Time to wrap up, with a quick summary.

UK house prices are rising at their fastest rate in almost seven years, as the stamp duty holiday and pressure for more space drives the market. Halifax, which released the data, thinks prices could easily keep rising.

Wales saw the largest increase in prices, while Greater London is lagging behind as people look to move to more rural areas, better suited to remote working.

The surge in house prices is also pushing consumer confidence to its highest level in five years, and helped to keep share in housebuilders higher today.

The Bank of England has warned that ‘stablecoins’ will need to be regulated like bank deposits, as it continues its work towards a possible UK ‘Britcoin’

The global chip shortage, and wider stresses in supply chains, are hitting trade.

China’s exports in May grew by less than expected, with analysts blaming semiconductor problems and Covid-19 outbreaks at key ports.

German factories are also being hurt, with orders dropping unexpectedly in April.

Shares in global tech giants have shrugged off the G7’s landmark deal on a minimum corporation tax rate, and new rules to prevent major multinationals dodging tax.

As Ken Polcari, managing partner at Kace Capital Advisors, put it:

While it all sounds good, the road to implementation (of the tax deal) is full of rocks and potholes.

“I would not react by becoming a seller in any of these names on this headline just yet.”

But Google has promised to change its ad systems, after being fined by French authorities for abusing its dominant position.

Jeff Bezos has his mind on higher things, literally - he’ll be on Blue Origin’s first manned flight to the edge of space next month.

Here are more of today’s stories:

Perhaps lulled into a stupor by the warm weather, London’s stock market has ended a rather slow day with some very small gains.

The FTSE 100 index of blue-chip shares has closed eight points higher at 7077 points, up 0.12%.

The smaller FTSE 250 index gained 0.3%, close to last week’s record highs.

Travel stocks posted some gains, with airline group IAG up 2.8%, budget airline easyJet gaining 3.1%, and jet engine manufacturer and servicer Rolls-Royce up 2.6%.

They fell last week after the government removed Portugal from the ‘green list’ of travel destinations.

This afternoon, Matt Hancock presented MPs with fresh data about the effectiveness of two doses of vaccine against the Delta variant. He told parliament that the jabs were working:

Despite the rise in cases, hospitalisations have been broadly flat. The majority of people in hospital with Covid appear to be those who haven’t had the vaccine at all.

Housebuilders also rallied, boosted by the jump in house prices reported this morning, with Persimmon up 2.7% and Barratt Developments gaining 1.6%.

Telecoms firm BT (+3.6%) led the FTSE 100 risers, after Jefferies raised its price target.

But mining companies fell, as the China’s export growth this morning weighed onthe sector. Copper producer Antofagasta lost 2.7%, as did Anglo American (iron ore, copper, diamonds, platinum)

Serviced office operator IWG (-10.25%) was the top faller on the FTSE 250 after warning profits will be “well below” the previous year because of the latest Covid variants.

Speaking of tech firms....France’s competition watchdog has fined Google €220m for abusing its market power in the online advertising industry.

The French Competition Authority said Google had unfairly sent business to its own services and discriminated against the competition.

The watchdog found that Google’s ad management platform for large publishers - Google Ad Manager - favoured the company’s own online ad marketplace - Google AdX - where publishers sell space to advertisers in real-time.

Significantly, Google has agreed to change some of its global advertising practices as well as pay the fine, which could help publishers and other tech companies.

CNBC has more details:

The investigation found that Google gave preferential treatment to its DFP advertising server, which allows publishers of sites and applications to sell their advertising space, and its SSP AdX listing platform, which organizes auction processes and allows publishers to sell their “impressions” or advertising inventory to advertisers. Google’s rivals and publishers suffered as a result, the regulator said.

Isabelle de Silva, president of the French Competition Authority, said in a statement that the decision is the first in the world “to look at the complex algorithmic auction processes by which online advertising ‘display’ operates.”

Google says it has agreed on a set of commitments to make it easier for publishers to make use of data, and use its tools with other ad technologies.

The FT reckons the French case could provide a blueprint for other ongoing lawsuits against the company, as it “laid out in detail” how Google dominates the world of online advertising:

“Google used its vertically integrated business model in display advertising to gain an advantage over other competitors,” said Isabelle de Silva, the president of France’s Competition Authority, at a briefing on Monday.

“This is the first investigation in the world that examines the display advertising space where Google is dominant, and the first time Google has agreed to a settlement with engagements. This case will be of interest to other regulators who are looking at the online ad market and technologies.”

Bloomberg is reporting that De Beers has raised some rough-diamond prices by about 10% this week, after seeing strong demand from buyers.

It says the world’s top producer is cashing in on rampant demand from cutters and polishers.

Here’s a flavour:

The diamond industry roared back to life in the past six months, after stalling at the start of the pandemic last year. Cutting centers in India and Antwerp have been replenishing supplies after they’d been unable to buy during the worst of the crisis. At the same time, demand jumped amid surprisingly good festive sales.

That’s created an opportunity for the biggest producers to rapidly escalate prices. De Beers has been increasing since the end of last year and was already back to pre-coronavirus levels. It sold more than $1.6 billion in rough gems in its first three sales of 2021, the most since 2018.

The increase at this week’s sale is unusually sharp for De Beers. The miner this week increased the prices for some rough diamonds bigger than 2 carats by about 10%, with other expensive goods rising in high single digits, according to people familiar with the matter, who asked not to be identified discussing private information. The company also raised the prices of some categories of smaller goods.

The luxury market has been notably strong recently. Last month, Cartier owner Richemont reported strong demand for jewellery, with sales exceeding their pre-pandemic levels over the last year.

The jump in UK house prices is helping to drive consumer confidence into rosier territory....

...although not if you’re priced out of buying a property, of course.

YouGov’s consumer confidence gauge, released this morning, has jumped to its highest level since April 2016. People are more upbeat about their personal finances, and confident about the future as they look beyond the pandemic.

The survey found that:

• Outlook on job security highest on record at 118.9
• Sentiment on house prices continues to improve, with retrospective measure at four-year peak
  
• Confidence among households about personal finances at record high, with measure improving by 2.7 in past month and expectations up by 1.5 points
• Outlook for business activity continues to improve, increasing by 3.8 points

Darren Yaxley, Director of Reputation Research at YouGov, said:

The growth is yet again driven by confidence in house value as property prices climb to a seven year high, but is also supplemented by huge increases in optimism for job security over the coming twelve months likely due to labour shortages.

“With not a single metric decreasing this month, business activity for the past 30 days and outlook for household finances over the next 12 months are the only metrics to show little change. Despite this the metrics are still firmly in the positive showing more Britons are feeling confident than not.”

Jeff Bezos is heading where no tech billionaire has gone before, with his brother alongside.

The Amazon.com founder, and his brother Mark, will both travel to the edge of space next month on the first human flight operated by his rocket company Blue Origin.

In an Instagram post, Bezos wrote that he’s dreamed of travelling to space since he was five:

On July 20th, I will take that journey with my brother. The greatest adventure, with my best friend.

The Bezos brothers will travel on the New Shepard spacecraft, along with the winner of a multimillion-dollar auction for the final seat - just a couple of weeks after Jeff steps down as Amazon’s chief executive.

The flight takes 11 minutes, with the reusable suborbital New Shepard system flying more than 62 miles above Earth beyond the Kármán line (the boundary between Earth’s atmosphere and outer space).

That’s high enough to experience a few minutes of weightlessness and see the curvature of the planet before the pressurized capsule returns to earth under parachutes.

In the Instagram video clip, Jeff Bezos explains how the flight will be an adventure, and ‘a big deal for me’:

To see the earth from space it changes you — it changes your relationship with this planet, with humanity. It’s one Earth.

Mark Bezos founded private equity firm HighPost Capital and also works for an anti-poverty charity, and as a volunteer firefighter. He says he didn’t expect his brother to be on the trip - let alone both of them.

Lunchtime update: The London stock market is holding its gains, thanks to a strong performance by the housebuilders.

The FTSE 100 index is up 20 points, or 0.3%, at 7089 points, with Persimmon (+2.8%), Barratt Development (+2.3%) and Taylor Wimpey (+2%) among the top risers.

The smaller FTSE 250 index is has gained 0.35%, with builders Crest Nicholson (+2.8%) and Redrow (+2.7%) among the risers.

Construction stocks are a good gauge of UK economic confidence, and Halifax’s prediction that house prices will keep rising will be providing support too.

Sophie Griffiths, market analyst at OANDA, says:

While miners are trading lower, housebuilders are boosting the index after a stronger-than-expected increase in house prices. The Halifax house price index recorded a 1.3% MoM rise, ahead of the 1.2% forecast.

European stock market have shaken off their earlier losses, with the Stoxx 600 now up 0.25%.

The Bank of England has launched a discussion paper examining the complex, but fascinating, question of central bank digital money and the wider issues surrounding digital currency.

And in it, the BoE says that “stablecoins” (digital tokens pegged to a traditional currency, but issued by private firms) should be regulated like payments handled by banks if they start to become widely used.

But there’s no decision yet on whether the central bank will launch its own digital currency.

In its discussion paper, the BoE says the use of stablecoins as money creates important issues. Any stablecoins that become “systemic” should be stable in value at all times and offer 1-to-1 redemption with a robust legal claim, the Bank says.

Stablecoins used as money should meet equivalent standards as those provided by commercial bank money (bank deposits), it continues. Plus, any regulatory model for stablecoins should include ‘a core set of features of the current banking regime’ -- including capital requirements, liquidity requirements and support from a central bank, and a backstop to compensate depositors in the event of failure.

The Bank says:

New forms of digital money could be preferred by the public to commercial bank deposits, but they will endure only if they can be trusted as a store of value and as an accepted means of payment.

This means that stablecoins must promise, credibly and consistently, to be fully interchangeable with existing forms of money. In other words, they must be anchored. This is essential for ensuring that users have the same confidence in stablecoins as commercial bank money.

The BBC’s Faisal Islam has tweeted the key points too:

The Bank says it hasn’t yet decided whether it will take the plunge and issue its own central bank digital currency, or CBDC (which chancellor Rishi Sunak has nicknamed ‘Britcoin’).

But Governor of the Bank of England, Andrew Bailey, said the bank is considering it closely.

“We live in an increasingly digitalised world where the way we make payments and use money is changing rapidly. The prospect of stablecoins as a means of payment and the emerging propositions of CBDC have generated a host of issues that central banks, governments, and society as a whole, need to carefully consider and address.

It is essential that we ask the difficult and pertinent questions when it comes to the future of these new forms of digital money.”

The Bank adds that responses to its recent discussion paper on CBDCs has identified five key issues:

1. Financial inclusion should be a prominent consideration in the design of any CBDC. Any CBDC should have a high degree of accessibility to people, regardless of their geographic location in the UK, age, socioeconomic status, digital skills or disability.
2. A competitive CBDC ecosystem with a diverse set of participants will support innovation and offer the best chance to deliver the benefits of CBDC. Respondents agreed the Bank should provide the minimum level of infrastructure for the system to be reliable, resilient, fast and efficient. The private sector should take a leading role in responding to the needs of the end users.
3. In assessing the case for CBDC, the Bank should assess whether non-CBDC payment innovations could deliver the same benefits. An assessment of the net benefits of CBDC should therefore consider to what extent they can instead be delivered by private sector proposals.
4. A CBDC should seek to protect users’ privacy. Feedback from respondents has emphasised the importance that users place on having privacy in their transactions. As with existing forms of digital payments, there are important legal compliance arrangements that CBDC would need to meet, such as anti money laundering, countering the financing of terrorism and sanctions. Subject to meeting these the Bank should therefore seek to ensure that users enjoy a strong level of privacy from any transactions associated with CBDC.
5. While CBDC should “do no harm” to the Bank’s ability to meet monetary and financial stability, opportunities to meet our policy objectives more effectively should also be considered in CBDC exploration. The Bank is primarily focused on possible benefits CBDC might bring for ‘payments’. It is also considering the possible opportunities that CBDC may offer for monetary and financial stability.

Serviced office provider IWG has already been battered by the pandemic, and the latest Covid-19 variants will mean more pain this year.

IWG warned this morning that underlying earnings for this year would be “well below” 2020’s levels, due to the emergence of new, more infections strains such as the Delta variant.

IWG had been pinning its recovery hopes on the move to flexible working - where people dividing their time between home, and a desk at one of its shared workspaces.

But as my colleague Kalyeena Makortoff reports, ongoing lockdowns and new variants are hitting IWG’s profits.

The company, formerly known as Regus, reported a £620m annual loss for 2020, when its finances were hit by social distancing rules and work from home orders resulted in empty offices.

The UK-listed company, which is headquartered in Switzerland, reported strong recovery in some markets including the US. However, occupancy levels across the whole group were lower than expected due to “the prolonged impact of Covid-19, including continuing lockdown restrictions and the emergence of new variants of the virus in some markets”.

“Accordingly, this will delay the anticipated recovery in our business and, given the operational gearing of the group, is expected to have a significant impact on the group’s results for 2021,” IWG said, adding that underlying earnings will come in “well below the level in 2020”.

Shares in IWG have tumbled almost 13% this morning, to 319p, making it the biggest faller on the FTSE 250 index of medium-size firms.

House prices are likely to continue rising for some time despite hitting a new record high in May, one of Britain’s biggest mortgage lenders has said.

The monthly snapshot of the property market from Halifax showed a 1.3% jump in the cost of a home in May, taking the average selling price to a record £261,743 as homebuyers raced to complete purchases before the stamp duty holiday begins to run down at the end of this month.

Halifax said almost £22,000 had been added to the average house price since May 2020, when the UK experienced the first easing of national lockdown restrictions, and the gradual reopening of the housing market after a temporary freeze. It marks a 9.5% annual increase, the fastest rate of growth in seven years.

The report echoes similar findings from a survey by Nationwide last week, which showed prices rising 10.9% year on year, the fastest rate since August 2014.

Here’s the full story:

The average UK house price has jumped by more than £22,000 over the past 12 months, and by £3,000 in May alone, Halifax’s data shows.

That puts the housing ladder further out of reach for many first-time buyers -- undermining the new 95% mortgage guarantee scheme launched this spring.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says:

‘Cheap borrowing and affordability is giving buyers more purchase power, which is pushing up prices. Lenders remain keen to lend and have plenty of cash to do so, resulting in ever-lower mortgage rates from sub-1 per cent.

However, lenders aren’t only targeting those with big deposits or similar levels of equity in their homes, with options also increasing for first-time buyers at 95 per cent loan-to-value and the first properties being sold under the government’s First Homes initiative. This is just as well given that rising property prices are not good news for first-time buyers, and will make getting on the housing ladder even more of a struggle.’

The UK housing boom is running particularly hot in Wales, and parts of the North of England.

Halifax’s data shows that Wales has seen the biggest surge in house prices, with the average property costing 11.9% more than a year ago.

Two other regions have recorded double-digit growth: the North West (+10.6%) and Yorkshire & Humber (+10.2%), outpacing the average annual rise of 9.5% (the fastest since 2014).

For Wales and the North West, these are the biggest percentage gains since April 2005, Halifax says, and for Yorkshire & Humber its the biggest jump since June 2006.

But the South of England, particularly London, are lagging.

Halifax MD Russell Galley explains:

This likely reflects a weakness in city prices given the shift in preference for properties with more space, whilst recent surcharges on stamp duty for non-UK residents and Brexit concerns will also have weighed on the capital’s market.

UK house prices have risen to a new peak, as the stamp duty holiday and the stampede for larger houses following the pandemic continues to fuel the market.

Halifax reports that the average property now costs £261,743, with annual house price inflation at its strongest level in almost seven years (on its index).

According to Halifax, the average price rose by 1.3% in May alone, and was 9.5% higher than a year ago.

Several factors seem to be driving prices sharply higher, Halifax says. One is the government’s extended freeze on stamp duty payments, which is reduced from £500,000 at the end of June, and ends three months later.

Plus, the savings build up by more prosperous families during lockdown; rising demand for homes better suited to home-working; and a shortage of properties on the market.

Russell Galley, managing director of Halifax, explains:

“Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates. For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.

Galley also predicts that prices could keep rising:

Whilst these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing.

These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.”

In London, mining stocks are under pressure following the slowdown in China’s exports.

Commodities giant Anglo American (-2%), copper producer Antofagasta (-1.5%) and precious metal producer Fresnillo (-1.4%) are the top fallers.

Weaker export growth could indicate less demand for raw materials such as iron ore, copper, coal, nickel and zinc.

But the wider FTSE 100 is up 0.2%, or 13 points, at 7082 points.

UK focused companies are in the risers, including housebuilders, banks such as Barclays (+1.9%), telecoms operator BT (+1.8%) and Royal Mail (+1.8%).

Neil Wilson of Markets.com says investors are waiting for US inflation data later this week, for fresh signals as to when America’s Federal Reserve might slow its stimulus programme.

The FTSE 100 is the only early riser as European equity markets opened the week broadly in the red as Chinese trade data maybe just weighed a touch with exports lower than forecast despite imports growing at the fastest clip in 10 years.

In London, housebuilders led gains while basic resources stocks fell. Asian shares were mixed, US futures are slightly weaker this morning. It’s a light data docket today – all eyes on the inflation data from the US later in the week alongside the upcoming ECB meeting.

Last week’s US Non-Farm Payroll report (showing fewer new jobs than expected) seemed to calm inflation worries, Wilson points out:

Friday’s jobs report was something Goldilocks-like: not too cold to douse confidence in the economic recovery in the US, but also not so hot as to make the Fed take its feet off the gas too early....

Inflation remains squarely in focus and the largest potential source of investors angst and market volatility this week. April’s CPI print jumped to 4.2%, the highest since 2008. The month-on-month increase in the core reading of 0.9% was the strongest since 1982. Given this, the monthly core reading will be the main focus as it will offer a guide on just how transitory or otherwise the pop in inflation is likely to be.

European stock markets have begun the new week in the red.

The pan-European Stoxx 600 has dropped by 0.3%, away from last week’s record high.

Germany’s DAX and France’s CAC are both down almost 0.4%.

In Frankfurt, chipmaker Infineon Technologies (-1.3%) and chemicals firm Linde (-1.3%) are among the fallers, along with takeaway operator Delivery Hero (-2%) and energy firms RWE (-1.1%) and Siemens Energy (-1.6%).

The bad news for manufacturers, and consumers, is that the global shortage of semiconductors won’t end soon.

Singapore’s Flex, one of the world’s largest electronics contract manufacturers, has warned that it will take at least a year for supplies to catch up with demand, the Financial Times reports this morning.

That would mean more delays and disruption for industries around the world, such as carmakers and technology manufacturers. And it’s likely to result in higher prices, with factories already reporting that input costs are rising extremely rapidly this year.

The FT says:

A rapid rebound in vehicle sales combined with a lockdown-driven boom in games consoles, laptops and televisions has left the world’s chipmakers overwhelmed by the sharp increase in demand.

Singapore-based Flex has more than 100 sites in 30 countries and manufactures devices and electronics for companies including Ford, British household appliances designer Dyson, UK online grocer Ocado and US computer and printer maker HP. Its position in the supply chain makes it a large buyer of chips.

Lynn Torrel, Flex’s chief procurement and supply chain officer, said that the manufacturers it relies on for semiconductors have pushed back their forecasts for when the shortage will end.

“With such strong demand, the expectation is mid to late-2022 depending on the commodity. Some are expecting [shortages to continue] into 2023,” she said.

German factories have reported a drop in orders - another sign that supply shortages are causing ructions.

New manufacturing orders at Europe’s largest economy dropped by 0.2% month-on-month - missing forecasts of a 1% gain (according to a Reuters poll).

The weakness was driven by a drop in domestic orders, which fell by 4.3%, while overseas orders rose by 2.7% month-on-month, the Economy Ministry reported.

Orders for intermediate goods (products designed to be used in a finished item) fell 1.0%, while capital goods inched by by 0.2% and new orders for consumer products rose by 1.4%.

Bloomberg says it’s a sign that supply shortages and higher prices are undercutting Germany’s economic recovery, adding:

Manufacturing has been a stronghold in Europe’s largest economy over the past months, benefiting from earlier recoveries in places such as China and the U.S.

Lately though, businesses have run into unprecedented supply-chain issues amid shortages of parts and raw materials.

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

The global chip shortage, rising raw material costs and creaking supply chains are all weighing on the global economy as it tries to recover from the shock of the Covid-19 pandemic.

And new trade data from China suggests these factors are now biting into growth.

China’s exports slowed in May, growing by 27.9% year-on-year, down from 32.3% in April. That’s weaker than economists had expected.

It suggests the sharp recovery from the pandemic may be slowing -- due to ongoing Covid-19 disruption, and deepening problems getting hold of semiconductors.

Imports surged by 51.1% in May - the fastest jump in a decade. But that growth in import values was fueled by surging commodity prices in the scramble for metals and fuel, which is creating concerns about rising inflation.

Iris Pang of ING says China’s car industry was hurt by the shortage of semiconductors:

The main reason for the shortfall is that all export items related to semiconductor chips have slowed.

Auto processing products and parts, the biggest export item, fell 4%YoY in terms of export value. This is most likely the result of the semiconductor chip shortage.

Pang also points out that recent Covid-19 outbreaks are also hitting trade. which could drive up consumer prices in the shops.

Since the end of May, there have been around 10 Covid cases daily in Guangdong, where most electronics factories are located.

Shipments from the port in Shenzhen that process most of the electronic throughput have been affected by Covid. Port workers now have to have Covid tests and port operations have been disrupted. Some factories in Guangdong were also affected by Covid, mostly caused by workers queuing up for testing.

As such we expect June trade and production data will be affected. This could push up prices of electronic goods in general and affect China’s export prices and eventually import prices in the US and Europe. Supply chains in Asia will also likely be disrupted.

More here: China: Exports slow but imports jump

Julian Evans-Pritchard, senior China economist at Capital Economics, said while import prices increased at a rapid pace, import volumes probably edged down in May.

“Once again, supply constraints are partly to blame – inbound shipments of semiconductors continued to drop back.

So too did imports of industrial metals.”

Commodity prices have dipped following the data, with traders anticipating that future demand may be slower than expected

Also coming up today

Experts are digesting the deal on a minimum global corporation tax rate of 15%, agreed by leading finance ministers on Saturday. The G7 also agreed that countries should have the right to tax the largest, most profitable multinationals’ profit in the locations where it is generated, a landmark moment.

But Amazon could escape paying this clampdown on the “largest and most profitable multinational enterprises”, due to its low profit margins.

Richard Murphy, visiting professor of accounting at the Sheffield University management school, said the 10% profits threshold was “inappropriate” because of different business models for different companies.

He added that current approaches to reporting profits in each country were “easily gamed”.

“This could turn out to be a false hope unless they get the detail right.”

Mortgage lender Halifax’s latest house price index is expected to confirm that prices have surged around 10% in the last year.

The Bank of England is releasing a discussion paper on new forms of Digital Money -- focused on the possibility that it issues a new Central Bank Digital Currency to run alongside cash and bank deposits.

European stock markets are expected to open little-changed:

The agenda

• 8.30am BST: Halifax house price index for May
  
• 10am BST: Bank of England publishes discussion paper on new forms of Digital Money