trillion in the same period last year, but long-term net inflows fell to $46 billion in the quarter, down 9.8 per cent.

Total revenue, most of which is earned as a percentage of assets under management, rose to $5.42 billion from $4.8 billion a year ago, while adjusted profit came in at $1.88 billion, up from $1.55 billion previously.

BlackRock’s iShares exchange traded funds had record first-half inflows, according to the chairman and chief executive Larry Fink.

“These are just the early days in our next phase of even stronger growth,” he said.

BlackRock’s takeover of the private credit specialist HPS Investment Partners closed after the quarter ended so is not included in these figures.

The European Commission headquarters in Brussels

ALAMY

Aircraft, machinery, cars, chemicals and medical devices are the main items on the latest list of US goods that will be hit with tariffs by the European Commission if talks with Washington do not yield agreement on trade.

The $72 billion package put forward by the commission, which oversees trade policy for the 27 countries of the European Union, also includes agriculture and food products and is in response to the US tariffs on cars and car parts, as well as a baseline tariff currently set at 10 per cent.

Over the weekend, President Trump suggested he might set tariffs on the EU at 30 per cent from August 1, which the EU trade commissioner Maros Sefcovic has said would make trade between the two parties almost impossible.

The EU’s first package of tariffs on $21 billion of US goods has been suspended till August 6. There is no date set for the EU to approve this latest package.

Standard Chartered has introduced spot trading for bitcoin and ether though its UK branch for institutional clients to cater for rising demand for crypto-assets.

The trading is fully integrated with Standard Chartered’s existing platforms, allowing institutional clients to trade crypto-assets through the bank’s familiar foreign exchange interfaces.

Bill Winters, Standard Chartered chief executive, said: “Digital assets are a foundational element of the evolution in financial services. They are integral to enabling new pathways for innovation, greater inclusion and growth across the industry.”

The UK-headquartered bank says it is the first systemically important global bank to offer deliverable, spot crypto-asset trading for institutional clients.

Zuckerberg has paid top dollar for the best engineers

GODOFREDO A VÁSQUEZ/AP

Mark Zuckerberg has said Meta Platforms will spend hundreds of billions of dollars to build several massive AI data centres as he plays catch-up with rivals.

The billionaire Meta founder and chief executive has been intensifying his investment in AI technology, including paying multimillion-dollar pay packages to attract top engineers.

Meta’s first multi-gigawatt data centre, Prometheus, is expected to come online in 2026, while another, Hyperion, will be able to scale up to 5 gigawatts over the coming years, Zuckerberg said in a post on his Threads social media platform.

• Read in full: Meta to spend hundreds of billions on AI data centres

The Bank of England is seeking to boost competition in the mortgage market by cutting red tape for small and mid-sized lenders.

The initiative is one of several policy revamps unveiled this morning before Rachel Reeves’s Mansion House speech this evening, which will set out further reforms to boost Britain’s financial services industry and the wider economy.

The chancellor used her first Mansion House speech last year to warn that financial regulation had gone too far in the wake of the 2008 banking crisis.

As well as simplifying regulations for smaller mortgage lenders, the Bank of England’s Prudential Regulation Authority said it would postpone part of its implementation of international capital reforms for a year until January 2028. These new standards are known as Basel 3.1 and the element that is being delayed relates to trading rules for investment banks.

The PRA also said it was revamping its rules on loss-absorbing debt that banks need to hold.

Shares in the FTSE 250 discount retailer B&M European Value Retail have fallen 7 per cent despite the company reporting its first like-for-like quarterly revenue growth in over a year.

Hot weather boosted sales of garden and outdoor products but with like-for-like revenue growth of 1.3 per cent in its UK market, gains were less than expected, according to analysts at Jefferies.

The shares, which have fallen 46 per cent over the past year, dropped 17p to 240p this morning.

Tens of thousands of lower earners will become eligible for mortgages for the first time as part of a relaxation of rules, Rachel Reeves is expected to announce today.

Banks and building societies will be allowed to offer more high loan-to-income mortgages. The mortgage lender Nationwide will be able to reduce the income threshold at which someone could borrow up to six times their income to £30,000 from £35,000. The threshold for joint mortgage applicants will fall to a £50,000 combined salary, down from £55,000.

You can read more here.

In other corporate news this morning:

Experian: The credit data company reported 8 per cent organic revenue growth in the first quarter and maintained its annual forecasts, supported by strong demand for its broad data services across markets. It expects organic revenue growth of 6 per cent to 8 per cent and total revenue growth of 9 per cent to 11 per cent for the year ending March 2026. The shares have risen 4 per cent this morning.

Robert Walters: The recruiter said macro uncertainty had become “more pronounced” in the second quarter. Net fee income in the quarter fell in Asia Pacific (11 per cent), Europe (23 per cent) and the UK (8 per cent). Over the first half, new fee income dropped 16 per cent to £140 million. Shares in the company, which cut its headcount by 77 roles to 3,125 staff by the end of June, fell 2.4 per cent to 176p.

London’s leading share index rose above 9,000 this morning for the first time, but the rise was held back by a fall in housebuilders after Barratt Redrow’s update.

The FTSE 100 rose 4 points, or 0.05 per cent, to 9,002.73 after closing at an all-time high of 8,998.06 on Monday. The intraday high yesterday was 8,999.22

John Moore, wealth manager at RBC Brewin Dolphin, said: “The FTSE 100 has been driven to the 9,000-point milestone by several factors. Firstly, while the index’s composition had been a brake on its progress compared to other markets, now it is providing a tailwind, with strong earnings momentum in the banking and defence sectors.

“Currency has also played a role, though its impact is likely to fluctuate over time … At the same time, the UK still offers robust income and optionality.”

Rio Tinto has named Simon Trott, the head of its iron ore division, as its new chief executive officer.

He replaces Jakob Stausholm, who announced his intention to step down in a surprise announcement in May.

Stausholm, who oversaw a big bet on lithium and expansions in iron ore and copper, took up the role in 2020 after the miner ousted its chief executive following the destruction of Australia’s ancient Juukan Gorge rock shelters.

Trott, who has been at Rio Tinto for 20 years, will take over the role on August 25.

Completions fell nearly 8 per cent year on year

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Housebuilder Barratt Redrow has launched a £100 million share buyback despite a fall in home completions in the year to June 29.

The total number of homes completed was 16,565, a decline of nearly 8 per cent year on year, due to a weaker first half. Yet net cash is ahead of its expectations at £772 million, and profits guidance for the year remains unchanged. Build cost inflation was flat.

David Thomas, chief executive, said: “Against a challenging market backdrop, we have delivered a solid performance this year. Our adjusted profits are in line with market expectations, despite home completions being slightly below our guided range, mainly due to the impact of fewer international and investor completions than expected in our London businesses.”

Embattled Thames Water has fallen to a £1.65 billion full-year pre-tax loss in the year to March 25 as debts increased to £16.8 billion. This compares with a £157 million profit the previous year.

The country’s biggest water supplier reported a worsening of its environmental performance, with sewage spills up by a third.

The loss included a £1.27 billion provision against a loan from its parent company not deemed recoverable, £122 million in fines, £198 million of restructuring plan fees and £151 million of restructuring costs.

The company is trying to win approval for a rescue plan funded by its senior creditors to avoid renationalisation.

Chris Weston, chief executive, said: “We recognise that our current gearing is too high and, to address this, we are progressing with our senior creditors’ plan to recapitalise the business which will see us return to a more stable financial foundation.”

Read in full: Thames Water reports £1.65bn loss

London’s leading share index is expected to rise above 9,000 this morning, with the FTSE 100 forecast to open 15 points higher and hit a new intraday high.

The FTSE 100 closed at a new all-time high of 8,998.06 on Monday as the US-UK trade deal meant Britain avoided the trade turmoil affecting markets in the European Union, which faces possible US tariffs of 30 per cent. The intraday high was 8,999.22.

Asian shares rose overnight as the focus turned from tariffs to US inflation data and quarterly results from America’s biggest banks. Tokyo’s Nikkei 255 was up 0.24 per cent, but China’s SSE Composite fell 0.8 per cent as strong second-quarter GDP growth slowed.

The dollar was flat against a basket of currencies and safe-haven buying buoyed the price of gold, up 0.6 per cent to $3,363.90 an ounce. The oil price dipped 0.3 per cent to $69 a barrel.

The trade truce with the US has helped China avoid a sharp slowdown

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China’s economy slowed in the second quarter with gross domestic product (GDP) growing 5.2 per cent year on year. This is down from 5.4 per cent growth in the first quarter but ahead of analysts’ expectations of growth of 5.1 per cent.

The world’s second-largest economy has so far avoided a sharp slowdown in part due to a fragile US-China trade truce and support from Beijing, but economists expect a weaker second half as exports lose momentum, prices continue to fall and consumer confidence remains low.

“China achieved growth above the official target of 5 per cent in the second quarter partly because of frontloading of exports,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “The above target growth in Q1 and Q2 give the government room to tolerate some slowdown in the second half of the year.”