UK growth slows, but interest rate cut unlikely in December Vaccine manufacturer shares hit by RFK Jr nomination | business

Despite summer economic slowdown, interest rate cut unlikely in December

High interest rates also weighed on the UK economy over the summer.

The Bank of England kept interest rates at a 16-year high of 5.25% until August, before cutting them to 5% (they were cut to 4.75% last week).

ICAEW economics director Suren Thiru suspects the bank will refuse to cut interest rates again next month, despite very weak growth in July-September.

Thiru says:

These figures suggest the economy was overheating even before the Budget, with weak business and consumer confidence weakening output in the third quarter, particularly in September.

After a tremendous performance in the first half of the year, the third quarter results paint a more realistic picture of the UK's underlying growth trajectory given long-standing challenges to low productivity and ongoing supply-side constraints.

Economic growth in the fourth quarter of this year is expected to be similarly moderate, as looming tax hikes and growing global uncertainty are likely to trigger new restrictions on spending and investment even as interest rates drop.

Despite these pessimistic figures, policy easing in December appears unlikely, as interest rate makers are sufficiently concerned about budget-driven inflation risks and growing global headwinds to likely refuse to authorize successive rate cuts.

The city agrees. According to financial markets this morning, there is only a 17.5% chance of a UK rate cut in December and an 82.5% chance that the BoE will keep interest rates on hold.

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The British economy came to a near standstill in the third quarter as uncertainty surrounding Labour's first budget and higher interest rates weighed on business and consumer spending.

The economy is said to have grown by 0.1% in the third quarter of this year, up from 0.5% in the second quarter, as Prime Minister Rachel Reeves attempts to lift the UK to the top of the G7 growth league. These are figures released by the Office for National Statistics (ONS).

The UK ranked 6th among G7 countries for growth in the third quarter. This is higher than Italy, but grew by 0.4%, 0.2%, and 0.7% than France, Germany, and the United States, respectively.

Figures released by the ONS on Friday showed output in the New Labor government's services and manufacturing sectors slowed in the three months to the end of September, suggesting uncertainty surrounding the budget and higher interest rates contributed to the subsequent loss of momentum. spring.

City economists expected quarter-on-quarter growth of 0.2%. Compared to the previous month in September, GDP decreased by 0.1%, falling below the forecast of 0.2%.

However, despite the economic slowdown, financial markets point to only an 18% chance of a further cut in UK interest rates next month.

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And analysis:

Pharmaceutical investors are selling stocks after Donald Trump nominated anti-vaccination activist Robert F. Kennedy Jr. to become Secretary of the U.S. Department of Health and Human Services.

RFK Jr has embraced numerous health-related conspiracy theories and is one of the most persistent and influential vaccine deniers in the country.

Trump's announcement sent stock prices of the world's largest pharmaceutical companies, including Moderna, AstraZeneca and GSK, down on Friday morning.

The European Commission forecasts that the German economy will contract -0.1% this year, casting a shadow over the upcoming general election.

One of the UK's largest property developers has stepped up its shift to a return to office working, saying occupancy in its central London offices has risen to a record high and portfolio values ​​have returned to growth.

Typhoo Tea is set to call in administrators as Britain's oldest tea brand struggles with debts of more than $70 million due to poor sales in the highly competitive drinks market.

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The pound fell to a four-month low against the US dollar today.

Sterling fell half a cent to $1.2616 this morning after weak growth data from the UK and hints from the Federal Reserve that it is in no rush to cut US interest rates.

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Austrian energy company OMV said Russia's Gazprom will stop supplying natural gas to Austria on November 16 (i.e. tomorrow).

The Austrian energy company made the announcement after pledging to enforce a ₹230 million ($242 million) arbitration award against the Russian company.

OMV was awarded ₹230 million ($243 million) under International Chamber of Commerce rules after a conflict with Gazprom over supply contracts. The plan is to recover this amount from Gazprom by withholding monthly gas bills.

Gasoline prices rose yesterday amid fears that Gazprom may turn off the tap in response.

Today, a day earlier, UK petrol prices were 1.3% higher.

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Updated on 10.15 EST

GM lays off 1,000 employees due to reorganization and cost cutting

General Motors today laid off about 1,000 employees as it seeks to cut costs and realign priorities in response to changing market conditions, according to people familiar with the decision.

Here are the details from CNBC:

For those affected, the redundancies announced on Friday morning are across the business. Some were due to poor performance and others were part of a review by the automaker to realign its priorities, according to sources who agreed to talk about the decisions on condition of anonymity.

The majority of the affected employees were in suburban Detroit at the automaker's global technology center in Warren, Michigan, officials said. The layoffs also included a small number of part-time employees.

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The S&P 500 healthcare sector fell 1.3% in early trading in New York, hitting its lowest level since May, according to Reuters.

Share Declining vaccine manufacturers, Wall Street falls

Wall Street actually opened with a deficit.

The Dow Jones Industrial Average fell 143 points (0.33%) to 43,607 points.

The S&P 500 index fell 0.7%, and the tech-heavy Nasdaq index fell 1.3%.

Vaccine makers also fell, with Pfizer and Moderna both falling more than 4.5%, adding to yesterday's losses, following Robert F Kennedy Jr's nomination as US Secretary of Health and Human Services.

As previously noted, US central bank Governor Jerome Powell disappointed investors by saying the Fed was in no rush to cut interest rates.

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The Boeing strike and shutdowns due to hurricanes have reduced factory output across the United States.

The U.S. Federal Reserve announced that industrial production (IP) fell 0.3% in October, following a 0.5% decline in September.

It adds:

Strikes at major civil aircraft producers reduced total IP growth by about 0.3 percentage points in September and 0.2 percentage points in October. IP growth decreased 0.1 percentage point in October due to the continued impact of Hurricane Milton and Hurricane Helen.

Aluminum prices soar after China cancels aluminum ingot export tax refunds. Photo: Ilya Naymushin/Reuters

There is drama in the commodity markets today.

Aluminum prices surged more than 8% at one point today after China's Finance Ministry announced it would reduce or cancel export tax rebates on a wide range of goods and other products.

The move sparked concerns that overseas shipments from China could be restricted.

Effective December 1, the export tax refund rate for some refined petroleum products, solar power, batteries and certain non-metallic mineral products will be reduced from 13% to 9%.

China will also cancel rebates on aluminum and copper products and chemically modified animal, plant or microbial oils and fats.

The three-month aluminum contract on the London Metal Exchange jumped 8.5% to $2,730 per metric ton, near a five-month high, according to Reuters.

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Latest: U.S. retail sales rose more than expected last month.

Sales at U.S. retailers and foodservice outlets rose 0.4% in October compared to the previous month, beating expectations for a 0.3% increase and up 2.8% year-over-year.

This month, sales at automobile and parts stores increased by 1.6%, and sales at electronics and home appliance stores also increased by 2.3%.

However, clothing sales this month decreased by 0.2%, while grocery store sales increased by only 0.1%.

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Analysts at brokerage Jefferies noted that RFK Jr told NBC in an interview that he would not remove the available vaccine.

But they added that the overall outlook for biotech development ventures appears to have been dimmed by his nomination.

The point is about sentiment, stance and perspective. This affects what biotech investors think of the FDA. [the U.S. Food and Drug Administration regulator] Other HHS issues will evolve (i.e., not promoting drugs and biotechnology).

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The pound fell against the euro today as traders digested worse-than-expected UK growth figures.

Sterling fell 0.3% to 1.199.

Joseph Dahrieh, senior official at trading platform Tickmill, says the pound continues to be under downward pressure.

Investor sentiment was dampened by rising concerns and speculation surrounding the Bank of England's future interest rate decisions, as market participants questioned whether the BoE would delay its rate-cut cycle.

The pound's trajectory will largely depend on the effectiveness of Britain's new expansionary budget. While this aims to stimulate growth, it also risks reigniting inflation, adding further uncertainty to the UK's monetary policy outlook.

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The UK hotel industry is hoping this summer's economic slowdown will force the government to reconsider plans to increase employers' national insurance premiums.

Kate Nicholls, CEO of UKHospitality, said:

These weak growth figures clearly show that the UK economy remains very weak. How the government approaches the economy and consumer confidence, both in policy and language, will be critical going forward.

The policy, which will impose a $3.4 billion charge on the hospitality industry in April, is already having a negative impact on investment and employment decisions and is certain to dampen economic growth once again.

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