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| Market turmoil: Stocks rally despite Greece falling back into recession - as it happened | Market turmoil: Stocks rally despite Greece falling back into recession - as it happened |
| (3 days later) | |
| 6.06pm GMT | 6.06pm GMT |
| 18:06 | 18:06 |
| New York Fed boss cool on negative interest rates | New York Fed boss cool on negative interest rates |
| Finally, more on New York Fed president William Dudley playing down talk of negative interest rates in the US, in the wake of Janet Yellen’s comments this week. Edward Helmore writes: | Finally, more on New York Fed president William Dudley playing down talk of negative interest rates in the US, in the wake of Janet Yellen’s comments this week. Edward Helmore writes: |
| New York Fed president William Dudley has dismissed speculation that the US Federal Reserve could adopt negative interest rates as “extraordinarily premature”. | New York Fed president William Dudley has dismissed speculation that the US Federal Reserve could adopt negative interest rates as “extraordinarily premature”. |
| Speaking a day after Fed chair Janet Yellen concluded two days of congressional testimony during which she left open questions on whether the US could follow central banks in Europe and Japan by adopting negative rates, Dudley, a voting member on the Fed’s policymaking committee, struck an optimistic tone. | Speaking a day after Fed chair Janet Yellen concluded two days of congressional testimony during which she left open questions on whether the US could follow central banks in Europe and Japan by adopting negative rates, Dudley, a voting member on the Fed’s policymaking committee, struck an optimistic tone. |
| He said US households and banks are better able to absorb shocks than they were when the last recession hit. | He said US households and banks are better able to absorb shocks than they were when the last recession hit. |
| Against a backdrop of supportive US consumer and household debt data released Friday, Dudley added US monetary policy remains “quite accommodative” after the Fed’s decision to raise interest rates in December. | Against a backdrop of supportive US consumer and household debt data released Friday, Dudley added US monetary policy remains “quite accommodative” after the Fed’s decision to raise interest rates in December. |
| “Key sectors of the US economy, such as the household sector, seem to be in good shape,” he said, repeating Yellen’s assertion that despite market turmoil that’s caused the S&P 500 to lose 10% of its value this year, economic expansions do not simply “die of old age”. | “Key sectors of the US economy, such as the household sector, seem to be in good shape,” he said, repeating Yellen’s assertion that despite market turmoil that’s caused the S&P 500 to lose 10% of its value this year, economic expansions do not simply “die of old age”. |
| The full story is here. | The full story is here. |
| On that note we’ll close up, and say thanks for all your comments. See you again soon. | On that note we’ll close up, and say thanks for all your comments. See you again soon. |
| 5.46pm GMT | 5.46pm GMT |
| 17:46 | 17:46 |
| European markets end a turbulent week on a buoyant note | European markets end a turbulent week on a buoyant note |
| Worries about a global slowdown, falling oil prices and the effect of negative interest rates on banks have combined to produce another traumatic week for stock market investors. | Worries about a global slowdown, falling oil prices and the effect of negative interest rates on banks have combined to produce another traumatic week for stock market investors. |
| But the week ended with sentiment much improved, with European markets showing significant gains. Oil jumped on renewed hopes that producers would agree to meet to cut output (although we have heard this many times before), which helped lift energy companies. Nicholas Hyett, investment analyst at Hargreaves Lansdown said: | But the week ended with sentiment much improved, with European markets showing significant gains. Oil jumped on renewed hopes that producers would agree to meet to cut output (although we have heard this many times before), which helped lift energy companies. Nicholas Hyett, investment analyst at Hargreaves Lansdown said: |
| Oil stocks are rallying today on speculation that Opec might be willing to cut production. It will need to be a big cut though; some US storage facilities are at 90% of capacity with new production still to come online this year. | Oil stocks are rallying today on speculation that Opec might be willing to cut production. It will need to be a big cut though; some US storage facilities are at 90% of capacity with new production still to come online this year. |
| Banks also came back from their beaten-down levels, after better than expected figures from Commerzbank, news that JP Morgan’s Jamie Dimon was snapping up the bank’s shares and Deutsche Bank’s plan to buy back debt. | Banks also came back from their beaten-down levels, after better than expected figures from Commerzbank, news that JP Morgan’s Jamie Dimon was snapping up the bank’s shares and Deutsche Bank’s plan to buy back debt. |
| Wall Street also helped, moving higher after better than expected US retail sales, while there appeared to be no real shocks in the eurozone GDP figures, albeit Greece moved back into recession. | Wall Street also helped, moving higher after better than expected US retail sales, while there appeared to be no real shocks in the eurozone GDP figures, albeit Greece moved back into recession. |
| Investors are already looking ahead to Monday, when Chinese markets re-open after a week’s holiday for New Year. Will its stock market move higher or play catch up with the falls elsewhere in global markets? With Wall Street closed on Monday, it could be another volatile day. Meanwhile the final scores in Europe ahead of the weekend showed: | Investors are already looking ahead to Monday, when Chinese markets re-open after a week’s holiday for New Year. Will its stock market move higher or play catch up with the falls elsewhere in global markets? With Wall Street closed on Monday, it could be another volatile day. Meanwhile the final scores in Europe ahead of the weekend showed: |
| In the US, the Dow Jones Industrial Average is currently 227 points or 1.4% higher. | In the US, the Dow Jones Industrial Average is currently 227 points or 1.4% higher. |
| Updated | Updated |
| at 5.49pm GMT | at 5.49pm GMT |
| 5.29pm GMT | 5.29pm GMT |
| 17:29 | 17:29 |
| More pictures from Greece, where farmers are protesting outside parliament. | More pictures from Greece, where farmers are protesting outside parliament. |
| 4.51pm GMT | 4.51pm GMT |
| 16:51 | 16:51 |
| And more proof of the volatile week markets have just suffered: | And more proof of the volatile week markets have just suffered: |
| This is amazing: after moving up and down 15% *four* times, Deutsche Bank is about to end the week pretty much flat pic.twitter.com/Y0e5no0Ykd | This is amazing: after moving up and down 15% *four* times, Deutsche Bank is about to end the week pretty much flat pic.twitter.com/Y0e5no0Ykd |
| Deutsche of course had been hit by worries about its balance sheet and the effect of negative interest rates, like others in the sector, as well as pressure on its contingent convertible bonds. | Deutsche of course had been hit by worries about its balance sheet and the effect of negative interest rates, like others in the sector, as well as pressure on its contingent convertible bonds. |
| But along with the recovery in bank shares, Deutsche has also been lifted by news it planned to buy back debt. | But along with the recovery in bank shares, Deutsche has also been lifted by news it planned to buy back debt. |
| 4.42pm GMT | 4.42pm GMT |
| 16:42 | 16:42 |
| FTSE 100 sees biggest daily rise since August | FTSE 100 sees biggest daily rise since August |
| The FTSE 100 has jumped 3.08%, its biggest one day rise since 27 August. | The FTSE 100 has jumped 3.08%, its biggest one day rise since 27 August. |
| As of Thursday, some £80bn had been wiped off the UK’s leading index. | As of Thursday, some £80bn had been wiped off the UK’s leading index. |
| With today’s recovery that has been cut to £36bn. | With today’s recovery that has been cut to £36bn. |
| 4.28pm GMT | 4.28pm GMT |
| 16:28 | 16:28 |
| More on oil: | More on oil: |
| Oil has had some big one day moves this year pic.twitter.com/uSTu5EX5vS | Oil has had some big one day moves this year pic.twitter.com/uSTu5EX5vS |
| 4.09pm GMT | 4.09pm GMT |
| 16:09 | 16:09 |
| Despite the current market rally, leading shares still have some way to go to mount a major recovery. Chris Beauchamp, senior market analyst at IG, said: | Despite the current market rally, leading shares still have some way to go to mount a major recovery. Chris Beauchamp, senior market analyst at IG, said: |
| The week finishes in much better form than it began, with stock markets in Europe and the US clawing back losses, with even some better US retail sales figures adding to the merry mood. European markets in particular can look forward to more positive momentum on Monday, when the US is out of action for Presidents Day. | The week finishes in much better form than it began, with stock markets in Europe and the US clawing back losses, with even some better US retail sales figures adding to the merry mood. European markets in particular can look forward to more positive momentum on Monday, when the US is out of action for Presidents Day. |
| That of course is the short-term picture, and for the FTSE 100 even a significant recovery in coming weeks, similar to that seen in January, would still leave the market in a firm downward move. | That of course is the short-term picture, and for the FTSE 100 even a significant recovery in coming weeks, similar to that seen in January, would still leave the market in a firm downward move. |
| Oil prices have been on another tear higher today, which has provided a firm base on which to build the broader stock market rally. However, pessimists (and there are many around at the moment) will be quick to point out that there’s little sign of an actual meeting between major oil producers, and that Saudi intransigence on production cuts remains the chief, and currently insuperable, obstacle to tackling the problem of huge oversupply. | Oil prices have been on another tear higher today, which has provided a firm base on which to build the broader stock market rally. However, pessimists (and there are many around at the moment) will be quick to point out that there’s little sign of an actual meeting between major oil producers, and that Saudi intransigence on production cuts remains the chief, and currently insuperable, obstacle to tackling the problem of huge oversupply. |
| At least the banks are doing better today, with both the FTSE banking sector and its European counterparts racing away. After all, even if rates aren’t going higher, there’s always the hope of more ECB largesse to sweeten the outlook somewhat... | At least the banks are doing better today, with both the FTSE banking sector and its European counterparts racing away. After all, even if rates aren’t going higher, there’s always the hope of more ECB largesse to sweeten the outlook somewhat... |
| The return of China to the market fray after their holiday could also be key for further gains, although a couple of days of volatility as they play catch-up cannot be ruled out. | The return of China to the market fray after their holiday could also be key for further gains, although a couple of days of volatility as they play catch-up cannot be ruled out. |
| 4.04pm GMT | 4.04pm GMT |
| 16:04 | 16:04 |
| US Federal Reserve chair Janet Yellen floated the idea the bank could look at negative rates in her testimony to Congress this week. | US Federal Reserve chair Janet Yellen floated the idea the bank could look at negative rates in her testimony to Congress this week. |
| But one of her colleagues is not so sure. New York Fed President William Dudley said negative rates elsewhere - ie in Japan and Europe - would have little effect on the US economy, reports Reuters, adding that negative rates “should not be part of the conversation right now in the US.” | But one of her colleagues is not so sure. New York Fed President William Dudley said negative rates elsewhere - ie in Japan and Europe - would have little effect on the US economy, reports Reuters, adding that negative rates “should not be part of the conversation right now in the US.” |
| He also said US bank were in good shape despite the share price falls in the sector in recent days. | He also said US bank were in good shape despite the share price falls in the sector in recent days. |
| Updated | Updated |
| at 4.05pm GMT | at 4.05pm GMT |
| 3.48pm GMT | 3.48pm GMT |
| 15:48 | 15:48 |
| Negative interest rates should help lift growth and inflation but if the market turmoil continues, the economic consequences could outweigh the benefits, says Michael Pearce at Capital Economics. He says: | Negative interest rates should help lift growth and inflation but if the market turmoil continues, the economic consequences could outweigh the benefits, says Michael Pearce at Capital Economics. He says: |
| In principle, cutting policy rates into negative territory should boost growth and inflation. But central banks have not communicated these benefits clearly, and the hesitant way in which they have been introduced has undermined confidence, raising the risk that negative rates do more harm than good. | In principle, cutting policy rates into negative territory should boost growth and inflation. But central banks have not communicated these benefits clearly, and the hesitant way in which they have been introduced has undermined confidence, raising the risk that negative rates do more harm than good. |
| Although markets are rebounding today, the sharp falls in equity prices and in particular bank shares since the beginning of the year have led many to claim that negative rates are damaging global economic prospects. Markets have focused on three main concerns. | Although markets are rebounding today, the sharp falls in equity prices and in particular bank shares since the beginning of the year have led many to claim that negative rates are damaging global economic prospects. Markets have focused on three main concerns. |
| 3.39pm GMT | 3.39pm GMT |
| 15:39 | 15:39 |
| The University of Michigan survey suggests a falling outlook for inflation: | The University of Michigan survey suggests a falling outlook for inflation: |
| 5-10yr #inflation expectations in the U. of Mich. survey fell 0.3% to 2.4% - lowest reading in the history of the series | 5-10yr #inflation expectations in the U. of Mich. survey fell 0.3% to 2.4% - lowest reading in the history of the series |
| #Fed will take note of the plunge in long-term #inflation expectations. Assuming no revisions, this raises concerns about inflation outlook | #Fed will take note of the plunge in long-term #inflation expectations. Assuming no revisions, this raises concerns about inflation outlook |
| 3.22pm GMT | 3.22pm GMT |
| 15:22 | 15:22 |
| The US consumer confidence figures are not too bad under the circumstances, reckons James Knightley at ING Bank: | The US consumer confidence figures are not too bad under the circumstances, reckons James Knightley at ING Bank: |
| US consumer confidence as measured by the University of Michigan dipped to 90.7 in February versus 92.0 in January. This is a bit weaker than the 92.3 consensus, but isn’t too bad given the scale of equity market sell-off. | US consumer confidence as measured by the University of Michigan dipped to 90.7 in February versus 92.0 in January. This is a bit weaker than the 92.3 consensus, but isn’t too bad given the scale of equity market sell-off. |
| Indeed, strong employment gains, rising real incomes and a firm housing market are providing enough offsetting effects for now and with retail sales having come in stronger than expected (when upward revisions are included) it looks a reasonably encouraging consumer spending story for now. | Indeed, strong employment gains, rising real incomes and a firm housing market are providing enough offsetting effects for now and with retail sales having come in stronger than expected (when upward revisions are included) it looks a reasonably encouraging consumer spending story for now. |
| However, equity markets don’t seem particularly interested unfortunately and the longer that this goes on the greater the risk that it feeds negatively into the real economy through weaker sentiment and tighter financial conditions. | However, equity markets don’t seem particularly interested unfortunately and the longer that this goes on the greater the risk that it feeds negatively into the real economy through weaker sentiment and tighter financial conditions. |
| 3.18pm GMT | 3.18pm GMT |
| 15:18 | 15:18 |
| And after the US retail sales, here is some less positive news in terms of consumer confidence. | And after the US retail sales, here is some less positive news in terms of consumer confidence. |
| The University of Michigan consumer sentiment index has missed expectations with a fall from 92 in December to 90.7. The consensus forecast was for a reading of 92 for January. The index of consumers expectations fell from 82.7 to 81, a four month low. | The University of Michigan consumer sentiment index has missed expectations with a fall from 92 in December to 90.7. The consensus forecast was for a reading of 92 for January. The index of consumers expectations fell from 82.7 to 81, a four month low. |
| Meanwhile business inventories rose 0.1%, in line with forecasts. | Meanwhile business inventories rose 0.1%, in line with forecasts. |
| 3.05pm GMT | 3.05pm GMT |
| 15:05 | 15:05 |
| Oil continues to rebound, on renewed hope of production cuts to stem the supply glut. | Oil continues to rebound, on renewed hope of production cuts to stem the supply glut. |
| Apparently helping the rally were reported comments from United Arab Emirates oil minister Suhail Al Mazrouei that producers were ready to work together. | Apparently helping the rally were reported comments from United Arab Emirates oil minister Suhail Al Mazrouei that producers were ready to work together. |
| But we have been here many times before, and he was also reported as saying that there would be no cuts unless there was full co-operation among producers. | But we have been here many times before, and he was also reported as saying that there would be no cuts unless there was full co-operation among producers. |
| There have been several optimistic reports suggesting Opec might be ready to talk to other producers such as Russia about limiting output, but so far no real progress. | There have been several optimistic reports suggesting Opec might be ready to talk to other producers such as Russia about limiting output, but so far no real progress. |
| Nevertheless, Brent crude is now up 5% at $31.59 a barrel while West Texas Intermediate - the US benchmark - is 6% better at $27.79. | Nevertheless, Brent crude is now up 5% at $31.59 a barrel while West Texas Intermediate - the US benchmark - is 6% better at $27.79. |
| And that is one of the factors helping to support stock markets as they bounce back from recent lows. | And that is one of the factors helping to support stock markets as they bounce back from recent lows. |
| Updated | Updated |
| at 4.24pm GMT | at 4.24pm GMT |
| 2.46pm GMT | 2.46pm GMT |
| 14:46 | 14:46 |
| Another cut in the European Central Bank’s deposit rate in March has strong support among the central bank’s governing council, Reuters is reporting. | Another cut in the European Central Bank’s deposit rate in March has strong support among the central bank’s governing council, Reuters is reporting. |
| Any cut could come as part of a broader package including some changes to the bank’s asset purchase programme, but there is little appetite for more radical action . Reuters says markets are pricing in at least two rate cuts by the end of the year, taking the deposit rate from -0.3% to -0.55%. | Any cut could come as part of a broader package including some changes to the bank’s asset purchase programme, but there is little appetite for more radical action . Reuters says markets are pricing in at least two rate cuts by the end of the year, taking the deposit rate from -0.3% to -0.55%. |
| Banking groups are unlikely to be happy, since their shares have been hammered this week by fears about the effects of the wave of negative rates on their balance sheets and margins. | Banking groups are unlikely to be happy, since their shares have been hammered this week by fears about the effects of the wave of negative rates on their balance sheets and margins. |
| Reuters reports one policymaker as saying: “Cutting the deposit rate by more than 10 basis points would hurt bank profitability, not a popular idea right now, especially given what’s happening in the banking sector.” | Reuters reports one policymaker as saying: “Cutting the deposit rate by more than 10 basis points would hurt bank profitability, not a popular idea right now, especially given what’s happening in the banking sector.” |
| Updated | Updated |
| at 2.59pm GMT | at 2.59pm GMT |
| 2.39pm GMT | 2.39pm GMT |
| 14:39 | 14:39 |
| Wall Street opens higher | Wall Street opens higher |
| With markets elsewhere moving ahead after the recent turmoil (the Nikkei was the exception), the US has joined in the more optimistic mood. | With markets elsewhere moving ahead after the recent turmoil (the Nikkei was the exception), the US has joined in the more optimistic mood. |
| The Dow Jones Industrial Average is up 140 points or 0.9% while the S&P 500 opened 0.6% higher and the Nasdaq added 1%. Energy and financial stocks were among the early gainers. | The Dow Jones Industrial Average is up 140 points or 0.9% while the S&P 500 opened 0.6% higher and the Nasdaq added 1%. Energy and financial stocks were among the early gainers. |
| 2.29pm GMT | 2.29pm GMT |
| 14:29 | 14:29 |
| It appears there is some disagreement over the earlier comments about Greece from the IMF’s Poul Thomsen: | It appears there is some disagreement over the earlier comments about Greece from the IMF’s Poul Thomsen: |
| *#GREECE OFFICIAL: #IMF BLOG POST NOT IN LINE WITH WHAT'S AGREED | *#GREECE OFFICIAL: #IMF BLOG POST NOT IN LINE WITH WHAT'S AGREED |
| Views expressed by #IMF's #Thomsen are radically different than what has been agreed between #Greece and institutions in the summer-govt off | Views expressed by #IMF's #Thomsen are radically different than what has been agreed between #Greece and institutions in the summer-govt off |
| But: | But: |
| #Greek govt official says the recipient of #IMF's #Thomsen positions is not #Greece but the rest of the institutions that disagree | #Greek govt official says the recipient of #IMF's #Thomsen positions is not #Greece but the rest of the institutions that disagree |
| 2.04pm GMT | 2.04pm GMT |
| 14:04 | 14:04 |
| The US retail sales show consumer spending remains important to the country’s economy but the key question is how it will cope with the global problems, says Nancy Curtin, chief investment officer at Close Brothers Asset Management: | The US retail sales show consumer spending remains important to the country’s economy but the key question is how it will cope with the global problems, says Nancy Curtin, chief investment officer at Close Brothers Asset Management: |
| Consumer spending has played a starring role in supporting growth in the US’ service-led economy, and the latest retail figures suggest this is set to continue. Lower oil prices have certainly helped, with the US consumer benefitting from cheaper gas to the tune of $80m per day. The labour market continues to strengthen and consumer confidence hasn’t been shaken, all of which bodes well for the domestic economy. | Consumer spending has played a starring role in supporting growth in the US’ service-led economy, and the latest retail figures suggest this is set to continue. Lower oil prices have certainly helped, with the US consumer benefitting from cheaper gas to the tune of $80m per day. The labour market continues to strengthen and consumer confidence hasn’t been shaken, all of which bodes well for the domestic economy. |
| What really matters though, is how well the US weathers the global risks in the long-term: namely, Chinese devaluation and the exacerbating effect of the stronger US dollar. Clearly, the tentacles of the Chinese slowdown are spreading, and the lack of a clear enough policy is a red flag to ongoing volatility. Equally, the dollar has been strengthening due to the robustness – until recently – of the US recovery and the Fed’s decision to hike rates in December. However, it does drag down exports and adds to the already widening trade deficit. While it’s not yet a case of stunting US growth, all eyes will remain on Yellen to soothe where she can. For now, as hinted in her testimony to Congress, she’ll continue to put any immediate rates rise on hold. | What really matters though, is how well the US weathers the global risks in the long-term: namely, Chinese devaluation and the exacerbating effect of the stronger US dollar. Clearly, the tentacles of the Chinese slowdown are spreading, and the lack of a clear enough policy is a red flag to ongoing volatility. Equally, the dollar has been strengthening due to the robustness – until recently – of the US recovery and the Fed’s decision to hike rates in December. However, it does drag down exports and adds to the already widening trade deficit. While it’s not yet a case of stunting US growth, all eyes will remain on Yellen to soothe where she can. For now, as hinted in her testimony to Congress, she’ll continue to put any immediate rates rise on hold. |
| 1.53pm GMT | 1.53pm GMT |
| 13:53 | 13:53 |
| Dennis de Jong, managing director at UFX.com, said the US retail sales showed some positive signs: | Dennis de Jong, managing director at UFX.com, said the US retail sales showed some positive signs: |
| With US data on the whole far from convincing following the interest rate rise, Fed Chair Janet Yellen will be pleased with the green shoots shown in today’s retail sales figures. | With US data on the whole far from convincing following the interest rate rise, Fed Chair Janet Yellen will be pleased with the green shoots shown in today’s retail sales figures. |
| Any positive figure is a step in the right direction, and onlookers still await an uptick in consumer activity prompted by continuing low fuel and energy prices. | Any positive figure is a step in the right direction, and onlookers still await an uptick in consumer activity prompted by continuing low fuel and energy prices. |
| Yellen will still be wary given that the numbers have been given a leg-up from the holiday season, and she should expect there to be further strain on the US economy in the coming months. | Yellen will still be wary given that the numbers have been given a leg-up from the holiday season, and she should expect there to be further strain on the US economy in the coming months. |