UK gilt yields come off highs and pound steadies

Under boss Tony Spring, Macy’s is restructuring by closing 150 Macy’s stores by 2026 and reinvesting in high-potential locations while improving product offerings and loyalty programmes. The company said its full year sales outlook took account of the impact of tariffs as well as the consumer being more “choiceful” in the second half of the year.

Polestar, the electric vehicle maker partly owned by Volvo Cars, reported widening losses in the second quarter of more than $1 billion.

This compared with a loss of $268 million for the same quarter to the end of June last year. The company saw strong sales in Europe but sales in the US were hit by consumer concerns over the high cost of living. In the US, Polestar saw a 56 per cent fall in second quarter sales as consumers opted for cheaper hybrid, and combustion-engined vehicles over more expensive electric cars. Polestar took a $739 million impairment charge on its Polestar 3 model, which is made in South Carolina.

Polestar, which along with Volvo is owned by China’s PSD Investment and Geely Holding, secured a $200 million equity investment from PSD in June.

The maker of Campbell’s soup and Goldfish crackers has warned that increases in input costs from tariffs and sluggish demand for snacks will push 2026 profits below Wall Street estimates.

Campbell’s expects tariffs to account for roughly 4 per cent of its cost of goods sold. The company expects net sales in 2026 to remain flat or decline up to 2 per cent, compared to a 2.4 per cent fall forecast by analysts.

Shares in the New Jersey-based company, down 25 per cent this year, rose 1.7 per cent in pre-market trading following the announcement.

Rivals including Kraft Heinz and Conagra have also reported softer demand.

Taylor Swift on her Eras tour last year

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Britain’s live music industry had a record year in 2024, with spending on gigs, concerts, festivals and events rising to £6.7 billion, boosted by big concerts from singers such as Taylor Swift, Charlie XCX and Dua Lipa.

Mainstream pop concerts accounted for 32.1 per cent of total consumer spending on live music. In contrast, festival spending rose by 1.9 per cent year-on-year, which Live said reflected slowing growth for music festivals, some of which have grappled with a prolonged period of inflation and rising costs.

Ticket prices have been driven higher, with venues taking steps to mitigate the impact of higher labour and energy costs.

The total spending for the year up 9.5 per cent on 2023, and a 28.2 per cent gain on 2022. The figures incorporated analysis from 55,000 gigs, concerts, festivals and events.

Watches of Switzerland shares have risen 7 per cent to 342p after the seller of luxury ranges such as Rolex and Patek Philippe reassured investors that it does not expect any immediate “material impact” from US tariffs.

However, Brian Duffy, the chief executive, warned prices were likely to rise in the United States and across other markets, including the UK, as watch brands look to offset the impact.

The retailer said it had seen “consistently strong trading … particularly in the US” in the 18 weeks leading up to September as it left guidance for 2026 unchanged. The update is the first since President Trump imposed 39 per cent tariffs on Switzerland last month, the highest for any developed country.

John Lewis is bringing the cult fashion favourite Joni and Jamie jeans back to Britain’s high streets as part of a tie-up with Topshop that aims to draw Generation Z shoppers through its doors.

The department store chain is to roll out the Topshop label across 32 of its stores from February next year, while Topman will launch in six of its stores. Both will also be available to buy on John Lewis’s website as part of the wholesale partnership.

The deal marks the first time in four years that Topshop has returned to the high street on a nationwide basis after its collapse into administration in 2021 and subsequent acquisition by Asos.

• Full story: John Lewis brings Topshop’s cult Joni jeans back to high street

Activity in the UK’s services sector rose to a 16 month high in August with S&P Global’s purchasing managers index (PMI) rising to 54.2 up from 51.8 in July in the highest reading since April 2024.

A reading above 50 means the sector is growing while the anything below that means it is contracting.
The survey pointed to a solid upturn in business conditions across the UK service sector with output and new work rising markedly, said S&P Global.

Business expectations for the year ahead also gained momentum in August with confidence hitting a ten-month high. Survey respondents cited lower borrowing costs, hopes of a turnaround in customer demand and fewer concerns about the impact of US tariffs.

UK gilt yields have come off highs after the chancellor Rachel Reeves promised a “tight grip” on public spending.

Reeves’ comments, made as she unveiled the date of the autumn budget, come after bond investors urged the chancellor to implement spending cuts, warning that relying solely on tax increases will not be enough to restore fiscal credibility amid rising borrowing costs.

Gilt yields fell across the curve, with the 30-year UK government bond down 4 basis points to 5.66 per cent, down from a fresh 27-year high above 5.7 per cent earlier. The yield on the 10-year gilt, regarded as a proxy for government borrowing costs, was also down 4 basis points to 4.77 per cent.

A weaker dollar helped to buoy the pound, which rose above $1.34 from $1.335 earlier this morning.

M&G fell short of market expectations for half-year adjusted profit due to one-off charges even though it saw record net inflows of £2.6 billion in its asset management arm.

The investment company took one-off charges in both its asset management and life insurance units. It reported adjusted operating profit before tax of £378 million for the half year to June compared with £375 million in the same period last year. This was below analysts’ consensus of £398 million.

M&G reported strong net inflows of £2.1 billion compared with the £1.1 billion outflow in the first half last year, while assets under management reached £354.6 billion.

Andrea Rossi, the chief executive, said there had been strong investor interest in European equities amid falling interest rates. “It’s like a renaissance of Europe,” he told Reuters.

Andrea Rossi

RACHEL ADAMS FOR THE TIMES

Rachel Reeves

JAIMI JOY/REUTERS

The chancellor Rachel Reeves has announced that she will deliver her autumn budget on Wednesday, November 26, with a focus on keeping a “tight grip” on public spending to help lower inflation and borrowing costs.

The announcement comes at a time when government borrowing costs have risen to a 27-year high on concerns about her ability to keep public finances under control and inflation is rising.

Reeves said in a video message: “Britain’s economy isn’t broken. But I know it’s not working well enough for working people. We must bring inflation and borrowing costs down by keeping a tight grip on day-to-day spending through our non-negotiable fiscal rules.”

Gold bullion in the vaults at the Bank of England

REX

Gold prices extended their record run on increased demand for safe-haven assets due to market uncertainty and growing expectations that the US Federal Reserve will cut interest rates this month.

Spot gold was up 0.2 per cent at $3,540.43 a ounce, after hitting an all-time high of $3,546.99 earlier in the session.

President Trump’s administration has added to market uncertainty by saying it will ask the Supreme Court for an expedited ruling on tariffs that a US appeals court found illegal last week.

Gold miners were among the biggest risers in the FTSE 100, which helped pushes the leading share index up 34 points, or 0.38 per cent, to 9,151.03 after opening slightly down at the start of trading.

Fresnillo and Endeavour Mining shares were up 4.22 per ent and 1.58 per cent respectively.

The FTSE 250 company, which processes, packs and delivers meat, fish and vegan alternatives to retailers, has reported a 4.7 per cent fall in first-half pre-tax profits to £24.3 million.

The shares have fallen 18 per cent, or 152p, to 670p.

Analysts at Shore Capital have nudged down its full-year profits forecast by 3 per cent to £78.2 million pre-tax, saying the results were “mixed reading”.

Hilton Food reported that meat and convenience food delivered above-market volume growth of 3.1 per cent in the half. However, this was offset by softer demand for white fish in UK seafood, driven by higher prices, and in Europe, its Foppen smoked salmon business was hit by “regulatory restrictions on shipments to the US resulting in operational disruptions”.

UK gilt yields have risen again on jitters over the chancellor’s ability to rein in the public finances, while the pound has weakened further.

The yield on the 30-year UK government bond was up 5 basis points to a fresh 27-year high of 5.75 per cent, up from yesterday’s high of 5.7 per cent. Yields across the bond curve have also risen.

Against the dollar, the pound was down 0.3 per cent to $1.335 and 0.1 per cent against the euro to €1.1486.

The FTSE 100 is trading largely flat this morning after falling for the fifth time in six days yesterday, dipping 7 points, or 0.08 per cent, at 9,109.60.

Ashtead was the biggest faller after the industrial equipment hire group, which makes most of its revenue in America, reported a fall in first-quarter profits. M&G, the money manager, fell despite a rise in inflows in the first half.

The Competition and Markets Authority is investigating the $2.4 billion purchase of the UK healthcare real estate investor Assura by Primary Health Properties.

The two companies are large NHS landlords. Assura owns more than 600 healthcare buildings worth £3.2 billion, and Primary Health Properties owns 516 surgeries, dental practices and medical centres, from Ramsgate to the Scottish Highlands and across to Cork, Ireland.

Lenders to the troubled water company have set out plans to deliver £20.5 billion of investment to turn around the UK’s biggest water supplier with about 16 million customers.

A 15-strong representative group have pledged to improve Thames Water’s poor pollution performance and cut sewage spills in a proposal to Ofwat, the regulator.

The bondholders, which include Aberdeen, Elliott Management and BlackRock, effectively own Thames Water after the High Court approved a financial restructuring this year.

Alistair Osborne writes in his column today: “True, all this needs government scrutiny and a big issue remains: the size of the equity injection and creditor haircut, so that Thames can regain an investment-grade credit rating. Still, for a drowning business, the plan’s focus looks about right.”

ROBIN UTRECHT/ANP/AFP/GETTY IMAGES

Shell will not restart construction of one of Europe’s largest biofuel plants in Rotterdam following an “in-depth commercial and technical evaluation to reassess the project’s competitiveness”.

The FTSE 100 oil company had paused the construction in July last year in an effort to tackle technical problems and bring costs under control. It was one of the clean energy projects that were scaled back under Wael Sawan, who took over as chief executive at the start of last year. Shell has also exited investments in renewable power and battery storage.

Shell’s decision will be a blow to the aviation industry’s net-zero plans. The facility was set to process about 820,000 tonnes of sustainable jet fuel and renewable diesel from waste a year.

Machteld de Haan, Shell’s downstream, renewables and energy solutions president, said: “As we evaluated market dynamics and the cost of completion, it became clear that the project would be insufficiently competitive to meet our customers’ need for affordable, low carbon products. This was a difficult decision, but the right one, as we prioritise our capital towards those projects that deliver both the needs of our customers and value for our shareholders.”

Ashtead, the FTSE 100 industrial equipment hire group which makes most of its revenue in America, has reported that pre-tax profits fell 6 per cent in the first quarter to $512 million. Revenue over the same period rose 2 per cent to $2.8 billion.

The group announced late last year that it planned to shift its primary stock market listing to New York after the board concluded in December that the US was the “natural long-term listing venue” for the group. The United States accounted for 98 per cent of operating profits last year and is home to Ashtead’s Sunbelt rentals division.

Alongside the trading update, Ashtead said it was on track to shift its primary listing to the US in March 2026, having previously guided to the “first three months of 2026”.

HOLLIE ADAMS/BLOOMBERG/GETTY IMAGES

Luxury retailer Watches of Switzerland has insisted that it does not anticipate any immediate material impact from US tariffs.

“We have seen consistently strong trading throughout the period, particularly in the US despite the announcement of increased tariffs on Swiss imports,” the company said as it updated shareholders ahead of its annual general meeting later today.

Swiss exports to the US have been subject to a 39 per cent levy since August, prompting fears that brands, including Rolex and Patek Philippe, will have to raise prices. America accounted for 48 per cent of the company’s sales last year, and its shares have fallen more than 42 per cent since the start of the year on mounting fears about the hit from the tariffs.

But the retailer reported an encouraging start to the current financial year this morning and said it did not anticipate any material impact from the US tariffs in the first half of the year “as brand partners had increased inventories”.

Warren Buffett, who masterminded the Kraft Heinz merger a decade ago, is disappointed by the decision to split the food and beverage company to unlock shareholder value.

“It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart will fix it,” Buffett told CNBC.

Berkshire Hathaway is Kraft Heinz’s largest shareholder with a 27.5 per cent stake. Kraft Heinz’s shares have fallen sharply since the merger, far underperforming the broader market.

Yesterday’s bond selloff in Europe and America has reached Japan amid growing concern about the global economy.

The yield on the 30-year Japanese government bond rose as much as 8 basis points to a record high of 3.28 per cent, while the 20-year yield rose 7 bps to 2.69 per cent, its highest level since October 1999. Bond yields move inversely to prices.

Long-dated bonds were sold off around the world yesterday and overnight, sending the US 30-year Treasury yield to its highest levels since mid-July. In the UK, the 30-year bond yield rose to a 27-year high on concerns about the government’s finances.

In Japan, market worries about government spending resurfaced as prime minister Shigeru Ishiba’s close aide Hiroshi Moriyama, the Liberal Democratic Party’s secretary general, said he intended to resign. It raised bets that Ishiba may follow.

Hiroshi Moriyama, Secretary-General of the Liberal Democratic Party

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