Oil prices jumped and stocks tumbled on Tuesday after Iran fired an estimated 180 missiles at Israel in retaliation for the ground invasion of southern Lebanon.
Brent crude jumped by as much as 4pc to above $74 a barrel following a warning from White House officials that a strike was imminent.
It rose further, topping $75 a barrel, after Tehran launched a volley of missiles at Israel shortly before 6pm London time.
Elsewhere, global stocks tumbled and the price of gold spiked on concerns about wider escalation in the region.
The pan-European Stoxx 600 index closed down 0.4pc, while the S&P 500 dropped 0.9pc on Wall Street.
Gold jumped by as much as 1.3pc to $2,673 per troy ounce, near its record high. The Israeli Shekel fell 1.1pc against the dollar.
The FTSE 100 was one of the few global stock indexes to register gains, buoyed by defence and oil stocks. BAE Systems, BP and Shell were all among the day’s biggest gainers.
Analysts said the moves were driven by concerns about escalation in the Middle East.
David Oxley at Capital Economics said: “Much remains uncertain. A significant escalation by Iran risks bringing the US into the war, which Tehran will presumably seek to avoid.
“Assuming this is avoided, the impact on oil prices will remain the key channel of transmission to the global economy.
“Iran accounts for about 4pc of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies are disrupted.”
Earlier in the day, oil prices had slid below $70 a barrel as traders reacted to Libya’s appointment of a new central bank governor, a key step to resolving a dispute between the country’s rival administrations that should allow oil output to resume.
The initial dip came despite Israel’s decision to launch a ground invasion of Lebanon through what the IDF called “limited, targeted” raids overnight.
Goldman Sachs initially said traders believed there was a “limited” risk of oil prices being pushed higher by the conflict, as markets expected higher supplies from both Libya and the Opec cartel. The Wall Street bank warned the price of crude could even fall as low as $60 a barrel by the end of next year.
However, a warning from Washington that Iran was preparing to launch an “imminent” ballistic missile attack on Israel sent immediate shockwaves through the market and sent the price of spiking.
Ashley Kelty, a senior oil and gas analyst at investment banks Panmure Liberum, said: “Biden has turned a blind eye to Iran increasing oil output by 800,000 barrels a day - a clear breach of sanctions - as he wants to keep the price at the petrol pumps low. It’s a key trigger for US voters.
“If Iran responds then the US will have to act and enforce these and possibly enforce further sanctions.
“Prior responses have been muted as there hasn’t been any disruption impact on supply. If this changes then things could rise very quickly.”
Mr Kelty was speaking before Tehran launched a volley of missiles at Israel. The strike raised concerns about a spiralling conflict in the Middle East, which could disrupt the supply of fuel from the region.
Yemen’s Iranian-backed Houthi rebels continue to target ships in the region, including oil tankers.
Two vessels sustained damage on Tuesday after being hit with missiles and a sea drone off Yemen’s Red Sea port of Hodeidah, maritime security agencies and sources monitoring the area said.
Yemen’s Iran-aligned Houthi militants later claimed responsibility for the attack on one of the ships, the Cordelia Moon, saying that it was struck with eight ballistic and winged missiles, a drone and an uncrewed surface boat.
The Yemeni Armed Forces claimed it was “triumphing for the oppression against the Palestinian and Lebanese peoples... and in retaliation to the American-British aggression against our country”.
In Britain, Edmund King, AA president, urged the Government not to raise fuel duty at the upcoming Budget, arguing there was “too much geo-political global uncertainty”.
Sir Keir Starmer opened the door to a rise in fuel duty over summer, a move that would reverse a 14-year freeze under the Conservatives.
Mr King said: “We are stressing to Government that any hike in fuel duty at the October 30th Budget could backfire if oil begins to increase and then drivers and industry would face a double hit. Increased fuel duty could be a catalyst for fuelling inflation which is the last thing industry, and consumers, need at the moment.”
Read the latest updates below.
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The Markets blog will return in the morning but you can keep up-to-date with breaking news around Iran’s missile attack on our dedicated live blog.
Shares on the Tel Aviv Stock Exchange slumped today ahead of Iran’s missile attack.
The TA-35 index of largest 35 list companies fell 1.4pc, while the broader TA-125 fell 1.2pc.
Currently, a gauge of global stock prices, the MSCI World index, is down 1.1pc.
Take-offs and landings at Ben Gurion International Airport near Tel Aviv have stopped, according to Israeli Army Radio, amid a missile attack by Iran.
The “key factor” determining the price of crude oil is how effective the Israelis are at repelling the missing attack, an energy trader has claimed.
Rebecca Babin, senior energy trader at CIBC Private Wealth, told Bloomberg:
The key factor for crude will be whether Israeli defense systems are able to shield against the attack and what subsequent actions Israel might take.
An Iranian missile attack on Israel was mostly priced into share prices this afternoon. But since missiles were launched, US stock indexes have edged downwards.
The S&P 500 is down 1.2pc, the Dow is down 0.6pc and the Nasdaq is down 2pc.
Iran fired a salvo of ballistic missiles at Israel on Tuesday in retaliation for Israel’s campaign against Tehran’s Hezbollah allies in Lebanon.
Alarms sounded across Israel and explosions could be heard in Jerusalem and the Jordan River valley after Israelis piled into bomb shelters. Reporters on state television lay flat on the ground during live broadcasts.
Journalists saw missiles intercepted in the airspace of neighbouring Jordan. Israeli media reports said as many as 100 missiles had been launched.
Earlier, the military had announced that any ballistic missile strike from Iran was expected to be widespread and told the public to shelter in safe rooms in the event of an attack.
The cost of a barrel of oil has edged up further after Iran launched a reported 100 missiles at Israel.
Brent crude, the global benchmark, is currently up 4.25pc at $74.80.
European shares closed lower, as investors moved out of riskier assets amid escalating fears that Iran was planning an attack on Israel.
The pan-European Stoxx 600, which includes some of Britain’s largest companies, closed 0.4pc lower, reversing course after rising as much as 0.5pc during the day.
A gauge of Stoxx volatility spiked to a more than three week high. Most Stoxx sectors fell, with euro zone banks leading losses, down 2.8pc.
It came as the FTSE 100 rose, closing up 0.5pc.
The FTSE was lifted by strong days of trading for defence giant BAE Systems, and for BP and Shell, with the energy groups helped by a rise in oil prices.
Investors are moving their money into “quality” stocks such as utilities and healthcare, along with gold and silver, a US investment analyst has said.
Sam Stovall, chief investment strategy at CFRA Research in Philadelphia, said:
It sort of reminds me of October 1956 ... Gamal Nasser seized control of the Suez Canal for Egypt, prompting a response by Britain and France, and at almost the same time, Soviet tanks went rolling into Budapest to quell Hungary’s brief experiment with some kind of revived democracy.
But for now, people may be selling but they’re not panicking ... we are seeing a flight to quality, like utilities and healthcare and consumer staples, all of which are either higher or down less than the market.
Gold and silver – classic stores of value in times of crisis – are also moving higher. But we’re not seeing tremendous changes higher or lower. I think people are adjusting their positions, out of a sense that they need to be prepared for whatever happens next.
The fact that the US is already commenting on an imminent retaliatory attack by Iran suggests, if it happens, it will be more in line with the well telegraphed and calibrated attack in April 2024, rather than the start of something more devastating or inflammatory.
But the market, which in the example of oil is not pricing in much disruption from a region-wide conflict, is highly sensitive to any scenario worse than this.
The market is “incredibly high sensitivity” to news about a possible Iran attack, a City broker has said.
Michael Brown, senior research strategy at Pepperstone, said:
I think the initial market reaction to the news has been pretty much exactly as one would have expected, with a knee-jerk risk-off vibe sweeping across the board, as the dollar vaulted to day-highs, along with gold and long-end Treasuries ...
The key question now is the degree to which these initial moves are consolidated, or pare back, which hinges almost entirely on whether an Iranian attack is indeed forthcoming.
Markets, hence, are likely to display an incredibly high sensitivity to incoming geopolitical news flow in the coming hours.
Though, if recent reports are to be believed and the aforementioned attack is similar in scale to that delivered in April, this could be greeted with a sigh of relief, and not be interpreted as a significant sign of escalation beyond what has already been seen.
The FTSE 100 was the only major market to break the trend affecting stock prices this afternoon, rising on the back of energy and defence companies.
The blue-chip index closed up 0.5pc. The top riser was defence giant BAE Systems, up 2.9pc, followed by oil company BP, which rose 2.4pc.
The biggest faller was British Airways owner IAG, down 5pc, followed by easyJet, down 3.5pc
Meanwhile, the mid-cap FTSE 250 fell 0.5pc.
The top riser was City firm Man Group, up 3.2pc, followed by gold mining company Centamin, up 2.7pc.
The biggest faller was chemicals company Elementis, down 7.9pc, followed by educational computer business Raspberry Pi, down 7.5pc.
Global stocks dropped this afternoon as investors reacted to the escalating Middle East conflict with fears that Iran was planning an attack on Israel.
The MSCI World index fell by 0.8pc.
Worries hit stocks in New York, with the S&P 500 currently down 0.9pc, Dow Jones down by 0.4pc and the Nasdaq down by 1.7pc.
Europe’s Stoxx 600 is down by 0.4pc
A senior White House official said on Tuesday that the United States has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel.
This was after Israel carried out two attacks on Beirut, striking the southern suburbs of the Lebanese capital and the city’s southern entrance, according to two security sources.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, said:
The situation in the Middle East continues to evolve rapidly. With Iran and Lebanon being drawn into the Middle East conflict more directly, reactions today are playing out in higher crude and gold prices.
While rising geopolitical tensions create elevated market uncertainty and anxiety over the near term, investors will likely measure the longer-term impact of growing Middle East conflict through potential impacts on oil supply.
Mr Saglimbene noted that investors were also monitoring a strike at US East Coast and Gulf Coast ports, which is expected to halt about half the country’s ocean shipping.
Brent Crude, the global oil benchmark, has risen 4.1pc to $74.70 a barrel, while the price of gold has risen 1.2pc against the dollar.
Oil prices are likely to stay elected as a result of worries about escalation from Iran, an analyst has a said. But there is a difference between “sabre rattling and direct action”, he said.
Derren Nathan, head of equity research at Hargreaves Lansdown, told The Telegraph:
As the third largest OPEC producer, any suggestion that Iran is likely to be drawn more directly into a conflict is likely to put upwards pressure on prices.
However, sabre rattling and direct action are two very different scenarios.
Back in April, Iran’s unprecedented launch of some 300 missiles and drones was largely thwarted. And recent comments by Iranian leaders have focussed more on getting sanctions removed. But this is a very volatile situation, and whether or not an attack materialises, that uncertainty is likely to keep oil trading above its recent lows, at least for the short term.
The price of a barrel of oil has continued to climb, with the global benchmark, Brent crude, hitting a high of $74.43, a rise of 3.71pc.
West Texas Intermediate, the US benchmark, rose as much as 4.2pc to $71.02 a barrel.
Today’s rises in oil prices are mere “mosquite bites” compared to a full-on Middle Eastern conflict, an investment banker has said.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said:
If a real threat were to occur, we would not see these mosquito bites, which have caused the prices to rise, but in fact, we would see the price flirting near the $100 [a barrel] price mark.
Rising tensions in the Middle East will not prevent central banks from cutting interest rates, despite some upward pressure on oil prices, a leading economist has said.
George Lagarias, chief economist at Forvis Mazars, told The Telegraph:
The situation in the Middle East is certainly heating up, with some repercussions on oil prices.
To spiral out of control, however, it could require the involvement of more Middle Eastern nations, who have chosen, for the time being, to remain out of the fray.
Escalation could pressure oil pruces upward, to be sure, but as long as warfare does not spread significantly, I would not expect the sort of energy price spike that would threaten central banks’ resolve to reduce interest rates this year.
Safe haven currencies the Japanese yen and Swiss franc gained today after reports that Iran is preparing to imminently launch a ballistic missile attack against Israel.
Adam Button, chief currency analyst at ForexLive in Toronto, said:
The market has largely ignored the Middle East conflict in the last month, but a direct Iran-Israel confrontation is always at risk of spiraling.
The Japanese yen strengthened 0.1pc against the US dollar to 143.5. The dollar was roughly flat against the Swiss franc at 0.846, erasing earlier gains.
The dollar index rose 0.4pc to 101.15.
The manufacturing sector in the US contracted in September for the sixth month in a row, according to new figures from the Institute for Supply Management (ISM).
The index came in at 47.2 last month, where a reading above 50 means the sector is expanding and a reading below means it is contracting.
Timothy Fiore of the ISM said:
Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy - which the US Federal Reserve addressed by the time of this report - and election uncertainty.
Naeem Aslam, chief investment officer of Zaye Capital Markets, said:
[The] ISM manufacturing numbers failed to print a number that was better than the expectations: actual 47.2 vs. the forecast of 47.6 while the previous reading was at 47.2 ...
This could potentially signal that the Fed may be more inclined to cut interest rates in order to stimulate the economy.
Additionally, the ongoing trade tensions between the US and China continue to weigh on market sentiment, further adding to the uncertainty in the global economy. As a result, investors may turn to safe-haven assets like gold as a hedge against market volatility.
US job openings rose unexpectedly in August as the American labour market continued to show resilience.
The US Labor Department reported Tuesday that employers posted 8m vacancies in August, up from 7.7m in July. Economists had expected openings to be virtually unchanged.
Redundancies fell in August. But the number of Americans quitting their jobs - a sign of confidence in the labour market - slid in August.
Job openings have come down steadily since peaking at 12.2m in March 2022, but they remain above where they stood before the coronavirus pandemic hit the `American economy in early 2020. When the economy roared back with unexpected strength from Covid-19 lockdowns, companies scrambled to find enough workers to keep up with customer orders.
The overheating economy caused an outburst of inflation, and the Federal Reserve responded by raising its benchmark interest rate 11 times in 2022 and 2023. Inflation has come down - from a peak of 9.1pc in June 2022 to 2.5pc in August.
The price of gold has pushed higher after the US warned about a potentially “imminent” attack on Israel by Iran.
Bullion rose as much as 1.2pc after a White House official said there would be “severe consequences” if Tehran launched an attack.
Gold has risen 29pc so far this year amid increasing geopolitical tensions in the Middle East - and as interest rates fall.
Li Xing Gan, financial markets strategist at Exness, said: “The escalating conflict in the Middle East has prompted investors to seek security in gold, bolstering its appeal amidst broader market uncertainty.
“However, gold prices could be weighed by the rebound of the US dollar. Although it remains near its two-year lows, the currency saw its second consecutive day of gains and could impede gold’s progress to a certain extent.”
At this point, my colleague Alex Singleton is taking over live updates duty, and will make sure you stay informed for the rest of the day.
The Israeli currency has dropped sharply after a White House official warned Iran is preparing to launch an “imminent” ballistic missile attack.
The shekel lost 1.1pc against the dollar while the Tel Aviv stock exchange slumped 1pc.
Oil prices have spiked higher after US officials warned that Iran is preparing to launch missiles against Israel following its invasion of southern Lebanon.
Brent crude oil jumped 1.8pc higher above $73 a barrel, having dipped below $70 earlier, as Washington said the US is actively engaging in defensive preparations to help Israel defend itself against the attack.
The American official said such a move by Iran would carry “severe consequences”.
The IDF launched “limited, targeted” raids overnight, ratcheting up geopolitical tensions in the Middle East.
The main US stock indexes slipped at the opening bell ahead of the first of several job reports this week.
The Dow Jones Industrial Average fell 67.2 points, or 0.2pc, at the open to 42,262.97, a day after Federal Reserve chair Jerome Powell pushed back against market expectations for larger-then-usual interest rate cuts.
The S&P 500 fell 4.7 points, or 0.1pc, at the open to 5,757.73​, while the Nasdaq Composite dropped 34.2 points, or 0.2pc, to 18,154.939.
Michel Barnier has pushed back France’s target date for cutting its deficit by two years as he set out his plan to plug a huge hole in the public finances.
The French prime minister said the country would aim to bring down its deficit to the EU’s limit of 3pc of GDP by 2029, versus an earlier aim of reaching that deficit level by 2027.
He told parliament: “The sword of Damocles hanging over us is our colossal financial debt.”
He added that France’s deficit was making France weaker in Europe.
US drugs giant Pfizer has sold a stake in Sensodyne and Panadol maker Haleon worth around £2.4bn, cutting its holding from 22pc to 15pc.
Pfizer sold 640m shares in Haleon for 380p each, reducing its holding in the consumer healthcare firm by 7.6pc.
It marks the latest move to sell down its stake in the group after Pfizer said last year it planned to reduce its holding gradually.
Haleon was formed in 2019 by the merger of the consumer healthcare businesses of British pharmaceutical group GSK and US rival Pfizer, sitting as a joint venture within GSK.
It was then spun out of GSK as a standalone business and listed on the London Stock Exchange in July 2022.
GSK initially retained a 12.9pc stake in Haleon after the flotation, but both GSK and Pfizer have been selling down their stakes in the company, with GSK offloading its holding completely in May when it sold its last remaining shares for £1.2bn.
Pfizer also sold around £2.6bn worth of Haleon shares in March.
Haleon shares were up 0.4pc as it said it had bought back an extra 60.5m of its shares from Pfizer at the same price, for a total of £230m, amid the stake sale.
Garden centre group Dobbies has revealed plans to shut 17 stores, in a move which will hit 465 jobs.
Dobbies Garden Centres said the proposed closures are part of a restructuring plan to help return the business to profit and reduce its rent bill.
The plan, which will need approval by creditors, will see the firm shut 11 larger Dobbies sites and six Little Dobbies by the end of the year.
Sites will continue to operate as normal until the restructuring process is given the green light.
The group said the closure will affect 465 workers, of which 82 are full-time, of the company’s roughly 3,600 strong workforce.
Dobbies will also work with landlords in order to secure temporary rent reductions at nine further stores.
It stressed that the process will not affect its suppliers.
The garden centre chain, which was bought by investment firm Ares Management last year, fell to a £105.2m pre-tax loss in the year to March 2023, against a £7m loss a year earlier, according to its most-recently filed company accounts.
The pound will soar to levels last seen before the Brexit vote as the Bank of England cuts interest rates slower than other major central banks, according to a UK asset manager.
Sterling will rise close to $1.50 next year as the Federal Reserve and European Central Bank cut borrowing costs, according to Columbia Threadneedle Investments.
The Fed surprised markets with a larger than usual half a percentage point interest rate cut last month, which has spurred betting for further steep reductions.
Meanwhile, the Bank of England kept rates on hold in September and Governor Andrew Bailey said they would come down “gradually”.
Steven Bell, chief EMEA economist Columbia Threadneedle, predicted the pound will strengthen by almost 13pc from its current level around $1.33, which is already near the highest in two and a half years.
The last time the pound stood at $1.50 was in February 2015, more than a year before Britain voted to leave the European Union.
Mr Bell also shrugged off concerns that the tax increased in the Budget later this month will derail the pound’s gains, saying that higher levies on capital gains will not impact consumer confidence.
The Bank of England is currently priced in to cut rates in November but is then only expected to reduce borrowing costs to about 120 basis points by next June, compared to 150 basis points for the European Central Bank and 165 basis points by the Fed.
Bond markets are rallying around the world after eurozone inflation fell below the European Central Bank’s 2pc target for the first time in three years.
The yield on German 10-year bunds - which move inversely to prices - fell as much as seven basis point to 2.04pc, which is its lowest level since January.
Meanwhile, French 10-year bond yields sank more than 12 basis points to 2.79pc, which is the biggest single day drop since May.
It comes as traders ramp up bets on the European Central Bank cutting interest rates later this month after inflation fell to 1.8pc in September.
Money markets indicate there is a 93pc chance that the ECB will reduce borrowing costs for the third time this year in October.
Neil Birrell, chief investment officer at Premier Miton Investors, said the drop in inflation “will have come as a relief for the ECB, which should now see its path clear for a rate cut”.
He added: “Core inflation remains a little higher, but the ECB will be keen to provide some stimulus to the economy, which needs a boost. The debate is now about how soon cuts will come, not if they will come.”
The number of people aged 100 or above has declined for the first time since the pandemic after a fall in life expectancy.
Our senior economics reporter Eir Nolsøe has the details:
New figures from the Office for National Statistics (ONS) showed there were 14,850 centenarians in England and Wales last year, a drop of 0.5pc.
It marks the first fall since 2018 and comes after Covid triggered a reversal in life expectancy as people struggled to access health services and after long-term sickness rates soared.
Life expectancy has fallen by 38 weeks for men and 23 weeks for women on average since 2019.
Read what is happening to life expectancy.
The price of oil could fall to as low as $60 a barrel by the end of next year, Goldman Sachs has warned, as commodities traders were unfazed by Israel’s invasion of southern Lebanon.
The Wall Street bank said traders believe there is a “limited” risk of prices being pushed higher by the conflict, as markets expect higher oil supplies from the Opec cartel and Libya.
Brent crude, the international benchmark, fell as much as 2.6pc today to briefly dip below $70 a barrel despite the IDF launching “limited, targeted” raids overnight, ratcheting up geopolitical tensions in the Middle East.
Goldman Sachs said the market is “shifting away” from Opec supporting prices after the Saudi-led group committed to ramping up production from December.
Saudi Arabia was reported to have abandoned its unofficial $100 a barrel price target last month amid increasing US production.
An agreement between warring political factions in Libya is also expected to see supplies from the north African country increase rapidly.
Oil prices have not stood at $60 a barrel since February 2021.
Analyst Daan Struyven said: “High spare capacity skews the risks to our price forecast to the downside, and we continue to estimate that Brent could fall to the low $60s by December 2025 if Opec fully reverses the extra voluntary supply cuts through November 2025.”
Troubled planemaker Boeing is reportedly considering raising at least $10bn (£7.5bn) by selling new stock as it races to cover the cost of strikes by factory workers.
The US aerospace giant has been grappling with walkouts that have stopped production of its 737 Max, which analysts have warned could cost the manufacturer $3.5bn (£2.7bn) in cashflow.
Union members last month voted to go on strike for the first time since 2008 after rejecting a 25pc pay rise and have not approved a subsequent offer of a 30pc raise.
It comes after new chief executive Kelly Ortberg was brought in to restore faith in the manufacturer after a door panel blew off a near-new 737 MAX mid-air in January.
The company is working with advisers to explore options and could seek to raise equity, according to Bloomberg.
A $10bn share sale would be the biggest by a public company since Saudi Aramco raised $12.3bn in June.
The pound has dipped after a slowdown in factory output in September.
Sterling was down 0.4pc against the dollar at $1.332 a day after finishing its strongest quarter in two years.
Britain’s currency hit a more than two-year high against the greenback just last week but the dollar was firmer across the board today after Federal Reserve chairman Jerome Powell pushed back against bets on more supersized interest rate cuts.
The key event for markets this week will be the US jobs figures due on Friday, which will offer clues about the health of the world’s biggest economy and the trajectory of Fed policy.
The pound edged lower as the S&P Global UK Manufacturing PMI slipped to 51.5 in September, unchanged from a preliminary estimate, as factory bosses worried about the upcoming Budget.
Sterling was down 0.1pc against the euro, which is worth 83.3p, a day after hitting its strongest since April 2022.
Michael Brown, senior research strategist at Pepperstone, said: “The pound is taking a little bit of backseat this week and riding the wave of external catalysts elsewhere.”
Nationwide has completed its £2.9bn takeover of Virgin Money, bringing together two of Britain’s largest banking groups.
Virgin Money’s shares have been cancelled from trading on the London Stock Exchange following the acquisition.
The purchase of the bank by the building society will pave the way for the creation of a combined group with around 24.5m customers, more than 25,000 staff and nearly 700 branches.
But combining two of the country’s largest lenders is a process that is expected to take several years.
It will eventually see the Virgin Money brand disappear from UK high streets, but it will not happen automatically.
The two brands will continue to exist on UK high streets for between four and six years, before Virgin Money is fully absorbed by Nationwide and customers are switched over.
The acquisition was approved by a judge at a specialist court last week, after 90pc of Virgin Money’s shareholders backed the scheme at a vote earlier this year.
Gas prices have fallen despite the latest conflict in the Middle East as Hezbollah fired missiles in response to Israel’s ground invasion of southern Lebanon.
Dutch front-month futures, the benchmark for Europe, fell as much as 3.2pc today to below €38 per megawatt hour, as the market was unaffected by the fighting.
Gas prices had risen 10pc since the middle of last week and remain close to their highest levels in a month.
However, Europe’s storage sites remain about 95pc full, with flows from Norway’s pipelines picking up after a period of heavy maintenance.
EnergyScan analysts wrote in a note: “The market must think that, after all, the European gas balance remains comfortable for the moment.”
The UK’s equivalent gas contract was down as much as 3.7pc to about 94p per therm.
Money markets indicate there is a greater chance that the European Central Bank will cut interest rates this month after inflation fell to 1.8pc.
Traders bet there is a 92pc probability that interest rates will be reduced in the eurozone at the next meeting of the Governing Council on October 17.
They had predicted a 62pc chance a week ago.
Eurozone inflation fell below the European Central Bank’s 2pc target for the first time in three years, reinforcing the case for another interest rate cut later this month.
The consumer prices index for the single currency area dropped from 2.2pc to 1.8pc in September, which was the lowest level since June 2021.
Oil prices have fallen in a sign that the turmoil in the Middle East will do little to impact energy prices this winter.
Brent crude, the international benchmark, has slipped 1.9pc today towards $70 a barrel as Israel’s invasion of Lebanon raised little concerns that supplies would be impacted.
Kathleen Brooks, research director at XTB, said:
The market has not reacted to the latest escalation in tensions between Israel and Hezbollah. This was a well signalled next step, and it has not come as a shock to investors.
We continue to think that fears about tensions in the Middle East will mostly play out in the gold market, with a limited impact elsewhere.
It is unclear how long Israeli forces will continue their ground incursion, however, Israel’s GDP has moderated sharply, and in Q3 the economy grew by 0.17pc. Credit rating agencies have also lowered their rating for Israeli sovereign bonds, which may add to pressure on Israel to keep ground operations short.
So far, Iran has not retaliated and, as yet this conflict has not become a wider issue across the Middle East. This is why markets have remained mostly immune to the situation.
Added to this, oil supply from outside of the US, along with expectations that oil demand will decline in the coming years, is also keeping a lid on oil prices. However, if Iran does retaliate or suggest that it will directly strike back at Israel, we expect the oil price to surge and this could rattle global markets.
UK manufacturers are holding back from making big decisions until after the Budget, a closely watched survey of activity has shown.
The S&P Global UK Manufacturing PMI showed factory output rose for a fifth consecutive month in September but also revealed that business confidence dipped to a nine-month low.
It said that “uncertainty relating to possible changes in government policy” and subdued global market conditions were weighing on UK manufacturers’ outlook for the year ahead.
Rob Dobson, director at S&P Global Market Intelligence, said:
Manufacturers have become more nervous about the outlook, suggesting that the current spell of impressive growth is fading, with business optimism about the year-ahead slumping to a nine-month low.
The extent of the drop in confidence was striking, beaten only by that seen in March 2020 prior to Covid lockdowns.
Uncertainty about the direction of government policy ahead of the coming Autumn Budget was a clear cause of the loss of confidence, especially given recent gloomy messaging, though firms are also worried about wider global geopolitical issues and economic growth risks.
Price pressures are also becoming a more prominent feature of the survey and a reminder that the inflation genie is not yet back in the bottle.
The eurozone’s manufacturing sector suffered its steepest slump this year last month as orders dried up at Germany’s factories.
The HCOB Eurozone Manufacturing PMI, a closely watched measure of the private sector, slipped deeper into contraction in September, dropping from 45.8 in August to 45.
It comes as output, new orders, employment and stocks all fell at an even faster pace in Germany, where the PMI dropped to 40.6, which was its lowest in a year.
The French manufacturing economy also continued to be blighted by subdued demand conditions but Spain’s sector enjoyed a bounce in performance.
Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said:
It is a real shame that Spain is only the fourth-largest economy in the eurozone. While handling the global manufacturing downturn surprisingly well, Spain just does not have enough weight to lift the rest of the eurozone with it.
The worsening industrial slump in Germany, for example, is too big for Spain’s momentum in September to make much of a difference.
According to our nowcast model, eurozone industrial production will likely drop by around 1pc in the third quarter compared to the last one. With incoming orders plummeting fast, we can expect another dip in production by year-end.
The FTSE 100 rose ahead of crucial European inflation figures later today.
Both the blue-chip index gained 0.3pc while the midcap FTSE 250 index was flat.
The precious metal miners index moved 0.6pc higher as gold prices ticked upwards.
In contrast, the personal goods index slipped as much as 2.2pc, weighed by a 2.6pc loss in Burberry after brokerages reduced their price target on the luxury retailer.
European inflation figures could reinforce bets that the European Central Bank will cut interest rates later in the month if they are lower than the 1.8pc expected.
Shares in Mulberry slipped 3.2pc after the luxury brand rejected sportswear retailer Frasers’ £83m takeover proposal, saying the bid did not have the support of majority shareholder Challice, which is owned by Singapore-based billionaire hotelier Ong Beng Seng.
Greggs kept its full-year outlook, though it said underlying sales growth slowed in the latest quarter with consumers continuing to face uncertainty. Shares of the baker and fast food chain were down as much as 5.6pc.
Britain will be hit with some of the coldest temperatures in Europe in the coming months as UK households face an average £149 increase in their energy bills from today.
The UK, France and Scandinavia will be the coldest parts of the continent this month, according to forecasters.
The new price cap from regulator Ofgem comes into force from today, meaning a typical home will pay £1,717 on energy bills a year, up from £1,568.
Bills have risen just as forecasters warn there is an 83pc chance of La Niña, a climate phenomenon that involves the sustained cooling of the central and eastern tropical Pacific Ocean.
The US Climate Prediction Center had predicted a 74pc chance a month ago. The phenomenon can lead to drought in California, Brazil and Argentina and rain in Indonesia and Australia, as well as bringing cooler weather to Europe.
Ofgem chief executive Jonathan Brearley has urged people to “shop around” and consider a fixed-rate tariff that could save money, adding that the regulator was working with Government, suppliers, charities and consumer groups to do “everything we can” to support customers.
Retailer The Works has revealed tumbling annual profits after sales and cost woes, but said it was on track to return to earnings growth over the year ahead.
The group reported a 40pc slump in underlying pre-tax profits to £3.2m for the year to May 5 after like-for-like sales dropped 0.9pc.
Statutory pre-tax profits fell 23pc to £6.9m.
The Works said trading started to turn around in the final three months and this has continued into the new financial year, with comparable store sales up 0.2pc in the first 21 weeks.
It said the improved performance was set to help profits grow in 2024-25, helping shares in the group jump 9pc in early trading.
The Works chairman Steve Bellamy said: “The board is mindful that the consumer environment has not yet fully recovered and of continued cost headwinds.
“With a strengthened leadership team and board, a good foundation for strategic progress, action taken around costs, and a solid start to sales in the new financial year, we are, however, confident that The Works will deliver profit growth in 2024-25.”
Dockworkers at major ports along the US East and Gulf Coasts have gone on strike after last-minute pay talks failed.
The International Longshoremen’s Association (ILA) said the walkout by its workers marks the first “coast-wide strike in almost 50 years” and could be a drag on the world’s largest economy just ahead of the November presidential election.
The shutdown would halt shipments of an array of goods from food to electronics and could cost the US economy billions of dollars a week.
Harold Daggett, who heads the 85,000-member union, said: “We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve.”
The walkout marks the ILA’s first since 1977 and follows other high-profile strikes at US automakers, Boeing and other employers.
The FTSE 100 inched upwards ahead of eurozone inflation figures later which could indicate how quickly interest rates could be cut in Europe.
The exporter-focused index was up 0.2pc to 8,250.33 while the midcap FTSE 250 rose 0.1pc to 21,065.77.
Oil prices were little changed as Israel launched an invasion against Hezbollah in southern Lebanon overnight.
Global benchmark Brent crude traded near $72 a barrel after it ended Monday modestly higher, with West Texas Intermediate also flat above $68.
The Israeli army confirmed shortly after 2am local time (12am in the UK) that it had begun the “limited, localised and targeted” operation.
Meanwhile, Libya is reportedly preparing to restore production after its two rival governments reached a compromise.
Brent plunged almost 17pc in the last quarter, and is now lower over the course of the year so far amid expectations that the Opec cartel and its allies will increase production from December.
Shop price inflation has fallen to its lowest level in more than three years as retailers attempt to lure consumers back with discounts and fierce competition, figures show.
Overall prices are now 0.6pc cheaper than they were a year ago, down from August’s deflation of 0.3pc, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.
Items other than food are 2.1pc cheaper than a year ago, a significant drop from August’s deflation of 1.5pc and its lowest rate since March 2021.
Furniture and clothing recorded the biggest drops in inflation as retailers tried to entice shoppers back.
However food inflation edged up to 2.3pc from 2pc in August as poor harvests in key producing regions led to higher prices for cooking oils and sugary products.
Fresh food inflation accelerated to 1.5pc from 1pc in August.
BRC chief executive Helen Dickinson said: “September was a good month for bargain hunters as big discounts and fierce competition pushed shop prices further into deflation.
“Easing price inflation will certainly be welcomed by consumers, but ongoing geopolitical tensions, climate change and government-imposed regulatory costs could all reverse this trend.”
Greggs has revealed its sales jumped by more than a 10th in recent weeks as the bakery chain continues to set up shop in new locations across the UK.
The high street chain said total sales increased 10.6pc over the 13 weeks to September 28, compared to the same period a year ago.
Greggs said it was on track to open between 140 and 160 new shops on a net basis, those opened minus those closed, in 2024.
It also said it was expecting the overall level of cost inflation this year to be toward 4pc, the lower end of its guidance, having fixed prices for things like energy going forward.
Mulberry’s billionaire backer has rejected a takeover bid from Mike Ashley’s Frasers and said the company will press ahead with its own plans to raise finance.
The luxury handbag maker said the £83m takeover bid tabled on Monday “does not recognise the company’s substantial future potential value”.
The Singapore-based billionaire hotelier Ong Beng Seng and his wife Christina own a controlling 56pc stake in the luxury retailer.
In an update to shareholders on Tuesday, Mulberry said Mr Ong “has no interest in supporting the possible offer”.
Instead, it will press ahead with plans announced on Friday to tap shareholders for another £10.75m.
Bosses are the most pessimistic about Britain’s economy since they were picking up the pieces after the bond market turmoil of Liz Truss’s premiership, a survey has shown.
Ahead of the Budget later this month, confidence among business chiefs in September was at its weakest since December 2022, according to the IoD Directors’ Economic Confidence Index.
The index dropped from minus 12 to minus 38 between August and September, while business investment intentions registered their lowest level since September 2020 amid the uncertainty over the Chancellor’s tax raising plans.
Bosses are also worried about the costs of the Government’s plans to shore up workers’ rights.
Anna Leach, chief economist at the Institute of Directors, said:
Business confidence and investment expectations both took a further and larger dive in September.
IoD members cite ongoing concerns over likely tax increases, the cost of workers’ rights, international competitiveness, broader cost pressures and the general outlook for UK economic growth.
There are a number of policy announcements forthcoming which could help foster a more supportive environment for growth and investment, and underpin an improvement in business confidence.
In the next few weeks we expect to see more detail on industrial strategy, the business tax roadmap and a likely update to the fiscal rules to better recognise the contribution of public sector investment to the UK’s asset base. These all have the potential to create a more steady environment for business decision-makers in the UK.
Thanks for joining me. We begin the day with a look at confidence levels among business leaders, which has fallen to its lowest level in two years ahead of the Budget.
The last time the IoD Directors’ Economic Confidence Index gave a reading this low, the economy was reeling from the bond market turmoil during Liz Truss’s brief tenure as prime minister.
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4) How Jim Ratcliffe’s plan to conquer the car industry drove into trouble | Supply issues and tepid demand are disrupting the billionaire’s foray into carmaking
5) Ben Marlow: Murdoch’s defeat is a victory for British business sovereignty | Let Rightmove’s resistance to foreign takeover attempts serve as a lesson to UK plc
Dockworkers at US ports from Maine to Texas began walking picket lines early today in a strike over wages and automation that could reignite inflation and cause shortages of goods if it goes on more than a few weeks.
The US Maritime Alliance has offered to increase wages for dockworkers by nearly 50pc in an effort to resume negotiations with the International Longshoremen’s Union and avoid a potentially crippling strike at East Coast and Gulf ports, according to a memo from USMX to its member companies.
Meanwhile, Asian shares were mixed overnight, with Japan’s Nikkei 225 index regaining some of its sharp losses from a day earlier.
A quarterly “tankan” survey by the Bank of Japan showed business confidence among large manufacturers remained steady at 13, indicating an improved outlook for business conditions. A positive number indicates that more companies maintain an optimistic outlook on business conditions than those who feel pessimistic.
The survey is closely monitored for clues about the impact of the Bank of Japan’s interest rate decisions, especially after the central bank ended negative rates in March and raised its short-term rate to 0.25pc in July.
Japan also reported that its unemployment rate for August fell to 2.5pc from 2.7pc in July, in line with market expectations.
Japan’s benchmark Nikkei 225 rallied 1.5pc to 38,476.33, as the yen weakened. The dollar is trading at 144.00 yen, up from 143.62 yen.
On Monday, the Nikkei tumbled nearly 5pc as markets reacted to the selection of Shigeru Ishiba to be Japan’s next prime minister. Mr Ishiba was due to take office later following the resignation of Prime Minister Fumio Kishida.
Australia’s S&P/ASX 200 dipped nearly 0.7pc to 8,214.80 after the data showed that retail sales in August rose 3.1pc from the same period last year, which is above expectation.
Markets in China and South Korea were shut for holidays. Mainland Chinese markets, which had their best day since 2008 on Monday, will remain closed until October 7 for the National Day break.
On Monday, the broad-based S&P 500 finished at 5,762.45, up 0.4pc for the day and up about 5.5pc for the quarter, which ended yesterday.
The Dow Jones Industrial Average was up 0.4pc at 42,330.15, while the tech-rich Nasdaq Composite Index climbed 0.4pc to 18,189.17.
In the bond market, the yield on benchmark 10-year US Treasury notes rose to 3.79pc last night from 3.76pc late on Friday.
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