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Germany hit by weak trade data - business live Germany hit by weak trade data - business live
(35 minutes later)
9.27am GMT09:27
Anglo American’s slump is deepening. The mining firm’s shares have now tumbled by 11% today, meaning it has lost 76% of its value this year.
Anglo-American, once a #mining titan, now worth just $5.6bn -- or about the same as the company that makes Candy Crush.
Updated at 9.27am GMT
9.17am GMT09:17
Two interesting developments from China to flag up:
1) The People’s Bank of Chine has fixed the yuan at its lowest level against the US dollar in four years. That indicates that the economic slowdown, and capital outflows, are hurting the yuan.
The PBoC may be relaxing its efforts to defend the yuan, now that the IMF has agreed to add it to its currency basket.
2) China’s inflation rate came in higher than expected last month, rising to 1.5% from 1.3% in October.
However, the prices that Chinese firms are receiving for their goods (the producer prices index) fell again. That indicates weak demand - a key cause of the commodity crash.
#China's inflation stabilizes BUT producer prices extending declines to a record 45 months. https://t.co/5wq6ShBV7n pic.twitter.com/2ixXrTBhAE
9.01am GMT09:01
Societe Generale’s Kit Juckes captures the mood this morning:
Oil prices have stopped falling, at least for now. Commodity markets are quiet even as the press is dominated by their weakness. And there’s a dearth of news to drive direction.
8.57am GMT08:57
There’s not relief for Anglo American this morning, as the long-established mining group’s shares hit fresh lows.
Shares in Anglo have slumped by almost 6%, having tumbled by 12% on Tuesday to its lowest ever level.
Investors clearly don’t think the worst is over for Anglo, after it announced 85,000 job cuts and froze its dividend yesterday.
Wednesday's FT front page: Commodities rout spurs Anglo to axe payouts and 85,000 jobs #tomorrowspaperstoday pic.twitter.com/oIV76UM4A7
Other mining stocks are recovering a little, though.
Rio Tinto is up 0.8%, having hit the lowest since 2009 on Tuesday. BHP Billiton has gained 0.9%, staggering back from a 10-year low.
8.40am GMT08:408.40am GMT08:40
Oil rout takes a breatherOil rout takes a breather
After two days of turmoil, there is a sense of calm in the commodities sector today.After two days of turmoil, there is a sense of calm in the commodities sector today.
Brent crude oil has gained 1.2% to $40.78 per barrel in early trading. That follows a truly dramatic day yesterday when it plunged below $40 before rebounding:Brent crude oil has gained 1.2% to $40.78 per barrel in early trading. That follows a truly dramatic day yesterday when it plunged below $40 before rebounding:
Oil. Boing. pic.twitter.com/74et3KOOx4Oil. Boing. pic.twitter.com/74et3KOOx4
US crude is gaining ground too - up 1.6% at $38.12 per barrel.US crude is gaining ground too - up 1.6% at $38.12 per barrel.
But there’s still plenty of nervousness in the markets.But there’s still plenty of nervousness in the markets.
FXTM Research Analyst Lukman Otunuga says prices could easily subside again:FXTM Research Analyst Lukman Otunuga says prices could easily subside again:
The decision from OPEC late last week to leave production levels unchanged has left a damaging mark and with investor sentiment continuously weak, the gates have been left wide open for WTI Oil to trade to extremely low levels, the likes of which have not been seen since the beginning of 2009 when prices reached $35.The decision from OPEC late last week to leave production levels unchanged has left a damaging mark and with investor sentiment continuously weak, the gates have been left wide open for WTI Oil to trade to extremely low levels, the likes of which have not been seen since the beginning of 2009 when prices reached $35.
8.26am GMT08:268.26am GMT08:26
German trade surplus near record highGerman trade surplus near record high
Germany’s trade surplus actually rose in October to over €20bn, because imports (-3.4%) fell faster than exports (-1.2%).Germany’s trade surplus actually rose in October to over €20bn, because imports (-3.4%) fell faster than exports (-1.2%).
German #export growth continues to slow down. Monthly trade surplus still around EUR 20 bn. #Germany #trade pic.twitter.com/fSOqxQTXayGerman #export growth continues to slow down. Monthly trade surplus still around EUR 20 bn. #Germany #trade pic.twitter.com/fSOqxQTXay
That’s close to the record surpluses posted this summer.That’s close to the record surpluses posted this summer.
Some may see this as a sign of Germany’s industrial might - producing products the rest of the world is keen to buy.Some may see this as a sign of Germany’s industrial might - producing products the rest of the world is keen to buy.
But it will also concern critics who argue that the German trade surplus is causing serious problems; sucking demand from elsewhere, and making it harder for its neighbours to grow.But it will also concern critics who argue that the German trade surplus is causing serious problems; sucking demand from elsewhere, and making it harder for its neighbours to grow.
As America’s former top central banker, Ben Bernanke, put it recently:As America’s former top central banker, Ben Bernanke, put it recently:
In a slow-growing world that is short aggregate demand, Germany’s trade surplus is a problem.In a slow-growing world that is short aggregate demand, Germany’s trade surplus is a problem.
Several other members of the euro zone are in deep recession, with high unemployment and with no “fiscal space” (meaning that their fiscal situations don’t allow them to raise spending or cut taxes as a way of stimulating domestic demand). Despite signs of recovery in the United States, growth is also generally slow outside the euro zone. The fact that Germany is selling so much more than it is buying redirects demand from its neighbors (as well as from other countries around the world), reducing output and employment outside Germany at a time at which monetary policy in many countries is reaching its limits.Several other members of the euro zone are in deep recession, with high unemployment and with no “fiscal space” (meaning that their fiscal situations don’t allow them to raise spending or cut taxes as a way of stimulating domestic demand). Despite signs of recovery in the United States, growth is also generally slow outside the euro zone. The fact that Germany is selling so much more than it is buying redirects demand from its neighbors (as well as from other countries around the world), reducing output and employment outside Germany at a time at which monetary policy in many countries is reaching its limits.
8.14am GMT08:148.14am GMT08:14
ING: Germany suffering from Chinese and Russian slowdownING: Germany suffering from Chinese and Russian slowdown
Today’s trade data show that Germany’s economy is “weakening, but not faltering”, argues Carsten Brzeski, ING economist.Today’s trade data show that Germany’s economy is “weakening, but not faltering”, argues Carsten Brzeski, ING economist.
He points out that demand from certain large emerging nations has contracted this year.He points out that demand from certain large emerging nations has contracted this year.
During the first nine months of the year, exports to China were down by 2.5% compared with last year’s period, showing the negative impact from the ongoing slowdown of the Chinese economy.During the first nine months of the year, exports to China were down by 2.5% compared with last year’s period, showing the negative impact from the ongoing slowdown of the Chinese economy.
At the same time, exports to Russia were slashed further, dropping another 28% on the back of sanctions. On the positive side, exports to the US surged by more than 20%, reflecting the direct impact of the euro weakening.At the same time, exports to Russia were slashed further, dropping another 28% on the back of sanctions. On the positive side, exports to the US surged by more than 20%, reflecting the direct impact of the euro weakening.
Germany has benefitted strongly from the ultra-loose monetary policy in the eurozone this year (ironic, given it needed the stimulus rather less than, say, France or Italy)Germany has benefitted strongly from the ultra-loose monetary policy in the eurozone this year (ironic, given it needed the stimulus rather less than, say, France or Italy)
And Carsten predicts that this trend will continue in 2016, with the weak euro making German exports competitive.And Carsten predicts that this trend will continue in 2016, with the weak euro making German exports competitive.
German exports have become an extremely mixed bag, always up for surprises and full of diverging trends. Due to too many economic slowdowns and geopolitical conflicts around the world, exports will continue having troubles gaining more momentum in the period ahead.German exports have become an extremely mixed bag, always up for surprises and full of diverging trends. Due to too many economic slowdowns and geopolitical conflicts around the world, exports will continue having troubles gaining more momentum in the period ahead.
However, as long as the monetary policy divergence on both sides of the Atlantic continues and the ECB continues with QE, exports should remain supportive to growth.However, as long as the monetary policy divergence on both sides of the Atlantic continues and the ECB continues with QE, exports should remain supportive to growth.
Weakening but not faltering. Quick take on German trade data. https://t.co/2Xr6ayvEkSWeakening but not faltering. Quick take on German trade data. https://t.co/2Xr6ayvEkS
Updated at 8.18am GMTUpdated at 8.18am GMT
7.56am GMT07:567.56am GMT07:56
German imports and exports slideGerman imports and exports slide
Germany has kicked the day off with disappointing trade data which suggests Europe’s largest economy is suffering from weakening demand at home, and abroad.Germany has kicked the day off with disappointing trade data which suggests Europe’s largest economy is suffering from weakening demand at home, and abroad.
German exports fell by 1.2 % month-on-month to €99bn in October (on a seasonally adjusted basis), according to the Federal Statistics Office.German exports fell by 1.2 % month-on-month to €99bn in October (on a seasonally adjusted basis), according to the Federal Statistics Office.
And imports took a sharper hit - contracting by 3.4% during the month to €78.3bn.And imports took a sharper hit - contracting by 3.4% during the month to €78.3bn.
It’s a weaker performance than expected:It’s a weaker performance than expected:
#German trade balance data disappointed - miss on Export and import figure#German trade balance data disappointed - miss on Export and import figure
The data also shows that the slowdown in emerging markets has been hurting Germany this year.The data also shows that the slowdown in emerging markets has been hurting Germany this year.
Over the year, German exports outside the EU have shrunk by 0.9% while sales to other EU countries are up by 6.4%.Over the year, German exports outside the EU have shrunk by 0.9% while sales to other EU countries are up by 6.4%.
Not a great sign for German growth this quarter....Not a great sign for German growth this quarter....
Bad #Germany trade data indicate a slowdown in Q4.Bad #Germany trade data indicate a slowdown in Q4.
I’ll pull together some reaction now...I’ll pull together some reaction now...
Updated at 8.20am GMTUpdated at 8.20am GMT
7.32am GMT07:327.32am GMT07:32
The Agenda: Can commodity crunch bottom out?The Agenda: Can commodity crunch bottom out?
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.
Today we’ll be watching the commodity markets closely, after yesterday’s rout.Today we’ll be watching the commodity markets closely, after yesterday’s rout.
Some investors are feeling pretty bruised after seeing iron ore prices hit their lowest in a decade, oil plunge below $40/barrel, and mining company shares hit their lowest in years (or ever, in Anglo American’s case).Some investors are feeling pretty bruised after seeing iron ore prices hit their lowest in a decade, oil plunge below $40/barrel, and mining company shares hit their lowest in years (or ever, in Anglo American’s case).
And worse could be ahead, if oil prices don’t bottom out soon.And worse could be ahead, if oil prices don’t bottom out soon.
As Alexei Moiseev, Russia’s deputy finance minister, put it to Reuters:As Alexei Moiseev, Russia’s deputy finance minister, put it to Reuters:
“If oil goes to $20, we will need to do additional [spending] cuts. Clearly we have shown that we are very willing to cut fiscal spending in line with an oil price at $60, for example.“If oil goes to $20, we will need to do additional [spending] cuts. Clearly we have shown that we are very willing to cut fiscal spending in line with an oil price at $60, for example.
In order for us to be long-term sustainable [with the] oil price at $40, we need to do additional cuts, but if the oil price goes to $20 we need to do even more cuts.”In order for us to be long-term sustainable [with the] oil price at $40, we need to do additional cuts, but if the oil price goes to $20 we need to do even more cuts.”
Related: Oil producers prepare for prices to halve to $20 a barrelRelated: Oil producers prepare for prices to halve to $20 a barrel
We get a new snapshot of America’s oil industry at 3.3pm GMT today, when the latest US crude oil inventories are released.We get a new snapshot of America’s oil industry at 3.3pm GMT today, when the latest US crude oil inventories are released.
The commodity rout is raising new concerns over the resilience of the global economy, as America’s central bank prepares to raise interest rates.The commodity rout is raising new concerns over the resilience of the global economy, as America’s central bank prepares to raise interest rates.
We find out how worried the Bank of England, when the minutes of its latest Financial Policy Committee meeting are released at 9.30am.We find out how worried the Bank of England, when the minutes of its latest Financial Policy Committee meeting are released at 9.30am.
And transport group Stagecoach is releasing its results.And transport group Stagecoach is releasing its results.
We’ll be tracking all the main events through the day....We’ll be tracking all the main events through the day....
Updated at 7.37am GMTUpdated at 7.37am GMT