Stocks on Wall Street fell on Thursday as the US economy grew at a slower pace than expected.
US gross domestic product (GDP) increased at an annualised rate of 1.3% in the first quarter of 2024, below an initial estimate of 1.6%, according to official figures.
Personal spending, which is the economy’s main driver of growth, rose 2%, compared to the previous estimate of 2.5%. Meanwhile, the Federal Reserve's preferred metric of inflation showed a 3.3% increase in prices in the first quarter, slightly down from previous projections.
The FTSE 100 (^FTSE) and European stocks retreated from their losing streak on Thursday, making gains in the afternoon, despite ongoing inflation fears.
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Traders are concerned that global interest rates will stay higher for longer as the yields on government bonds push higher. On Tuesday, inflation in Germany came in higher than expected.
London’s benchmark index gained 0.6% on the day, breaking a previous run of six days of losses
Germany's DAX (^GDAXI) rose 0.1%, while the CAC (^FCHI) in Paris headed 0.5% into the green
The pan-European STOXX 600 (^STOXX) was up 0.6%
Wall Street slipped as US jobless claims also inched up — there were 219,000 fresh initial claims last week, an increase of 3,000
The pound was 0.2% higher against the dollar (GBPUSD=X) at 1.2730
Best UK mortgage deals of the week
Number of UK homes up for sale hits 8-year high
“Hotter and stickier than expected global inflation appears to be taking the air out of asset markets," Mizuho Bank said.
"In other words, 'Goldilocks' is coming undone. And worries about adverse demand impact from higher rates is seeping through.”
Read more: Trending tickers: Salesforce, Dr Martens, Aramco and Disney
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Well that's all we have time for today — thanks for following along as always. Be sure to join us again tomorrow when we'll be back for more news of what's moving markets and happening across the global economy.
Until then... have a good evening all!
LaToya Harding
Queen could sell catalogue to Sony for $1bn
Sony Music is reportedly in talks to buy the music catalogue of rock band Queen.
According to Bloomberg, the company is working with another investor, which could potentially total $1bn (£790m).
The deal would cover Queen's songs and all related intellectual property - including the rights to logos, music videos, merchandise, publishing and other business opportunities.
Discussions over the sale have been taking place since last year.
It comes as Sony also acquired a 50% interest in Michael Jackson’s music earlier this year from the late singer’s estate. This was at a cost of at least $600m (£472m).
LaToya Harding
Red Bull in sponsorship deal with Leeds United
Red Bull has snapped up a minority stake in Leeds United, set to become the club’s main shirt sponsor next season.
The energy drinks brand already has deals with football clubs RB Leipzig, Red Bull Salzburg and New York Red Bulls.
Leeds will spend a second consecutive season in the Championship after losing to Southampton in last weekend’s play-off final at Wembley.
Oliver Mintzlaff, Red Bull’s head of corporate projects and investments, said:
“The ambition to bring Leeds United back to the Premier League and establish themselves in the best football league in the world fits very well with Red Bull.”
LaToya Harding
US jobless claims rise
The number of Americans filing new claims for unemployment benefits rose slightly, but still remains on historically low terms.
There were 219,000 fresh initial claims for jobless support last week, an increase of 3,000.
The initial claims data is a proxy for the number of workers laid off by US companies and has been low in recent years as firms have held onto labour.
US new weekly unemployment claims last week were 219,000. That was +3,000 WoW. pic.twitter.com/a3yko0DCVF
— RonH (@Ronh999) May 30, 2024
LaToya Harding
US economy grows at slower pace than expected
The US economy grew at a slower pace than expected, new data has shown. Gross domestic product (GDP) increased at an annualized rate of 1.3% in the first quarter of 2024, below an initial estimate of 1.6%, according to official figures
Personal spending, which is the economy’s main driver of growth, rose 2%, compared to the previous estimate of 2.5%.
Meanwhile, the Federal Reserve's preferred metric of inflation showed a 3.3% increase in prices in the first quarter, slightly down from previous projections.
⚠️Breaking! US GDP Growth Revised Lower: The US economy expanded at an annualized rate of 1.3% in Q1 2024, down from the initial estimate of 1.6%, and significantly lower than the 3.4% growth recorded in Q4 2023. #MM pic.twitter.com/0DTVOvVBT2
— MacroMicro (@MacroMicroMe) May 30, 2024
LaToya Harding
Best UK mortgage deals of the week
Mortgage rates were virtually unchanged this week, but future homeowners are still struggling to find a decent price and more are taking loans well into retirement.
The average rate on a two-year fixed deal this week stood at 5.89%, the same as before, while rates for a five-year deal came in at 5.35%, slightly lower than last week's 5.39%, according to figures from Uswitch.
This follows the Bank of England's (BoE) decision to leave UK interest rates on hold at their 16-year high of 5.25% for a sixth consecutive time.
With fewer BoE interest-rate cuts now expected in 2024, lenders appear split on the direction of travel for mortgage rates, with increases and cuts across the big six lenders.
Read more here
LaToya Harding
Ether price rallies on ETF speculation as Solana surges
Ether (ETH-USD), the native cryptocurrency of the Ethereum blockchain, rallied in the past fortnight, outperforming bitcoin. This comes as the US Securities and Exchange Commission (SEC) approves eight spot ether exchange-traded funds (ETFs).
On 23 May, the SEC approved spot ether ETF applications from fund managers including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton.
In the two weeks leading up to the approval and afterwards, the value of ether rose by over 28%, reaching $3,748 (£2,948) as of the time of writing. In the same period, other major crypto tokens, bitcoin (BTC-USD) and solana (SOL-USD) increased by 4.2% and 6.25% respectively, according to Coingecko data.
The anticipation surrounding the impact of these ETFs led to a surge in investor interest. Derivatives market indicators show that many traders expect ether to increase in value once these ETFs begin trading on major exchanges, such as the Chicago Board Options Exchange (CBOE), Nasdaq (^IXIC) and the New York Stock Exchange (^NYA) in the coming weeks or months.
Read the full article here
LaToya Harding
Nightcap steps away from Revolution Bars takeover
Nightcap has walked away from a potential rescue deal for struggling Revolution Bars.
The company, which runs 46 UK bars including Dirty Martini chains, said it was “disappointed” its merger proposal had been rejected by its competitor earlier this week.
Last month Revolution launched a sale process and major restructuring plans in a bid to stay afloat. The plans included a £12.5m fundraising and the closure of 18 venues.
However, on Tuesday it rebuffed the proposed offer from Nightcap, warning it was “incapable of being delivered”.
LaToya Harding
Wall Street set to open lower ahead of GDP data
Wall Street is set to open in the red later today as investors eye US GDP data.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said:
"All eyes are on the US GDP update due today, and the Fed's favourite gauge of inflation - the core PCE number - due tomorrow. The US GDP is expected to have slowed significantly in the Q1, with - however - a significant rise in price pressures (that's already priced in), while the core PCE print for April could hint at some easing in the latest pickup in inflation.
"The best outcome would be a reasonably soft growth coupled with easing price pressures, but we could realistically get a slowing growth coupled with an insufficient easing in price pressures, instead. To the Fed, the inflation number will matter more than the growth update as regardless of the deteriorating economic growth, the progress in inflation will determine whether the Fed could remain on path to cut rates this year.
"Therefore, it will be hard to interpret today's GDP data before seeing tomorrow's PCE print. And even then, Citigroup thinks that this week's data will trigger limited price action; the upcoming US jobs and CPI updates in the next weeks will matter more."
LaToya Harding
Almost half of people dipping into savings
Almost half of Brits are dipping into their savings to cover everyday expenses as the squeeze on household finances continues to bite.
People are having to dip into their savings around three times a month on average, according to a new survey by Compare the Market.
Some 27% said they are unable to save anything at all, while a quarter can only save between £100 and £250 per month.
Andy Hanco*ck, chief growth officer at Compare the Market, said:
It is encouraging that people are seemingly confident about their ability to manage and pay their everyday bills in the summer months ahead, signalling a positive outlook on the consistency and reliability of their financial situations.
However, our research shows that many people are still struggling to save on a monthly basis, and a significant number are having to rely on those savings each month to pay for everyday bills or lean on credit cards for additional costs such as holidays.
LaToya Harding
Eurozone unemployment rate falls to record low
Unemployment in the eurozone has fallen to a new record low, statistics body Eurostat has said.
The seasonally-adjusted unemployment rate across the euro area fell to 6.4% in April, down from 6.5% in March. This was the lowest since the single currency was created.
In the wider EU, the jobless rate remained at 6%.
Eurostat estimated that 13.149 million persons in the EU, of whom 10.998 million in the euro area, were unemployed in April, adding:
Compared with March 2024, unemployment decreased by 103 thousand in the EU and by 100 thousand in the euro area. Compared with April 2023, unemployment increased by 95 thousand in the EU and decreased by 101 thousand in the euro area.
Euro area #unemployment at 6.4% in April 2024, EU at 6.0% https://t.co/1znbPeuR5z pic.twitter.com/kBD983Ycni
— EU_Eurostat (@EU_Eurostat) May 30, 2024
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Rand weakens amid South Africa election results
South Africa’s rand has fallen more than 1% against the US dollar today, as early results from the South African general election come in.
Early results suggest the governing African National Congress (ANC) party could lose its majority, although it is still expected to remain as the largest party.
Reuters said:
"With results in from 10% of polling stations, the ANC’s share of the vote in Wednesday’s election stood at 42.3%, with the pro-business Democratic Alliance (DA) on 26.3% and the Marxist Economic Freedom Fighters (EFF) on 8.1%, data from the electoral commission showed.
"If the final results were to resemble the early picture, the ANC would be forced to make a deal with one or more other parties to govern - a situation that could lead to unprecedented political volatility in the coming weeks or months.
#SouthAFrica: the rand slips as early results show the ANC's vote dropping a lot.
From ballots from 10% of voting districts counted, the ANC's share is 42.3%. Big drops in Gauteng, KZN and W Cape.
NB: it is still very early.https://t.co/luqitIcZ5v pic.twitter.com/lyGLL6lFK3
— Paul Wallace (@PaulWallace123) May 30, 2024
Can market gains continue over the summer?
Global stock market gains are likely to continue over the summer months, an analyst has said.
This is despite short-term concerns over interest rates, and it also historically being a slow season for equities.
Nigel Green of deVere Group said:
"One of the primary drivers of the current bullish market sentiment is the expectation of sustained economic growth, despite this meaning that we expect global monetary policy to remain ‘higher-for-longer’ for the rest of the year.
“Institutions like the International Monetary Fund (IMF) and Bloomberg have recently revised their global economic forecasts upwards, further fuelling investor confidence. This positive outlook is underpinned by strong economic indicators, particularly in the US.
“Key metrics such as consumer spending, job creation, and corporate earnings continue to show robust performance. This solid economic foundation fosters a sense of stability and resilience in the world's largest economy, reassuring investors of its continued growth trajectory.”
LaToya Harding
Auto Trader top FTSE gainer
Auto Trader (AUTO.L) soared 13% on Thursday to the top of the FTSE 100 after beating full-year profit estimates.
The online car marketplace cashed in on “robust” demand for used cars with an 18% increase in pre-tax profits to £345m for the year to the end of March as two-thirds of UK car buyers used its platform.
It added that losses of £8.8m from its car rental business Autorama are expected to reduce, despite the leasing market remaining tight.
Nathan Coe, chief executive of Auto Trader, said:
This has been another year of strong financial, operational and strategic progress for Auto Trader.
We are confident in our prospects for the year ahead and, in the longer term, we see significant opportunities to continue growing our marketplace and to move more of the car buying process online, on Auto Trader.
LaToya Harding
De La Rue in takeover talks
De La Rue is in takeover talks with potential buyers of each of its core divisions, it has revealed.
The banknote printing company, which makes notes for the Bank of England and other central banks around the globe, said it had spoken to a “number of parties who have made proposals” related to either its currency or authentication operations.
Clive Whiley, chairman of De La Rue, said:
"Since my appointment a year ago, the board has considered a broad range of possible strategic alternatives including transactions with multiple parties which may involve a combination with, or the sale of, the group’s divisions.
"The board confirms that the discussions with the relevant parties are advancing, and we expect to update further at the time of the full year results in July."
LaToya Harding
Average tax refund up 6.1% annually
The latest data release by tax specialists, RIFT Tax Refunds, has revealed that the average taxpayer could be owed as much as £1,562 by HMRC, with this total having increased by 6.6% over the last year alone.
In 2023, the average tax refund owed by HMRC came in at £1,562, a 6.6% increase versus the previous year.
However, what many may not realise is that it is possible to claim a tax refund for up to the last four years, with the average four year refund currently sitting at just over £3,000 according to RIFT.
With the 2023/24 financial year having now come to an end as of 5th April this year, it means that anyone who hasn’t claimed a tax refund for the 2019/20 financial year is now unable to do so. But they are still well within their rights to claim for the last four tax years before next year’s April deadline.
While anyone could be owed a tax refund, some of the most common sectors include the armed forces, those working either offshore or in construction, as well as those working within the security sector.
In fact, in 2023 it was construction workers who were owed the most by HMRC, with the average one year tax refund claim coming in at £1,125, having increased by 3.7% year on year.
Those working in the security sector saw the largest year on year increase, with the average one year claim climbing by 3.9% to an average of £846, while the average one year claim for the armed forces also exceeded £800.
While offshore workers received the lowest amount for a one year claim, the average worker still secured a tax refund to the tune of £753 from HMRC in 2023.
LaToya Harding
Salesforce slips on weaker-than-expected revenue
Shares in Salesforce (CRM) plunged by over 16% in pre-market trading after the business software maker reported weaker-than-expected revenue and issued guidance that trailed Wall Street’s expectations.
Salesforce called for adjusted earnings per share in the current quarter of $2.34 to $2.36 on $9.2bn to $9.25bn in revenue. Analysts had expected $2.40 in adjusted earnings per share on $9.37bn in revenue.
Net income jumped to $1.53bn, or $1.56 per share, from $19m, or 20 cents per share a year ago.
The company's first-quarter adjusted earnings per share jumped 44% to $2.44, higher than expectations of $2.38.
Salesforce left its fiscal 2025 revenue forecast unchanged, but cut its operating margin expectations to 19.9% from its prior forecast of around 20.4%.
Chief executive officer Marc Benioff underscored the recent emphasis on profit and the long-term potential of artificial intelligence as positive for the company.
“We’re incredibly well positioned to help companies realise the promise of AI over the next decade,” Benioff said in a statement.
See what other tickers are trending here
LaToya Harding
Brent oil prices dip
Brent oil prices (BZ=F) dipped during early Thursday trading, down 0.1% to 83.52 at the time of writing, primarily driven by fears over future demand.
The US economy remains resilient, with inflation continuing to be a concern.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“Against this backdrop, the Federal Reserve has room to maintain higher rates for longer, a dynamic that bodes poorly for oil demand forecasts and puts downward pressure on prices.”
“Another consequence of this situation is a general fall in risk appetite in the financial markets, which also weighs negatively on the price of oil.”
LaToya Harding
UK car output down for second month in a row
UK car production slipped 7% year-on-year in April, falling for a second consecutive month.
The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that manufacturers wound down existing models and more plants transitioned to electric vehicle (EV) production.
A total of 61,820 cars rolled off production lines last month, compared with 66,527 units in the same period last year. March production volumes were down by 27.1%.
It came as electrified vehicles, which included fully electric models, plug-in hybrids and full hybrids, represented 40.5%, up from 37.7%, of all cars produced.
Manufacturers produced a combined 25,031 units of EVs, a modest 0.1% rise on the previous year, the industry body said.
SMMT CEO Mike Hawes said:
"With a general election in a matter of weeks, the next government must ensure the conditions are right not just for the competitiveness of UK manufacturing, but for the investment required to transition the sector to a net zero future."
LaToya Harding
Dr Martens shares rise on cost-savings plan
Dr Martens (DOC.L) shares kicked 8% higher on Thursday after it laid out cost-saving plans of between £20-25m.
The iconic boot brand saw profits slide 43% last year amid struggling demand in its US wholesale business. Profit came to £97.2m as revenue declined by 12% to £877m.
After a number of recent profit warnings, the company said current trading is in line with expectations.
CEO Kenny Wilson said:
“Our FY24 results were as expected and reflect continued weak USA consumer demand. This particularly impacted our USA wholesale business and offset our Group DTC performance, where pairs grew by 7%. We have achieved robust performances in EMEA and APAC, and our supply chain strategy continues to deliver good savings.
“We are clear that we need to drive demand in the USA to return to growth in FY26 onwards and are executing a detailed plan to achieve this, with refocused and increased USA marketing investment in the year ahead.
"I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead.”
Watch: How does inflation affect interest rates?
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