Blog close and recap

Well that's all we have time for today, thanks for following along. Be sure to join us again tomorrow bright and early.

Here's a quick recap of some of the top stories...

ECB hikes interest rates to record 4%

Arm set for biggest IPO of 2023

Cash payments rise for first time in a decade

Global non-cash transactions to reach 1.3trn this year

John Lewis blames inflation for turnaround delay

The Range buys Wilko brand

Lidl's UK business falls to loss

US retail sales boosted by higher fuel prices

Have a good evening!

Fitch ECB reaction

Charles Seville, senior director, in Fitch Ratings’ Economics team, said:

Even though core inflation remains too high, and hasn’t fallen that much, the tightening to date is slowing inflationary pressures. We expect this marks a peak for ECB policy rates and that they will keep them at these levels until the second half of 2024.

US retail sales boosted by higher fuel prices

US retail sales rose slightly in August thanks to a spike in gas prices, new data has shown/

Sales in the world’s largest economy climbed 0.6% to $697.6bn last month, inching up from July’s revised 0.5% bump, the Commerce Department said.

Economists forecast a slowdown from July to August although consumers continued to spend.

Arm Holdings to open at $58 per share

Arm shares are on track to jump sharply in New York, as they make their debut on Nasdaq.

Reuters has reported that Arm Holdings shares are currently indicated to open at $58.01.

That would be a 13% increase on the $51 per share which investors bought stock in its IPO.

Arm IPO: What you need to know and how you can buy the stock

British chip designer Arm, which is owned by Japanese group SoftBank (SFTBY), has signed up 28 banks, including Barclays (BARC.L), Goldman Sachs Group (GS), JPMorgan Chase & Co. (JPM) and Mizuho Financial Group (MFG), for its blockbuster initial public offering (IPO) today with its shares set to begin trading on the Nasdaq (^IXIC).

SoftBank (SFTBY) is offering 9.4% of Arm’s stock on the public market but it will still retain 90% after the IPO.

So what does all this mean for investors and how can you buy Arm stock?

Read more here

ECB commentary...

Victoria Scholar, head of investment at interactive investor, said:

The ECB began tightening later than the Fed and the Bank of England, landing it behind the curve, which forced the central bank into acting more swiftly.

But that aggressive policy has had consequences for the euro zone economy with Germany potentially heading into a recession. With sluggish growth and increased labour market slack, the more dovish ECB rate setters believed a pause would have been more appropriate, but the governing council decided to prioritise tackling inflation, even if it comes at a cost to the economy.

Looking ahead, the recent rally in oil prices is likely to muddy the picture for the ECB by standing in the way of the eurozone’s disinflationary path.

Government bond yields in the euro zone fell despite another hike from the ECB. Price action in the bond market reflects the ECB’s signalling that it is probably at the end of this tightening cycle, even though inflation for August hit 5.3%, still sharply above its 2% target.

Eurozone growth forecasts

The ECB has lifted its inflation forecasts for 2023, and 2024.

"The September ECB staff macroeconomic projections for the euro area see average inflation at 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025. This is an upward revision for 2023 and 2024 and a downward revision for 2025. The upward revision for 2023 and 2024 mainly reflects a higher path for energy prices."

However, it cut its forecast for 2025 to from 2.2% to 2.1%.

Is this a 4% ceiling for interest rates?

The ECB signalled that this could be the the end of the rate hikes. It said:

"Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target."

Neil Wilson of Markets.com said: "This is a clear and deliberate signal to the market that the ECB thinks it is done for now and we have reached the peak in rates."

Meanwhile, Richard Carter, head of fixed interest research at Quilter Cheviot, said: "The European Central Bank has, it appears, decided that 4% is the level it feels comfortable with allowing interest rates to climb to and help bring inflation down.

"Many market participants expected it to hold today and move into a wait and see pattern with the data, but it clearly sees the need to hike once more now before joining the Federal Reserve in an extended pause."

ECB hikes interest rates to record 4%

The European Central Bank (ECB) has hiked interest rates for a 10th consecutive time in a bid to tackle high inflation.

The bank's Governing Council decided to raise the three key ECB interest rates by 25 basis points. The move, which was expected by financial markets, means rates are at highest level since the euro was launched in 1999.

"Inflation continues to decline but is still expected to remain too high for too long," it said on Thursday.

The ECB's benchmark deposit facility rate, which is paid to commercial banks when they deposit money with the central bank overnight, rose from 3.75% to 4%.

The main refinancing rate, which provides the bulk of liquidity to the banking system, has increased from 4.25% to 4.5%, and the marginal lending facility, charged when banks borrow from the ECB, has risen to 4.75%.

Read the full article here

Bank flags around £1.69bn of COVID loans for suspected fraud

Commercial banks which distributed the government-backed loans to firms flagged around £1.69bn of those loans for suspected fraud, new research has revealed.

This marks a 43% rise from the £1.1bn flagged three months earlier.

It comes as The department for Business and Trade has released new quarterly data for the £77bn the total drawn value COVID loan schemes, which were meant to keep businesses afloat during the pandemic lockdowns.