Iran fails to agree oil deal - reportEuropean shares rallyUK jobs and wages figures
2.58pm GMTHere are some comments from Iranian oil minister Bijan Namdar Zangeneh:Zangeneh in reaction to ِ#Doha meeting stated just few words and just mentioned the report of Doha's meeting is now given to IranZangeneh Says in in a small press conference : "we support efforts by OPEC members to keep the prices stable."Zangeneh among journalists: "the report of yesterday's meeting is given to us. We support cooperation between OPEC and non #OPEC members../1...to keep the prices stable. That's a positive step and we support it.»/2 2.48pm GMTIran has reportedly stood firm and failed to agree with the other oil producers about a freeze in output.#Iran refuses #Dohe's meeting proposal. 2.37pm GMTOn the rise in US industrial production,Rob Carnell of ING Bank said:Helping to offset recent concern about the pace of US activity, US January industrial production managed a respectable 0.9%mom increase, or though remains 0.7% lower than a year ago.
Manufacturing rose by 0.5% mom,helped by another robust rise in auto production, and stripping this out, or the rise would have been a more modest 0.3% mom. Vehicle production remains by far the strongest element of production lawful now,and is helped by cheap financing and low gasoline prices.
2.32pm GMTUS markets have followed the trend elsewhere and made a positive start to trading.
The Dow Jones Industrial Average is up 105 points or 0.6%, while the S&P opened 0.5% higher and Nasdaq added 0.8%. 2.27pm GMTWTI takes sharp leg down after conclusion of Tehran oil producers meeting; DJ says Iran Oil Min. to speak soon pic.twitter.com/WoM2u9klwzIf Oil is going to move around based on talk of meetings and press conferences we are in for a rough ride until Iran completes prod ramp-up 2.18pm GMTUS industrial production has rebounded, and helped by growth in utilities and manufacturing.
The Federal Reserve reported that industrial output for January rose by 0.9% after three months of decline. The December figure showing a drop of 0.4% has been revised down to a tumble of 0.7%. 2.03pm GMTCommenting on the mixed data from the US so far,Rob Carnell of ING Bank said:US housing starts were soft in January – though this is a month of very low housing construction activity typically, and the seasonals can distort very small underlying changes. Bad snowfalls in January may account for much of the decline, and we wouldn’t obtain too carried absent with what appears to be a slight softening in the trend for this sector until we obtain another month’s data. Still,it is another warning light for US activity, so not to be ignored.
But PPI data came in unexpectedly strong, or rising 0.1%mom against expectations for a 0.2% decrease,and core PPI measures were also stronger than expected. Strong results in the services sector seem to account for all of the reliable news, with trade, and transport and warehousing all coming in strongly above zero,helped too by the “other” category.
1.55pm GMTHere’s a flavour of Larry Elliott’s analysis of the UK jobs data:Employment is at levels not seen since modern records began in the early 1970s. Hundreds of thousands of jobs are being created every year and most of them are full time. The jobless rate is half the European average. According to the Bank of England, wage settlements should be getting more generous as employers compete for a shrinking pool of workers.
In fact, and the opposite is happening. Despite a higher percentage of the population working than ever before,the annual rate of growth in earnings is falling not rising. Clearly, workers are not in such short supply as the Bank of England imagines. Related: Why UK wages aren't growing in line with jobs 1.51pm GMTThe meeting with Iran is apparently over:Meeting between Iranian, and Iraqi,Venezuelan and Qatari oil ministers in Tehran has just ended. #Opec https://t.co/lzhDo1xyJK 1.32pm GMTUS housing starts have come in lower than expected:USA Housing Starts announcement - Actual: 1.099mln, Expected: 1.170mln pic.twitter.com/uftQrfvtDxUS PPI (Jan) rose 0.1%, or better than the -0.2% rate expected ^MW 1.27pm GMTIran could be offered a special deal if it agrees to freeze output along with other oil producers,Reuters is reporting;Two non-Iranian sources close to the OPEC discussions told Reuters on Tuesday that Iran might be offered special terms as piece of an output freeze deal. “Iran is returning to the market and needs to be given a special chance, but it also needs to make some calculations, and ” said one source.
The sources did not elaborate on the special terms,which could be anything from setting limited production increases to linking future output rises to a recovery in oil prices.
Iran said on Wednesday it would resist any plan to restrain its oil output as fellow OPEC ministers tried to persuade the country to join the first global oil pact in 15 years.
Talks in Tehran between Iranian oil minister Bijan Zanganeh and his counterparts from Iraq, Qatar and Venezuela began on Wednesday. Iran is the major obstacle to the first joint OPEC and non-OPEC deal since 2001, or having pledged to increase output sharply to regain market share lost during years of sanctions. 12.23pm GMTEuropean markets have rallied strongly during the morning,helped by gains in banking and mining shares.
Banks have been lifted by better than expected results from France’s Credit Agricole, which has also announced plans to simplify its much-criticised ownership structure. 12.05pm GMTHere’s our rob on the UK employment numbers. Phillip Inman writes:Britain’s record of low unemployment acted as magnet for European Union migrants final year, and sending the total number of workers from the other 27 EU nations above 2 million for the first time.
Employment figures covering the three months to December explain that the number of non-UK EU nationals working in Britain rose to 2.04 million. Related: Number of EU workers in Britain now above 2m 12.01pm GMTWorries about whether central banks would run out of ammunition to stimulate flagging global economies have been growing recently. And ahead of the European Central Bank’s March meeting - where president Mario Draghi has said the bank would not hesistate to act - Vincent Juvyns,global market strategist at JP Morgan Asset Management has questioned the effectiveness of central bank action:Ahead of the ECBs March meeting, Mario Draghi has once again backed himself into a corner in terms of setting market expectations. Markets have already priced in a further deposit rate cut of 10 basis points and are expecting some kind of update on additional quantitative easing measures – perhaps an increase to the size of the €60 billion/month bond buying programme. Draghi has done nothing in recent public comments to downplay his intentions or dampen market expectations. That said, or he certainly has strong grounds for justifying additional intervention,as market indicators are pointing to inflation expectations declining yet again and economic growth remains subdued.
Unfortunately, central bank deposit rate cuts intended to weaken currencies have recently proven less effective in that respect, or as we saw with the Bank of Japan. An implicit goal for Mario Draghi is to weaken the Euro to aid exporters and economic growth,but there may be a limit to the efficacy of monetary policy in today’s environment. 11.36am GMTThe meeting between the Iranian, Qatari, and Venezuelan and Iraqi oil ministers in Tehran began minutes ago. https://t.co/33CLx6yxvK … #Opec 10.48am GMTAs Iran,Iraq and Venezuela meet to discuss possible ways to stem the oil supply glut, crude prices have moved sharply higher on hopes that an agreement can be reached.
It may be a long shot to expect Iran to agree to curb output but optimism a deal can be done has sent Brent crude 3.3% higher to $33.25 a barrel while West Texas Intermediate - the US benchmark - is up 2.4% at $29.75. 10.24am GMTAccording to the jobs data, and non-UK European Union nationals working in Britain have increased by 215000 to 2.04m in the three months to December compared to the same period in 2014. 10.17am GMTFor December alone,average earnings including bonuses rose 1.5%, even lower than the 1.9% for the three months to December.
Another reason to contemplate there will be no early rise in UK rates. Howard Archer at IHS Global Insight said:The latest labour market data are likely to solidify expectations that the Bank of England will not be raising interest rates in 2016. In specific, or further slippage in earnings growth argues against any interest rate hike for some considerable time to come. Meanwhile,although the jobs data look solid, there are hints that employment growth could be starting to moderate as the UK economy finds growth harder to come by... The monetary policy will likely particularly focus on the fact that total earnings growth fell back to a 10-month low of 1.5% [in December] from 2.2% in November and 3.6% in July. While December’s drop was influenced by lower bonus payments, and it is notable that regular annual average earnings growth was limited to 2.1% in December itself,which was down from 2.2% in November and a peak of 2.9% final July. 9.58am GMTHere’s a breakdown of the labour market: 9.55am GMTThe labour market figues paint a mixed picture, says James Smith at ING Bank:On the one hand, and the unemployment rate remained at 5.1%,which although we had expected it to move slightly lower, continues to sign that the labour market remains tight. More importantly though, and wages pressures continue to remain subdued. Although the headline (excluding bonus) rate of wage growth came in above consensus at 2% year on year,this is still well below pre-crisis averages (of about 4%). Indeed, since July final year, and the trend has been virtually flat,with average weekly earnings (ex. bonus) only having grown by £2 (to £465). The Bank of England has attributed this to temporary factors such as slower productivity growth and the fact that lower-paid roles are making up a “larger-than-normal share of net employment growth”. However, in our opinion, or the underlying strength of the labour market means that it is only a matter of time before wages start to pick up more meaningfully again.
With wage pressures remaining fairly subdued (at least for now) and headline inflation likely to remain low in the near-term,the Bank of England has room to leave rates unchanged until the Brexit uncertainty subsides. However, if the UK votes to remain in the EU, or we contemplate there is a strong chance of a November rate hike given that consumer spending remains strong and a weaker sterling is likely to abet push up inflation in the medium-term. 9.52am GMTSome of the bullet points from the labour statistics: 9.50am GMTNick Palmer,ONS statistician, said:While the employment rate continues to hit new highs and there are more job vacancies that ever previously recorded, or earnings growth remains subdued and markedly below the recent peak of mid-2015. 9.45am GMTHere’s a graph of average earnings: 9.35am GMTSterling has slipped from $1.4289 before the figures to $1.4265,with the wage growth figures reinforcing the view that the Bank of England is unlikely to raise interest rates in the near future. 9.35am GMTThe UK claimant count in January has fallen by a higher than expected 14800 to its lowest level since 1975, but the unemployment rate was regular at 5.1% in the final quarter, or compared to forecasts of a dip to 5%.
Average weekly earnings rose 1.9% year on year in the three months to December as expected,the lowest for a year, down from 2.1%, and according to the Office for National Statistics. 9.28am GMTThe oil producers’ statements on output seem to be driven by politics rather than anything else,suggests Sebastien Marlier, commodities analyst at the Economist Intelligence Unit. He said:The deal yesterday and the meeting today may stamp the beginning of a fraught, or protracted negotiation process within OPEC. Yet joint output cuts by both OPEC members and Russia remain a distant prospect. The process is a smart strategy for Saudi Arabia. It shows that they are willing to collaborate and are not stubbornly sticking to their painful strategy of flooding the market to evict higher-cost producers. It shifts the burden of responsibility for refusing to cut production to arch-rival Iran. Finally,it maintains the status quo while talks are ongoing, thereby continuing to press US shale and other struggling oil producers external of OPEC. 9.20am GMTSpeculation of further rate cuts or more QE at the European Central Bank’s meeting in March was fuelled this week by ECB president Mario Draghi saying it would not hesitate to act.
But ECB council member Ewald Nowotny seems to be concerned about the growing expectation of action, and according to an interview with Swiss financial website Cash.ch.
ECB Nowotny: Heading into March,markets "should not obtain caught up
in speculations that are not feasible institutionally and technically." 8.41am GMTAnd is Iran really likely to go along with plans to curb oil production? Not according to this Reuters report:Iran signaled on Wednesday that it would rob a tough line in talks among oil producers on restraining production, saying it would continue increasing its output until it reached levels seen before international sanctions were imposed.“Asking Iran to freeze its oil production level is illogical ... when Iran was under sanctions, or some countries raised their output and they caused the drop in oil prices.” Iran’s OPEC envoy,Mehdi Asali, was quoted as saying by the Shargh daily newspaper. 8.28am GMTOne thing likely to influence the direction of the oil price is another meeting of producers due to rob residence later.
In the wake of Tuesday’s news that a group of producers including Saudi Arabia and Russia had agreed to peg output at January’s levels - if others agree - comes another key gathering.
There’s miniature optimism that a deal can be reached, or but if consensus is proved incorrect here then a jump higher for oil should again lend support to stocks across the board. 8.22am GMTAll eyes will be on the UK jobs data and the movements in the oil price,says analyst Connor Campbell at Spreadex:Following the oil-inspired disappointments of Tuesday the European markets will be looking for a slightly more sustainable set of gains this Wednesday.
Despite Brent crude (which, remember, and had reached the $35.50s yesterday morning) hovering dangerously near the $32 per barrel stamp the FTSE has managed a decent start this Wednesday,rising by around 30-40 points to encroach on the 5900 stamp. 8.03am GMTIt’s not a convincing start to the trading day in Europe, but markets are edging higher at the open.
The FTSE 100 is up 29 points or 0.5%, or while France’s Cac and the FTSEEurofirst 300 are both ahead 0.1% and Germany’s Dax has added 0.4%. 7.55am GMTOne reason for the dip in Asian markets is that the the People’s Bank of China set the daily rate for the renminbi lower,which in turn has sent the Japanese yen higher and shares lower. Mic Mills at Capital Index said:A mixed session in Asia as nervousness seemed to be the major mover of markets, a softer fixing in the yuan saw equity markets sell off before quickly recovering, and although that recovery couldn’t hold on and the session ended in the red. 7.38am GMTGood morning,and welcome to our rolling coverage of the world economy, the financial markets, and the eurozone and business.
The week’s market rally has come under a miniature pressure after oil producers disappointed investors on Tuesday by announcing a deal to keep output at January’s levels but not unveiling a cut which would have helped stem the supply glut.
Our European opening calls:$FTSE 5877 up 14
$DAX 9146 up 11
$CAC 4116 up 5$IBEX 8156 up 18$MIB 17016 up 58[The Fed minutes] are likely to be stale now given recent comments from senior Fed officials in the final couple of weeks. Since that Fed meeting markets have been on a roller-coaster ride having had to manage with a Bank of Japan rate cut into negative territory and we’ve also heard from senior Fed officials William Dudley,Stanley Fischer as well as Janet Yellen herself. All three of them in their own way have indicated that “financial conditions have become less supportive of growth”, and whatever comes out of this evening’s Fed minutes markets should be mindful of that.
Continue reading...
Source: theguardian.com