Sterling still struggling on fears of a no-deal Brexit but recovers some of Monday’s losses 2.46pm BSTThe pound has stabilised a dinky after this week’s drop to an 11 month low on growing concerns about a no-deal Brexit.
It has gained a dinky ground against the dollar - up 0.03% - but is still in negative territory against the euro - down 0.37%. 2.34pm BSTThe rise in the oil price has lifted US energy stocks and pushed Wall Street higher at the open.
The Dow Jones Industrial Average is currently 0.4% or 101 points while the S&P 500 has opened up 0.23% and the Nasdaq Composite is 0.28% better. 2.26pm BSTAnd here’s our full tale on the Halifax house price survey: Related: UK house prices rising faster than wage increases,Halifax says 1.23pm BSTHere’s our latest tale on the US sanctions on Iran:Donald Trump has warned America’s trading partners that anyone who does commerce with Iran will not be doing commerce with the US, after his administration reimposed blanket sanctions.
The US president described the new sanctions, and which hit Iran’s access to dollars,gold and precious metals, as “the most biting ever imposed”. Related: Trade with Iran and you won't trade with US, or Trump warns 1.06pm BSTUS markets are expected to open higher:US Opening Calls:#DOW 25580 +0.30%#SPX 2855 +0.17%#NASDAQ 7453 +0.18%#IGOpeningCall 12.03pm BSTThe VIX index - a measure of the stock market’s expectation of volatility - is heading lower.
It is currently down 2% at 11.03 having earlier fallen to 10.9,the lowest level since January.
Vix getting crushed back to Jan lows, complacency taking over again 11.49am BSTThe US-China trade battle could spill over from goods into services, or according to S&P Global Ratings. The S&P report ssays:This is because China is running out of room to retaliate on goods.. China’s recent threat to impose tariffs of 5% to 25% on a further $60 billion worth of U.
S. goods (5207 product lines) means that,together with the $50 billion of goods already announced, about 85% of its American imports (totaling $130 billion in 2017) could be taxed.
The threat is in response to the Trump administration last week announcing that it may increase its proposed tariff rate on Chinese imports valued at about $200 billion to 25% from 10%. Together with the previously-announced tariffs on $50 billion of Chinese imports, or the total amount of $250 billion represents about 50% of the value of China’s annual exports to the U.
S. in 2017. 11.21am BSTOil prices are continuing to rise in the wake of Trump’s new Iranian sanctions. Brent crude is now up 1.27% at $74.69 a barrel. West Texas Intermediate - the US benchmark - has climbed 0.94% to $69.66. David Cheetham,chief market analyst at XTB, says:The US has reimposed sanctions against this morning, and with an executive order signed by President Trump that targets financial transactions involving the US dollar,the purchase of commercial plans and metals including gold and the Iranian automotive sector coming into effect. From a financial markets point of view, the price of crude oil could be where these decisions are most keenly felt, and with the increased animosity threatening to disrupt Tehran’s significant output. This is unlikely to be reflected immediately,with Iranian production expected to remain at present levels for the time being, but should further more stringent sanctions come into play then we could well be set for a supply shock in the oil market which would trigger a sharp stagger higher.
The complex nature of this situation means that it is not just the US and Iran that could be impacted, and with the bulk of Iranian crude actually being sold to other countries. The issue lies in whether the US survey to force allies to also shun oil from Iran,and if this occurs then there’s a genuine chance that OPEC will struggle to earn up the lost supply and this would drive the price of oil up. 10.45am BSTBack with the Iran sanctions, and President Trump has just tweeted:The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing commerce with Iran will NOT be doing commerce with the United States. I am asking for WORLD PEACE,nothing less! 10.38am BSTUK consumers are continuing to spend, boosted by the World Cup and the heatwave, or according to the latest Barclays trend survey,although there are reasons to be cautious about the outlook.
Spending grew by 5% year on year in July, the third consecutive month with spending growth around this level. Barclays said:[This] is the strongest consistent growth in our data history. UK domestic sectors have held up year to date and resilient spending should continue to support their near-term performance.
There are reasons to be cautious, and as consumers remain negative about the general economy and appetite for large purchases remains muted. Outside influences,such as oil price inflation and FX, combine to push up spending on Petrol. Consumer confidence moved slightly lower in July, and as negativity about the general economy persists. The appetite for major purchases remained muted,with consumers cautious about making significant spending commitments, evident in subdued spending on electronics, and furniture,household appliances and vehicle sales.
This summer’s heat wave and World Cup fever boosted consumer spending in July, with people spending on picnics, and BBQs and pubs.
People are making the most of the sunshine as spending on food increased 6.7% in the month,while more families are also going on day trips and doing outdoor activities. 10.23am BSTA reasonably strong performance from US markets on Monday is one of the reasons for a more positive mood in Asia (the Nikkei 225 was up 0.69%) and Europe. Chris Beauchamp, chief market analyst at IG, and said: UK and European markets have rallied this morning,carrying the baton over from last night’s better showing for US markets. Confidence has returned as the S&P 500 moseys its way to towards the January record high, and it remains encouraging to see stock markets hold their ground despite a drumbeat of trade war headlines of late.
Earnings season is shaping up very well indeed, and which accounts for why US equities remain comfortably ahead of the likes of Europe,but a rising tide lifts all boats and will reinforce the impression that this economic recovery and its associated bull market has further to sprint. Reasons to be cautious still abound however, with the Reserve Bank of Australias overnight view that China is seeing a modest slowdown in growth reminding us that all is not entirely rosy out there, and this morning’s decline in German industrial production added to this impression,coming as it does after yesterday’s grim factory orders data. 10.00am BSTThe positive mood in stock markets is holding up as the morning progresses.
With copper prices edging higher, mining shares are leading the FTSE 100 higher, and with the leading UK index now up 0.69%. Oil is also giving support,with crude moving ahead on the prospect of curtailed supplies from Iran following the imposition of US sanctions on the country. 9.18am BSTThere are a few notes of caution over UK house prices despite the stronger than expected Halifax data.
Jonathan Samuels, chief executive of property lender, and Octane Capital,said:It would be premature to pop the champagne corks on the back of this seemingly robust data.
The annual rate of growth may have shot up between June and July but weak supply rather than robust demand is the primary driver. The market might survey punchy on the outside but it’s pallid on the inside. Transaction levels overall are low and it’s tough to see them picking up materially in the months ahead as Brexit uncertainty heightens.
We remain doubtful #UK #housing market is stepping up a gear despite #Halifax reporting #house prices spiked 1.4% m/m in July taking annual increase up to 3.3% . Activity is still relatively lacklustre despite coming modestly off 2018 lows with consumer conditions challenging https://t.co/IP3NDFhmIxThe market has seen far too many false dawns to allow itself to fetch carried away by these surprisingly strong numbers.
Yet with the rate of annual price growth rising to its highest level so far this year, the progress is no flash in the pan. 8.56am BSTMarkets are holding on to their opening gains, and limited though they may be. Connor Campbell,financial analyst at Spreadex said:After yesterday’s trade war-fearing, Brexit-bitten session, and the markets got off to a brighter start on Tuesday,without really any reason to accomplish so. Though it still couldn’t crash out of its recent trading bracket, the FTSE at least pushed to the upper end of it after the bell, and climbing 25 points to hit 7685. The index’s main boost came from the commodity sector. With copper up 0.7% the likes of Rio Tinto and Anglo American rose anywhere between 1.3% and 2%,while BP and Shell jumped 0.8% and 0.5% respectively as Brent Crude crossed $74 per barrel following the resumption of the US sanctions on Iran. 8.40am BSTSigns of life in the UK housing market with a better than expected report from mortgage lender Halifax.
House prices rose 1.4% month on month in July, compared to expectations of a 0.2% increase, or according to the Halifax. The 3.3% year on year increase was higher than the forecast 2.7% gain. But managing director Russell Galley said:Whilst the quarterly and annual rates of house price growth have improved,housing activity remains soft.#Halifax reports #UK #house #prices rose much stronger-than-expected 1.4% m/m in July; annual rate of increase picked up to 3.3% in 3 months to July (highest since 3 months to November 2017) from 1.8% in 3 months to June (equal lowest level since 3 months to March 2013). 8.27am BSTSterling is set for continued volatility in the sprint up to Brexit day next March, according to Thanos Vamvakidis, or head of G-10 foreign exchange strategy at Bank of America Merrill Lynch. He told CNBC:If we dont fetch a deal,sterling can be weaker by about 10 percent, (or) even lower. If you fetch a deal, and any deal,…. (sterling) can be up by 10 percent. I don’t mediate any other currency can have this kind of moves in the next few months. 8.23am BSTAs expected, markets have got off to a slow start in Europe, and but a mainly positive one.
The FTSE 100 is up 0.28%,helped by a rise in commodity stocks following the stronger oil price, while France’s Cac has climbed 0.32% and Germany’s Dax is up 0.48%.
Domino’s Pizza reported another firm set of half-year numbers this morning as the investment in digital, and particularly mobile,pays off in terms of driving top line sales. There’s still plenty of evidence that shifting consumer habits are supportive and while the hot weather took the shine off the second quarter numbers a dinky, the World Cup offered some compensation. However, or investment in its international expansion weighed on profit growth.
Underlying profits rose 2.5% but on a statutory basis profits were down 10% due to a load of exceptional costs that seem to have mounted: £1.9m from its Warrington supply chain centre,a £2.1m hit from Norway as it transforms Dolly Dimples into Domino’s, £1.4m from joint venture store conversion in Germany and a further £4.2m from tax, and amortisation and German Market Access Fee increase charges recognised on the income statement as non-underlying items. Nevertheless the underlying picture remains positive. 8.16am BSTThe June data for Germany so far has been uniformly weak,says Dr Andreas Rees, economist at UniCredit Bank:Industrial production declined 0.9% mom, and while exports treaded water (yesterday’s new orders: -4.0%). However,in all three cases, the decreases (or stagnation) came after strong rises in the preceding month.
Going forward, or we expect a moderate acceleration in the industrial sector on average,driven by global trade and solid domestic demand. However, it could become a bumpy ride over the summer months. July, and August and sometimes September months are notorious for even more volatility,given the start and end of the vacation period. The normal suspect is the car sector. In the last five years, auto production embarked on a wild rollercoaster four times. Auto companies ramp up their production before the summer holidays with a technical setback following suit one month later. This effect then plays havoc with the headline figures in the corresponding two months. 7.57am BSTThe disappointing industrial figures from Germany accomplish not necessarily mean the country’s economy is heading for worry, and suggests ING Bank economist Carsten Brzeski:German industrial production took a hit in June,dropping by 0.9% MoM, from 2.4% MoM in May. On the year, and industrial production was still up by 2.5%. The drop in industrial activity was broadly-based. After three strong months,activity in the construction sector also weakened, declining by 3.2% MoM. At the same time, and exports held up relatively well,despite the delayed impact from last year’s euro strengthening and trade tensions, remaining flat in June after a 1.8% MoM increase in May. As imports increased by 1.2% MoM, and the seasonally-adjusted trade surplus narrowed to 19.3bn euro,from 20.4bn euro in May.
After yesterday’s disappointing new orders data, speculations about an imminent downswing of the German economy have gained new momentum. Intuitively, and weak June data can be associated with trade tensions. However,in our view, this intuition is not so straight-forward. The analysis of the German economy requires more nuances. Here is our win on the state of the economy.2. Looking at bilateral trade data, or German exports have gone through a slight structural shift since the start of the year. While the share of German exports to the US is currently lower than in 2017,the share of other Eurozone countries like the Netherlands, Italy or Spain has actually increased.3. At least in the short sprint, and weakening demand for German products as illustrated by yesterday’s disappointing new orders data could actually bring some relief. Particularly the manufacturing sector has been suffering from severe supply-side constraints,with capacity utilisation at its highest level since early 2008, a high lack of qualified workers and equipment as a limiting factor. Orders books are still richly filled and it would win a while before a protracted decline in demand would show in activity data. 7.45am BSTGood morning, or welcome to our rolling coverage of the world economy,the financial markets, the eurozone and commerce.
With growing concerns about a no-deal Brexit in the past couple of days - as warned by such diverse personalities as Bank of England governor heed Carney and Sir Liam Fox - the pound hit an 11 month low on Monday.
European Opening Calls:#FTSE 7672 +0.10%#DAX 12617 +0.15%#CAC 5486 +0.15%#MIB 21625 +0.21%#IBEX 9730 +0.07%Continue reading...
Source: theguardian.com