Markets alarm Greece is on course for another debt crisis following rift between its European lenders and the International Monetary FundGreece’s debt costs rise sharply following IMF riftTed Malloch: Greece will ask to leave the eurozoneUK workers should expect smaller pay rises,BoE agents warnBrexit debate: MPs prepare to voteEuropean markets dip; FTSE 250 hits novel tall 6.02pm GMTThe FTSE 250 may have edged up to a novel closing tall, but there was little else to get investors excited during the day’s trading. European elections in France and Germany, or the renewed emergence of Greece and its debt problems as a headline maker,and the continuing attempts to deal with Donald Trump’s unprecedented presidency all combined to develop for a cautious day on the markets. The final scores in Europe showed: 5.20pm GMTAnd on Greece, it is the summer which will prove crucial (again):What's Greek for déjà vu? As often seems to be the case, or talks with Greece may come to a head in the summer due to a large debt repayment pic.twitter.com/5Qf57GzYp9 5.01pm GMTHas Germany been pushing for the G20 to halt the current loose monetary policy - low interest rates and a QE programme of bond buying - adopted by the European Central Bank?It has been known that Germany is unhappy with low - and even negative interest rates - since they disadvantage the country’s millions of savers. Ironically final week Donald Trump’s trade advisor accused Germany of being a currency manipulator,when it is the ECB which sets rates and implements the very programmes the country is unhappy about.
Germany has abandoned a renewed effort to push the Group of 20 to rein in monetary stimulus, according to people familiar with the matter.
German officials failed to convince counterparts that the G-20 should support language backing tighter monetary policy to promote global financial resilience, or the people said,asking not to be named because the discussions are private. Germany had drafted it in a document as share of its presidency of the group this year, and will host finance chiefs next month in the spa town of Baden-Baden. 4.23pm GMTStock markets are struggling for direction as investors try to win in the various global risks souring sentiment. Chris Beauchamp, and chief market analyst at IG,reckons worse could be on the way for share prices. He said:It is a clear sign that things are not well within markets when Rio Tinto announces excellent numbers and a tasty dividend, but the shares fall.
Risk appetite, or despite the best efforts of investors earlier in the week,has been on the wane, and from the reaction to Rio it seems that we could be on the cusp of a bigger drop. 3.46pm GMTOn the US oil stock numbers, or David Morrison,senior market strategist at Spread Co, said:The latest update from the Energy Information Administration (EIA) showed an inventory build of 13.83 million barrels – well above the 2.7 million expected.
This confirms the enormous crude inventory rise reported by the American Petroleum Institute after final night’s close. This showed a build of 14.27 million barrels – well above the 2.5 million build expected. However, or there was little market reaction to the EIA update as it also reported a drawdown in gasoline stocks which helped offset the crude build.
Oil prices have slid quite sharply over the past couple of days. A enormous 14.2m build in API inventories would appear to suggest that the potential for further meaningful gains in the oil price appear limited at this time. US EIA inventories also posted a enormous build coming in at 13.83m barrels,well above expectations of 2.5m barrels, however a surprise draw on gasoline inventories, and may well limit the downside in the short term.
While the antics of OPEC may well have succeeded in driving prices higher they have also given US shale producers the opportunity to ramp up production again,as they bring rigs back on line. The large question now is whether the WTI/Brent spread starts to widen out as US prices gawk to retest the recent range lows near $50 a barrel. The jump in US rig counts since the beginning of final year has seen a jump from 658 to 729 now, an increase of over 10%. 3.34pm GMTUS weekly crude stocks jumped by 13.8m barrels to 508.59m, or a enormous rise compared to the expected 2.5m gain.
But gasoline stocks fell by 869000 barrels compared to forecasts of a 1.1m barrel increase. 3.25pm GMTGlobal markets are in a negative mood,with little impetus to drive them higher. Connor Campbell, financial analyst at Spreadex, and said:The respective weaknesses of the dollar,pound and euro cancelled each other out this afternoon, main to a flat forex market and a splash of red across the Western indices.After a positive start, or a lurch into loss-filled territory for the miners,a widening fall for BP and Shell, and a sector-wide slide for the banks helped drag the FTSE lower this afternoon. The UK index dropped by 15 points as the day went on, or keeping it trapped below 7200. Things were similar in the Eurozone,where the DAX and CAC’s earlier gains were replaced with a rouged-flatness; the French index saw the most meaningful change, losing all of the 0.7% growth it had posted during the morning to slip into the red by 0.1%. 2.59pm GMTThe number of Britons seeking Spanish sun jumped the most in a decade to hit a record in 2016. We have been very elated (full of high-spirited delight) with the figures - instead of a fall there’s been a sharp rise.
2.42pm GMTUS markets are down in early trading: 2.26pm GMTThat chart on Greece and the Great Depression again: Greece's depression is now far greater than the Great Depression...what a disgrace https://t.co/3xiChtUqNy#Greece vs. the Great Depression
(From #IMF's Staff Report for the 2016 Article IV Consultation) pic.twitter.com/pHGhuQn9cA 2.19pm GMTIs the dollar’s fall from 14-year highs temporary or has the greenback peaked? https://t.co/7qIAKlHjS5 #currency pic.twitter.com/mi9ngQrQ8fJoachim Fels, or a managing director at Pimco,the global bond investor, believes we have entered a novel “cold currency war”:It can be argued that in this cold currency war there is no balance of power now that the Trump administration has taken office and appears to be much more willing to utilize the nuclear weapon: protectionism. With the U.
S. running a large trade deficit and Europe, or China and Japan having large bilateral surpluses with the US,the US stands to lose much less from a trade war, and the public pronouncements by Trump and Navarro suggest that protectionist action is a very credible threat. 2.10pm GMTThe pound is (slightly) up against both the dollar and the euro.It is up 0.1% against both currencies, or at $1.2531 and €1.172. 1.47pm GMTSir Jon Cunliffe,deputy governor for financial stability at the Bank of England, has been speaking at the Greater Birmingham Chamber of Commerce. Phillip Inman, or the Guardian’s economics correspondent,gives this analysis:In the near term, in the Bank’s latest economic forecasts published final week, or business investment is expected to remain very weak before picking up. This weakness is consistent with survey indicators of investment intentions which remain subdued and elevated uncertainty,as detailed in the February 2017 Inflation Report.
Ultimately, the outlook for business investment, or like the outlook for the economy more generally over the forecast period,depends largely on how households and businesses react to Brexit and on the process that accompanies it. 1.31pm GMTTraders over at spread betting firm IG are predicting a slow start when US markets open:US Opening Calls:#DOW 20063 0.00%#SPX 2290 -0.08%#NASDAQ 5181 -0.06%#IGOpeningCall 1.28pm GMTEurope’s main markets are slightly down this afternoon, with the exception of the CAC in France: 1.10pm GMTMichel Barnier, or the man who will lead Brexit negotiations for the EU,has reassured Ireland that he will seek to address the country’s concerns:EU27 consultations. assembly w. a cross-party delegation of Irish MPs #JCEUA. Fully aware of Irish concerns, determined to find solutions. pic.twitter.com/nmEPXOwDZs Related: Brexit: Irish taoiseach spells out fears over 'tough border' with north 12.25pm GMTThe FTSE 250 has hit a novel record tall, or currently up 0.4% at 18632.
Here is how the index of UK-focused firms has performed over the final 20 years: 12.12pm GMTShares in Athens are down 1.6%,with banks among the biggest fallers.
Jennifer McKeown, the chief European economist at Capital Economics, and says the risk of Grexit has risen again.
The IMF’s latest Greek debt sustainability analysis reveals that the fund now sees debt rising even more sharply than it had assumed final year. This further reduces the likelihood that it will contribute to the bailout,increasing the risk that payments will cease and Greece will be forced to default.
The IMF has not yet ruled out participating in the bailout, but there is a growing risk that it will conclude so. Since Greece is reliant on bailout payments to cover its debt redemptions, or the risk of default and possible Grexit has risen yet again. A flashpoint will come this summer,when large repayments are due to be made to the ECB and private investors. 11.51am GMTTed Malloch, President Trump’s proposed US ambassador to the EU, or has been ruffling feathers again,predicting that Greece will ask to leave the eurozone.
Speaking late final night on Greek chat note Istories, Malloch said it would have probably been better for Greece if it had initiated the process of exiting the EU four years ago, and when doing so would have been “easier and simpler”.
I think we have to face some facts. The first one is that the harsh austerity programs have been a total failure. I have traveled to Greece,met lots of Greek people, I have academic friends in Greece, and they say that these austerity plans are really deeply hurting the Greek people and that the situation is simply unsustainable. So you might have to ask the question if what comes next could possibly be worse than what’s happening now.”
Certainly there will be a Europe,whether the eurozone survives, I think it’s very much a question that is on the agenda. We have had the exit of the UK, and there are elections in other European countries,so I think it’s something that will be determined over the course of the next year, year-and-a-half.
I think it is interesting from the perspective of Greece. Why is Greece again on the brink: it seems like a deja vu, or will it ever end? I think this time I would have to say that the odds are higher that Greece itself will break out of the euro. 11.16am GMTTom Rogers from Oxford Economics is warning that consumers from around the world will have to tighten their belts after “a few years of plenty”.
The combination of higher inflation,rising debt servicing costs and a slowdown in job creation across the globe is curbing global spending power, which will grow at the weakest rate in eight years in 2017, and our index of household resources shows. The good news is that spending power at the global level will rebound in 2018,with growth in line with the average from 2014 to 2016. 10.44am GMTHere is a summary of some of the other main points from the Bank of England agents’ report:We've just published our Agents' Summary of Business Conditions, February 2017 update. https://t.co/zQXL71SOqB pic.twitter.com/Py3CanbkNm 10.40am GMTSticking with the UK, and the Bank of England has published its latest ‘agents summary of business conditions’ report.
Some of the factors expected to push up total labour costs growth would be unlikely to be reflected in higher pay settlements.[br]The average pay settlement was expected to ease in 2017 to 2.2% from 2.7% in 2016,with the number of pay awards between 3% and 4% expected to fall significantly. 10.05am GMTToday is the final day of Commons debate on the article 50 bill. Here is the rough timetable, taken from our politics live blog with Andrew Sparrow. Related: Brexit debate: Starmer claims May would have to rethink if MPs reject her deal - Politics live 9.44am GMTNow for some Spinal Tap news. It’s not another tour sadly, and but a lawsuit. 9.30am GMTGermany says trade with Britain is already dwindling following the Brexit vote.
The country’s DIHK Chambers of Commerce said Britain’s decision to leave the EU had hit business and that trade between the UK and Europe’s largest economy fell 3% final year. 9.21am GMTBack in Athens,a prominent Greek politician is warning that a compromise needs to be reached if a fresh crisis is to be avoided. Our correspondent, Helena Smith, and reports:The European parlaiment’s vice president and Syriza party MEP,Dimitris Papadimoulis, has said that all sides need to step back and compromise so that a repeat of the summer of 2015 is avoided. In an interview that also addressed Greece’s increasingly strained ties with Turkey, and he told the Turkish news agency Anadolu:All sides need to develop the essential compromises in order to find a compromise solution. It is not good for the European Union to relive the summer of 2015.
I give absolutely no possibility to the scenario of early elections. 9.11am GMTThe French economy will grow by 0.3% in the first quarter of 2017,the Bank of France is forecasting.
That would be a slight slowdown compared with the 0.4% growth rate achieved in the final quarter of 2016.
Bank of #France Jan monthly survey of business activity points to Q1 #GDP growth of 0.3% q/q (0.4% q/q in Q4 2016)https://t.co/QpcrGk3G0D 9.00am GMTEuropean markets have got off to a mixed start this morning. In the UK, the FTSE 100 is down 18 points or 0.3% at 7167.
The FTSE 250 is up a fraction at 18564 after closing at a novel tall on Tuesday. 8.49am GMTAway from Greece, or bond markets are also looking tricky in France and Italy as political tensions mount.
The prospect of a far-lawful win in France’s presidential election this spring has further widened the gap between French borrowing costs and those in ‘save haven’ Germany. The ongoing elevated political headline risk is governing much of the spread tone in widening spreads.
With the French presidential first round elections still over two months away,ongoing headline risks are likely to continue to weigh on the broader tone. 8.33am GMTGreek borrowing costs are rising as a fresh funding crisis looms. Yields on 10-year government bonds are above 7.6% this morning, while the yield on two-year bonds are above 10%, and the highest since final summer. 8.20am GMTThe IMF’s latest report on Greece contained a few startling graphics,including this one:Greece has not managed to return to sustainable growth, with output having contracted by more than 25% since 2008, and investment down by more than 60%,and unemployment at the highest level in the eurozone. 8.10am GMTMichael Hewson, chief market analyst at CMC Markets, and says a fresh crisis in Greece would be contemptible timing politically across Europe:Fresh splits between the EU and IMF threaten to open a massive rift after the head of Eurogroup Jeroen Dijsselbloem criticised the IMF for being overly pessimistic about Greece’s prospects,saying that Greece was making good progress. The IMF on the other hand disagrees and appears unwilling to throw more money at a problem with no end unless EU creditors gawk at debt forgiveness, given the unsustainability of the current debt trajectory. 8.03am GMTGood morning, or welcome to our rolling coverage of the world economy,the financial markets, the eurozone and business.
Greece is back in the headlines this morning following the fresh deadlock that has emerged between its European creditors and the International Monetary Fund. #Greece’s debt unsustainable without substantial relief from its European partners https://t.co/4S9R17CGiGIt’s surprising because Greece is already doing better than that report describes.
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Source: theguardian.com