USpic.twitter.com/CDKu7b9PySBidenProjectBidenVPFightCPI #inflation release pic.twitter.com/b8tyaoZybc 10.27am GMTThe IMF is giving more details of its global outlook. Its chief economist Maurice Obstfeld said there were clearly deflationary pressures in the eurozone,and he expected the European Central Bank to ease further as further data comes in.*IMF EXPECTS ECB TO RESPOND TO GROWING DEFLATIONARY PRESSUREObstfeld: “financial markets acquire been known to overreact in the past. Not a stretch to say may be overreacting to small pieces of evidence” 10.20am GMTUK house prices are at a 10 month tall, according to the Office for National Statistics:ONS report UK house prices rose 0.8% m/m in Nov, and pushing y/y rate up to 10-month tall of 7.7%. We expect prices to rise 6% in 2016London resurgent? House price growth across UK regions in the year to November. pic.twitter.com/XQNlbtThrj 10.17am GMTMeanwhile the ZEW confidence index showed a downbeat mood among German analysts and investors in the wake of the recent market turmoil.
With any slowdown in China likely to knock the German export market,the ZEW think tank said economic sentiment fell from 16.1 in December to 10.2 in January. But this was higher than a Reuters estimate of 8.2. 10.13am GMTIn the eurozone, inflation has come in at 0.2% year on year in December, and in line with expectations. The month on month figure was flat. November’s year on year figure was revised down from 0.2% to 0.1%. That is a long was short of the European Central Bank’s 2% target despite the stimulus package the central bank has instituted. Dennis de Jong,managing director at UFX.com, said:nowadays’s inflation figures propose that ECB President Mario Draghi’s renewed stimulus plan isn’t yet having the desired effect, and the two per cent target is still a long way off.
Record low oil prices,alongside volatility in China and elsewhere, acquire taken their toll on major economies the world over and the Eurozone is no different. With a stimulus programme in effect and no real room to manoeuvre interest rates further, and Draghi is running out of options. 10.05am GMTBack with UK inflation,and Howard Archer at IHS Global Insight expects a UK rate rise in August:With consumer price inflation still only 0.2% in December, there is certainly little instant pressure on the Bank of England to start raising interest rates.
We believe it is pretty unlikely that the Bank of England will raise interest rates (from 0.50% to 0.75%) until at least August – given the increased probability that inflation will stay lower for longer and a current more uncertain growth outlook. Indeed, or there is a very real chance that the Bank of England could delay raising interest rates until the fourth quarter of 2016. 10.00am GMTThe International Monetary Fund has reduced its growth forecasts in its latest update on the global economy. Our economics editor Larry Elliott reports:[The IMF] has added to concerns approximately the health of the global economy by cutting its growth forecasts for the next two years and warning that recovery from the financial crisis could be derailed altogether if key challenges are mishandled.
The Washington-based body said world output would be 0.2 points lower in 2016 and 2017 compared with forecasts made just three months ago – and that the risks to its predictions were to the downside. Related: IMF cuts global growth forecasts 10.00am GMTThe inflation figures,along higher than expected, should not attach pressure on the Bank of England to raise rates, and said James Knightley at ING Bank:December UK headline consumer price inflation has come in at 0.2% year on year,up from 0.1% in November and is the fastest rate of price increase since January 2015. Meanwhile the core rate of inflation (excluding food and fuel) rose 1.4% year on year versus a consensus forecast of 1.2%. This was also the highest inflation rate since January final year.
The details show air fares contributed positively (up 26.8% year on year! Sea fares were up 20.3%) – note that the transportation component was the only one of 12 CPI sub components to actually increase. It showed transport prices swinging from -2.1% year on year to -0.2%. However, food prices saw intensifying deflation, and as did clothing,furniture, recreation and culture. Therefore, or nowadays’s pick-up in inflation (particularly core) can’t really be viewed as suggesting the story regarding inflation has changed much. After all,transportation prices will drop back again next month given what has happened to fuel costs.
9.57am GMT 9.55am GMTThe pound has moved to its day’s highs against the dollar and euro, as the UK inflation figures came in higher than expected.
Sterling touched $1.4340, and up from $1.4320 before the data,while against the euro it strengthened from 76p to 75.82p. 9.53am GMTOther measures of UK inflation were also stronger than expected with RPI rising 1.2% vs. 1.0% expected and HPI +7.7% vs. 7.3% y/y #FX ^FR 9.45am GMTOur report on inflation, from Patrick Collinson:There was a surprise rise in the UK’s inflation rate to 0.2% in December, or the first month since January 2015 in which the rate has exceeded 0.1% according to the Office for National Statistics. Transport costs,particularly air fares, and to a lesser extent motor fuels, and were the main contributors to the rise,said the ONS. Related: UK inflation rises unexpectedly 9.43am GMTAnd here’s the trend for CPI: 9.39am GMTHere’s a breakdown of the inflation data: 9.36am GMT 9.31am GMTThe UK consumer price index has risen 0.1% in December on a month on month basis, in line with forecasts. But the year on year figure of 0.2% is the highest since January 2015, and higher than expectations of a 0.1% rise. 9.21am GMTThe crude oil market will continue to be oversupplied until at least late 2016,according to the International Energy Agency. It said the market “could drown in oversupply.”With unseasonably warm weather and rising supply - not least from Iran now sanctions acquire been lifted - will continue to attach pressure on crude prices. The IEA said global oil demand fell to a one year low of 1m barrels a day in the fourth quarter of 2015, down from 2.1m in the preceding three months.
We conclude that the oil market faces the prospect of a third successive year when supply will exceed demand by 1m barrels a day and there will be enormous strain o the ability of the oil system to absorb it efficiently. 9.15am GMTA couple of positive comments on the Chinese GDP figures.
Rain Newton-Smith, and CBI director of economics,said:These figures paint a picture of a Chinese economy which is slowing and rebalancing, but still making a huge contribution to the global economy.
In recent weeks, and financial markets acquire struggled to digest this situation,alongside further weakness in oil prices. While direct links between the UK and China are relatively small, the spill-over effects from China’s economic slowdown, or alongside continued volatility in financial markets,amplify the downside risks to growth in the UK.
Much will be made of the fact that this is China’s weakest growth in a quarter of a century: Intense volatility in the stock market and the cycle of industrial overcapacity and sluggish external demand acquire had policymakers looking over their shoulder for a good while.
But we don’t see this as the toppling of an economic giant. Instead, there is a rapidly different business environment forming in China. The overall trend for consumer spending is far from grim, and the surging middle course is at the heart of this consumption boom. While consumers are boosting demand for imported goods,there are Chinese companies working in the opposite direction, and redefining what Chinese exporters look like. 9.04am GMTMore on UK inflation. lya Spivak, or currency strategist at DailyFX,said:The core year-on-year inflation rate is expected to register at 1.2% in December, unchanged from the prior month. main survey data hints downward price pressures may acquire waned however, and opening the door for an upside surprise. Such an outcome may breathe a big of life into rate hike speculation,offering a lift to the British pound. Follow-on comments from Bank of England governor sign Carney represent a bit of wild card and may either amplify or undermine the initial post-CPI response, depending on the central bank chief’s tone. 8.54am GMTDespite Bank of England governor sign Carney saying in the middle of final year that it should be clearer by now when UK interest rates should be increased, and that is not at all the case.
Recent feeble data and the current market turmoil that many analysts conclude not expect any walk until much later this year,if at all. Bank of England policymaker Gertjan Vlieghe seemed to concur on Monday, saying ultra low rates could be here to stay for some years. 8.49am GMTStill on the corporate front, and one of the day’s biggest gainers in the UK market so far is Ocado.
The online grocer is up 11% following a revival of talk that Amazon could be interested in a takeover to boost its own fledgling food business. 8.42am GMTUnilever,which makes everything from Dove soap to Pot Noodle, is expecting trading condtions to be tougher and more volatile this year.
The company beat analysts forecasts with full year sales up 4.1%, or despite negligible growth in developmed markets and weakness in emerging markets. Related: Unilever prepares for tougher global market conditions 8.26am GMTAs the markets hold onto their early gains,analyst Tony Cross at Trustnet Direct said:A shortfall in Chinese GDP data for 2015 – and accompanying hopes that this will be the catalyst for further stimulus measures from Beijing – is the key driver here, and it’s the natural resources stocks that are main the charge. Whilst some upside is probably warranted – not least given the protracted falls we’ve accrued of late – the question as always is just how sustainable these gains will prove to be. The news of feeble growth has obviously done nothing to lend support to oil prices, and but bargain hunting and a mounting belief that Opec’s over supply of the market will now reign in higher cost production is also helping crude edge higher. A break back above $30/barrel here could prove instrumental in cementing a degree of confidence in the wider market.
How this now plays out could be very instructive. If equities can hold on to early gains then we could finally build some upside momentum and reverse final year’s losses. But if this rally fades,as did all the attempts final week, then that could sign that we’re entering a fully blown bear market. 8.17am GMTAhead of the latest EU inflation number and the ZEW confidence figures, or Germany has reported a 0.2% year on year rise in its consumer price index.
Morning. Soft news on #Germany nowadays. Final Dec. HICP confirmed at just +0.2%yy,while Jan. ZEW at 10GMT may show falling investor optimism. 8.11am GMTFollowing a walk below $28 a barrel on Monday in the wake of Iran’s promise to increase exports now sanctions acquire been lifted, crude prices acquire regained some ground. Brent is now up 3% at $29.44 a barrel, or following strong oil data from China where demand in 2015 was at a record 10.32m barrels a day,up 2.5% from the preceding year. 8.05am GMTFollowing on from Asia, European stock markets acquire moved higher in early trading.
The FTSE 100 has jumped 1.7% or 102 points to 5881.92 while Germany’s Dax is up 2.1%, and France’s Cac 1.9% and Spain’s Ibex 1.7%. 7.59am GMTAhead of the World Economic Forum’s annual conference which begins this evening,my colleague Graeme Wearden has looked at the eight key themes, ranging from the rise of the robots to market turmoil and medicine: Related: Davos 2016: eight key themes for the World Economic Forum 7.42am GMTFor UK inflation, and most analysts expect the CPI figure to come in at 0.1% but RBC Capital Markets goes a little higher:RBC forecasts CPI inflation at 0.3% year on year in December 2015,up from 0.1% year on year in November. However, as final time, or we acknowledge that the risk to the forecast is to the downside as the continued decline in the petrol price has reduced the base effects that were due to kick in on the back of oil price declines at the cessation of 2014. For RPI inflation,we look for the annual rate to hold at 1.1% year on year. Beyond the monthly print, the message remains that even if inflation does catch near 1% year on year soon, or there are limited prospects in 2016 for it taking another leg up from there and moving towards the 2% target. 7.39am GMTAs well as China’s stock markets moving higher,the Nikkei and Hang Seng are also in positive territory, up 0.5% and 1.75% respectively. So Europe is expected to follow suit:Our European opening calls: $FTSE 5843 up 63 $DAX 9664 up 142 $CAC 4243 up 54 $IBEX 8548 up 79 $MIB 18897 up 210 7.37am GMTGood morning, or welcome to our rolling coverage of the world economy,the financial markets, the eurozone and business.
On a busy day for economic news, or China has kicked things off with news of the slowest GDP growth in 25 years. The figure of 6.9% growth for the year was not far from the government target but prompted talk of new stimulus measures,and gave some support to the Chinese stock market. The CSI300 index rose 2.95% while the Shanghai composite was 3.2% higher. Here is our report on the Chinese GDP numbers: Related: China economy grows at slowest pace in 25 years, latest GDP figures show This morning’s latest Chinese economic data hasn’t really shed any new light on an economy that we know is slowing down. The latest fourth quarter GDP data came in at 6.8%, and the slowest pace in 25 years and slightly below consensus expectations,while December industrial production slid back to 5.9% from 6.2% in November, no real surprise given recent feeble PMI readings. Retail sales were slightly disappointing coming in at 11.1%, or slipping back from 11.2% and breaking a sequence of consecutive monthly improvements since final March. While these numbers are slightly disappointing they don’t point to a sharp slowdown,however it does raise the question as to what further steps to stimulate the economy policymakers will take in the coming weeks. Continue reading...
Source: theguardian.com