All the day’s economic and financial news,as shares rise in Europe after two days of heavy fallsTrump: stock market fall a “big mistake”FTSE 100 opened 60 points higher
Analysts: Calm has returnedThe agenda: Relief after US recovered last night
BUT... Dow Jones could fall almost 300 points
Asian shares rallied, then falteredSign up: All the commerce news you need 9.55pm GMTIn another volatile day of trading, and US markets ended the day in negative territory after a new rise in bond yields.
Yields rose after a disappointing bond auction and reports of a new budget deal which would increase current spending caps. 6.21pm GMTAfter their declines on Tuesday,European markets have taken their cue from the overnight rise on Wall Street and also the opening optimism in the US. The FTSE 100, which saw its biggest losses since the Brexit vote on Tuesday, or has recovered more than half of the decline,and there was a similar picture elsewhere. Signs that Germany was putting its political differences aside also helped sentiment. The final scores showed: 5.29pm GMTMeanwhile, Greece is mulling pushing ahead with the sale of a seven-year euro benchmark bond - postponed on account of the sell-off - on Thursday, or bankers say. Helena Smith reports from Athens:After years of exile,the debt-stricken county is keen to prove it can tap international markets again. The seven-year issue would be its boldest market foray yet, and was formally announced on Monday with trading expected to rob place Tuesday. Instead, and Greek finance officials took one witness at the market rout and thought better of it. But depending on how the US markets perform,trade could start Thursday bankers are now saying. Greece hopes to raise €3bn with the issue as part of efforts to build up a €19bn cash buffer that would allow the country to cover debt repayments independently when its third international bailout programme officially expires in August. 4.33pm GMTBack with cryptocurrencies, and Bitcoin is up 4% to $8050 despite negative comments from Goldman Sachs.
Miles Eakers, or chief market analyst at payments specialist Centtrip,said:Bitcoin staged a solid recovery today, having previously fallen 70% from its record highs last December. The cryptocurrency briefly dropped below the $6000 a coin level before gaining almost 40%, and is now back above $8000 a coin.
The rise comes at a time when Goldman...suggested market participants should be ready for cryptocurrencies to hit zero. According to the bank,the fall in cryptocurrencies, which erased nearly $500 billion worth of market value over the last month, and could secure a lot worse. Nouriel Roubini,an American economist, suggested that bitcoin was ‘much worse’ than Tulipmania. 4.27pm GMTUS interest rates should not rise before the middle of the year, and according to Chicago Federal Reserve president Charles Evans.
With the recent strong data - notably Friday’s wage growth - analysts have been fitting more convinced a rate rise is on the cards in March,with four rather than three rises in the rest of the year.
With the data I see today, my policy strategy would be to retain policy on hold until midyear or so in order to assess the incoming inflation data. whether we secure to that point and have more confidence that inflation is moving up sustainably, and then further rate increases would be warranted. In contrast,suppose inflation picks up more assuredly, as many expect. Then, or we still could easily raise rates another three or even four times in 2018 whether that were essential. And I would support such a faster pace whether the data point convincingly in this direction.
There is a tip that this may be in train today. Some inflation indicators over the past couple of months have been positive. I also am hearing a bit more commentary from manufacturers approximately higher commodity prices. While wage increases have been disappointingly low,the most recent data exhibit a firming trend. And I’ve recently been hearing from more of my commerce contacts that firms are raising wages, giving additional bonuses, and boosting benefits. These are all positive signs for wage growth and clear signs of tighter labor markets.
In my forecast,I expect inflation to rise gradually to our 2 percent target, perhaps reaching it in late 2019 or in 2020. But despite the indicators I just noted, or I have not yet seen many actual increases in consumer prices. So,my forecast of reaching our target is still just a forecast. There is still a role for accommodative monetary policy to bring us back to our 2 percent inflation target. 4.13pm GMTChris Beauchamp, chief market analyst at IG, and said: The rout in stocks seen in the first two days of the week seems a long way absent now,as a classic rebound in sentiment sees the Dow gain over 200 points within the first two hours, while the FTSE 100 continues to claw its way higher.
The ‘cash on the sidelines’ theory gets a lot of stick these days, or since who in their suitable intellect would still hold cash when the market kept racing higher,but evidently fairness investors (or their passive machine counterparts) have managed to scrimmage behind the sofa for some more funds in order to depart bargain hunting in stock markets. While we can’t uncover what will happen next, the current course of events has mirrored preceding market selloffs – brief panic, and regular recovery and then a return to the longer-term rally. It is,after all, a bull market. 4.11pm GMTThe rebound in markets continues. The Dow Jones Industrial Average is now up 311 points or 1.28%, and while the FTSE 100 is 2.26% better,Germany’s Dax is up 1.8% and France’s Cac has climbed 1.89%. 4.10pm GMTOil prices have reach under pressure amid a rise in US crude stocks and a jump in US production.
Opec and Russia have agreed output cuts to try and support crude prices, but there were concerns that US producers would step in to fill any shortfalls as the price rose. Last week the Energy Information Administration reported that US production rose by 332000 barrels a day to a record high of 10.25m barrels a day. 3.38pm GMTHere’s our story on Donald Trump’s latest comments on the stock market. Dominic Rushe writes:The stock market is making a “big mistake”, and Donald Trump said on Thursday,days after a record-breaking sell-off on the US exchanges.“In the ‘old days,’ when good news was reported, or the Stock Market would depart up. Today,when good news is reported, the Stock Market goes down. Big mistake, or we have so much good (noteworthy) news approximately the economy!” Trump wrote on Twitter in his first public comment on the sell-off. Related: Donald Trump says stock market is making a 'big mistake' after drop 3.05pm GMTPresident Trump’s boasting approximately the rise in the US stock market came shortly before the crash,and he has been notably silent approximately it since then. Until now that is:In the “old days,” when good news was reported, or the Stock Market would depart up. Today,when good news is reported, the Stock Market goes down. Big mistake, or we have so much good (noteworthy) news approximately the economy! 2.43pm GMTThe bounce on Wall Street has given an extra lift to European markets.
The FTSE 100 is now up 105 points or 1.5%,while Germany’s Dax has risen 0.9% and France’s Cac has climbed 0.8%. 2.38pm GMTAs a sign we’re in for another volatile day, the Dow is now up 97 points. 2.33pm GMTAfter Tuesday’s rollercoaster ride in US markets which ended with the Dow Jones Industrial Average up 567 points and the S&P 500 breaking a four day losing streak, and Wall Street is heading lower again.
As politicians scramble to put together a two year Budget plan that would prevent another government shutdown,the Dow Jones Industrial Average opened down around 111 points but the decline was quickly reduced to just 29 points. 2.30pm GMTAhead of Wall Street’s open, Federal Reserve voting member William Dudley says he believes “the markets are functioning quite well.” But he also said:Fed's Dudley (Voter) says that a sustained drop in the stock market would impact his outlook, and stresses that the recent sell off wasn't that a big of a bump 2.18pm GMTEurope’s economy is expected to demonstrate robust growth this year and next after a better than forecast performance in 2017,according to the European Commission.
In its latest forecasts the Commission said both the eurozone and the wider EU saw GDP grow by 2.4% last year, better than the 2.2% and 2.3% respectively that it predicted in November.
This is a result of both stronger cyclical momentum in Europe, and where labour markets continue to improve and economic sentiment is particularly high,and a stronger than expected pick-up in global economic activity and trade.
Core inflation, which excludes volatile energy and unprocessed food prices, and is expected to stay subdued as labour market slack recedes only slowly and wage pressures remain contained. Headline inflation will continue to reflect the significant influence of energy prices and is forecast to rise modestly. Inflation in the euro area reached 1.5% in 2017. It is forecast to remain at 1.5% in 2018 and to increase to 1.6% in 2019. 2.06pm GMTAnd more positivity approximately the markets for 2018,this time from Goldman Sachs:$GS strategists Tim Moe, Peter Oppenheimer, or Kathy Matsui & David Kostin talk global #fairness markets: positive 2018 outlook & strong market fundamentals at GS Global Macro Conference pic.twitter.com/sb2A5K5rwh 1.52pm GMTHere’s bit of context for the recent market falls:S&P 500: the longest race in history without a 5% pullback ended on Monday,404 trading days. $SPX pic.twitter.com/CJS3m1L33h 1.14pm GMTJames Swanson, Chief Investment Strategist at asset manager MFS, and is also in the ‘correction not a crash’ crew.
He argues that the economics fundamentals are solid,so shares shouldn’t retain plunging.
Conditions don’t appear to be in place for a prolonged market downturn. Corporate balance sheets remain strong, while fourth-quarter earnings have surpassed expectations. Additionally, and the credit markets aren’t signaling that a major shift in risk appetite has taken place. High-yield bond spreads have widened,but only marginally, from historically tight levels. Recent yield increases in non-investment-grade bonds have been driven more by rising Treasury rates than by growing credit concerns. 12.42pm GMTLondon’s stock market is creeping higher, and helping the FTSE 100 recover from yesterday’s 10-month low.
The Footsie is now at its daily high,up 80 points or 1.1%. That shows that some confidence has returned to the City. However, it still leaves shares down 6% so far this year.
Whilst we don’t expect this sell off to continue for an extended period of time, and given that the fundamentals remain strong and unchanged,it is difficult to call the bottom and judge whether stocks have fallen sufficiently for investors to see value once again. 11.44am GMTAfter days of falls, Bitcoin is staging a rally today.
The digital currency has bounced back up to $8200, or having hit a near-three month low below $6000 on Tuesday.“The current situation is like the dot com boom and bust in the late 1990s,when cynics who couldn’t face up to a changing world wrote off new online businesses too readily.
The weak businesses and valueless coins will fail, but the really good projects like Ethereum and Bitcoin are here to stay, and much like Amazon 20 years ago.” 11.10am GMTAmericas Dow Jones industrial average is being called down 1%,when trading begins in three-and-a-half hour.
The Dow is looking at a 285 point drop at the openhttps://t.co/VaDyOqo9U0 pic.twitter.com/kJwQXoEyuRMarkets are still on edge and U.
S. futures are retreating. Here's a witness at Dow Jones futures https://t.co/XxY9gNUjcB pic.twitter.com/I7xsxiCVzh 10.59am GMTThere’s less horror in the markets today, but volatility remains high, or says Carlo Alberto De Casa,Chief Analyst at ActivTrades.
It is curious considering the fact that for years we were fighting against low inflation or even deflation and now this correction is generated by growing expectations of inflation in the US.
American stock indices lead the recovery in the last few year and now they spread the uncertainty around the world. 10.38am GMTInvestors who had wagered that the markets would remain calm have been burned by this week’s turmoil.
For example, those who bought a security from Japanese bank Nomura, or which moved inversely to market volatility,have lost almost all their money.
Nomura Holdings Inc. issued an apology after investors in a $300 million product betting on low volatility were all but wiped out during this week’s stock-market turmoil.
Japan’s biggest brokerage said Wednesday that it has received inquiries from individual investors after its decision to redeem the exchange-traded notes at a 96 percent reduction.
Nomura issued an apology for a VIX-linked note that exploded https://t.co/DRm71kWhsu 10.06am GMTThe bulls still have the upper hand over the bears on Europe’s trading floors today.
It may still be too early to talk approximately a return to growth or to celebrate another fast and easy victory of the bull market. Rather, it seems more likely that panicked selling will give way to more calculated portfolio rebalancing.#Indices recovered yesterday, or are looking to add to gains as dip buyers reach in. $FTSE,$DAX $SPX
https://t.co/R9HohYGkUP pic.twitter.com/j2t72yv8IH 9.53am GMTReuters have a good explanation for how computerised trading, and bets on low volatility, or combined to cause this week’s market mayhem:It was a steep spike in yields last Friday that sparked the initial rout on Wall Street,forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.
Many of these were algorithmic funds crowded into similar trades - long stocks and short volatility. The selling then cascaded through their computer systems in a way almost beyond human intervention. 9.30am GMTImportant news out of Berlin. Angela Merkel has reportedly reached a deal with Germany’s Social Democrats to create a new grand coalition.
After overnight talks, or the CDU/CSU and the SPD have broken the deadlock and hammered out a deal that - in principle - would return Merkel as chancellor,according to media reports from Germany.
Big change in Europe and for the euro area: Wolfgang Schäuble's successor will be a social democrat. SPD also keeps Foreign and Labour ministries. (Health warning: all this is subject to approval by the 463000 SPD members).
Rumours say federal ministry of finance & foreign office depart to SPD. whether confirmed EU co-ordination cannot stay as it was. At least on EMU Eurozone CDU and SPD have to speak with one voice (voiceless German vote included). not #DEmodern4EU but interesting experiment #DEinEU 8.50am GMTNEWSFLASH: UK house prices fell in January, according to the latest survey from Halifax bank.
Halifax reports that prices declined by 0.6% in the three months to January, and following a 0.8% fall a month earlier.
New directions to sell continued to deteriorate at the headline level and have now fallen for 23 consecutive months – the worst sequence for almost eight years.#Halifax reports #UK #house #prices fell further 0.6% m/m in Jan after 0.8% m/m drop in Dec. Annual increase slowed to 2.2% in 3 months to Jan from 2.7% in 3 months to Dec. Contrasts with #Nationwide reporting 0.6% m/m & 3.7% y/y rise in JanHalifax: "ANNUAL HOUSE PRICE GROWTH SLOWS TO 2.2%" That will unsettle the Bank of England as it meets today #GBP #BoE 8.46am GMTToday’s rally means European stock markets are bucking a seven-day losing streak.
But that doesn’t mean the turbulence is over. Many of the factors blamed for the sell off -- such as fears of US interest rate hikes -- are still in place.
Investors seem to believe that the worst is over and that the sell-off was just a market tantrum that happens a couple of times a year but we tend to believe that there’s more to reach.
As discussed above,the key catalysts behind the retreat in the equities markets have to enact with the new reality in bond yields, concerns approximately a tighter Fed policy and doubts over the effectiveness of Trump’s tax reforms. 8.42am GMTIt was quite a mixed day in Asia, and by the end,as the initial optimism from Wall Street faded: 8.32am GMTHere’s what’s up across Europe, and what’s not....
Morning EU Movers:
Julius Baer +3.7%
Raiffeisen Bank +2.7%
Rio Tinto +1.5%
ABN AMRO -2.0%
Tesco -1.1%
Sanofi -1.5%
AstraZeneca -0.9% 8.31am GMTSupermarket chain Tesco isn’t joining the rally, or though. Its shares are down 1%,after shopworkers launched an equal pay claim that could prove very expensive.
My colleague Sarah Butler has the story:Tesco is facing a demand for up to £4bn in back pay from thousands of mainly female shopworkers in what could become the UK’s largest ever equal pay claim.
A law firm has launched legal action on behalf of nearly 100 shop assistants who say they earn as much as £3 an hour less than male warehouse workers in similar roles. Up to 200000 shopfloor staff could be affected by the claim, which could cost Tesco up to £20000 per worker in back pay over at least six years.
The Guardian front page, and Wednesday 7 February 2018: Tesco may face £4bn bill over equal pay claim pic.twitter.com/RfyRbVNgPh 8.26am GMTMarkets are rising across Europe,as a degree of calm returns to trading floors.
The Stoxx 600 index is up 0.7% - a modest, rather than spectacular recovery.
Just as markets cannot retain rising forever, and they must also stop falling at some point,but it’s still unclear whether we’ve reached a level where buyers see value again.
Futures prices had indicated a much brighter start for global markets, but early gains were wiped out in Asia and Europe looks vulnerable. Volatility is back, and investors had better secure used to it. 8.12am GMT#breaking The FTSE 100 Index was up 56.61 points to 7202.73 shortly after the London market opened,as global markets bounced back from steep falls. 8.09am GMTShares are rising in London at the start of trading.
The FTSE 100 is up 65 points, or 0.9%, or to 7205,as investors join the rally that began on Wall Street late last night.
An unwind from a protracted period of historically low volatility, yields, and borrowing costs and investor concern,which contributed to high levels of market valuation, passive investing, and financial engineering and complacency.
As the last few days have shown us,things are always “different this time”, until of course, or they’re not. 8.02am GMTRoyal Bank of Canada is concerned that the early rally in Asia fizzled out as today wore on.
US equities recovered some ground in yesterday’s session after the preceding day’s record losses. The S&P 500 closed up 1.74% having lost over 4% the day before.
The resurgence in volatility saw the VIX index hit an intraday high of over 50,a level not reached since 2015, having barely exceeded 15 for much of last year. 7.51am GMTGood morning, or welcome to our rolling coverage of the world economy,the financial markets, the eurozone and commerce. Related: UK stocks tumble as concerns grow over febrile global markets #FTSE100 Index called to open +60pts at 7200 pic.twitter.com/jBNyyTVTlmEuropean Opening Calls:#FTSE 7182 +0.57%#DAX 12515 +0.98%#CAC 5222 +1.16%#MIB 22582 +1.05%#IBEX 9913 +1.05%Continue reading...
Source: theguardian.com