- Sterling looks set to lose ground against the euro for a 10th consecutive week, a new record
- Interest rates might be cut to almost zero in a no-deal Brexit - Bank of England policy maker
- Calls for Bank of England to revamp its “unnecessarily complex” communications system
- Thomas Cook confirms "advanced discussions" on £750m rescue deal led by China's Fosun
- Fosun would take a controlling stake in Thomas Cook's tour operator business
- Government risks angering Trump as it pushes ahead with digital services tax
- 'Boris Johnson must stop the hamster wheel of doom - starting with electric scooters' - Ryan Bourne
- Sign up for our weekly Economic Intelligence newsletter here
Markets wrap: US stocks continue to chase records as rate cut expectations persist
US stocks are modestly higher so far today, as declines in health care stocks are offset by gains in technology, consumer and industrial company stocks.
The gains come a day after the Dow Jones Industrial Average closed above 27,000 points for the first time.
Investors remain focused on the Federal Reserve. The Fed is expected to cut its benchmark interest rate later this month for the first time in more than a decade to help counter slowing growth.
The Dow rose 120 points, or 0.5pc, to 27,210. The Standard & Poor's 500 index rose 0.1% and the Nasdaq composite rose 0.2%.
The FTSE 100 was almost flat, slipping 3.85 points to close at 7,505.97, a fall of 1pc for the week. The mid-cap FTSE 250 added 0.6pc but failed to recover losses earlier in the week as it ended at 19,551.83, 0.5pc lower for the week.
In Europe, the CAC 40 added 0.4pc today while the Dax slipped 0.1pc.
That's all for today. Thanks for joining and have a great weekend.
How to retire at 55 and live off dividends: the ultimate plan for a 40-year-old saver
Looking forward to the weekend? What about an early retirement?
Retiring could be a lot closer than many think, given careful planning and a strategic investment.
Telegraph Money has devised a plan for retiring at 55, the earliest you can access a private pension, with a portfolio capable of delivering £15,000 in dividend income a year, in today’s money.
Ford and Volkswagen agree multi-billion joint venture into self-driving and electric cars
Ford and Volkswagen are expanding their partnership into electric vehicles to include systems for self-driving cars and sharing car platforms.
With electric and autonomous vehicles driving the biggest shake-up in the automotive sector in a century, the immense costs of developing these ground-breaking technologies is forcing even the biggest players to form alliances to share the financial strain.
The need for cost-sharing partnerships is underlined by the current downturn in vehicle sales and predicted changes to ownership models as new technologies are proven.
Our industry editor Alan Tovey has written a full report.
Eurozone factories rebound but fears mount as trade bellwethers struggle
Eurozone manufacturers enjoyed a surprise rebound in May but a shock tumble in trade bellwethers from Asia signalled that any recovery in global factories could be short-lived.
Industrial production bounced back from two straight months of contraction to climb 0.9pc in May compared to the previous month - well above the stagnation predicted by economists.
The eurozone’s big four economies - France, Germany, Italy and Spain - all saw industrial production rise for the first time in 2019, Eurostat revealed.
Germany’s ailing industrial sector showed signs of recovery as its output grew 0.7pc but its factories still racked up a seventh straight month of year-on-year decline.
Read the full report.
Wall Street opens with new record highs
Markets have opened in the US and the S&P 500 and Dow Jones indices have both hit record highs as Federal Reserve chairman Jerome Powell's dovish remarks earlier this week continue to lift stocks.
This marks the third time the S&P 500 has hit an all-time high this week, and traded above the 3,000 level.
The Dow Jones Industrial Average rose 51.41 points, or 0.19pc, at the open to 27,139.49.
The S&P 500 opened higher by 3.45 points, or 0.12pc, at 3,003.36.
The Nasdaq Composite gained 13.16 points, or 0.16pc, to 8,209.20 at the opening bell.
Philip Hammond's push to tax Big Tech - how does it work and who will it affect?
It has been years in the planning and Treasury mandarins have spent months agonising over how best to make it fly without shaking confidence in the UK’s reputation as a technology hub.
But when Philip Hammond finally unveiled his long-awaited digital services tax it was overshadowed by something else: a transatlantic spat between Donald Trump and French plans for a similar tax on Silicon Valley.
The five star factory: why Amazon, Google and TripAdvisor are plagued by fake reviews
Beneath the surface of the apps and websites where we happily browse restaurants, ponder hotel bookings and shop for Christmas presents, there is a thriving black market in fake feedback.
Reviews are bought and sold, sometimes in their thousands, on Amazon, TripAdvisor, Yelp and Google Maps – written variously by robots, hackers, enterprising gig workers in the developing world and stay-at-home professional shoppers in the West.
It is a five star factory, endlessly churning out completely synthetic ratings.
Read the full report.
No deal Brexit would see rates slashed close to zero, says Bank of England policymaker
We now have a full report on the comments from the Bank of England's Gertjan Vlieghe in his speech in London earlier today.
Interest rates could be cut to almost zero if Britain leaves the EU without a deal in October, according to Vlieghe, a senior official at the Bank of England.
Borrowing costs would then stay at rock bottom for a prolonged period as policymakers wait for the economy to adjust to the change, meaning the current rate of 0.75pc could be as good as it gets for savers for several years.
“I think it is more likely that I would move to cut Bank Rate towards the effective lower bound of close to 0pc in the event of a no deal scenario,” said Vlieghe.
“It is highly uncertain when I would want to reverse these interest rate cuts, which would either be driven by an improvement in the underlying economy as the disruptive impact of no deal fades, or by upside risks to inflation if the exchange rate and tariff driven boost to inflation puts upward pressure on medium-term inflation expectations.”
Sterling slumps: what will happen to the pound with a no-deal Brexit or a Jeremy Corbyn government?
The pound dipped below $1.25 this week as the prospect of a “no deal” Brexit hardened but forecasters have suggested the pain for holidaymakers and importers could worsen depending on what happens behind the door of No. 10.
The spectre of dollar parity – where £1 buys just $1 – is most likely to be raised in the event of a withdrawal from the EU without a formal agreement, economists said.
A radical left-wing government under Jeremy Corbyn would also see sterling plummet.
Read the full analysis by Taha Lokhandwala.
What next for the pound?
The pound’s strength against most other currencies was dealt an almighty blow following the 2016 referendum outcome, falling close to 20pc from 2015 highs, and economists have said the 31 October deadline to leave the EU remains the biggest factor.
What happens next depends on a number of factors, particularly the outcome of the UK's efforts to depart from the European Union.
Trump takes aim at Facebook's Libra plans and says cryptocurrencies 'are not money'
Donald Trump warned Facebook over its plan to create a digital currency that poses a new obstacle to its cryptocurrency ambitions.
“Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks,” the President said on Twitter.
He also expressed skepticism of digital currencies in general in other tweets.
Sterling on course for record run of losses against the euro
The pound has gained slightly against the euro today but looks set to lose ground against the euro for a 10th consecutive week, a new record.
Sterling has come under pressure amid political turmoil and rising expectations of a no-deal Brexit.
Investors and economists have also taken little notice of statements from the Bank of England that it could raise rates in the coming months.
WPP to bank £2.5bn from Kantar sale
WPP will bank £2.5bn from selling a stake in Kantar as the advertising giant overhauls its sprawling portfolio built up over decades by its longtime chief Sir Martin Sorrell.
The sale comes as WPP, which owns advertising agencies including Ogilvy and Wunderman Thompson, grapples with a share price that has sunk more than a third in the past two years.
WPP is trying to trim its debt following several profit warnings and the loss of major accounts including Ford and GSK.
Vinjeru Mkandawire has a full report here.
British Steel eases workers' pay fears while search for 'credible' buyer continues
Bosses at embattled British Steel have attempted to ease workers' fears that their pay is at risk while a “credible buyer” is sought.
Rumours have circulated among the company’s 5,000 staff that there could be an issue with their July salaries, due to be paid on the 25th.
However, The Telegraph has seen an internal memo signed by chief executive Gerald Reichmann that states staff will be paid as normal.
“We are still operating in a ‘business as usual’ capacity and will continue to do so while we seek a solution,” he said.
Read industry editor Alan Tovey's full report here.
Lira slips at end of rollercoaster week as US-Turkey tensions resurface
The Turkish lira has taken another tumble on currency markets this morning amid fears that tensions with the US could spike after the delivery of the first parts of a Russian missile defence system.
The Trump administration has warned that Turkey will face sanctions if it follows through with the purchase. But the US president admitted that it is a “complicated” situation after meeting with Recep Tayyip Erdogan at last month’s G20 summit.
The battered currency has slipped 1pc against the dollar at the end of a rollercoaster week. It slumped as much as 2.8pc on Monday after Erdogan sacked the head of the central bank, reigniting worries over its independence.
Who will be the next Governor of the Bank of England?
The process of selecting a new head for the three-century old central bank has been complicated by political turmoil.
The new prime minister and chancellor are expected to take up their roles at the end of July. The current Governor, Mark Carney, will step down at the end of January after extending his tenure twice to help provide continuity during the Brexit process.
We have written extensively about the vacancy. Take a look:
- Liam Halligan: Why the next Governor needs to be a Brexiteer
Interviews begin for next Bank of England Governor
Interviews for the next Bank of England governor have started and the candidates could be whittled down to a shortlist very soon, according to the Chancellor, Philip Hammond.
“We’ve advertised this post, all candidates that have applied have been screened, a long list has been drawn up and interviews are now taking place,” Hammond said in a Bloomberg Television interview in Luxembourg Friday.
“By the time my successor is appointed, there will be a shortlist from which he can take the process forward,” he added.
Headhunters and civil servants have sifted through about 30 applications. A broad range of candidates applied for the role and the announcement will be made in the autumn, Hammond said.
Statement from Fosun on Thomas Cook rescue deal
Fosun has issued a statement on this morning's announcement of a possible deal that would see the Chinese group take majority control of Thomas Cook's tour operator business. The deal would see Fosun and a group of banks inject £750m into Thomas Cook through a combination of capital investment and financing facilities.
A spokesperson for Fosun Tourism Group said:
“Fosun is a shareholder in Thomas Cook, because it is a British company operating in the global travel industry, in which we have extensive experience.
We are committed investors, with a proven track record of turning around iconic brands including ClubMed and Wolverhampton Wanderers FC.”
Economy has deteriorated - Vlieghe
Gertjan Vlieghe, who is viewed as one of the more dovish members of the Bank's rate-setting group, used his speech to outline his own policy view.
The economic outlook has deteriorated since his last speech in February, with the global environment adding to Brexit headwinds, he said.
While UK growth data is volatile, and may show stagnation or a slight contraction in the second quarter, he is concerned about the vulnerability of households given the weak savings rate and signs that the labour market may no longer be tightening.
The full speech is available here.
Bank of England needs a communications revamp - Vlieghe
In his speech in London this morning, Gertjan Vlieghe also said the Bank of England needs to dramatically revamp a central part of its communications and should publish a preferred interest rate path to improve an “unnecessarily complex” system.
The Bank has been dubbed an “unreliable boyfriend” by lawmakers amid criticism over its messaging since the financial crisis.
The BOE’s current system means that, at times, the growth and inflation forecasts are not consistent with the monetary policy committee’s objectives or intended actions, Vlieghe said.
Credibility is key for central banks - if markets don't heed their statements, it becomes more difficult to manage the economy.
Currently traders are increasingly pricing in a UK interest rate cut, even as officials are signaling that the next move in the benchmark will be higher.
Interest rates might be cut to almost zero in a no-deal Brexit
Interest rates could be cut to almost zero in the event of a no-deal Brexit, according to a Bank of England policy-maker.
Gertjan Vlieghe, who is a member of the Bank's monetary policy committee (MPC), said in a speech this morning:
"On balance I think it is more likely that I would move to cut Bank Rate towards the effective lower bound of close to 0pc in the event of a no-deal scenario.
It is highly uncertain when I would want to reverse these interest rate cuts."
Deliveroo seals Pret A Manger partnership
Pret A Manger has agreed to partner exclusively with Deliveroo for food delivery.
Delivery will be available from 120 of the sandwich chain's sites, according to a statement from Deliveroo.
In May, Pret agreed to buy rival chain Eat in a bid to expand its "Veggie Pret" brand as it aims to boost its presence in the vegetarian and vegan food-to-go market.
Deliveroo has also said this morning that it will expand to a further 50 towns and cities in the UK this summer and autumn, including Maidenhead, Wrexham and Hastings.
Daimler issues profit warning after airbag fiasco
More bad news for the automotive sector this morning.
Germany's Daimler has issued its fourth profit warning in just over a year after it swung to a loss of €1.6bn (£1.3bn), excluding interest and taxes.
This time it blamed higher costs arising from a recall of faulty airbags and increasing the amounts set aside to address allegations of emissions-tampering in diesel cars.
The Mercedes-Benz maker now forecasts full-year earnings excluding some items to be “significantly” below last year’s figure, according to a statement Friday.
The shares fell as much as 4.5pc in early German trading.
Lookers shares sink as car dealer warns on profits
Shares in car dealership Lookers have sunk by more than a fifth this morning after it warned that "challenging conditions are likely to continue" into the second half of the year.
Its difficulties could be "exacerbated by continued weakness in consumer confidence in light of wider political and economic uncertainty, and further pressure on used car margins", it said.
It also warned of cost increases and and the possibility of restrictions on vehicle supply as new emissions regulations come into force in the coming months.
Interserve appoints turnaround specialist as chairman
Embattled outsourcer Interserve has appointed Alan Lovell, a turnaround specialist, as its new chairman.
He will succeed Glyn Barker on Monday. Barker has led the company since March 2019.
Lovell said he was "pleased to be joining Interserve at this exciting time".
Interserve faces an uncertain future after lenders took control of the business as part of a pre-pack administration in March. An "exciting time", indeed.
WPP offloads 60pc stake in Kantar
Bain Capital has agreed to buy 60pc of Kantar, WPP’s market research business, in a deal that values the unit at $4bn ($3.2bn).
The transaction would deliver proceeds of $3.1bn to WPP as it aims to streamline and simplify its business. WPP will retain a 40pc stake in Kantar.
Bain, a private equity firm, beat off competition in an auction from Apollo Global Management, Platinum Equity and Vista Equity Partners in the final round of bidding, according to earlier reports.
WPP will use about 60pc of the proceeds to reduce borrowing and return the rest to shareholders, it said in a statement. Shares are up 0.5pc so far this morning.
This morning's front page
Our lead story this morning: Britain risks angering Trump as it pushes ahead with digital services tax
Also on the front page:
- Amazon to retrain 100,000 workers by 2025 as technology threatens to upend their roles
Is there still money to be made selling holidays?
Fosun must think so. It is set to take a majority stake in Thomas Cook's tour operator business. It already owns Club Med.
The graphic below shows that 86pc of Britons took at least one holiday last year. The vast majority (81pc) were booked online.
City breaks were the most popular type of vacation, followed by beach holidays.
Thomas Cook's share price plunges more than a third
Shares in Thomas Cook have plunged by more than a third following this morning's announcement.
That will not come as a surprise as existing shareholders will be diluted by the new capital set to be invested by Fosun.
A significant amount of the group's external bank and bond debt will also be converted into shares.
What now for Thomas Cook's boss?
Thomas Cook boss Peter Fankhauser has just told media that the proposed deal with Fosun and Thomas Cook's creditors "is in the interests of wider stakeholders", including employees, customers and suppliers.
He emphasised that existing bookings would not be affected by the plans announced this morning.
But what about his own future? Will there be a place for him in either the airline or the tour operator business once the deal has gone through? He wasn't giving much away:
"Today’s announcement is really not about me. My priority is to deliver the plan and then time will tell."
Take a look at some more of the numbers behind Thomas Cook.
Thomas Cook's shareholders will suffer 'significant dilution'
Chief executive Peter Fankhauser has admitted that the deal with Fosun and bank creditors, if it goes ahead, will come "at the cost of a significant dilution of our existing shareholders".
Thomas Cook's woes have seen its market value sink to little more than £200m, with net debt around £1.25bn.
Government risks angering Trump as it pushes ahead with digital services tax
The Government has risked provoking Donald Trump into retaliating against the UK by targeting Silicon Valley tech titans with a new tax, just hours after France was blasted for its own new digital levy.
Philip Hammond yesterday outlined plans for the UK's new digital services tax, which will come into force next year, and will directly hit the likes of Facebook, Google and Amazon.
The release came amid an escalating war of words between French ministers and the Trump administration, which saw the US order an investigation into tax proposals and pave the way for retaliatory tariffs against the EU nation for approving its own digital tax.
Read the full report here.
Thomas Cook confirms £750m rescue talks with Chinese tour operator Fosun
Good morning. Cash-strapped travel firm Thomas Cook has said it is in "advanced discussions" with Chinese conglomerate Fosun, paving the way for a sale of its tour operator business.
Fosun, which is the company's largest shareholder, and Thomas Cook's core lenders are considering how the parties could "make a substantial new capital investment as part of a proposed recapitalisation and separation" of the firm.
The Thomas Cook Group said the proposal would see Fosun owning a significant controlling stake in the Group Tour Operator and a significant minority interest in the Group Airline.
We'll have more details once we get them but for now you can read a full report here.
In the diary
Trading update: Ashmore, The Gym Group
Economics: Industrial production (EZ), PPI (US)