The world faces its most “dangerous time” in decades, the boss of JP Morgan has warned as global conflicts combine with fragile economies.
Jamie Dimon warned about the potential impact on food and energy markets of the wars in the Middle East and Ukraine, which come as global governments battle high inflation.
Mr Dimon, the longest serving chairman and chief executive of America’s Big Four banks, was speaking as the bank unveiled rising third quarter profits.
Earnings rose in the third quarter as surging rates and the acquisition of failed First Republic Bank drove its interest income to a record high.
Mr Dimon said: “We still do not know the longer-term consequences of quantitative tightening, which reduces liquidity in the system at a time when market-making capabilities are increasingly limited by regulations.
“Furthermore, the war in Ukraine compounded by last week’s attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships.
“This may be the most dangerous time the world has seen in decades.”
Read the latest updates below.
05:17 PM BST
Putin denies allegations that Russia sabotaged gas pipeline
President Vladimir Putin has said allegations of Russia’s involvement in the leak at the Balticconnector gas pipeline are “total nonsense”.
Speaking at a briefing in Kyrgyzstan, Mr Putin suggested that an earthquake or damage from a ship anchor could likely be the cause of the leak.
The gas pipeline, which transports 2.6bn cubic metres of gas a year between Finland and Estonia, started leaking on Sunday. The Finnish authorities have said they are investigating on the assumption that it was caused by deliberate sabotage, igniting suspicion of Russian involvement.
Estonian Prime Minister Kaja Kallas said she would not rule out Russian involvement until the investigation is complete.
Finnish Prime Minister Petteri Orpo said the leak was caused by an “external source”.
Fears of sabotage have sparked market concerns over the vulnerability of other Baltic and North Sea gas infrastructure. Alongside worries over the risk to gas supply from the conflict in Israel, it has contributed to a 47pc jump in wholesale UK gas prices since the start of the week.
04:32 PM BST
NASA launches spacecraft to metal asteroid
SpaceX’s Falcon Heavy rocket launched on Friday carrying a NASA spacecraft on a $985m interplanetary science mission.
The spacecraft will investigate a metal-rich asteroid called Psyche, which could give clues about the Earth’s core.
The rocket lifted off from Florida’s Kennedy Space Center at 10.19am local time on Friday. It is the first time NASA has used the SpaceX rocket for a mission of this kind.
The journey to Psyche will take nearly six years. The spacecraft will orbit the asteroid for two years to anaylse what it is made from.
Psyche is shaped like a potato and is up to 173 miles wide.
04:19 PM BST
US house prices most unaffordable on record
Housing affordability in the US slumped to a new record low in August, new data shows.
A combination of high house prices and high mortgage rates mean homes are more unaffordable than at any point in American history since at least 1989, according to the National Association of Realtors.
The NAR’s index for housing affordability fell to 91.7 in August, down from 93.9 in July.
If the index is below 100, it means a household with an average income will not qualify for a mortgage on a typical home.
High borrowing costs initially triggered a drop in house prices in the US, but a shortage of supply means values have climbed to hit new record highs.
An average family buying a typical $413,500 home in August had to spend 27.3pc of their household income on their mortgage payments, with rates at 7.12pc.
A year earlier, when the average home cost $398,800 and rates were at 5.29pc, buying a home only took up 22.6pc of a typical household’s income.
03:32 PM BST
Handing over
This is the point when I duck out – and I will leave you in the hands of Melissa Lawford as you head toward the weekend.
My parting gift for you is this, err, very red image of cranberries being harvested in British Columbia, Canada:
03:23 PM BST
Next agrees £115m takeover of FatFace
Next has agreed a takeover of clothing brand FatFace in a deal worth £115.2m in cash and shares.
The high street bellwether, helmed by the Conservative peer Lord Wolfson, said the acquisition would not materially impact its underlying profits when it comes to report its full-year results.
Will Crumbie, who joined FatFace in 2014 and became chief executive in 2021, will continue to lead the business.
It makes FatFace the latest in a string of high street chains — including Made.com, Joules, and Cath Kidston — to be snapped up by Next since the end of the pandemic.
FatFace currently runs more than 200 shops across the UK and Ireland, as well as a handful of sites in the US and Canada.
03:16 PM BST
Falling import prices boost inflation hopes
US import prices increased less than expected in September as a strong dollar depressed prices of non-energy products, which over time will help to lower domestic inflation.
In the 12 months to September, import prices dropped 1.7pc after falling 2.9pc in August, the Labor Department said.
Annual import prices have now declined for eight straight months.
Christopher Rupkey, chief economist at FWDBONDS in New York, said: “The stronger US dollar on the back of higher bond yields may be in danger of pricing American exports out of world markets, but it is doing one good thing, which is tamping down the prices of imported goods coming into the country and aiding the Fed’s inflation fight.”
Jeffrey Roach, chief economist at LPL Financial, said: “Declining import prices for consumer goods and auto parts should minimize the risk of a resurgence in consumer inflation.”
03:02 PM BST
JP Morgan shares gain most since April
It has been quite the start for US banks on Wall Street after a string of them published results.
JP Morgan shares have risen 4.5pc, making their largest gain since April, while those of Wells Fargo were lifted 3.7pc.
Citigroup shares increased by 3.7pc, also after it posted better results than expected.
02:45 PM BST
Brent tips back above $89
Oil has risen 3.6pc today in its highest gain since Monday when markets were reacting to the outbreak of conflict in the Middle East.
Brent crude has risen back above $89 in a volatile week for the commodity.
US-produced West Texas Intermediate has risen 3.9pc today to more than $86 a barrel.
02:35 PM BST
Wall Street opens higher
US stock markets opened higher as the yields on the bond market fell back after this week’s persistently high inflation figures across the Pond.
The Dow Jones Industrial Average was 0.6pc higher at 33,831.47 while the broad-based S&P 500 gained 0.4pc to 4,368.65.
The tech-heavy Nasdaq Composite rose by 0.2pc to 13,000.01.
02:28 PM BST
Microsoft and Activision complete £56bn merger
Microsoft has completed its acquisition of video game-maker Activision Blizzard for $69bn (£56bn), closing one of the most expensive tech acquisitions in history just hours after UK regulators gave their approval.
The notice that the deal has gone through came on the same day that Microsoft was given the all clear from the Competition and Markets Authority, which reversed its earlier decision to block the gaming deal.
Taking over the studios behind blockbuster games like Call of Duty, Diablo and Overwatch will be a boost for Microsoft’s Xbox gaming console, which ranks third in sales behind PlayStation and Nintendo.
02:16 PM BST
Bank of England must not lower interest rates early, warns IMF chief
The Bank of England and the European Central Bank and are now “in the right spot” on interest rates but must maintain tight monetary policy for “as long as necessary”, an International Monetary Fund chief has said.
European director Alfred Kammer told a press conference during IMF and World Bank annual meetings in Morocco that central banks need to avoid easing monetary policy prematurely as positive data comes in that indicates easing inflation.
They also must be ready to respond should negative surprises occur showing inflation more persistent than expected, he said.
02:03 PM BST
Pound creeps higher after dollar rally
The pound has edged higher a day after the dollar had its biggest daily increase since March amid stubbornly high US inflation figures.
The dollar index, which measures the US currency against six of its major peers, rose 0.8pc on Thursday, its biggest one-day jump since March 15.
However, today the pound clawed back some of its loss and is up 0.1pc against the greenback to nearly $1.22.
Sterling was flat against the euro at 86p.
01:45 PM BST
US markets mixed before opening bell
Wall Street’s main stock indexes lacked direction before the opening bell as investors assessed earnings from major US banks.
JP Morgan Chase, the biggest American bank, posted a jump in third-quarter profit as higher interest rates boosted its income from loans. Its shares rose 0.5pc in premarket trading.
Wells Fargo gained 1.9pc after the US lender’s profit got a boost from customers paying higher interest on loans. Citigroup gained 2.4pc as it reported steady earnings.
BlackRock reported a 13pc rise in third-quarter profit on a rebound in markets. However, shares of the world’s largest asset manager remained flat.
US stocks registered their first decline in five days on Thursday as yields rose after data showed inflation remains stubbornly high. Yields, however, eased today.
The Dow Jones Industrial Average gained 0.2pc in premarket trading. The S&P 500 was up 0.1pc in premarket trading, while the Nasdaq 100 was down 0.2pc.
01:32 PM BST
Citigroup buoyed by rising investment banking fees
Citigroup’s profit was broadly steady in the third quarter, fuelled by rising interest payments and surging investment banking fees.
The bank’s net income rose to $3.5bn (£2.9bn) from a year ago, while earnings per share remained stable at $1.63, exceeding the consensus estimate of $1.21 by analysts polled by LSEG.
Revenue at Citi’s institutional clients group that houses its Wall Street operations increased 12pc from a year ago, fuelled by a jump in investment banking fees. The gains were a bright spot after several quarters of depressed dealmaking.
Citi’s overall revenue climbed 9pc to $20.1bn (£16.5bn).
The third largest US lender set aside more money to cover potential bad loans, even though delinquency levels were still low compared to historical levels.
Rivals Wells Fargo and JP Morgan Chase also reported higher quarterly profits today, boosted by a rise interest payments.
01:18 PM BST
World faces most dangerous time in decades, warns JP Morgan boss
The boss of JP Morgan has warned “this may be the most dangerous time the world has seen in decades” as global conflicts combine with fragile economies.
Jamie Dimon outlined his concerns as the bank unveiled rising third quarter profits. He said:
Currently, US consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers.
However, persistently tight labor markets as well as extremely high government debt levels with the largest peacetime fiscal deficits ever are increasing the risks that inflation remains elevated and that interest rates rise further from here.
Additionally, we still do not know the longer-term consequences of quantitative tightening, which reduces liquidity in the system at a time when market-making capabilities are increasingly limited by regulations.
Furthermore, the war in Ukraine compounded by last week’s attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships.
This may be the most dangerous time the world has seen in decades. While we hope for the best, we prepare the Firm for a broad range of outcomes so we can consistently deliver for clients no matter the environment.
To conclude, I want to thank our extraordinary employees for all of their hard work in making us one of the most trusted financial institutions in the world.
01:06 PM BST
Nigel Farage to bank with Lloyds after Coutts account closure
Nigel Farage will start banking with Lloyds after the controversial closure of his Coutts account.
Our correspondents Simon Foy and Matt Oliver have the latest:
The former UK Independence Party leader said on Friday he was relieved to have been offered an account by Lloyds, Britain’s biggest mortgage provider, after he was rejected by a string of other high street lenders because of his political views.
It comes after his accounts with Coutts were closed over the summer after staff decided his views did not “align” with the bank’s own values “as an inclusive organisation”.
When the row went public, it triggered a furore that led to the resignation of Dame Alison Rose as chief executive of NatWest, which owns Coutts.
An official inquiry into debanking was also launched.
Read what Mr Farage told the Telegraph.
12:52 PM BST
Jeff Bezos buys neighbour’s Florida mansion for $79m
Amazon founder Jeff Bezos has bought his neighbour’s Florida mansion for $79m (£65m) in an area known as “Billionaire Bunker”.
Our senior technology reporter Matthew Field has the details:
The seven-bedroom property, which has a wine cellar, a home cinema and a sauna, is located next door to another vast property that Mr Bezos bought earlier this year for a reported $68m.
The estate, which covers 19,000 sq ft, is situated in Indian Creek, a village on a private island near Miami. The sale was first reported by Bloomberg.
The waterfront property was built in 2000 and last sold in 2014 for $28m. It was listed earlier this year with a $85m price tag.
Details of the house are listed in a now-deleted online listing, which boasts of “timeless European glamour” across its seven bedrooms and 14 bathrooms.
Read who else lives in the area.
12:40 PM BST
Higher loan repayment costs boost Wells Fargo
Wells Fargo’s profit rose in the third quarter as the US lender benefited from customers paying higher interest on loans.
The swiftest tightening of US monetary policy in 40 years aimed at reining in sticky inflation has buoyed banks’ interest income.
Federal Reserve officials have said monetary policy will need to stay restrictive for a longer period to bring inflation back down to its 2pc target but are debating whether another hike is needed this year.
Wells Fargo, one of the Big Four banks in the US, said net interest income climbed 8pc to $13.1bn in the third quarter.
The bank authorised a new share buyback program of up to $30bn in July in a show of confidence.
It comes as Wells Fargo is still trying to fix a six-year-old scandal over sales practices that led to hefty fines and an asset cap imposed by the Fed.
12:00 PM BST
JP Morgan bolstered by higher interest rates
JP Morgan Chase’s profit rose in the third quarter as higher interest rates boosted its income from loans.
Profit was $13.2bn (£10.8bn), or $4.33 per share, for the three months ended September 30, compared with $9.7bn (£8bn), or $3.12 per share, a year earlier.
The Federal Reserve’s interest-rate increases have bolstered banks’ net interest income (NII), or the difference between what they earn on loans and pay out on deposits.
JPMorgan’s earnings also got a boost from its acquisition of First Republic Bank in May that added around $173bn of loans to its balance sheet.
NII rose 30pc to $22.9 billion, the bank said.
11:48 AM BST
Burger King eyes expansion as profits cut in half
Burger King plans to open more than 60 restaurants across the UK over the next two years despite revealing underlying profits more than halved last year.
The fast-food giant said opened 32 new Burger King sites in 2022 and 74 acquired from its largest franchise partner, Karali Group.
Total revenue increased 39pc during the year to £294.5m, while like-for-like sales grew by 11pc.
However, underlying pre-tax earnings fell to £15.2m compared to £33.1m in 2021 as it was hit by surging food inflation and higher energy bills.
Burger King UK chief executive Alasdair Murdoch said:
I am pleased to announce a resilient full year performance and strong strategic progress in 2022 as we announce ambitious plans to open 60 new restaurants over the next two years.
We have continued our rapid expansion in the UK and delivered good growth during the year, despite industry-wide headwinds.
11:30 AM BST
John Lewis hires new boss for housing push
The John Lewis Partnership has appointed a new property chief to lead Dame Sharon White’s ambitious plans to expand into housing.
The retail group, which runs the department store chain and Waitrose supermarket business, said Royal Mail executive Martin Gafsen will become its director of property from November 15.
He will succeed Chris Harris, who unexpectedly stepped down from the position in June after more than five years.
Mr Gafsen joins from Royal Mail Group, where he was property and facilities director for the past 16 years.
In the new role, he will be in charge of the strategy and management of the partnership’s property portfolio.
Mr Gafsen said: “It’s a great privilege to join the partnership, home to two of the UK’s most loved brands.
“With an extensive and valuable property portfolio, we have an important role to play in ensuring it continues delivering value for the long-term benefit of customers and partners for generations to come.”
11:15 AM BST
Gas prices surge as households prepare for Arctic blast
Gas prices are on track for their largest weekly gain in 15 months as the Middle East conflict deepens just as Britain prepares for a downturn in temperatures.
UK contracts for the fossil fuel hit their highest level since February today amid a perfect storm of factors threatening supplies ahead of the winter.
Israel has closed its Tamar gas field in the Mediterranean, which is within range of Hamas rockets, which comes just as demand is poised to increase from an Arctic blast heading for western Europe this weekend.
Meanwhile, workers in Australia are threatening fresh strike action at two of Chevron’s liquefied natural gas plants which account for roughly 7pc of global supplies of liquified natural gas.
Simon French, chief economist at the broker Panmure Gordon, said the surge in gas prices meant it was “squeeky bum time” for the Bank of England, as rising gas prices threaten to fuel inflation ahead of its next interest rate decision.
10:53 AM BST
UK finances ‘definitely worse’ now than in spring, says Hunt
Chancellor Jeremy Hunt said “the numbers are definitely worse than what I faced in the spring” as he discussed the difficulties the UK economy could have ahead.
Asked on Sky News about the upcoming Autumn Statement and if good or bad news was expected, he said: “I think it’s a bit of both.
“I think the British economy compared to when I became Chancellor a year ago has proved to be much more resilient than nearly every international organisation predicted and people are looking at some of the underlying strengths.”
But he added: “In the short-term, we have challenges. We have a challenge with inflation, which is still too high. And we have the challenge of the international environment where there is still a lot of shocks.
“So I need, as Chancellor, to focus on reliance in the face of those shocks. I am very much hoping for the best, but I do need to prepare for the worst, because I think we can see that the world is a very dangerous place right now.”
Asked if the economic numbers, including inflation, are not as good as he would have hoped for at this time, he said:
The numbers are definitely worse than what I faced in the spring.
Our debt interest is likely to be £20bn to £30bn higher this year than we predicted in the spring. So yes, it’s a very challenging environment in the short-term.
But my approach to this is to say we will manage those short-term pressures whilst at the same time building for the long-term.
10:40 AM BST
Equifax fined £11m for security breach by Chinese hackers
Equifax has been fined £11.2m over one of the largest cybersecurity breaches in history when the details of nearly 14m UK consumers was accessed by Chinese hackers.
The Financial Conduct Authority issued the fine after it said Equifax failed “to manage and monitor the security” of its British customers in an attack that was “entirely preventable”.
More than 147m Americans also had their personal information stolen by the credit reporting company in the incident 2017, one of the largest known data breaches in history.
The hackers were able to access customers’ names, dates of birth, phone numbers, Equifax membership login details, partially exposed credit card details, and home addresses.
Equifax’s UK operation, which left the handling of its data to its US parent company, did not find out that UK consumer data had been accessed until six weeks after it discovered the breach. The FCA said its data arrangement effectively counted as outsourcing.
Therese Chambers, joint executive director of enforcement at the FCA, said:
Financial firms hold data on customers that is highly attractive to criminals. They have a duty to keep it safe and Equifax failed to do so.
They compounded this failure by the ways they mishandled their response to the data breach. Regulated firms are on the hook, regardless of whether they outsource or not.
10:18 AM BST
UK not in tax cuts territory, says Hunt
Jeremy Hunt has warned Britain’s financial position has worsened as the Treasury contends with higher debt payments.
The Chancellor, who is in Marrakech for the World Bank and IMF’s annual meeting, insisted “we are not in that territory” when asked by journalists about tax cuts.
He said the Autumn Statement will lay out his plans for Britain to get out of its low growth trap.
He added that Britain’s innovation sectors have allowed it to grow faster than Germany but the UK needs to tackle productivity and business investment.
10:02 AM BST
Gold on track for biggest gain since March
Gold is poised to make its largest weekly advance in nearly seven months as the conflict in the Middle East pushes investors toward safe-haven assets.
The precious metal is on track for an increase 2.8pc this week, which would be the most since March.
09:40 AM BST
Bailey warns the ‘last mile’ in reducing inflation will be the hardest
Andrew Bailey has warned interest rates will remain higher for longer, adding that the “last mile” in getting inflation down will be the hardest and require higher borrowing costs to bear down on the economy.
Our economics editor Szu Ping Chan is listening to his speech at the IMF and World Bank summit in Marrakech:
The Governor of the Bank of England said future decisions on interest rates would be “tight” as he described UK economic activity as “subdued”.
However, he added that the Bank remained focused on its goal of steering inflation back to its 2pc target.
He told an event hosted by the Institute of International Finance: “In the last few months, there has been solid progress in terms of showing signs that inflation is being tackled, but let’s not get carried away because there’s an awful lot still to do.
“This is why the decision of our last meeting was such a tight one. And… they’re gonna go on being tight ones.”
Mr Bailey said interest rates were now in “restrictive” territory, meaning they are slowing the economy.
He said: “We are seeing policy operating in a restricted fashion and obviously that does have a have an effect on the outlook for activity.”
Inflation currently stands at 6.7pc and the Bank does not expect it to get back to its 2pc target until 2025.
09:20 AM BST
Oil gains amid Israel-Gaza bloodshed
Oil prices have pushed higher amid fears the Israel-Hamas war could destabilise the Middle East.
Brent crude, the international benchmark, has risen 2.3pc toward $88 a barrel, while US-produced West Texas Intermediate has risen 2.4pc toward $85.
Brent has gained more than 4pc this week but crude has been volatile as traders try to price in the potential for the war to draw in Iran, a supplier of arms and money to Hamas.
Charu Chanana, market strategist for Saxo Capital, said: “The key threat to oil will only come if Iran’s involvement is proven. The oil demand outlook also remains muddled.”
08:56 AM BST
‘Squeeky bum time’ for Bank of England as gas prices surge
Gas prices earlier this their highest levels since February, giving a headache to the Bank of England as policymakers decide whether to raise interest rates again at their next meeting in November.
Panmure Gordon chief economist Simon French has warned the rising prices will be a “direct feed” into the inflation figures for November:
Squeaky bum time at the Bank of England given havoc that gas prices did to inflation forecasts last year. Gas futures have gone vertical – a direct feed into the November CPI forecast. A week ago, gas looked like a 🔽 for 2024 CPI, offsetting oil 🔼. Not the case this morning 😟 pic.twitter.com/hdtgKc1mKd
— Simon French (@shjfrench) October 13, 2023
08:46 AM BST
Oil stocks lift FTSE 100 despite inflation fears
The FTSE 100 inched higher as gains in energy shares on higher crude prices limited the impact of worries about persistent US inflation and what it mean for interest rates.
The UK’s flagship stock index was up barely 0.1pc, while the mid-cap FTSE 250 was down 0.3pc. Both indexes, however, are set for their biggest weekly gains in four weeks.
Globally, stock markets have taken a hit after hotter-than-expected US inflation data on Thursday bolstered the case for the Federal Reserve to tighten monetary policy further.
Shares of oil majors Shell and BP rose 0.9pc and 1.4pc respectively, tracking crude prices higher.
Precious metal miners added 2.1pc, while industrial metal miners also advanced 0.5pc as gold and copper prices edged higher.
Fund manager Ashmore slipped 1.9pc as assets under management declined in the September-quarter amid subdued market conditions due to weaker China economic data and high interest rates.
St James’s Place dropped 10pc to the bottom of the FTSE 100 as it confirmed it is reviewing its fees after regulators introduced new rules over the summer. The broader investment banking and brokerage services sector lost 1.4pc.
08:30 AM BST
St James’s Place shares sink as it reviews fees
Investment manager St James’s Place suffered the largest drop in its share price in more than two months after it said it is reviewing its fees and charges.
The biggest wealth manager in Britain said it will reassess its models following the arrival of new consumer rules this summer that mean companies have to provide their clients with fair value for money – or face action from the regulator.
Shares suffered a 10pc fall after bosses issued a statement to shareholders saying they “continue to build on the work completed for consumer duty”.
The statement said: “Whilst the evaluation has not yet been completed and therefore no decision has been made, we are confident that all the options under consideration will ensure value for clients and a strong, secure, and sustainable business for all stakeholders.”
St James’s Place has nearly 4,800 advisers looking after the fortunes of more than 900,000 clients.
08:16 AM BST
Gas prices hit highest level in eight months
British gas prices have continued their march higher as the bloodshed in the Middle East and gas leak in the Baltic Sea raises concerns about supplies.
The UK contract has gained as much as 5.3pc today to 141p per therm while European benchmarks have risen as much as 5.9pc to €56 per megawatt hour.
Both last traded at those levels in February.
In addition to the Israel and Baltic sea concerns, workers at two of Chevron’s liquefied natural gas plants in Australia are threatening strikes at facilities which account for roughly 7pc of global LNG supply.
08:08 AM BST
UK markets mixed at the open
It is a tentative picture as markets open in London after stronger-than-expected US inflation figures bolstered the case for the Federal Reserve to keep rates higher for longer.
The internationally-focused FTSE 100 has risen less than 0.1pc to 7,645.30 while the domestically-orientated FTSE 250 has dropped 0.3pc to 17,788.77.
08:04 AM BST
Stubborn French inflation revised higher
French annual inflation was slightly higher than initially measured in September, at 5.7pc, official figures show.
Higher prices in the energy sector outpaced easing price increases in the food sector as well as in services, according to final figures from the INSEE statistics body.
The inflation figure, on an EU-harmonised basis, stood at 5.7pc, slightly up from initial, preliminary figure of 5.6pc, reaching the same level as in August.
In its economic outlook published Thursday, INSEE said inflation, a major headache for consumers and the government this year, would ease by end 2023.
07:55 AM BST
Loungers plans to open record number of new sites
Cafe, bar and restaurant operator Loungers has said the growth rate of its sales accelerated in the 24 weeks to the start of October.
Sales grew 7.7pc during the period, up from a 5.7pc rise in the prior 12 weeks, the company said.
In the first half of the financial year Loungers made £149.6m in revenue, up 22.3pc on the year before. It said that pressure from inflation was easing.
The group opened another 16 sites in the six months, giving it a total of 238. It expects to open a record 34 new locations this financial year.
07:40 AM BST
UK approval removes last major obstacle to Microsoft and Activision merger
The Competition and Markets Authority had been the last major obstacle to Microsoft and Activision Blizzard’s mega merger and came the X-Box maker updated its offer in August.
Since the deal was announced in January 2022, Microsoft has secured approvals from competition authorities covering more than 40 countries.
Crucially, it got a thumbs-up from the European Union after agreeing to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years.
However, the deal faced resistance from British and American regulators who worried it would stifle competition in the video game industry.
Top rival Sony also feared it would limit PlayStation gamers’ access to Call of Duty, Activision’s long-running military shooter series.
The US Federal Trade Commission lost a court bid to pause the deal so that its in-house judge could review it.
The FTC has not given up, appealing the decision and last month filing notice of its plan to resume that trial. That signals the US regulator’s intention to unwind the deal even after it closes.
07:30 AM BST
Microsoft president grateful for UK’s ‘thorough review’
Microsoft President Brad Smith said the company was grateful for the “thorough review and decision.”
He said: “We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.”
We’re grateful for the CMA’s thorough review and decision today. We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.
— Brad Smith (@BradSmi) October 13, 2023
07:28 AM BST
Activision boss ‘excited for next chapter’
After UK regulators gave the all clear, Activision Blizzard chief executive Bobby Kotick wrote on his company’s website:
Today the CMA, the regulatory authority in the UK, approved our transaction with Microsoft.
We now have all regulatory approvals necessary to close and we look forward to bringing joy and connection to even more players around the world.
Our board chair Brian Kelly and I are incredibly proud of all of you and your accomplishments over the last four decades.
We’re excited for our next chapter together with Microsoft and the endless possibilities it creates for you and for our players.
07:26 AM BST
Competition chiefs give go-ahead to Microsoft’s £56bn Activision takeover
Microsoft has been given the green light for its $69bn (£56bn) takeover of Activision Blizzard after regulators overturned an earlier decision to block to deal.
The Competition and Markets Authority (CMA) said it would approve the merger after Microsoft stripped out the Call of Duty maker’s cloud streaming rights from its plans.
The CMA said it would grant its assent “subject to the condition that the sale of Activision’s cloud streaming rights completes prior to completion of the merger”.
Microsoft said in August that it would offload Activision’s cloud streaming rights for PC and console games to video game publisher Ubisoft.
The CMA blocked Microsoft’s original effort to buy Activision in April, saying it would give the tech giant a stranglehold on the fast-growing cloud gaming market.
We’ve cleared the new deal for Microsoft to buy Activision without cloud gaming rights.
In August, Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights.
Read more: https://t.co/Z4scLEJFy0
1/2 pic.twitter.com/gmqwZsOOFi
— Competition & Markets Authority (@CMAgovUK) October 13, 2023
The decision prompted claims from Activision that Britain was “closed for business”.
The companies had agreed to extend an original mid-July deadline to October 18 to overcome the regulator’s objections.
The approval also helps Microsoft avoid paying Activision a $4.5bn penalty if the deal does not close.
The watchdog said: “The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers.”
07:20 AM BST
Good morning
Thanks for joining us. Competition regulators have given their assent to Microsoft’s revised $69bn (£54bn) merger with Activision Blizzard after the US tech giant agreed to revise the plans.
The Competition and Markets Authority gave its assent to the plans provided that Microsoft offloads Activision’s cloud streaming rights for PC and console games.
5 things to start your day
1) ‘New cloud darkening’ over global economy after Hamas attack on Israel, says IMF | Recovery is ‘limping along’ amid the threat of a new Middle East war
2) How the ghost of Jeffrey Epstein chased Jes Staley out of the City | American banker’s fall from grace appears to have been as brutal as it has been swift
3) Boss of world’s largest cinema chain victim of catfish blackmail scam | Outspoken chief executive revealed details of the case after scammer’s sentencing
4) Microsoft pays HMRC £136m amid US tax row | Software giant made the payment in the last 15 months under a ‘bilateral agreement’
5) Dyson’s family-owned parent company paid £1.2bn dividend | Sir James steadily increases cash payments to Weybourne Holdings
What happened overnight
Asian markets slipped following a decline on Wall Street driven by mounting pressure from rising bond market yields.
China’s consumer prices in September remained flat compared to the same period last year, the National Bureau of Statistics reported, indicating persistent deflationary pressures and weak domestic demand.
Meanwhile, China’s producer price index, which measures prices that factories charge wholesalers for their products, declined for the 12th straight month.
The Hang Seng in Hong Kong slipped 2pc to 17,875.33 from a five-week high, and the Shanghai Composite index fell 0.6pc to 3,087.88.
Singapore’s economy expanded faster than expected in the third quarter, according to the preliminary government data. The central bank decided to maintain its current monetary policy settings for the second consecutive meeting, as core inflation remains low and concerns about economic growth persist.
In South Korea, the Kospi lost 0.9pc, to 2,458.05 after official figures showed unemployment rose to 2.6pc in September from a historic low of 2.4pc in August.
Japan’s Nikkei 225 index fell 0.6pc to 32,293.69. Australia’s S&P/ASX 200 lost 0.5pc to 7,053.80. Taiwan’s Taiex slipped 0.4pc, and the SET in Bangkok gave up 0.7pc.
On Thursday, the S&P 500 fell 0.6pc to 4,349.61. It was the first drop for the index in five days, breaking its longest winning streak since August.
The Dow Jones Industrial Average dropped 0.5pc to 33,631.14, and the Nasdaq Composite sank 0.6pc, to 13,574.22.
