Join me as we explore the latest developments surrounding Britain’s biggest steelworks. Today, Tata, the Indian conglomerate that owns Port Talbot steelworks in south Wales, is set to announce the future of its operations. The government is prepared to inject £500m to support the production of “greener” steel.
Tata has been engaging in discussions with the government for several months about potential state aid amounting to hundreds of millions of pounds. The objective is to transition the plant’s two coal-fired blast furnaces into electric arc versions that can run on zero-carbon electricity.
Despite the potential environmental benefits, unions have expressed concern over the possible loss of around 3,000 jobs, mostly at Port Talbot. The electric arc furnaces require fewer personnel to operate, posing a threat to high-value manufacturing jobs in an area already facing a shortage.
Ministers will make an official announcement today, highlighting that the agreement aims to secure the survival of the plant, which employs half of Tata Steel’s workforce of 8,000 individuals.
This development comes after Tata experienced a substantial decline in profits, with accounts revealing a shift from an £82m profit in 2021 to a significant loss in the past year. Rising costs of energy and raw materials, such as iron, contributed to this decline.
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What happened overnight
Asian markets experienced positive growth, particularly in China, as the central bank implemented measures to stimulate lending and revitalize the economy. Hong Kong’s Hang Seng rose by 1.3%, while the Shanghai Composite index increased by 0.4%.
The People’s Bank of China announced a cut in the reserve requirement for banks by 0.25 percentage points, aiming to support the recovery of the economy. In addition, China reported a 4.5% increase in industrial output in August compared to the previous year, indicating signs of economic improvement post-pandemic.
In Japan, the Nikkei 225 surged by 1%, and Australia’s S&P/ASX 200 jumped by 1.7%. The Kospi in South Korea also experienced a 0.6% increase. SoftBank Group Corp., the former owner of chip designer Arm Holdings, saw a 2.9% rise in Tokyo following Arm’s successful debut on Nasdaq.
In the US, Wall Street closed higher due to strong retail sales figures ahead of the Federal Reserve’s upcoming interest rate decision. The S&P 500 recorded its best day in two weeks, climbing by 0.8%, while the Dow Jones Industrial Average added 1%. The Nasdaq composite also rose by 0.8% after the successful initial public offering of British chip designer Arm.
Throughout the day, the yield on the 10-year Treasury slightly increased to 4.29% compared to 4.25% the previous day.
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