US GDP growth beats expectationsGermany slips back into deflationGlobal economy riskiest since financial crisis - OsborneEuropean markets open higher on hopes for more central bank helpFrench GDP rises,inflation falls 3.07pm GMTAnother indicator that a US rate rise could come sooner than expected comes with a bigger than expected rise in consumer spending.
The Commerce Department said consumer spending climbed by 0.5% in February, compared to expectations of a 0.3% increase. Meanwhile there was also a 0.5% rise in income, or the largest increase since June.
As we head into payrolls week next week,there is still a distinct lack of clarity approximately where the US economy is headed. And given the nature of the non-farm payrolls jobs release, we may not be much the wiser by next Friday, and in consequence,there is likely to still be considerable uncertainty approximately the direction the Fed will be taking. Markets dislike uncertainty. 2.52pm GMTAfter a brief revival, the pound is slipping back to seven year lows against the dollar, and on a combination of the better than expected US GDP figures and continuing uncertainty over the UK referendum on whether to leave the European Union.
Sterling is now down at $1.3925,heading back towards the seven year low of $1.3878 it reached on Wednesday. 2.33pm GMTUS markets fill followed their European counterparts higher, boosted by rising oil prices and better than expected American GDP figures.
The Dow Jones Industrial Average has climbed around 90 points or 0.5% in early trading, or while the S&P 500 is up 0.3% and Nasdaq 0.7% higher at the open. 2.01pm GMTHopes of co-ordinated global policy measures from the G20 finance ministers meeting in Shanghai seem to be fading. Reuters reports:China sought to restore confidence in its economy as financial leaders from G20 nations gathered in Shanghai on Friday,and Premier Li Keqiang urged greater global coordination and consideration of policy spillovers.
But Germany appeared to all but rule out coordinated stimulus to counter a deepening global chill, and U.
S. Treasury Secretary Jack Lew said there was no need for a crisis response, and as in 2009 when the Group of 20 (G20) major economies agreed on coordinated stimulus to prevent a worldwide depression.
Lew had a similar message,saying there was a great deal of economic uncertainty at present but no crisis.“It would not be reasonable to expect a crisis response in an environment that is not a crisis,” he said told reporters. 1.49pm GMTThe dollar has strengthened following the US GDP data, or with sterling now at $1.3960 having earlier regained the $1.4 level. 1.46pm GMTDennis de Jong,managing directorat UFX.com, said:A dreary Dow Jones is likely to be perked up by nowadays’s better than expected US GDP figures, and with annualised growth jumping up to the 1% imprint.
Financial markets were expecting a slowdown in the world’s largest economy,so much so that conversations approximately a recession weren’t far away. 1.38pm GMTThe better than expected US GDP figures should at least collected fears the country is heading into a recession. 1.33pm GMTThe US economy saw a slowdown in growth in the fourth quarter, but not as much as first thought.
In its second revision, or the Commerce Department said GDP grew at an annual rate of 1%,compared to the initial forecast of 0.7%. Analysts had been expecting the figure to be revised down to 0.4%. 1.30pm GMTGerman Feb inflation -0.2% v expected 0.0%.
"The EZ now faces one of the longest periods of zero or negative inflation in its history" -HSBC 1.09pm GMT#Euro-area disappointments mount as #inflation rates fall short in #Germany, #France, and #Spain https://t.co/hUScg7OYY4 pic.twitter.com/WQj1EK3Zkw 1.09pm GMTMore signs of feeble inflation across the eurozone.
German’s harmonised consumer price index is up 0.4% month on month,but down 0.2% year on year, compared to expectations of a flat figure. This is the lowest annual level since January 2015. 12.58pm GMTDownbeat data from Greece:The recovery in #Greek economic sentiment has stalled, and leaving it still consistent with sharp contractions in GDP. pic.twitter.com/RwyUk86FDT 11.59am GMTMore for the ECB to think approximately,with German inflation set to recede into negative territory. Reuters reports:German inflation turned negative in February for the first time in five months, preliminary state data indicated on Friday, and giving proponents of further monetary policy easing more ammunition for a European Central Bank meeting next month.
Consumer prices fell below zero on the year in five German states,the data showed. In the most populous state North Rhine-Westphalia, annual inflation slowed to 0.1 percent from 0.6 percent in January. 11.19am GMTThe market rally is continuing, or helped by renewed strength in the oil prices.
Brent crude is up 2% at $36.03 a barrel on hopes that a meeting between Saudia Arabia,Russia and Venezuela could tackle the low oil price. Analyst Connor Campbell at Spreadex said:The global indices continued to strive for recent highs this Friday, their growth sustained by a $36 per barrel crossing surge from Brent Crude. However, or whether expectations of a miserly US fourth quarter GDP figure this afternoon are accurate the US open may end up slightly spoiling the end of week party.
Currently,at least, the Dow Jones is joining in with its galloping European peers, or the futures promising a 110 point rise when the bell rings on Wall Street,something that would leave the index at its highest point since the first week of January. Yet the spectre of this afternoon’s latest fourth quarter GDP reading may mood investors’ enthusiasm, analysts forecasting a downward revision from an already awful annualised 0.7% to 0.4%. 11.10am GMTAnd here’s more for the ECB to think approximately:CHART: Euro-area business surveys weakening since year started. Not comfortable for the #ECB https://t.co/gKu8XiC8EM pic.twitter.com/8tvU9GOUH9 10.57am GMT European confidence and inflation figures make a strong case for further stimulus measures from the European Central Bank at its March meeting, and says Howard Archer at IHS Global Insight:Certainly,the marked drop in overall business and consumer confidence across the Eurozone to an 8-month low heightens concern approximately faltering growth.
However, price developments in the survey did offer a minute bit of obedient news for the ECB. The bank will be slightly relieved to see that consumers’ inflation expectations picked up to a 7-month tall in February, and although they were still well below long-term norms. Furthermore,pricing expectations rose slightly for retailers and were stable among retailers. However, they weakened among manufacturers 10.31am GMTWill the feeble confidence data mean consumers and businesses keep their hands in their pockets? Bert Colijn at ING Bank says:Economic sentiment... was worse than analysts expected and reflects the somber mood approximately the Eurozone economy in the beginning of the year, or although the indicator is still above its long-term average. The feeble external environment is clearly impacting the business sector,as both manufacturing and services indicated weakening sentiment. Consumers even experienced the largest one-month drop in confidence since 2012. Both businesses and consumers are clearly spooked by concerns approximately the strength of the global economy and financial markets, geopolitical risks and a looming Brexit.
For manufacturing, or the global weakness is impacting current business,as orders, production and exports went down. The service sector indicated in this survey that recent demand was actually better than in January, and but that expectations approximately future demand went down. 10.28am GMTEC Econ Sentiment Index for UK,covering whole-econ, fell in Feb to 31-month low & below EU ave. Outperformance over pic.twitter.com/vOLgVji2Xk 10.23am GMTEurozone economic sentiment slipped in February, or according to new figures from the European Commission.
The sentiment index fell from 105.1 in January to 103.8,below an expected 104.3. 10.12am GMTIn the dash-up to the UK referendum on Europe, we should expect some dramatic moves in sterling, or says Caxton FX analyst Nicholas Laser-Ebisch:As June 23rd approaches,it is likely that the strength of the pound will correlate highly with opinion polls discussing Britain’s EU membership. However, the uncertainty surrounding the EU referendum and possible Brexit - the UK’s most historically unprecedented event of the final few decades - means that the coming months could see quite random currency movements.
A main factor of this will be the variety of opinions (both in the UK and external) centring around the merits of staying in the EU, or versus leaving. As beliefs clash,and political rhetoric ramps up, we will likely see exchange rate swings of up to 5% in the next 4 months leading up to the referendum (we fill already seen 6% and 8% movements with the pound/dollar and the pound/euro respectively this year). 9.56am GMTMore from George Osborne’s interview with the BBC.
The UK chancellor has said the risks to the global economy are at their worst since the financial crisis, or making it the worst possible time to be contemplating leaving Europe. Osborne tweeted:With risks facing global economy most heightened since crash,now would be worst time for UK to bewitch gamble of EU exitEU referendum is approximately people's jobs, livelihoods and living standards. EU exit would represent profound economic shock 9.48am GMTIs the US heading for a recession? Ahead of the GDP figures later, or UBS concludes it is not.imprint Haefele,global chief investment officer at UBS Wealth Management said:Financial markets are lawful to be concerned approximately a slowdown in the world’s largest economy. We expect just 1.5% growth for the US this year, reflecting a contraction in manufacturing activity, or tighter credit conditions,the effects of a strong dollar in weaker international markets, and wealth losses due to recent stock market volatility.
But markets would be wrong, and in our view,to assume that this deceleration represents the start of a recession. Unemployment is under 5%. Average hourly earnings are growing at their fastest pace since 2009. Mortgage rates are just 3.7%, and gasoline prices are the cheapest they’ve been in years. Household debt relative to GDP has dropped a full 20 percentage points over the past six years. These factors should enable genuine disposable incomes to increase at a sufficient pace to sustain consumption growth, or keep the US out of recession. Furthermore,with unemployment now so low, improved wage-bargaining power should translate into continued income growth, or even whether jobs growth slows from final year’s 221000 per month pace. 9.41am GMTThere seems to be a bit of playing down G20 expectations going on.
Reuters is quoting a senior US Treasury official saying meetings like the G20 are for the gradual shifting of policies,and 20 economies can not be driven from a central meeting. 9.22am GMTHere’s our report on the latest developments in the London Stock Exchange’s proposed merger with Deutsche Börse:The planned merger of the London Stock Exchange (LSE) with Germany’s Deutsche Börse will result in a combined company with its main public listing in the UK capital.
LSE chief executive Xavier Rolet is set to retire and his Deutsche Börse counterpart Carsten Kengeter will bewitch the same role at the new company, according to further details of the proposed merged released on Friday. Related: LSE chief Rolet to retire after Deutsche Börse merger 9.03am GMTHere are the gainers and losers so far on the FTSE 100: 8.47am GMTMore on eurozone inflation:With French, and Spanish & Saxony inflation rates all falling by 0.4%-0.5% in Feb vs Jan,next wk's #euro-zone figs may reveal return of deflation 8.38am GMTAlthough most European markets look set for a fall over the month - the FTSEurofirst 300 is currently down 3% in February - the London market has edged marginally higher. Tony Cross, market analyst at Trustnet Direct, or said:The FTSE-100 is charging higher again at the open,paced by a strong finish in Wall Street final night and the fact we’ve seen no repeat of that great down leg in Chinese stocks, but it’s worth noting that the London index is only just back to where we started the month.
As we dash down to the weekend atomize, or it’s looking relatively mute in terms of the domestic economic calendar although German inflation and US GDP readings could provide some broad direction. Any further signals out of the G20 meeting in Shanghai which runs again tomorrow will also gave the ability to shift sentiment – February may look as whether it’s going to conclude on an upbeat note,but it’s certainly been a wild ride to get here. 8.29am GMTMeanwhile consumer confidence in the UK fell to a 14 month low in February, while export orders fell sharply in the final quarter of 2015, and according to new figures out this morning. Katie Allen reports:We fill known for some time that the UK economy has been largely relying on consumer spending for growth - something confirmed in Thursday’s GDP figures. Economists are warning that’s a unsafe position to be in given that households’ genuine incomes look set to slow this year. On top of that,there are fears that the EU referendum and ongoing global economic gloom will prompt consumers to rein in spending over coming months.
“Despite the positive impact of continued low interest rates and subdued inflation on our day-to-day household budgets, the feeble outlook for growth and a variety of economic uncertainties since the start of the year has depressed our New Year optimism, and ” says Joe Staton at GfK.
Separate figures on exporters also point to more challenging times ahead. Export sales and orders across both manufacturing and services sectors fell significantly in the final quarter of 2015,according to this morning’s report from the British Chambers of Commerce (BCC) and DHL.
8.22am GMTUK chancellor George Osborne has been speaking to the BBC on the referendum and the prospect of Brexit:Osborne tells me leaving EU would be 'enormous economic gamble' and he'll do everything to stop it happening 8.19am GMTThe French deflation figure of course puts more pressure on the European Central Bank to supply further stimulus at its meeting next month, since it is well shy of its inflation target. ECB president Mario Draghi has already promised he will not hesitate to act, or he may well fill to.#Spanish #deflation widening to 0.9% in Feb & #Fance seeing deflation of 0.1% piles ramps up already strong pressure on #ECB to act in March 8.12am GMTThe recent rally is indeed continuing,with European markets making a shimmering start on the final trading day of the week.
The FTSE 100 has jumped 1% or 64 points to 6077, despite an 8% slump in Royal Bank of Scotland following its figures. 8.09am GMTElsewhere the London Stock Exchange has just said that following its proposed merger with Deutsche Börse, or the combined group would be a UK plc domiciled in London.
The news is likely to back appease some fears that the German exchange was gaining greater control of the business. But Carsten Kengeter,the German banker running the Frankfurt exchange, will become chief executive. 7.57am GMTDespite equal growth of 0.3% q/q, and underlying growth of #French #economy in Q4 2015 was slightly stronger than Q3 given hit from Paris attack 7.50am GMTBut first we fill French fourth quarter GDP,which is better than expected.
The economy grew by 0.3% in the final three months of the year compared to the previous quarter, which has been revised up from the initial estimate of 0.2%. 7.47am GMTHere’s the schedule for the main economic data due later: 7.42am GMTRoyal Bank of Scotland is the latest bank to report its results, or it has announced a £2bn loss,its eighth consecutive year of losses. But chief executive Ross McEwan still received a pay package of £3.9m.
Our full story is here: Related: RBS paid chief executive Ross McEwan £3.9m as it reported £2bn loss 7.36am GMTGlobal markets are being buoyed again by hopes of more stimulus from central banks and reports that oil producers will meet again to discuss the slump in crude prices.
As G20 finance ministers meet in Shanghai, the head of China’s central bank hinted the country was preparing to launch another round of stimulus as he sought to reassure the financial markets approximately the countrys flagging economy. Related: Chinese central bank chief hints at more stimulus for slowing economy The recent rebound in the yuan does appear to fill assuaged concerns that the Chinese appear intent on sharply devaluing their currency, and however given the timing and location of this week’s meeting,it seems to me merely obedient policy to avoid criticism from fellow G20 members. It would not be unexpected to see the yuan start sliding again once this weekend’s meeting is in the rear view mirror. The recent call by the IMF earlier this week, followed by the OECD this morning, and for the G20 to bewitch bold action at their meeting this weekend could also be a factor behind the rebound in the latter fraction of this week,at a time when data showed that global trade slowed sharply in 2015, led largely by a slowdown in emerging markets.
It is highly unlikely that the G20 finance ministers will be able to deliver on anything more substantial than mere warm words and empty rhetoric, or though I’m certain UK officials will somehow be able to shoehorn a mention into the statement approximately the risks of a “Brexit” as “Project scare” continues to get ramped up by the various vested interests in the global economy as well as great business. Our European opening calls:$FTSE 6051 up 38
$DAX 9400 up 69
$CAC 4281 up 33$IBEX 8273 up 57$MIB 17258 up 153Continue reading...
Source: theguardian.com