The boss of Nike will step down next month, making way for a company veteran to take his place as the leader of the world’s biggest sportswear company amid tough competition in the retail sector.

In a statement, Nike said John Donahoe will retire on 13 October, staying on in an advisory role until early next year to “ensure a smooth transition”.

Demand for the company’s trainers has been faltering in international markets like China and the company’s stock price had slumped.

Shares rose more than 9% in after-hours trading, however, following the announcement that Elliott Hill would return to the firm.

Mr Donahoe was responsible for boosting Nike’s online presence, as well as driving more sales directly from customers instead of partnering with other shops on High Streets or in shopping centres.

He joined the company’s board in 2014 before taking on the role of chief executive in 2020.

His tenure has been challenging with huge shifts in the retail landscape during the pandemic and as inflation spiked in the following years.

The footwear firm has also faced tough competition from the likes of newer rivals like On and Hoka, which some analysts have described as being more innovative and on-top of current trends.

Nike had been hoping that new products and a marketing campaign around the Olympic Games in Paris would help bring shoppers back to the brand.

But in the announcement on Thursday, it said that the board and Mr Donahoe had “decided he will retire from his role”.

“It became clear now was the time to make a leadership change,” Mr Donahoe said, adding that Elliott Hill is the right person for the job and he was looking forward to seeing his future success.

His successor, Mr Hill, retired from the company just four years ago after serving in a number of senior leadership roles in Europe and the US.

He said he was “eager to reconnect” with employees he had worked with in the past.

“Together with our talented teams, I look forward to delivering bold, innovative products, that set us apart in the marketplace and captivate consumers for years to come,” he added.

Good morning. Today we’re covering:

• China’s growing military activity near Taiwan

• A novel treatment for schizophrenia

• Australia’s successful approach to economic security

But first: the audit that Volkswagen claimed cleared it of allegations of forced labour in Xinjiang failed to meet international standards, according to a review of the leaked report on its findings.

The carmaker said in December that an audit had found “no indications of any use of forced labour” at its plant in the western Chinese region, where human rights groups have documented widespread abuse against the mainly Muslim Uyghur ethnic group.

Löning, the Berlin consultancy founded by former German human rights commissioner Markus Löning, had applied the “internationally renowned” social auditing standard SA8000, VW said in a press release then. This prompted global index provider MSCI to remove a “red flag”, which since 2022 had barred ESG-focused investors from buying VW shares because of the Xinjiang allegations.

But the audit report, seen by the FT, shows that the Chinese firm involved in the work with Löning, Guangdong Liangma Law, did not adhere to critical aspects of the SA8000 auditing standard.

VW’s audit “departs” from the SA8000 standard “in several important ways”, chief among them the way interviews with staff were conducted, said Judy Gearhart, a professor at American University who helped develop the SA8000 rules.

The carmaker said that the SA8000 standard had only been used by the auditors as a “basis” but that “full examination of all points mentioned in the standard were [not] necessary”. 

Here’s what the review of the audit found.

Here’s what else I’m keeping tabs on today and over the weekend:

• Economic data: Hong Kong, Japan and India report inflation data for August.

• Monetary policy: Traders expect the Bank of Japan to hold rates at a policy meeting concluding today. Meanwhile, China is expected to slash its lending rate, according to a Reuters poll.

• Summit: US President Joe Biden hosts the leaders of India, Japan and Australia on Saturday for a gathering of the Quad nations in his home state of Delaware.

• Sri Lanka: The country holds its presidential election on Saturday.

What lies ahead for India after the first 100 days of Prime Minister Narendra Modi’s third term? Join FT, Nikkei Asia and Asia Society experts for a webinar on October 10 and put your questions to our panel now. Register for free. 

Five more top stories

1. Taiwan’s defence minister has warned that China’s growing military activity will make it more difficult to spot harbingers of an attack on his country. “We have to think about how we differentiate between peacetime and wartime,” Wellington Koo told reporters earlier today. The remarks came a day after a Chinese aircraft carrier group passed through waters near Taiwan’s northern tip.

2. The S&P 500 closed at a record high yesterday as investors bet the Federal Reserve’s jumbo half-point interest rate cut would help deliver a soft landing for the US economy. The US gains capped a global rally that also featured strong gains in European and Asian markets. Japan’s Topix 2 closed per cent higher yesterday, led by tech stocks and exporters.

3. Israel struck targets along Lebanon’s southern border yesterday as the leader of the Hizbollah militant group said the Jewish state had crossed “all red lines” with this week’s mass detonations of communication devices. Hizbollah leader Hassan Nasrallah said the attacks, which killed 32 people and injured thousands, were a “major security and military blow”.

4. Nike chief executive John Donahoe will step down next month in an abrupt leadership change at the world’s largest sportswear maker. The move punctuates a period of dour financial performance, including a dramatic stock sell-off after the company lowered its guidance in June. Here’s who will replace him.

5. Brazil’s Supreme Court will impose a fine of about $1mn per day on Elon Musk’s X and his satellite internet provider Starlink after service to the social media platform was temporarily restored in spite of a court-ordered ban. Users were able to access the service after X switched its third-party cloud provider.

How well did you keep up with the news this week? Take our quiz.

The Big Read

Schizophrenia sufferers are frequently pushed to the fringes of society, haunted by the delusions and hallucinations that define the worst flare-ups of the illness, while poorly served by a choice of old and imperfect treatments. Now hope is at hand. If approved by US regulators this month, a twice-daily pill will arguably be the first truly novel treatment for the “cancer of psychiatry” in more than seven decades.

We’re also reading . . . 

Chart of the day

A frantic hunt by chocolate manufacturers for high-grade cocoa has left a backlog of old, poor-quality beans lying in London’s warehouses, leading to a rare divergence in prices between the UK and the US.

Take a break from the news

Thanks to a wave of nostalgia, demand for classic football kits is soaring. But so are the prices. HTSI’s Alexander Tyndall looks at the rise of the football shirt — and why a Holland ’88 kit might cost you £900.

Additional contributions from Gordon Smith and Tee Zhuo

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The S&P 500 closed at a record high on Thursday as investors bet the Federal Reserve’s jumbo half-point interest rate cut would help deliver a soft landing for the US economy.

Wall Street’s benchmark index rose 1.7 per cent to 5,713.64, surpassing the previous record closing level set in July and capping a global rally that also featured strong gains in European and Asian markets. The S&P also set a new intraday peak of 5,733.57 before pulling back slightly by the end of the day.

Lower interest rates are generally considered positive for stocks, especially in high-growth sectors such as technology because they encourage economic growth, reduce companies’ debt burdens and spur investment in riskier assets.

Big Tech groups were the biggest drivers of Thursday’s advance, and the tech-dominated Nasdaq Composite rose 2.5 per cent. The Russell 2000 index of small-cap companies, which have higher average levels of debt, climbed 2.1 per cent.

At the other end of the spectrum, defensive sectors including consumer staples and utilities were the worst performers in the S&P 500.

Strategists at JPMorgan said Fed chair Jay Powell’s comments on Wednesday and officials’ revised interest rate expectations reaffirmed a “Goldilocks narrative and should be viewed as positive for the economy and earnings”.

Before Wednesday’s cut, US rates had been at their highest since 2001 as the Fed sought to bring down inflation from the biggest surge in a generation. But with consumer price inflation now at 2.5 per cent, close to the Fed’s 2 per cent target, the central bank has signalled more reductions to come.

In the latest “dot plot” of officials’ forecasts, most expected the rate to fall another half-percentage point by the end of the year, to 4.25 per cent to 4.5 per cent. However, futures markets were pricing in that the Fed would make nearly three-quarters of a percentage point of cuts.

The US gains followed a similarly positive session in Europe. The continent-wide Stoxx Europe 600 index rose 1.4 per cent, while the Cac 40 in Paris was up 2.3 per cent and the FTSE 100 gained 0.9 per cent. Japanese stocks also climbed, with the Topix 2 per cent higher, led by tech stocks and exporters.

The yen weakened 0.2 per cent to ¥142.63 against the dollar on Thursday. Traders expect the Bank of Japan to hold rates at a policy meeting concluding on Friday.

Sterling was up 0.5 per cent against the dollar at $1.3280, around its strongest level since March 2022 after the Bank of England held interest rates at 5 per cent on Thursday but signalled it may cut them again as soon November.

The dollar index, which tracks the US currency against a basket of peers, was flat.

Bitcoin jumped 5 per cent to $63,213.

Economists maintain that lower US interest rates can benefit emerging markets by reducing the cost of dollar financing and other borrowing costs. Lower rates on US bonds can also often make assets from other countries more attractive.

“By slashing real rates and real returns on US dollar bonds, relatively speaking emerging countries are going to do better,” said Trinh Nguyen, senior emerging Asia economist at Natixis.

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The stories that matter on money and politics in the race for the White House

Billionaire hedge fund manager John Paulson has brushed aside Wall Street worries that Donald Trump’s plans to raise tariffs will harm the economy, calling for the US to “decouple” from China.

In a shift from his own earlier criticism of the Republican presidential candidate’s trade policy, the Trump megadonor said “strategic tariffs” would be a valuable negotiating tool to “level” the playing field.

“We’re not in the period of free trade,” Paulson said in an interview with the Financial Times. “It’s very one-sided.”

“That’s why I respect Trump because he says these things,” said Paulson, a Wall Street titan who has been mentioned as a possible Treasury secretary if the Republican wins November’s election.

“Maybe he doesn’t articulate them so well all the times but when I listen and look into it, I find he’s absolutely correct,” he added.

Trump this month threatened to impose tariffs of 100 per cent on imports from countries that shifted away from using the dollar.

Some economists have warned increased tariffs would hit consumers, slow growth and stoke inflation.

The Tax Foundation — which favours lower taxes and a simpler code — has said Trump’s formal proposals for a 60 per cent tariff on Chinese goods and 10 per cent to 20 per cent duties on most other imports would increase costs for US businesses and shrink the economy.

Paulson’s comments contrast with his remarks in April, when he described tariffs as a “blunt tool” to fix trade imbalances and said “we don’t want to decouple from China”.

In this week’s interview, he said Beijing “has become more adversarial towards the US” and driven foreign investment out of China.

“There’s certainly been a decoupling on an economic basis,” Paulson said. “I think there’s a desire, a need to decouple from China.”

Paulson, who made his fortune shorting the housing market before it crashed in 2008, said that, while he previously subscribed to the “economic orthodoxy” that free trade benefits the globe, trade is not “implemented fairly”.

Paulson said one of his investments — Steinway Musical Instruments — had been hit by a 30 per cent tariff for selling woodwind instruments in China, while the US imposes a tariff of just 3 per on such instruments.

“I’m living this every day,” he said. “We are decimated.”

“Other companies I’m involved in — they’re planning on closing the US factories and going to Mexico or going offshore, and so it’s come to a point where it’s really affected us,” he added. “We need to stand up and protect American manufacturers.”

When asked about Trump’s pledge to carry out the largest deportation in US history, Paulson said the former president would enact his plan in stages. “I believe in immigration, but I believe in fair immigration,” he said. “I totally support deporting criminals.”

Paulson hit out at plans by Democratic presidential nominee Kamala Harris to increase corporate taxes and capital gains tax, as well as a proposed new levy on unrealised gains for those whose net worth exceeds $100mn.

“No question, the combination of these things would result in a market crash and immediate recession,” he said.

Despite the suggestions of a possible Treasury role, Paulson said it was “not so easy” for him to take on an administration post because of his holdings.

One potential conflict of interest would involve his preferred shares in Fannie Mae and Freddie Mac, the state-backed groups that guarantee most US mortgages, which Paulson said should revert to being private companies.

As a shareholder, he would stand to gain from a sale.

“Now they are in a position to be released,” he said of the mortgage giants. “They have sufficient capital to stand on their own and become private companies and support the housing sector.”

Paulson argued a Trump presidency would unleash natural gas production, boost manufacturing and make government more efficient. The Republican nominee has said he will appoint Elon Musk to head a commission to audit the administration and make “drastic reforms” to regulation.