Euro falls sharply as ECB vows to keep printing money until 2024

ECB President Christine Lagarde interest rates inflation Europe energy crisis recession – AP Photo/Michael Probst, File

The euro tumbled below parity against the dollar on Thursday night after the European Central Bank (ECB) vowed to continue its money printing programme despite surging inflation.

The ECB increased interest rates by 0.75pc in an effort to limit sharply rising prices, with inflation hitting 9.9pc across the eurozone last month.

But it also said that it would continue the quantitative easing (QE) programme where new money is created to buy bonds.

The euro dropped around 1pc against the dollar to lows of $0.9976 on fears that inflation will remain higher for longer, with the rise in interest rates serving to make a looming recession worse.

Christine Lagarde, president of the ECB, said: “Inflation remains far too high and will stay above the target for an extended period.”

The second straight 0.75-point rise in rates lifts the benchmark deposit rate to 1.5pc, bringing it to its highest level since early 2009. Inflation in the euro area reached 9.9pc in September, five times the ECB’s target.

The large increase in borrowing costs was already expected by markets. More surprisingly, the ECB announced it would only take very limited measures to start shrinking its €8.8 trillion (£7.6 trillion) balance sheet.

The ECB vowed to continue creating money by reinvesting the principal payments from maturing bonds bought in the aftermath of the eurozone crisis and during Covid.

Bonds bought in the years after the eurozone crisis would be reinvested for “as long as necessary”, it said. The ECB also extended the life of its Covid debt purchases “until at least the end of 2024”.

The cautious approach marks a divergence from the UK and the US. The Federal Reserve has already started to sell bonds back into the market, reversing QE, while the Bank of England will follow next week.

Unlike at the last rate announcement, Christine Lagarde was tight-lipped about how many more rate increases were yet to come and acknowledged that the economy was already showing signs of a downturn.

She said: “Economic activity in the euro area is likely to have slowed significantly in the third quarter.”

While the central bank has moved more slowly than in the US and the UK, its decision to make borrowing more costly will prove unpopular in several eurozone countries.

Leaders in Italy, France and Finland have all expressed doubts about whether aggressive rate hikes are the right approach.

In Britain, the head of the Debt Management Office (DMO) warned this week that plans to begin so-called quantitative tightening will drive up government borrowing costs.

Sir Robert Stheeman, the civil servant in charge of the DMO, said: “We now have a situation where net issuance to the market will be the highest in history.

“How that plays out normally, you would expect that to be a question of supply and demand. And if there’s a lot of supply, well, then theoretically, you will need the price to fall and yields have potentially to rise in order for that supply to be taken down by the market at clearing level.”

06:42 PM

That’s all for today

Here’s a reminder of our top stories today:

Mark Zuckerberg’s net worth slashed by $10bn as Meta profits halve Share price plunges by a fifth amid doubts about future of ‘Metaverse’

Comcast slashes value of Sky by $8.6bn as European viewers tune out The company reduced its future cash flow assumptions in the face of the cost of living crisis

Made.com co-founder accuses bosses of losing focus as rescue talks collapse The online retailer said there was ‘no reasonable prospect’ that an offer would be made for the business

Shell in talks with Government as ministers consider new windfall tax Oil and gas giant did not pay any tax in Britain, despite an existing windfall scheme

House prices to drop 20pc as early as next year, bank warns Lloyds also expects UK economy to shrink 1pc in 2023

The pound closed down slightly against the dollar at $1.16. Sterling was up 0.6pc against the Euro at €1.16

Later, we are expecting the results for Apple and Amazon after 9pm.

05:39 PM

Twitter won’t become a ‘free-for-all hellscape’, says Musk

Elon Musk has sought to reassure advertisers of his plans for Twitter, saying he does not want it to become a “free-for-all hellscape” of hateful content.

While Musk has previously said he is a free speech “absolutist”, he has sought to play down those comments and said he intends Twitter to a “a digital town square” where topics are debated “in a healthy manner”.

“There is currently a great danger that social media will splinter into far right wing and far left wing echo chambers,” Musk said, adding that “traditional media has fueled and catered to these polarized extremes.”

04:53 PM

$100bn wiped from Zuckerberg’s personal wealth

Meta’s share price collapse overnight means Facebook founder Mark Zuckerberg is nursing $100bn in losses in the last 13 months.

Shares in Meta opened down 22pc on Thursday after last night’s disappointing results. Sales fell and the company’s spending on its Metaverse technology continued to rise.

That has burned a huge hole in Zuckerberg’s pocket. Last year, he was worth over $140bn in September, according to Bloomberg’s Billionaires Index. Now, he is worth just under $40bn, meaning he has lost a massive $100bn in just over a year.

04:38 PM

FTSE 100 closing price

Up 0.25pc to 7,073.69

04:20 PM

Sky valuation slashed by $8.6bn

Sky’s American owner has written off a quarter of the price it paid for the British broadcaster, slashing its valuation by $8.6bn (£7.4bn) just four years after winning a landmark bidding war against Rupert Murdoch’s Fox.

The US media giant reported Sky’s revenues had fallen 14.7pc to $4.3bn on the back of a weakening economic outlook in Europe.

The 2018 takeover battle that saw Brian Roberts, Comcast’s billionaire chairman whose father founded the company, snatch sky from under the nose of the Murdoch family for $39bn is viewed as one of the most dramatic takeover battles in City memory.

However, since then Sky has endured repeated hits to its revenues with the impact of Covid-19 on live sports and now an economic slowdown in Europe hitting its key markets.

Comcast said Sky’s revenue from consumers had remained roughly stable on a constant currency basis, but was down 15pc in dollar terms. Advertising revenues fell and sales in Germany and Italy dragged down its overall growth.

03:35 PM

Handing over

That’s all from me for today – thanks for following! Matthew Field will take things from here.

03:24 PM

Striking rail union boss steps down amid sexual harassment inquiry

Manuel Cortes rail union – Guy Smallman/Getty Images

The head of a rail union at the centre of this year’s strike chaos has stepped down after an inquiry into allegations against him of sexual harassment and bullying was extended.

Oliver Gill has the story:

Manuel Cortes retired as general secretary of the Transport Salaried Staffs’ Association (TSSA) this week, the union confirmed in response to questions from The Telegraph.

He has been one of three figureheads of a wave of industrial action on the railways alongside Mick Lynch, the head of the Rail, Maritime and Transport workers union (RMT) and Mick Whelan, general secretary of drivers union Aslef.

Mr Cortes, 55, is facing allegations of unwanted touching and demands for kisses from at least two women, The Guardian reported in September.

The union leader has denied claims of harassment but has apologised for any hurt caused by his behaviour.

Last month, Baroness Helena Kennedy KC was appointed to conduct an independent inquiry into claims of sexual harassment and bullying at the TSSA following specific allegations against Mr Cortes.

Read Ollie’s full story here

03:02 PM

Meta crashes 25pc to lowest since 2016

Mark Zuckerberg metaverse – Michael Nagle/Bloomberg

While Wall Street has opened higher, it’s not all positive.

Shares in Meta have crashed 25pc at the open as investors baulked at an advertising slowdown and Mark Zuckerberg’s big bet on the metaverse.

The Facebook owner had a quarter of its value wiped out following lacklustre figures for the third-quarter.

Mr Zuckerberg has pleaded for patience with the social media giant’s growing investments in unproven bets.

But investors aren’t buying it. The stock is already down 61pc this year, knocking its market value down by a huge $672bn.

02:39 PM

Wall Street opens higher as GDP data eases recession fears

Wall Street’s main indices have opened higher after data showed US economic growth rebounded in the third quarter, helping to ease worries about an imminent recession fuelled by aggressive interest rate rises.

The S&P 500 jumped 0.9pc at the open, while the Dow Jones was up 0.7pc. The Nasdaq inched marginally higher.

02:35 PM

Octopus set to buy collapsed energy firm Bulb ‘as soon as this week’

Octopus is said to be closing in on a takeover of collapsed energy supplier Bulb and a deal could be announced as soon as this week.

The Government is set to help close a transaction for Bulb, Bloomberg reports.

Octopus will become one of the UK’s largest energy suppliers after adding Bulb’s roughly 1.6m household customers.

Bulb collapsed last November when wholesale prices surged above the regulator’s price cap, forcing it to sell energy at a loss.

The Government stepped in and appointed Teneo to run the company, with the bailout expected to cost the taxpayer around £4bn.

02:22 PM

Lagarde: Economic slowdown will deepen

Christine Lagarde has said economic activity likely slowed significantly in the third quarter and will probably slow further in the months ahead.

Speaking at the ECB press conference, she said: “We expect a further weakening in the remainder of this year and the beginning of next year.”

The central bank boss warned risks to economic growth were “clearly on the downside” due to the war in Ukraine.

She said energy and food costs could remain persistently higher than expectations and the weakening global economy could also drag.

02:04 PM

Lagarde: Energy bills support should be ‘temporary and targeted’

Christine Lagarde, President of the ECB, is now giving a press conference, and she’s weighed in on energy support from governments.

To limit the risk of fuelling inflation fiscal support measures to shield the economy from the impact of high energy prices should be temporary and targeted at the most vulnerable.

Policymakers should provide incentives to lower energy consumption and bolster energy supply. At the same time, governments should pursue fiscal policies that show they are committed to gradually bringing down high public debt ratios.

01:57 PM

US economy rebounds

The US economy rebounded in the third quarter when it grew by 2.6pc, coming in slightly higher than forecasts of 2.4pc.

This reinforces evidence that despite two consecutive quarters of negative growth in the first half of the year, the world’s largest economy is yet to enter a recession.

However, with the Federal Reserve expected to deliver a fourth outsized rate increase next week, analysts expect that an economic downturn is not far off.

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01:37 PM

Reaction: ECB decides recession is ‘necessary evil’

Jeremy Batstone Carr at Raymond James says the ECB is taking a different approach to its peers.

The European Central Bank (ECB) is between a rock and a hard place as it looks to control inflation without tanking the economy, and has decided that potentially tipping the region into a recession is a necessary evil in order to control spiralling inflation.

The eurozone is facing challenges that will be familiar to much of the rest of the world, with headline regional inflation running at a year-on-year rate of 10pc, five times the target level. In response the ECB has raised its base interest rate by a further 0.75 points as it prioritises its core mandate of ensuring price stability.

However, the attempt to cushion the blow to households and businesses from rising costs is likely to create issues elsewhere by imparting a marked downward pressure on economic activity by dramatically increasing the cost of borrowing.

While its US and UK counterparts are acting to reduce of the size of the balance sheet, the ECB is taking a different route and shunning the quantitative tightening path. A bigger priority for the ECB will be the trend in bond yield spreads between the peripheral and core member states.

The Bank unveiled its new Transmission Protection Instrument this summer, and even though it has had no cause to use the facility thus far, its mere presence ensures that spreads remain within the boundaries of acceptability. But, as markets face ongoing pressures, the ECB may intervene using this tool to control disorderly dynamics.

01:25 PM

Reaction: ECB ‘living on the edge of a pivot’

FX analyst Viraj Patel says the ECB is “living on the edge of a pivot”.

The central bank has said it’s taking a meeting-by-meeting approach to raising rates, suggesting a change of direction could come soon.

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01:15 PM

ECB raises interest rates to 1.5pc

As expected, the ECB has raised interest rates to 75 basis points to 1.5pc.

01:13 PM

Lloyds braces for house prices to drop by as much as a fifth amid mortgage slowdown

Lloyds Banking Group is bracing for house prices to slump by as much as a fifth next year as it warned of a slowdown in mortgage lending amid mounting interest rates.

Patrick Mulholland has more:

The FTSE 100 lender said it expected the UK economy to shrink 1pc next year, and by as much as 4.5pc in a worst case scenario.

It came as Lloyds said profits slumped by more than a quarter to £1.5bn during the three months to the end of September compared with a year earlier, well below analyst forecasts of £1.8bn.

Lloyds said that higher interest rates and the bleak outlook for the economy was likely to lead to a slowdown in mortgage lending over the next year.

According to its predictions, house prices will fall by 7.9pc during the period, with its worst-case model assuming a crash of almost 18pc. Commercial property prices are forecast to drop by 15pc under its base case scenario, with a slump of 36pc predicted in its worst case.

Previous forecasts by Lloyds had suggested house prices would fall by as much as 30.2pc between 2020 and 2022, with even its base case model predicting a 0.7pc decrease. House prices have soared to record levels since the pandemic hit as lockdowns sparked a rush among buyers for more space and properties in rural locations.

Read Patrick’s full story here

12:29 PM

Sunak: No options off the table for economic plan

Rishi Sunak and Chancellor Jeremy Hunt are taking no tax options off the table as they consider how to plug the hole in the UK’s budget, the PM’s spokesman said.

The Chancellor will deliver the autumn statement on November 17 after delaying it from October 31, and has pledged to get the public finances back on a sustainable footing.

He’s warned it will involved “decisions of eye-watering difficulty” on tax and spending.

The spokesman declined to comment on a possible expansion of the windfall tax on energy firms or a similar levy on banks.

12:24 PM

French winter power prices jump amid nuclear troubles

Winter electricity prices in France have climbed the most in almost a month as concerns over the country’s fleet of nuclear reactors persist.

France gets more than two-thirds of its electricity from nuclear energy, but only half its capacity is available as the Government repairs its ageing power stations.

French power prices have remained high, with traders expecting hundreds of hours of power shortages this winter.

Prices for November climbed as much as 8.3pc to €447 a megawatt-hour today, while December prices hit €756.

While prices for January have eased back slightly, they’re still trading near €1,000 per megawatt-hour – about 10 times higher than average and far higher than the German equivalent.

12:03 PM

European stocks decline ahead of ECB decision

European stocks fell this morning as traders braced for another interest rate rise from the European Central Bank.

The Europe-wide Stoxx 600 index fell 0.6pc, with Credit Suisse tumbling 12pc after it reported its fourth straight loss and unveiled plans to raise money from Saudi Arabia.

Markets are expecting the ECB to raise rates by 75 basis points to 1.5pc – the highest in more than a decade.

Europe is grappling with surging inflation at a time when the energy crisis threatens to push the bloc into recession.

11:34 AM

Twitter shares to be suspended as Musk nears deal

Twitter shares will be suspended for trading in New York tomorrow as Elon Musk approaches a court-ordered deadline to complete his $44bn takeover.

The world’s richest man, who must close the deal by October 28, visited Twitter’s headquarters in San Francisco yesterday and hinted he was the company’s top boss after updating his profile bio to “Chief Twit”.

The deal’s completion would mark an end to a lawsuit by Twitter, which, along with investors, now expects the deal to be completed on its original terms of $54.20 per share.

11:03 AM

Net zero will hand Opec cartel control over half of global oil market

Net zero restrictions on oil drilling are tightening Saudi Arabia’s grip over the global market for crude and will deepen tensions with the West, the International Energy Agency (IEA) has warned.

Rachel Millard reports:

Green rules which limit new oil fields mean that the Saudi-led Opec cartel will come to control 52pc of the market, the agency said, compared to just over a third now.

In its annual energy outlook published on Thursday, the IEA said that “geopolitical tensions” are overshadowing energy markets.

However, it added that Vladimir Putin had squandered Russia’s role as an energy superpower by cutting gas flows following the invasion of Ukraine. The IEA predicted that Russian fossil fuel exports will never return to 2021 levels as a result.

Warning that the growing power of Opec will lead to opposition in the West, it said: “It cannot be taken for granted that importers will be comfortable with such a concentration in supply.”

The warning is significant at a time of deep division between the US, a key IEA member, and Opec over oil supplies amid a global cost-of-living crisis and Russia’s war on Ukraine.

Read Rachel Millard’s full story here

10:43 AM

Mortgage lending to slump to lowest in a decade, warns EY

UK mortgage lending is headed for its biggest plunge in more than a decade next year after a surge in interest rates and cost-of-living squeeze brings household budgets to a breaking point.

Total loans for house purchases may total just £11bn next year, a fraction of the £63bn expected for 2022, according to a report from EY.

That would mark 0.7pc growth in lending – the lowest since 2011 and down from a healthy 4pc increase expected this year.

Borrowing costs are soaring along with expectations that the Bank of England will keep raising interest rates in response to the highest inflation in 40 years.

Investors are betting on the biggest increase in 33 years when policy makers meet again next week, taking the base rate to 3pc from near zero at the end of last year.

Anna Anthony at EY said:

While interest rates are still fairly low by historic standards, they are the highest they’ve been in a decade and are set to rise further.

This will put further pressure on already-strained finances and will have a knock-on effect on demand for most forms of bank lending.

10:25 AM

Shell boss backs windfall tax

Shell chief executive Ben van Beurden – Jason Alden/Bloomberg

Ben van Beurden, chief executive of Shell, has once again thrown his weight behind the need for windfall taxes against energy firms.

Rachel Millard reports:

The reality is, what we are seeing today, is that many many people in society, particularly of course the most vulnerable, are suffering very badly as a result of it [high prices].

I think it is only sensible, it’s a societal reality, that of course governments intervene and alleviate the pressure on those who need that alleviation most.

And I think therefore [it’s] also a societal point we have to accept that governments will raise taxes for that.

Therefore I think we should be prepared and accept that our industry will be looked at for raising taxes in order to fund the transfers to those who need it most in these very difficult times.

We should not be surprised. We should be helping governments to design the right policies, and of course there’s many ways in which you can design windfall taxes, special levies, solidarity contributions etc, and I think we should be at the table to make sure these designs are correct and appropriate.

10:09 AM

Zahawi hints PM could extend windfall tax

Nadhim Zahawi has suggested that Rishi Sunak and Jeremy Hunt will consider extending the windfall tax on energy giants as part of their planning for the Autumn Statement, writes Jack Maidment.

The Conservative Party chairman was asked about Shell’s profits and was asked if the Government will review its position on the windfall tax.

He told LBC Radio: “So the Prime Minister when chancellor was actually the chancellor who introduced the windfall tax which is raising £5 billion from the energy producers like Shell.

“It also is incentivising them, this is why Rishi Sunak was so smart about this when he was chancellor, that if they make an investment in the UK… then of course they will be incentivised to do so.

“But these are tough decisions and I know the Chancellor and the Prime Minister will be looking at everything as to how we make sure…”

LBC presenter Nick Ferrari said: “So they might look at an additional windfall tax…?”

Mr Zahawi said: “I would not preempt any decisions but absolutely the Chancellor and the Prime Minister will look at every decision and will, on the 17th November, stand up at the despatch box… and deliver an Autumn Statement that demonstrates we have an energy plan that delivers energy security because what you can’t do is create a tax system that disincentivises investment.”

09:46 AM

Huawei revenue falls as sanctions and China lockdowns weigh

Huawei revenue sanctions China – NICOLAS ASFOURI / AFP

Chinese telecoms giant Huawei suffered a 2.2pc fall in revenue in the first three quarters of the year as US sanctions and continued Covid restrictions in China weighed on sales.

Huawei made 445.8bn yuan (£53.2bn) in revenue in the first three quarters of 2022, down from 455.8bn yuan in the same period a year ago.

The company provided few specifics and did not include a breakdown of its data by business segment.

A spokesman told AFP: “Our device business was impacted by Covid-19 and global economic downturn.”

Huawei has been left reeling by sanctions rolled out by former US President Donald Trump, fuelled by concerns about cybersecurity and espionage.

Current President Joe Biden’s administration has added to the pressure with the US Chip Act, which threatens Huawei’s access to global semiconductor supply chains.

09:33 AM

Pound slips after fiscal plan delay

Sterling has pulled back from its early gains against the dollar as investors awaited more clues on the Government’s delayed fiscal plans.

The pound slipped 0.3pc to $1.1592, taking a breather after rallying 2.5pc so far this week.

The gains have partly been due to a weaker dollar, with analysts warning the pound could be hit by uncertainty over how the fiscal plans will impact the economy ahead of an expected recession.

The yield on the 10-year government bond rose 5.3 basis points to 3.63pc.

09:15 AM

Budweiser says demand still strong despite price rises

Budweiser AB InBev beer – AP Photo/Gene J. Puskar

The maker of Budweiser has said consumer demand for beer remains resilient despite higher prices, just a day after rival Heineken warned of slowing demand.

AB InBev, which also makes Stella Artois and is the world’s largest brewer, reported earnings growth of 6.5pc in the third quarter and raised the lower end of its profit growth forecast.

Michel Doukeris, chief executive, said: “We continue to see strong consumer demand for our portfolio and a resilient beer category.”

Shares in AB InBev, which is the main beer sponsor for the World Cup in Qatar, jumped as much as 6.2pc in early trading – the most in seven months.

Beer and spirits makers have been raising prices to offset higher raw material costs, but there are signs drinkers are starting to vote with their feet.

Shares of Heineken fell 5pc on Wednesday after the second-biggest brewer warned of slowing demand in Europe. Carlsberg lifted its profit forecast, but boss Cees ‘t Hart said consumer sentiment was “weakening.”

09:05 AM

Credit Suisse sells stake to Saudis

Credit Suisse Saudi Arabia – REUTERS/Arnd Wiegmann/File Photo/File Photo

Credit Suisse has raised 1.5bn Swiss francs (£1.3bn) from the Saudi National Bank through shares sales, as it seeks to restructure its ailing business by hiving off its investment bank and refocusing its efforts on wealth management.

Patrick Mulholland reports:

After months of speculation, the troubled Swiss lender announced it was seeking to raise 4bn Swiss francs of capital as part of “a radical strategy” to create “a stronger, more resilient and more efficient bank” focused on client needs.

Credit Suisse also revealed it would sell its securitised products unit to US investment groups Pimco and Apollo, and outlined plans to spin off its capital markets and advisory business over the next three years under a rejuvenated CS First Boston brand.

The Zurich-based bank will cut 2.5bn francs of costs, representing 15pc of its total cost base, by 2025.

The revamp – the second such strategy rethink in less than a year – comes as Credit Suisse looks to move past a succession of scandals that have cost billions of dollars in trading errors and misconduct.

Ulrich Körner, Chief Executive Officer of Credit Suisse, said: “This is a historic moment for Credit Suisse. We are radically restructuring the investment bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs.

“The new executive board is focused on restoring trust through the relentless and accountable delivery of our new strategy, where risk management remains at the very core of everything we do.”

08:50 AM

FTSE risers and fallers

The FTSE 100 has edged back into positive territory, driven higher by gains for energy firms.

The blue-chip index rose 0.2pc after slipping into the red at the opening bell.

Shell was the biggest boost, rising more than 4pc after it reported another quarter of huge profits thanks to surging gas prices. The figures pushed rivals BP and Harbour Energy higher as well.

Unilever also gained ground after it raised its sales forecast thanks to higher prices, with investors shrugging off concerns about declining consumer sentiment.

Airtel Africa was the biggest laggard, dropping 5.8pc following its half-year results.

The domestically-focused FTSE 250 opened flat, with oil and gas firm Energean rising 2.6pc.

08:33 AM

Unilever sounds the alarm on consumer sentiment

Unilever has given a dire assessment of consumer sentiment in Europe and China – two of its key markets – but raised its full-year sales forecast as it lifted prices to counter soaring costs.

Like the rest of the consumer goods industry, Unilever’s margins have been squeezed since the start of the war in Ukraine that has pushed up costs of energy and key ingredients. As a result, the company has raised prices sharply.

Graeme Pitkethly, chief financial officer, told reporters: “Consumer sentiment in Europe is at an all time low” as he warned of fears of a “confluence of events” in Europe with energy prices and inflation rising and consumers’ savings waning.

Unilever’s prices rose 12.5pc in the third quarter, with sales rising more than expected despite a 1.6pc fall in volumes.

Mr Piktethly said: “Both the premium segments of the market and the value segments of the market are actually growing quite quickly, at an equivalent rate.”

But he said inflation and the promise of austerity in some countries has prompted a cost-of-living crisis that is pushing some people towards cheaper alternative products, such as private label goods made by retailers.

“The basic needs of our European consumers are occupying a higher share of wallets – things like utilities, transportation and food – and there tends to be cut back on discretionary non-food items.”

08:20 AM

$10bn wiped off Mark Zuckerberg’s wealth

Matthew Field has crunched the numbers on what Meta’s share price slump means for its founder’s wallet:

Mark Zuckerberg has seen $10bn slashed from his net worth as shares in Facebook-owner Meta plunged amid mounting scepticism over its metaverse ambitions.

Shares in the Big Tech company fell nearly 19pc in after hours trading, which will wipe out a fifth of its chief executive’s $49bn fortune.

Mr Zuckerberg’s net worth has fallen by around $85bn so far this year. He was worth around $125bn at the start of January, according to Bloomberg data. The latest fall will leave him worth just under $40bn.

08:15 AM

Martin Sorrell: Meta could break up company as metaverse costs surge

Sir Martin Sorrell Meta – JULIAN SIMMONDS

Meta could break up its company to split its traditional social media platforms from its riskier bets in the metaverse, Sir Martin Sorrell has said.

The advertising tycoon said investors were raising their eyebrows at Mark Zuckerberg’s expensive push into uncharted waters through its Reality Labs division at a time when advertising budgets are being squeezed.

He said concepts such as the metaverse were of “significant importance” but added: “The downside is that it is going to take time.”

Sir Martin told BBC Radio 4’s Today programme:

If you manage to split Reality Labs, where the investment is being made in the metaverse, from the Facebook and Instagram platforms… If you split those two businesses you might have a very different market result and you probably would see and accretion in the value of Facebook platforms.

08:02 AM

FTSE 100 dips at the open

The FTSE 100 has started the day on the back foot as investors continue to weigh rising interest rates and the risk of a recession.

The blue-chip index slipped 0.3pc to 7,036 points.

07:48 AM

Shell raises dividend after second-highest profit

Shell will raise its dividend after reporting its second-highest profit on record, though there are signs some parts of the business are starting to slow.

A recent run of bumper earnings is boosting rewards for shareholders, while also keeping oil giants under scrutiny amid the energy crisis.

Still, Shell’s profits came in slightly below expectations at $9.5bn. That’s down from the record $11.5bn record achieved in the second quarter.

Ben van Beurden, outgoing chief executive, said:

We are delivering robust results at a time of ongoing volatility in global energy markets. At the same time we are working closely with governments and customers to address their short and long-term energy needs.

07:35 AM

Lloyds profits fall after £668m impairment

Lloyds profits impairment charge – REUTERS/Toby Melville/File Photo

Lloyds has posted a fall in profits after revealing a £668m impairment charge as it gears up for heavier loan losses amid soaring mortgage rates.

The UK’s biggest lender said its pre-tax profits stood at £1.5bn in the third quarter – a substantial drop from the £2bn reported last year and short of expectations.

It revealed a £668m impairment charge in the three months to September 30, a big swing from the £199m it held onto in credit last year.

Lloyds said this reflected the worsening economy and higher interest rate environment, but assured investors that there has been only “very modest” evidence of customers struggling with repayments to-date.

07:26 AM

Elon Musk: I don’t plan to cut 75pc of jobs

From one tech billionaire to another now…

Elon Musk is said to have told Twitter staff that he doesn’t plan to cut 75pc of the workforce when he takes over the company.

The world’s richest person, whose $44bn deal for Twitter is set to close tomorrow, denied reports of the huge job cuts in an address to employees at the firm’s San Francisco office, Bloomberg reports.

But the billionaire is still expected to cut staff as part of the takeover, sparking anxiety among workers.

In his latest stunt, Musk yesterday posted a clip of him walking into the offices carrying a kitchen sink. He’s also changed his Twitter profile description to “Chief Twit”.

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07:11 AM

Mark Zuckerberg hit by tech slowdown as Meta profits halve

The slump in Meta’s shares follows a lacklustre set of third-quarter figures from the social media company.

Our senior tech reporter Gareth Corfield has the lowdown on the numbers.

Read his full story here

07:03 AM

Good morning

Around $65bn (£56bn) has been wiped off Meta’s market capitalisation as the social media behemoth fell victim to a global advertising slowdown.

The Facebook owner last night reported lower sales while its profits halved to $4.4bn.

The figures spooked investors, with shares slumping 20pc in after-hours trading.

Mark Zuckerberg also asked shareholders for patience as Meta piles more money into experimental ventures such as the metaverse.

5 things to start your day

1) Net zero will hand Opec cartel control over half of global oil market – Saudi-led group to have 52pc market share by 2050 if new drilling ends, says International Energy Agency

2) Clearing NHS backlogs will not bring workers back to labour market, says IFS – Many out of work with long-term sickness are already retired, research finds

3) How the economic stars are aligning to reduce Rishi Sunak’s budget black hole – There is less pressure to tighten the public purse strings as Britain faces recession

4) Mercedes-Benz finally pulls out of Russia in blow to elite – Automobile giant the latest carmaker to leave Russia over invasion of Ukraine

5) The black sheep of the EU head for crisis as Brussels cuts off lifelines – Viktor Orban desperate to unlock frozen funds as inflation surges in Budapest

What happened overnight

Asian shares rose on Thursday on growing expectations that major central banks could start slowing the pace of interest rate hikes in coming months, while the dollar’s retreat lifted commodities and pushed treasury yields lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.59pc higher and set for a third straight session of gains. The index is down roughly 2pc for the month.

Australia’s resources-heavy share index advanced 0.81pc, while Japan’s Nikkei opened 0.09pc lower.

China’s stock market opened 0.1pc higher, with Hong Kong’s Hang Seng Index up 2.6pc at the open.

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