European shares hit six-month high on Ukraine peace deal hopes; grocery price inflation in Great Britain eases to 5%, survey shows – as it happened | Business

Key events

Closing summary

European stock markets have risen on hopes that we are getting closer to a Ukraine peace deal.

However, defence stocks haven fallen, with Europe’s aerospace & defence stocks index down by 3%, putting it on track for its biggest daily drop since early July. The companies’ valuations have been boosted this year by the prospect of soaring defence budgets, as western governments shore up their defences against Russian president Vladimir Putin.

The FTSE 100 index in London has climbed 28 points, or 0.3%, to 9,186 while the German, Italian and French markets have gained between 0.5% and 1%.

On Wall Street, the Dow Jones has gained 0.2% while the Nasdaq has fallen 0.4% and the S&P 500 index is flat.

Our main stories today:

Thank you for reading. We’ll be back tomorrow to bring you the latest news. – JK

Share

Updated at 10.05 EDT

Shein looks at returning to China for Hong Kong listing after London IPO stalls

The online fashion retailer Shein is understood to be considering moving its base back to China from Singapore to pave the way for a Hong Kong listing.

The business, which was founded in China and moved its headquarters to Singapore in 2022, had been considering a £50bn float in London after failing to win approval from regulators in the US for a New York flotation.

However, Chinese authorities have not given the nod to a UK listing and the fast-fashion group has faced questions about conditions in its supply chain from campaigners, influential British MPs and investors.

The company is subject to oversight by Chinese regulators despite being officially based in Singapore because the China Securities Regulatory Commission requires all companies with substantial links to the country to clear a review before listing shares anywhere in the world. Shein still makes most of its clothing in China.

It has consulted lawyers about setting up a parent company in mainland China, according to a Bloomberg report, indicating that the company is now most likely to list in Hong Kong.

ShareBoss of flexible office group IWG dismisses 17% fall in share price as ‘machine selling’

The boss of the flexible office company IWG played down a 17% drop in its share price on Tuesday as “not rational”, arguing that economic uncertainty around the world is supporting demand for hybrid workspace.

IWG, which owns the Spaces and Regus brands, said its adjusted profit rose by 6% to $262m (£194m) for its first half of the year, but its shares plunged after it told investors it expected adjusted profit to end 2025 at the lower end of previous guidance of $525m-$565m.

Mark Dixon, the IWG chief executive, who owns 25% of the £1.9bn business, has seen the value of his personal stake drop by £96m.

“It is a strange reaction on the share price. It looks like it is machines selling … it is not rational,” he told the Guardian.

Share

There has been a mixed open on Wall Street.

The Dow Jones rose by 0.2%, or 104 points, to 45,016 while the Nasdaq slipped by 0.1% and the S&P 500 index was flat.

The dollar is also flat against a basket of major currencies.

Share

Alexandra Brown, North America economist at Capital Economics, has dug deeper into the data.

While the pick-up in housing starts in July was somewhat of a positive surprise, as we expected flooding in Texas to heavily weigh on groundbreaking, the continued loss of momentum in permit issuance supports our view that the outlook for homebuilding this year is bleak.

The 5.9% m/m rise in seasonally adjusted housing starts in July took them to 1.43m annualised, from June’s upwardly revised 1.39m figure. This took starts to a five-month high and occurred despite extreme flooding in Texas in the aftermath of Tropical Storm Barry, which was widely expected to depress starts. The reality turned out to be quite different with the South being the main source of the strength in housing starts, which were up 19% from last month. The gain in starts was also broad-based by housing type. Single-family starts rose by 2.8%, while multi-family rose by 11.6% in the month. The one blemish on the report, however, was the 2.8% decline in building permits which tend to be less volatile than starts and a good guide to where they are going, although admittedly this weakness all stemmed from the multi-family segment.

Contrasting the decent starts numbers, homebuilder confidence remains very weak with the NAHB homebuilder confidence index falling back down to 32 in August after modest optimism about some recent government legislation caused it to edge up to 33 last month. The NAHB press release blamed a combination of elevated mortgage rates, weak buyer traffic, and ongoing frustrations with regulatory policies. It highlighted that the share of builders who used sales incentives such as offering temporarily lower mortgage rates hit a post-pandemic high this month.

Looking forward, we expect that homebuilding will weaken over the next year, with housing starts remaining below 1.32m as elevated mortgage rates keep demand for new homes subdued. That said, while homebuilder margins have been declining, made worse by tariffs, they have not yet fallen sharply below their long-run average. This should prevent homebuilding from collapsing.

ShareUS housing starts hit five-month high

The number of homes started in the US hit a five-month high in July, driven by the biggest increase in multifamily construction in more than two years.

Total US housing starts – capturing new residential construction – rose by 5.2% last month to an annualised rate of 1.43 million homes, 12.9% higher than in July last year, according to the US Commerce Department. That was above all forecasts in a Bloomberg survey of economists.

Multifamily starts increased by nearly 10% to an annualised 489,000 homes, the fastest pace since mid-2023. New construction of single-family homes rose by 2.8% to an annualised 939,000.

Despite the pickup, the nation’s homebuilders have grown more cautious in the past couple of years as mortgage rates doubled, dragging down demand and contributing to the biggest supply of new homes since 2007. While builders have cut prices and offered generous incentives, residential construction has been a drag on the economy in four of the last five quarters.

ShareCompany insolvencies rise in England and Wales

Company insolvencies in England and Wales have continued to rise steadily, according to official figures.

Insolvencies were up slightly in July, at 2,081, figures from the Insolvency Service showed. This compares with 2,053 in June and 2,078 in July last year.

The number of company insolvencies in the first seven months of this year was higher than the second half of 2024, but remained slightly lower than the 30-year high seen in 2023.

There were 339 compulsory liquidations, 1,583 creditors’ voluntary liquidations (CVLs), 147 administrations and 12 company voluntary arrangements (CVAs). CVLs and administrations were both higher than the previous month but compulsory liquidations were lower.

Tom Russell, president of R3, the UK’s restructuring, turnaround and insolvency trade body, said caution is widespread, with many firms delaying major decisions until the direction of the economy becomes clearer, while households continue to feel the strain of higher day-to-day costs.

He added that compulsory liquidations are on the rise as HMRC takes a tougher stance on unpaid taxes, while retail, hospitality and construction remain among the sectors most affected by difficult trading conditions.

Simon Edel, UK turnaround and restructuring strategy partner at EY-Parthenon, said:

We note there has been a significant rise in the number restructuring plans, with more sanctioned plans in July (13) than throughout the entirety of 2024 (nine).

There has also been a 24% increase in administration activity compared to June, which is 5% higher than July 2024. The month-on-month rises in insolvency activity and Creditors’ Voluntary Liquidations (CVLs) last month – while small – are a further indication that companies continue to be challenged by relentless uncertainty, as geopolitical tensions and recent policy shifts hit business confidence, delaying decision-making and dampening spending.

In addition to formal restructuring processes, our recent Restructuring Pulse survey revealed an increase in consensual restructuring transactions to save businesses.

Many businesses are also contending with higher costs including recent increases to employer National Insurance Contributions and the National Living Wage. With interest rates still relatively high – alongside significant working capital demands and a constrained credit environment – liquidity pressures are intensifying for more UK companies. This is causing more businesses and stakeholders to call time.

ShareSwiss army knife maker considers production shift to ease US tariff impact

Victorinox, maker of Swiss army knives, is considering shifting part of its production to the US to reduce the impact of import tariffs on its business, according to its chief executive.

Carl Elsener, who runs the family-owned business, told the Wirtschaftswoche business magazine:

We are looking into carrying out directly on site individual processing steps at the end of the value chain, such as the final cleaning and packaging of commercial knives.

That would reduce the value of the goods on which we have to pay customs duty by 10% to 15%.

Switzerland has been hard hit by Donald Trump’s trade tariffs, with duties of 39%.

Swiss army knives of manufacturer Victorinox are on display in Bern. Photograph: Peter Klaunzer/EPA

Victorinox, founded in 1884 as Messerfabrik Carl Elsener in the town of Ibach, in the Canton of Schwyz, is known for its red, multi-purpose pocket knives with the Swiss coat of arms.

Elsener named the brand “Victoria” upon the death of his mother in 1909, and later the name was changed to Victorinox – a blending of ‘Victoria’ and ‘inox’, an abbreviation for acier inoxydable, French for stainless steel.

Share

Updated at 06.34 EDT

Retail sales data for Great Britain delayed by two weeks

The Office for National Statistics has delayed the publication of the latest retail sales data for Great Britain by two weeks.

The statistics office said the July figures will now be released on 5 September, rather than this Friday, “to allow for further quality assurance”.

In June, a scathing report by Sir Robert Devereux, a retired career civil servant, said the UK’s main statistics body needs a £10m overhaul and its top role split in two after a series of management failings and errors that have plagued the organisation for several years.

Officials at the Bank of England and the Treasury, MPs and City analysts have criticised the ONS’s operations after its surveys were hit by falling participation rates among businesses and the public during the pandemic, leading to questions about the validity of its data.

The ONS, which is based in Newport, south Wales, has sought to increase the rate of responses to its surveys, but with only limited success.

In particular, its labour market data showing the level of employment in the UK economy have been heavily revised in recent years.

Share

Updated at 07.44 EDT

European shares rise to highest since early March; defence stocks down

With traders hoping for a peace deal between Russia and Ukraine, Europe’s Stoxx 600 index of leading European shares has hit its highest level since early March, rising by 0.6%.

Defence stocks are falling as de-escalation could reduce the need for military assets, some analysts say, with BAE Systems dropping 3.6%, Rheinmetall losing 4.2% and Thales shares down 3.5%. However, others say toppy valuations are behind the declines, and there are still expectations of soaring defence budgets.

Fiona Cioncotta, market analyst at City Index, said:

The Dax is edging higher around the 24,400 level as optimism surrounding a Russia-Ukraine peace deal was offset by caution ahead of this week’s PMI releases and the Jackson Hole symposium.

Investors continue to weigh up the possibility of a peace deal between Russia and Ukraine after an encouraging meeting between Zelenski and Trump at the White House. Trump told his Ukrainian counterpart that the US would help guarantee Ukraine’s security in any peace deal to end the war.

A trilateral meeting is expected with Putin within the next few weeks to begin negotiations.

Sterling has edged 0.1% higher against the dollar to $1.3515, ahead of tomorrow’s UK inflation figures.

Francesco Pesole, currency strategist at ING, said:

While the path to peace in Ukraine appears somewhat clearer following last Friday’s and Monday’s summits, markets remain cautious. This is understandable, given that the most challenging negotiations – particularly over territorial issues – are still ahead of us.

You can follow the latest on our Europe live blog here:

Share

Updated at 07.32 EDT

Bank holiday weekend travel disruption expected on British roads and rail

Holidaymakers in Britain have been warned they could face delays when travelling this weekend as the weight of almost 18m car journeys and widespread rail engineering works are expected to cause disruption over the August bank holiday, celebrated in England and Wales.

Plus ça change…

The RAC said drivers should set off as early as possible to avoid heavy traffic, particularly on major routes to airports and coastal areas. The south-east and south-west of England are expected to see the heaviest congestion.

Busy M25 motorway near Heathrow airport. Photograph: Peter Lane/Alamy

Heavy traffic is expected on the M5 between Bristol and Devon, according to the transport analytics company Inrix. On Friday and Saturday there are likely to be holdups of more than 40 minutes on the stretch between junction 15 north of Bristol and junction 23 for Bridgewater.

On Friday, drivers making Channel crossings via Dover or Folkestone are expected to face delays exceeding 30 minutes on the M20 in Kent.

ShareScrapping of audit watchdog for English councils ‘led to soaring costs and chaos’

David Cameron’s “bonfire of the quangos” decision to abolish England’s council spending watchdog has left a broken system that is costing taxpayers more money than it was promised to save.

In a highly critical report, academics at the University of Sheffield said the coalition government of the Conservatives and Liberal Democrats had promised savings of £100m a year by abolishing the Audit Commission.

However, replacing the public body with a private-sector model had resulted in “chaos” and soaring costs to audit councils amid the financial crisis hitting England’s town halls.

Several councils have declared effective bankruptcy linked to years of austerity, soaring costs amid pressure on services, as well as local missteps. They include Birmingham, Nottingham and Woking.

Share

The FTSE 100 index is now up 0.3%, or 26 points, at 9,1983 while the Dax in Frankfurt is 0.2% ahead, and the CAC in Paris and the FTSE MiB in Milan have both gained around 0.7%.

Joshua Mahony, market analyst at Scope Markets, has looked at today’s equity market moves:

A mixed bag in Europe this morning, with early gains fading for the Dax despite apparent progress being made as Trump pushes Ukraine towards a deal that could end the war.

Curiously, some of the best performing stocks in Europe this year have been defence and military names, with the drag provided by BAE Systems, Rheinmetall, and Thales highlighting that the war has actually been a tailwind for equities as governments ramp up fiscal expenditure in a bid to support the Ukrainian efforts.

With Hamas apparently agreeing to a ceasefire proposal, and efforts to end the Ukraine-Russia war seemingly making headway, traders are left wondering exactly what the implications could be for financial markets should both conflicts draw to a close. The weakness seen in oil prices highlight an easing of concerns and potential rise in supply.

However, it is worthwhile noting that from a European perspective, a deal to end the war could actually provide a drag on markets as a sharp run higher for defence stocks reverse course.

Share

Updated at 05.20 EDT

FTSE 100 flat, oil prices fall

The FTSE 100 index has opened flat, with JD Sports leading gains, up nearly 5%, after a broker upgrade from Deutsche Bank. The German market is also flat while the French bourse has gained 0.5%.

Oil prices are falling again, with Brent crude down by 0.8% at $66.08 a barrel, reversing after a 1% gain yesterday as developing Ukraine talks increase the chances of an end to Russian crude sanctions, said Victoria Scholar, head of investment at interactive investor.

She added:

BHP Group reported annual profit of $10.16 billion down 26% year-on-year, hitting a five year low and falling short of analysts’ expectations on the back of weak iron ore prices which fell nearly 20% over the year. However the dividend came in a bit higher than anticipated, helping to support shares.

US-brokered peace negotiations to try to end the Russia-Ukraine war continue to dominate. It looks like talks are making progress after a constructive meeting between Trump and Zelensky which the President of Ukraine described as the ‘best’ so far. However so far, no peace deal or ceasefire has been agreed.

Trump said on Truth Social that he ‘began the arrangements’ for a summit with Zelensky and Putin. Meanwhile Ukraine reportedly offered a $100bn weapons deal to the US in return for security guarantees. European leaders have also been involved in talks in Washington but they have disagreed with Trump over the need for a ceasefire. However Trump suggested that the US might help with security guarantees for Ukraine.

US futures are pointing to a softer open as markets await a key gathering of central bankers at the Jackson Hole summit. It comes after US indices were broadly flat on Monday.

Share

The report also showed that Lidl is set to overtake Morrisons to become the UK’s fifth biggest supermarket with sales growth ahead of all its major rivals over the summer as shoppers search for ways to offset higher bills.

The German-owned discounter increased sales by 10.7% in the three months to 11 August, according to the latest market share data from analysts at Worldpanel, formerly known as Kantar, more than double the pace of the wider market which rose 4.5%.

That put Lidl within 0.1 percentage points of matching Morrisons’ market share of 8.4% as the Bradford-based chain continued to struggle with sales up just 0.9%.

Morrisons is trying to turn around performance after building up debts in a £7bn takeover by US private equity firm Clayton Dubilier & Rice in 2021.

The UK’s number three chain, Asda also continues to have difficulties with sales down 2.6% despite efforts to turn around performance by chairman Allan Leighton. It is now in danger of being overtaken by discounter Aldi, which is just 1 percentage point behind it on market share with growth of 4.8%.

Both Aldi and Lidl continue to rapidly open stores, putting them on track to enter the top tier of British supermarkets and disrupt the traditional “big four”.

Both Asda and Morrisons’ growth is behind the 5% level of grocery inflation registered in August by Worldpanel suggesting the amount of items they sold has dropped.

ShareGrocery price inflation in Britain eases slightly to 5%, survey shows

Grocery price inflation in Great Britain has eased slightly but remains high, according to a monthly survey.

Annual grocery price inflation slipped to 5% in the four weeks to 10 August, from 5.2% in July, said retail analysts Worldpanel by Numerator, formerly known as Kantar.

Prices are rising fastest for chocolate confectionery, fresh meat and coffee, and are falling fastest in champagne & sparkling wine, dog food and sugar confectionery.

The Bank of England expressed concerns around rising food prices, but still cut interest rates at its meeting on 7 August.

Fraser McKevitt, head of retail and consumer insight at Worldpanel, said:

We’ve seen a marginal drop in grocery price inflation this month, but we’re still well past the point at which price rises really start to bite and consumers are continuing to adapt their behaviour to make ends meet. What people pay for their supermarket shopping often impacts their spending across other parts of the high street too, including their eating and drinking habits out of the home.

Casual and fast service restaurants especially have seen a decline in visitors over the summer, with trips falling by 6% during the three months to mid-July – compared with last year. The outliers in this are coffee shops which have bucked the trend.

Share

Updated at 03.33 EDT

Introduction: SoftBank invests $2bn in Intel; proposed new UK property tax ‘could cut cost of buying expensive homes’

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Japan’s SoftBank has agreed to invest $2bn (£1.5bn) in Intel, the struggling US chip company, while the Trump administration is reportedly considering a 10% stake in the business by converting Chips Act subsidies into equity. That would make Washington Intel’s largest shareholder.

The Japanese technology investor announced its multi-billion dollar deal, amounting to a 2% stake in Intel, on Tuesday, describing Intel as a “trusted leader in innovation”. Intel shares fell by 5% while SoftBank shares were down 4%, retreating from all-time highs.

Masayoshi Son, SoftBank’s chairman and chief executive, said:

Semiconductors are the foundation of every industry. For more than 50 years, Intel has been a trusted leader in innovation. This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.

All eyes were on Washington yesterday, where Donald Trump met with Volodymyr Zelenskyy and seven European leaders to discuss a peace deal in Ukraine. According to Trump, Vladimir Putin wants to do face-to-face talks with the Ukrainian president, although Moscow has not confirmed the meeting. (Trump called Putin during his meeting with the Europeans, but some experts are sceptical.)

Traders are cautious, with most Asian stock markets slightly lower. Japan’s Nikkei fell by 0.4% while Hong Kong’s Hang Seng dropped by 0.3%.

Here’s some reaction to our scoop yesterday that the UK Treasury is considering a new tax on the sale of homes worth more than £500,000 as a step towards a radical overhaul of stamp duty and council tax.

David Fell from Hamptons told the Times:

Who is better off will come down to how closely the government chooses to follow any recommendations. But I think in response to the general principle, the shift would probably cut the cost of buying the most expensive homes, but add to the annual cost of ownership, particularly given the artificially low levels of council tax charged by many places that have the most expensive house prices.

The impact of a change to the system would probably depend on the level at which the rates were set, and the length of time it takes for the higher ownership charges to outweigh existing stamp duty and council tax bills.

The Agenda

Share

Updated at 02.59 EDT