Global stocks rally as Fed minutes suggest no rush to raise US rates - live

Discussion in 'Market News' started by Lily, Oct 9, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    2.06pm BST

    Guardian exclusive: David Forsey, the chief executive of the FTSE 100 retailer Sports Direct, has been charged with a criminal offence relating to the group’s controversial pre-pack administration of its fashion retailer USC.

    The 49-year-old businessman is accused of failing to notify authorities of plans to lay off warehouse staff in Scotland, around 200 of whom were given just 15 minutes notice by the administrator in January that they were losing their jobs. Forsey was sent his summons in July and his case is scheduled to be heard at Chesterfield magistrates’ court next week.

    1.27pm BST

    Here are some comments from European Central Bank president Mario Draghi at the IMF/World Bank meetings in Lima. He flagged up fresh risks from slowing emerging markets to the eurozone, which has been resilient so far, he said.

    Faced with a more challenging external environment than six months ago, the euro area economy has shown signs of resilience. However, developments surrounding the slower growth in emerging market economies are posing renewed risks to the euro area outlook.”

    In the light of renewed risks that have emerged on the back of recent developments in global and in financial and commodity markets, we are closely monitoring all relevant incoming information.”

    are ready to use all the instruments available within our mandate to act, if warranted, in particular by adjusting the size, composition and duration of the asset-purchase programme.”

    It is also necessary for the euro area to move towards completing banking union in order to create a truly single banking system and achieve its objectives of breaking the bank-sovereign nexus, making the financial system more resilient, and protecting the interests of taxpayers. In parallel, the authorities will need to decisively deal with remaining crisis legacies to create a better foundation for bank lending to the real economy.”

    1.09pm BST

    Here is our full story on the UK trade figures. The August trade in goods deficit narrowed to £11.1bn from £12.2bn in July as reported earlier, but was bigger than expected despite record car exports. This means the UK is heading for a huge shortfall in the third quarter.

    Paul Hollingsworth, UK economist at Capital Economics, said:

    Even if the trade deficit held steady in September, this would still leave the deficit in the third quarter as a whole at around £11bn, far higher than the £3.5bn deficit recorded in the second quarter.”

    1.01pm BST

    Standard Chartered’s new boss Bill Winters plans to cut up to a quarter of the bank’s most senior staff to reduce costs – a loss of about 1,000 jobs – Reuters is reporting, citing a memo sent to staff.

    The memo shows that Winters plans to reduce the number of staff who are graded in bands 1-4 by a quarter. They cover bankers from director level upwards, and include about 4,000 people.

    Our situation requires decisive and immediate action. Each member of the management team has a mission to drive through improvements in our returns and part of this will be further streamlining of our organisation, eliminating management layers and duplication of roles.”

    We lost some discipline during that time, leading to our recent problems with loan impairments and relatively high expenses.”

    12.25pm BST

    Returning to the markets, oil is enjoying a good week, and is set for its biggest weekly rise since 2009. Brent crude, the global benchmark, is up 1.4% at $53.81 a barrel, putting it on track for a 12% gain this week. US crude has risen by 2.4% to $50.60 a barrel.

    12.21pm BST

    In the Volkswagen emissions-rigging scandal, it has emerged that about 3.6m VW diesel cars in Europe with 1.6l engines will need hardware changes to ensure they comply with emissions standards. News agency Reuters cited a spokesman for the German transport ministry.

    Police raided the embattled German carmaker’s offices and several employees’ homes yesterday as prosecutors stepped up their investigation into the scandal that has rocked the group and the global car industry.

    12.15pm BST

    In the beer battle, South African brewer SABMiller has announced a drastically accelerated cost-cutting plan today after rebuffing a $100bn (£65bn) takeover approach from rival Anheuser-Busch InBev, the world’s largest brewer.

    SABMiller, which makes Grolsch, Coors and Peroni, has announced that it is aiming for annual cost savings of $1.05bn by 2020. The previous target was $500m by 2018. SABMiller’s management is meeting shareholders today.

    11.16am BST

    Martin Beck, senior economic advisor to the EY ITEM Club, has looked at the UK trade figures:

    The July trade release had been dire so there was always a good chance that there would be some payback in the August data. However, the scale of the rebound was underwhelming, with the trade deficit narrowing from £4.4bn in July to £3.3bn in August; this kept it much wider than the average of the past six months (-£2.5bn).

    The monthly data has been hugely volatile lately, with July’s collapse in goods exports being followed by a rebound in August. But the underlying picture is one of a weakening export performance, with the official data moving closer to the story that has been conveyed by business surveys for some time.

    11.09am BST

    Zinc has surged 10% and other base metals also jumped after commodities giant Glencore said it would slash its zinc output by a third. Glencore said it would cut 500,000 tonnes of annual zinc production, equivalent to 4% of global supply.

    Glencore shares are now up 7.3% at 129.5p, the top riser on the FTSE 100 index.

    10.31am BST

    The London Metal Exchange wants to buy the Baltic Exchange, also in London, and has made an informal approach, Reuters reported, citing two sources. One said:

    The LME has made strong overtures to the Baltic.”

    10.07am BST

    Sterling dipped after the poor construction numbers and the bigger-than-expected trade deficit, which cast some doubt on the strength of Britain’s economic recovery. The pound slipped 0.4% to 73.72p per euro.

    10.04am BST

    The official trade figures were a bit better. They showed Britain’s deficit in trade in goods narrowed in August, to £11.1bn from £12.2bn in July, but it was still larger than expected and is also set to weigh on economic growth in the third quarter. This reduced the trade in goods and services gap by £1.2bn from July to £3.3bn.

    Exports of goods went up £800m to £23.6bn in August, as exports of cars hit a record high of £2.4bn, up £600m, while chemicals increased by £500m. Imports declined by £300m to £34.7bn.

    9.56am BST

    Construction output dropped 4.3% from July, its biggest monthly fall since December 2012. It was down 1.3% when compared with August 2014 - the first year-on-year fall since May 2013, the Office for National Statistics said.

    City economists had expected a monthly increase of 1%. Construction makes up about 6% of Britain’s economy. In the three months to August, output fell by 0.8%, the biggest decline since March 2013.

    .@ONS construction output in Aug 1.3% lower than a year ago, 1st annual fall since May 2013

    9.50am BST

    The British construction industry had a bad August, a particularly wet month. Official figures out today show output fell at its sharpest rate since late 2012, adding to other signs that overall economic growth slowed in the third quarter, between July and September.

    9.41am BST

    The FTSE 100 index in London, meanwhile, is on course for its biggest weekly rise in nearly four years.

    Our markets correspondent Nick Fletcher reports:

    The FTSE 100 has jumped another 29.15 points to 6404.97, its eighth day of rises. This week the index has gained 4.55% so far, its biggest weekly rise since December 2011, and it is set for its highest close since 18 August. As well as the Fed, investors are also hoping for further stimulus measures from the European Central Bank and perhaps the Chinese authorities.

    Gloomy forecasts for the global outlook from the International Monetary Fund have added to the feeling that central banks will keep acting to try and boost growth.”

    9.38am BST

    A degree of calm has returned to financial markets. European shares are heading for their best week since January, on fresh optimism that interest rate hikes in the UK and US could still be some way off. The pan-European FTSEurofirst 300 index is up 4.8% so far this week, following a sharp sell-off in August and September. Commodity prices have also stabilised somewhat.

    Neither the Bank of England nor the US Fed seems to be in a rush to raise borrowing costs.

    The Fed minutes indicate that it will be patient in raising rates. The jury is still out whether the Fed will hike rates in December or early 2016, but this seems to be enough to lift global stocks after a horrible third quarter.”

    9.25am BST

    Glencore is the top performer on the FTSE 100 index this morning. Its shares leapt more than 5% to 127p after the embattled FTSE 100 miner said it would cut a third of its annual zinc output, in a bid to ride out weak commodities prices. You can read the full story here.

    9.06am BST

    Last night, International Monetary Fund chief Christine Lagarde urged global policymakers to build stronger buffers against volatile financial markets in a “rapidly changing and uncertain world”.

    Speaking at the fund’s annual meeting in Peru, she denied the global economy was entering a “dark period” but said debts needed to be cut and called for greater international cooperation to prevent the economic recovery from being derailed.

    8.58am BST

    The IMF/World Bank autumn meetings are under way in Lima, Peru. George Osborne will be speaking there at 10pm UK time. Over here, David Cameron is due to meet German chancellor Angela Merkel at Chequers.

    In the US, Fed members Evans and Lockhart are scheduled to speak on the US economy and monetary policy.

    8.49am BST

    Regarding economic data, it is a quiet day. UK construction output and trade numbers for August are out at 9.30am London time.

    Investec economist Victoria Clarke has done a preview:

    The UK’s trade deficit widened markedly in July, to £11.1bn, with exports seen falling sharply, particularly to the United States and particularly chemical exports.

    One key uncertainty looking at the prospect for the August numbers is whether we will see last month’s slump in chemical exports unwind; we are pencilling in only a modest correction.

    8.38am BST

    Economists at Daiwa Capital Markets agreed:

    The minutes from the FOMC’s September meeting confirmed overnight that ‘many’, albeit not ‘most’, voting members still expected conditions for lift-off to be met this year, although ‘several’ remained concerned about the downside risks to activity and inflation.

    Indeed, the latest labour market report effectively ruled out a rate hike at the October FOMC meeting. And, in the absence of an improvement in tone of global economic data and financial market developments, lift-off might still be postponed into early 2016.”

    Fed minutes and China calm give risk a lift. Japan's fear index Nikkei Volatility drops almost 5% to lowest since Aug

    Dovish Fed minutes give EM assets another lift. Rupiah and Ringgit jump most since #Asia crisis in 1998 on inflows.

    8.33am BST

    Angus Campbell, senior analyst at online broker FxPro, has sent his thoughts on the Fed.

    Risk assets are being buoyed further by hungry investors happy to get back into equities as the outlook for monetary policy tightening looks more assured with rates set to stay lower for longer. The FOMC minutes were decidedly dovish with the Fed continuing to stress its concern in respect to risks from overseas and the impact this is having on global growth and US domestic inflation. This is increasing risk appetite giving renewed strength to the Aussie which overnight has broken to a new six week high against the dollar having pressed against the 0.7300 level already this morning.

    As we continue to move into the final quarter of 2015 the odds on there being a December rate hike from the Fed have significantly reduced. Our chief economist has been consistent in his call for no Fed hike this year as far back as 2014 (read here) and as the past couple of years have proved, whilst it is incredibly difficult to predict central bank monetary policy, we are looking for the first Fed hike to come in March 2016.”

    8.30am BST

    The UK government has sold off another 1% of its stake in Lloyds Banking Group, reducing its holding in the bailed-out bank to below 11% (10.97%).

    UK Financial Investments, which manages the government’s stakes in Lloyds and Royal Bank of Scotland, has now recouped £15.5bn of the £20.5bn of taxpayers’ money which was pumped into Lloyds to rescue it at the height of the financial crisis in 2008.

    8.17am BST

    Germany’s Dax opened 1.1% higher, France’s CAC and Italy’s FTSE MiB gained 1%, and Spain’s Ibex rose 0.9% in early trading, on hopes hat a US rate hike could be some way off.

    8.11am BST

    Unexpectedly weak US jobs numbers published a week ago triggered speculation that the Fed could hold off raising rates this year and wait until 2016.

    The dollar lost ground on Friday as rate hike expectations receded, falling 0.2% against the euro to $1.1302.

    8.05am BST

    In Asia, Japan’s Nikkei closed 1.6% higher, taking the week’s gain to 4%. Chinese stock markets were also up, extending Thursday’s 3% gains. The blue-chip CSI300 index finished the day 1.3% higher while the Shanghai Composite Index rose 1.2%.

    In London, the FTSE 100 has climbed 45 points, or 0.7%, to 6240.75 within the first five minutes of trading.

    Good Morning. The ‘bad-news-is-good-news’ dynamics continue after dovish Fed minutes. Asian risk markets rally.

    7.53am BST

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    Wall Street and Asian shares rallied overnight as the minutes of the last US Federal Reserve meeting suggested an imminent interest rate hike was unlikely. European stock markets are set to open higher, with gains of 0.9% predicted for Britain’s FTSE 100 index, 1.4% for Germany’s Dax and France’s CAC 1.3%.

    After assessing the outlook for economic activity, the labor market, and inflation and weighing the uncertainties associated with the outlook, all but one member concluded that, although the U.S. economy had strengthened and labor underutilization had diminished, economic conditions did not warrant an increase in the target range for the federal funds rate at this meeting.

    In part because of the risks to the outlook for economic activity and inflation, the committee decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated and bolstering members’ confidence that inflation would gradually move up toward 2 percent over the medium term.”

    European equities are set to rally as central banks give into the bulls’ demands for dovish monetary policy to rescue them from their current plight. The Fed Minutes underlined the global economic slowdown and the potential to threaten the US economic outlook.”

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