Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Profits at NatWest Group rebounded in the second quarter, allowing the UK taxpayer-owned bank to announce a fresh round of dividends that will result in a payout of at least £190m to the Treasury, reports our banking correspondent Kalyeena Makortoff.
The group – formerly known as Royal Bank of Scotland – said it planned to pay investors dividends worth £347m at 3p per share, with more than half reserved for the government, which still holds a 54.7% stake in the lender following its £45.5bn state bailout in 2008. The dividend will be welcomed by the chancellor, who has been trying to find ways to offset a surge in borrowing costs linked to the pandemic.
The government could be in line for an even larger payout, however, as NatWest also revealed plans for a £750m general share buyback this year, and plans to distribute at least £1bn to shareholders over the next three years.
It came as the bank returned to profit in the second quarter, having swung to a loss of £1.3bn last year after it put aside cash to cover potential customer defaults during the Covid crisis. Pre-tax profits for the three months to June 30 this year surged to £1.6bn, easily beating consensus estimates for £861m.
Research from the Local Data Company and the British Retail Consortium shows that more than one in seven shops are now vacant on UK high streets, retail parks and shopping centres, the highest proportion since at least 2015, as the Covid-19 pandemic ramped up pressure on already weakened retailers, writes our retail correspondent Sarah Butler.
Fashion stores have been hit particularly hard, with a major shift to online shopping during the pandemic, and a lack of parties, events and nights out to dress up for.
Asian stock markets are sliding again after enjoying some respite yesterday, with Japan’s Nikkei down 1.8%, Hong Kong’s Hang Seng losing 1.9% (tech stocks such as Alibaba have shed about 10%) and the Australian index falling 0.4%.
China’s regulatory crackdown isn’t going away and the spread of the delta variant is also weighing on markets.
Stock futures are pointing to a lower open in Europe and on Wall Street later, after yesterday’s gains that took the Eurostoxx 600, FTSE 250, Dow Jones and S&P 500 to fresh record highs. Markets were lifted by strong company results, such as Lloyds Banking Group, Royal Dutch Shell and Anglo American in the UK, and shrugged off disappointing US GDP data and weekly jobless claims.
The question, as we come to the end of the month, is will the recovery seen in the past two days be enough to see European markets post their sixth successive monthly gains, asks Michael Hewson, chief market analyst at CMC Markets UK.
In the US, Robinhood’s stock market debut fell flat yesterday. The trading platform, used by amateur investors to play the stock market, priced at the lower end of its price range, at $38 apiece and raised $2.1bn, valuing the company at $32bn. However the shares slid 8.4% to $34.82 at the end of their first trading day in New York, after slumping as much as 12%.
We’re getting flash estimates for GDP growth between April and June from major European countries and the eurozone as a whole this morning, along with eurozone inflation for July. France is expected to come out of recession and Germany is set to bounce back from its 1.8% decline in the first quarter with a 2% economic expansion.
The US Federal Reserve’s preferred measure of inflation, core PCE (the personal consumption expenditure price index), is forecast to rise further, to 3.7% in June from May’s three-decade high of 3.4%.
Fed chair Jerome Powell again asserted this week that the inflation surge will be temporary, after the central bank’s decision to leave interest rates and the bond purchase programme unchanged. But he acknowledged that price increases have been stronger than expected and could last longer than anticipated.
- 8am BST: Italy unemployment rate for June (forecast: 10.4%)
- 8am BST: Spain GDP growth for Q2 flash estimate (2.2%)
- 9am BST: Germany GDP for Q2 flash (forecast: 2%)
- 9am BST: Italy GDP for Q2 flash (forecast: 1.3%)
- 10am BST: Eurozone inflation for July
- 10am BST: Eurozone GDP for Q2 flash (forecast: 1.5%)
- 1.30pm BST: US PCE price index for June (forecast: 3.7%)