Time to wrap up….

The chief executive of Telegram, Pavel Durov, has announced the messaging app will improve moderation on the platform and has removed some features that have been used for illegal activity.

The app’s founder unveiled the changes on Friday hours after calling his arrest by the French authorities last month “misguided”. Durov has since been charged with allegedly allowing criminal activity on the app.

In a post on X, the platform formerly known as Twitter, he said the messaging app was “committed to turn moderation on Telegram from an area of criticism into one of praise”.

The changes announced by Durov included removing the app’s People Nearby feature which he said had “issues with bots and scammers” and replacing it with Businesses Nearby, featuring legitimate businesses; and disabling media uploads on the app’s blogging tool, Telegraph, which Durov said was being “misused by anonymous actors”.

Durov added that Telegram’s nearly 1 billion users had been let down by a minority.

Durov has also called his recent arrest ‘“misguided”, and defended Telegram.

US employers added 142,000 jobs last month, the labor department announced on Friday, in one of the year’s most closely watched economic news releases.

The release comes as the US Federal Reserve prepares to cut interest rates for the first time since March 2020, and November’s election puts a spotlight on the state of the US economy.

The reading for August was shy of the average forecast increase of 163,000 jobs by economists surveyed by Bloomberg.

The weaker-than-forecast job creation has caused wobbles in the markets – the S&P 500 share index is now down 1.7%, and the oil price has slipped to its lowest since May 2023.

In London, the FTSE 100 lost 60 points to close at 8181 points, its 6th daily fall in a row.

The bond markets currently indicate there’s a 75% chance of a small, 25 basis point, cut to US interest rates this month, and a 25% chance of a larger, 50-basis point cut.

In the UK, house prices hit a two-year high last month, in the latest sign that the property market has recovered from the aftermath of Liz Truss’s infamous mini-budget that sent borrowing costs soaring, according to the latest figures from Halifax.

The lender said the cost of an average house increased by 0.3% last month, after rising 0.9% in July, pushing the average cost of a property to £292,505.

This is the highest level since August 2022, the month before Truss’s disastrous mini-budget.

The drama over Telegram began on Saturday 24 August, when Pavel Durov was arrested at the Bourget airport outside Paris, where he had flown on his private jet.

French investigators had issued a warrant for Durov’s arrest as part of an inquiry into allegations of fraud, drug trafficking, organised crime, promotion of terrorism and cyberbullying. And on the following day, Sunday 25th August, his detention was extended.

Durov’s arrest quickly became a major issue, with French authorities criticised by free-speech advocates, far-right figures and authoritarian governments around the world. X’s owner, Elon Musk, fuelled the row by posting ‘#FreePavel’ and claiming the arrest was an example of the world entering “Dangerous times”.

Durov’s lawyer David-Olivier Kaminski told French media,

“it’s totally absurd to think that the person in charge of a social network could be implicated in criminal acts that don’t concern him, directly or indirectly.”

On Monday 27th August, President Emmanuel Macron insisted the French government was not involved in Durov’s arrest. On the same day, prosecutors announced that Durov had been detained in connection with an investigation into criminal activity on the platform and a lack of cooperation with law enforcement.

The move intensified focus on the regulation of social media firms.

As Telegram is not end-to-end encrypted by default (despite being marketed as a “secure messenger.”) it is harder to rebuff law enforcement if they come seeking information about a user:

Durov was then charged on Wednesday 28 August with allegedly allowing criminal activity on the messaging app.

Overnight, Durov claimed his arrest ‘“misguided”, and insisted that Telegram was not an anarchic paradise.

He wrote:

“We take down millions of harmful posts and channels every day.”

Newsflash: The boss of the messaging service Telegram, Pavel Durov, has announced that his app is removing or disabling some features that he says have been misused by scammers, bots and criminals.

Durov says Telegram will take a new approach towards moderating content and remove some features that had been abused for illegal activity. The move comes almost two weeks after Durov was arrested in France.

Writing on Telegram,and also on X (formerly Twitter), Durov says the platform is tackling the “0.001% involved in illicit activities” on the plaform.

He says;

Telegram has reached 10 million paid subscribers. 10 million people are now enjoying Telegram Premium!

Today, we’re introducing new features while phasing out a few outdated ones.

We’ve removed the People Nearby feature, which was used by less than 0.1% of Telegram users, but had issues with bots and scammers.

In its place, we will be launching “Businesses Nearby”, showcasing legitimate, verified businesses. These businesses will be able to display product catalogs and accept payments seamlessly.

We’ve also disabled new media uploads to Telegraph, our standalone blogging tool, which seems to have been misused by anonymous actors.

While 99.999% of Telegram users have nothing to do with crime, the 0.001% involved in illicit activities create a bad image for the entire platform, putting the interests of our almost billion users at risk.

That’s why this year we are committed to turn moderation on Telegram from an area of criticism into one of praise.

Durov was last week charged by the French judiciary for allegedly allowing criminal activity on the messaging app but avoided jail with a €5m bail.

The charges against Durov include complicity in the spread of sexual images of children and a litany of other alleged violations on the messaging app.

President Joe Biden has responded to today’s jobs report, saying it is important to sustain the “historic gains” that US workers have received.

In a statement issued by the White House. Biden says:

Today’s report showed unemployment fell to 4.2% and another 142,000 jobs were created last month. Thanks to our work to rescue the economy, nearly 16 million new jobs have been created, wages and incomes are rising faster than prices, businesses are investing in America, and millions of entrepreneurs are opening small businesses—acts of hope and confidence in our economy.

With inflation back down close to normal levels, it is important to focus on sustaining the historic gains we have made for American workers.

And with the election looming, the president criticises the Republican party’s economic policies:

The Vice President and I are fighting to expand opportunity and grow the middle class. We will keep working to support American workers and businesses, and to lower housing and health care costs for hardworking Americans.

The last thing we should do is turn back to the failed trickle-down economics pushed by Congressional Republicans, like cutting taxes for the wealthy and large corporations, raising taxes on middle class families by nearly $4,000 per year, or cutting Social Security, Medicare, Medicaid, and the Affordable Care Act.

Trading has begun on Wall Street, with little early drama.

The S&P 500 share index is basically flat, losing just 1.2 points to 5,502 early doors.

Tech stocks are lower again, pulling the Nasdaq Composite down by over 0.5%.

But the Dow Jones industrial average, of 30 large US companies, has gained 0.4%.

Newsflash: Wall Street investors are increasing their bets that the US Federal Reserve will slash US interest rates by half a percentage point at its next meeting, on 17 and 18 September.

CME Group’s FedWatch Tool, which uses pricing data from the futures market to predict interest rates, is now indicating there’s a 51% chance of a 50 basis point cut later this month.

Before today’s non-farm payroll was released, a 50bp cut in September was only a 41% prospect, with a smaller, quarter-point cut seen as more likely.

Those odds have now narrowed to a effective coin-toss, after fewer jobs were created in August than expected – at just 142,000.

Traders are also digesting that June and July’s payrolls were revised lower, accentuating the slowdown in hiring this summer.

However, Fed policymakers will also note that the US jobless rate has dropped back to 4.2% – not a move typically associated with a steep downturn.

[Interest rates are typically adjusted in moves of 25 basis point, or a quarter of one percentage point – but they can be moved by 50bp, or 75bp, or even more if central bankers feel the need to act dramatically].

A cut to US interest rates later this month is “all but guaranteed” after today’s “worse than feared US jobs data”, says Richard Carter, head of fixed interest research at Quilter Cheviot.

But the question remains whether the Fed will take a modest approach, with a quarter-point cut, or make a dramatic half-point cut.

Carter says:

“Today’s US jobs data is expected to determine the size and pace of the highly anticipated Federal Reserve rate cuts, and with the increase in nonfarm payrolls coming in worse than feared at 142,000, we will no doubt see increased speculation that the Fed will take decisive action with a 50bps cut on the 18^th of September.

“Alongside this disappointing August figure, July’s nonfarm payrolls number was also revised down from 114,000 to just 89,000. Meanwhile, the unemployment rate fell slightly to 4.2% following a rise to 4.3% in July, and wage growth came in at 3.8% on an annual basis, up 0.2% compared to 3.6% reported last month.

“Markets have been pricing in significant cuts before year end, with many economists touting more than 1%, and today’s labour market print could exacerbate this further. As was the case last month, this data release has proven notably weaker than had been hoped, suggesting the economy may be weakening more than is consistent with the Fed’s aim of a soft landing.

“When considered alongside signs of softening elsewhere in the economy, today’s worse than expected jobs data will all but guarantee a shift in the Federal Reserve’s stance. The Fed’s decision making is highly data sensitive, and with many datapoints continuously suggesting a slowing economy, it seems inevitable that we will see the first cut confirmed this month.”

The August US labour market report painted something of a mixed picture of the employment situation, says Michael Brown, senior research strategist at brokerage Pepperstone.

Brown explains:

Headline nonfarm payrolls marginally missed expectations, at +142k last month, though such a print was well within the forecast range, even if a 2-month net revision of -86k is hardly anything to be pleased about.

On a more positive note, unemployment fell to 4.2%, as a degree of temporary weather-related weakness in July was unwound, while participation remained unchanged at 62.7%, just shy of cycle highs. Earnings, finally, were a touch hotter than expected, having risen by 0.4% MoM, bringing the annual rate 0.2pp higher to 3.8%.

All of this does little to clear-up the debate over the September Fed meeting, he adds:

Doves will point to a cooling pace of headline payrolls growth as potential reasoning for a larger 50bp cut. Hawks, meanwhile, will reasonably point towards the lack of further cooling compared to the July report, and hot-ish earnings growth, as reasons to kick-off the normalisation cycle with a more modest 25bp move.

My base case remains for the latter, particularly given the risk the Fed run of sparking a market panic were a larger cut to be delivered.

The dollar is weakening against other currencies, after fewer jobs were created in the US last month than expected.

That could be an indication that more investors are expecting a hefty cut to US interest rates when the Fed meets later this month.

The pound has gained half a cent against the dollar, to $1.323 – approaching August’s two-year high.

The euro has risen by 0.2% to $1.1135.

Newsflash: The US economy added fewer jobs than expected last month, but there’s a welcome fall in the jobless rate.

Payroll employment across the US rose by 142,000 in August, the US Bureau of Labor Statistics reports.

That’s a little below expectations for around 160,000 new jobs.

Worryingly, June and July’s non-farm payrolls have been revised down too, to show fewer jobs created than first thought – a sign of softening in the labor market this summer.

The change in total nonfarm payroll employment for June was revised down by 61,000, from +179,000 to +118,000, and the change for July was revised down by 25,000, from +114,000 to +89,000.

In better news, the unemployment rate has dipped to 4.2%, down from July’s 4.3%. That might calm some worries that the US was sliding into recession.

Investors are bracing for the final major economic news of the week – the US non-farm payroll for August.

The jobs report will have a crucial impact on interest rates in the US, with the Federal Reserve expected to lower borrowing costs this month to ward off a recession. A bad jobs report could spur the Fed into a deeper cut to interest rates.

August’s NFP will also give an insight into the heath of the US labor market, with just two months to go until the presidential elections.

After a shock slowdown in hiring in July, economists expect a pick-up in job creation in August. The NFP is forecast to rise by around 160,000 last month, up from July’s 114,000 (which may be revised).

The unemployment rate, which jumped to 4.3% in July, may drop back to 4.2%.

Derren Nathan, head of equity research at Hargreaves Lansdown, says there are nerves in the markets, with European stocks a little lower today.

Nathan adds:

If growth meets or beats forecasts of 160,000 there may be something of a relief rally, but any miss could be punished harshly. To put things in context though, growth is still growth, and a soft-landing doesn’t mean a slowdown can be completely avoided.

European aeroplane manufacturer Airbus has landed a bumper order from a private customer.

Reuters reports that Airbus landed a rare order from a single “private customer” for three A350-900s and three A320neos worth well over $1bn at catalogue prices.

Reuters adds:

Airbus declined to comment but typically uses the “private customer” designation to describe jets bought to be used by VIPs in luxury configurations or by governments. Demand for such aircraft remains strong in the Middle East, analysts say.

Airbus also reported that it booked 46 new orders overall in August, and made 47 deliveries to 31 customers (details here).

Newsflash: Britain’s competition authority believes Google is using anti-competitive practices in the market for adverts on websites and apps, potentially harming thousands of UK publishers and advertisers.

Following an investigation, the Competition and Markets Authority has provisionally found that Google has abused its dominant positions through the operation of both its publisher ad server and buying tools to restrict competition in the UK.

The CMA says Google ‘self-preferences’ its own ad exchange - harming competition and, as a result, advertisers and publishers.

This relates to the rapid series of auctions and transactions which takes place when a user opens a web page or app, to determine which ads will be shown.

The CMA accuses Google of abusing its dominant position to strengthen the market position of its AdX service – an ad exchange that matches bids from publishers and advertisers.

Google also operates ad buying tools for publishers, and for advertisers, and the CMA believes it has conducted various practices that give AdX competitive advantages, and disadvantage Google’s rivals.

They include:

• providing AdX with exclusive or preferential access to advertisers that use Google Ads’ platform;

• manipulating advertiser bids so that they have a higher value when submitted into AdX’s auction than when submitted into rival exchanges’ auctions; and

• allowing AdX to bid first in auctions run by DFP for online advertising space, effectively giving it an ‘right of first refusal’ - with rivals potentially not having any chance to submit bids.

The regulator has laid out its concerns in a statement of objections today.

Juliette Enser, interim executive director of enforcement at the CMA, explains:

We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites.

Many businesses are able to keep their digital content free or cheaper by using online advertising to generate revenue. Adverts on these websites and apps reach millions of people across the UK – assisting the buying and selling of goods and services.

That’s why it’s so important that publishers and advertisers – who enable this free content – can benefit from effective competition and get a fair deal when buying or selling digital advertising space.

Global food prices fell slightly last month, driven by cheaper sugar, meat and cereal quotations.

The UN’s world food price index, just released, dipped to 120.7 points in August from 121 points in July.

The index gives important detail to the drivers of food commodity prices, which are lower than in their peak in 2022.

Today, it show that global wheat export prices fell month-on-month, due to “sluggish international demand” and strong competition among exporters, especially from “competitively priced Black Sea supplies”. Higher than expected wheat production in Argentina and the US also pushed down prices.

The sugar price index fell by 4.7% compared with July.

The UN’s Food and Agriculture Association says:

The decline in August was mainly driven by the improving production outlook for the 2024/25 season in Thailand and India, following favourable rainfall that benefited sugarcane crops. In addition, lower international crude oil prices exerted further downward pressure on sugar prices.

Meat prices fell by 0.7%, including a drop in poultry prices in Brazil where exports were suspended du to an outbreak of Newcastle Disease. World pig prices also dropped, due to a slowdown in import purchases, especially by China.

But not everything got cheaper. Vegetable oil prices rose by 0.8% month-on-month, due to higher world palm oil prices. Dairy prices rose by 2.2%, driven by whole milk powder, skimmed milk powder and butter.

Shares in engineering firm Rolls-Royce have fallen over 1%, after Europe’s air safety regulator ordered inspections on the Airbus A350-1000 fleet, powered by its Trent XWB-97.

The European Union Aviation Safety Agency (EASA) acted after a Cathay Pacific A350-1000 suffered an engine fire on Monday.

EASA executive director Florian Guillermet said in a statement.

“This action is a precautionary measure, based on the information received from the initial investigation of the recent Cathay Pacific serious incident and on the airline’s findings in its own subsequent inspections.”

“We will continue to follow closely all information that will be made available through the ongoing safety investigation.”

The EASA explains that the flight from Hong Kong to Zurich “experienced an in-flight engine fire shortly after take-off”.

The regulator adds:

The fire was promptly detected and extinguished, and the aircraft returned safely to Hong Kong.

Rolls-Royce has confirmed that the Cathay Pacific aircraft was powered by its Trent XWB-97 engines.

European stock markets are lower in early trading, as investors anticipate today’s US employment report (at 1.30pm UK time).

The FTSE 100 index is down 41 points, or 0.5%, at 8200 points. That would be its sixth daily loss in a row, its worst run since May.

Germany’s DAX has lost 0.45%, and France’s CAC is 0.3% lower.

UBS reports that the market mood remains cautious ahead of the US jobs data

Mark Haefele, chief investment officer at UBS Global Wealth Management, says:

“Given the importance of the jobs data, investors should brace for volatility in the wake of the release. Our base case remains for a soft economic landing, though recession risks have increased. We recommend focusing on long-term financial plans and ensuring adequate diversification.”

There’s more gloom in the German economy this morning, where factory output has fallen sharply.

German industrial production fell by 2.4% in July, statistics body Destatis reports, much worse than the 0.3% fall predicted by economists.

Production dropped by 8.1% in the automotive industry, following a 7.9% rise in June.

The declines in the manufacture of electrical equipment (-7.0%) and the manufacture of metal products (-3.8%) also had a significantly negative impact, Destatis adds.

Carsten Brzeski, global head of macro at ING, says:

A drop in German industrial production in July not only brings a weak start to the third quarter but is another illustration of how difficult it will be to bring the economy back to strong growth.

UK house builder Berkeley has reported this morning that trading has been stable between 1 May 2024 to 31 August – the first four months of its current fiscal year.

Berkeley is also confident it will hit its profit targets, and is (predictably) backing the new government’s drive to speed up houebuilding.

It told the City:

Berkeley supports the proposed changes to the planning system and the Government’s aspiration to deliver 1.5 million new homes across this Parliament as part of its mission for growth.

Achieving this ambition requires a change of attitude and a refreshed partnership approach to allow developments, that are currently stalled, to come forward and Berkeley is committed to playing its full part in delivering the new homes the Country needs.

Poppy Gustafsson , the co-founder and chief executive of British cybersecurity firm Darktrace, is to leave the company following its $5.3bn (£4.2bn) sale to US private equity business Thoma Bravo.

Gustafsson, one of the most well-known figures in the UK tech industry, founded Darktrace in Cambridge in 2013 with the backing from the late billionaire tycoon Mike Lynch’s Invoke Capital.

In April, Thoma Bravo, which walked away from previous takeover talks in 2022, agreed a deal for the London-listed company which had been considered by analysts to be undervalued by investors.

Gustafsson is to step down with immediate effect and will be replaced by Jill Popelka, Darktrace’s current chief operating officer.

Gustafsson, who was awarded an OBE for services to cyber security in 2019, says:

““Darktrace has been a huge part of my life and my identity for over a decade and I am immensely proud of everything we have achieved in that time.

“Now is the right time to hand over the reins so Jill can lead Darktrace through its transition into private ownership and beyond. I remain Darktrace’s number one fan.”

Lynch and his wife Angela Bacares held a 6.8% stake in Darktrace which was worth £300m at the time of the sale.

Lynch died last month when his superyacht sunk off the coast of Italy in a storm.

Northern Ireland continues to record the strongest annual house price growth in the UK, Halifax reports.

Northern Ireland continues to record the strongest property price growth of any nation or region in the UK, rising by +9.8% on an annual basis in August. The average price of a property in Northern Ireland is now £201,043.

The average price of a property in Northern Ireland is now £201,043. House prices in Wales also recorded strong growth, up +5.5%, compared to the previous year, with properties now costing an average of £224,433.

Scotland saw a more modest rise in house prices, where a typical property now costs £205,144, +1.7% more than the year before.

The North West once again recorded the strongest house price growth of any region in England, up by +4.0% over the last year, to sit at £232,917.

London continues to have the most expensive property prices in the UK, now averaging £536,056, up +1.5% compared to last year.

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

UK house prices have risen close to the record high set two years ago, a new survey this morning shows, as confidence in the market picks up.

Lender Halifax has just reported that the average price of a house sold in August rose to £292,505, the highest since August 2022. That’s only £1,000 shy of the record high set in June 2022.

Halifax’s monthly gauge of the housing market also shows that prices rose by +0.3% in August, following a rise of +0.9% in July.

On an annual basis, prices rose by +4.3%, the strongest year-on-year rise since November 2022.

Recent cuts to mortgage rates have helped buyers afford homes; that trend could continue, with the Bank of England expected to cut interest rates at least once more this year (after it started easing policy in August).

Halifax points out that this higher annual growth largely reflects the base impact of weaker prices a year ago.

Amanda Bryden, head of mortgages at Halifax, says:

“Recent price rises build on a largely positive summer for the UK housing market. Prospective homebuyers are feeling more confident thanks to easing interest rates. That optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years.

Such has been the resilience of house prices that the average property is now just £1,000 shy of the record high set in June 2022 (£293,507). While this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs.

Reaction to follow….

Also coming up today

Global investors are bracing for the latest US jobs report, which will influence how quickly, and deeply, America’s central bank may cut interest rates.

Economists are hoping for a pick-up in hiring; expectations are for a 160,000 increase in payrolls in August, up from the disappointing 114,000 in July. The US unemployment rate is forecast to drop back to 4.2%, from 4.3%.

Jim Reid, strategist at Deutsche Bank, sets the scene:

After much anticipation, we have finally arrived at the latest US jobs report day, which is of crucial importance as the Fed decides how much to cut rates this month.

It was only five weeks ago that the last jobs report underwhelmed, with payrolls growth down to just +114k alongside negative revision to the previous couple of months. So the big question today is whether that disappointing report was just a blip, or was it the start of a more serious deterioration.

The agenda

• 7am BST: Halifax house price index for August

• 7am BST: German industrial output for July

• 9am BST: UN food price index

• 10am BST: Eurozone final GDP Q2 report

• 1.30pm BST: US non-farm payroll report for August