Central banks come close to calling time on tightening

As we speak’s high tales

• Microsoft’s bid to accumulate video games developer Activision Blizzard moved closer to completion after the UK’s competitors regulator provisionally accepted the tech large’s amendments to its proposed $75bn takeover.

• Washington and Beijing created two working teams to deal with economic and financial issues in a recent try to stabilise US-China relations. EU commerce commissioner Valdis Dombrovskis arrived in China with a long list of commercial grievances to debate.

• The opposition Labour social gathering mentioned it could strengthen the UK’s fiscal watchdog, the Workplace for Funds Duty, to keep away from any repeat of the federal government’s disastrous “mini” Funds, which occurred 12 months in the past tomorrow. Shadow chancellor Rachel Reeves outlined within the FT her plan to “bring back stability”.

For up-to-the-minute information updates, go to our live blog

Good night.

It’s been an eventful few days for the worldwide economic system with some crucial central financial institution choices and a rising view that the tip of rate of interest rises is in sight, whereas new surveys point out rocky occasions forward for the UK and Europe.

Within the UK, the “flash” studying for the S&P World/Cips buying managers’ index this morning confirmed enterprise exercise slipping at the fastest rate since January 2021, suggesting the economic system was heading for recession. The rating of 46.8 for September was down from 48.6 final month, the place 50 marks the divide between exercise shrinking and increasing.

It follows the Financial institution of England’s choice on Wednesday to hold interest rates at 5.25 per cent, the primary pause after nearly two years of charge rises, following the discharge of better than expected inflation data.

The S&P knowledge, which the BoE had sight of earlier than its charges choice, highlighted the “mounting toll on the economic system from the fact of the elevated price of dwelling and the latest fast rise in rates of interest”, in accordance with the corporate’s chief enterprise economist Chris Williamson (though some economists warn that PMI outcomes can typically sign downturns that by no means materialise).

Throughout the Channel, the eurozone PMI studying was additionally in unfavorable territory at 47.1 however that was an enchancment on August’s 46.7 studying. A drop in new orders for business, nevertheless, added to fears of financial contraction within the third quarter, sending the euro to a six-month low towards the greenback.

Traders additionally guess the grim financial outlook made it extra seemingly that final week’s quarter-point interest rate rise by the European Central Financial institution could be its final. Nonetheless, yesterday’s hawkish remarks from Joachim Nagel, head of the Bundesbank, through which he mentioned “entrenched” inflation should be averted “at all costs”, counsel traders mustn’t turn out to be too optimistic. The OECD earlier this week additionally confused the significance of keeping rates at elevated levels till inflation was really tamed.

Within the US, right now’s PMI studying was barely constructive at 50.1, a seven-month low, as output stagnated with the services sector losing further momentum. The information follows the choice by the Federal Reserve on Wednesday to hold rates steady at their 22-year excessive however on the identical time signalling help for an additional charge rise this yr and fewer cuts in 2024.  

Policymakers are nonetheless cautious of discussing the potential of charge cuts till there may be extra certainty that value stability has been restored, however the perception is rising {that a} change is coming. Or as one economist put it: “The worldwide financial tightening cycle has ended.”

Chris Giles, the FT’s economics editor, is launching a brand new e-newsletter on central banks for premium subscribers. To be sure you obtain the primary version on October 17, register here.

Must know: UK and European economic system

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Must know: international economic system

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Science round-up

The World Well being Group urged China to supply extra details about the origins of Covid-19, and mentioned it was able to ship a second crew to look into the matter, nearly 4 years after the primary instances emerged within the metropolis of Wuhan.

Right here’s our explainer on how the latest catastrophic flooding in Libya was fuelled by a “medicane” — an intense Mediterranean cyclone with hurricane-like traits. And right here’s our choose of recent books on climate and the environment.

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Some excellent news

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