Oil drops back below $100 a barrel again
The Brent crude oil price is dropping this morning, towards the two-week lows hit yesterday.
Brent is down around 3% at $98.30 a barrel, back below the $100 a dollar mark, following Donald Trump’s claim that it’s “very possible” the US and Iran will agree a peace deal.
Saxo’s Strategy Team say:
double quotation markOil fell sharply on Wednesday as markets priced a lower risk of prolonged disruption in the Strait of Hormuz, after the US reportedly sent a one-page proposal through Pakistan aimed at ending the conflict and gradually reopening the waterway. Iran is expected to respond in the coming days, with nuclear talks likely to follow later.
However, it’s not yet clear that Trump has found a way to end the conflict, with his latest proposal dubbed an “American wishlist, not a reality” by the spokesperson for the Iranian parliament’s national security and foreign policy commission…
Updated at 03.56 EDT
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UK petrol prices have hit their highest level in over two weeks, as the recent drop in prices fizzles out.
The RAC reports that the average price of a litre of unleaded has risen by 0.1p today to 157.56p, the highest since 20 April.
That moves petrol back towards its recent peak of 158.31p set on 15 April, and still sharply higher than its pre-Iran war level of 132.83p.
ShareUS job cuts rise as AI drives layoffs
Newsflash: US-based employers announced 83,387 job cuts in April, as firms turn to AI systems.
Outplacement and executive coaching firm Challenger, Gray & Christmas has reported that job cuts rose by 38% month-on-month in April, up from 60,620 job cuts recorded in March.
Challenger, Gray & Christmas’s latest job cuts report also shows that US employers have announced 300,749 job cuts so far this year, down 50% from the 602,493 cuts recorded in January-Aprill
Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas says:
double quotation mark“Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements. They are also often citing AI spend and innovation.
Regardless of whether individual jobs are being replaced by AI, the money for those roles is.”
In April, Artificial Intelligence (AI) led all reasons for job cuts for the second month in a row, with 21,490 announced during the month, 26% of total cuts.
ShareTrain services hit by commmunication problems
Gwyn Topham
Trains in parts of southern England have been severely disrupted after a fault in a radio system.
Services out of London Waterloo have been badly delayed by an issue preventing drivers and signallers communicating, affecting the railway’s Wessex region southwest of London.
It is understood that the fault has now been fixed, but ongoing disruption is expected in places until the end of the day.
Some services have been cancelled or delayed for an hour or more.
The National Rail website has warned passengers that services may be disrupted through the day. The most affected operators are South Western Railway, as well as some CrossCountry, Gatwick Express, Great Western Railway, London Overground, Southern and Thameslink trains.
SWR warned that services across its entire network “may be cancelled, delayed by up to 90 minutes or revised”.
A Network Rail spokesperson said:
double quotation mark“Due to issues with radio communications, train services in the South West and South have been subject to some delays this morning. Staff have worked to resolve the fault, and train services are now returning to normal. We apologise to passengers for the disruption caused to their journeys this morning.”
ShareGas price down a little
European wholesale gas prices have dipped today, as traders assess the prospects of a peace deal between the United States and Iran which could get energy supplies from the Gulf flowing again.
The month-ahead UK gas price has dipped by almost 1% to 106.64p a therm.
That’s down from a peak of 180p in March after the Iran war began, but still above its pre-conflict levels below 80p.
The benchmark Dutch front-month contract at the TTF hub in the Netherlands is down 1% at €43.44 per Megawatt hour.
ShareUK construction slump: what the experts say
Brian Smith, head of cost management at AECOM, the infrastructure consultancy:
double quotation mark“A dip in output is a troubling sign for a period when activity typically starts to pick up. While a hold in interest rates will keep pressure on developers and buyers, greater stability in borrowing costs should provide a more predictable backdrop for investment decisions.
“Geopolitical tensions continue to threaten rising inflation, further sustaining an unwanted period of uncertainty for developer and contractor confidence.
Paul Atkinson, restructuring advisory partner at business advisery firm FRP:
double quotation mark “There is mounting pressure on many parts of the sector, particularly housebuilding, where demand remains sensitive to borrowing costs.
“There are still pockets of resilience. Many contractors are continuing to adapt their approach, whether by strengthening supply chains, improving cash management or focusing on more secure pipelines.
Huda As’ad, Accenture’s Capital Projects and Infrastructure lead in the UK:
double quotation mark“The steep decline in output this month is a sharp reminder that the sector is still struggling to build sustained momentum. Persistent cost pressures, supply chain disruption and project delays are continuing to stall progress and dent confidence.”
ShareUK builders hit by surge in costs as output tumbles
Newsflash: Output across the UK’s construction output tumbled last month, as the Middle East war hit confidence and drove up prices.
Data provider S&P Global has reported there was a “sharp fall” in business activity across construction last month, with input cost inflation surging and supply chains hit by the conflict.
Its UK Construction Purchasing Managers’ Index has dropped to 39.7 in April, down from 45.6 in March, showing a sharper contraction (50 points = stagnation).
Civil engineering activity registered the steepest decline, followed by house building.
Construction companies reported subdued demand conditions and a lack of new work, with some noting that “elevated business uncertainty due to the Middle East conflict had led to longer sales conversion times and fewer tender opportunities”.
As a result, builders shed jobs at the fastest rate in four months.
Cost inflation jumped at the fastest rates since June 2022, while building firms also reported international shipping delays and difficulties importing materials from the Gulf region.
Tim Moore, economics director at S&P Global Market Intelligence, says:
double quotation mark“A rapid acceleration of input cost inflation was seen across the UK construction sector in April. Aside from the post-pandemic surge in input prices from early-2021 to mid-2022, the latest rise in purchasing costs was the steepest in three decades of data collection.
Around two-thirds of the survey panel reported higher cost burdens in April, which was overwhelmingly linked to fuel surcharges and subsequent rises in raw material prices. Adding to supply chain challenges, the latest data also indicated longer wait times for the delivery of construction items due to international shipping delays.
April data again signalled subdued underlying demand conditions, despite construction companies reporting pockets of growth in areas such as energy infrastructure work. A lack of new orders to replace completed projects contributed to the sharpest decline in business activity for five months.
Expectations for construction activity over the next 12 months remained positive overall during April, but confidence levels were the lowest since last November. Survey respondents cited a growing list of factors weighing on construction sector optimism, including fragile investment sentiment and elevated borrowing costs, alongside continued uncertainty about the impact of the Middle East conflict on prices, supply chains and broader economic prospects.”
ShareAutotrader shares jump as activist fund Palliser ‘builds stake’
Back in the City, shares in car marketplace Autotrader have jumped after reports that an activist investor began accumulating a stake.
Sky News are reporting that Palliser Capital has begun building a stake in Autotrader Group and pushing for it to set out plans to return up to £700m to shareholders.
Sky’s Mark Kleinman says:
double quotation markSources said that Palliser executives had held constructive discussions with Autotrader’s chief executive, Nathan Coe, and other board members in recent weeks, and that the fund manager had expressed support for the company’s strategy.
One insider said Palliser had been pushing for Autotrader to set out plans to return about £700m to shareholders through a tender offer, share buybacks and dividend payments at its full-year results later this month.
Autotrader are the top riser on the FTSE 100 share index now, up 5.5%.
ShareNorway raises interest rates as Middle East war threatens economic outlook
Newsflash: Norway’s central bank has raised interest rates, to combat the inflationary dangers of the Iran war.
The Norges Bank’s Monetary Policy and Financial Stability Committee has just announced it is lifting its policy rate from 4% to 4.25%.
Norges Bank said inflation was already “unexpectedly high”, and pointed out that increase in oil and gas prices due to the war in the Middle East could lead to faster price rises.
Governor Ida Wolden Bache says:
double quotation mark“The Committee judged it appropriate to raise the policy rate at this meeting. Inflation is too high and has run above target for several years.
She added:
double quotation mark“The policy rate forecast presented in March implied the potential need for further tightening of monetary policy later this year. The monetary policy outlook does not appear to have changed materially since March, but the war in the Middle East is still causing substantial uncertainty about the economic outlook.”
ShareSweden’s Riksbank leaves interest rates on hold
Sweden’s central bank has left its key interest rate on hold today, while it assesses the economic damage from the Iran war.
The Riksbank held its benchmark rate at 1.75% today, as expected.
It says:
double quotation markThe risk that the war in the Middle East will lead to higher inflation has increased somewhat. However, inflation is currently below the target and the recent outcomes have been clearly lower than the Riksbank’s forecast in March.
In addition, economic activity is weak. This means that there is scope to wait until there is a clearer picture of the effects of the war and the supply shocks it entails.
ShareEuropean markets higher, but UK lags
European markets are higher in early trading, although London is lagging behind.
Germany’s DAX share index has gained 0.4% in early trading, while France’s CAC 40 is 0.7% higher, lifting the pan-European Stoxx 600 index by 0.2%.
However, the UK’s FTSE 100 index is down 58 points, or 0.55%, with energy companies among the fallers.
Jim Reid of Deutsche Bank told clients this morning:
double quotation markThe main driver of the moves over the last 24 hours was that Axios report that the US and Iran were close to agreeing a one-page memo that would end the war and set a framework for more detailed nuclear negotiations.
Its provision would reportedly include a moratorium on nuclear enrichment for Iran, whilst the US would lift its sanctions and release billions in frozen Iranian funds in return, as well as both sides lifting restrictions around the Strait of Hormuz. And whilst the report left plenty of questions, a more positive tone continued during the day with Trump saying he thought the war “had a very good chance of ending” by next week and telling Fox News that he was “cautiously optimistic” about the proposal. He didn’t look to dispute the Axios report which was notable.
Meanwhile, Iran’s ISNA said that Iran was looking at the US proposal, with Bloomberg reporting that Iran is expected to send a response via Pakistan in the next two days.