BMW is set to recall approximately 1.5 million vehicles due to issues with their braking systems, a move that has resulted in a €4.3 billion (£3.7 billion) reduction in the value of the German automaker. This significant recall will negatively impact the company’s global sales for the latter half of the year, according to the company, which also manufactures Rolls-Royce and Mini vehicles. BMW’s shares have plummeted by as much as 9.6%, as the company braces for a substantial financial hit, estimated to be in the “high three-digit million” euros range over the next quarter.

Additionally, BMW has revised its profit expectations for the year, with margins now projected to fall between 6% and 7%, down from an earlier forecast of 8% to 10%. The luxury car brand has been struggling with diminishing demand from China, which has adversely affected the broader German automotive industry. In the second quarter, BMW reported an 8.6% drop in net profit to €2.7 billion, with revenues declining by 0.7% to just under €37 billion.

In a related development, Volkswagen has informed the German metalworkers’ union IG Metall of its intention to terminate several labor agreements, including a job security guarantee at six German plants that was set to last until 2029. This decision is part of Volkswagen’s broader cost-cutting strategy aimed at enhancing its competitiveness against more affordable Asian competitors. The company’s announcement has sparked significant concern within Germany’s government and sent shockwaves through the global automotive sector.

The head of Volkswagen’s works council has promised strong resistance against any layoffs or factory closures, attributing the company’s difficulties to management decisions. Volkswagen emphasized that reducing costs in Germany is essential to remain competitive and invest independently in new technologies and products.

Meanwhile, Wall Street saw a downturn as major bank shares fell sharply. JPMorgan Chase’s stock dropped nearly 7%, marking its most significant decline in over four years, following comments from the bank’s president that tempered expectations regarding interest income. Similarly, Goldman Sachs saw its shares fall by 5.3% after CEO David Solomon indicated that trading revenue would likely decrease by 10% in the third quarter.

The S&P 500 decreased by 0.3%, the Dow Jones Industrial Average fell by 0.8%, and the Nasdaq Composite edged down by 0.1%. The FTSE 100 also declined due to falling oil prices and a weak performance from AstraZeneca. Major oil companies like Shell and BP experienced drops of 1.5% and 2.1%, respectively, as Brent crude oil prices hit their lowest levels since 2021.

Pharmaceutical giant AstraZeneca was among the worst performers on the FTSE 100, following disappointing trial results for one of its lung cancer treatments. The price of Brent crude oil fell below $70 per barrel for the first time since late 2021 amid concerns about slowing global economic growth and OPEC revising its oil demand forecasts downward for 2024 and 2025.

In aviation news, Wizz Air has announced the launch of £135 no-frills flights from London to the Middle East, targeting budget-conscious travelers with this low-cost alternative.

In other market movements, student accommodation provider Unite Group saw a 3.9% rise in its shares, while JD Sports increased by 3.4%. Conversely, Barclays and aerospace manufacturer Melrose Industries saw declines of 3.3% and 2.9%, respectively.

On the mid-cap FTSE 250 index, gold miner Centamin surged by 22.9%, followed by real estate company Hammerson, which rose by 2.9%. However, Alpha Group fell by 11%, and Ithaca Energy dropped by 4.9%.

In the mining sector, Anglo American has begun selling shares in Anglo American Platinum (Amplats), reducing its share capital by around 5%. This move follows Anglo American’s rejection of a takeover offer from BHP earlier this year, which it deemed significantly undervalued.

The dollar strengthened slightly against a basket of major currencies but weakened against both the euro and the pound. Market attention is now focused on next week’s Federal Reserve meeting, where an interest rate cut is anticipated for the first time in over four years.

Lastly, significant leadership changes have occurred at two of Britain’s oldest asset management firms. Jason Windsor has been appointed permanent CEO of Abrdn after serving as interim CEO since May. Abrdn has faced challenges including worse-than-expected cash outflows and significant job cuts earlier this year. Meanwhile, Schroders announced that its current CFO Richard Oldfield will take over as CEO on November 8, following Peter Harrison’s retirement.

Apple’s shares dropped by as much as 1.9% following the unveiling of its new iPhone 16, which failed to excite investors due to its long-expected but still-in-development AI features. This comes at a time when competitor Huawei is raising the stakes with its industry-first tri-fold phone.

Volkswagen’s struggles continue as it informs IG Metall of plans to scrap decades-old job security agreements at six German plants. This move is part of a cost-cutting effort essential for competing with cheaper Asian rivals and comes amid threats of potential plant closures on German soil for the first time in Volkswagen’s history.

Market indices such as the S&P 500 and Nasdaq showed slight gains while awaiting key inflation data that could influence future interest rate cuts by the Federal Reserve. Despite Apple’s recent product launch disappointment, Tesla saw a notable increase in share value, leading gains among megacap stocks.

Oil prices have fallen below $70 per barrel for the first time in three years due to concerns about slowdowns in both US and Chinese economies and high supply levels.

Thank you for following our market updates today; stay tuned for more business news tomorrow morning.