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| Version 2 | Version 3 |
|---|---|
| China slowdown spooks global markets, while UK and US manufacturing disappoint - as it happened | China slowdown spooks global markets, while UK and US manufacturing disappoint - as it happened |
| (about 23 hours later) | |
| 5.38pm GMT | 5.38pm GMT |
| 17:38 | 17:38 |
| Stocks sink, oil price gains peter out as China provides the cues again in 2016 | Stocks sink, oil price gains peter out as China provides the cues again in 2016 |
| So it’s been a not-so-happy new year start on stock markets. | So it’s been a not-so-happy new year start on stock markets. |
| Any investors hoping 2016 would bring some fresh market forces will have been spooked by a very familiar pattern today, as weak manufacturing data from China again provided much of the (downward) momentum. | Any investors hoping 2016 would bring some fresh market forces will have been spooked by a very familiar pattern today, as weak manufacturing data from China again provided much of the (downward) momentum. |
| Here’s a closing summary of the first trading day of 2016. | Here’s a closing summary of the first trading day of 2016. |
| That’s all for today. Thanks for reading and the comments, we will be back early tomorrow with more rolling coverage from global markets. | That’s all for today. Thanks for reading and the comments, we will be back early tomorrow with more rolling coverage from global markets. |
| 5.01pm GMT | 5.01pm GMT |
| 17:01 | 17:01 |
| Sorry start to 2016 for stock markets, FTSE's second worst new year on record | Sorry start to 2016 for stock markets, FTSE's second worst new year on record |
| Time for a round-up of European stock markets at the close and on many exchanges it’s clearly been the worst start to the year for many years. | Time for a round-up of European stock markets at the close and on many exchanges it’s clearly been the worst start to the year for many years. |
| The FTSE 100 has lost almost 2.4% on the first day of trading in 2016, that’s a drop of 149 points to 6093. The bluechip index is now at its lowest since 22 December and today marked the biggest one-day drop since a 2.5% fall on 28 September 2015. It is also the second worst opening day on record, says RBS. | The FTSE 100 has lost almost 2.4% on the first day of trading in 2016, that’s a drop of 149 points to 6093. The bluechip index is now at its lowest since 22 December and today marked the biggest one-day drop since a 2.5% fall on 28 September 2015. It is also the second worst opening day on record, says RBS. |
| Here is how markets stand around Europe: | Here is how markets stand around Europe: |
| France’s CAC 40 down 3% | France’s CAC 40 down 3% |
| FTSE Eurofirst 300 down 2.8% | FTSE Eurofirst 300 down 2.8% |
| Germany’s Dax down 4.5% | Germany’s Dax down 4.5% |
| FTSE 100 down 2.4% | FTSE 100 down 2.4% |
| FTSE 100 posts 2nd worst opening day on record, down 2.6%. (h/t/ @asentance for eagle eyes on chart) pic.twitter.com/ctqs8uXj3j | FTSE 100 posts 2nd worst opening day on record, down 2.6%. (h/t/ @asentance for eagle eyes on chart) pic.twitter.com/ctqs8uXj3j |
| Those falls follows a plunge in Chinese shares - the worst ever start to a year for the Shanghai Composite index - which saw trading there halted. | Those falls follows a plunge in Chinese shares - the worst ever start to a year for the Shanghai Composite index - which saw trading there halted. |
| Over on Wall Street, things are not looking much better and the Dow Jones industrial average is down 2.4% while the S&P 500 is down 2.3%. | Over on Wall Street, things are not looking much better and the Dow Jones industrial average is down 2.4% while the S&P 500 is down 2.3%. |
| If the Dow closes where it is now, down 2.2%, it will be its worst opening day performance since 1932, when it fell 8.1% on Jan 4 that year. | If the Dow closes where it is now, down 2.2%, it will be its worst opening day performance since 1932, when it fell 8.1% on Jan 4 that year. |
| Dow's worst starts to a year over the past century: -8.1% in 1932 -2.3% in 1922 -1.8% in 1983 -1.7% in 1930, 1980 and 2008 Currently -2.5% | Dow's worst starts to a year over the past century: -8.1% in 1932 -2.3% in 1922 -1.8% in 1983 -1.7% in 1930, 1980 and 2008 Currently -2.5% |
| Updated | Updated |
| at 6.13pm GMT | at 6.13pm GMT |
| 4.33pm GMT | 4.33pm GMT |
| 16:33 | 16:33 |
| Oil price gains evaporate | Oil price gains evaporate |
| Just when you thought it might be safe to bet on a rising oil price, Brent crude has turned negative. | Just when you thought it might be safe to bet on a rising oil price, Brent crude has turned negative. |
| It had rallied to a session high of $38.99 a barrel earlier on the back of predictions supply could be hit by tensions between Iran and Saudia Arabia. But the price fell back on worries about slower demand after news of a further factory slowdown in China and releases from the US showing its construction and manufacturing sectors had lost steam. | It had rallied to a session high of $38.99 a barrel earlier on the back of predictions supply could be hit by tensions between Iran and Saudia Arabia. But the price fell back on worries about slower demand after news of a further factory slowdown in China and releases from the US showing its construction and manufacturing sectors had lost steam. |
| Brent crude is currently down 0.9% or 31 cents at $36.97 a barrel. | Brent crude is currently down 0.9% or 31 cents at $36.97 a barrel. |
| 4.23pm GMT | 4.23pm GMT |
| 16:23 | 16:23 |
| Meanwhile, former Bank of England policymaker David Blanchflower has been scouring the skies for omens.... | Meanwhile, former Bank of England policymaker David Blanchflower has been scouring the skies for omens.... |
| Just saw my first adult bald eagle of 2016 not sure what it means as stocks plunge but I couldn't see any vultures circling though | Just saw my first adult bald eagle of 2016 not sure what it means as stocks plunge but I couldn't see any vultures circling though |
| 4.18pm GMT | 4.18pm GMT |
| 16:18 | 16:18 |
| Sweden's central bank opens door to currency intervention | Sweden's central bank opens door to currency intervention |
| Sweden’s central bank has come a step closer to intervening in currency markets to weaken the crown, which it worries is keeping inflation from rising back to more normal levels. | Sweden’s central bank has come a step closer to intervening in currency markets to weaken the crown, which it worries is keeping inflation from rising back to more normal levels. |
| Against the backdrop of negative interest rates, a quantitative easing programme and a Swedish inflation rate in negative territory at -0.1%, the Riksbank’s governor Stefan Ingves said last week the central bank was ready to start currency interventions to stop the crown from strengthening. | Against the backdrop of negative interest rates, a quantitative easing programme and a Swedish inflation rate in negative territory at -0.1%, the Riksbank’s governor Stefan Ingves said last week the central bank was ready to start currency interventions to stop the crown from strengthening. |
| Today the bank’s policy-setting board said in a statement it has voted to give the governor the power to intervene immediately in the currency market. | Today the bank’s policy-setting board said in a statement it has voted to give the governor the power to intervene immediately in the currency market. |
| The decision at an extraordinary meeting of the six-member board means the central bank will be able to “instantly intervene on the foreign exchange market if necessary, as a complementary monetary policy measure, to safeguard the rise in inflation”. | The decision at an extraordinary meeting of the six-member board means the central bank will be able to “instantly intervene on the foreign exchange market if necessary, as a complementary monetary policy measure, to safeguard the rise in inflation”. |
| The statement adds: | The statement adds: |
| “Since the last monetary policy meeting in mid-December, the Swedish krona has appreciated against most other currencies. If this development were to continue, it could jeopardise the ongoing upturn in inflation.” | “Since the last monetary policy meeting in mid-December, the Swedish krona has appreciated against most other currencies. If this development were to continue, it could jeopardise the ongoing upturn in inflation.” |
| The crown weakened against the euro and the dollar after the announcement. | The crown weakened against the euro and the dollar after the announcement. |
| 3.51pm GMT | 3.51pm GMT |
| 15:51 | 15:51 |
| With global downturn fears prompting such a rocky start to the new year for global markets, what perfect timing for the IMF’s new economist to share his predictions for 2016. | With global downturn fears prompting such a rocky start to the new year for global markets, what perfect timing for the IMF’s new economist to share his predictions for 2016. |
| Maury Obstfeld has put China and its slowing economy high on his watchlist for 2016. He also highlights “the crisis of refugees fleeing Iraq and Syria”, climate change and international trade— “which has had setbacks in recent years”, Obstfeld says, citing the effective end of the Doha trade round. | Maury Obstfeld has put China and its slowing economy high on his watchlist for 2016. He also highlights “the crisis of refugees fleeing Iraq and Syria”, climate change and international trade— “which has had setbacks in recent years”, Obstfeld says, citing the effective end of the Doha trade round. |
| Obstfeld, former chair of the economics department at University of California at Berkeley, joined the International Monetary Fund in September to succeed Olivier Blanchard. Shortly before the start of the new year, IMF Survey magazine interviewed Obstfeld and has just published the chief economist’s views online. | Obstfeld, former chair of the economics department at University of California at Berkeley, joined the International Monetary Fund in September to succeed Olivier Blanchard. Shortly before the start of the new year, IMF Survey magazine interviewed Obstfeld and has just published the chief economist’s views online. |
| Here are some extracts: | Here are some extracts: |
| On key issues to watch in 2016: | On key issues to watch in 2016: |
| China will remain high on the list. Its economy is slowing as it transitions from investment and manufacturing to consumption and services. But the global spillovers from China’s reduced rate of growth, through its diminished imports and lower demand for commodities, have been much larger than we would have anticipated. Serious challenges to restructuring remain in terms of state-owned enterprise balance sheet weaknesses, the financial markets, and the general flexibility and rationality of resource allocation. Growth below the authorities’ official targets could again spook global financial markets—but then again, time-honored methods of enforcing growth targets could simply extend economic imbalances, spelling possible trouble down the road. | China will remain high on the list. Its economy is slowing as it transitions from investment and manufacturing to consumption and services. But the global spillovers from China’s reduced rate of growth, through its diminished imports and lower demand for commodities, have been much larger than we would have anticipated. Serious challenges to restructuring remain in terms of state-owned enterprise balance sheet weaknesses, the financial markets, and the general flexibility and rationality of resource allocation. Growth below the authorities’ official targets could again spook global financial markets—but then again, time-honored methods of enforcing growth targets could simply extend economic imbalances, spelling possible trouble down the road. |
| On how 2015 turned out: | On how 2015 turned out: |
| There was good news and bad news. The U.S. economy continued its solid growth and job creation, while Europe generally picked up speed and Japan remained a question mark. But with some exceptions (such as India), emerging and developing countries continued to slow in the face of falling commodity prices and tighter financial conditions, and synchronized and sustainable global growth remained elusive. | There was good news and bad news. The U.S. economy continued its solid growth and job creation, while Europe generally picked up speed and Japan remained a question mark. But with some exceptions (such as India), emerging and developing countries continued to slow in the face of falling commodity prices and tighter financial conditions, and synchronized and sustainable global growth remained elusive. |
| The comments follow a prediction from IMF head Christine Lagarde last week that global growth will be disappointing this year as the prospect of rising interest rates in the US and a further slowdown in China feed into uncertainty around the world. | The comments follow a prediction from IMF head Christine Lagarde last week that global growth will be disappointing this year as the prospect of rising interest rates in the US and a further slowdown in China feed into uncertainty around the world. |
| 3.28pm GMT | 3.28pm GMT |
| 15:28 | 15:28 |
| Separate date from the US construction sector also strikes a downbeat tone. | Separate date from the US construction sector also strikes a downbeat tone. |
| The Commerce Department said construction spending fell for the first time in nearly 1-1/2 years in November. Spending fell 0.4% after a downwardly revised 0.3% rise in October. | The Commerce Department said construction spending fell for the first time in nearly 1-1/2 years in November. Spending fell 0.4% after a downwardly revised 0.3% rise in October. |
| As Reuters reports, the government revised construction data from January 2005 through October 2015 because of a “processing error in the tabulation of data”. The revisions, which showed construction spending was not as strong as previously reported for much of 2015, could prompt economists to lower their fourth-quarter gross domestic product estimates. | As Reuters reports, the government revised construction data from January 2005 through October 2015 because of a “processing error in the tabulation of data”. The revisions, which showed construction spending was not as strong as previously reported for much of 2015, could prompt economists to lower their fourth-quarter gross domestic product estimates. |
| Economists polled by Reuters had forecast construction spending rising 0.6% in November after a previously reported 1.0% increase in October. | Economists polled by Reuters had forecast construction spending rising 0.6% in November after a previously reported 1.0% increase in October. |
| Unsurprisingly, this trio of disappointing releases is prompting questions over why the US Federal Reserve thought December was the right time to raise interest rates - the first increase for almost a decade. | Unsurprisingly, this trio of disappointing releases is prompting questions over why the US Federal Reserve thought December was the right time to raise interest rates - the first increase for almost a decade. |
| ISM shows US manufacturing declines at fastest pace in 6 years. Remind me why the #Fed is raising rates? #markets #stocks #bonds #fx #forex | ISM shows US manufacturing declines at fastest pace in 6 years. Remind me why the #Fed is raising rates? #markets #stocks #bonds #fx #forex |
| Meanwhile, US stock markets have sold off further, with the Dow Jones industrial average down more than 2.3% at one point in its biggest one-day fall for more than four months. The Dow Jones is now down 2%, the S&P 500 is down 2.1% and the Nasdaq is down 2.7%. | Meanwhile, US stock markets have sold off further, with the Dow Jones industrial average down more than 2.3% at one point in its biggest one-day fall for more than four months. The Dow Jones is now down 2%, the S&P 500 is down 2.1% and the Nasdaq is down 2.7%. |
| 3.12pm GMT | 3.12pm GMT |
| 15:12 | 15:12 |
| US ISM report fans fears of factory slowdown | US ISM report fans fears of factory slowdown |
| Hot on the heels of that weaker Markit PMI report on US manufacturers comes the separate Institute for Supply Management report and it makes even gloomier reading, suggesting the sector shrank again in December. | Hot on the heels of that weaker Markit PMI report on US manufacturers comes the separate Institute for Supply Management report and it makes even gloomier reading, suggesting the sector shrank again in December. |
| The main activity index fell to 48.2 in December from 48.6 in November, confounding forecasts for a pick-up to 49.0 in a Reuters poll of economists. | The main activity index fell to 48.2 in December from 48.6 in November, confounding forecasts for a pick-up to 49.0 in a Reuters poll of economists. |
| As with Markit’s PMI reports, a reading above 50 signals expansion, a reading below suggest contraction. | As with Markit’s PMI reports, a reading above 50 signals expansion, a reading below suggest contraction. |
| The new orders index in the ISM report edged up to 49.2 from 48.9 in November, but was still below the all-important 50-mark. | The new orders index in the ISM report edged up to 49.2 from 48.9 in November, but was still below the all-important 50-mark. |
| Manufacturing Recession Deepens: ISM Manufacturing 48.2, Exp. 49.0, Last 48.6 | Manufacturing Recession Deepens: ISM Manufacturing 48.2, Exp. 49.0, Last 48.6 |
| 3.02pm GMT | 3.02pm GMT |
| 15:02 | 15:02 |
| More details on that weaker Markit U.S. Manufacturing Purchasing Managers’ Index: | More details on that weaker Markit U.S. Manufacturing Purchasing Managers’ Index: |
| The authors note the latest reading (51.2 in December) was much weaker than the survey average (54.2) and pointed to “only a marginal upturn in operating conditions”. | The authors note the latest reading (51.2 in December) was much weaker than the survey average (54.2) and pointed to “only a marginal upturn in operating conditions”. |
| The report also shows output slowed in December and that input costs declined again. | The report also shows output slowed in December and that input costs declined again. |
| On new orders (which expanded at the weakest pace since September 2009), Markit said there was anecdotal evidence of “softer underlying demand conditions, intense competition for new work and subdued business confidence among clients”, while export sales were also close to stagnation in December, with manufacturers noting that the strong dollar continued to act as a drag on demand from abroad. | On new orders (which expanded at the weakest pace since September 2009), Markit said there was anecdotal evidence of “softer underlying demand conditions, intense competition for new work and subdued business confidence among clients”, while export sales were also close to stagnation in December, with manufacturers noting that the strong dollar continued to act as a drag on demand from abroad. |
| Markit #US Manufacturing #PMI falls to 51.2 in December, lowest level since Oct'12 https://t.co/kSnmmAbUqU pic.twitter.com/KtkpIgnjlg | Markit #US Manufacturing #PMI falls to 51.2 in December, lowest level since Oct'12 https://t.co/kSnmmAbUqU pic.twitter.com/KtkpIgnjlg |
| Chris Williamson, chief economist at Markit said: | Chris Williamson, chief economist at Markit said: |
| “The manufacturing sector saw a disappointing end to 2015, and its plight looks set to continue into the New Year as headwinds show no sign of abating any time soon. | “The manufacturing sector saw a disappointing end to 2015, and its plight looks set to continue into the New Year as headwinds show no sign of abating any time soon. |
| “Order book growth has stalled as producers report some of the toughest trading conditions since the end of the global financial crisis. | “Order book growth has stalled as producers report some of the toughest trading conditions since the end of the global financial crisis. |
| “The strong dollar is hurting exporters as well as hitting domestic sales as firms compete against inflows of cheap imports. Low oil prices are meanwhile hitting demand for goods and machinery from the energy sector. There are signs that consumers are becoming more cautious in relation to spending as interest rates lift off their historic lows, and overseas demand remains in the doldrums. All of these factors look set to continue to hurt manufacturers, and even intensify, in coming months. | “The strong dollar is hurting exporters as well as hitting domestic sales as firms compete against inflows of cheap imports. Low oil prices are meanwhile hitting demand for goods and machinery from the energy sector. There are signs that consumers are becoming more cautious in relation to spending as interest rates lift off their historic lows, and overseas demand remains in the doldrums. All of these factors look set to continue to hurt manufacturers, and even intensify, in coming months. |
| “However, with the Fed stressing that the trajectory of interest rates will be data dependent, any extended period of weakness at least suggests that the rate hiking process will be very gradual.” | “However, with the Fed stressing that the trajectory of interest rates will be data dependent, any extended period of weakness at least suggests that the rate hiking process will be very gradual.” |
| 2.55pm GMT | 2.55pm GMT |
| 14:55 | 14:55 |
| US manufacturing slows in December, shows PMI report | US manufacturing slows in December, shows PMI report |
| The US manufacturing sector grew at a slower pace in December, expanding at the weakest pace for more than three years, according to the latest PMI report from the world’s biggest economy. | The US manufacturing sector grew at a slower pace in December, expanding at the weakest pace for more than three years, according to the latest PMI report from the world’s biggest economy. |
| The survey by data company Markit also pointed to a slowdown in orders, with the weakest reading since during the financial crisis in September 2009. | The survey by data company Markit also pointed to a slowdown in orders, with the weakest reading since during the financial crisis in September 2009. |
| The headline index for manufacturing came in at 51.2 for December, down from an inital estimate of 51.3 and from 52.8 in November. That was above the 50-mark that separates expansion from contraction but the weakest reading since October 2012. | The headline index for manufacturing came in at 51.2 for December, down from an inital estimate of 51.3 and from 52.8 in November. That was above the 50-mark that separates expansion from contraction but the weakest reading since October 2012. |
| The report follows a flurry of manufacturing surveys from around the world. The picture was particularly weak in China, where the factory sector shrank for a 10th month running. Reports from Europe were slightly brighter with eurozone manufacturing activity picking up in December while in the UK, manufacturing continued to grow but at a slower pace. | The report follows a flurry of manufacturing surveys from around the world. The picture was particularly weak in China, where the factory sector shrank for a 10th month running. Reports from Europe were slightly brighter with eurozone manufacturing activity picking up in December while in the UK, manufacturing continued to grow but at a slower pace. |
| 2.36pm GMT | 2.36pm GMT |
| 14:36 | 14:36 |
| Wall Street falls 350 points in early trading | Wall Street falls 350 points in early trading |
| Ahead of the latest US manufacturing data, American markets have joined in the global rout prompted by weak Chinese figures earlier. | Ahead of the latest US manufacturing data, American markets have joined in the global rout prompted by weak Chinese figures earlier. |
| The Dow Jones Industrial Average has slumped 350 points or 2% in early trading, while Nasdaq is 2.2% lower and the S&P 500 is off 1.2%. | The Dow Jones Industrial Average has slumped 350 points or 2% in early trading, while Nasdaq is 2.2% lower and the S&P 500 is off 1.2%. |
| 2.35pm GMT | 2.35pm GMT |
| 14:35 | 14:35 |
| Worst first-day performance ever for Shanghai Comp, India's Nifty. (major indices except Topix more than a decade) pic.twitter.com/IRiBOFTdil | Worst first-day performance ever for Shanghai Comp, India's Nifty. (major indices except Topix more than a decade) pic.twitter.com/IRiBOFTdil |
| 2.08pm GMT | 2.08pm GMT |
| 14:08 | 14:08 |
| With the FTSE 100 down 2.3%, here are the major movers. With commodity prices falling on renewed fears of a Chinese slowdown, it is no surprise that mining shares are among the biggest fallers. Standard Chartered is also down due to its exposure to emerging markets, and commodity company lending. | With the FTSE 100 down 2.3%, here are the major movers. With commodity prices falling on renewed fears of a Chinese slowdown, it is no surprise that mining shares are among the biggest fallers. Standard Chartered is also down due to its exposure to emerging markets, and commodity company lending. |
| An exception to the mining slide is Randgold Resources, lifted by a rise in the gold price as investors seek a haven for their cash: | An exception to the mining slide is Randgold Resources, lifted by a rise in the gold price as investors seek a haven for their cash: |
| Germany’s Dax, now down 4.1%, has seen a broad based fall with the best performers being companies recording, not an increase, but the smallest declines: | Germany’s Dax, now down 4.1%, has seen a broad based fall with the best performers being companies recording, not an increase, but the smallest declines: |
| 1.51pm GMT | 1.51pm GMT |
| 13:51 | 13:51 |
| Danny Blanchflower, former member of the Bank of England’s monetary policy committee: | Danny Blanchflower, former member of the Bank of England’s monetary policy committee: |
| China stocks slump; Brazil headed into deep recession; German inflation drops; UK manuf PMI slows; Middle East turmoil- UK rate rise anyone? | China stocks slump; Brazil headed into deep recession; German inflation drops; UK manuf PMI slows; Middle East turmoil- UK rate rise anyone? |
| 1.14pm GMT | 1.14pm GMT |
| 13:14 | 13:14 |
| German inflation figures are one positive in a flurry of negative news, according to Carsten Brzeski at ING Bank: | German inflation figures are one positive in a flurry of negative news, according to Carsten Brzeski at ING Bank: |
| With these December data, the year 2015 marks the lowest average annual inflation rate in Germany since the start of the monetary union. | With these December data, the year 2015 marks the lowest average annual inflation rate in Germany since the start of the monetary union. |
| Looking at the available components at the regional levels shows that the drop in headline inflation was not only driven by lower energy prices but also some tentative second-round effects on consumer goods and probably first discounts in the Christmas sale season. | Looking at the available components at the regional levels shows that the drop in headline inflation was not only driven by lower energy prices but also some tentative second-round effects on consumer goods and probably first discounts in the Christmas sale season. |
| Looking ahead, it should take at least until the second half of the year before German headline inflation at least crosses the 1%-threshold again. With the continued slump in energy prices, further second-round effects on other goods and only little pricing power from retailers and producer, it is hard to see a strong acceleration of German inflation any time soon. Even the strong labour market and latest wage increases have done little to push up – at least – core inflation. | Looking ahead, it should take at least until the second half of the year before German headline inflation at least crosses the 1%-threshold again. With the continued slump in energy prices, further second-round effects on other goods and only little pricing power from retailers and producer, it is hard to see a strong acceleration of German inflation any time soon. Even the strong labour market and latest wage increases have done little to push up – at least – core inflation. |
| All of this means that German consumers are currently enjoying the best of both worlds: a strong labour market with decent wage increases and low inflation. The perfect combination for an improvement of German consumers’ purchasing power and hence private consumption. Looking at other deja-vus at the start of the New Year, like new tensions in the Middle-East, tumbling Chinese stock markets and new problems with structural reforms in Greece, at least German inflation data provide one comforting and positive signal for 2016 today. | All of this means that German consumers are currently enjoying the best of both worlds: a strong labour market with decent wage increases and low inflation. The perfect combination for an improvement of German consumers’ purchasing power and hence private consumption. Looking at other deja-vus at the start of the New Year, like new tensions in the Middle-East, tumbling Chinese stock markets and new problems with structural reforms in Greece, at least German inflation data provide one comforting and positive signal for 2016 today. |
| 1.05pm GMT | 1.05pm GMT |
| 13:05 | 13:05 |
| German inflation slows in December | German inflation slows in December |
| German inflation figures have come in slightly weaker than expected in December: | German inflation figures have come in slightly weaker than expected in December: |
| German CPI EU Harmonized (MoM) Dec P: 0.00% (est 0.20%; prev 0.10%) -CPI EU Harmonized (YoY) Dec P: 0.20% (est 0.40%; prev 0.30%) | German CPI EU Harmonized (MoM) Dec P: 0.00% (est 0.20%; prev 0.10%) -CPI EU Harmonized (YoY) Dec P: 0.20% (est 0.40%; prev 0.30%) |
| The harmonised figures have been brought in line with other European countries. | The harmonised figures have been brought in line with other European countries. |
| Updated | Updated |
| at 1.11pm GMT | at 1.11pm GMT |
| 12.23pm GMT | 12.23pm GMT |
| 12:23 | 12:23 |
| Apart from the weak data, there is another reason for the slump in Chinese shares, according to Mark Dampier, head of investment research at Hargreaves Lansdown: | Apart from the weak data, there is another reason for the slump in Chinese shares, according to Mark Dampier, head of investment research at Hargreaves Lansdown: |
| Contrary to reports, the fall in the Chinese stock market has little to do with the December PMI data coming in at 49.7 against a consensus of 49.8. It has far more to do with worries that major shareholders will reduce their positions after the ban of share sales and short selling which came in at the end of trading on Friday. | Contrary to reports, the fall in the Chinese stock market has little to do with the December PMI data coming in at 49.7 against a consensus of 49.8. It has far more to do with worries that major shareholders will reduce their positions after the ban of share sales and short selling which came in at the end of trading on Friday. |
| 12.21pm GMT | 12.21pm GMT |
| 12:21 | 12:21 |
| The slide in global markets is getting worse. | The slide in global markets is getting worse. |
| Germany’s Dax, now down 4.3% is heading for its biggest daily fall since August last year following the global market rout in the wake of renewed worries about the Chinese economy. Germany of course is a major exporter and likely to be hard hit by any slowdown. | Germany’s Dax, now down 4.3% is heading for its biggest daily fall since August last year following the global market rout in the wake of renewed worries about the Chinese economy. Germany of course is a major exporter and likely to be hard hit by any slowdown. |
| France’s Cac is 2.8% lower while in London, the FTSE 100 has now dropped 162 points or 2.6%, on course for its worst daily performance since September. | France’s Cac is 2.8% lower while in London, the FTSE 100 has now dropped 162 points or 2.6%, on course for its worst daily performance since September. |
| The #China factor: Dax plunges by 4.4%, biggest fall since Black Monday in Aug on fears over hard landing in China. pic.twitter.com/GLVlbTetZ3 | The #China factor: Dax plunges by 4.4%, biggest fall since Black Monday in Aug on fears over hard landing in China. pic.twitter.com/GLVlbTetZ3 |
| Updated | Updated |
| at 1.49pm GMT | at 1.49pm GMT |
| 11.52am GMT | 11.52am GMT |
| 11:52 | 11:52 |
| It looks like the global share sell-off which has followed the weak Chinese data will extend to US markets: | It looks like the global share sell-off which has followed the weak Chinese data will extend to US markets: |
| Dow futures fall more than 310 points, Nasdaq futures lower by more than 2% https://t.co/sommmOynTY pic.twitter.com/2VxHodjibz | Dow futures fall more than 310 points, Nasdaq futures lower by more than 2% https://t.co/sommmOynTY pic.twitter.com/2VxHodjibz |
| 11.48am GMT | 11.48am GMT |
| 11:48 | 11:48 |
| Daniel Vernazza, lead UK economist at UniCredit Research, said: | Daniel Vernazza, lead UK economist at UniCredit Research, said: |
| With economic growth slowing and consumer credit growth rising fast, the risk to our forecast for the first Bank of England hike to come in May this year is that they delay further and try to use macroprudential policy as the first line of defence against risks to financial stability. | With economic growth slowing and consumer credit growth rising fast, the risk to our forecast for the first Bank of England hike to come in May this year is that they delay further and try to use macroprudential policy as the first line of defence against risks to financial stability. |
| The weakness in UK manufacturing activity is explained by a number of headwinds facing UK manufacturers. First, sterling’s past appreciation is still weighing on the competitiveness of UK manufacturers. Second, external demand remains subdued, particularly in emerging markets. Earlier today, Caixin’s China manufacturing PMI surprisingly fell back to 48.2 in December from 48.6 in the prior month; and the new export orders sub-component fell sharply from 51.6 to 47.8, suggesting weak external demand. | The weakness in UK manufacturing activity is explained by a number of headwinds facing UK manufacturers. First, sterling’s past appreciation is still weighing on the competitiveness of UK manufacturers. Second, external demand remains subdued, particularly in emerging markets. Earlier today, Caixin’s China manufacturing PMI surprisingly fell back to 48.2 in December from 48.6 in the prior month; and the new export orders sub-component fell sharply from 51.6 to 47.8, suggesting weak external demand. |
| 11.17am GMT | 11.17am GMT |
| 11:17 | 11:17 |
| On the UK manufacturing data, economist Malcolm Barr at JP Morgan said: | On the UK manufacturing data, economist Malcolm Barr at JP Morgan said: |
| The December manufacturing PMI release was a modest disappointment, with the headline index nudging down to 51.9 (J.P. Morgan 52.5) from a revised 52.5 in November (previously reported as 52.7). Having stepped down in late 2014 the PMI has been in a range between 51.5 (the survey’s long run average) and 54 for nearly all of 2015. | The December manufacturing PMI release was a modest disappointment, with the headline index nudging down to 51.9 (J.P. Morgan 52.5) from a revised 52.5 in November (previously reported as 52.7). Having stepped down in late 2014 the PMI has been in a range between 51.5 (the survey’s long run average) and 54 for nearly all of 2015. |
| The data increasingly make the move up in activity in to 55.2 in October look like it was a blip. | The data increasingly make the move up in activity in to 55.2 in October look like it was a blip. |
| Updated | Updated |
| at 1.16pm GMT | at 1.16pm GMT |
| 10.53am GMT | 10.53am GMT |
| 10:53 | 10:53 |
| The pound has hit a nine month low against the dollar, as weakness in the economy cast doubt over an imminent UK rate rise and worries grew over the impact of any departure from the European Union. Sterling was down to $1.4684, its lowest since April, and is currently at $1.4795. | The pound has hit a nine month low against the dollar, as weakness in the economy cast doubt over an imminent UK rate rise and worries grew over the impact of any departure from the European Union. Sterling was down to $1.4684, its lowest since April, and is currently at $1.4795. |
| 10.31am GMT | 10.31am GMT |
| 10:31 | 10:31 |
| And here’s a nice graphic showing how China’s CS! 300 suffered major falls last year. And the new year is already on the way to a similar performance. | And here’s a nice graphic showing how China’s CS! 300 suffered major falls last year. And the new year is already on the way to a similar performance. |
| Number of Days China's CSI 300 Dropped by More than 3%: 2015: 22, 2014: 2, 2013: 7, 2012: 0, 2011: 7. pic.twitter.com/gSA1PoWcAD | Number of Days China's CSI 300 Dropped by More than 3%: 2015: 22, 2014: 2, 2013: 7, 2012: 0, 2011: 7. pic.twitter.com/gSA1PoWcAD |
| 10.23am GMT | 10.23am GMT |
| 10:23 | 10:23 |
| The grim start to the new year means some £34bn has been wiped off the value of Britain’s top one hundred companies with the FTSE 100 down 133 points. | The grim start to the new year means some £34bn has been wiped off the value of Britain’s top one hundred companies with the FTSE 100 down 133 points. |
| Alastair McCaig, market analyst at IG, said: | Alastair McCaig, market analyst at IG, said: |
| Anyone hitting the trading floor expecting a calm and quiet start to 2016 was given a rude surprise as Asian chaos affected European markets. Worries over China’s ability to keep up its pace of economic growth have been hit with an early warning sign as the Caixin PMI data came in weaker than expected, and stretched the contraction in China to ten months. This swift return to the 2015 template of worrying about China looks to have been the trigger for the selloff in Chinese equities. It is the first time Chinese regulators have activated the suspension in trading as a circuit breaker safety measure. | Anyone hitting the trading floor expecting a calm and quiet start to 2016 was given a rude surprise as Asian chaos affected European markets. Worries over China’s ability to keep up its pace of economic growth have been hit with an early warning sign as the Caixin PMI data came in weaker than expected, and stretched the contraction in China to ten months. This swift return to the 2015 template of worrying about China looks to have been the trigger for the selloff in Chinese equities. It is the first time Chinese regulators have activated the suspension in trading as a circuit breaker safety measure. |
| Starting the year off by suspending trading an hour and a half early on the back of a 7% fall has set an ugly precedent for the year ahead. Tensions in the Middle East have escalated again as the relationship between Saudi Arabia and Iran is being stretched to breaking point. Considering the prominence both nations take as far as global oil supply is concerned, the subsequent spike in oil prices is, if anything, a little on the mild side. | Starting the year off by suspending trading an hour and a half early on the back of a 7% fall has set an ugly precedent for the year ahead. Tensions in the Middle East have escalated again as the relationship between Saudi Arabia and Iran is being stretched to breaking point. Considering the prominence both nations take as far as global oil supply is concerned, the subsequent spike in oil prices is, if anything, a little on the mild side. |
| Updated | Updated |
| at 10.25am GMT | at 10.25am GMT |
| 10.04am GMT | 10.04am GMT |
| 10:04 | 10:04 |
| An interest rate rise is still on the cards this year, even though the manufacturing sector has come in weaker than expected, according to ING Bank. However any increase in borrowing costs may now come later than forecasters currently believe, said ING’s James Smith: | An interest rate rise is still on the cards this year, even though the manufacturing sector has come in weaker than expected, according to ING Bank. However any increase in borrowing costs may now come later than forecasters currently believe, said ING’s James Smith: |
| The UK manufacturing PMI fell unexpectedly to 51.9 in December, from 52.7 previously (consensus 52.8), consistent with levels seen through most of 2015 before the surprise uplift in October. This marks a disappointing end for what was a difficult year for the manufacturing sector given external growth concerns and sterling strength. Looking at the details, Markit said that input prices continued to fall sharply in December, which they attribute to lower commodity prices (principally oil). Furthermore, export orders continued to grow, albeit at a slower pace. | The UK manufacturing PMI fell unexpectedly to 51.9 in December, from 52.7 previously (consensus 52.8), consistent with levels seen through most of 2015 before the surprise uplift in October. This marks a disappointing end for what was a difficult year for the manufacturing sector given external growth concerns and sterling strength. Looking at the details, Markit said that input prices continued to fall sharply in December, which they attribute to lower commodity prices (principally oil). Furthermore, export orders continued to grow, albeit at a slower pace. |
| All in all, this suggests that the manufacturing sector contributed very little to fourth quarter GDP growth (released at the end of this month), although it is worth noting that manufacturing only forms around 10% of the UK economy (versus 30% in the late 1970s). The service sector, which makes up over three quarters, is performing better and we should get a further indication of this on Wednesday when the services PMI is released. | All in all, this suggests that the manufacturing sector contributed very little to fourth quarter GDP growth (released at the end of this month), although it is worth noting that manufacturing only forms around 10% of the UK economy (versus 30% in the late 1970s). The service sector, which makes up over three quarters, is performing better and we should get a further indication of this on Wednesday when the services PMI is released. |
| Overall, the economy remains strong and the case for a rate hike in 2016 looks very compelling. Although we continue to forecast a hike in the second quarter, the risks surrounding the EU referendum are beginning to build and the probability that the Bank of England will leave rates lower for a longer period of time is increasing. | Overall, the economy remains strong and the case for a rate hike in 2016 looks very compelling. Although we continue to forecast a hike in the second quarter, the risks surrounding the EU referendum are beginning to build and the probability that the Bank of England will leave rates lower for a longer period of time is increasing. |
| 9.54am GMT | 9.54am GMT |
| 09:54 | 09:54 |
| Despite the disappointing UK manufacturing figures, Howard Archer of IHS Global Insight said there could be a pickup in GDP growth in the fourth quarter: | Despite the disappointing UK manufacturing figures, Howard Archer of IHS Global Insight said there could be a pickup in GDP growth in the fourth quarter: |
| Despite December’s dip, the purchasing managers’ survey does show overall improvement in the fourth quarter of 2015; and it does look possible that the manufacturing sector managed to eke out a modicum of growth in the fourth quarter after contracting in both the third (by 0.4% quarter-on-quarter) and second quarters (by 0.6%). In fact the manufacturing PMI averaged 53.3 in the fourth quarter, which was markedly above the third quarter average of 51.8 and clearly above the 50.0 level indicates flat activity. Meanwhile, although latest hard data show that manufacturing output dipped 0.4% month-on-month in October this followed increases in both September (0.9%) and August (0.3%) so it was actually up 0.4% on a three-month/three-month basis. | Despite December’s dip, the purchasing managers’ survey does show overall improvement in the fourth quarter of 2015; and it does look possible that the manufacturing sector managed to eke out a modicum of growth in the fourth quarter after contracting in both the third (by 0.4% quarter-on-quarter) and second quarters (by 0.6%). In fact the manufacturing PMI averaged 53.3 in the fourth quarter, which was markedly above the third quarter average of 51.8 and clearly above the 50.0 level indicates flat activity. Meanwhile, although latest hard data show that manufacturing output dipped 0.4% month-on-month in October this followed increases in both September (0.9%) and August (0.3%) so it was actually up 0.4% on a three-month/three-month basis. |
| If the manufacturing sector did manage to eke out some growth in the fourth quarter, it would boost the chances that the economy managed to achieve some pick-up in GDP growth after it dipped to 0.4% quarter-on-quarter in the third quarter. We have pencilled in GDP growth of 0.6% quarter-on quarter in the fourth quarter of 2015. | If the manufacturing sector did manage to eke out some growth in the fourth quarter, it would boost the chances that the economy managed to achieve some pick-up in GDP growth after it dipped to 0.4% quarter-on-quarter in the third quarter. We have pencilled in GDP growth of 0.6% quarter-on quarter in the fourth quarter of 2015. |
| Even if the manufacturing sector did manage to eke out some growth in the fourth quarter, 2015 was undoubtedly a torrid year for manufacturers. | Even if the manufacturing sector did manage to eke out some growth in the fourth quarter, 2015 was undoubtedly a torrid year for manufacturers. |
| Furthermore, the pretty lacklustre December PMI suggest that 2016 is also likely to be challenging for manufacturers. Indeed, the breakdown of the December purchasing managers’ survey shows new orders growth matching July’s lowest level for 2015, with export orders only inching up. Furthermore, backlogs of work contracted markedly. | Furthermore, the pretty lacklustre December PMI suggest that 2016 is also likely to be challenging for manufacturers. Indeed, the breakdown of the December purchasing managers’ survey shows new orders growth matching July’s lowest level for 2015, with export orders only inching up. Furthermore, backlogs of work contracted markedly. |
| 9.48am GMT | 9.48am GMT |
| 09:48 | 09:48 |
| Meanwhile, more signs of a buoyant UK housing market and confident consumers, with higher than expected lending figures. Reuters reports: | Meanwhile, more signs of a buoyant UK housing market and confident consumers, with higher than expected lending figures. Reuters reports: |
| British lending to consumers expanded at the fastest annual rate in almost a decade in November and banks approved more mortgages than forecast, showing a buoyant mood among households towards the end of 2015. | British lending to consumers expanded at the fastest annual rate in almost a decade in November and banks approved more mortgages than forecast, showing a buoyant mood among households towards the end of 2015. |
| The Bank of England said net lending to consumers in November was up 8.3 percent compared with a year earlier, the biggest such increase since February 2006 and a growth rate that may raise concern at the Bank about lending standards. | The Bank of England said net lending to consumers in November was up 8.3 percent compared with a year earlier, the biggest such increase since February 2006 and a growth rate that may raise concern at the Bank about lending standards. |
| Lenders also granted more home loans than expected, with 70,410 mortgages for house purchase approved, the highest number in three months. | Lenders also granted more home loans than expected, with 70,410 mortgages for house purchase approved, the highest number in three months. |
| The figures add to signs that Britain’s housing market is accelerating after a dip in mid-2014 when tighter rules on mortgage lending took effect, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans. | The figures add to signs that Britain’s housing market is accelerating after a dip in mid-2014 when tighter rules on mortgage lending took effect, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans. |