Good morning. Today we're talking about European fintech mergers, Arm’s major investment backing and cooling US inflation.

Big Stories

Fintech merger talks

British digital bank Monzo is in talks to merge with Danish peer Lunar Group, according to Bloomberg. The deal would create a pan-European banking giant with over 7m customers that is better placed to challenge traditional high street banks. Lunar last raised funds in 2022 at a valuation of about $2.2bn. Meanwhile Monzo's valuation has fallen since its last fundraising in 2021, but is still estimated to be around $4.5bn. According to reports, Monzo has been actively exploring other acquisition targets alongside Lunar to help it expand in Europe. Experts have been predicting a wave of dealmaking in the fintech sector, as firms find it harder to raise cash due to a combination of rate hikes and investor caution.

Arm listing’s major backer

Chipmaker Nvidia is in talks to be an anchor investor in the initial public offering of Arm, the British chip designer. Nvidia, which recently became only the fourth company to reach a $1tn market value, is reportedly seeking a stake that would value Arm at between $35bn and $40bn. Arm is currently owned by SoftBank, which is looking to sell the company in an IPO as soon as September. Nvidia's interest in Arm is seen as a way to expand its reach into the mobile and server markets. Arm's designs are used in a wide variety of products, including smartphones, tablets and servers. If agreed the investment would be a major coup for Nvidia giving it access to Arm's technology and its customer base.

US prices continue to cool

There are signs US inflation may soon reach its 2% target, as the latest data revealed that prices rose 3% last month, down from the 40-year-high of 9% in June last year and marking the 12th straight month of cooling. The slowdown in inflation was driven by lower energy prices and a moderation in rent growth. However, core inflation, which excludes food and energy, remained elevated at 4.8%. The lower than expected reading eases the pressure on the Federal Reserve to continue its aggressive interest rate hikes. However the US central bank is still expected to raise rates at their next meeting while inflation remains above target.

Elsewhere...

New AI: Tesla boss Elon Musk has announced the formation of an artificial intelligence startup.

Water pledge: Thames Water customers will not face bigger bills to cover higher interest payments on the troubled supplier’s debt pile, bosses have told MPs.

Crisis averted: The International Monetary Fund has approved a much-awaited $3bn bailout for Pakistan, a move that is likely to help prevent the country from defaulting on its debt.

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