Inflation fears weigh on markets; UK businesses push for closer relations with EU – business live | Business

The South African rand fell more than 1% against the US dollar today after the first results of South Africa’s general election came out.

Early results from yesterday’s South African election poll suggest the incumbents African National Congress (ANC) a party may lose its majority even though it is still expected to remain the largest party.

Reuters there are details:

With results from 10% of polling stations, the ANC’s share of the vote in Wednesday’s election stood at 42.3%, with the pro-business Democratic Alliance (DA) on 26.3% and the Marxist Economic Freedom Fighters (EFF) on 8.1%, data from the electoral commission show.

If the final results look anything like the early picture, the ANC will be forced to strike a deal with one or more other parties to govern – a situation that could lead to unprecedented political instability in the coming weeks or months.

The rand fell 1.2% to 18.67 per US dollar.

UK businesses are urging the next government to make improving relations with the European Union a key part of its drive to revive the economy.

The British Chamber of Commerce’s election manifesto, published today, cited an improved relationship with the EU as one of its five priorities, saying it would help cut costs and boost trade.

The BCCwhich runs over 50 UK Chambers across the country, calls for:

Shevaun Haviland, general manager of BCCsays it’s not about conversion Brexitexplaining…

“The EU is the UK’s biggest market, so we urgently need to establish a better trading relationship with our nearest neighbour. It’s not about rewriting the referendum result, it’s about cutting red tape and promoting trade.

Both the Conservatives and Labor have been criticized for not focusing on the impact of leaving the EU in this referendum, with former deputy prime minister Michael Heseltine warning the election campaign would be “the most dishonest in modern times”.

British food importers from the EU have warned that new post-Brexit checks introduced this spring will raise costs and create painful delays at the border.

Jamie DimonHead of JP Morganfueled further concern by warning yesterday that the US economy was at risk of stagnation – the toxic combination of rising prices and sluggish growth.

Speaking at a Wall Street conference yesterday, Dimon warned that the past five years of massive fiscal and monetary stimulus risked tipping the US into deflation.

Dimon said:

“I’m not saying it’s going to happen, I’m just putting the odds much higher than other people,” Dimon added. “I look at the amount of fiscal and monetary stimulus that’s happened over the last five years — it’s been so extraordinary, how can you tell me it’s not going to lead to stagflation?”

“Maybe not… But I, for one, am fully prepared for it.”

Dimon also explained that JP Morgan is prepared for both a soft landing and something rather bumpier, saying:

“If we have a soft landing and rates stay where they are, go down a bit – which is what the world expects, everybody’s fine.”

If you have a harder landing with stagflation, you’re going to see a lot of stress and strain in the system from banks to leveraged companies to real estate and a whole bunch of things.”

Good morning and welcome to our ongoing coverage of business, financial markets and the global economy.

Fears of sticky inflation – and even the dreaded stagflation – are hitting markets this week.

Investors have become increasingly concerned that global interest rates will stay higher for longer, a concern that has weighed on stocks in recent days as the yield — or rate of return — on government bonds has risen.

Last night, the United Kingdom FTSE 100 the index fell for a sixth straight day and traders are bracing for further losses today.

Central banks are trying to slow growth through high interest rates to reduce inflation, but without cooling their economies so much that unemployment soars.

But with US inflation at 3.4% last month, still well above the 2% target, confidence that this soft landing can be achieved is wavering. Yesterday, inflation in Germany exceeded the forecast.

Like Mizuho bank said in a comment:

“Hotter and stickier than expected global inflation appears to be taking the air out of asset markets.

In other words, Goldilocks is canceled. And concerns about an adverse impact on demand from higher interest rates percolating through us.”

A surprisingly weak US debt auction yesterday sparked fresh anxiety on trading floors, with buyers demanding higher rates as they bid for the bonds.

Kyle Rhoda, senior analyst of financial markets in capital.com, explains:

Rising global yields are forcing a revaluation of global stock prices, with Wall Street falling further overnight. Upward pressure on yields was compounded by a weak seven-year auction, reigniting fears about how the U.S. will finance its growing deficit.

Although the European Central Bank looks certain to cut interest rates next week, both the US Federal Reserve and the Bank of England are expected to delay their first cuts until the autumn.

The agenda

• 8am BST: Swiss Q1 2024 GDP report

• 10am BST: Eurozone unemployment report for April

• 10am BST: Eurozone confidence statistics for May

• 10am BST: EU trade statistics with Ukraine

• 13.30 BST: Second estimate of US GDP for Q1 2024

• 1.30pm BST: US Jobless Claims