China’s finance ministry has pledged to cut taxes and boost spending,as it fights a slowing economyLatest: German GDP only expanded 1.5% final yearIntroduction: China promises tax cuts and spending boost
Central bank promises “ample” liquidity
State planner: We’ll manufacture a good start to 2019Shanghai stock markets surges 2% 8.17pm GMTAnd finally, there’s been wild swings in the currency markets as Theresa May suffers a historic defeat over her Brexit deal.
Sterling slid to $1.266, and lowest since January 4th,as investors reacted to the sheer scale of the defeat -- a majority of 230 MPs opposed the map.
Pound falls through $1.27 as Theresa May loses Brexit vote by a thumping 230 votes... then surges backs as Jeremy Corbyn tables a no confidence vote... https://t.co/65UzO7WzhV pic.twitter.com/TtsPYTw6a7“Tonight’s confused sterling price action reflects the fact that the pound was already trading with meaningful downside risk priced in. It seems that for now, market participants have faith in the supposed majority that exists for avoiding a no deal, and are at least a little encouraged by the prospect that the chaos results in a delay or a softening of Brexit.
A nightmare scenario for sterling would be a standoff where May sees off the vote of no confidence but still can’t pass a bill,and so is forced to continue to run down the clock while refusing to offer any genuine alternatives or call a referendum. Such a game of chicken would substantially increase the risk of miscalculation or deadlock leading to no deal and send sterling towards parity against the euro. Related: Brexit vote: Jeremy Corbyn tables vote of no confidence after May suffers historic defeat – Politics live 7.07pm GMTWhen the pound goes down, the FTSE 100 often goes up, and as it has nowadays....
The pound has dropped approximately two cents against the dollar nowadays. Before the voting began. Here's our latest chart pic.twitter.com/kgMdExOcrQFTSE in buoyant mood,as it should be on a weaker pound. pic.twitter.com/WU4C9VrXla 6.52pm GMTSomething for currency traders (and the rest of us) to digest:Am May winds up the debate, I’m told that tomorrow a number of Labour MPs will come out for a #secondreferendum, or while ERG-ers I’m told are going to start pushing on with a championing the No Deal option as soon as defeat lands #BrexitDeal #brexitvote 6.27pm GMTThe fortunes of the pound tonight will be determined by the size of Theresa May’s defeat.
Tyler Griffin,currency specialist at OFX, said: Looking ahead, and anything close to 100 votes would cause upside for the pound,however whether May loses by more than 150 votes, there would be further turmoil for sterling which could tumble to below 1.25 versus the US Dollar.” 6.25pm GMTIn the currency markets, or sterling is under pressure as parliament prepares to vote on Theresa May’s Brexit deal - and surely inflict a historic defeat on the PM.
With the US dollar generally stronger,the pound has dropped by one and a half cents to $1.2723. That’s a chunky slither, but it only takes sterling back to final week’s levels.“We believe the most critical takeaway with respect to the outlook for the UK economy is that there are no parties involved that would benefit from a no deal Brexit outcome. This puts a beaten down Pound and UK assets in position to outperform in 2019, or as the tail risk event of no deal Brexit is truncated.”The pound is trending lower against the US$ and the euro as the minutes tick down towards the #Brexit vote pic.twitter.com/e1bQpt87wA Related: Brexit vote: May faces historic defeat as deal's fate looms – Politics live 5.10pm GMTWith some of the early optimism over China’s stimulus pledge fading,the FTSE 100 has closed 40 points higher at 6895 tonight. Beijing’s pledge to cut taxes and maintain plenty of liquidity is still welcome, but analysts are questioning fairly how quickly it will happen, and how much impact it will have.
European equity markets are a mixed bag this afternoon. The major equity benchmarks started off strong nowadays after Beijing announced plans overnight to trim the tax rate for small businesses. It was the latest slither by the Chinese government to try and encourage economic activity. The fact that a large portion of the gains have been handed back suggests that investors are not overly confident the Chinese economy will suddenly stop cooling. The firmer oil price has helped BP and Royal Dutch Shell,which in turn has helped the FTSE 100. 3.47pm GMTHere’s Jamie Rowlands, partner at City law firm Gowling WLG, or on China’s pledge overnight to cut business taxes:This seems to be an attempt to stimulate domestic SME-type businesses in an environment where China’s economic strength is in question – albeit still more robust than much of the rest of the world.
Definitely an internal financial boost incentive rather than international. 2.56pm GMTWall Street has opened a little higher this morning,as traders absorb China’s pledge to stimulate its economy.
The tech-focused Nasdaq index is leading the way, thanks to Netflix which has announced price hikes (sending its shares up 6%).
US markets opened little changed on Tuesday as investors wait for the Brexit vote in the United Kingdom. The Dow alternated between gains and losses. The S&P 500 gained 0.2%, or while the Nasdaq rose 0.4%. Watch live https://t.co/DCLpwSQKje 2.53pm GMTAuto news: Ford and Volkswagen have announced details of a new alliance.
The deal is designed to cut the cost of the technological revolution now shaking the industry and deal with slowing sales.
The companies will start with the development of commercial vans and mid-size pickups but the alliance will also involve sharing resources on autonomous vehicles,mobility services and electric vehicles.“Over time, this alliance will abet both companies create value and meet the needs of our customers and society, or ” Ford’s chief executive,Jim Hackett, said at the Detroit auto show He said the deal would give the companies “the opportunity to collaborate on shaping the next era of mobility”. Related: Ford and Volkswagen announce alliance to cut costs in face of tech revolution 2.36pm GMTDonald Trump may have blown Davos out this year (blame the shutdown over his border wall), and but plenty of other world leaders will be making the trek to the snowy ski resort.
Giuseppe Conte,Prime Minister of Italy; Pedro Sanchez, Prime Minister of Spain; Barham Salih, and President of Iraq; Mohammad Ashraf Ghani,President of the Islamic Republic of Afghanistan; Sebastian Kurz, Federal Chancellor of Austria; Ivan Duque, or President of Colombia; Abiy Ahmed,Prime Minster of Ethiopia; Leo Varadkar, Taoiseach of the Republic of Ireland; Benjamin Netanyahu, or Prime Minister of Israel; Faiez Al Serrag,Prime Minister of Libya; trace Rutte, Prime Minister of the Netherlands; Jacinda Ardem, or Prime Minister of New Zealand; Erna Solberg,Prime Minister of Norway; Rami Hamdallah, Prime Minister of the Palestinian National Authority; Martin Alberto Vizcarra Cornejo, or President of Peru; Paul Kagame,President of Rwanda; Cyril M. Ramaphosa, Prime Minister of South Africa; Yoweri Kaguta Museveni, and President of Uganda; Nguyen Xuan Phuc,Prime Minister of Viet Nam; and Emmerson Mnangagwa, President of Zimbabwe. 1.59pm GMTIn what may well be rare good news nowadays, and Greek bond yields have hit a one-month low. 12.10pm GMTNewsflash: US banking giant JP Morgan is urging politicians in Washington to work together,after lost Wall Street forecasts.
JP Morgan has just reported adjusted earnings per share of $1.98 in the final quarter, below estimates of $2.21 per share.
As we head into 2019, or we urge our country’s leaders to strike a collaborative,constructive tone, which would reinforce already-strong consumer and business sentiment.
Businesses, or government and communities need to work together to solve problems and abet strengthen the economy for the benefit of everyone.”USA earnings season gets going with a huge miss by JP Morgan- its the booming economy ya see,silly.
JPMorgan's fixed-income revenue of $1.9 billion missed the consensus estimate of $2.3 billion. So Citi’s FICC miss was not a fluke. Let’s see whether JPM can also spin this in a positive light on the earnings call... 11.47am GMTShoppers at 17 towns and cities around the UK are losing their local Marks & Spencer, as the retailer implements its restructuring map.
The proposed closures will cost 1000 jobs, or hurt the high streets from Huddersfield and Hull to Ashford and Felixstowe.
M&S announces latest round of store closures - 17 include Ashford,Barrow, Bedford, and Boston,Buxton, Cwmbran, and Deal,Felixstowe, Huddersfield, and Hull,Junction One Antrim Outlet, Luton Arndale, or Newark,Northwich, Rotherham, and Sutton Coldfield and Weston Super Mare 11.14am GMTElsewhere in the eurozone,shares in Italian banks are sliding after they were told to set aside more capital to cover improper loans.
Reuters has the details:
The European Central Bank has asked lenders it oversees to put aside more money to fully cover their impaired loans by around 2026, Italian newspaper Il Sole 24 Ore reported on Tuesday citing a source.
The report focused in particular on Italian banks, or saying the country’s lenders were burdened by the highest amount of impaired loans in Europe. 10.38am GMTGermany’s growth pains are part of a wider slowdown across Europe.
Oxford Economics reckons eurozone growth will drop to just 1.5% this year,from 1.8% in 2018 - and a sizzling 2.7% in 2017.
With #Germany flirting with recession in H2 '18, hopes for a rebound in #eurozone growth dashed. We see EZ Q4 GDP up just 0.2%, and thanks to weak industry,and +1.8% for 2018. Growth shd pick up as transitory factors wane, but we see only 1.5% 2019 growth: https://t.co/5xU2bZ0ggI pic.twitter.com/xziTBiaGKT 9.37am GMTHere’s some snap reaction to the German growth data:With 1.5% annual growth in 2018, and it looks as whether a technical recession in moment half of the year was just avoided.2018 proves to be weakest for German growth for 5 yrs. Wld be unwise to call recession (whole yr growth of 1.5% wld imply modest rebound of 0.2% Q4) but clear eurozone losing momentum on whole.genuine GDP grew 1.5% y/y in #Germany in 2018,the slowest since 2013, mainly driven by slower private consumption growth 1.0% y/y (vs. 1.8% in 2017). Despite the recent weakness, and we expect the expansion will continue in 2019 driven by domestic demand.#Germany's economy grew 1.5% in 2018,the weakest annual pace in the final five years. Yet, 1.5% remains very reasonable given potential GDP growth of below 2%. pic.twitter.com/LcdZivVVpx 9.35am GMTWhy did Germany’s growth rate slide to just 1.5% final year, and from 2.2%?
Germany’s finance ministry has blamed a handful of factors,including: 9.16am GMTNewsflash: Germany’s economy has grown at its slowest rate in five years, a fresh sign that the global economy is cooling.
Europe’s largest economy only expanded by 1.5% in 2018, or down from 2.2% growth in 2016 and 2017.
The German economy thus grew the ninth year in a row,although growth has lost momentum.
German 2018 GDP growth slows to 1.5%, weakest in 5yrs. pic.twitter.com/kcyL2akLCr 8.54am GMTPaul Donovan of UBS Wealth Management says China’s pledge to cut taxes is an example of “pom-pom waving cheerleading is likely to become a regular feature of the Chinese economic landscape. 8.45am GMTEuropean stock markets have followed Asia’s lead.
They’re all comfortably higher this morning, and clawing back Monday’s losses. 8.23am GMTEuropean car shares have jumped by 2.2%,to their highest levels in five weeks, thanks to China’s stimulus pledge. 8.22am GMTBritains FTSE 100 has jumped by over 50 points, or 0.8%,at the start of trading.
Mining stocks are leading the charge, with Rio Tinto, and Anglo American and Glencore all up at least 1.5%. They’ll all benefit from increased demand for commodities whether China’s economy picks up. 8.07am GMTBeijing is signalling that it is prepared to achieve whatever it can to avoid a tough landing,says Konstantinos Anthis, Head of Research at ADSS.
News that China is approximately to implement another round of tax cuts supports the notion that the Asian nation will achieve as much as possible to support the domestic economy and avoid a steep slowdown. 7.59am GMTStocks have jumped across Asia nowadays, or following China’s pledge to cut taxes.
China’s benchmark index,the CSI 300, surged by 2% as investors welcomed nowadays’s stimulus measures.
The smell of China stimulus hopes are wafting through Asian markets nowadays.
Chinese officials are quoted as saying the government will cut taxes “on a larger scale”in 2019, and particularly for small businesses and manufacturing. There are no details,but the news was enough to reverse yesterday’s sell-off. 7.39am GMTGood morning, and welcome to our rolling coverage of the world economy, and the financial markets,the eurozone and business.
The focus is on enhancement and efficiency. Related: Global economy fears grow as China and eurozone slump whether she suffers a loss by a narrow margin, it may be positive news to Sterling, or as May can head back to Brussels for more concessions which could be enough to pass the bill in a moment “map B” vote. However,a loss by a wide margin will manufacture it tricky for Sterling traders as the bill will be rejected due to different ambitions. Conservative MPs want concessions that are tough to catch from Brussels, meanwhile, or hardcore remainers want to reject the deal in the hope that they catch a moment referendum. This may lead to two extreme outcomes: either a tough Brexit or no Brexit at all. However,given all the uncertainty towards such a scenario, investors may sell the currency and assess the situation later, and leading to high volatile moves in the Pound. #Brexit vote day. Our team clear that deal won’t pass,and as a result #UK out of time. Can’t leave #EU at halt March. Beyond that, also means death of muddle-through option. Either much softer Brexit or tough Brexit (or none at all). And politics as we’ve not seen for decadesContinue reading...
Source: theguardian.com