Volkswagen crisis hits German confidence as carmaker slashes investment by €1bn - live updates

Discussion in 'Market News' started by Lily, Oct 13, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Morale among German analysts and investors plummets, due to VW diesel emissions scandal and weakness in emerging markets


    11.23am BST

    For the first time in seven years an Irish budget will actually be giving away something for its citizens after the years of tax hikes, brutal spending cuts, the humiliation of an IMF-EU bail out and the crash of the Celtic Tiger.

    10.40am BST

    The Volkswagen diesel emissions scandal and economic problems in emerging markets have become a toxic cocktail for confidence within Germany, new data shows.

    More ugly numbers from #Germany: German Oct ZEW Econ Sentiment drops to 1.9 from 12.1 in Sep on VW scandal.

    “The exhaust gas scandal of Volkswagen and the weak growth of emerging markets has dampened economic outlook for Germany.”

    ZEW darkened by Germany's 3 shocks: #refugees, #Volkswagen, EM woes. Still, too soon to talk about slowdown. My take

    10.26am BST

    Over in Germany, Volkswagen has just announced that it is cutting its investment programme by €1bn per year, as it grapples with the fallout from the diesel emissions scandal.

    In a statement just released, VW announced a range of changes including shifting all its diesel cars to cleaner exhaust emissions systems, and making the next generation of its Phaeton car run on electricity..

    “The Volkswagen brand is repositioning itself for the future.

    We are becoming more efficient, we are giving our product range and our core technologies a new focus, and we are creating room for forward-looking technologies by speeding up the efficiency program.”

    10.15am BST

    Over in parliament, MPs are beginning to quiz former hedge-fund economist Gertjan Vlieghe about his appointment to Britain’s Monetary Policy Committee. You can see it here. It could be quite tasty, as explained earlier....

    The first Belgo-Brit on the MPC, Gertjan Vlieghe, is appearing before the Treasury Select Committee right now

    10.11am BST

    September’s inflation rate is used to calculate a range of benefits payments in the UK.

    Consumer expert Paul Lewis reports that these payments will now be frozen, as will other payments linked to the headline inflation rate.

    CPI of -0.1% means benefits will be frozen - not cut -including the extra bits of state pension. Company pensions linked to CPI also frozen.

    To be clear all the extra bits of the state pension are index linked with CPI. They will be frozen next April because Sept CPI is -0.1%.

    10.03am BST

    Britain’s return to negative inflation isn’t a great surprise or a great calamity, says Jeremy Cook, chief economist at the international payments company, World First:

    He reckons inflation will pick up sharply in 2016, once the recent slump in oil prices fades into history.

    Headline inflation has been pressured for nearly a year now from falling energy and commodity prices but we must remember that base effects will see that initial drop in oil prices fall out of the calculations in the coming months.

    10.00am BST

    Howard Archer of IHS Global Insight also sees UK interest rates on hold for longer.

    Deflation of 0.1% in September will likely fuel market belief BOE will not be raising interest rates before late-2016 & maywait until 2017

    9.59am BST

    With inflation back below zero, it’s hard to see Britain’s interest rates rising from their current record low before 2016.

    Peter Cameron, Associate Fund Manager at EdenTree Investment Management, explains:

    “Inflation is back in negative territory again and it’s very unlikely that we’ll see the Bank of England raise interest rates this side of Christmas. Although wage pressures are emerging and the impact of the falling oil price will soon start to drop out of the numbers, a rate hike would have a deflationary effect by pushing up Sterling.

    At a time when the ECB is signalling it is ready to expand QE and the Fed is likely to delay its own rate lift-off into 2016, the Bank will be fearful of allowing Sterling to appreciate too much.”

    9.56am BST

    Underlying CPI picture is of inflation close to zero for several months, and a big boost to real wages, which continues.

    9.55am BST

    There’s no sign of deflation in the British housing market. New data shows that prices rose by 5.2% across the country in August:

    UK regional house price growth in August. East of England out in front and North West prices grew faster than London.

    9.50am BST

    UK chancellor George Osborne insists that Britain is not entering a period of ‘damaging deflation’:

    Inflation at -0.1% while wages rising at fastest rate in over a decade is a real boost for budgets of working families

    We shouldn't mistake this for damaging deflation: we remain vigilant and our system is designed to deal with such risks

    9.48am BST

    The bigger picture is of a broadly flat inflation rate since the beginning of the year, says Richard Campbell, head of CPI at the Office for National Statistics.

    “The main downward pressures on CPI came from clothing, which rose more slowly this September than in recent years, and falling petrol and diesel prices.”

    9.42am BST

    Clothing and footwear prices rose by 2.8% between August and September this year, compared to 4% between the same 2 months a year ago. That pushed the inflation rate down, to 0.1% in September.

    Fuel prices fell by 2.9% between August and September this year compared with a smaller fall of 0.6% between the same 2 months a year ago.

    The largest downward contribution came from petrol, with prices falling by 3.7 pence per litre between August and September this year compared with a fall of 0.8 pence per litre between the same 2 months a year ago. Diesel prices are now at their lowest level since December 2009, standing at 110.2 pence per litre.

    Gas prices fell by 2.1% between August and September this year, compared with no change between the same 2 months a year ago, with price reductions from a major supplier.

    9.37am BST

    Food and fuel have played a key role in dragging UK inflation down in the last year.

    Over the last year, food prices fell by 2.5% and prices of motor fuels fell by 14.9%, according to the ONS.

    9.35am BST

    This chart confirms that the UK’s inflation rate has been bobbing around zero for most of this year.

    9.34am BST

    Here’s the key points from today’s inflation report:

    9.31am BST

    Here we go! UK inflation has turned negative again!

    The Consumer prices index fell by 0.1% in September, the Office for National Statistics reports. That’s weaker than the zero reading that economists had expected.

    9.26am BST

    Crumbs! The pound has just taken a dive in the foreign exchange markets, dropping almost one cent against the US dollar.

    Leaked #CPIguesses

    9.19am BST

    More signs of weakness in Germany - Berlin is expected to trim its estimate for growth this year to 1.7%, down from 1.8%.

    Economy minister Sigmar Gabriel could announce the new forecast tomorrow, according to Reuters.

    9.06am BST

    Just 30 minute to go until we get the Britain’s inflation date for September.

    City economists broadly expect that the consumer prices index will remain flat for a second month, leaving inflation at zero. But a negative reading can’t be ruled out.

    Falling pump prices and a cut in energy bills by British Gas are expected to have kept inflation at zero last month, putting little pressure on the Bank of England to raise interest rates from their record low any time soon.

    Official figures on inflation due at 9.30am are forecast to show no change in the consumer prices index measure. Against the backdrop of tumbling global commodity prices, from food to oil, inflation in the UK has been at or close to zero since February, well below the Bank’s target of 2%.

    Related: UK inflation forecast to stay at zero

    8.58am BST

    MPs could give Gertjan Vlieghe, Britain’s newest interest rate setter, a rough ride when he appears before them in an hour’s time.

    “It’s probably right that happens because financial markets have not had a great reputation recently. Sadly, I think, that will overshadow what is an otherwise great appointment.”

    BOE's New Official Faces Grilling on Hedge-Fund Links, Rate View via @business

    8.45am BST

    Bloomberg economist Maxime Sbaihi predicts that today’s ZEW survey, due at 10am BST, will show economic confidence deteriorated in Germany this month.

    Combination of #refugeecrisis, #VolkswagenScandal & EM slowdown is likely to weigh on the German ZEW survey for October (released today).

    8.31am BST

    European stock markets are all falling this morning, as the 20% slide in Chinese imports last month spooks traders.

    In London, the FTSE 100 has lost 36 points, or 0.6%, led by mining stocks such as Glencore (-4.5%).

    A whopping 20% fall in Chinese imports in September didn’t get the day off to the best start, with that drop in demand sure to cause ripples of worry the world over.

    8.13am BST

    Shares in SABMiller have jumped by 9% at the start of trading in London, to around £39.50.

    That’s short of the £44 per share proposal which its board have accepted; the City may not be 100% convinced that AB InBev will pull this deal off.

    7.57am BST

    You know a deal is big when it moves the pound.

    Here’s how sterling reacted to the news that AB INBev and SABMiller have agreed terms.

    7.49am BST

    One of the biggest takeover battles in the City in recent years is heading to a climax this morning.

    They have a deal. #SABMiller agrees "in principle" to £44 per share offer from #ABInBev. Now they face the regulators.

    Related: SABMiller agrees AB Inbev takeover deal of £68bn

    7.46am BST

    The impact of China’s slowdown will be felt around the globe, warns economist Cees Bruggemans.

    China September trade: exports -3.7% yoy, imports -20%. China is Aussie & Kiwi biggest export destination. Doesn't bode well for currencies

    7.38am BST

    The 20% tumble in Chinese imports last month means that growth is continuing to slow, says Yang Zhao, China economist at Nomura Holdings Inc. in Hong Kong.

    He said (via Bloomberg)

    “Import growth remained sluggish, suggesting weakening domestic demand, particularly investment demand

    We maintain our view that GDP growth will decline to 6.7 percent in the third quarter.”

    7.33am BST

    The latest trade data from China has sent a shiver through the markets this morning.

    Chinese imports slumped by over 20% year-on-year in September (in dollar terms), a worse performance than economists had expected. That means imports have now fallen for 11 months running, as the country’s economy has slowed.

    Imports plunged 20.4% in September from a year earlier to $145.2bn, customs officials said, due to weak commodity prices and soft domestic demand.

    These factors will complicate Beijing’s efforts to stave off deflation, one of the headwinds threatening the world’s second biggest economy.

    Equities down, metals down, Oz$ down...after Chinese imports SLUMP 17.7%

    7.21am BST

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

    After the glamour and drama of yesterday’s Nobel economics prize, we’re back into the gritty world of data this morning.

    Continue reading...

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