Time to wrap up…. here’s today’s main news stories so far:

Just in: US producer prices unexpectedly fell last month, by the most since last October, another sign that inflationary pressures are moderating.

New data from the Bureau of Labor Statistics shows that the producer price index for final demand decreased 0.2% in May, compared with April (when they rose by 0.5%).

PPI is a guide to what goods and services producers charge for their wares, so is a good guide to inflationary pressures in the US economy.

On an annual basis, the PPI index rose by 2.2% compared with May 2023, down from 2.3% in April.

The monthly fall in the PPI index was driven by an 0.8% drop in prices charged for goods, thanks to a 7.1% decline in prices for gasoline.

Th BLS adds:

The indexes for diesel fuel, chicken eggs, electric power, jet fuel, and basic organic chemicals also fell. Conversely, prices for cigarettes rose 3.3 percent. The indexes for hay, hayseeds, and oilseeds and for residual fuels also moved higher.

Services producer prices were unchanged in May after increasing 0.6%.

Coming on top of yesterday’s fall in consumer price inflation, this is another welcome sign that the price pressures in the US are easing.

It’s the sort of evidence the US Federal Reserve will like to see, as it assesses when it can start lowering US interest rates (after keeping them on hold yesterday).

Over in the US, the number of people filing new claims for unemployment support has risen.

There were 242,000 seasonally adjusted initial claims last week, an increase of 13,000 on the previous week’s figures.

That suggests an increase in US companies laying off workers, as initial claims are a proxy for job losses.

Shares in Tesla are rallying in pre-market trading, after Elon Musk posted that shareholders are voting in favour of his $56bn pay award.

They’re up around 6.6% at $189, which would recover some of their 28% fall so far this year (they began January near $250).

AJ Bell investment director Russ Mould says the results of today’s AGM (which begins in almost 12 hours time) will have an impact on Tesla’s share price:

“A crunch vote on Elon Musk’s pay at Tesla’s AGM later could either provide a further catalyst for the share price to stall or remove an overhang and allow the shares to power up once more.

“Musk, no stranger to controversy, has gone on record as saying his blockbuster pay package will pass by a wide margin but there has been considerable disquiet about its size relative to the recent performance of Tesla. He also says the move to incorporate the business in Texas, linked to the renumeration issue, will get through.

“The company’s attempt to protect market share and invest in areas like automation and artificial intelligence has diluted margins and the shares have lost nearly 30% of their value since the start of 2024. Defeat could further undermine Musk’s credibility.

“Somewhat unusually ordinary investors, which make up around 30% of the shareholder register, will have a major part to play in the destiny of the vote.”

UK housebuilder Crest Nicholson has tumbled into the red, highlighting the struggles in the property sector.

Crest made a pre-tax loss of £30.9m in the six months to the end of April, down from a £28.4m profit a year earlier. It completed 11.9% fewer homes than a year before, down from 894 to 788, and was also hit by a fall in reservations at the end of last year.

It now expect to make an adjusted pre-tax profit of £22m-£29m for the full financial year, below analyst forecasts of almost £39m.

CEO Peter Truscott says the housing sector faces “several macro headwinds”, including stretched affordability, volatile mortgage rates, and low consumer confidence.

He told shareholders:

Over the last six months, the UK economy has experienced a mix of challenges and positive developments. Inflation, while starting to decline, has remained a persistent issue, impacting consumer purchasing power and business costs.

The timing of an interest rate cut by the Bank of England has been a subject of speculation, adding to economic uncertainty. Mortgage rates have been volatile, initially decreasing but rising again due to SWAP³ rates increasing, which has impacted the housing market.

Shares in Crest have dropped 10% in early trading.

There are signs this morning that the UK housing market is losing momentum, as recent increases in mortgage rates dampen demand from home buyers.

The latest poll of UK property surveyors has found that a net balance of 8% saw home buyer demand falling rather than rising in May. That’s the weakest reading since November 2023,

Buyer demand was weakest in the South East and South West of England, the report said.

The Royal Institution of Chartered Surveyors (Rics) also reported signs of house prices weakening; its net balance of house prices fell to -17 from a downwardly revised -7 in April, the lowest reading since January.

Survey participants also reported a fall in the number of sales agreed during May, although this is expected to rise over the next quarter.

Rics chief executive Justin Young said:

“Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip – just as parties launch their manifestos.

“Greater attention must be paid to improving conditions for ‘generation rent’, who are faced with rising rents and a lack of suitable options.

“This particular demographic – typically made up of people aged between 18 and 40 – has doubled in the last two decades, so politicians need to focus on them, as well as homeowners, as a means of gaining the support of a growing portion of the electorate.

“The housing market needs policies that think longer term, not short, and awareness that the different tenures are interlinked, so there is no one solution that will fix the situation.

“With the market under strain, the supply and demand gap in both lettings and buy side continues to create issues.”

Julian Jessop, economist at the right-wing thinktank the Institute of Economic Affairs, says Rics’s data shows the need to cut UK interest rates soon:

Even if Tesla’s shareholders do approve Musk’s mega pay deal, the company also needs to persuade an already skeptical Delaware judge to recognize it.

My colleague Nick Robins-Early explains:

However, it is unclear if a court that blocked the deal will accept the re-vote, which is not binding, and allow the company to restore the pay package and move its HQ.

A Delaware chancery court judge nullified Musk’s pay package in January. Chancellor Kathaleen McCormick ruled that the board’s process of reaching the dollar figure, which she called “unfathomable”, was illegitimate and that Musk’s ties with board members were too extensive for them to be considered independent.

Today is a red letter day for Tesla, which is asking its shareholders to approve a massive compensation package for CEO Elon Musk worth at one stage up to $56bn (£44bn).

The package is up for approval, again, after being thrown out by a Delaware judge earlier this year – which has prompted the electric car manufacturer to also seek investor approval to shift its legal base to Texas.

Tesla has been urging shareholders to back the package – the largest ever granted to an executive at a US-listed company – with chair Robyn Denholm warning that Musk could step back if it was blocked.

Despite that plea, some major shareholders are opposing the package, including Norges Bank Investment Management, and the California State Teachers’ Retirement System (CalSTRS). And major proxy firms Glass Lewis and Institutional Shareholder Services (ISS) had urged shareholders to reject the pay package.

Musk, though, has declared this morning that shareholders are voting to approve the package, and the move to Texas, by “wide margins”.

Rolling out the red heart emoji, he posted:

“Thanks for your support!!”

The AGM starts at 9.30pm UK time tonight. Reuters points out that shareholders are allowed to change their vote up to the start of the annual meeting….

The pay package was first agreed by Tesla’s board, and backed by shareholders, in 2018. For Musk to qualify for the money, Tesla had to hit various revenue, profit and share price targets, which were met.

But back in January, Delaware judge Kathaleen McCormick ruled in favor of a Tesla shareholder who argued that the company’s board inappropriately set the pay package. The judge agreed Musk’s pay package was unnecessary in keeping Musk dedicated to Tesla, an argument that company officers made during the trial.

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

Financial markets are clinging onto hopes of a soft landing after the world’s most powerful central banker hailed a fall in US inflation.

Under a soft landing, central bankers tame inflation and eventually cut interest rates while avoiding a recession. Sticky price pressures in the US have made this scenario seem less likely, as we’ve moved through 2024.

But investors are cheered by yesterday’s data showing that US consumer price inflation weakened to 3.3% in May, along with a fall in underlying inflation.

Federal Reserve chair Jerome Powell bolstered that optimism, telling reporters last night that it was “certainly a better inflation report than almost anybody expected.”

Powell was speaking after the Fed left US interest rates on hold, at a two-decade high.

And its latest dot plots showed that Fed officials now expect just one interest rate cut this year, down from three forecast in March. They also expect inflation to be more stubborn this year than they thought in the spring.

But Powell also hinted that the Fed is ready to cut rates if inflation falls quickly, or if the economy weakened, saying:

“If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we are prepared to respond.”

This lifted stocks on Wall Street, where the S&P 500 and the Nasdaq Composite closed at record highs for a third straight session.

Traders are encouraged that the Fed doesn’t see a big slowdown on the horizon, and sanguine that this may mean fewer rate cuts than hoped this year. After all, the Fed now sees an extra rate cut in 2025.

So while the landing may be delayed, it may not be too bumpy.

Analysts at ING say the Fed wants to see three things: More evidence of inflation pressures easing, more evidence of labour market slack, and softening consumer spending.

They add:

If we get all three of these, we believe the Fed will indeed seek to move monetary policy from “restrictive” to “slightly less restrictive” with 25bp rate cuts at the September, November and December FOMC meetings.

Also coming up today

Leaders from the G7 are meeting in Borgo Egnazia in the southern region of Puglia, where they’re expected to approve a plan to use the interest from frozen Russian assets to support Ukraine

The latest index of US producer prices will test the soft landing narrative, with economists predicting a slowdown in price rises in May.

The agenda

• 9.30pm BST: Tesla AGM, where shareholders will vote on Elon Musk’s$56bn pay deal

• 1.30pm BST: PPI index of US producer prices

• 1.30pm BST: US weekly initial jobless claims

• 2pm BST: Russia’s trade balance for April