EU-US trade deal hits investor confidence; Tesla awards Elon Musk almost $30bn of shares – as it happened
Boom! Shares in lenders exposed to the UK car finance scandal have surged at the start of trading in London, as investors react to Friday night’s supreme court ruling.Shares in Close Brothers jumped 27% after the stock market opened, after the court ruled in its favour in a case over car finance.Close Bros are leading the FTSE 250 index of medium-sized companies.Lloyds Banking Group is leading the larger FTSE 100 share index – its shares have jumped by almost 6% in early trading.As flagged earlier, Lloyds had previously set aside £1.
2bn to cover compensation claims over car finance commissions paid to car dealers.These share price moves are a clear sign that the Supreme court ruling is a win for the lenders, even though the FCA is now consulting on a compensation scheme for motorists.That’s because the FCA estimates the cost of its scheme will be between £9bn and £18bn.Before the supreme court overturned two of the three rulings against the industry, lenders were facing an estimated bill of £44bn.Time to wrap up….
Investor confidence in the EU has fallen sharply after Donald Trump’s trade agreement with Brussels, amid mounting concern about the economic hit from the US president’s tariff war.The latest snapshot from the Sentix index showed that investor sentiment fell significantly at the start of the month after the deal last week between Trump and the European Commission president, Ursula von der Leyen.The data provider said its weekly survey of thousands of investors in more than 20 countries showed that the pact was a “deal that dampens the mood”, with Trump and the US viewed as “winners” at the expense of the eurozone.“The result is devastating for the eurozone,” said Manfred Hübner, the managing director of the Sentix economic index.“The current situation and expectations are both declining.
The wrinkles of concern in the economy are deepening again,”Switzerland, which was hit with a 39% tariff by Trump, is now indicating it might make the US a better offer,Shares on the Swiss stock market dropped this morning, as traders reacted to the prospect of high levies at the US border,Tesla’s board has approved the award of $30bn (£23bn) worth of shares to its chief executive, Elon Musk, after a US court ruled against a previous pay deal for the world’s richest person,Musk will pay $2bn to buy 96m shares in the electric carmaker at the same price as the 10-year pay package agreed in 2018, which is stuck in legal limbo awaiting a court date for an appeal.
The award was based on a recommendation from a “special committee” of the board.The announcement in a financial filing was accompanied by a shareholder letter from two members of the committee, Tesla’s chair, Robyn Denholm, and Kathleen Wilson-Thompson.It described the award as a “good faith” payment to Musk after the previous pay deal, worth $56bn, was rescinded in 2024 by a judge in Delaware, where the company was incorporated until June that year.Shares in UK lenders surged on Monday after a favourable supreme court ruling significantly slashed the anticipated bill for companies engulfed in the car finance scandal.The specialist lender Close Brothers, which is the most exposed to the scandal, jumped as much as 27% at the start of trading, and are still up 22%.
The UK’s biggest motor loan provider, Lloyds Banking Group, are now up 8%.Shares in Barclays, which no longer provides car finance but is dealing with the fallout for the remaining loans on its books, rose by 1.1%.Shares in FirstRand, one of the lenders involved in the supreme court case, jumped by 4.8%.
More tariff news: the European Union will suspend its two packages of countermeasures to U.S.tariffs for six months following the deal agreed with U.S.President Donald Trump.
A comission spokesperson explains:“The EU continues to work with the U.S.to finalise a Joint Statement, as agreed on 27 July.“With these objectives in mind, the Commission will take the necessary steps to suspend by 6 months the EU’s countermeasures against the US, which were due to enter into force on 7 August.”The EU had threatened to impose nearly €100bn (£87bn) worth of tariffs on US imports ranging from bourbon to Boeing aircraft in one fell swoop if a trade deal wasn’t reached….
Just in: US factory orders dropped sharply in June, after a busy May.The US Census Bureau has reported that new orders for manufactured goods fell by 4.8% in June, to $611.7bn.That follows an 8,3% jump in orders in May.
The drop in June was driven by weaker demand for durable goods – items designed to last several years.Wall Street has opened higher, recovering from Friday’s losses.The Dow Jones industrial average has risen by 317 points, or 0.75%, in early trading to 43,906 points.The broader S&P 500 share index is 1% higher.
Shares fell last Friday after a surprisingly weak US jobs report, which prompted Donald Trump to fire the federal government official in charge of labor statistics a few hours later,Shares in Tesla have, as expected, jumped at the start of trading,They’re up 2,5%, to just over $310 each,Over in Zurich, Switzerland’s government says it is ready to make a “more attractive” trade offer to Donald Trump, in the hope of avoiding a 39% tariff on its exports to the US.
Following a crisis meeting this morning, the Swiss cabinet says:“Switzerland enters this new phase ready to present a more attractive offer, taking U.S.concerns into account and seeking to ease the current tariff situation.”Switzerland was shocked that Trump announced a 39% tariff on its wares, which prompted the drop on the Swiss stock marked this morning.Wedbush analyst Dan Ives has welcomed Tesla’s decision to hand Elon Musk almost $30bn in share options that will vest in two year’s time.
Ives says it“removes an overhang on the stock” adding:“Musk remains Tesla’s big asset and this comp [compensation] issue has been a constant concern of shareholders.”Dan Ives wrote in a client note “Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.” @Newsday @AP 🏆🔥🐂🎯🍿https://t.co/rRd2On4qn4Today’s $30bn share award won’t be the end of the discussions about Elon Musk’s pay.In their letter to shareholders, Robyn Denholm and Kathleen Wilson-Thompson explain that the Tesla board’s special committee will continue its work on “a longer-term CEO compensation strategy”.
They intent to put this plan to a shareholder vote at Tesla’s annual meeting on 6 November.Shares in Tesla have risen by over 2% in pre-market trading – a sign that Wall Street approves of Musk’s new share package.They’ve risen by 2.3% to $309 per share, up from $302 on Friday night, which will lift the value of Musk’s 96m share package closer to $30bn.Investors may well be reassured that today’s share package will keep Musk at Tesla, as the shares will vest in two year’s time.
Customer loyalty towards Tesla across America has plunged since CEO Elon Musk endorsed President Donald Trump last summer, according to data from research firm S&P Global Mobility,The data shows Tesla’s customer loyalty peaked in June 2024, when 73% of Tesla-owning US households in the market for a new car bought another Tesla, Reuters reportsBrand loyalty rate started to nosedive in July, the month when Musk endorsed Trump,The rate bottomed out at 49,9% last March, after Musk launched the Department of Government Efficiency in January and started firing thousands of government workers,S&P analyst Tom Libby called it “unprecedented” to see the runaway leader in customer loyalty fall so quickly to industry-average levels, adding:“I’ve never seen this rapid of a decline in such a short period of time.
”Tesla’s US loyalty rate has since ticked back up to 57.4% in May.But even so, this does raise the question about whether Musk really deserves $30bn of shares….
BP begins costs review as quarterly profits of £1.77bn beat forecast
The oil and gas group BP is launching a fresh cost-cutting scheme, despite reporting better-than-expected profits, as it tries to do more for its shareholders to fend off pressure from activist investors.The fossil fuel company said it would begin a fresh review of its business when its new chair, Albert Manifold, joins the board in September.BP reported a rise in profits to $2.35bn (£1.77bn) between April and June, a drop of 15% on the same period a year earlier when the company benefited from higher oil and gas prices
Chinese carmakers led by BYD report big rises in UK sales in July
Chinese carmakers led by BYD reported big jumps in UK sales last month, despite a declining overall car market, including a 59% slump in sales from their electric vehicle rival Tesla.BYD sales quadrupled year on year to reach 3,200 in July, even as overall sales of all types of car declined by 5% to 140,000, according to data published on Tuesday by the Society of Motor Manufacturers and Traders (SMMT), a lobby group.The car industry has said it is struggling with a weak economy, which is holding back consumer spending.At the same time, carmakers are waiting for clarity on which models will be eligible for subsidies of up to £3,750 under a new grant scheme announced by the UK government last month. The government on Tuesday said that four Citroën models would be eligible for the grant
UK services sector has biggest fall in orders for nearly three years
The UK’s dominant service sector has reported its biggest drop in new orders in almost three years in July, adding to pressure on the Bank of England to cut interest rates on Thursday.Sounding the alarm over a loss of momentum amid a worsening global economic backdrop, the data provider S&P Global Market Intelligence said total new work in the sector, which accounts for about 80% of the economy, eased to the slowest pace since November 2022.The survey of 650 companies in the sector, which includes finance, IT, communications and property but excludes retail, is closely watched by the Bank and the government for early warning signs from the economy.Threadneedle Street is widely expected to cut borrowing costs at its next policy meeting on Thursday from the current level of 4.25% amid growing concerns about the strength of the economy
Domino’s Pizza profits dive as people cut back on takeaways in UK
Domino’s Pizza said the takeaway market had “become tougher” as it blamed weaker consumer confidence in the run-up to the autumn budget and rising wage costs for lower-than-expected sales and a slump in profits.After a drop of nearly 15% in half-year profits, the company now expected full-year underlying profits of between £130m and £140m, about £6m below analysts’ expectations.Domino’s said it was gaining market share but its franchise partners were being more cautious about opening new outlets because of higher employment costs. Employers’ national insurance payments and the legal minimum wage were both increased in April.The company opened 11 stores in the six months to the end of June, fewer than expected, and is now forecasting openings in the mid-20s for the full year
Neil Woodford and his investment firm fined almost £46m over fund failings
The former star stock picker Neil Woodford and his investment management company have been fined almost £46m by the UK’s financial regulator over the collapse of his popular equity fund.The Financial Conduct Authority (FCA) has given Woodford a penalty of £5.89m and banned him from holding senior manager roles and managing funds for retail investors and fined Woodford Investment Management (WIM) £40m.The penalties are for failures in their management of the flagship Woodford Equity Income Fund (WEIF), which closed in October 2019 after investors, including many ordinary retail customers, rushed to withdraw money in response to the poor performance of a number of company investments, including some hard-to-sell illiquid assets.The value of the fund fell from a high of more than £10
Guinness owner Diageo’s profits slump as it warns of $200m Trump tariff hit
The world’s biggest spirits company, Diageo, has revealed a slump in annual profits and expanded its cost-cutting plan as it searches for a new boss after the resignation of the chief executive, Debra Crew.The FTSE 100 company, which owns brands including Guinness, Johnnie Walker whisky, Gordon’s gin and Smirnoff vodka, reported a nearly 28% fall in operating profit in the 12 months to the end of June compared with a year earlier.The drinks maker also upped its target for cost savings from £500m to £625m. The interim CEO, Nik Jhangiani, said the savings were “not about job cuts”, adding that while some roles would go, the overall workforce could still increase.The figures come weeks after the surprise announcement that the group had begun the hunt for a successor to Crew, who it said had stepped down “by mutual agreement”, after a period of investor disquiet over its declining share price
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