Shares, pound and oil slide as recession fears mount – business live

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Back in the transport world, rail services around Britain are expected to be severely disrupted by the hot weather next week.

Trains are expected to run slowly to reduce the risk of track and equipment failing in extreme heat, our transport correspondent Gwyn Topham reports:

Blanket speed restrictions are likely to be put in place around the south-east of England, with the air temperature forecast to possibly surpass the highest ever recorded in Britain, which was 38.7 in 2019.

Network Rail’s emergency weather action teams are meeting on Friday to examine detailed forecasts, and will be expected to limit train speeds for safety if temperatures pass 35C.

Passengers will be informed that trains are likely to run with severe delays, particularly on main lines in and out of London, where a 60mph speed limit would have a significant effect on fast services.

Crude Oil is now below the level it was at the day before Russia invaded Ukraine, down over 30% from its high in March. Markets are increasingly pricing in a global recession and a slowdown in demand (similar to what we saw in the back half of 2008).

— Charlie Bilello (@charliebilello) July 14, 2022

US crude oil has sunk to its levels when the Ukraine war began, down 5% to around $91.34 per barrel.

Britain’s FTSE 250 index, which contains medium-sized companies, is down 1.6% in afternoon trading, around a one-week low.

Each of the 30 members of the Dow Jones industrial average are in the red.

JP Morgan (-4.5%) are the top faller, followed by Goldman Sachs (-4%), after JPM and Morgan Stanley both disappointed with today’s earnings’ figures.

Chevron has lost 3.7% as the oil price drops to five-month lows.

Wall Street is taking an early tumble too.

The Dow Jones industrial average has fallen by 563 points in early trading to 30,209, down 1.8% today.

Traders have been jolted by yesterday’s jump in US inflation, which has led to speculatation that the Federal Reserve could raise interest rate by a whole percentage point later this month — as Canada did, unexpectedly, yesterday.

Shares in JP Morgan have fallen over 4% after it reported a fall in profits.

Jamie Dimon’s warning that the global economy will be hit by the Ukraine war, rising inflation and falling consumer confidence will also be worrying traders.

The rise in US producer price inflation, and the jump in jobless claims to eight month highs today (see here), also suggest growth is weakening even as prices keep rising higher.

Shares, oil, pound and euro slide on recession fears

Shares, oil, the pound and the euro are all tumbling today as recession worries hammer markets again.

In London, the FTSE 100 index of blue-chip shares is down 119 points, or 1.6%, at 7035, a one-week low.

Mining companies and oil giants are along the fallers, with Anglo American falling 6% and Shell down 4.5%. Insurance company Admiral is the top faller,down 17%, after a profit warning from smaller rival Sable this morning.

The pound has sunk below $1.18 for the first time since March 2020, down a cent today…

The pound vs the US dollar over the last five years Photograph: Refinitiv

… while the euro has again fallen below parity with the US dollar, as it did yesterday for the first time in 20 years.

Recession fears have pushed oil down to its lowest levels since the Ukraine war began.

Brent crude, the international benchmark, has fallen 3.3% to $96.29 per barrel, the lowest since 25th February.

Wednesday’s surge in US inflation to 9.1%, a new 40-year high, has fuelled concerns that central banks will raise interest rates even faster — despite signs of slowing growth.

Craig Erlam, senior market analyst at OANDA, says central banks are scrambling to hike aggressively in a desperate attempt to get it back under control and limit the shock to the economy.

Recession fears have fully gripped the markets and central banks are left with little alternative but to tighten aggressively into it…

Investors are clearly now of the view that the ship has sailed on that and the job now is ensuring any recession is shallow and brief. The expectation now is that the Fed will hike aggressively before reversing course in the middle of next year in order to stimulate the economy out of recession. Even that is looking optimistic at this point.

US jobless claims hit eight-month high

The number of Americans applying for unemployment benefits has hit its highest level in nearly 8 months.

New applications for jobless support rose by 9,000 last week to 244,000, the highest since last November.

That indicates firms may have cut more staff as the US economy was hit by soaring inflation.

Analysts had expected the number to remain flat from the previous week.

The four-week average for claims, which evens out some of the week-to-week volatility, rose by 3,250 from the previous week, to 235,750.

More encouragingly, the total number of Americans collecting jobless benefits has dropped, dowm 41,000 to 1,331,000. That’s around its lowest level in 50 years.

Weekly initial jobless claims starting to inch up. Now 244,000. Need 300,000 for recessionary warning. But now registering the tech layoffs we’ve been hearing about. Continuing claims fell however.

— Tracey Ryniec (@TraceyRyniec) July 14, 2022

US producers continued to hike their prices last month, in a sign that inflationary pressures have not abated.

Producer prices jumped by 1.1% during June, driven by an increase in the cost of goods, the U.S. Bureau of Labor Statistics reports.

That drove producer prices up by 11.3% over the last year — the largest increase since a record 11.6-percent jump in March.

Those costs feed through to consumers in higher prices.

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