Apple has unveiled an AR headset called the Vision Pro in the tech giant’s most significant product launch since the iPhone, promising that it will be “a new kind of computer”.
The device, which resembles a pair of ski goggles, projects apps such as web browsers, video calls and games into a wearer’s visual field, making them appear huge.
The device is Apple’s first foray into augmented reality, which Tim Cook, the chief executive, has said is the next major frontier in technology.
Unlike existing virtual reality (VR) headsets, wearers will be able to see the world around them while using the device. Other people will also be able to see the user’s eyes through the headset’s screen.
Price and user experience
Apple said the Vision Pro, which will cost $3,499 (£2,814), will be “the most advanced personal electronics device ever” when it is released next year.
The Vision Pro will be controlled using hand movements, eye tracking and voice instructions.
Apple showed off users experiencing a “personal movie theatre” while sitting on a plane, projecting several huge computer screens on a desk, and watching different sports games at the same time on multiple virtual televisions. The device will scan users’ irises to verify their identity, for example to make payments or enter passwords.
Welcome to the era of spatial computing with Apple Vision Pro. You’ve never seen anything like this before! pic.twitter.com/PEIxKNpXBs
— Tim Cook (@tim_cook) June 5, 2023
Mr Cook described the Vision Pro as “a new kind of computer that augments reality by seamlessly blending the digital world with the real world”. He said it was the “first Apple product you look through, not at.”
He also suggested that the device was the start of a long-term push into AR, saying it will “introduce us to spatial computing”. Mr Cook has said that he ultimately wants the company to be able to fit the technology into eyeglasses.
He said the device “will change the way we communicate, collaborate, work and enjoy entertainment”.
The high price of the Vision Pro means it will be likely to be out of reach for many people at first, although the “Pro” branding suggested that cheaper versions are likely to be released in future.
The product has been the culmination of years of work on AR, which has been a priority for Mr Cook but has so far struggled to become a mainstream technology.
It is designed to be lightweight and not overheat, connecting to an external battery that wearers hold in their pocket. The battery will last for around two hours, or the device can be plugged in.
The launch of the device kicks off a new rivalry with Mark Zuckerberg’s Meta, who has bet the Facebook owner’s future on AR and sister technology VR. Meta last week announced a new version of its Quest headset.
Apple shares hit an all-time high on Monday in anticipation of the launch, valuing the world’s biggest company at $2.9 trillion, but fell after the company revealed the Vision Pro’s higher-than-expected price and its announcement that the new product would not be released until next year.
Apple said the Vision Pro will be released early next year in the US, and in other countries later in 2024. The staggered launch suggests initial supplies may be limited.
Apple's share price falls
That’s enough excitment for one day. Before we go, let’s have a look at Apple’s share price.
Apple shares hit an all-time high on Monday in anticipation of the VR headset launch, valuing the world’s biggest company at $2.9 trillion.
However, they later fell after the tech company revealed Vision Pro’s higher-than-expected price and said it would not be released until next year.
And here's how much it costs...
Apple’s Vision Pro will cost $3,499. It will be released early next year in the US.
Apple partners with Disney to offer immersive entertainment experience
Apple’s Vision Pro will also offer an immersive version of streaming platform Disney+.
The partnership includes Disney-owned brands ESPN+, National Geographic and Marvel, which will be available as soon as Vision Pro launches.
Apple unveils VR headset
Apple has unveiled its first-ever headset: Vision Pro.
The new VR device - which is controlled by users’ hands, voice and eyes - allows users to watch movies, shows and connect with others in a 3D immersive environment.
The VR goggles can be used alongside Apple’s apps, including FaceTime, Safari, and Apple Music.
According to Apple, Vision Pro will revolutionise spatial computing in the way that the Mac changed personal computing and the iPhone mobile computing.
Apple Watch gets fitness upgrade
Next up is the Apple Watch, which is on version 10 of its operating system.
Apple has introduced a “smart stack” that will allow users to quickly rotate between “quick views” of different apps such as music controls, timer and the calendar.
As usual, there are new watch faces and tweaks to the fitness app, which has become a key selling point of the wearable device.
WatchOS also has new features for cyclists allowing users to view new metrics such as FTP, a measure of cycling fitness, and power zones.
There are updates for Apple’s health features too. Users can log their state of mind, and the iPhone Health app will match that to other variables such as exercise levels.
Apple boosts artificial offering with i0S 17 update
Apple has previewed the upcoming version of its iPhone operating system, iOS 17, which will be released later this year.
The software will feature a “live voicemail” feature in the phone app, which will transcribe voicemail messages as they are being in real time, allowing phone owners to pick up a call if it is urgent.
FaceTime will allow people to leave video voicemail messages.
Apple is also significantly upgrading its autocorrect feature, with the feature understanding entire sentences so it can correct words with context. It has also upgraded predictive text, suggesting words as you type in a similar way to Gmail.
The iMessage app is receiving a “check in feature” that will automatically alert loved ones when you get home.
Many of the features are a subtle rebuke to criticisms that Apple has missed the AI wave.
Apple unveils 'best and most capable lineup in the history of the personal computer'
Apple has unveiled a 15-inch version of its popular MacBook Air laptop, in addition to the 13-inch version that is currently the world’s best-selling computer, technology editor James Titcomb reports.
The 15 inch MacBook Air is 11.5mm thin and weighs around 1.5kg, as well as boasting 18 hours of battery life. It will cost $1,299 - which is likely to equate to roughly the same figure in pounds.
Sales of Apple’s laptops have been boosted in recent years by the launch of computers featuring its in-house M series of chips. However, they fell by around 32pc in the last quarter as the pandemic boom in computer sales faltered.
Apple also unveiled a new version of its high-end Mac Studio computer, featuring a new M2 Ultra chip, and a new Mac Pro, which is used for demanding tasks such as video editing and 3D simulation.
It means that all of Apple’s computers now feature the company’s own processors. Tim Cook calls it the “best and most capable lineup in the history of the personal computer.”
Apple begins Worldwide Developers Conference
Apple’s annual developers conference in California has kicked off.
The tech company has so far unveiled its new M2 Ultra, the most powerful chip made for a personal computer ever, plus the 15-inch Macbook Air, the world’s thinnest laptop.
Chief executive Tim Cook is also expected to debut the VR headset, which will be the first time that the world’s largest company has moved into a new product category since launching the Apple Watch nine years ago.
Watch it live below
Ex-F1 owner to make offer for Center Parcs
CVC Capital Partners, the former owner of Formula One, is poised to table an offer for Center Parcs.
The Luxembourg-based private equity firm is reportedly among the potential buyers considering a takeover of the British chain of family holiday resorts.
Any offer made by CVC would be through its long-term Strategic Opportunities investment fund, Sky News reported.
The potential buyout would expand CVC’s UK staycation portfolio, having bought the majority stake in rival Away Resorts in 2021.
It follows reports last month that Center Parcs owner Brookfield Property Partners had appointed investment bankers to identify potential buyers for the resort’s UK holiday village.
The Canadian property giant is reportedly seeking between £4bn and £5bn from the sale, which is managed by Bank of America, Barclays and Eastdil Secured.
CVC Capital Partners was approached for comment.
FTSE 100 closes flat after disapointing US services report
The FTSE 100 has roughly flat after a sharp decline during the late afternoon. It closed 0.1pc lower at 7,599.99.
The blue-chip index sank after the Institute for Supply Management’s closely watched gauge of US services unexpectedly fell to the lowest level of the year.
Combined with softer orders, the decline indicates service providers are experiencing sluggish demand.
The mid-cap FTSE 250 index closed 0.19pc lower at 19,113.55.
JP Morgan boss has 'no plans' to run for US presidency
Jamie Dimon, the chief executive of JP Morgan, has shutdown fresh speculation that he plans on running for the White House.
“As he has said in the past, Jamie has no plans to run for office,” a JP Morgan spokesman told Bloomberg. “He is very happy in his current role.”
It comes after the long-time JP Morgan chief executive, who has been in his role since 2005, last week hinted at a political career once he steps down from the Wall Street titan.
“I love my country, and maybe one day I’ll serve my country in one capacity or another,’ he told BloombergTV.
New York hedge fund investor Bill Ackman said last week that Mr Dimon should run for president in 2024, describing him as a political centrist who could beat President Joe Biden in a primary.
Hunt plans biggest shake-up of employee ownership schemes in 23 years
Chancellor Jeremy Hunt is planning to make it easier for employees to own shares in the companies they work for in a bid to boost economic growth.
Economics reporter Melissa Lawford has the details:
The Government has launched a call for evidence asking businesses for their views on how to improve Save As You Earn (SAYE) and the Share Incentive Plan (SIP) in what is set to be the biggest reform of employee ownership schemes in 23 years.
The call for evidence, which was first announced in Mr Hunt’s Spring Budget, will likely be the widest consultation on these schemes since the introduction of the SIP in 2000.
The SAYE scheme allows employees to buy discounted shares in their company if they save money each month for three to five years, while the SIP scheme enables employers to sell shares directly to employees, or offer them as awards, tax free.
New analysis by HM Revenue & Customs shows that 81pc of employers who use the schemes found they helped boost businesses...
I’ll say cheerio for now at this point and hand over our live blog to Adam Mawardi.
I leave you with the latest gauge of the services sector in the US, which nearly stagnated in May as business activity and orders slowed.
The Institute for Supply Management’s (ISM) overall gauge of services fell to 50.3, the weakest level this year, from 51.9 in April.
The business activity index, which parallels the ISM factory output index, fell for a fourth month to a three-year low of 51.5. Combined with softer orders, the decline indicates service providers are experiencing sluggish demand.
The picture for services was more positive in the S&P Global US Services purchasing managers index, also out today:
The #US service sector signalled solid growth in May (#PMI at 54.9, Apr: 53.6). Business activity rose at the strongest pace since April 2022 as strengthening underlying demand conditions drove sharp increase in new orders. Read more: https://t.co/ywFp7a89gf pic.twitter.com/6y6XmIVbsY
— S&P Global PMI™ (@SPGlobalPMI) June 5, 2023
Price pressures remain strong, says Lagarde
Christine Lagarde said inflation pressures remain powerful and borrowing costs will be raised further to tackle them.
The European Central Bank President said the full effects of the ECB’s action to date is still materialising, as she reiterated that there is no clear evidence that underlying inflation has peaked.
Food inflation remains elevated, she told the European Union in Brussels. She said:
Price pressures remain strong.
Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2pc medium-term target and will be kept at those levels for as long as necessary.
Discussing eurozone banks following the wider turbulence in the industry, Ms Lagarde was optimistic. She said:
Financial stability in the euro area has proved robust so far, but we continue to assess possible risks, taking into account a wide range of indicators.
We do not see a trade-off between financial stability and price stability in the euro area.
S&P 500 on verge of new 'bull market'
US stocks are drifting to begin what could be a quiet stretch following weeks of gains that rallied Wall Street to the edge of a so-called “bull market.”
The S&P 500 was 0.2pc higher in early trading, and if it finishes the day there, it will be more than 20pc above where it was in mid-October. It has wobbled since and the index was last flat.
Such a rally would mean the stock market has transformed from its frigid “bear market,” where Wall Street’s main measure of health fell more than 20pc over nine months, into a powerful bull, indicating stocks will largely rise.
The Dow Jones Industrial Average was down 0.1pc, while the Nasdaq composite was 0.2pc higher.
Apple poised to close at record high ahead of mixed-reality headset launch
Apple shares surged by more than 1pc as markets opened putting the world’s largest company on track to close at a record high as it prepares to unveil a mixed-reality headset at its annual software developer conference.
The launch will see Apple make its first big move into a new product category since the introduction of the Apple Watch nine years ago.
It will also put it in direct competition with Facebook-owner Meta Platforms.
Like Meta’s Quest Pro from last year and Quest 3 announced last week, Apple’s device is likely to blend a video feed from the outside world with a virtual world displayed on screens inside the headset.
Shares of the iPhone maker have risen 1.6pc to hit a record intraday high of $183.76.
European gas prices jump 20pc
European gas futures jumped 20pc, the biggest jump since March amid signs of a tighter liquefied natural gas market and potentially stronger Asian demand for the fuel.
Benchmark month-ahead Dutch futures rose as much as 20pc to more than €28 a megawatt-hour after last week skidding to the lowest level in two years. The UK equivalent increased by more than 21pc.
The continent is still finding its footing after a historic energy crisis triggered by the severe supply cuts following Russia’s invasion of Ukraine.
Europe has amassed higher-than-usual storage levels after a relatively mild winter, record imports of liquified natural gas (LNG) and tepid demand.
However, traders are mindful of persistent risks, including the possibility of even lower Russian supplies and competition with Asia for LNG.
US shipments of the fuel — vital for Europe’s energy security — are currently more profitable to Asia in July, August and September, according to Bloomberg.
There’s also a link to the oil market. Saudi Arabia on Sunday agreed to curb crude supply further in July to help shore up sagging oil prices. Long-term LNG contracts are often linked to oil, meaning buyers may prefer spot shipments for now.
OUCH! European #gas futures jumped >20%, the biggest jump since March amid signs of a tighter LNG market and potentially stronger Asian demand for the fuel. This again widens the price gap w/US natural gas. (via BBG) pic.twitter.com/cHnqIarRCz
— Holger Zschaepitz (@Schuldensuehner) June 5, 2023
US markets cautious at the opening bell
Wall Street began the week tentatively amid concerns about the impact of potential cuts in Saudi Arabian oil production next month.
The Dow Jones Industrial Average opened flat at 33764.04 while the broad-based S&P 500 edged up 0.1pc to 4,286.79.
The tech-heavy Nasdaq Composite rose by 0.1pc to 13,257.53.
City beats Paris and Frankfurt in investment race
The City has reasserted its credentials as Europe’s leading financial centre after figures showed an increase in foreign investment in Britain.
The UK landed 76 financial service projects in 2022, up 17pc from the previous year despite the economic downturn and political instability in Westminster, according to analysis by EY.
Britain was way ahead of France in second place, which had 45 projects, a fall of 25pc, while Germany and Spain followed with 31 each.
The rise in the UK was thanks to an increase in American investment, with 21 US-backed projects — up a quarter year-on-year.
Anna Anthony, UK financial services managing partner at EY, said even in challenging times, investors see the UK “as the most attractive European financial services market”.
Brokerage fined £17m for role in controversial tax scheme
Financial regulators have handed out a £17.2m fine over a company’s role in controversial so-called cum-ex tax transactions.
The Financial Conduct Authority (FCA) said brokerage ED&F Man Capital Markets “enabled” significant volumes of dividend arbitrage trading that allowed millions of euros to be illegitimately claimed from Danish tax authorities.
It is the fourth case brought against London brokers in relation to the trades and the largest penalty yet.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said: “It is completely unacceptable for authorised firms to make money from this kind of trading.”
ED&F Man did not dispute the FCA’s findings and was given a 30pc discount in the fine.
Danish and German investigators separately raided the London offices of ED&F Man in November.
Cum-ex took advantage of tax laws that seemed to allow multiple investors to claim refunds of a tax that was paid only once.
Germany abolished the practice in 2012. Some traders then targeted Denmark in similar trades and the country has said it suffered a loss of more than $2bn (£1.6bn).
Gold miner Polymetal eyes sale of Russian arm
Anglo-Russian gold and silver miner Polymetal International could be eyeing up a sale of its Russian subsidiary following the resignation of its top two bosses and being targeted by Western sanctions.
The London-listed firm, which primarily operates in Russia, said it is considering “all possible options” regarding divesting the Russian arm.
Shares in the company have dived since Vladimir Putin led an invasion of Ukraine in February last year.
Prior to the war breaking out, shares in the business were trading at around 1,100p. They have since lost more than 80pc of their value and are now worth about 180p.
Polymetal’s chief executive, Vitaly Nesis, and chief financial officer, Maxim Nazimok, cut ties with the Russian arm of the business completely, the company said.
But they remain with the wider group and are focusing on operations in Kazakhstan, where the firm plans to relocate from its current domicile in Jersey and escape the risk of further sanctions.
It is likely to result in the company de-listing its stocks from the London markets.
It said: “In the light of recent developments, and in the interests of preserving shareholder value, the board and the special committee have decided to consider all possible options available for divestment of JSC Polymetal and its subsidiaries.”
Oil price rallies higher amid Saudi cuts
Oil has surged even higher after Saudi Arabia said it would cut production by a million barrels a day in July.
Brent crude, the international benchmark, has risen by 2.2pc today and is heading toward $78 a barrel.
US-produced West Texas Intermediate has leapt 2.4pc to more than $73 a barrel.
Crude #oil has erased all of last week's losses as #SaudiArabia said it will cut its supply by another 1 million barrels per day in July.
When investing in oil (or #commodities), it's important to take into account that there is a cartel, #OPEC+, which has been pretty active in… pic.twitter.com/dQia7uEZNV
— jeroen blokland (@jsblokland) June 5, 2023
British Airways and Boots warn staff data stolen in massive hack
Chief business correspondent Oliver Gill and technology editor James Titcomb have the details:
BA has written to all of its 34,000-strong workforce warning them of a “cyber security incident which has led to the disclosure of personal information about colleagues paid through British Airways’ payroll in the UK and Ireland”.
An email to BA staff – seen by the Telegraph – warns that the compromised information includes names, addresses, national insurance numbers, banking details and other information.
Boots has also emailed its employees saying that staff’s names, surnames, employee numbers, dates of birth, email addresses, the first lines of their home address and national insurance numbers have been affected. It said a “very small number” of employees may have had other data compromised.
Read how the hack relates to Zellis, which provides payroll services.
Airline industry profits expected to double to $10bn this year
The airline industry’s trade body is doubling its estimate for global industry profits this year as a surge in flying drives up ticket prices.
Airline executives from the 300 airlines represented by the International Air Transport Association descended on Istanbul over the weekend for the start of the organisation’s 79th annual general meeting.
Global industry profits are now expected to reach $9.8bn (£7.9bn) this year, more than double the $4.7bn forecast in December, the IATA said today.
It expects some 4.35bn passengers to travel in 2023, around 96pc of 2019 levels.
The trade body’s director general Willie Walsh, said: “Taking everything into account we believe this will be a good year for aviation.”
More than 1,520 participants are taking part in the IATA AGM, the first being held since all Covid restrictions were lifted.
On the agenda are topics including sustainability, as carriers navigate the path toward achieving net zero carbon emissions by 2050, as well as airlines’ recovery from Covid and lessons learned from 2022’s host of operational challenges.
US markets face lacklustre open
Wall Street is poised for a subdued start to the week as investors weigh the possibility of a pause in interest rate rises by the Federal Reserve at its upcoming policy meeting.
US stocks rallied on Friday after a labour market report showing moderating wage growth in May, while investors welcomed a Washington deal that avoided a catastrophic debt default.
The benchmark S&P 500 closed at a fresh nine-month high on Friday and the tech-heavy Nasdaq scaled a new one-year peak, underpinned by gains in megacap technology stocks that have outperformed the broader market this year.
Traders are pricing in a 78.2pc chance that the Fed will hold interest rates at the conclusion of its June 13-14 policy meeting, according to CME Group’s Fedwatch tool, though they expect another hike in July.
In premarket trading, the Dow Jones Industrial Average was up 0.1pc, while the S&P 500 looks flat. Futures on the Nasdaq 100 e-minis were down 0.2pc.
Final Eurostar train to Disneyland Paris departs
Eurostar has ended its service to Disneyland Paris, while its Amsterdam link faces being suspended for nearly a year.
The final train from London St Pancras to Marne-la-Vallee, a station next to the theme park, departed at 10.34am today as the operator focuses on its core routes to Paris and Brussels.
Meanwhile, Dutch media reported that infrastructure secretary Vivianne Heijnen has warned that no Eurostar trains will be able to run to or from Amsterdam Centraal, the capital’s main station, from June 2024 until as late as May 2025, while it is renovated.
Eurostar’s direct trains to Disneyland Paris have been popular with British families since they began running in 1996.
Passengers travelling on the route in future will be forced to change trains, adding time and complexity to their journeys.
Pound slumps as markets weigh-up Fed rate raise
The pound has slumped against the dollar as markets priced in around a one-in-four chance of the US Federal Reserve raising benchmark rates this month after all, following robust jobs data on Friday.
Sterling has dropped 0.6pc against the greenback to well below $1.24.
The dollar index - which tracks the greenback against six peers - had come off the boil last week, after some Fed officials voiced a preference for a pause in rate hikes and after a breakthrough in US debt ceiling talks calmed market jitters.
Despite a surprisingly high payroll figure for May, indicating the US economy may still be running hot, analysts said the Fed may still have scope to pause rate rises as wage pressures eased and unemployment rose from a 53-year low.
Markets now put the probability of a 25 basis point hike at the meeting on June 13-14 at about 27pc.
Oil and gas 'part of our energy mix for many, many years' says Starmer
Sir Keir Starmer has tried to reassure trade union critics that Labour’s energy plans would not hit jobs, claiming that oil and gas would be necessary for “many, many years” to come.
GMB union general secretary Gary Smith warned the party’s policy to ban new oil and gas extraction licences in the North Sea would create a “cliff edge” that will hit jobs.
Speaking on a visit to Hinkley Point C in Somerset, Sir Keir stressed that adapting to climate change and tapping new sources of energy would bring fresh opportunities. He told broadcasters:
I think we have a once-in-a-generation opportunity now to seize the jobs of the future.
Oil and gas will be part of that, because where there is existing licences they will go on to the 2050s and so oil and gas will be part of our energy mix for many, many years to come.
But we need to seize the opportunities for the next generation of jobs. And that is in renewables, it is in nuclear, Hinkley Point C here today, staring at the future.
We have got 9,000 people working on this site, they are going to power the UK and they are the jobs of the future.
Mortgage deals pulled as market expects interest rates to rise
Another 200 residential mortgage deals were pulled over the weekend as the average rate on a two-year fixed rate deal jumped to 5.72pc.
Economics reporter Melissa Lawford has the details:
In total, 699 residential fixed-rate deals have disappeared from the market in the last two weeks – equivalent to more than one in eight mortgage deals, according to Moneyfacts.
Lenders are repricing deals fast after surprisingly high inflation data triggered large jumps in expectations for future borrowing costs.
The average rate on a two-year fix (across all deposit sizes) has climbed from 5.33pc to 5.72pc in 13 days, a jump of 0.39 percentage points.
This means that a buyer taking out a typical £200,000 loan will have to pay an extra £780 per year compared to if they had secured a mortgage deal two weeks earlier.
The average rate on a five-year fix has climbed from 5.01pc to 5.41pc over the same period.
Asos shares surge 15pc after '£1bn takeover approach'
Asos shares have surge higher after it was reported that the troubled online fashion retailer had received a £1bn takeover approach from a company backed by China’s Alibaba.
The retailer was approached by Turkish online fast fashion firm Trendyol in late December, according to a report in the Sunday Times.
It is believed that the proposed deal would have valued Asos at between £10 and £12 a share.
Talks are not thought to be active but news of the recent bid interest sent shares in Asos jumping 15pc higher at one stage in morning trading.
Trendyol - which in 2021 raised £265m from Alibaba and $1.5bn (£1.2bn) from other investors including SoftBank and the Qatar Investment Authority - is said to have been working with advisers from Morgan Stanley on the approach.
Asos has seen its shares tumble as sales have languished and costs rocketed, with customer spending coming under pressure and shoppers returning to the high street.
It was booted out of the FTSE 250 in the recent FTSE reshuffle due to its hefty stock market declines.
The group was last month forced to raise funds in order to strengthen its balance sheet, with a £75m investor cash call, as well as entering into a new £275m debt facility. Asos declined to comment on the reported takeover interest.
UK 'must future-proof' City's financial services sector
After the EY report showing the UK retained its crown as Europe’s top destination for financial services investment, City of London Corporation policy chairman Chris Hayward said:
London continues to lead Europe in attracting foreign direct investment in financial services, and the sector is proving resilient despite the global challenges facing the UK economy.
That is good news for every household, because a strong City creates the wealth and jobs that support the economy and fund our public services.
But it is vital that we continue to build on this success. We must future-proof the sector to ensure we remain globally competitive and the natural choice for foreign investors.
Government borrowing costs edge higher
The cost of Government borrowing has begun ticking higher again at the start of this week as concerns linger about the health of Britain’s economy.
The yield on two-year gilts, which are sensitive to rises in interest rates, has risen by seven basis points to 4.4pc today, while 10-year bond yields have climbed six basis points to 4.2pc.
Both remain around the levels seen during Liz Truss’s short-lived time as prime minister.
Yields are ticking higher around the world amid worries over potential inflation that could be caused by rising oil prices, as Saudi Arabia plans to cut production by a million barrels a day from July.
Ten-year US Treasury yields have risen nearly five basis points while German 10-year bund yields have climbed nearly six basis points.
EU to extend ban on Ukrainian grain imports
The European Commission is expected to extend its ban on Ukrainian grain imports until September 15, Poland’s agriculture minister has said.
The EU set restrictions until today on imports of wheat, maize, rapeseed and sunflower seed from the war-torn country to ease the excess supply of the grains in Bulgaria, Hungary, Poland, Romania and Slovakia.
Those countries had complained that cheaper Ukrainian grain was making domestic production unprofitable and had asked the EU to extend the ban.
Poland’s agriculture minister Robert Telus tweeted: “We have received from the EC a draft of a new regulation banning the import of four products to the five countries. The effective date provided for in the draft is September 15 this year. It’s a draft but I hope it will come into force from tomorrow.”
Ukrainian wheat, maize, rapeseed and sunflower seed can be sold to any other country in the 27-nation bloc.
The EU had earlier liberalised all imports from Ukraine to help Kyiv’s efforts to fend off Russia’s invasion. The five countries became transit routes for Ukrainian grain that could not be exported through its Black Sea ports because of the war.
Ukrainian President Volodymyr Zelenskiy on Thursday called for the unconditional removal of all export restrictions on Ukrainian agricultural products at talks with European Commission President Ursula von der Leyen.
UK services sector grows for fourth straight month
Britain’s dominant services sector continued to expand last month but increased wage pressures pushed up cost inflation to a three-month high, according to a closely-watched survey.
The S&P Global/CIPS UK Services purchasing managers’ index delivered a reading of 55.2 in May, down slightly from 55.9 in April but above the 50 mark separating growth from contraction for the fourth consecutive month.
Robust sales pipelines and greater willingness to spend from consumers, despite ongoing economic uncertainty, helped to boost order volumes in May.
However, the overall rate of input price inflation edged up to a three-month high amid elevated wage pressures and continuing supplier price hikes.
Tim Moore, economics director at S&P Global Market Intelligence, said:
Service sector businesses have experienced strong growth so far in the second quarter of 2023, fuelled by resilient demand for consumer and technology services, combined with a post-pandemic tailwind as households switched from spending on goods to services.
Higher salary payments more than offset lower fuel costs, which meant that overall input price inflation edged up to its strongest for three months in May.
Fueled by resilient demand for consumer and technology services, growth across the #UK’s service sector remained robust in May (#PMI at 55.2; Apr: 55.9). This was despite still severe #inflationary pressures. Read more: https://t.co/Rt4oTQPxyX @cipsnews pic.twitter.com/KaO0MAcgtL
— S&P Global PMI™ (@SPGlobalPMI) June 5, 2023
Mondi cancels sale of Russian facility
Packaging and paper group Mondi has pulled out of its deal to sell part of its Russian business to venture capital firm Augment.
It said it would not go ahead with the sale of Mondi Syktyvkar and two affiliated entities after a lack of progress in gaining the necessary approvals.
In a statement, the company said it remains committed to selling Syktyvkar and “will continue to assess all alternative divestment options”.
A separate deal announced in December to dispose of three Russian packaging converting operations to Gotek Group is not affected.
New car registrations on longest run of expansion since 2015
The number of new car registrations in the UK has increased for the tenth straight month - its longest run in eight years - as the market continues to bounce back from the pandemic.
The Society of Motor Manufacturers and Traders said registrations increased by 16.7pc in May.
Despite the boost, sales are 21pc down on pre-coronavirus levels in 2019.
— SMMT (@SMMT) June 5, 2023
Fall in inflation will be 'gradual,' says ECB chief
A European Central Bank chief has said the surge in inflation is only slowly easing, and the dangers of a resurgence exceed those of a more rapid retreat.
Governing Council member Boris Vujcic told Bloomberg: “Disinflation is expected to be gradual, with the risks still tilted upward driven by risks coming from the tight labour market and underlying price pressures in the services sector.”
The Croatian central bank chief spoke just under two weeks before the ECB next sets borrowing costs, with investors and economists widely expecting another quarter-point increase in the deposit rate to 3.5pc.
It is unclear whether the ECB’s programme of rate increases will end at the following meeting, in July, or persist into the next one, in September.
Mr Vujcic said wage pressures in the eurozone are “still very lively, and we still need to see where it will stop”.
Gas prices tick higher as Saudi oil cuts deliver boost
European natural gas prices jumped along with oil after Saudi Arabia pledged additional crude-output cuts that could help provide a floor to the gas market.
The kingdom on Sunday agreed to curb supply next month to the lowest level in several years, as the Opec+ cartel seeks to shore up sagging oil prices.
Long-term contracts in the liquified natural gas market are often linked to oil prices — meaning LNG buyers may prefer spot shipments for now.
Dutch gas futures surged as much as 7.5pc and last traded 3.4pc higher at just below €24.50 per megawatt- hour.
German exports bounce back amid US and China demand
German exports bounced back in April after falling a month earlier, official data has shown, but analysts said it was too soon to see a recovery in Europe’s recession-hit largest economy.
Germany exported goods worth €130.4bn (£112.4bn) in April, data published by federal statistics agency Destatis said, a 1.2pc increase on the previous month.
In March, demand for goods made in Germany plunged by 6pc.
The bounce-back was driven by a 4.7pc jump in exports to the United States, which was once again Germany’s biggest export destination.
Exports to China saw a 10.1pc increase, while those to European Union countries rose by more than 4pc.
Imports fell 1.7pc in April to €112bn, leading a trade surplus of €18.4bn euros for the month.
ING bank economist Carsten Brzeski said the April rebound in exports is “too little to make us happy”.
He said: “Trade is no longer the strong resilient growth driver of the German economy it used to be.”
Good Morning from Germany, where trade surplus has jumped from €14.9bn in Mar to €18.4bn in Apr as a result of tumbling energy prices & high order backlogs. Exports surprisingly increased by 1.2% MoM, while imports fell by 1.7%. Exports to US were up 4.7%, to China by 10.1%,… pic.twitter.com/cShPVw2aIn
— Holger Zschaepitz (@Schuldensuehner) June 5, 2023
Saudi cuts help boost FTSE 100
The FTSE 100 edged up as energy companies were boosted by a pledge by top oil exporter Saudi Arabia to cut supplies.
The resource-heavy FTSE 100 has added 0.5pc, boosted by a 1.1pc jump in energy firms as oil prices advanced following Saudi Arabia’s pledge to cut production by another one million barrels per day from July.
The mid-cap FTSE 250 added 0.3pc, aided by a 5.9pc surge in Asos after a Turkish retailer backed by China’s Alibaba reportedly made a bid for the UK retailer.
The broader retail sector housing the stock added 0.4pc.
UK listed shares of Indivior surged as much as 10.3pc to over a four-month high after the drugmaker said it agreed to settle a lawsuit by US states accusing it of illegally suppressing generic competition for its opioid addiction treatment Suboxone.
New business lobby group launched ahead of CBI crunch vote
One of the UK’s biggest business groups has positioned itself to replace the Confederation of British Industry a day ahead of a crunch vote to determine the future of the scandal-hit organisation.
The British Chambers of Commerce announced a new business council including major companies such as BP and Heathrow Airport and said large corporations were “looking for a different kind of representation”.
It comes as the CBI fights to secure its future following a series of sexual harassment allegations, with its members poised to vote on a turnaround plan on Tuesday.
It was first cast into chaos in March when The Guardian newspaper published allegations of misconduct against the CBI’s then director general, Tony Danker.
Mr Danker apologised and said that the offence or anxiety he had caused was “unintentional”. He stepped aside while outside lawyers investigated the claims against him.
Before long though the floodgates opened - another dozen or more women approached The Guardian saying they had been victims of sexual harassment while working for the business group.
Shevaun Haviland, the British Chambers of Commerce’s director general, said: “The voice of business needs to be heard loud and clear, and now is the right time for us to speak up.”
Markets rise at the open
The FTSE 100 rose as markets opened as the commodity-heavy index was boosted by surging oil prices.
The blue-chip index climbed 0.3pc to 7,632.87 while the midcap FTSE 250 rose by the same amount to 19,206.11.
UBS poised to complete Credit Suisse takeover this month
UBS has said that it expects to complete its takeover of longtime rival Credit Suisse as early as next week.
The two Zurich-based banks are uniting in a 3 billion-franc (£2.7bn) deal that was arranged hastily in March by the Swiss government and regulators after Credit Suisse’s stock plunged and jittery depositors quickly pulled out their money.
The merger was aimed at stemming upheaval in the global financial system after the collapse of two US banks shook confidence in the sector. The takeover will leave UBS as Switzerland’s single banking titan.
UBS said today that it expects to complete the acquisition by as early as June 12.
It said: “Completion is subject to the registration statement, which covers shares to be delivered, being declared effective by the US Securities and Exchange Commission, and to satisfaction, or waiver by UBS, of other remaining closing conditions.”
The reputation of 167-year-old Credit Suisse was pummelled in recent years over stock price declines, a string of scandals and the flight of customers worried about the bank’s future.
Prince Harry to take on Mirror over hacking claims
The Duke of Sussex is due to appear at the High Court today as his case against the publisher of the Daily Mirror over alleged unlawful information gathering begins.
Prince Harry is suing Mirror Group Newspapers (MGN) for damages, claiming journalists at its titles - which also include the Sunday Mirror and Sunday People - were linked to methods including phone hacking, so-called “blagging” or gaining information by deception and use of private investigators for unlawful activities.
His claim is being heard alongside three other “representative” claims during a trial which began last month and is due to last six to seven weeks.
Prince Harry alleges about 140 articles published between 1996 and 2010 contained information gathered using unlawful methods, and 33 of these have been selected to be considered at the trial.
MGN is contesting the claims and has either denied or not admitted each of them. The publisher also argues some of the claimants have brought their legal action too late.
The Duke is due to arrive at the court in London today and is due to enter the witness box on Tuesday, when he will face cross-examination from MGN’s lawyers.
Diageo boss' retirement brought forward after 'significant setback' in surgery
The world’s largest spirits maker has brought forward the appointment of its new chief executive after its boss suffered complications in surgery on a stomach ulcer.
Sir Ivan Menezes, who has led Johnnie Walker maker Diageo since 2013, had announced he would retire this summer, with Debra Crew due to take over as chief executive on July 1.
However Diageo announced today that Sir Ivan, who was knighted in the King’s first New Year’s Honours list, has “suffered a significant setback due to complications, which followed emergency surgery on the ulcer”.
As a result Ms Crew has been appointed interim chief executive with immediate effect, ahead of her formal ratification to the role in July.
The company said:
Our thoughts are with our much-loved colleague, Ivan, and his family.
Out of respect for Ivan and his family’s privacy, we will not be commenting further at this time.
Oil prices rise as Opec cuts production targets
Oil prices have rallied after Saudi Arabia said it would cut production by an extra one million barrels a day in July in an attempt to prop up the crude market.
The Arab state will lower its output to its lowest level in several years as Saudi Energy Minister Prince Abdulaziz bin Salman said he “will do whatever is necessary to bring stability to this market”.
It follows a tense meeting of the Opec+ cartel of oil-producing nations over the weekend, where the 23-member group decided it would not deepen its recent cuts to output.
Vivek Dhar, director of mining and energy commodities research at Commonwealth Bank of Australia, called Saudi Arabia’s decision a “voluntary cut” that was “notable more for downside protection” .
Oil in New York tumbled 11pc last month amid concerns over the outlook for demand, especially in China.
Today, international benchmark Brent crude has already climbed as much as 1.5pc to more than $77 a barrel, while US-produced West Texas Intermediate has risen as much as 1.6pc toward $73.
Saudi Arabia has sacrificed further market share to stabilise the market.
While others in the group pledged to maintain their existing cuts until the end of 2024, Russia made no commitment to curb output further and the United Arab Emirates secured a higher production quota for next year.
Saudi Arabia’s production cut in July could be extended, but the Saudis will keep the market “in suspense” about whether this will happen, Energy Minister Prince Abdulaziz bin Salman said.
The minister has repeatedly sought to hurt bearish oil speculators, warning them to “watch out” in the build-up to Sunday’s meeting.
Vandana Hari, founder of Vanda Insights, told Bloomberg TV: “Saudi Arabia would ideally want prices to be above $80 a barrel, and it is now trading around $77 a barrel.”
She added that if the health of the global economy falters, the short sellers “will be back in no time”.
Oil prices have advanced after Saudi Arabia said it would cut production by a million barrels a day from July, sacrificing market share in an attempt to prop up the crude market.
Brent crude, the international benchmark, has already climbed as much as 1.5pc to more than $77 a barrel, while US-produced West Texas Intermediate has risen as much as 1.6pc toward $73.
5 things to start your day
1) Saudi Arabia slashes oil production and threatens to do ‘whatever is necessary’ to boost prices | The move is likely to inflame tensions with US President Joe Biden and risks reigniting inflation in Britain and Europe
2) Tim Cook seeks Apple’s next iPhone moment with bet on VR | Monday’s launch is anticipated to be the most pivotal of Cook’s leadership
3) Record demand for 35-year mortgages as first-time buyers face soaring rates | More Britons sign up to loans that will stretch into their seventies
4) Siemens and Microsoft launch last-ditch bid to save CBI as support drains away | Businesses lead show of support for embattled group ahead of crunch vote on its future
5) Aldi has lightbulb moment in efforts to keep down prices | German supermarket has resorted to dimming stores as it grapples with inflation
What happened overnight
Asian stocks followed Wall Street higher on Monday after strong US hiring data coupled with scant wage gains suggested a possible recession might be further away, but also that inflationary pressures are weakening.
The Nikkei 225 in Tokyo advanced 1.9pc to 32,124.17 and the Shanghai Composite Index added less than 0.1pc to 3,232.80. The Hang Seng in Hong Kong gained 0.7pc to 19.078.22.
The Kospi in Seoul was 0.6pc higher at 2,616.25 and the S&P ASX 200 in Sydney jumped 1.2pc to 7,232.10.
Singapore and Jakarta gained. Markets in New Zealand and Thailand were closed for holidays.
Wall Street’s benchmark S&P 500 index leaped 1.5pc on Friday, putting it on the verge of entering what traders call a “bull market” after rising nearly 20pc in seven months.