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| Markets rally as eurozone growth hits four-year high - business live | |
| (35 minutes later) | |
| 9.29am BST09:29 | |
| European markets push higher after PMI reports | |
| European investors are cheering the surge in eurozone private sector growth last month. | |
| The FTSE 100 is now up by 103 points, or 1.7%, while Germany’s DAX is 1.8% higher. | |
| Today’s PMI reports are helping to ease concerns over Europe’s economy, as Howard Archer of IHS Global Insight explains: | |
| IHS believes that the Eurozone should be able to achieve reasonable, if unspectacular growth over the coming months – although the threat to global growth that could come from a marked Chinese slowdown clearly poses a downside risk. | |
| 9.19am BST09:19 | |
| The increase in eurozone private sector growth means even less chance that the ECB will announce new stimulus measures today. | |
| So argues Bloomberg economist Maxime Sbaihi, who predicts plenty of questions about China at this afternoon’s press conference: | |
| CHART: Euro-area #PMI at new 4y high in August. No summer break for the recovery -> No #ECB policy change today. pic.twitter.com/HHHbvvlw6U | |
| It's #ECB day again and a different (external) world than last meeting (July 16). #Draghi will have more questions on China than #Greece... | |
| 9.11am BST09:11 | |
| Eurozone private sector growth hits four-year high | |
| Despite the slowdown in France, the eurozone’s private sector is growing at its fastest rate in four years. | |
| Data firm Markit just released its Eurozone composite PMI, and it shows that output expanded more quickly in August. | |
| The easing of the Greek debt crisis appears to have boosted confidence, encouraging companies to hire extra staff to handle a rise in business. | |
| Markit’s Final Eurozone Services Business Activity Index rose to 54.4, up from July 54.0. | |
| And if you include the latest manufacturing data, the final Eurozone Composite Output Index rose to 54.3, up from July’s 53.9. | |
| Chris Williamson of Markit says Spain’s performance was particularly impressive, while France appears to be stalling again: | |
| “Although global economic worries have intensified in recent weeks, the calming of Grexit fears has led to an improvement in the business environment across the eurozone, pushing the pace of economic growth to its fastest for just over four years in August. The PMI is indicating euro area GDP growth close to 0.4% in the third quarter, a solid albeit unspectacular rate of expansion. | |
| “The upturn was stronger than recorded by the flash reading, thanks mainly to stronger growth in Germany and the best performance for over four years in Italy, where the PMIs are both pointing to 0.5% GDP growth in the third quarter. But it is Spain that remains the star performer among the largest eurozone countries, with the PMI signalling another 1.0% GDP growth spurt in the third quarter. | |
| “The worrying deterioration of growth in France is a major concern, the PMI dropping below the flash reading to signal a near-stagnation of the economy in the third quarter, but the ECB will be reassured by the ability of the eurozone economy as a whole to withstand recent headwinds. | |
| In summary, Spain, Italy and Germany all beat expectations for Services PMI's. France slips back #euro | |
| 8.59am BST08:59 | |
| Not for the first time (or the last, I fear), Germany’s economy has outperformed France. | |
| The German service sector PMI rose to 54.9 last month, from 53.8 in July, indicating faster growth. | |
| Companies reported an increase in output and new business, meaning they could hire more staff and even raise prices. That last point will please the ECB as it wonders if inflation can pick up. | |
| 8.55am BST08:55 | |
| Less encouragingly, France’s service sector came off the boil last month and only reported modest growth: | |
| France Services PMI (Aug) falls back to 50.6, down from 51.8 | |
| 8.52am BST08:52 | 8.52am BST08:52 |
| Now this is encouraging -- Italy’s service sector just grew at the fastest pace since the early days of the financial crisis. | Now this is encouraging -- Italy’s service sector just grew at the fastest pace since the early days of the financial crisis. |
| The Italian Services PMI, which tracks activity across the sector, jumped to 54.6 in August, from 52.0 in July. | The Italian Services PMI, which tracks activity across the sector, jumped to 54.6 in August, from 52.0 in July. |
| Markit reports that: | Markit reports that: |
| However, business expectations weakened to their lowest level this year. | However, business expectations weakened to their lowest level this year. |
| Service sector activity growth in #Italy fastest in almost five-and-a-half years in August. Headline index at 54.6 http://t.co/yuYYk2FmaU | Service sector activity growth in #Italy fastest in almost five-and-a-half years in August. Headline index at 54.6 http://t.co/yuYYk2FmaU |
| Updated at 8.53am BST | Updated at 8.53am BST |
| 8.42am BST08:42 | 8.42am BST08:42 |
| Sweden's Riksbank hints at further stimulus | Sweden's Riksbank hints at further stimulus |
| Sweden’s central bank has resisted the temptation to cut borrowing costs to fresh record lows. | Sweden’s central bank has resisted the temptation to cut borrowing costs to fresh record lows. |
| The Riksbank left benchmark interest rates unchanged at minus 0.35%, but did hint that it could do more, saying: | The Riksbank left benchmark interest rates unchanged at minus 0.35%, but did hint that it could do more, saying: |
| “The Riksbank remains highly prepared to make monetary policy even more expansionary in the event of inflation prospects deteriorating.” | “The Riksbank remains highly prepared to make monetary policy even more expansionary in the event of inflation prospects deteriorating.” |
| #Swedish Central Bank leaves rate unchanged,but cuts inflation outlook& says room more QE...almost exactly what expected from @ecb later | #Swedish Central Bank leaves rate unchanged,but cuts inflation outlook& says room more QE...almost exactly what expected from @ecb later |
| 8.40am BST08:40 | 8.40am BST08:40 |
| Budget airline easyJet is leading the FTSE 100 risers in London. | Budget airline easyJet is leading the FTSE 100 risers in London. |
| Shares surged by almost 7%, after raising its profit forecasts and reporting record traffic levels in August. | Shares surged by almost 7%, after raising its profit forecasts and reporting record traffic levels in August. |
| Updated at 8.40am BST | Updated at 8.40am BST |
| 8.36am BST08:36 | 8.36am BST08:36 |
| European shares rally | European shares rally |
| Up we go again! European stock markets have jumped at the start of trading, as investors pile into shares ahead of the ECB meeting. | Up we go again! European stock markets have jumped at the start of trading, as investors pile into shares ahead of the ECB meeting. |
| The FTSE 100 leapt by 86 points, or nearly 1.5%, with traders anticipating that Mario Draghi may suggest new stimulus moves at this afternoon’s press conference in Frankfurt. | The FTSE 100 leapt by 86 points, or nearly 1.5%, with traders anticipating that Mario Draghi may suggest new stimulus moves at this afternoon’s press conference in Frankfurt. |
| The absence of any dramatic swings in China may have helped the mood too, helping the City has shrugged off its recent angst over the global economy. | The absence of any dramatic swings in China may have helped the mood too, helping the City has shrugged off its recent angst over the global economy. |
| 8.31am BST08:31 | 8.31am BST08:31 |
| Spain’s services companies have posted another month of solid growth, as its economy continues to recover. | Spain’s services companies have posted another month of solid growth, as its economy continues to recover. |
| The Spanish Services PMI came in at 59.6 in August, down very slightly on July’s 59.7 but still a strong result (any reading over 50 shows growth). Measures of new business and job creation remained robust too. | The Spanish Services PMI came in at 59.6 in August, down very slightly on July’s 59.7 but still a strong result (any reading over 50 shows growth). Measures of new business and job creation remained robust too. |
| 8.20am BST08:20 | 8.20am BST08:20 |
| Overnight, the International Monetary Fund has warned that the downside risks to global growth have risen, partly due to the slowdown in China. | Overnight, the International Monetary Fund has warned that the downside risks to global growth have risen, partly due to the slowdown in China. |
| In a new report, ahead of the G20 finance ministers meeting in Ankara this weekend, the Fund said: | In a new report, ahead of the G20 finance ministers meeting in Ankara this weekend, the Fund said: |
| Near-term downside risks for emerging economies have increased, given the combination of China’s growth transition, lower commodity prices, potential adverse corporate balance sheet and funding challenges related to a dollar appreciation, and capital flow reversals and disruptive asset price shifts. | Near-term downside risks for emerging economies have increased, given the combination of China’s growth transition, lower commodity prices, potential adverse corporate balance sheet and funding challenges related to a dollar appreciation, and capital flow reversals and disruptive asset price shifts. |
| Risks to growth include financial market volatility, declining commodity prices & depreciating EMs currencies. #G20 http://t.co/sHBUAx62c0 | Risks to growth include financial market volatility, declining commodity prices & depreciating EMs currencies. #G20 http://t.co/sHBUAx62c0 |
| The IMF also warned that global interest rates may have to stay low for even longer -- a signal to the Federal Reserve not to hike borrowing costs this month? | The IMF also warned that global interest rates may have to stay low for even longer -- a signal to the Federal Reserve not to hike borrowing costs this month? |
| Related: IMF: China slowdown could keep global interest rates low | Related: IMF: China slowdown could keep global interest rates low |
| 8.13am BST08:13 | 8.13am BST08:13 |
| Most mornings recently, we’ve been glued to the twists and turns on the Chinese stock market. Not today, though. | Most mornings recently, we’ve been glued to the twists and turns on the Chinese stock market. Not today, though. |
| The Shanghai index is closed until Monday, so Beijing could hold a parade to mark its victory over Japan and the end of the second world war. And what an event it was, with masses of tanks, planes and troops on display. | The Shanghai index is closed until Monday, so Beijing could hold a parade to mark its victory over Japan and the end of the second world war. And what an event it was, with masses of tanks, planes and troops on display. |
| Russia’s Vladimir Putin was there too; Britain, curiously, was represented by Ken Clarke MP, the long-serving former minister. | Russia’s Vladimir Putin was there too; Britain, curiously, was represented by Ken Clarke MP, the long-serving former minister. |
| For the Brits Ken Clarke has turned up. Didn't seem overly keen to have the official photo. pic.twitter.com/nyum4nUE1n | For the Brits Ken Clarke has turned up. Didn't seem overly keen to have the official photo. pic.twitter.com/nyum4nUE1n |
| My colleague Claire Phipps live-blogged the whole thing: | My colleague Claire Phipps live-blogged the whole thing: |
| Related: China military parade commemorates second world war victory – as it happened | Related: China military parade commemorates second world war victory – as it happened |
| And Tom Phillips tweeted from Tiananmen Square: | And Tom Phillips tweeted from Tiananmen Square: |
| Xi, Putin aaaand Jiang Zemin out on balcony. Big gasp for last guy pic.twitter.com/V6Pcau9d8D | Xi, Putin aaaand Jiang Zemin out on balcony. Big gasp for last guy pic.twitter.com/V6Pcau9d8D |
| If you think you're melting imagine these guys... pic.twitter.com/33uUpcCkE1 | If you think you're melting imagine these guys... pic.twitter.com/33uUpcCkE1 |
| Tanks rolling into Tiananmen pic.twitter.com/IokDotmPXx | Tanks rolling into Tiananmen pic.twitter.com/IokDotmPXx |
| Updated at 8.16am BST | Updated at 8.16am BST |
| 7.54am BST07:54 | 7.54am BST07:54 |
| After some tough days, Asia’s markets are staging a modest recovery today. | After some tough days, Asia’s markets are staging a modest recovery today. |
| Japan’s Nikkei jumped by 0.7%, following three days of losses, and there are also gains in South Korea and India. | Japan’s Nikkei jumped by 0.7%, following three days of losses, and there are also gains in South Korea and India. |
| But there are still concerns over how the region will fare, given the turbulence in China. | But there are still concerns over how the region will fare, given the turbulence in China. |
| Angus Nicholson of IG reports “growing concern” about the Japanese banking sector, which may have made some reckless loans. | Angus Nicholson of IG reports “growing concern” about the Japanese banking sector, which may have made some reckless loans. |
| In the face of poor growth prospects in Japan, banks aggressively began lending to emerging Asian nations. With the massive falls seen in emerging market currencies over the past twelve months or so, defaults on these loans have been soaring. This is likely to be a major headwind to the performance of the Nikkei over the coming months as well. | In the face of poor growth prospects in Japan, banks aggressively began lending to emerging Asian nations. With the massive falls seen in emerging market currencies over the past twelve months or so, defaults on these loans have been soaring. This is likely to be a major headwind to the performance of the Nikkei over the coming months as well. |
| Updated at 7.55am BST | Updated at 7.55am BST |
| 7.36am BST07:36 | 7.36am BST07:36 |
| Introduction: ECB may cut forecasts today | Introduction: ECB may cut forecasts today |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| It’s European Central Bank day. President Mario Draghi and the governing council are gathering in Frankfurt to set monetary policy, and discuss the state of Europe’s economy. | It’s European Central Bank day. President Mario Draghi and the governing council are gathering in Frankfurt to set monetary policy, and discuss the state of Europe’s economy. |
| Economists believe the central bank could downgrade its inflation forecast, with price pressures stubbornly low and growth still somewhat sluggish. | Economists believe the central bank could downgrade its inflation forecast, with price pressures stubbornly low and growth still somewhat sluggish. |
| Draghi may also hint that the ECB could launch future stimulus measures, if inflation doesn’t pick up soon. It’s currently just 0.2%, compared to a target of just below 2%. | Draghi may also hint that the ECB could launch future stimulus measures, if inflation doesn’t pick up soon. It’s currently just 0.2%, compared to a target of just below 2%. |
| And he’ll also field a few questions about Greece, where the banking sector is still gripped by capital controls. | And he’ll also field a few questions about Greece, where the banking sector is still gripped by capital controls. |
| Draghi is quite capable of talking the euro down if he fancies it, and the prospect of a dovish performance from the ECB chief will push shares higher this morning: | Draghi is quite capable of talking the euro down if he fancies it, and the prospect of a dovish performance from the ECB chief will push shares higher this morning: |
| Ian Williams of stockbroker Peel Hunt says: | Ian Williams of stockbroker Peel Hunt says: |
| Investors will be looking to ECB President Draghi for more supportive comments later today. | Investors will be looking to ECB President Draghi for more supportive comments later today. |
| Our European opening calls: $FTSE 6130 up 47 $DAX 10134 up 86 $CAC 4590 up 35 $IBEX 10027 up 89 $MIB 21765 up 153 | Our European opening calls: $FTSE 6130 up 47 $DAX 10134 up 86 $CAC 4590 up 35 $IBEX 10027 up 89 $MIB 21765 up 153 |
| Today’s agenda: | Today’s agenda: |
| Sweden’s central bank is also meeting today. It could potentially cut interest rates deeper into negative territory to spur inflation. | Sweden’s central bank is also meeting today. It could potentially cut interest rates deeper into negative territory to spur inflation. |
| New PMI surveys of the world’s service sector are released today, which will show if growth eased in August. | New PMI surveys of the world’s service sector are released today, which will show if growth eased in August. |
| We also find out how many Americans claimed unemployment benefit last week, ahead of tomorrow’s eagerly awaited Non-Farm Payroll report. | We also find out how many Americans claimed unemployment benefit last week, ahead of tomorrow’s eagerly awaited Non-Farm Payroll report. |
| I’ll be tracking all the main events though the day. | I’ll be tracking all the main events though the day. |
| Updated at 7.55am BST | Updated at 7.55am BST |