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The world this week

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The Bank of England lifted its benchmark interest rate by a quarter of a percentage point, to 5.25%. Investors had been expecting a half-point increase before the latest inflation figures showed a marked slowdown in the pace of consumer-price rises. The betting now centres on when the central bank will end its current round of monetary tightening. The Federal Reserve and the European Central Bank have left their options open for their next meetings, in September.

Amid higher mortgage rates, house prices in Britain fell in July by 3.8% compared with the same month last year, according to a closely watched index published by the Nationwide Building Society. Although that was the sharpest decline on an annual basis since July 2009, the average house price of £260,828 ($336,000) was still higher in July than during the first five months of this year.

The yield on Japanese ten-year government bonds soared to nine-year highs, after the Bank of Japan raised its cap on the yield from 0.5% to 1%. The adjustment to the central bank’s “yield-curve control” policy took markets by surprise; such a move was not expected until the end of the year. But, amid rising inflation, the bank’s ultra-low interest-rate regime has come under pressure. It insists it has not tightened monetary policy; many analysts disagree.

Turkey’s annual rate of inflation jumped to 47.8% in July from 38.2% in June, the first time since October that the rate has risen. A new tax on fuel was one factor behind the uptick.

The euro area’s economy grew by 0.3% in the second quarter over the previous three months, after two quarters in which growth either shrank or stagnated. Much of the growth in the second quarter was explained by changes to the shifting around of intellectual property by multinationals that have their headquarters in Ireland for tax purposes. Germany’s GDP growth rate was zero. Italy’s fell by 0.3%. Meanwhile, annual inflation in the euro area slowed to 5.3% in July, though the price index for services climbed by 5.6%, a record high.

The S&P 500 had a good July, taking its gain for the first seven months of the year to 20%, the best January to July streak in 26 years. Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, dubbed the Magnificent Seven, are behind much of the rally, but other sectors, notably travel-related shares and cruise lines in particular, have also soared. The tech-heavy NASDAQ index has fared even better, rising by 37% since the start of 2023.

Reaching a milestone

Uber made its first operating profit since floating on the stockmarket in 2019. The ride-hailing and food-delivery company made $326m in the three months ending June 30th. Revenue from its ride-hailing business was up by 25%.

The big five Western oil companies reported huge falls in quarterly profits, a consequence of lower oil prices. BP ’s headline profit plunged by 69%, year on year, to $2.6bn. ExxonMobil’s net income tumbled to $7.9bn from the $17.9bn it had reported a year earlier. Headline profits at Chevron and Shell slumped by around half, to $6bn and $5bn respectively. At TotalEnergies profit was down by 28%, to $4.1bn.

Oil prices have rallied since the end of the second quarter, however, reaching three-month highs this week because of tighter supplies. Brent crude had traded around $85 a barrel before slipping back.

BAE Systems reported a record backlog in orders as it announced increases in revenue and profit for the first half of the year. Like others in the industry, the British defence company is benefiting from what its chief executive describes as security “moving up national agendas”. It is busily replacing British military equipment that was sent to Ukraine and is looking to open a base in that country to carry out repairs to tanks and artillery.

Twitter , now officially known as X, sued the Centre for Countering Digital Hate, accusing it of conducting a “scare campaign” against the platform. X alleges that the CCDH , which has offices in London and Washington, unlawfully scraped its platform and used selected data to try to “drive away advertisers”. The CCDH retorted that it was merely highlighting Twitter’s “toxic content”.

On a sure footing

Associated with hippies in the 1970s and now the sandal of choice for Barbie, Birkenstock is reportedly considering floating on the stockmarket in September in an IPO that could value the firm at more than $8bn. Birkenstock is currently owned by a private-equity group backed by LVMH, the world’s biggest luxury-goods company. The German sandal-maker traces its roots to 1774. The sandals went on the market in America during the 1960s, where they apparently sold best when placed next to the granola section in health-food stores.

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The world this week. image: Getty Images. Share. The Bank of England lifted its benchmark interest rate by a quarter of a percentage point, to 5.25%. Investors had been expecting a half-point increase before the latest inflation figures showed a marked slowdown in the pace of consumer-price rises. The betting now centres on when the central bank will end its current round of monetary tightening. The Federal Reserve and the European Central Bank have left their options open for their next meetings, in September. Amid higher mortgage rates, house prices in Britain fell in July by 3.8% compared with the same month last year, according to a closely watched index published by the Nationwide Building Society. Although that was the sharpest decline on an annual basis since July 2009, the average house price of £260,828 ($336,000) was still higher in July than during the first five months of this year. The yield on Japanese ten-year government bonds soared to nine-year highs, after the Bank of Japan raised its cap on the yield from 0.5% to 1%. The adjustment to the central bank’s “yield-curve control” policy took markets by surprise; such a move was not expected until the end of the year. But, amid rising inflation, the bank’s ultra-low interest-rate regime has come under pressure. It insists it has not tightened monetary policy; many analysts disagree. Turkey’s annual rate of inflation jumped to 47.8% in July from 38.2% in June, the first time since October that the rate has risen. A new tax on fuel was one factor behind the uptick. The euro area’s economy grew by 0.3% in the second quarter over the previous three months, after two quarters in which growth either shrank or stagnated. Much of the growth in the second quarter was explained by changes to the shifting around of intellectual property by multinationals that have their headquarters in Ireland for tax purposes. Germany’s GDP growth rate was zero. Italy’s fell by 0.3%. Meanwhile, annual inflation in the euro area slowed to 5.3% in July, though the price index for services climbed by 5.6%, a record high. The S&P 500 had a good July, taking its gain for the first seven months of the year to 20%, the best January to July streak in 26 years. Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, dubbed the Magnificent Seven, are behind much of the rally, but other sectors, notably travel-related shares and cruise lines in particular, have also soared. The tech-heavy NASDAQ index has fared even better, rising by 37% since the start of 2023. Reaching a milestone. Uber made its first operating profit since floating on the stockmarket in 2019. The ride-hailing and food-delivery company made $326m in the three months ending June 30th. Revenue from its ride-hailing business was up by 25%. The big five Western oil companies reported huge falls in quarterly profits, a consequence of lower oil prices. BP ’s headline profit plunged by 69%, year on year, to $2.6bn. ExxonMobil’s net income tumbled to $7.9bn from the $17.9bn it had reported a year earlier. Headline profits at Chevron and Shell slumped by around half, to $6bn and $5bn respectively. At TotalEnergies profit was down by 28%, to $4.1bn. Oil prices have rallied since the end of the second quarter, however, reaching three-month highs this week because of tighter supplies. Brent crude had traded around $85 a barrel before slipping back. BAE Systems reported a record backlog in orders as it announced increases in revenue and profit for the first half of the year. Like others in the industry, the British defence company is benefiting from what its chief executive describes as security “moving up national agendas”. It is busily replacing British military equipment that was sent to Ukraine and is looking to open a base in that country to carry out repairs to tanks and artillery. Twitter , now officially known as X, sued the Centre for Countering Digital Hate, accusing it of conducting a “scare campaign” against the platform. X alleges that the CCDH , which has offices in London and Washington, unlawfully scraped its platform and used selected data to try to “drive away advertisers”. The CCDH retorted that it was merely highlighting Twitter’s “toxic content”. On a sure footing. Associated with hippies in the 1970s and now the sandal of choice for Barbie, Birkenstock is reportedly considering floating on the stockmarket in September in an IPO that could value the firm at more than $8bn. Birkenstock is currently owned by a private-equity group backed by LVMH, the world’s biggest luxury-goods company. The German sandal-maker traces its roots to 1774. The sandals went on the market in America during the 1960s, where they apparently sold best when placed next to the granola section in health-food stores. Share. Reuse this content.