Closing post
Time to wrap up.
The US inflation squeeze has intensified, with new data showing that US producer prices rose in September at the fastest pace in more than four years.
With higher energy costs hitting the US economy, the producer price index advanced 1.3% from a month earlier — the most since March 2022. On an annual basis, prices were 6.3% higher.
The data helped to push down shares on Wall Street, as an accelerating sell-off of AI-linked shares has hit global markets.
South Korea’s benchmark Kospi 200 index, which is heavily skewed towards the companies that make memory chips, fell more than 8% overnight to a six-month closing low, triggering circuit breakers that brought trading to a halt at various points.
Some of those semiconductor stocks, such as SK Hynix and Samsung Electronics, plunged nearly 11% and 9.5% respectively. The index closed at a six-month low, down 8.1%.
US stocks fell further when trading resumed on Thursday. The Nasdaq dropped another 1.4% at the start of trading, with Dell, which makes datacentre servers, and Coherent, which manufactures components for AI datacentres, leading the early fallers.
Related: Tech market sell-off deepens amid fears over US inflation and AI debt
The UK rallied, though, helped by the news that Britain’s economy kept growing.
Figures from the Office for National Statistics showed gross domestic product (GDP) rose by 0.1% last month, compared with 0.4% growth in July. That confounded a forecast by City economists of a 0.1% contraction.
With less than a fortnight before the budget, the ONS reading represents a surprise boost given that the Middle East war is rattling the global economy and hitting British households and businesses with a surge in energy costs.
Related: UK economy unexpectedly grows in August despite fall in consumer spending
John Healey has promised to use his first budget in a fortnight’s time to offer consumers and businesses a “breathing space” while sticking to Labour’s fiscal rules.
Speaking to journalists in Bangkok, where he has been attending the International Monetary Fund annual meetings, the chancellor said he was conscious of rising costs.
Healey also hailed the contribution that UK banks make, calling them part of the ‘jewel in the crown’ – amid speculation that he could impose higher taxes on them in the budget.
He told reporters:
My observations on the banks are just that people too often see them as a big distant financial institutions, when they are hardwired into the economic fabric of this country and our future prospects.
Related: John Healey vows to give ‘breathing space’ to consumers and businesses in first budget
Some Labour MPs want the chancellor to raise taxes on the gambling sector.
Updated
US lawmakers unveil bill to hold Wall Street’s ‘Epstein-connected’ bosses to account
US lawmakers have unveiled a new bill to hold Wall Street’s “Epstein-connected” bosses to account for helping finance the late sex offender’s crimes.
It came as top Democratic senator Elizabeth Warren condemned the UK bank Barclays for “dodging responsibility” over its failure to vet former boss Jes Staley and his ties to the once well-connected billionaire.
A bipartisan group of politicians, led by Warren and House representative Robert Garcia, are introducing a bill on Thursday known as the Epstein Wall Street Records Act. The bill follows a months-long investigation into the financier, who died in prison in 2019 while awaiting trial on child sex-trafficking charges.
If passed, the bill would force regulators including the Federal Reserve and the Securities and Exchange Commission to investigate “Epstein connected” financial firms and executives for potential breaches of banking, investment or illicit funding laws; and fine or even ban wrongdoers from the US financial sector.
Related: US lawmakers unveil bill to hold Wall Street’s ‘Epstein-connected’ bosses to account
FTSE 100 hits five-week high
The UK stock market is continuing to benefit from turmoil elsewhere.
The FTSE 100 share index is now up 1.1% at 10,843 points, its highest level since 8 September.
Kathleen Brooks, research director at XTB, says US assets are acting like a ‘harbour in the storm’:
A stronger economy, combined with a resilient FTSE 100, which is the best performing major index so far this week, is good news for the pound and the Gilt market. As other markets crash and burn, the pound is the top performing G7 currency this week, and the Gilt market is the best performer amongst its peers on Thursday. When the AI trade sells off, the UK is the harbour in the storm.
The US economy is continuing to hold onto workers, despite inflationary pressures.
The number of Americans filing new claims for unemployment support remained low last week, at 199,000 - 1,000 more than a week earlier.
Coherent Corp, the US manufacturer of lasers, engineered materials, and optoelectronic components for AI data centres, is also caught up in the sell-off – its shares are down 9%.
Europe has to take action to curb soaring oil and gas prices to prevent people from turning to populists and extremists, a senior EU official has said.
Dan Jørgensen, the European commissioner for energy and housing policy, said EU governments could choose actions to make fossil fuels cheaper as long as they were “targeted” and “temporary” so as not to derail the continent from its goal to tackle the climate crisis by drastically cutting carbon emissions.
Our Europe Live blog has all the details:
Related: Zelenskyy says latest Russian attacks come ‘in response to signals from US’ – Europe live
Dell (-9%) are leading the fallers on the S&P 500, as doubts persist about the AI boom.
That adds to their 11% drop yesterday, after analysts at Barclays raised concerns that enterprise spending on artificial intelligence won’t justify the AI buildout.
Wall Street opens in the red
Stocks are dropping on Wall Street at the start of trading, as inflation worries and AI angst hit share prices.
Tech stocks are leading the sell-off, pulling the Nasdaq index down by 1.3%.
The broader S&P 500 share index has dropped by 0.5%.
This morning’s jump in the US PPI index will have raised concerns about inflationary pressures.
Traders are also reacting to the sell-off in Asia-Pacific markets overnight, where South Korea’s Kospi hit a six-month low overnight (see earlier post).
On the AI front, AstraZeneca has entered into a new collaboration with a Californian AI therapeuticscompany called insitro, aimed at identifying novel targets to develop medicines for liver and heart disease.
The collaboration will focus on the areas of metabolic dysfunction-associated steatohepatitis (MASH), a serious liver disease, and cardiomyopathies, diseases of the heart muscle.
Insitro has created a virtual human to generate large-scale human and cellular data with AI-enabled target identification and medicine design. The deal is worth $1.46bn, with $40m paid upfront by AstraZeneca. The Californian company also has partnerships with US drugmakers Bristol Myers-Squibb and Eli Lilly.
Sharon Barr, executive vice resident and head of biopharmaceuticals research & development at AstraZeneca, said:
“We know that disease biology is incredibly complex, and one of the most critical decisions in R&D is selecting the right target. This strategic collaboration underscores our commitment to maximising the potential of cutting-edge AI to tackle the root cause of disease.
Partnering with insitro, we will use advanced AI to identify the biological drivers of disease to support the rapid discovery of high-quality novel targets, advancing our ambition to deliver the next generation of medicines to patients faster.”
Today’s jump in wholesale US inflation increases the pressure on the US Federal Reserve to raise interest rates soon.
Waleed Said, technical analyst at GivTrade, says the increase in core PPI means the energy shock from the Iran war is spreading, adding:
A firmer Fed is more likely but the market pricing about a one in three chance of a hike in October so don’t overreact to the headline but a rate hike in December does seem imminent.
US PPI inflation driven up by soaring gasoline
Tin hats on!
New data from the US has shown that producers are hiking prices at their fastest rate in almost four years, and much faster than expected.
Ths increase was driven by a surge in energy prices, which more than wiped out a drop in egg prices.
The Producer Price Index, which measures how much goods makers and services firms charge for their wares, jumped by 6.3% in the year to September. That’s the largest 12-month increase since December 2022, when it rose by 6.4%.
On a monthly basis, prices climbed by 1.2% in September alone, a sign that inflationary pressures rose last month.
The report shows that goods prices jumped by 2.6% in September alone, the largest increase since data were first calculated in December 2009.
That was driven by the rise in motor fuel; The Bureau of Labor Statistics reports:
Half of the September increase in the index for final demand goods can be traced to prices for gasoline, which jumped 20.3 percent. The indexes for diesel fuel, fresh and dry vegetables, jet fuel, residential electric power, and crude petroleum also rose. In contrast, prices for chicken eggs dropped 39.7 percent.
Alarmingly, core PPI also jumped. Prices for final demand less foods, energy, and trade services rose 5.0% in the year to September.
PPI is an important measure, as increases in producer prices tend to be passed onto consumers, who already experienced a jump in inflation last month:
Related: US inflation rose to 3.7% in September in blow to Republicans before midterms
EU pushing for action over trade deficit with China
The EU is set to call for further action to curb the bloc’s vast trade deficit with China, widely blamed for job losses and factory closures across the continent.
EU leaders meeting in Brussels on Thursday to discuss the trade deficit with China - which hit €360bn in 2025 - are expected to call for “new instruments to better address these imbalances” according to a draft statement.
The European Commission, which negotiates trade policy on behalf of the 27 member states, agreed a deal this month with Beijing that will see the EU limit hybrid car exports from China to 350,000 vehicles a year, potentially halving Chinese market share.
Related: EU to limit Chinese hybrid vehicle imports to 350,000 a year
EU countries have welcomed the deal, but think it is not enough and want steps to protect other industrial sectors, such as chemicals, plastics and machinery.
The debate has sharpened since Germany - long reluctant to use trade defences against China - converted to a more hawkish position amid pressure from German industrial leaders, who are laying off workers and closing factories.
Germany and France last week called for better use of existing trade defence measures, including urgent action in the chemicals and plastics sectors.
The EU’s two biggest economies are also seeking “a diversification instrument” that would cut off access to the EU market when faced with severe imbalances. Dubbed the “kill switch”, the law is intended to be country agnostic, but is clearly aimed at China.
Member states have welcomed the deal negotiated by EU trade commissioner Maroš Šefčovič on hybrid cars, but are sceptical as to whether Beijing will stick to it. China would adhere to the agreement because they began to realise “they are killing their customers” , Šefčovič was reported to have said, according to a senior EU diplomat.
The EU diplomat highlighted the urgency of the situation from the EU’s point of view: “We don’t have much time because every month that goes by, thousands of jobs are lost.”
UK government says it is minded to intervene in Sky-ITV deal
Media news: The UK government is ‘minded to intervene’ in Sky’s£1.6bn deal to buy ITV’s broadcasting and streaming arm.
Lisa Nandy, secretary of state for Digital, Culture, Media and Sport, has told parliament she believes there are public interest grounds for intervening in the deal.
They include ‘the need for free expression of opinion in news media’, the need for a pluratity of views in the news, and the need for a wide range of broadcasting which is “of high quality and calculated to appeal to a wide variety of tastes and interests.”
Back in July, Sky said the deal was a chance to create a “UK-focused national streaming champion”.
Related: Sky owner announces £1.6bn takeover of ITV’s broadcasting arm
Labour MPs urge Healey to raise taxes on slot machines
Nearly 90 Labour MPs have urged the Chancellor, John Healey, to ignore the gambling sector’s warnings about job losses and double the tax on high street slot machines at his inaugural budget later this month.
Campaigners say raising “machine games duty” (MGD) from 20% to 40% could raise £460m to fund public services and reduce the harm caused by 24-hour slots venues.
But Healey is also under pressure from the UK’s £13bn-a-year gambling industry, which has warned of up to 16,000 job losses at casinos and bookmakers, if the tax rise goes ahead.
In a letter sent on Thursday, 88 Labour MPs – nearly a quarter of the party’s backbenchers – demanded that “those who profit most from products associated with the greatest harm should be taxed at a higher rate”.
Their main target is “Category B3” slot machines, which allow punters to place rapid fire stakes of £2 every 2.5 seconds, for a chance of a £500 jackpot. Fruit machines in pubs, which are usually Category C, should be exempt, they said.
There were 49,094 B3 machines in Great Britain as of June 2024, racking up annual takings of nearly £2bn according to Gambling Commission figures. Each terminal took an average of £40,127 during that year, more than the median UK salary.
The MPs cited evidence from the regulator that players of these machines are “among the groups most likely to contact gambling help services, that those with gambling problems play gaming machines more frequently than those with fewer problems, and that problem gamblers spend relatively more time and money on machines.”
The Guardian has previously exposed how so-called adult gaming centres (AGCs), known by some in the industry as “slot farms” have exploited vulnerable gamblers and taken advantage of lax planning laws to flood high streets with the machines in the UK’s poorest areas.
The machines “depend on repeated local losses, often in communities least able to afford them” according to the letter, led by Alex Ballinger MP.
The prime minister, Andy Burnham, is understood to be supportive of measures that would crack down on AGCs, having been a vocal critic of them as Mayor of Greater Manchester.
Earlier this week the bosses of firms including Ladbrokes and Paddy Power signed a last-ditch letter to Healey, predicting that doubling MGD could trigger up to 1,470 betting shop closures, 34 casino closures and 15,900 job losses.
Signatories included Britain’s largest taxpayer, Fred Done, whose family have earned £105m in dividends from their gambling business since 2022.
Related: Done family took £30m dividend from Betfred before warning of job cuts
UK consumers’ pre-Christmas spending to rise, partly thanks to inflation
The UK economy could get a festive boost from a jump in spending this Christmas, new research shows.
Bain & Company are forecasting that UK consumers’ spending will register the strongest rise in 4 years in the pre-Christmas season this year. Nominal sales are projected to grow 3.5% in the November-December trading period, compared to the same period last year.
However, about half that increase is due to inflation! Higher price mean consumers are forced to pay more at the till for their Christmas shopping, even before adding more to this year’s Christmas stockings.
Sales volumes could grow in clothing & accessories, electronics & appliances, and health & personal care products, Bain suggests.
The group adds:
The Bain Consumer Lab findings also show UK consumers expect to do more of their shopping online this Christmas season. 42% of survey respondents said they plan to do all or most online vs 18% who plan to do all or most in-store. Of online shoppers, 69% say they will start their shopping journey on Amazon while 20% say they will start their shopping on AI platforms.
Toy shop Hamleys reported this week that a cartoonish banana so addictively squidgy that it is “really difficult to put down” will be among the top Christmas presents this year….so lets hope John Healey leaves us with enough money for one of those!
Related: Merry squishmas: £10 squeezy banana on list of top festive season toys
US tech stocks are expected to fall when trading begins in under two and a half hour’s time.
The futures market indicates the Nasdaq index could drop by around 1.2%, adding to yesterday’s fall of almost 1.9%.
Charu Chanana, chief investment strategist at Saxo says the markets are getting increasingly nervous, despite strong results from tech companies such as ASML and Micron, adding:
AI demand is not the problem; expectations and financing are. CoreWeave’s bond selloff highlights growing scrutiny of debt-funded AI infrastructure and the cost of capital.
The IMF warned today that the Middle East region is suffering a highly uneven economic shock this year.
Prolonged war in the Middle East and further disruptions to energy production, shipping routes or critical infrastructure pose the biggest risk to economies in the Middle East and Central Asia, the Fund pointed out.
Jihad Azour, the IMF’s director for the Middle East and Central Asia, told a news conference:
“The outlook depends critically on how quickly energy production and trade normalize, and on countries’ ability to preserve macroeconomic stability.”
Back in the financial markets, US government borrowing costs are heading for their biggest daily drop in over a year.
The sell-off in AI-linked stocks, such as chipmakers, today is driving investors into bonds instead. And the US, as well as the UK, is benefitting.
Ten-year US Treasury yields are down 11 basis points today to 5.08%, which Reuters has spotted would be the largest one-day decline since early August 2025.
Elsewhere in Bangkok today, Bank of England deputy governor Sarah Breeden has said UK firms are trying to cut custs in response to the energy price shock, rather than just lift their prices.
That trend should make it easier for the central bank to contain inflation, and limit pressure to raise interest rates.
Speaking to CNBC TV on the sidelines of the IMF’s annual meeting, Breedon said:
“What’s really different now, relative to when we had the last energy shock in 2022, is that people aren’t looking to push costs through.
“There’s a desire to absorb the shock rather than just pass it on, which makes our job as monetary policymakers a bit easier in these uncertain times.”
Healey: Banks are part of 'jewel in the crown' of UK economy
Intriguingly, Chancellor of the Exchequer John Healey has told Bloomberg that banks are a part of the “jewel” in the UK’s economic crown.
That, alongside his comments to UK journalists in Bangkok that banks are “hardwired into the economic fabric of this country and our future prospects” could, perhaps, dampen speculation that the budget might contain a bank tax.
“They’re a big contributor to the economy…
“They [the banks] are a part of the jewel, if you like, in the British economic crown.”
Important to note that Healey was very keen to avoid pre-budget speculation this morning, pointing out how economically damaging it could be.
Last week, the Trades Union Congress (TUC) calculated that tax cuts for big banks have deprived the UK government of £6bn in revenues.
The TUC argues that the government should reverse the cut to the bank surcharge made in 2023 by Tory chancellor Jeremy Hunt.
Bank bosses have been lobbying intensively against bank tax rises, after narrowly escaping higher levies during last year’s budget. Jamie Dimon, chief executive of the largest US bank, JP Morgan, warned Burnham and Healey against further levies during a meeting last month, saying it could put investment and jobs at risk.
Related: Tory tax break for banks has cost UK public purse £6bn, says TUC
Updated
Healey working on more support for Ukraine
John Healey wrapped up his meeting with the UK press pack in Bangkok with a heavy hint that he is preparing to offer more support to Ukraine at the budget.
Healey, who was of course defence secretary earlier this year, said:
“Now is the time to step up pressure on Putin and step up support for Ukraine.”
Asked if that could come as soon as the budget, Healey said:
“I’m working on different ways we can step up support for Ukraine, military, diplomatic, and economic, and you know, if anybody needed any reminder of that, it’s what we see coming out of Ukraine, with Putin targeting these energy systems, leaving thousands without power, as we’ve got a harsh winter approaching.
The future of Ukraine is the future of European security, and that’s that’s why it’s so crucial that Putin doesn’t prevail.”
Healey pledges to stick to fiscal rules
The press pack are now pressing John Healey on whether he will stick to the UK’s fiscal rules (which were a big part of his predecessor Rachel Reeves).
Healey pledges to meet those rules (that day-to-day public spending must be covered by tax revenues, and that debt is falling as a share of GDP by the 2029/30 financial year).
Healey tells reporters in Bangkok:
“The test year is now just three years ahead, so this is a tighter set of fiscal rules than we had before. It’s not five years out, four years out - it’s in three years, 2029-2030, with borrowing set to fall and current spending covered by what we raise.
We will meet those fiscal rules, and I think one of the hallmarks of the IMF’s backing of our fiscal plans is recognition that there isn’t just a forecast for the future, but there’s some evidence of performance already.”
Healey: Closer UK-EU links are important
Asked about the potential economic benefits for the UK of potentially rejoining the European Union, John Healey said:
“Those sort of matters may become part of a wider conversation that the prime minister’s keen to keen to encourage, because his basic starting point is one that very few people would dispute - that Brexit has not been good for for Britain.
But my task now, whatever happens in the future, is to make sure that we do our best to open up access to the markets where we can. That’s what the European Summit is designed to do in specific areas. You know, we’ve got a big argument with Europe over the way that they frame their Made in Europe plans, just as we have over access to some of their defence.
And that big argument is, at this time of all times, when you have a strengthening US, a more resurgent China, actually, the strength of Europe beyond the European Union is enhanced in the economy and the national security side. If other European nations like us, like Norway, have contributions to make, we can do so with them.”
Reminder: earlier this week, Andy Burnham said the existing UK-EU relationship is “not good enough”.
The UK is also lobbying hard to be included in the EU’s flagship industrial “Made in Europe” legislation, amid fears of the damage if British manufacturers are locked out.
Updated
Healey: won't engage in 'deeply damaging' pre-budget speculation
UK journalists then quizzed John Healey about specific tax options - including capital gains tax.
The chancellor responded that speculation ahead of previous budgets had been economically damaging.
Speaking on the sidelines of the IMF’s annual meeting in Bangkok today, the chancellor says:
“Just in general terms, if you think back to the run-up to previous budgets, the speculation about what was set to be in those budgets was actually deeply damaging.
It led to people cashing in their pensions early when they didn’t need to. It led to people holding back or not investing in their businesses when they didn’t need to. So I’m just not going to get drawn into any speculation, especially as chancellor, especially this close to the budget.”
Healey then talks about “signs of encouragement” on the economic picture, as underpinned this week by the upgrade in the IMF’s growth forecast.
“The task of the budget is to reinforce those elements of potential rapid growth in Britain for the future.”
Healey: Budget will give Britain a bit of breathing space
Asked about energy prices, John Healey then cited the government’s VAT cut on electricity bills, saying:
“It doesn’t remove the cost pressure. It recognises those pressures and says, look, where we can, we’re a government that will act to try and give people a bit of breathing space. I’ve been very clear. Also, the prime minister’s talked about recognising the cost of business, not just the cost of living.
And then he tells journalists in Bangkok that the budget will give Britain “a bit of breathing space”:
And so, I want the budget to be a budget that gives Britain a bit of breathing space, but also reinforces the the strength of our fiscal plans and the strength of our resilience and our economy for the future.”
Healey quizzed about bank tax plans
Over at the IMF’s annual meeting in Bangkok today, chancellor John Healey is meeting with UK journalists now, including my colleague Heather Stewart.
Healey, who should be cheered by the news that the UK economy grew unexpectedly in August, was asked whether he plans to impose new taxes on the bank sector, and replies:
“I don’t want anybody to try and read in or second guess what [we may] do in two weeks’ time.
My observations on the banks are just that people too often see them as a big distant financial institutions, when they are hardwired into the economic fabric of this country and our future prospects.
That said, you know I’ve got decisions to take in the in the budget, and I will. I’ll set those out in two weeks’ time.
Healey added that his “special responsibility as Chancellor is to protect the resilience of the British economy for the future” – echoing what he told Sky News a few minutes ago.
The chancellor also welcomed the IMF’s support for the UK’s fiscal plans.
Updated
Healey: I will protect the resilience of the economy
UK chancellor John Healey has pledged to protect the ‘resilience of the UK economy’ when he presents his budget on 28 October.
Speaking to Sky News at the IMF’s annual meeting in Bangkok, Healey said the IMF had backed Britain’s plans this week, and upgraded its growth forecast for this year.
Related: IMF raises UK growth forecast as economist says Healey should ‘stay the course’
Speaking after the latest UK GDP report showed the economy kept growing, by 0.1%, in August, Healey say:
They [the IMF] say stay the path, and my budget will. It’s my job, my responsibility as chancellor to make sure that I can protect that resilience in the British economy, and I will do that in the budget in two week’s time.
UK bond yields fall amid semiconductor sell-off
The slump in tech stocks is helping to push down Britain’s borrowing costs.
The yield, or interest rate, on UK debt has dropped today as investors buy up these gilts.
This has pushed the yield on UK 10-year bonds down by 10 basis points (0.1 of a percentage point) to 5.33% today.
Thirty-year gilt yields are down 10bps too, to 5.8%.
Neil Wilson, investor strategist at Saxo UK, explains what’s occuring:
The sell-off across semiconductor stocks has sent bond yields lower, which if it sticks could ultimately support risk sentiment and support valuations.
This is two-fold; one a flight to relative safety with the risk-free rate generating 5%, and two, because a breakdown in the AI capex narrative and pullback in spend will shrink the supply of debt, the huge increase of which has been a powerful driver of bond yields moving out to multi-year highs.
Chip sell-off drags South Korea's Kospi index to six-month low
Oof! South Korea’s benchmark Kospi share index has closed at a six-month low, as inflation fears and worries about the IT boom triggered a sell-off.
The Kospi ended the day down 7.5% at its lowest closing level since April, after a day of wild trading that briefly caused circuit breakers to be triggered. At its worst point, the Kospi was down over 9%.
Chipmakers drove the selloff – Samsung Electronics fell 9.5% and SK Hynix plunged by 11.1%.
It’s been a staggering year for South Korean traders. In the first half of 2026 the Kospi roughly doubled in value, as investors flocked to buy shares in chipmakers whose products were in hot demand with AI companies.
Related: Are global stock markets heading for a crash?
But that boom began to fade as we entered July. And now, the Kospi is ‘only’ up 30% for 2026.
The South Korean stock market boom was driven by a surge of interest from retail investors, many of whom bought shares on margin (with borrowed money), and could have lost their stakes as the market turned sour.
As covered earlier, today’s tech rout is partly due to worries over US inflation, which may trigger interest rate rises.
There’s also concern about the high amount of borrowing which AI firms are taking on as they roll out data centres and train new AI models.
Lee Hardman of Japanese bank MUFG told clients this morning:
Bloomberg has reported that investor confidence in AI-related confidence has been undermined in part funding concerns.
CoreWeave, the world’s biggest and most established neocloud, a relatively new term for companies that rent out computing power to AI model developers and teach leaders, saw its shares plunge in value by as much as 17% yesterday, and its debt due in 2032 traded at less than 78 cents on the dollar.
According to Bloomberg, credit default swaps on the company are pricing in more than a 50% chance of default within the next five years.
European stock markets pulled down by tech slump
Although Britain’s FTSE 100 share index is holding up well this morning, other European markets are in the red in early trading.
Germany’s DAX index dropped by 0.5% at the start of trading, a few minutes ago, while France’s CAC is down 0.2% and Spain’s IBEX lost 0.17%,
Updated
Mining shares slide in London
The London stock market is open, and shares in mining companies are dropping sharply.
Copper produder Antofagasta (-6.5%) is leading the fallers on the FTSE 100 share index, with Rio Tinto (-4.2%) and Anglo American (-4%) close behind. That may reflect concerns that a rise in US interest rates to fight inflation will dampen growth, and demand for commodities.
However, the wider FTSE 100 index is only down 0.1%. As it doesn’t include many tech shares, it is insulated from the rout in chip stocks today. Instead, ‘defensive shares’ such as tobacco firms, consumer goods maker Haleon (+2.6%) and hotel chain Whitbread (+2.4%) are in demand.
Update: Antofagasta also released its latest production report this morning – this showed a 7% rise in third-quarter copper production, with the company maintaining its annual guidance.
Updated
Deutsche Bank: The UK’s resilience story continues
The UK economy “surprised yet again” by growing by 0.1% in August, says Sanjay Raja, chief UK economist at Deutsche Bank:
Raja explains that the UK’s resilience story continues:
Undoubtedly, there may be some hiccups to come in the run up to year end, especially as energy prices continue to bite household incomes, and higher rates continue to drag on spending and investment.
The good news? The UK’s resilience story continues. It’s hard to overstate how strong the UK performance has been all year. The UK economy remains the fastest growing G7 economy.
What’s more impressive? If you believe the HMRC jobs data, UK GDP growth has hit 1.8% this year in the first eight months of the year, with 95k FEWER jobs. Who said productivity growth was dead in the UK?”
November interest rate rise 'highly likely' after UK growth surprise
Today’s better-than-forecast UK growth report is good news for chancellor John Healey as he hobnobs with other finance ministers at the IMF meeting in Bangkok.
But it may encourage the Bank of England to raise interest rates as soon as its next meeting in November….
Suren Thiru, chief economist at chartered accountants group ICAEW, explains:
“While August’s unexpected uptick all but confirms that the OBR will raise its growth forecast for this year from 1.1% to 1.4%, the Chancellor still faces a major Budget headache, as elevated borrowing costs eat into fiscal headroom and increase pressure for tax rises.
“These unexpectedly upbeat figures will further embolden hawkish sentiment among policymakers by reinforcing the view that the economy is strong enough to withstand a rate rise, making a November hike look highly likely.”
The money markets indicate there’s a nearly 93% chance that the Bank raises rates at its November meeting….
Updated
PwC: UK on track to be second-fastest-growing G7 economy this year
August’s growth means the UK economy continues to perform well against international rivals.
Britain had already grown faster than fellow-G7 members France, Germany, Italy, Japan and Canada in the first half of 2026, and roughly as fast as the US.
Jake Finney, senior economist at PwC, says:
“The latest GDP figures are encouraging, with the economy growing by 0.7% in the three months to August, its strongest growth rate since May. On its current trajectory, the UK is likely to record growth comfortably above 1% this year, which would probably be enough to make it the second-fastest-growing economy in the G7.
“The UK’s growth performance has been a bright spot amid a less impressive run of economic news following events in the Middle East. Business investment has been an important driver, particularly spending on ICT hardware, likely linked to the build-out of AI infrastructure. The UK still lags the US in both the scale of that investment and the boost it provides to growth, but it is making progress and remains ahead of many of its European peers.
UK economy 'lost momentum' despite keeping growing in August
Emeritus professor Joe Nellis, head of economic research at accountancy and advisory firm MHA, points out that the underlying pace of growth in the UK economy remains weak.
Responding to this morning’s UK GDP report, he says:
The loss of momentum in August reflects the impact of continued inflationary pressures that have negatively impacted consumer confidence and spending.
Businesses also continue to face tough trading conditions resulting from rising employment costs and taxation which have squeezed profitability, particularly among small and medium-sized enterprises, discouraging investment spending and recruitment activity.
Computer programming drove growth in the last quarter
Over the last quarter, the UK economy grew by 0.7%, today’s GDP report shows.
That’s the fastest quarterly growth since the three months to May.
Growth over the quarter was driven by the IT sector – perhaps a sign that AI technology is starting to boost growth?
ONS director of economic statistics Liz McKeown explains:
“GDP growth showed further strength in the latest three months, led by the services sector, while both production and construction fell. Upward revisions to already strong services growth in June and July helped drive robust growth across the three months, despite services showing no growth in August.
“Computer programming was once again the largest contributor to growth in the three months to August. Looking at a longer-term picture, compared with the same three-month period a year ago, the increased strength now seen in services is evident not just in computer programming but across a range of business-facing industries, including legal services, research and development and advertising.”
UK growth driven by manufacturing
Britain’s manufacturers drove the economy forwards in August.
Today’s GDP report shows that the growth in August was driven by a 0.8% growth in production – including a 1.2% jump in manufacturing output.
The Office for National Statistics says this was due to growth of 5.1% in manufacture of basic pharmaceutical products and pharmaceutical preparations, and growth of 1.8% in manufacture of transport equipment.
Services (which makes up around three-quarters of the economy) showed no growth, and construction output fell by 0.2% in the month.
UK GDP REPORT: economy kept growing in August!
Newsflash: the UK economy posted modest growth in August, beating expectations!
The Office for National Statistics reports that monthly GDP grew by 0.1% in August, beating expectations of a fall of 0.1%.
That follows unrevised growth of 0.4% in July.
June’s growth rate has been revised up too – to +0.4%, up from +0.3% previously.
Updated
“Markets have just had an incredibly tumultuous 24 hours, as a strong US CPI print was then followed up with mounting fears around the AI trade”, reports Jim Reid, strategist at Deutsche Bank.
He adds:
Moreover, there’s been a huge selloff in Asia overnight, with the KOSPI (-7.04%) and the Nikkei (-5.08%) both slumping, and the KOSPI even saw a circuit breaker triggered earlier given the scale of the declines.
Reid points out that the cost of insuring the debt of some AI companies, such as CoreWeave, has been rising – a sign that investors are nervous about leverage and borrowing levels.
Chancellor Healey pledges to 'stay the path' at IMF meeting
The chancellor, John Healey, has arrived in Bangkok for the IMF/World Bank meetings and spoke briefly as he entered the conference centre this morning.
He welcomed the IMF’s endorsement of the UK’s fiscal policy -the Fund’s managing director Kristalina Georgieva urged the government to “stay the course” on Wednesday.
Healey said:
“I’m pleased the IMF here in Bangkok have backed our economic plans in London. They say the UK stands out on growth despite the deep economic shocks that are affecting worldwide at present.
They say Britain stands out on our plans to get to grips with the big borrowing costs by previous governments. They also say it’s important to stay the path, and I will follow that as I prepare my budget in two weeks’ time.”
He said he would be urging fellow G7 member-countries to continue backing Ukraine; and announced £20m of UK support - alongside France and the US - for critical repairs in Chernobyl.
Healey attended a meeting of G20 central bankers and finance ministers today, and was also due to hold discussions with Georgieva, and have bilateral meetings with the Australian, Qatari and Saudi finance ministers, and the South Korean deputy prime minister.
[NB John, it’s STAY THE COURSE not STAY THE PATH that’s not a thing]
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Protests against the IMF and World Bank
Heather Stewart is the Guardian’s economic editor, attending the annual meeting of the International Monetary Fund and the Wold Bank in Thailand this week.
Good morning from Bangkok, where the route from my hotel to the vast Queen Sikirit conference centre where the IMF/World Bank meetings are being held was blocked by this small but noisy protest by the People’s Network Against World Bank-IMF, with their friendly-looking World Bank pig.
They’re apparently a coalition of environmental and civil society groups who oppose IMF/Bank-backed development projects as costly and opaque.
Local media have reported scuffles, but at the time I saw them, the numerous police lined up appeared bored, rather than tense.
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Introduction: Chip stock sell-off deepens ahead of UK GDP report
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The sell-off in chip stocks is deepening today, worrying investors as market await the latest UK GDP report.
Signs of rising inflation in the US are driving concerns about the risk of interest rate hikes, and AI-linked stocks are bearing the brunt.
In South Korea today, the KOSPI share index has plunged by over 8%, extending its recent losses. Chip giants Samsung Electronics (-9%) and SK Hynix (-10.5%) are leading the rout.
Japan’s Nikkei 225 is sliding too – it’s down by 4.5% in late trading.
This follows a drop on Wall Street on Wednesday, where the S&P 500 index fell by 1.1% and the Nasdaq Composite lost 1.9%.
That includes an 11% plunge in Dell’s shares, which CNBC blames on mounting concerns that enterprise spending on artificial intelligence won’t justify the AI buildout.
The news yesterday that US inflation has jumped to 3.7% has alarmed traders, as it makes it more likely that the US Federal Reserve will raise interest rates soon – possibly even at the end of this month.
Related: US inflation rose to 3.7% in September in blow to Republicans before midterms
Chris Weston, analyst at brokerage Pepperstone, says signs that US inflation pressures are spreading worries investors:
Further evidence of right-tail inflation risk in the US has reinforced the higher-for-longer rates narrative, with sellers emerging across risk assets and interest rate-sensitive equities coming under renewed pressure.
The breadth of price pressures across the CPI basket has been particularly concerning, challenging a market desperately in need of evidence of disinflation.
These inflation pressures will also worry policymakers at the IMF’s Annual Meeting in Bangkok, which continues today (of which more shortly…)
We’ll soon learn how the UK economy performed in August, too. The latest GDP data, due at 7am, is expected to show a fall of 0.1% in the month, as growth fizzled out after a strong July.
The agenda
7am BST: UK GDP report for August
10am BST: Eurozone industrial production report for August
1.30pm BST: US initial jobless claims data
1.30pm BST: US PPI index of producer price inflation in September
