Euro at risk of falling to dollar parity if Fed holds down rates - live updates

Demand for corporate loans in the eurozone saw a “substantial decline” in the first quarter as the bloc continues to grapple with higher borrowing costs, the European Central Bank said.

The ECB’s quarterly Bank Lending Survey also shows that credit standards - banks’ internal guidelines or loan-approved criteria - were slightly tighter for firms across the bloc.

Demand for mortgages eased slightly for the first time since 2021.

The ECB said: “Higher interest rates, as well as lower fixed investment for firms and lower consumer confidence for households, exerted dampening pressure on loan demand.

“The substantial decline in loan demand from firms contrasted with bank’s prior expectations of a stabilisation.”

Pharmaceuticals companies were told to make fewer drugs for the sake of the environment, in new draft guidelines for businesses in the Government’s latest net zero drive.

Tim Wallace has the story:

The suggestion was among a vast array of proposals which Britain’s biggest businesses have been told to consider as they are ordered to publish lengthy reports every year to show how they plan to meet their net zero targets.

The Government said that it had removed this recommendation hours before the guidelines were published, following questions from The Telegraph.

The draft guidance said pharma companies should “reduce the overall quantity of products manufactured and purchased” as part of efforts to explore “sustainable alternatives” to drugs with high emissions. 

Britain’s pharmaceutical industry employs 66,000 people, with a turnover of £40.8bn and exports of £26.1bn, according to the Association of the British Pharmaceutical Industry (ABPI).

Other recommendations in the Treasury report, which have not been redacted, include advice to clothing companies to reduce the amount of cotton used in t-shirts or replace traditional textiles with lab-grown fabrics.

Read Tim’s full story here

UK stocks are down this morning as investors wait to crucial data that could give hints about the outlook for interest rate cuts.

The FTSE 100 was down as much as 0.2pc, while the domestically-focused FTSE 250 lost 0.3pc.

Miners are the best performers this morning as gold prices hover near record highs and industrial metals extended their gains.

BP rose 1.5pc after a positive first quarter trading update.

Investors will have a close eye on key economic events including US inflation figures, the European Central Bank’s policy meeting and Britain’s GDP numbers.

The maker of Winston and Gauloises cigarettes is gearing up for a boost in profits in the first half of the year thanks to rising tobacco prices.

Imperial Brands reported a rise in tobacco revenues on a constant currency basis, as well as an improvement in its NGP (next generation products) business, which includes vapes and heated tobacco.

The London-listed company’s combustible tobacco business, which mainly covers cigarettes, reported declines in the UK and Germany.

However, bosses said this was offset by gains in the US, Spain and Australia. As a result, it is on track to hit half-year and full-year targets.

Imperial added: “At the same time, we have delivered strong pricing, more than offsetting wider industry volume pressures in certain markets.”

The FTSE 100 has started the day marginally on the back foot, despite positive data elsewhere in the economy.

The blue-chip index slipped 0.1pc to 7,932 points.

BP is expecting to report a strong performance from its trading business in the first quarter thanks to a market improvement from buying and selling oil.

In a trading update this morning, the energy giant also pointed to rising oil and gas production and improved margins in its refining business.

BP’s gas marketing and trading business kept up the good performance seen in the previous quarter, while oil improved after a weak fourth quarter.

The company expects its net debt to rise for the first quarter as it steps up working capital.

The oil giant enjoyed a strong end to the year, with shares jumping on better-than-expected profits and an accelerated share buyback.

It comes after the boss of rival Shell said the company was considering quitting London due to concerns its shares were undervalued.

HSBC will take a $1bn hit after inking a deal to sell its business in Argentina.

The banking giant has agreed to sell the division to Grupo Financiero Galicio, the country’s largest private financial group, for $550m.

The deal includes banking, asset management and insurance, as well as $100m of subordinated debt.

HSBC said the move will allow it to focus on higher-value opportunities. It will book the pre-tax loss in the first quarter of this year.

Noel Quinn, HSBC chief executive, said: 

We are pleased to agree the sale of HSBC Argentina. This transaction is another important step in the execution of our strategy and enables us to focus our resources on higher value opportunities across our international network. 

HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network. 

Furthermore, given its size, it also generates substantial earnings volatility for the Group when its results are translated into US dollars. Galicia is better placed to invest in and grow the business.

Karen Johnson, head of retail at Barclays, said:

Retailers were braced for a more subdued start to 2024, and recent figures are in line with expectations.

However, in spite of this initial lull, many retailers are confident that spending will rebound in the coming months, particularly in anticipation of better weather, the energy price cap drop, an uplift in the National Minimum Wage, and the buzz around major events such as Taylor Swift’s Eras Tour and the Paris 2024 Olympics.
 

Linda Ellett at KPMG, said:

An early Easter showed green shoots of spring for retailers in March, with sales growth up and above headline inflation for the first time in more than two years.

There were also some signs of improvement with more categories starting to see positive sales growth in March for the first time in months.

There’s more positive data out this morning. Szu Ping Chan has the details:

Retail sales improved in March as the early Easter saw households ramp up spending, according to figures published by the British Retail Consortium.

Total UK retail sales were up by 3.5pc compared with last March. This is above the three-month average of 2.1pc and the first time in more than two years that sales growth has outpaced inflation.

This means British households are no longer spending more to get less, according to the BRC-KPMG retail sales monitor.

The figures showed food sales rose 6.8pc year-on-year because of the early Easter and the subsequent uplift ahead of the long bank holiday weekend.

Elsewhere, wet weather dampened sales of garden furniture, barbecues, DIY products, and clothing and footwear.

Good morning

Here are some of our top stories from yesterday to get you caught up:

1) Shell considers quitting London for New York | Oil and gas giant looks at ‘all options’ amid concerns it is under-appreciated by investors

2) ‘Shadow bank’ lending risks triggering new financial crisis, warns IMF | Caution comes after Bank of England launched review into risks posed by private equity

3) ‘Hallucinating’ AI could cause social order collapse, warns tech giant | Japan’s NTT calls for restrictions as chatbots ‘lie with confidence’

4) Mocking our company name is childish, says Abrdn exctve | Fund has been a victim of ‘corporate bullying’ since its rebrand, Peter Branner says

5) Matthew Lesh: Hands off our Isas – they are the savings incentive Britain needs | Criticism of the tax-free pots flies in the face of economic and investment principles

What happened overnight 

On Wall Street, the Dow Jones Industrial Average fell 0.03pc, to 38,892.80, the S&P 500 lost 0.04pc, to 5,202.39 and the Nasdaq Composite gained 0.03pc.

US Treasury yields moved higher on Monday as fixed income investors lowered their expectations for how deeply the Fed will be able to cut interest rates this year after the jobs report.

The yield on benchmark 10-year US Treasury bonds rose to 4.424pc, from 4.378pc late on Friday.