Time to wrap up….
Investor confidence in the EU has fallen sharply after Donald Trump’s trade agreement with Brussels, amid mounting concern about the economic hit from the US president’s tariff war.
The latest snapshot from the Sentix index showed that investor sentiment fell significantly at the start of the month after the deal last week between Trump and the European Commission president, Ursula von der Leyen.
The data provider said its weekly survey of thousands of investors in more than 20 countries showed that the pact was a “deal that dampens the mood”, with Trump and the US viewed as “winners” at the expense of the eurozone.
“The result is devastating for the eurozone,” said Manfred Hübner, the managing director of the Sentix economic index.
“The current situation and expectations are both declining. The wrinkles of concern in the economy are deepening again.”
Switzerland, which was hit with a 39% tariff by Trump, is now indicating it might make the US a better offer. Shares on the Swiss stock market dropped this morning, as traders reacted to the prospect of high levies at the US border.
Tesla’s board has approved the award of $30bn (£23bn) worth of shares to its chief executive, Elon Musk, after a US court ruled against a previous pay deal for the world’s richest person.
Musk will pay $2bn to buy 96m shares in the electric carmaker at the same price as the 10-year pay package agreed in 2018, which is stuck in legal limbo awaiting a court date for an appeal. The award was based on a recommendation from a “special committee” of the board.
The announcement in a financial filing was accompanied by a shareholder letter from two members of the committee, Tesla’s chair, Robyn Denholm, and Kathleen Wilson-Thompson.
It described the award as a “good faith” payment to Musk after the previous pay deal, worth $56bn, was rescinded in 2024 by a judge in Delaware, where the company was incorporated until June that year.
Shares in UK lenders surged on Monday after a favourable supreme court ruling significantly slashed the anticipated bill for companies engulfed in the car finance scandal.
The specialist lender Close Brothers, which is the most exposed to the scandal, jumped as much as 27% at the start of trading, and are still up 22%.
The UK’s biggest motor loan provider, Lloyds Banking Group, are now up 8%. Shares in Barclays, which no longer provides car finance but is dealing with the fallout for the remaining loans on its books, rose by 1.1%. Shares in FirstRand, one of the lenders involved in the supreme court case, jumped by 4.8%.
More tariff news: the European Union will suspend its two packages of countermeasures to U.S. tariffs for six months following the deal agreed with U.S. President Donald Trump.
A comission spokesperson explains:
“The EU continues to work with the U.S. to finalise a Joint Statement, as agreed on 27 July.
“With these objectives in mind, the Commission will take the necessary steps to suspend by 6 months the EU’s countermeasures against the US, which were due to enter into force on 7 August.”
The EU had threatened to impose nearly €100bn (£87bn) worth of tariffs on US imports ranging from bourbon to Boeing aircraft in one fell swoop if a trade deal wasn’t reached….
US factory orders fall 4.8%
Just in: US factory orders dropped sharply in June, after a busy May.
The US Census Bureau has reported that new orders for manufactured goods fell by 4.8% in June, to $611.7bn.
That follows an 8,3% jump in orders in May.
The drop in June was driven by weaker demand for durable goods – items designed to last several years.
Wall Street has opened higher, recovering from Friday’s losses.
The Dow Jones industrial average has risen by 317 points, or 0.75%, in early trading to 43,906 points. The broader S&P 500 share index is 1% higher.
Shares fell last Friday after a surprisingly weak US jobs report, which prompted Donald Trump to fire the federal government official in charge of labor statistics a few hours later.
Shares in Tesla have, as expected, jumped at the start of trading.
They’re up 2.5%, to just over $310 each.
Swiss government says it's ready to make Trump 'more attractive offer' on tariffs
Over in Zurich, Switzerland’s government says it is ready to make a “more attractive” trade offer to Donald Trump, in the hope of avoiding a 39% tariff on its exports to the US.
Following a crisis meeting this morning, the Swiss cabinet says:
“Switzerland enters this new phase ready to present a more attractive offer, taking U.S. concerns into account and seeking to ease the current tariff situation.”
Switzerland was shocked that Trump announced a 39% tariff on its wares, which prompted the drop on the Swiss stock marked this morning.
Updated
Wedbush analyst Dan Ives has welcomed Tesla’s decision to hand Elon Musk almost $30bn in share options that will vest in two year’s time.
Ives says it“removes an overhang on the stock” adding:
“Musk remains Tesla’s big asset and this comp [compensation] issue has been a constant concern of shareholders.”
Dan Ives wrote in a client note “Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.” @Newsday @AP 🏆🔥🐂🎯🍿https://t.co/rRd2On4qn4
— Dan Ives (@DivesTech) August 4, 2025
Today’s $30bn share award won’t be the end of the discussions about Elon Musk’s pay.
In their letter to shareholders, Robyn Denholm and Kathleen Wilson-Thompson explain that the Tesla board’s special committee will continue its work on “a longer-term CEO compensation strategy”.
They intent to put this plan to a shareholder vote at Tesla’s annual meeting on 6 November.
Tesla shares higher in pre-market trading
Shares in Tesla have risen by over 2% in pre-market trading – a sign that Wall Street approves of Musk’s new share package.
They’ve risen by 2.3% to $309 per share, up from $302 on Friday night, which will lift the value of Musk’s 96m share package closer to $30bn.
Investors may well be reassured that today’s share package will keep Musk at Tesla, as the shares will vest in two year’s time.
Reuters: Tesla's brand loyalty collapsed after Musk backed Trump
Customer loyalty towards Tesla across America has plunged since CEO Elon Musk endorsed President Donald Trump last summer, according to data from research firm S&P Global Mobility.
The data shows Tesla’s customer loyalty peaked in June 2024, when 73% of Tesla-owning US households in the market for a new car bought another Tesla, Reuters reports
Brand loyalty rate started to nosedive in July, the month when Musk endorsed Trump.
The rate bottomed out at 49.9% last March, after Musk launched the Department of Government Efficiency in January and started firing thousands of government workers.
S&P analyst Tom Libby called it “unprecedented” to see the runaway leader in customer loyalty fall so quickly to industry-average levels, adding:
“I’ve never seen this rapid of a decline in such a short period of time.”
Tesla’s US loyalty rate has since ticked back up to 57.4% in May.
But even so, this does raise the question about whether Musk really deserves $30bn of shares….
Delays on the Eurostar
Eurostar passengers travelling and from Paris face long delays and cancellations after a power failure on the high-speed rail line north of the French capital.
The cross-Channel train operator warned that trains between London and Paris and Brussels and Paris would be disrupted throughout Monday.
It said trains were still running but had been rerouted via slower rail lines, adding up to two hours to departures on Monday morning. A number of afternoon services have been cancelled.
The latest disruption comes during peak holiday season, on the main rail route from Britain to the continent.
Eurostar said it advised passengers to postpone their journey if possible, and exchange their ticket free of charge or request a full refund. It said extra staff had been deployed in the stations to assist passengers.
Tesla approves $30bn share award to Elon Musk
Just in: Tesla has awarded Elon Musk stock options worth almost $30bn, in its latest attempt to pump up the billionaire’s pay packet, and keep him at the company.
Tesla had announced that is has approved an award of 96 million shares of restricted stock to CEO Musk, under its 2019 Equity Incentive Plan.
At Tesla’s latest share price, $302, the shares would be worth $29bn. Musk would have to pay just $23.34 per share to get them, which would cost him around $2bn, when they vest in two year’s time.
This follows the blocking off Musk’s massive, $56bn, pay packet by a Delaware judge.
If the Delaware pay deal is reinstated (there’s an appeal to Delaware’s Supreme Court), these new share options will by immediately forfeited, Tesla add (a sign that it is an attempt to get Musk at least part of that offer).
Robyn Denholm and Kathleen Wilson-Thompson, members of the special committee of the Tesla’s board of directors, told shareholders that it was “imperative to retain and motivate our extraordinary talent, beginning with Elon”.
In a letter to shareholders, they added:
We would also like to stress that prior to recommending this award, we reviewed your letters, read your X posts, and considered the direct feedback we have received from many of you in order to align our recommendation with your expressed views. From those communications, we know that one of your top concerns is keeping Elon’s energies focused on Tesla.
This award is a critical first step toward achieving that goal, although it is limited by the capacity of our current equity incentive plan. As such, we are also working on next steps to address that issue. Still, while our work remains ongoing, we feel it is important to communicate directly and transparently with you all, our shareholders and Tesla’s owners.
Updated
The Swiss franc has weakened again this morning, adding to Friday’s losses, as traders anticipate steep tariffs on Switzerland’s goods at the US border.
The euro has climbed by almost 0.5% against the swiss franc, to 0.9355CHF.
Raffi Boyadjian, lead market analyst at Trading Point, says:
Many investors remain hopeful that some of the steep tariffs announced last week will be renegotiated and reduced. For example, reports suggest that Canadian Prime Minister Mark Carney will meet with Trump later this week to potentially reach a deal that would bring down the 35% levy on Canadian imports into the US.
The Canadian dollar is unchanged versus the greenback today, but the Swiss franc is tumbling following the White House’s decision to slap 39% tariffs on Switzerland – something not expected by the Swiss government.
The yen, meanwhile, enjoyed a revival in its safe-haven status during Friday’s risk-off trading, although it is paring those gains today, with the dollar rebounding to just below 148 yen.
Jean-Philippe Bertschy, an analyst at Vontobel, has warned that 39% tariffs on Swiss exports to the US would be “devastating for numerous brands in Switzerland.”
Eurozone August Sentix -3.7 (est +6.9, last +4.5)
— Mario Cavaggioni (@CavaggioniMario) August 4, 2025
A bit of surprise from Sentix who is, however, just a survey of analysts.
The index's setback suggests still a sub-50 Composite PMI and while I don't read too much into today's data, it confirms that recovery remains fragile. pic.twitter.com/MacXwOZq0o
EU-US trade deal hits eurozone investor sentiment
Investor sentiment in the euro zone has taken a tumble, as the EU-US trade deal annnounced a week ago dampened confidence.
Data provider Sentix’s latest confidence gauge found that investors are not impressed by the EU’s latest tariff deal with the US.
The survey of 1,050 investors, conducted from July 31 to August 2, found a decline in the current economic situation, and also in future expectations.
It also found a slump in confidence about the Swiss economy, after Donald Trump announced Switzerland will face a 39% tariff – much higher than the EU’s 15%.
Sentix reports:
The latest data from the “first mover” provides investors’ initial assessment of the EU-US tariff deal. And the result is devastating for the eurozone. The sentix economic index has fallen significantly to -3.7 points. The current situation and expectations are both declining. The wrinkles of concern in the economy are deepening again.
Even German Chancellor Friedrich Merz, who recently raved about a turnaround in the economy, has been proven wrong: the Germany index has collapsed by more than 12 points to -12.8 points.
Donald Trump and the US are the winners in the current figures. Advance effects are the main factor pumping up the situation figures. However, expectations are also falling in the US to -7.8 points. Investors are particularly harsh on the Swiss economy. The sentix economic index has slumped by a full 21.2 points here.
Sentix managing director Manfred Huebner says:
“The tariff agreement is proving to be a real mood killer.”
Updated
Swatch group chief executive Nick Hayek has called on Swiss President Karin Keller-Sutter to meet US President Donald Trump in Washington to negotiate a better deal than the 39% tariffs announced on Swiss imports into the United States.
Hayek told Reuters on Monday he was confident an agreement could still be reached before the tariffs, which were announced on Friday, went into effect on August 7.
Hayek said:
“Karin Keller-Sutter is the boss of the Swiss government, she is the president.
She should take the plane and go to Washington. That would increase the chances of a deal enormously.
“It’s not doomsday. Of course a settlement can be reached. Why would Donald Trump say tariffs are coming on August 1 and not implement them until the 7th? The door is always open.”
Swiss stocks tumble after Trump tariff shock
The Swiss stock market has tumbled into the red after Donald Trump shocked Switzerland by announcing a 39% tariff on its imports to the US.
The Swiss Main Index (SMI) is down over 1%, after losing almost 2% at the start of trading. The market had been closed on Friday for a public holiday, so this is Zürich traders’ first opportunity to react.
Most stocks are in the red, including pharmaceuticals firm Roche (-1%), luxury goods maker Richemont (-0.8%), and bank UBS (-1.8%).
Economists have warned that the tariffs would have a serious impact on the export-oriented Swiss economy, increasing the risk of recession.
South Africa’s FirstRand has said it may need to update its accounting provisions after Friday’s supreme court ruling on motor finance claims, potentially pushing the lender’s annual earnings growth towards the lower end of its forecast.
It told shareholders:
On 11 December 2024, FirstRand Bank London Branch obtained permission from the Supreme Court to appeal the UK Court of Appeal’s judgment against it in respect of the Wrench and Johnson motor finance commissions cases. The appeal was heard by the Supreme Court between 1 April 2025 and 3 April 2025.
FirstRand welcomes the clarity provided by the judgment. FirstRand Bank London Branch’s main ground of appeal (that car dealers do not owe their customers a fiduciary duty) was upheld, and it is important to note that the successful ground was the most important and substantive issue that required the Supreme Court’s consideration following last year’s UK Court of Appeal ruling.
The company had earlier expected to deliver full-year earnings growth in the low double-digit to mid-teens range, Reuters reports.
Shares in FirstRand are up 4.7% this morning, on the Johannesburg stock exchange.
Updated
'Completely impractical' for compensation scheme to look back to 2007
The trade body for the motor finance sector has criticised the Financial Conduct Authority for proposing to backdate its compensation scheme to 2007.
Stephen Haddrill, director general of the Finance & Leasing Association, told Radio 4’s Today programme that while it “makes sense” to have a compensation schem, there rae “major concerns” about the time limit.
Haddrill argued:
I just think it’s completely impractical.
It’s not simply firms that don’t have the details about contracts back then, customers don’t either.
FCA chief: don't use claim management firms
The head of the UK’s financial watchdog is urging consumers seeking redress in the car finance scandal not to use claims management companies or law firms to handle their case.
Nikhil Rathi, the chief executive of the Financial Conduct Authority, has told Radio 4’s Today Programme that the FCA’s proposed compensation scheme will be free to use.
Rathi says:
“We have taken action against 225 adverts because there have been exaggerated claims out there.
If you sign up to these companies you may lose up to 30% of any money you are owed.
He also explains that the FCA will now have to decide which car finance commissions should be classed as ‘unfair’ – based on the guidance from the supreme court.
Rathi explains:
They [the court] have said that different characteristics determine what is unfair.
It could be the level of the commission, how it was disclosed, the characteristics of a consumer….
Rathi also explains that the FCA could start its compensation scheme by October, and hopes that compensation can start to be paid out next year. The regulator is looking to the industry to cooperate over this, he adds.
Shares in Barclays are up over 1.8% in early trading.
It had previously set aside £90m to cover potential motor finance compensation payouts.
Shares in lenders surge after Supreme court ruling on car finance
Boom! Shares in lenders exposed to the UK car finance scandal have surged at the start of trading in London, as investors react to Friday night’s supreme court ruling.
Shares in Close Brothers jumped 27% after the stock market opened, after the court ruled in its favour in a case over car finance. Close Bros are leading the FTSE 250 index of medium-sized companies.
Lloyds Banking Group is leading the larger FTSE 100 share index – its shares have jumped by almost 6% in early trading.
As flagged earlier, Lloyds had previously set aside £1.2bn to cover compensation claims over car finance commissions paid to car dealers.
These share price moves are a clear sign that the Supreme court ruling is a win for the lenders, even though the FCA is now consulting on a compensation scheme for motorists.
That’s because the FCA estimates the cost of its scheme will be between £9bn and £18bn. Before the supreme court overturned two of the three rulings against the industry, lenders were facing an estimated bill of £44bn.
Updated
The announcement of BP’s major oil discovery comes a day after energy producers agreed to boost output again.
The Opec+ group agreed on Sunday to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated hikes designed to regain market share.
The move means Opec+ has now fully reversed its largest tranche of output cuts, made as oil demand slumped after the Covid-19 pandemic.
The oil price is little changed this morning, though, with Brent crude up 0.25% at $69.83 per barrel.
BP announces largest oil and gas discovery in 25 years
Away from the car finance scandal, BP has made its biggest largest oil discovery in 25 years, off the coast of Brazil.
BP has told the City that it has made a significant oil and gas discovery at the Bumerangue prospect in the deepwater offshore Brazil.
BP says it made the discovery after drilling an exploration well in the Santos Basin, 404 kilometres from Rio de Janeiro. The site has a water depth of 2,372 metres, and the well was drilled to a total depth of 5,855 metres.
It discovered a hydrocarbon column with an estimated depth of 500 metres, in a “pre-salt carbonate reservoir” with an area more than 300 square kilometres.
Gordon Birrell, BP’s executive vice president for Production & Operations says:
“We are excited to announce this significant discovery at Bumerangue, bp’s largest in 25 years. This is another success in what has been an exceptional year so far for our exploration team, underscoring our commitment to growing our upstream.
Brazil is an important country for bp, and our ambition is to explore the potential of establishing a material and advantaged production hub in the country.”
Lawyer: compensation scheme could have significant ramifications for UK motor finance industry
The FCA’s decision to consult on an industry-wide compensation scheme for car finance customers could have “significant ramifications” for the UK motor finance industry, says Hyder Jumabhoy, partner at international law firm White & Case.
Jumabhoy explains:
“While it is too early to predict the full impact with certainty until the FCA’s consultation process is complete, we expect this move to accelerate M&A activity due to some lenders having decreased risk appetite but also because of unused provision amounts becoming available for acquisitions. It could also prompt some car manufacturers to enter the UK motor finance market to steady the supply of finance to buyers of new vehicles.
“The next six weeks in the run-up to the launch of the FCA’s consultation will be crucial, as the industry assess the implications of the Supreme Court’s ruling and the emerging shape of the scheme in 2026.”
Lender S & U: Supreme court ruling is “victory for common sense”
Specialist financier S & U PLC has welcomed last week’s Supreme Court decisions on motor finance commissions as a “victory for common sense”.
Anthony Coombs, Chairman of S&U, argues the ruling will significantly boost confidence throughout the motor finance industry and benefit lenders and consumers alike in attracting investment and increasing competition.
In a statement to the City this morning, Coombs added:
As such, it is entirely consistent with the Treasury’s recent emphasis on regulation which encourages growth and which will, in the words of the Financial Conduct Authority, “ensure the integrity of the motor finance market, so that it works well for future consumers.”
S & U are the parent company of Advantage Finance, which they say has never used the discretionary commission arrangements which are at the heart of the car finance scandal.
Updated
Close Brothers, who have been one of the UK’s biggest providers of car loans, has issued a short statement to the City this morning.
The firm says:
Further to the group’s announcement issued on 2 August, we note the announcement of the Financial Conduct Authority on 3 August of its intention to consult on an industry wide redress scheme in respect of motor finance commissions.
We look forward to engaging with the FCA in respect of the consultation.
On 2 August, Close Brothers said it “welcomes the outcome” of the supreme court ruling, adding that it “provides clarity on important legal and commercial principles.”
Back in March, the company posted a £103m loss for the first half of its financial year, and estimated that the motor finance commission scandal would cost it a total of £200m this year.
Lloyds doesn't expect 'material' change to car finance provisions
Lenders exposed to the car finance scandal are issuing statements this morning, ahead of the opening of the London stock exchange at 8am.
Lloyds Banking Group says it has undertaken an initial assessment of the impact of Friday’s supreme court judgment.
Lloyds, which had previously set aside £1.2bn to cover compensation payments, has told the City that “whilst the judgment announced on 1 August provides additional clarity, there remain a number of uncertainties that the Group continues to consider in its approach to provisioning.”
The bank says:
After initial assessment of the Supreme Court judgment, and pending resolution of the outstanding uncertainties, in particular the FCA redress scheme, the Group currently believes that if there is any change to the provision it is unlikely to be material in the context of the Group.
The provision will continue to be reviewed for any further information that becomes available, with an update provided as and when necessary.
Introduction: City investors to give verdict on car finance scandal ruling
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The latest twists in the UK car finance scandal could grip the City today, as investors try to estimate where the financial impact will land, and how heavy it will be.
Yesterday afternoon, Britain’s financial regulator said it would open a redress scheme for consumers who were treated unfairly when they bought a vehicle using car finance, and “secret” commission payment were made to car dealers.
The Financial Conduct Authority (FCA) will consult on the redress scheme, which could cost banks between £9bn and £18bn. Motorists who were mis-sold car finance were warned that they are likely to get less than £950 a claim.
Nikhil Rathi, chief executive of the FCA, said last night:
“It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated. We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”
“Our aim is a compensation scheme that’s fair and easy to participate in, so there’s no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get.”
“It will take time to establish a scheme but we hope to start getting people any money they are owed next year.”
The FCA is acting after the UK supreme court partly overturned a landmark Court of Appeal case on hidden car finance commission claims on Friday, a move that looks like a partial win for lenders.
The court rejected two claims which alleged that commissions paid to car dealers were bribes, and that dealers owed a duty of loyalty to the customer.
As my colleague Kalyeena Makortoff explains here, the court appears to have closed the door to compensation except in more serious cases, although they did uphold a third case of a customer, Marcus Johnson, concluding that he had been treated unfairly.
Martin Lewis, founder of MoneySavingExpert.com, has told Sky News the consultation is “likely to mean 40% of people who got a car finance deal between 2007 and 2021 will be due some form of redress, likely to be hundreds not thousands of pounds”.
The Supreme Court ruling came just after the London stock market close on Friday night.
The market reopens at 8am, so we’ll see how the City reacts to the verdict, and the FCA’s compensation scheme, shortly…
The agenda
3pm BST: US factory orders report for June
Updated
