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Summary

  1. Get in touch: bizlivepage@bbc.co.uk
  2. UK interest rates rise to 0.75%
  3. Construction PMIs hit 55.8
  4. FTSE down on earnings results
  5. Npower fined £2.4m over meter failures
  6. Barclays hit by US and PPI settlement costs
  7. Rolls-Royce takes £554m hit over Trent 1000 engines
  8. Barclays hit by £2bn US and PPI settlement costs

Live Reporting

By Tom Espiner

All times stated are UK

Good night!

That's all for tonight from Business Live - thanks for reading.

Do join us again tomorrow from 6am for the last working day of this first week of August.

Tesla jump burns short-sellers

tesla car
Getty Images

Tesla shares jumped 16% on Thursday - a day after the electric car marker reported results - leaving short-sellers nursing paper losses of more than $1.1bn.

Short-sellers aim to profit by selling borrowed shares, hoping to buy them back later at a lower price.

Tesla is the most shorted US stock but it is the fourth worst-performing short bet in the US since the start of 2016, with short-sellers losing $4.7bn over that period, according to data from financial analytics firm S3.

"Long-term short sellers will probably shrug off this loss, as they were down billions in the past and not only kept their positions but built them up," said S3 Partners' Ihor Dusaniwsky.

"But I would imagine shorter term momentum short sellers would be quick on the trigger to exit their positions after suffering a 10% loss in just one day."

Would you take a bite?

Apple logo
Getty Images

Despite its $1 trillion price tag, many analysts still do not view Apple's shares as expensive given they are trading at about 15 times expected profits, or earnings to use the American term. That's somewhat lower than Amazon at 82 times earnings and Microsoft at 25 times.

Jeff Carbone, co-founder of Cornerstone Financial Partners in Charlotte, North Carolina, has included Apple in his clients' portfolios for about a decade.

Recently, some of his older clients have bought Apple shares for their grandchildren. "We still see upside from it, and as new money gets deposited we continue to buy, preferably on the dip," he said.

Also pushing Apple higher in recent months was its decision to set aside $100bn for a new share buyback scheme.

Apple boosts Wall Street

Apple logo
PA

Apple ended the day its value passed the $1 trillion mark at $207.39, helping the Nasdaq Composite rise 1.25%.

The S&P 500 added 0.5% while the Dow Jones Industrial Average let the side down, slipping 7 points to be almost flat.

Weetabix wars in NZ

Packets of Weet-Bix
Jeff Greenberg

A shop owner in New Zealand is involved in a battle of the breakfast cereals after her plans to import British favourite Weetabix ended up in court.

British expat Lisa Wilson wanted to sell the wheat-based breakfast to homesick Britons in her Canterbury-based shop A Little Bit of Britain, but has come up against domestic manufacturer Sanitarium, which says the brand name istoo similar to their own local brand Weet-Bix, Radio New Zealand reports.

Customs officials seized a shipment of Weetabix last August after a complaint by Sanitarium.

Read more here.

In pictures: Australia's drought seen from the air

A farm outside Walgett in New South Wales
Reuters

Parts of eastern Australia are suffering their worst drought in living memory as a lack of rainfall in winter hits farms badly.

About 98% of New South Wales is drought-stricken, and two-thirds of neighbouring Queensland.

As a result, farmers are having to order in food for their livestock, which raises their costs considerably.

Read more here.

WEF: US summers are getting hotter

Heatwave in New York
Getty Images

Summers are getting hotter, according to a climate change research organisation, and any short term boosts to the US economy through tourism are likely to be far out-weighed by long-term adverse effects on agriculture and the environment, according to the World Economic Forum.

"Although holidaymakers and the US tourism industry might welcome a few additional warm summer days, extreme sun and periods of prolonged heat can seriously impact the wellbeing of people, animals and crops," it said.

US states vow to fight Trump's vehicle emissions plans

Exhaust fumes
Getty Images

California and 18 other US states have said they will fight a Trump administration proposal to weaken fuel efficiency standards for cars and trucks and force states into line, arguing the US has an obligation to protect the environment for future generations.

The Trump administration billed the proposed rollback from Obama-era fuel efficiency standards as a way to help car companies and lower vehicle prices for consumers, but critics said the plan would accelerate climate change and increase fuel prices.

US stocks rise

Apple is helping to push the Nasdaq higher after becoming the first $1trn publicly listed US company.

Market sentiment was also lifted by a comment by Commerce Secretary Wilbur Ross, who said the tariffs that US is threatening to impose on Chinese goods would not be disastrous for the Asian nation.

"It's not something that's going to be cataclysmic," he said in an interview with Fox Business Network, saying that a 25% tariff on $200bn worth of goods would equal to less than 1% of China's economy.

"There's optimism now that the US style of threatening tariffs may ultimately come to fruition in a deal," said Brad Neuman, director of market strategy at Alger, a growth equity asset management firm in New York City.

The Dow Jones Industrial Average is up 0.02%, at 25,339, the S&P 500 is up 0.47% at , at 2,827, and the Nasdaq Composite is up 1.22% at 7,891 points.

What about Tesla?

Jonathan Josephs

BBC business producer

Why Apple is worth $1trn

Why Apple is worth $1 trillion ... and who could challenge it

Apple has become the world's first $1 trillion company.

How did it get here - and which other firms could soon be worth as much?

Interest rates: Your questions answered

Interest rate decision 'tailored to Brexit scenarios'

Bank of England Mark Carney

Some business groups questioned the decision to raise the rate now ahead of the UK agreeing a Brexit deal with the European Union.

However, the Bank of England Governor Mark Carney told the BBC that the Monetary Policy Committee (MPC) would lower the rate if the situation merited such a move.

"There are a variety of scenarios that can happen with Brexit… but in many of those scenarios interest rates should be at least at these levels and so this decision is consistent with that," he said.

"In those scenarios where the interest rate should be lower, well then the MPC which meets eight times a year would, I'm confident, take the right decision to adjust interest rates at that time."

Cook took Apple higher

Dave Lee

North America technology reporter

Tim Cook
Getty Images

It may have been the vision of Steve Jobs that hurtled Apple towards this milestone, but it was the business acumen of current chief executive Tim Cook that tipped them over.

Against a backdrop of tech company stocks performing poorly, Apple has soared ahead. The surge in its stock price has been driven by two key factors. It is selling fewer iPhones, but By releasing a more expensive version last year, it is making more money per device.

And it's diversified where its profits are coming from. It now makes around $10bn each quarter on services - such as selling apps, cloud storage and music streaming.

Apple told investors earlier this week that it expected a very strong end to the year helped, naturally,by the release of yet another new iPhone.

Stock markets are volatile, and a small but growing threat from Chinese device makers might eat into Apple's margins in years to come. But no matter your view of the company and its products, its devices have changed the world - and today made financial history as well.

Apple says it has paid two-thirds of €13bn Irish tax bill

Tech giant Apple has paid two-thirds of the €13bn (£11.6bn) which EU antitrust regulators said it owes Ireland in back taxes, the company said in a regulatory filing late on Wednesday.

In August 2016 the European Commission ordered Ireland to recover the money from Apple because of an illegal tax deal which gave the company an unfair advantage in breach of the bloc's state aid rules.

The total amount to be repaid was calculated at €13bn plus €1bn in interest.

"As of 30 June, 2018, €4.5bn of the recovery amount was funded into escrow. Subsequent to 30 June 30, 2018, the company has funded an additional €4.5bn of the recovery amount into escrow," Apple said in its quarterly report.

Hostage to fortune

Bloomberg

BreakingApple hits $1trn stock market valuation

Apple logo
Getty Images

Apple has became the first $1trn publicly listed US company, crowning a decade-long rise fueled by its ubiquitous iPhone that transformed it from a niche player in personal computers into a global powerhouse spanning entertainment and communications.

The tech company's stock jumped 2.8%, bringing its gain to about 9% since Tuesday when it reported June-quarter results above expectations and said it bought back $20bn of its own shares.

Wall Street falls as trade war fears return

Container ship
Getty Images

US stocks have fallen, especially shares in banks, as worries of a trade war between the US and China return.

On Wednesday US President Donald Trump proposed 25% tariffs on $200bn of Chinese imports.

US Trade Representative Robert Lighthizer said Mr Trump raised the duty from a previously proposed 10% because China has refused to meet Washington's demands and has imposed retaliatory tariffs on US goods.

The Dow Jones Industrial Average was down 0.59%, at 25,183, the S&P 500 was down 0.21%, at 2,807 and the Nasdaq Composite was up 0.21% at 7,723.

BMW builds X5 in Thailand to counteract US China tariffs

BMW logo
Getty Images

BMW is producing between 10,000 and 20,000 X5 sports utility vehicles in Thailand as a way to get vehicles to the Chinese market now that imported vehicles from the US face a 40% tariff.

In spring 2016, BMW started building the X5 in Thailand, and this plant is now capable of making a "significant portion" of the vehicles that would otherwise have been exported from its plant in Spartanburg, South Carolina to China.

Trump 'will follow through on tariffs'

RBS says debit card problems resolved

RBS logo
Reuters

RBS says that some Natwest and RBS customers had problems making debit card payments this morning, but that the issue has now been resolved.

“Debit card payments are now being processed as normal," the bank said in a statement.

"We apologise for the inconvenience caused. No customers will be left of pocket as a result of this issue."

View more on twitter

Sterling falls after Bank's Brexit warning

Pound coins and dollars
Getty Images

The pound fell on Thursday despite the Bank of England lifting interest rates from crisis-era lows, after Governor Mark Carney said monetary policy needed to "walk not run" and expressed concern about the risks of a cliff-edge Brexit.

The move raising 25 basis points to 0.75% was widely expected, although the unanimous decision of the BoE's nine rate-setters was not.

The market initially took that unanimity as a more hawkish-than-expected sign.

FTSE slides after rates announcement

FTSE 100 graph
BBC

The FTSE 100 is still on a downward trajectory after the Bank of England's interest rates announcement and as US-China trade war fears continue.

The index is down more than 1.1%.

Staffing risks for banks?

Bank of England
Reuters

KPMG is concerned about the impact the interest rate rise will have on banks.

"In the longer term, should the rates continue to rise and with less notice, many risk managers will need to be conscious of their teams’ experience. Banks now have relatively senior professionals who built their careers during a decade long, low rate environment," said KPMG's banking partner Steven Hall.

"Firms will want to keep a keen eye on employees providing critical functions such as analysts, forecasters and credit collections teams who have never experienced volatile rates."

However, where consumers are concerned, Mr Hall says banks are bracing themselves to start dealing with a rising number of vulnerable customers.

"Consumers have become dependent on freely available cheap credit and as interest rates rise so will defaults. Supporting both banks’ balance sheets and vulnerable consumers through that process will be new to many workers and challenging for everyone," he said.

Property sector to 'take decision in its stride'

Houses for sale
PA

“UK real estate is likely to take today’s MPC decision in its stride," says Miles Gibson, Head of UK Research at commercial property services and investment firm CBRE.

"It was widely expected and both long and short rates remain very low, ensuring that the spread between UK property yields and base rates remains very attractive to investors. For example, the average UK prime property yield stands at 5.3% while UK 10 year bonds are at just 1.4%.

"Looking forward, we expect the UK base rate to rise only very gradually and we do not expect a further increase in 2018, not least because of the uncertainty associated with Brexit.”

'Brexit uncertainty to affect future rate decisions'

The CBI reaction to interest rate rise.

City of London
PA

“This decision was in line with our expectations," says Alpesh Paleja, CBI principal economist.

"The case for another rate rise has been building, with inflationary pressures being stoked by a tight labour market and many indicators now suggesting that weak activity in the first quarter of 2018 was a blip.

"The Monetary Policy Committee has signalled further rate rises over the next few years, if the economy evolves as they expect. These are likely to be very slow and limited, particularly over the next year as uncertainty around Brexit takes its toll on business investment."

How will the Brexit deal affect how the Bank sets interest rates?

Szu Ping Chan

Business Reporter

House hunters
Getty

Mr Carney says what matters for the economy is not the deal itself but how households and businesses react to it.

The Bank's forecast of steady growth in output, wages and employment is based on a "smooth" Brexit outcome. In that case, a "gentle" increase in rates remains appropriate.

Mr Carney insists that policymakers "can't be handicapped or tied by a range of Brexit possibilities" and that it must set policy based on what it knows now.

He says that policymakers are ready to act whatever the Brexit outcome. "That's why we meet every six weeks and take decisions every six weeks."

He adds that a hard Brexit will mean policymakers will have to balance keeping a lid on inflation and supporting employment. "It's not as simple as Brexit equals a reduction in interest rates."

Mr Carney adds that policymakers cannot afford to "wait, wait wait for perfect certainty" before deciding on policy.

'Tariffs not yet hurt business confidence'

Szu Ping Chan

Business Reporter

Mr Carney says recent trade tariffs and threats of more to come are putting a dent in the global recovery.

However, while there is evidence that trade flows are more subdued, he says tariffs have not yet hurt business confidence - particularly in the US - in a material way, or made companies more reluctant to invest.

He says the UK is unlikely to suffer from the recent tensions beyond jitters in financial markets and a weakening in confidence, though heightened tensions could change this.

Mr Carney says what matters for the economy is not the deal itself but how households and businesses react to it.

Problems with NatWest debit cards

Could unemployment fall further?

Szu Ping Chan

Business Reporter

Bank of England governor Mark Carney
Bank of England

Could unemployment fall further than the Bank of England's estimate of 4.25% before the economy starts to overheat? And if so, why raise rates now?

Mr Carney says there is a broad range of evidence that points to a trio of "uncomfortable new normals" for the jobs market and broader economy.

Firstly, living standards may never grow at the same rates as the past.

The Bank believes that productivity growth, which is a key ingredient of rising living standards, is now only expected to rise by 1% a year, compared with 2.25% before the crisis.

Secondly, this means pay growth will probably only average 3% a year in the future.

Thirdly the new normal for growth is around 1.5% per year, which is well below the 2.75% to 3% seen pre-crisis.

These factors suggest that even a modest expansion will be enough to warrant interest rate rises, which has in the past led to slower employment growth.

Sterling slides against dollar and euro

Pound falls against the Euro graph
BBC

The pound has now fallen against the dollar and the euro after the Bank of England raised interest rates from 0.5% to 0.75%.

Sterling fell as much as 0.8% to $1.3017, down from around $1.31 before Governor Mark Carney gave his post-rate decision news conference.

The pound also slipped against the euro after earlier rising. It dropped 0.4% to €1.1219 per euro as Mr Carney spoke.

Inflation needs to stay at 2%

Szu Ping Chan

Business Reporter

Mr Carney says the Bank has to set monetary policy is "for the economy as a whole", suggesting that policymakers cannot keep rates low for households with high debt levels.

He says deviating from its goal of keeping inflation at 2% for the economy as a whole would hit the poorest the hardest.

What about savers?

Szu Ping Chan

Business Reporter

Sir Dave Ramsden
Bank of England

Many commercial banks have failed to pass on the full 0.25 percentage point increase from November. Do they expect similar behaviour this time around?

Mr Carney says banks are using the opportunity to grab back some of the margins they gave away to savers when interest rates were slashed in the wake of the financial crisis.

Sir Dave Ramsden, deputy governor for markets and banking, suggests that consumers should shop around for the best deals in order to benefit from the rate rise.

He notes that there has been "some pick up in instant access deposit rates" as well as accounts where savers lock their money away for a period of time.

RBS updates on base rate move

RBS logo
Getty Images

RBS is first out of the blocks about what it will mean for some of their customers.

It says: "The Bank of England base rate has increased today from 0.50% to 0.75%.

"The Royal Bank of Scotland, NatWest and Ulster Bank North Base Rate has also increased today from 0.50% to 0.75%.

"For those customers on Base Rate Linked products, we will increase their rate to 0.75%."

Are British households ready for a rate rise?

Szu Ping Chan

Business Reporter

Bank of England governor Mark Carney
Bank of England

Mr Carney says the Bank spends a large amount of time looking at how households with different levels of debt and savings would cope with rate rises.

He says the broad message that interest rates are going up gradually is getting through to UK households and businesses.

Mr Carney says households have put themselves in a better financial position since the crisis ten years ago. "They paid down a lot of debt, and the ability to service that debt has improved quite markedly," he says.

Mr Carney says it would take an overnight rate rise of 1 percentage point to push up debt service costs as a share of income to historic averages.

He adds that this doesn't take into account any increases in income.

BoE explains its decision

Bank of England infographic
Bank of England

The Bank of England has explained its decision in an easy-to-read visual summary:

"In May, we said that if the economy performs broadly as we expect, then we would need to reduce the amount of support we are providing to make sure inflation returns sustainably to the 2% target. We thought that would probably require modest rises in interest rates over the next few years.

"Since then, the economy has developed broadly as expected. So we have removed a little of the support, raising interest rates from 0.5% to 0.75%.

"If the economy continues to perform as expected, we think we will need to raise interest rates a bit more over the next few years. We expect any rises in interest rates to happen at a gradual pace and to a limited extent. Interest rates are likely to remain substantially lower than a decade ago."

This is a 'critical period'

Szu Ping Chan

Business Reporter

Bank of England press conference
Bank of England

Mr Carney suggests that today's interest rate rise is not "one and done". He says the increase to 0.75% would still leave inflation above the Bank's 2% target in three years' time.

But all these predictions are based on a steadily growing economy. Mr Carney says the final Brexit deal will play a crucial role in setting interest rates in the future.

Today's forecasts of steady growth, low unemployment and solid pay rises are based on a smooth Brexit transition, which reflects how businesses and households are behaving at the moment.

Mr Carney describes this as a "critical period', with the UK and Europe seeking a Brexit deal by the end of the year.

Mr Carney says any future rises will be "limited and gradual". Policy needs to "walk not run to stand still", he adds.

Labour market remains strong

Szu Ping Chan

Business Reporter

Mr Carney says exporters remain in a "sweet spot", with the fall in the value of the pound "in anticipation of a Brexit that has not yet happened" increasing Britain's competitiveness.

He says the labour market remains strong.

Pay is expected to keep rising, even though increases in wages are unlikely to reach those seen before the financial crisis.

Pound jumps on rate rise

Pound against Euro graph
BBC

The sterling has jumped on the interest rate rise news.

The pound is now 0.16% up against the euro at €1.1273.

The press conference begins...

Szu Ping Chan

Business Reporter

Bank of England governor Mark Carney
Bank of England

The Inflation Report press conference begins.

Governor Mark Carney says two years after the Bank of England cut rates to a record low of 0.25% amid an uncertain economic outlook and a falling pound, economic conditions are very different today.

Employment is now at a record high, and pay growth is picking up. So the Monetary Policy Committee has raised rates to 0.75% to prevent the economy from overheating.

He says the Bank expects growth to rebound in the second quarter to 0.4%. He says the weakness in the first quarter when the economy grew by 0.2% "primarily reflected the weather, not the economic climate".