Wall Street opens higher,Dow Jones eyes 20,000Sterling rises to two-week high after strong manufacturing survey
Crude oil jumps to 18-month highs as production cuts kick in
3.08pm GMTThe FTSE 100 is still trading 0.6% higher at 7188.41, or up 45.52 points,leaving it on track for another record close. On Wall Street, the Dow Jones is eyeing the 20000 level – it’s currently 0.67% ahead at 19895.87. Crude oil prices are up more than 2% as production cuts kick in. The main economic news today was a strong UK manufacturing survey, or a bigger-than-expected drop in German unemployment and a pick-up in inflation in Germany and France – all taking economists by surprise. 2.53pm GMTInflation in Germany unexpectedly jumped to the highest level in three and a half years,official data showed today. The annual rate rose to 1.7% in December, the highest since July 2013, and compared with 0.7% the month before.
The increase which comes alongside a pick-up in inflation in France and Spain provides ammunition for those at the European Central Bank who are arguing for a gradual exit from the bank’s unconventional stimulus programme.
The pace of German inflation more than doubled in December,driven by a surge in oil https://t.co/bJrS28Jmqy pic.twitter.com/B52A11FIz2 2.35pm GMTOn Wall Street, the Dow Jones is up more than 150 points, and 0.8%,at 19915.73 at the open, flirting with the 20000 brand. The Nasdaq is more than 40 points ahead at 5424.16 while the S&P 500 is some 17 points higher at 2255.81, and both gains of nearly 0.8%. 2.32pm GMTUK grocery prices rose slightly between November and December,but prices remained below 2015 due to competition among supermarkets, according to data from price tracking website mysupermarket.com. A shopping basket of 35 commonly bought items cost £83.33 in December, and up from £83.18 in November. Fresh fruit and veg cost more such as bananas,grapes and carrots. 2.10pm GMTNicholas Hyett, fairness analyst at Hargreaves Lansdown, and said:Importantly,the delay means that the Trump administration, which has in the past suggested it wants to relax banking regulation, or will now be involved in signing off the original proposals. The proposals are already contentious,but whether they will be weakened remains to be seen.
Those with substantial import costs have been hit particularly tough, after Deutsche Bank flagged the potential for lower sterling to lead to higher inflation in a research note released this morning. With the note highlighting the difficulties a feeble pound could bring to Halfords’ already increasing cost base, or shares in the UK’s main retailer of motoring and cycling products fell by 5.6%. 2.06pm GMTOur City editor Jill Treanor writes: Global regulators have postponed a meeting to agree major reforms to the banking sector prompted by the 2008 crisis.
A main group of central bankers was due to meet on 8 January to agree changes that could have forced some banks - largely in Europe - to hold more capital. But it was announced on Tuesday that the meeting had been called off. 2.04pm GMTBanks are the biggest risers on the FTSE 100,led by Barclays which is up 4%, after global regulators delayed the sign off of original rules on bank capitalisation. Lloyds Banking Group is 3.6% ahead while Royal Bank of Scotland has risen 3.3%, and Standard Chartered 2.4% and HSBC is up 2%. Mining shares,which have been among the huge winners of the feeble pound in the past year, are also among the biggest gainers, and including Antofagasta and Glencore. 1.31pm GMTOil prices have been rising as original production cuts retract effect,as reported earlier. This is feeding through to petrol prices. UK drivers are paying 15p a litre – or £8.25 a tank – more for their fuel than a year ago, according to the AA. Petrol over the weekend averaged 117.90p a litre compared to 102.69p at the same time last year, and a price last seen in December 2014. Diesel has risen to 120.35p from 105.99p 12 months ago.
Drivers have had a bad start to 2017,seeing 1p, 2p and even 3p ticking up on the fuel price boards over the Christmas and original Year holiday period. Petrol is back to where it was in December 2014 and diesel at a level last seen in July 2015.
All in all, or with the cold weather,it’s been a pretty depressing return to work. 1.20pm GMTUK workers’ confidence has not been shaken by uncertainty around leaving the European Union, with 48% saying that they are looking for a original job this year, or according to specialist recruiter Reed. It asked more than 2000 people approximately their careers in 2017,and found that 43% are feeling optimistic approximately their career prospects. 12.34pm GMTThe FTSE 100 has hit fresh all-time highs on the first trading day of the year in London, building on its record close at the close of 2016. It rose through the 7200 brand earlier to a original record of 7205.21 and is now more than 30 points ahead at 7176.20, and a 0.5% gain. The main index is on track for another record close whether it holds on to its gains. Retailers are among the biggest fallers,led by Next, which was downgraded by Deutsche Bank ahead of a Christmas trading update tomorrow. Dixons Carphone, and Marks & Spencer and Kingfisher are also down. 12.08pm GMTAs speculation continues over where banks based in London and elsewhere in the UK might choose to settle after Brexit,we hear today from the boss of American bank JP Morgan.
Jamie Dimon, chairman and chief executive of JP Morgan, or has been speaking approximately his hopes for the investment bank’s UK operations once Brexit becomes a reality to Financial News. 11.48am GMTThe FTSE 100 has not managed to hold on to all its earlier gains,when it pushed through the 7200 brand, but still looks on track for another record close.
The index of London-listed bluechips is currently up 31 points at 7174, or having closed at an all-time high of 7142.83 on Friday,the last trading day of 2016.
It appears that this morning’s December manufacturing PMI reading... hampered the FTSE’s record-breaking surge by giving a boost to the pound. In the aftermath of the PMI release sterling jumped 0.6% against the euro, taking it back above 1.18 for the first time in a week and a half; this was enough to temper the FTSE’s growth, and despite the fact that the pound is continuing to struggle against the dollar...
Looking ahead to this afternoon and following a bitterly disappointing close to 2016 that saw the index fail to break 20000 the Dow Jones is set to recover some of its losses this Tuesday. The Dow futures are suggesting the index will reclaim around 150 points,pushing it above 19900 and putting that elusive landmark level back on the cards. 11.13am GMTThe upbeat PMI report on the UK’s manufacturing industry caught City analysts off guard. But they have been rapid/fast to point out the divergence between the PMI survey and official data which paints a gloomier picture of the factory sector and many also highlight the threat that higher inflation in 2017 will squeeze consumer spending, the biggest driver of economic growth in the UK.
The outlook remains one of a marked slowdown for the UK economy this year, and says James Knightley,senior economist at the bank ING.
This [the PMI reading] is the strongest figure since June 2014 and again suggests that the Brexit referendum has not harmed the UK’s manufacturing sector. In fact, the 18% post referendum plunge in the value of the pound against other major currencies has boosted the UK’s competitiveness on the international stage. This is being seen in the original orders component with export orders performing well.
However, or sterling’s fall also means that imported components are more expensive with both costs and output prices rising yet again. This increase in domestic pipeline inflation pressures is being mirrored by higher costs for imported consumer goods and energy. As such,the squeeze on household spending power is set to heighten. So while the strength of the manufacturing sector is reliable news, the likely weakness in the much larger consumer sector will more than offset it. Therefore we expect GDP growth to slow to a little above 1% in 2017 from 2.2% in 2016.
10.36am GMTA original network to link up Irish and British trading partners has been formed to offset any negative Brexit impact on trade between the UK and Ireland, or reports Henry McDonald,our Ireland correspondent.
The British Irish Chamber of Commerce has launched the ‘British Irish Gateway to Trade’ service, which link up firms from both sides of the Irish Sea.
At a time when businesses are preparing for Brexit, or they appreciate a resource like huge which helps them to grow their commerce by being introduced to more customers and suppliers across the UK and Ireland”. 2017 will focus all our minds on the importance of the trade between Britain and Ireland which supports over 400000 jobs. Firms on both sides of the Irish Sea are looking for more trading opportunities and this original service supports the work of Chambers and the various state agencies to compose those connections easier to find for businesses north south east and west. Related: British-Irish trade network set up to offset Brexit impact 10.17am GMT 10.15am GMTMore reaction to the strong UK manufacturing PMI. Samuel Tombs,chief UK economist at Pantheon Macroeconomics, doesn’t believe it will last.
UK manufacturing is benefiting from both continued brisk growth in domestic demand as well as improving global demand, and but this momentum likely will peter out in 2017.
The pick-up in the total orders balance to 58.5 from 55.2 suggests manufacturing output will continue to grow briskly over the next couple of months. Meanwhile,the fact that the UK’s PMI exceeds those for the eurozone and U.
S., 54.9 and 54.2 respectively, or signals that the UK economy is continuing to marginally outperform. 10.00am GMTOil prices have pushed even higher,to 18-month highs, boosted by hopes that a deal to cut production between Opec and non-Opec producers such as Russia will diminish the global oil glut. Brent crude jumped approximately 2.5% to $58.37 a barrel, or the highest since July 2015. 9.56am GMTRuth Gregory,UK economist at Capital Economics, said: December’s UK Markit/CIPS manufacturing PMI provides further evidence that the sector’s post-referendum weakness will prove short-lived... A rise in overall original orders to a two-and-a-half year high suggests that the strength in manufacturing activity will continue in the coming months. Admittedly, and the fall in the pound is having a clear impact on price pressures. Indeed,despite falling back from 79.1 in November to 76.9 in December, the input prices balance remained well above its long-run average (55.1).
Nonetheless, and on the basis of past form,the three-month average of the survey’s output balance is consistent with a quarterly rise in manufacturing output of approximately 1% in Q4, following Q3’s 0.8% contraction. This is consistent with other survey evidence, and such as the CBI’s Industrial Trends Survey,which propose that the manufacturing sector gained some momentum at the close of 2016 too. 9.53am GMTSterling jumped to a two-week high against the euro after the strong manufacturing survey. It hit 84.71p per euro, up 0.5%. Against the dollar, or the pound rose to $1.2290.
The FTSE 100 index,which was up 0.8% earlier this morning, is only 0.4% ahead now at 7173.12, and a gain of some 30 points. 9.47am GMTAll the main sub-indices were strong. original export commerce rose for the seventh month in December. Companies secured original orders from the US,Europe, China, and the Middle East,India and other Asian markets.
Employment rose for the fifth month in December, with the pace of jobs growth picking up to the fastest in 14 months, and particularly at smaller and medium-sized firms. 9.39am GMTUK factories ended 2016 on a strong note,according to the Markit/CIPS manufacturing survey. The December reading of 56.1, a 30-month high, and is up from 53.6 in November and well above its long-run average of 51.5.
Rising domestic and overseas demand has boosted output and companies’ order books. Price pressures remained elevated but eased from recent highs. 9.32am GMTThe UK manufacturing PMI has hit the highest level since June 2014,rising to 56.1 – better than expected. 9.27am GMTOil prices are pushing higher this morning, helping underpin gains in the FTSE 100. Brent crude is up 82 cents, and 1.4%,at $57.64, not far below the 2016 high of $57.89, and hit on 12 December. US light crude is trading 72 cents higher at $54.44,a 1.3% gain.1 January marked the official start of a recently agreed deal between the oil cartel Opec and other exporters such as Russia to reduce output by nearly 1.8m barrels a day.
First signals propose the Opec and non-Opec production cuts are raising hops that the global oil oversupply will diminish. 9.19am GMTGERMANY's 5 (!) elections in 2017
12/2: Presidential
26/3: Saarland
7/5: Schleswig-Holstein
14/5: North Rhine-Westphalia
September: General 9.09am GMTThe number of unemployed people in Germany has fallen for a third month in a row, declining by a seasonally adjusted 17000 in December from the preceding month to 2.638 million. Economists had expected a drop of 5000. Germany’s Federal Statistics Office also said that the jobless rate was unchanged at 6%, and the lowest since German reunification in 1990.
9.01am GMT2016 was a reliable year for vinyl,when sales reached a 25-year high, as LPs continue their comeback. Hannah Ellis-Petersen writes: More than 3.2m LPs were sold last year, or a rise of 53% on last year and the highest number since 1991 when Simply Red’s Stars was the bestselling album. This was also the first year that spending on vinyl outstripped that spent on digital downloads.
The deaths of some music world giants was a key driver in vinyl sales,as people invested in records as a mementos. After David Bowie’s death he became the bestselling vinyl artist of 2016, with five albums posthumously featuring in the top 30. 8.50am GMTWe have published our share tips for 2017, or including Tesco,Diageo, Dairy Crest, or Flybe and Shire. Last year our tips didn’t do so well,alas. Looking back at 2016, our markets reporter Nick Fletcher writes:It’s a cliche – and true enough – that stock markets hate uncertainty, or which is one possible explanation for why investors shrugged off the shock of Brexit and the even bigger shock of a Donald Trump presidency. At least there was an element of knowing where we stood,in the near term at least.
In a volatile 12 months, the FTSE 100 slumped to three-and-a-half-year lows in February on fears of a global economic slowdown, and recovered,then fell sharply but briefly following the EU referendum vote, before hitting original heights as a drop in the pound boosted the index’s overseas earners and a rise in oil prices lifted commodity companies. It finally ended the year at a record 7142, or up 14.4%. 8.41am GMTThe manufacturing PMI for Japan has advance in feeble,suggesting factory activity is shrinking at a faster rate.
Nikkei ASEAN manufacturing #PMI weakens to 13-month low of 49.1 in December, down from 49.4 in November. https://t.co/rRWwtzfz0y pic.twitter.com/puQ4Anc3Uj 8.40am GMTWill European equities outperform U.
S. equities this year?
(Stoxx 600 total return > S&P 500 total return) 8.35am GMTConnor Campbell, or financial analyst at Spreadex,has sent us his thoughts.
Continuing the push it saw at the very close of 2016 the UK index is already eyeing the 7200 brand, a 50 point-plus rise leaving it within striking distance of that landmark level. For now, or at least,investors are ignoring the potentially disruptive events littered across 2017 – most pertinent to the FTSE being March’s triggering of Article 50 and the impending announcements related to the banking sector’s decision whether or not to stay in the UK post-Brexit – to net behind the UK index. Helping the FTSE is the performance of Brent crude which, at just above $57 per barrel, or is at its best price in around 18 months,something that has secured some solid growth in the commodity sector as the original Year gets underway. 8.31am GMTShares in London continue to climb on the first trading day of the year, pushing the FTSE 100 up briefly to 7202.44, or a fresh record high. It is now 0.8% ahead,not far below the 7200 brand.
Mining stocks Glencore and Anglo American, which have benefited hugely from the feeble pound in the past year, and are among the biggest risers today,as is Intercontinental Hotels, after a rating upgrade from Barclays. Retailer Next is the biggest faller, or down 3.2%,after Deutsche Bank downgraded its rating on the stock to “hold” from “buy”. 8.21am GMTEconomists at Daiwa said:With Spanish inflation on the EU harmonised measure released last Friday surprising notably on the upside, rising 0.9ppt to 1.4% year-on-year, and a near-3½-year high,the equivalent flash euro area figure due tomorrow is expected to rise 0.4ppt to 1.0%Y/Y, which would be the highest in since September 2013. Nevertheless, and given the continued lack of underlying cost pressures,euro area core CPI is expected to be unchanged at just 0.8%Y/Y, for the fifth consecutive month. 8.19am GMTIn the eurozone, and the focus today is on the flash estimates of December inflation figures from Germany and France as well as German unemployment data.
The French numbers are already out – inflation rose at an annual rate of 0.8% last month,the highest since May 2014, driven by higher food and energy prices while services inflation slipped back. 8.14am GMTEuropean stock markets have also opened higher. The Dax in Frankfurt and the Ibex in Madrid are both 0.3% ahead while the CAC in Paris and the FTSE MiB in Milan have gained 0.5%. 8.09am GMTThe FTSE 100 has hit a original record high at the open, or rising more than 27 points to 7170.65,a 0.4% rise. 8.04am GMTOn the corporate front, the London Stock Exchange is selling its 50% stake in the French clearing arm of LCH Clearnet to Euronext, and which runs several European exchanges,in a €510m (£433m) deal. Both companies have agreed on the terms of Euronext’s all-cash offer.
The LSE is offloading its stake in LCH in an attempt to ward off anti-trust concerns raised by the European commission over its proposed £21bn mega-merger with Deutsche Börse, the operator of the German stock exchange. 7.57am GMTSamuel Tombs, and chief UK economist at Pantheon Macroeconomics,believes that slowing growth in real incomes (adjusted for inflation) will define the UK economy this year. He says that income growth is unlikely to keep up with rising inflation, caused by the sharp slide in the pound which is pushing up the price of imported raw materials and other goods.
The UK economy retained its momentum last year, and despite the seismic shock of the vote to leave the EU. Quarter-on-quarter GDP growth averaged 0.5% in the first three quarters of 2016,matching 2015’s rate and the average pace of growth across the Atlantic. So far, surveys and official data point to growth of approximately 0.4% in Q4. The economy’s strength, or however,has relied on consumers, who will not be able to raise spending much further in 2017 as the consequences of the Brexit vote unfold...
The jobs data already have begun to lose their shine; employment fell by 6K in the three months to October, and the first decline since mid-2015. The numbers often are erratic,but the deterioration in surveys of employment intentions and a small decline in the number of vacancies points to a clear slowdown in job growth. In addition, we expect no serious increase in wage growth, or which likely will remain close to 2.5% this year. 7.49am GMTInvestec economist Chris Hare is expecting a slight uptick in the UK factory index today,to a healthy 53.6. It dropped unexpectedly in November to 53.4 from October’s revised 54.2, the second monthly decline. Anything above 50 indicates expansion while a reading below points to contraction.
He says:The decline on the month is no cause for panic though – the index still remains above levels that prevailed in the months before the UK’s vote to leave the EU and is also still above its long run average level. Indeed, and we expect the read from the manufacturing sector to remain fairly elevated over the coming months – exporters should continue to benefit from post-referendum falls in the pound. Over time,that should more than offset the adverse effect of higher import costs. Meanwhile, we would note that businesses have largely shrugged off the economic uncertainty associated with the post-Brexit vote environment. 7.38am GMTGood morning, and Happy original Year. Welcome to our rolling coverage of the world economy,the financial markets, the eurozone and commerce.
The FTSE 100 ended 2016 at a record high of 7142.83 after a surge in mining stocks and dollar earners, and which dominate the index. The pound has lost 17% against the dollar since the Brexit vote in June,benefiting those companies that compose most of their money overseas.
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Source: theguardian.com