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| Stock markets rally as China vows to boost spending - live updates | Stock markets rally as China vows to boost spending - live updates |
| (35 minutes later) | |
| 10.23am BST10:23 | |
| The drop in Britain’s manufacturing output in July suggests growth is weakening this quarter, as the slowdown in China and beyond hits demand. | |
| Howard Archer of IHS Global Insight says growth could drop to 0.5%, from 0.7% three months ago, or even lower. | |
| Muted manufacturing activity and weakened exports is worrying for hopes that UK growth can become more balanced and less dependent on the services sector and consumer spending. | |
| 10.08am BST10:08 | |
| Mike Rigby, head of manufacturing at Barclays, says British factories are finding it tough to get export orders in the current climate. | |
| Here’s his take on today’s gloomy industrial data: | |
| “It hasn’t been a particularly good summer for manufacturing production and growth is hard-earned. Although macroeconomic conditions remain broadly supportive, it’s surprising that lower oil prices haven’t yet had more of a positive effect on the sector. | |
| With demand in the Eurozone still sluggish and an uncertain international picture, manufacturing output appears to be is stuck in neutral.” | |
| 10.07am BST10:07 | |
| The UK' trade deficit widened in July. Latest leg in the services surplus vs goods deficit race won by goods. pic.twitter.com/ODtO3fnbAQ | |
| 10.00am BST10:00 | |
| The disappointing drop in UK manufacturing output send the pound down almost half a cent against the US dollar, to $1.536 | |
| Weak UK manufacturing data sees sterling sell off, #GBPUSD down to 1.5360 RO pic.twitter.com/ejdJAnTbNp | |
| The stock market remains upbeat, though -- probably because weak economic data means more chance of fresh stimulus measures from central bankers. | |
| 9.52am BST09:52 | 9.52am BST09:52 |
| UK factory production slumps, and trade gap widens | UK factory production slumps, and trade gap widens |
| Two disappointing pieces of economic data from the UK just hit the wires, showing that Britain’s manufacturing base is struggling. | Two disappointing pieces of economic data from the UK just hit the wires, showing that Britain’s manufacturing base is struggling. |
| UK industrial output shrank by 0.4% month-on-month in July, dashing hopes of a small rise. It was just 0.8% higher than a year ago. | UK industrial output shrank by 0.4% month-on-month in July, dashing hopes of a small rise. It was just 0.8% higher than a year ago. |
| And the picture at manufacturing firms is particularly worrying. Production fell by 0.8% month-on-month, the biggest decline since May 2014, and is 0.5% lower than in July 2014. | And the picture at manufacturing firms is particularly worrying. Production fell by 0.8% month-on-month, the biggest decline since May 2014, and is 0.5% lower than in July 2014. |
| The Office for National Statistics says that output fell sharply at transport equipment makers, and manufacturer of basic metals & metal products. | The Office for National Statistics says that output fell sharply at transport equipment makers, and manufacturer of basic metals & metal products. |
| It may partly be because UK car factories shut down for the summer earlier this year. | It may partly be because UK car factories shut down for the summer earlier this year. |
| But that’s not the only bad news. | But that’s not the only bad news. |
| Britain’s trade gap has widened sharply in July. The deficit in goods widened to £11bn, the biggest since July 2014, as exports tumbled by almost 10%. | Britain’s trade gap has widened sharply in July. The deficit in goods widened to £11bn, the biggest since July 2014, as exports tumbled by almost 10%. |
| The ONS says: | The ONS says: |
| Exports of goods decreased by £2.3 billion to £22.8 billion in July 2015, the lowest export figure since September 2010. This is attributed to decreases in semi-manufactures (specifically chemicals) of £1.0 billion and finished manufactures of £0.8 billion. Imports of goods increased by £0.3 billion to £33.9 billion over the same period. | Exports of goods decreased by £2.3 billion to £22.8 billion in July 2015, the lowest export figure since September 2010. This is attributed to decreases in semi-manufactures (specifically chemicals) of £1.0 billion and finished manufactures of £0.8 billion. Imports of goods increased by £0.3 billion to £33.9 billion over the same period. |
| Even when Britain’s surplus in Services is included, the overall trade gap was £3.37bn, compared to just £800m in June. | Even when Britain’s surplus in Services is included, the overall trade gap was £3.37bn, compared to just £800m in June. |
| Updated at 9.54am BST | Updated at 9.54am BST |
| 9.23am BST09:23 | 9.23am BST09:23 |
| The prospect of more stimulus in Japan was a key factor behind today’s strong rally, which dragged the Nikkei back from a seven-month low. | The prospect of more stimulus in Japan was a key factor behind today’s strong rally, which dragged the Nikkei back from a seven-month low. |
| Associated Press explains: | Associated Press explains: |
| The Nikkei, which had earlier hit its lowest level since February, bounced after comments by Prime Minister Shinzo Abe raised expectations of more measures to shore up economic growth under his “Abenomics” stimulus program. | The Nikkei, which had earlier hit its lowest level since February, bounced after comments by Prime Minister Shinzo Abe raised expectations of more measures to shore up economic growth under his “Abenomics” stimulus program. |
| In remarks from Abe read to a Bank of America-Merrill Lynch conference in Tokyo, he pledged to cut corporate tax rates by at least 3.3% next year. | In remarks from Abe read to a Bank of America-Merrill Lynch conference in Tokyo, he pledged to cut corporate tax rates by at least 3.3% next year. |
| Passage of legislation making it easier to hire temporary workers and reports that Abe plans to keep his current economic team in a cabinet reshuffle next month also appeared to whet investor appetite. | Passage of legislation making it easier to hire temporary workers and reports that Abe plans to keep his current economic team in a cabinet reshuffle next month also appeared to whet investor appetite. |
| Japan’s economy does still look weak - it shrank by 0.3% in the last quarter, despite Abe’s existing stimulus measures. | Japan’s economy does still look weak - it shrank by 0.3% in the last quarter, despite Abe’s existing stimulus measures. |
| Japan's economy may require more emergency support... Which if you believe the markets is apparently great news. | Japan's economy may require more emergency support... Which if you believe the markets is apparently great news. |
| Updated at 9.23am BST | Updated at 9.23am BST |
| 8.56am BST08:56 | 8.56am BST08:56 |
| Shanghai stocks jump 2.3% | Shanghai stocks jump 2.3% |
| The promise of fresh stimulus from Beijing had a predictable effect on shares in China. | The promise of fresh stimulus from Beijing had a predictable effect on shares in China. |
| The Shanghai stock market joined the Asian rally with gusto, and closed 2.3% higher. | The Shanghai stock market joined the Asian rally with gusto, and closed 2.3% higher. |
| That’s a full 10% higher than its recent low, in late August, suggesting the selloff may have bottomed out. | That’s a full 10% higher than its recent low, in late August, suggesting the selloff may have bottomed out. |
| Even so, it still leaves the Chinese market down a third since June as the equity bubble deflates. | Even so, it still leaves the Chinese market down a third since June as the equity bubble deflates. |
| Updated at 8.57am BST | Updated at 8.57am BST |
| 8.49am BST08:49 | 8.49am BST08:49 |
| China's pledge to boost spending | China's pledge to boost spending |
| Reuters has a good take on China’s new pledge to boost spending, a day after trade data showed a worrying tumble in imports. | Reuters has a good take on China’s new pledge to boost spending, a day after trade data showed a worrying tumble in imports. |
| China will strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system to support the economy, the Ministry of Finance said, joining other steps by authorities to re-energize sputtering growth. | China will strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system to support the economy, the Ministry of Finance said, joining other steps by authorities to re-energize sputtering growth. |
| The ministry will accelerate major construction projects, bring in private financing through increased use of the public private partnership (PPP) model, standardize the management of local government debt and reform taxes, it said in a statement late on Tuesday. | The ministry will accelerate major construction projects, bring in private financing through increased use of the public private partnership (PPP) model, standardize the management of local government debt and reform taxes, it said in a statement late on Tuesday. |
| Chinese policymakers have stepped up efforts to revive an economy growing at its slowest pace in decades, with a 40 percent plunge in mainland stock markets since mid-June roiling global financial markets. | Chinese policymakers have stepped up efforts to revive an economy growing at its slowest pace in decades, with a 40 percent plunge in mainland stock markets since mid-June roiling global financial markets. |
| On Tuesday, data showed China’s imports tumbled in August, raising concerns about the health of the world’s second-largest economy and its contribution to global growth. | On Tuesday, data showed China’s imports tumbled in August, raising concerns about the health of the world’s second-largest economy and its contribution to global growth. |
| “We will accelerate the implementation and improvement of proactive fiscal policy and related measures, do timely fine tuning, and speed up reform measures to support stable growth and promote continued healthy economic development,” the finance ministry statement said. | “We will accelerate the implementation and improvement of proactive fiscal policy and related measures, do timely fine tuning, and speed up reform measures to support stable growth and promote continued healthy economic development,” the finance ministry statement said. |
| Full story: China finance minister targets fiscal policy, infrastructure to support economy | Full story: China finance minister targets fiscal policy, infrastructure to support economy |
| 8.33am BST08:33 | 8.33am BST08:33 |
| Japan’s stock market has been one of the worst performers since China devalued the yuan last month. | Japan’s stock market has been one of the worst performers since China devalued the yuan last month. |
| The Nikkei’s remarkable 7.7% leap today suggests that investors are now shaking off their worries. | The Nikkei’s remarkable 7.7% leap today suggests that investors are now shaking off their worries. |
| Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management, said (via Bloomberg): | Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management, said (via Bloomberg): |
| “The selloff in Japanese equities has been excessive amid concerns over China’s economic slowdown. Today’s rally can be sustained once the market’s perception of the Chinese economy improves.” | “The selloff in Japanese equities has been excessive amid concerns over China’s economic slowdown. Today’s rally can be sustained once the market’s perception of the Chinese economy improves.” |
| 8.25am BST08:25 | 8.25am BST08:25 |
| Budget airline Ryanair can also take some credit for today’s upbeat mood. | Budget airline Ryanair can also take some credit for today’s upbeat mood. |
| Ryanair hiked its profit forecast by 25% this morning after stronger-than-expected passenger growth over the summer. Its shares have surged 9% in Dublin this morning to a new record high. | Ryanair hiked its profit forecast by 25% this morning after stronger-than-expected passenger growth over the summer. Its shares have surged 9% in Dublin this morning to a new record high. |
| Updated at 8.27am BST | Updated at 8.27am BST |
| 8.19am BST08:19 | 8.19am BST08:19 |
| The main European markets are rallying too; with the German DAX up 2.1% and France’s CAC up 2.3%. | The main European markets are rallying too; with the German DAX up 2.1% and France’s CAC up 2.3%. |
| Shares in carmakers such as Renault, Daimler and BMW are all up around 5%, after China reported a rise in car sales last month. | Shares in carmakers such as Renault, Daimler and BMW are all up around 5%, after China reported a rise in car sales last month. |
| . @BMW & @Groupe_Renault both up 5%...auto stocks getting lift after China auto sales August give some relief = +0.6% yoy | . @BMW & @Groupe_Renault both up 5%...auto stocks getting lift after China auto sales August give some relief = +0.6% yoy |
| 8.14am BST08:14 | 8.14am BST08:14 |
| FTSE 100 jumps 1.7% in early trading | FTSE 100 jumps 1.7% in early trading |
| Britain’s FTSE 100 has jumped by 100 points at the start of trading, a gain of 1.7%, to 6246 points. | Britain’s FTSE 100 has jumped by 100 points at the start of trading, a gain of 1.7%, to 6246 points. |
| Mining shares are leading the way, with commodity trader Glencore up 5.8% and Anglo American up 4%. Both companies would benefit if China does boost spending to avoid a “hard landing”, as it appeared to pledge overnight. | Mining shares are leading the way, with commodity trader Glencore up 5.8% and Anglo American up 4%. Both companies would benefit if China does boost spending to avoid a “hard landing”, as it appeared to pledge overnight. |
| 8.07am BST08:07 | 8.07am BST08:07 |
| European stock markets are open, sending traders racing to buy shares..... | European stock markets are open, sending traders racing to buy shares..... |
| It's time. @RobinKwong http://t.co/VQA0NGhKVR pic.twitter.com/hVAfdRA2ga | It's time. @RobinKwong http://t.co/VQA0NGhKVR pic.twitter.com/hVAfdRA2ga |
| 8.06am BST08:06 | 8.06am BST08:06 |
| World Bank: Fed shouldn't raise rates now | World Bank: Fed shouldn't raise rates now |
| Today’s market rally is also being driven by hopes that the US Federal Reserve will not raise interest rates next week. | Today’s market rally is also being driven by hopes that the US Federal Reserve will not raise interest rates next week. |
| The World Bank’s chief economist, Kaushik Basu, told the Financial Times that the Fed risks triggering “panic and turmoil” in emerging markets if it hikes at its September meeting. | The World Bank’s chief economist, Kaushik Basu, told the Financial Times that the Fed risks triggering “panic and turmoil” in emerging markets if it hikes at its September meeting. |
| Policymakers hold fire until the global economy is on a surer footing, Basu argued. | Policymakers hold fire until the global economy is on a surer footing, Basu argued. |
| More here: | More here: |
| World Bank chief economist warns Fed to delay rate rise | World Bank chief economist warns Fed to delay rate rise |
| 7.40am BST07:40 | 7.40am BST07:40 |
| Introduction: Markets rally as China promises to do more | Introduction: Markets rally as China promises to do more |
| Good morning. | Good morning. |
| A new sense of optimism is racing through the financial world this morning, driving shares up sharply across Asia - with Europe due to follow. | A new sense of optimism is racing through the financial world this morning, driving shares up sharply across Asia - with Europe due to follow. |
| Japan’s stock market has just posted its biggest one-day jump in seven years, as confidence returned to Tokyo’s trading floors. | Japan’s stock market has just posted its biggest one-day jump in seven years, as confidence returned to Tokyo’s trading floors. |
| The Nikkei surged by 7.71%, a gain of 1,343 points. to close at 18,770. | The Nikkei surged by 7.71%, a gain of 1,343 points. to close at 18,770. |
| Every share gained ground, with many jumping over 10%. | Every share gained ground, with many jumping over 10%. |
| We’ve not seen this sort of move since the wild days of the financial crisis in 2008. | We’ve not seen this sort of move since the wild days of the financial crisis in 2008. |
| The surge was triggered by two factors. | The surge was triggered by two factors. |
| 1) Prime minister Shinzo Abe pledged to implement a planned corporation tax cut, and to go further if possible. | 1) Prime minister Shinzo Abe pledged to implement a planned corporation tax cut, and to go further if possible. |
| 2) New optimism over China. Last night, China’s Ministry of Finance issued a statement focused on “fiscal measures to support growth” - seen as a sign that Beijing will spend more to support the economy. | 2) New optimism over China. Last night, China’s Ministry of Finance issued a statement focused on “fiscal measures to support growth” - seen as a sign that Beijing will spend more to support the economy. |
| Angus Nicholson of IG Index explains: | Angus Nicholson of IG Index explains: |
| Global markets have been buoyed by China’s new market intervention and the announcement from the China’s Ministry of Finance (MoF) that they will speed up fiscal spending. Japanese markets have been the standout performer in Asia today, seeing a record daily rise off the back of plans to cut corporate tax rates.... | Global markets have been buoyed by China’s new market intervention and the announcement from the China’s Ministry of Finance (MoF) that they will speed up fiscal spending. Japanese markets have been the standout performer in Asia today, seeing a record daily rise off the back of plans to cut corporate tax rates.... |
| Prime Minister Shinzo Abe announced plans for dramatic cuts to corporate tax rates. He stated that he planned to initially cut the current corporate tax rate of 35% by 3.3%, and push it down into the twenties over several years until it reaches as level that compares favourably in the international context. | Prime Minister Shinzo Abe announced plans for dramatic cuts to corporate tax rates. He stated that he planned to initially cut the current corporate tax rate of 35% by 3.3%, and push it down into the twenties over several years until it reaches as level that compares favourably in the international context. |
| The market was no doubt buoyed by this news alongside renewed Chinese stock market support and fiscal spending, as well as further weakness in the yen. However, the Nikkei 225 was also partly just very oversold and primed for a rally on short covering alone. The percentage of stocks trading below their 200-day moving average had reached 20.4%, its lowest level since mid-2012. | The market was no doubt buoyed by this news alongside renewed Chinese stock market support and fiscal spending, as well as further weakness in the yen. However, the Nikkei 225 was also partly just very oversold and primed for a rally on short covering alone. The percentage of stocks trading below their 200-day moving average had reached 20.4%, its lowest level since mid-2012. |
| Good news for those who suffered losses after the Great Fall of China, three weeks ago. | Good news for those who suffered losses after the Great Fall of China, three weeks ago. |
| A stormer of a session for the Nikkei sees it finish +1,343 points or 7.71% higher. FTSE100 forecast to start +100 points at 6246. | A stormer of a session for the Nikkei sees it finish +1,343 points or 7.71% higher. FTSE100 forecast to start +100 points at 6246. |
| "Billions wiped onto pensions" ™ | "Billions wiped onto pensions" ™ |
| We’ll be tracking all the latest developments across the world economy, the financial markets, the eurozone and business through the day. | We’ll be tracking all the latest developments across the world economy, the financial markets, the eurozone and business through the day. |
| Updated at 8.08am BST | Updated at 8.08am BST |