London Underground strikes this week called off; pound hits six-month low against dollar – business live

  • london
  • October 3, 2023
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Planned strikes by London Underground workers called off

Newsflash: Strike action on London Underground planned for later this week has been suspended.

The RMT union has announced that strike action planned for Wednesday 4th and Friday 6th October will now not go ahead. They had been called as part of the long-running dispute over jobs and conditions.

This follows “significant progress” made by RMT negotiators and London Underground Limited (LUL) representatives, the union says.

RMT general secretary Mick Lynch said:

“I congratulate all our members who were prepared to take strike action and our negotiations team for securing this victory in our tube dispute.

“Without the unity and industrial power of our members, there is no way we would have been able to make the progress we have.

“We still remain in dispute over outstanding issues around pensions and working agreements and will continue to pursue a negotiated settlement.”

Newsflash: The number of job vacancies in the US has jumped.

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There were 9.6m job openings on the last business day of August, the U.S. Bureau of Labor Statistics reports, a sharp increase on the 8.9m openings at the end of July.

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That suggests demand for workers is still high, despite the pressure from the rise in interest rates, which could lead the US Federal Reserve to maintain borrowing costs at high levels for longer.

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The Bureau of Labor Statistics reports:

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Over the month, job openings increased in professional and business services ( 509,000), finance and insurance ( 96,000), state and local government education ( 76,000), nondurable goods manufacturing ( 59,000), and federal government ( 31,000).

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The number of workers quitting their jobs was little changed, at 3.6m – leaving the quits rate unchanged at 2.3%.

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Newsflash: Strike action on London Underground planned for later this week has been suspended.

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The RMT union has announced that strike action planned for Wednesday 4th and Friday 6th October will now not go ahead. They had been called as part of the long-running dispute over jobs and conditions.

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This follows “significant progress” made by RMT negotiators and London Underground Limited (LUL) representatives, the union says.

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RMT general secretary Mick Lynch said:

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“I congratulate all our members who were prepared to take strike action and our negotiations team for securing this victory in our tube dispute.

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“Without the unity and industrial power of our members, there is no way we would have been able to make the progress we have.

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“We still remain in dispute over outstanding issues around pensions and working agreements and will continue to pursue a negotiated settlement.”

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The pound has dropped to its lowest level against the US dollar since mid-March this morning.

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Sterling has dipped to $1.2059 this morning, a six and a half-month low.

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The slide came as the dollar hit its highest level of 2023 against a basket of currencies. It has been strengthening due to concerns that interest rates will stay high for longer than expected, thanks to the strength of the US economy.

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Yesterday, manufacturing data showed that America’s manufacturing sector was close to recovery, while last week’s jobless claims figures remained historically low. That could encourage the US Federal Reserve to raise interest rates on more time this year.

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In contrast, the Bank of England may have ended its hiking cycle, after leaving UK interest rates on hold last month.

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September was the worst month in a year for the pound, against the US dollar, and October has not started strongly either.

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Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

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The dollar’s strength is set to compromise other countries efforts to bring down inflation as their weaker currencies in the face of the greenback’s strength makes imports more expensive.

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The pound has been sent reeling again to $1.207, the lowest levels since mid-March.

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The collision of a weaker outlook in the UK with the resilience the US economy is showing is weighing heavily on sterling, amid expectations the Federal Reserve will hike interest rates again, while the Bank of England has pressed pause and the path is more uncertain.

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Government bond prices also fell yesterday, pushing up the yield (or interest rate) on UK gilts to the highest level since the fallout from Liz Truss’s mini-budget a year ago.

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Greggs said it has enjoyed strong trading and inflation is beginning to ease, says Victoria Scholar, head of investment at interactive investor:

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The bakery’s offering of drinks and snacks with speedy service have been enjoying strong sales from workers and other people on the go. Despite the cost-of-living crisis with consumers forced to make cutbacks, demand at Greggs remains robust thanks to its competitive pricing and appealing range of hot and cold items like sandwiches, sausage rolls, coffees, and sweet treats.

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Even faced with pressures from inflation, Greggs is still expanding with between 135 and 145 net shop openings this year and it is also investing in its supply chain.

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Shares in Greggs are up over 40% over the past year. But they have been giving back some gains since the May highs. Nonetheless the analysts remain bullish on the stock with 8 buy recommendations versus 3 holds and zero sells.”

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Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, says Greggs’ performance so far this year is impressive, and it should return to profit growth in 2024 as cost pressures ease:

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“This is another solid performance from Greggs in a challenging economic environment, with little sign so far of consumers cutting back on sausage rolls and pasties.

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Greggs has continued to gain market share in a difficult environment which is mightily impressive. There is no doubt Greggs’ brand is resonating strongly with the UK consumer and is in fine fettle.

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The cost of raw materials, energy and wages have risen rapidly over the last year, but encouragingly these cost pressures are now beginning to ease. This isn’t just good news for profit margins but should also help underpin consumer demand by reducing the need for price increases.

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Matt Britzman, equity analyst at Hargreaves Lansdown says the baker chain “continues to delight”.

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Greggs is starting to build quite the reputation for delivering strong results, and today’s update certainly hasn’t bucked that trend. Once heralded for its sausage rolls, Greggs has worked hard to expand the menu whilst retaining its core value offering. All the while, the expanding delivery service (like the new partnership with Uber Eats), click & collect options, and later opening times make it easier than ever to get your bakery fix.

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Inflated costs are starting to ease, which gives more wiggle room on pricing over the second half. Don’t be surprised to see a slight cooling effect on like-for-like sales from here, as it laps periods last year when prices moved higher. It’s a win in the long run though, less pressure on costs makes it easier to keep prices in check and retain that coveted value offering.

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Bears will argue the valuation doesn’t leave a whole lot of room for error, and they’d be right. But with great food comes with even greater expectations and Gregg’s broadening shoulders look strong enough to carry that weight.”

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British baker and fast food chain Greggs has confirmed that cost pressures are easing.

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In its latest quarterly results, just released to the City, Greggs says there has been “some easing in cost inflation” in the last three months.

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The company explains that it is now around a year since the “significant commodity-led increases” of 2022 for energy and food ingredients, which means annual inflation rates are now slowing.

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It adds:

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At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share.

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We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions.

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Greggs reported that like-for-like sales in company-managed shops have risen by 14.2% in the 13 weeks to 30 September.

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It is sticking with its guidance for the financial year, despite “the uncertainty in the economy as a whole”.

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

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Food prices in the UK are finally falling, new data this morning shows, thanks to a supermarket price war and easing inflationary pressures.

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The British Retail Consortium reports that UK food prices fell by 0.1% during September. That’s the first monthly drop in the cost of food in the shops in over two years.

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It brought the annual rate of food price inflation down to 9.9% in September, down from 11.5% in August, and the lowest since August 2022.

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Helen Dickinson, OBE, chief executive of the British Retail Consortium, said ”fierce competition between retailers” pulled year-on-year food inflation down to single digits.

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Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month. Households also benefitted from price cuts for school uniforms and other back-to-school essentials.

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Several UK supermarkets have announced rafts of price cuts in recent months, with Tesco squeezing suppliers so it can pass savings on.

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More widely, the BRC says prices in British store chains rose at the slowest pace in a year in September, with annual shop price inflation cooling to 6.2% last month from 6.9% in August, its lowest since September 2022.

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Annual non-food inflation dropped to 4.4% in September, its lowest since December 2022, and down from August’s 4.7%.

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Dickinson predicts shop price inflation to continue to fall over the rest of the year, however there are still many risks to this trend.

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They include high interest rates, climbing oil prices, global shortages of sugar, and supply chain disruption from the war in Ukraine.

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Food prices have been a key factor pushing up the official UK inflation rate in the last 18 months or so, so the BRC’s figures could indicate the cost of living squeeze is easing.

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That will cheer the government, with reports last weekend that Rishi Sunak might call a general election once CPI inflation has dropped below 3%. It was 6.7% in August, having peaked around 11% last year.

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Also coming up today

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The highly anticipated criminal trial of Sam Bankman-Fried, former CEO of bankrupt crypto exchange FTX, begins today; he faces seven counts of fraud and conspiracy.

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The agenda

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  • 8am BST: Spanish unemployment for September

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  • 2pm BST: Sam Bankman-Fried’s trial begins in New York

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  • 3pm BST: JOLTS US job openings data

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  • 3pm BST: IBD/TIPP index of US economic optimism.

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Key events

US JOLTS shows rise in vacancies

Newsflash: The number of job vacancies in the US has jumped.

There were 9.6m job openings on the last business day of August, the U.S. Bureau of Labor Statistics reports, a sharp increase on the 8.9m openings at the end of July.

That suggests demand for workers is still high, despite the pressure from the rise in interest rates, which could lead the US Federal Reserve to maintain borrowing costs at high levels for longer.

The Bureau of Labor Statistics reports:

Over the month, job openings increased in professional and business services ( 509,000), finance and insurance ( 96,000), state and local government education ( 76,000), nondurable goods manufacturing ( 59,000), and federal government ( 31,000).

Job openings *rose* in August to 9.6 million, up from 8.9 million in July. Quits, layoffs both basically flat. #JOLTShttps://t.co/gRAJfT6CuF

— Ben Casselman (@bencasselman) October 3, 2023

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The number of workers quitting their jobs was little changed, at 3.6m – leaving the quits rate unchanged at 2.3%.

JOLTS Quits rate unchanged in August to 2.3% … still down considerably from peak but hanging around peaks in 2019, mid-2000s, and early 2000s pic.twitter.com/0BLeoCSoMv

— Liz Ann Sonders (@LizAnnSonders) October 3, 2023

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JOLTS Quits rate unchanged in August to 2.3% … still down considerably from peak but hanging around peaks in 2019, mid-2000s, and early 2000s pic.twitter.com/0BLeoCSoMv

— Liz Ann Sonders (@LizAnnSonders) October 3, 2023

Back in the financial markets, recession fears are weighing on the pound, according to George Pavel, general manager at Capex.com Middle East.

The dollar was volatile today but remained on a bullish trajectory overall supported by traders’ confidence in the resilience of the US economy which was reinforced by the stronger-than-expected PMI data. Additionally, Federal Reserve members maintained a hawkish stance, emphasizing the necessity of keeping interest rates elevated for an extended period. This helped keep yields near this year’s peak which could continue to support the dollar.

Conversely, the euro faces mounting selling pressure as traders factor in the end of the current tightening cycle. Economic data, particularly for Germany, indicates a deterioration in the economic situation.

The British pound remains weak due to heightened concerns about an impending recession in the UK. If they remain elevated, current interest rates could also weigh on the economy and on the value of the pound.

Although the London Underground strikes this week have been called off, train drivers union ASLEF is still holding a strike on Wednesday.

Aslef members have also been conducting an overtime ban this week, which also causes disruption to sevices.

Labour MP Jon Trickett tweets:

Glad to see the RMT and London Underground reach an agreement.

Why won’t the Tory government reach an agreement with the railway unions? They’re wasting huge amounts of public money prolonging the national dispute when it would be much cheaper for them to settle. https://t.co/bwDWXa2ztg

— Jon Trickett MP (@jon_trickett) October 3, 2023

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Glad to see the RMT and London Underground reach an agreement.

Why won’t the Tory government reach an agreement with the railway unions? They’re wasting huge amounts of public money prolonging the national dispute when it would be much cheaper for them to settle. https://t.co/bwDWXa2ztg

— Jon Trickett MP (@jon_trickett) October 3, 2023

Nick Dent, London Underground’s director of customer operations, has said:

“We are pleased that the RMT has withdrawn its planned industrial action this week and that the dispute on our change proposals in stations is now resolved.

“This is good news for London and we will continue to work closely with our trade unions as we evolve London Underground to ensure we can continue to support the capital in the most effective way.”

The strikes which have now been called off would have caused severe disruption across the whole Tube network.

Transport for London had predicted that most Tube services would be severely affected or will not run on strike days, with a knock-on impact on services the next morning too.

?London Underground Tube strikes on 4th & 6th Oct suspended following progress made by RMT negotiators

“Following talks at ACAS, RMT has managed to save key jobs, prevent detrimental changes to rosters and secure protection of earnings around grading changes.”

— Alicia Fitzgerald (@alicia_fitzg) October 3, 2023

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?London Underground Tube strikes on 4th & 6th Oct suspended following progress made by RMT negotiators

“Following talks at ACAS, RMT has managed to save key jobs, prevent detrimental changes to rosters and secure protection of earnings around grading changes.”

— Alicia Fitzgerald (@alicia_fitzg) October 3, 2023

? #TubeStrike suspended after RMT win concessions:
Strike action on London Underground has been suspended following significant progress made by @RMTunion negotiators and London Underground Limited (LUL) representatives. ? pic.twitter.com/zQWPyEfS3z

— RMT (@RMTunion) October 3, 2023

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The RMT also say that negotations at conciliation service ACAS have delivered progress in their dispute with London Underground Limited (LUL).

Announcing that strike action on London Underground has been suspended, the union explains:

Following talks at ACAS, RMT has managed to save key jobs, prevent detrimental changes to rosters and secure protection of earnings around grading changes.

The significant progress means that key elements have been settled although there remains wider negotiations to be had in the job, pensions and working agreements dispute.

Planned strikes by London Underground workers called off

Newsflash: Strike action on London Underground planned for later this week has been suspended.

The RMT union has announced that strike action planned for Wednesday 4th and Friday 6th October will now not go ahead. They had been called as part of the long-running dispute over jobs and conditions.

This follows “significant progress” made by RMT negotiators and London Underground Limited (LUL) representatives, the union says.

RMT general secretary Mick Lynch said:

“I congratulate all our members who were prepared to take strike action and our negotiations team for securing this victory in our tube dispute.

“Without the unity and industrial power of our members, there is no way we would have been able to make the progress we have.

“We still remain in dispute over outstanding issues around pensions and working agreements and will continue to pursue a negotiated settlement.”

There’s drama in the bond market, where the interest rates on long-dated US government debt have hit the highest level in 16 years:

*TREASURY 30-YEAR YIELD RISES TO 4.856%, HIGHEST SINCE 2007

The long bond yield is now up 55 bps in 13 trading days. pic.twitter.com/oFP32YS72h

— Jim Bianco (@biancoresearch) October 3, 2023

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#Bond Yields moving higher once again

*TREASURY 30-YEAR YIELD RISES TO 4.856%, HIGHEST SINCE 2007 pic.twitter.com/F1TLjSblnF

— Christian Fromhertz ?? (@cfromhertz) October 3, 2023

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In the month of September 2023, the British Pound ? $GBP fell 4.26% against the US Dollar. ? $USD. $GBPUSD

? @Bloomberg pic.twitter.com/6VRGMqD6UN

— CTech ? (@ChemwenoBTC) October 3, 2023

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The strength of the US dollar has pushed the Russian rouble to a six-week low.

The rouble weakened to 100 to the US dollar this morning, for the first time since mid-August (when it hit a 16-month low).

Reuters says the rouble is being “weighed down by foreign currency outflows and the country’s shrinking current account surplus”.

The Russian rouble weakened past the symbolic threshold of 100 to the dollar in early trade, weighed down by foreign currency outflows and the country's shrinking current account surplus. More here: https://t.co/WOdkGJzBa2

— Reuters Business (@ReutersBiz) October 3, 2023

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The Russian rouble weakened past the symbolic threshold of 100 to the dollar in early trade, weighed down by foreign currency outflows and the country’s shrinking current account surplus. More here: https://t.co/WOdkGJzBa2

— Reuters Business (@ReutersBiz) October 3, 2023

The rouble’s slump in August prompted Moscow’s central bank to hold an extraordinary meeting at which it hiked interest rates by 3.5 percentage points in an emergency move to support the currency.

The UK’s insurance sector’s ability to cope with a market crisis will be tested in 2025.

The Bank of England has announced it will run a “dynamic” stress test for the general insurance sector in 2025, which will assess its resilience to a marketwide crisis.

The BoE’s Prudential Regulation Authority, which supervises insurers, said this stress test will be “a significant change from previous exercises”. It will involve simulating a sequential set of adverse events over a short period of time to see how insurers cope.

The test would assess the solvency, liquidity and risk management of the general insurance industry (which offers home insurance and motor car cover, for example).

A weaker pound will push up the cost of imports from abroad.

Sterling is slightly lower against the euro today, at €1.152, down from around €1.177 in August (and €1.30 before the 2016 Brexit vote).

Mark Jones, partner at law firm Gordons, warns that it could undermine the move to lower food prices (which dropped 0.1% month-on-month in September, new data today shows).

Jones explains:

“Whilst it is good to see even a 0.1% fall in food prices, consumers shouldn’t get too excited by the news. Prices will continue to rise and we’re likely to see a significant increase in the new year.

Commodity prices are spiking again, the pound has weakened and suppliers to the supermarkets tend to agree increased prices which take effect in January. In the last three months, oil has gone from $70 a barrel to around $90 and given we import around 42% of our food, a falling pound won’t help food prices stay low.

We have at least another six months of rising prices.”