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FTSE 100 extends record winning streak - business live FTSE 100 extends record winning streak - business live
(35 minutes later)
1.42pm GMT
13:42
US retail sales rise 0.6% in December
US retail sales grew by 0.6% in December according to figures just in from the Commerce Department.
It was a touch below expectations of a 0.7% increase, but November’s growth figure was revised up to 0.2% from 0.1%.
Growth in December was fuelled by higher demand for cars, with sales up 2.4%. When cars were taken out of the equation, retail sales were up 0.2%.
Overall, the figures are likely to be taken as sign that the world’s largest economy was in decent shape at the end of 2016.
More pay, greater confidence lifts December retail sales https://t.co/ADIzq8xt5o
1.22pm GMT
13:22
Over in the US, figures are expected to show US retail sales rose 0.7% in December, following a 0.1% rise in November. The data lands at 13.30 UK time.
12.42pm GMT12.42pm GMT
12:4212:42
Oil prices continue to slide and are on course for the first weekly fall since late December.Oil prices continue to slide and are on course for the first weekly fall since late December.
Crude has been hit by concerns about whether the production cuts agreed by Opec in November will stick, and the fall in Chinese exports reported earlier had added to the negative sentiment, since it casts doubt on the strength of the world’s second largest economy.Crude has been hit by concerns about whether the production cuts agreed by Opec in November will stick, and the fall in Chinese exports reported earlier had added to the negative sentiment, since it casts doubt on the strength of the world’s second largest economy.
So Brent is currently down 1% at $55.43 a barrel, while West Texas Intermediate has fallen a similar amount to $52.44.So Brent is currently down 1% at $55.43 a barrel, while West Texas Intermediate has fallen a similar amount to $52.44.
12.28pm GMT12.28pm GMT
12:2812:28
The FTSE 100 is on course to close at a record high for the 12th straight day.The FTSE 100 is on course to close at a record high for the 12th straight day.
Here’s an update of trading across Europe’s main markets:Here’s an update of trading across Europe’s main markets:
FTSE 100: +0.4% at 7,318FTSE 100: +0.4% at 7,318
Germany’s DAX: +0.6% at 11,591Germany’s DAX: +0.6% at 11,591
French CAC: +0.9% at 4,907French CAC: +0.9% at 4,907
Italy’s FTSE MIB: +1.6% at 19,456Italy’s FTSE MIB: +1.6% at 19,456
Spain’s IBEX: +0.9% at 9,489Spain’s IBEX: +0.9% at 9,489
Europe’s STOXX 600: +0.6% at 365Europe’s STOXX 600: +0.6% at 365
12.12pm GMT12.12pm GMT
12:1212:12
BIS: no single factor caused flash crash in poundBIS: no single factor caused flash crash in pound
The Bank for International Settlements has published its report on the “flash crash” in the pound in October.The Bank for International Settlements has published its report on the “flash crash” in the pound in October.
The Guardian’s Jill Treanor reports:The Guardian’s Jill Treanor reports:
October’s flash crash in the pound - when the currency nose dived 9% against the dollar in Asian trading hours - was caused by a combination of inexperienced traders, algorithmic trading and complex trading positions, according to an official report.October’s flash crash in the pound - when the currency nose dived 9% against the dollar in Asian trading hours - was caused by a combination of inexperienced traders, algorithmic trading and complex trading positions, according to an official report.
The flash crash sparked a range of theories about why the pound fell so fast in just a few seconds after midnight.After an investigation by the Bank for International Settlements it is far from clear what caused the slide in the pound, which nose dived from $1.26 to$1.1491, before recovering again.The flash crash sparked a range of theories about why the pound fell so fast in just a few seconds after midnight.After an investigation by the Bank for International Settlements it is far from clear what caused the slide in the pound, which nose dived from $1.26 to$1.1491, before recovering again.
While it says it cannot rule out “fat fingers” - mistaken trading - or attempts at market abuse, the BIS concludes there is little evidence to substantiate the claims. Instead it points to a combination of inexperienced traders, algorithmic trading and complex trading positions being implemented at a time of day when the pound would not usually be trading.While it says it cannot rule out “fat fingers” - mistaken trading - or attempts at market abuse, the BIS concludes there is little evidence to substantiate the claims. Instead it points to a combination of inexperienced traders, algorithmic trading and complex trading positions being implemented at a time of day when the pound would not usually be trading.
No big losses were suffered by the big players in the markets and some of the trades which took place as sterling plunged were cancelled, the report said.No big losses were suffered by the big players in the markets and some of the trades which took place as sterling plunged were cancelled, the report said.
Whatever the cause of the initial selling in sterling, the market was likely to be vulnerable at that time of day to sharp moves and an associated withdrawal of liquidity.Whatever the cause of the initial selling in sterling, the market was likely to be vulnerable at that time of day to sharp moves and an associated withdrawal of liquidity.
UpdatedUpdated
at 12.17pm GMTat 12.17pm GMT
11.42am GMT11.42am GMT
11:4211:42
Julia KolleweJulia Kollewe
Gold has been hitting seven-week highs above $1,200 an ounce this week and is hovering just below that level this morning.Gold has been hitting seven-week highs above $1,200 an ounce this week and is hovering just below that level this morning.
The World Gold Council believes gold will continue to shine this year, despite some concerns that the strength of the US dollar could limit its appeal.The World Gold Council believes gold will continue to shine this year, despite some concerns that the strength of the US dollar could limit its appeal.
In its outlook for 2017, the organisation argues that demand for gold will be underpinned by a number of factors including heightened geopolitical risks, currency depreciation (euro and pound) and growing inflation expectations.In its outlook for 2017, the organisation argues that demand for gold will be underpinned by a number of factors including heightened geopolitical risks, currency depreciation (euro and pound) and growing inflation expectations.
Looking back at 2016, it says:Looking back at 2016, it says:
“The gold price had a strong performance in 2016, rising close to 10% in US dollar terms making it one of the best performing assets last year, despite a post-US election pullback. And the price has gained more than 5% since the Federal Reserve increased rates in mid-December.”“The gold price had a strong performance in 2016, rising close to 10% in US dollar terms making it one of the best performing assets last year, despite a post-US election pullback. And the price has gained more than 5% since the Federal Reserve increased rates in mid-December.”
Gold always thrives on uncertainty and there is plenty of that at present. The unknowns presented by US president-elect Donald Trump, who will be inaugurated on 20 January, Britain’s exit negotiations with the EU, and elections in the Netherlands, France and Germany should all boost demand for bullion, seen as a safe haven in times of trouble.Gold always thrives on uncertainty and there is plenty of that at present. The unknowns presented by US president-elect Donald Trump, who will be inaugurated on 20 January, Britain’s exit negotiations with the EU, and elections in the Netherlands, France and Germany should all boost demand for bullion, seen as a safe haven in times of trouble.
11.25am GMT11.25am GMT
11:2511:25
Berenberg’s chart of the week features the global manufacturing sector.Berenberg’s chart of the week features the global manufacturing sector.
The German bank says purchasing managers indices for major regions suggest an upturn is underway.The German bank says purchasing managers indices for major regions suggest an upturn is underway.
Holger Schmieding, chief economist, says:Holger Schmieding, chief economist, says:
All major regions, manufacturing is picking up. While turning at different times, purchasing managers indexes in the US, China, Germany and the UK are rising. Along with stable gains in employment, the pick-up in export-orientated manufacturing reflects growing optimism and willingness to spend by businesses and households. More investment in long-lived capital could generate the productivity gains that have been woefully weak recently.All major regions, manufacturing is picking up. While turning at different times, purchasing managers indexes in the US, China, Germany and the UK are rising. Along with stable gains in employment, the pick-up in export-orientated manufacturing reflects growing optimism and willingness to spend by businesses and households. More investment in long-lived capital could generate the productivity gains that have been woefully weak recently.
He asks, will the upswing continue? Answer:He asks, will the upswing continue? Answer:
US households are the global consumer of last resort; their spending patterns shape global trends, for better, and for worse. Done right, pro-growth policies should boost US demand growth over the coming years, supporting gains in global goods demand and manufacturing output.US households are the global consumer of last resort; their spending patterns shape global trends, for better, and for worse. Done right, pro-growth policies should boost US demand growth over the coming years, supporting gains in global goods demand and manufacturing output.
Of course, the downside risks linked to the new administration’s potential policies are profound. International trade remains a significant wildcard. Trump has proposed to impose tariffs and erect other barriers to imports, which could trigger tit-for-tat responses for trade partners, thus inhibiting international trade and cross border flows of goods. On balance, we do not expect Congress to approve such proposals and are optimistic the upturn will continue.Of course, the downside risks linked to the new administration’s potential policies are profound. International trade remains a significant wildcard. Trump has proposed to impose tariffs and erect other barriers to imports, which could trigger tit-for-tat responses for trade partners, thus inhibiting international trade and cross border flows of goods. On balance, we do not expect Congress to approve such proposals and are optimistic the upturn will continue.
11.01am GMT11.01am GMT
11:0111:01
Germany poised for Brexit negotiationsGermany poised for Brexit negotiations
German Chancellor Angela Merkel will chair a cabinet meeting on Brexit next week, a government spokesman has said.German Chancellor Angela Merkel will chair a cabinet meeting on Brexit next week, a government spokesman has said.
The ministerial committee on Brexit will meet for the first time on Wednesday to discuss organisational and structural issues as it prepares for formal negotiations with Britain to begin.The ministerial committee on Brexit will meet for the first time on Wednesday to discuss organisational and structural issues as it prepares for formal negotiations with Britain to begin.
Finance minister Wolfgang Schaeuble, economy minister Sigmar Gabriel, foreign minister Frank-Walter Steinmeier and Merkel’s chief of staff Peter Altmaier will be among those to attend the meeting.Finance minister Wolfgang Schaeuble, economy minister Sigmar Gabriel, foreign minister Frank-Walter Steinmeier and Merkel’s chief of staff Peter Altmaier will be among those to attend the meeting.
Government spokesman Steffen Seibert, said:Government spokesman Steffen Seibert, said:
The committee will deal with preparations for negotiations on Britain’s exit from the European Union, preparations within the federal government as well as by the European institutions.”The committee will deal with preparations for negotiations on Britain’s exit from the European Union, preparations within the federal government as well as by the European institutions.”
UpdatedUpdated
at 11.12am GMTat 11.12am GMT
10.56am GMT10.56am GMT
10:5610:56
Arnaud Masset, market analyst at the internet bank Swissquote, considers the dollar’s prospects:Arnaud Masset, market analyst at the internet bank Swissquote, considers the dollar’s prospects:
The dollar index rose almost 1% ahead of [Trump’s press] conference but quickly reversed gains, sliding as much as 2% since then, down to 100.72 before stabilising at around 101.30.The dollar index rose almost 1% ahead of [Trump’s press] conference but quickly reversed gains, sliding as much as 2% since then, down to 100.72 before stabilising at around 101.30.
The market does not expect much from Trump’s investiture next week as it will most likely be in the same vein. Against this backdrop, we expect the market will pay increasing attention to US fundamentals and to the Federal Reserve. Obviously this will not happen overnight as investors still expect a lot from the Trump presidency; however, they have also started to realised that they were somewhat overoptimistic.The market does not expect much from Trump’s investiture next week as it will most likely be in the same vein. Against this backdrop, we expect the market will pay increasing attention to US fundamentals and to the Federal Reserve. Obviously this will not happen overnight as investors still expect a lot from the Trump presidency; however, they have also started to realised that they were somewhat overoptimistic.
We remain bearish on the US dollar and expect high quality commodity and emerging market currencies to continue rallying. However, in the short-term, the Trump story will remain the main driver in the foreign exchange market, meaning that event risk is definitely something to monitor, especially the President-elect’s Twitter feed.We remain bearish on the US dollar and expect high quality commodity and emerging market currencies to continue rallying. However, in the short-term, the Trump story will remain the main driver in the foreign exchange market, meaning that event risk is definitely something to monitor, especially the President-elect’s Twitter feed.
10.41am GMT10.41am GMT
10:4110:41
Dollar weakens on Trump uncertaintyDollar weakens on Trump uncertainty
The US dollar is heading for its worst week in two months when measured against a basket of six major currencies.The US dollar is heading for its worst week in two months when measured against a basket of six major currencies.
The dollar index was down slightly for a third day and 1% lower over the week.The dollar index was down slightly for a third day and 1% lower over the week.
Currency traders were left disappointed by lack of policy detail from Donald Trump when he gave a press conference on Wednesday. The US president-elect talked about his plans to build a wall on the border with Mexico, but there was no detail on potential fiscal stimulus.Currency traders were left disappointed by lack of policy detail from Donald Trump when he gave a press conference on Wednesday. The US president-elect talked about his plans to build a wall on the border with Mexico, but there was no detail on potential fiscal stimulus.
Nomura’s Jordan Rochester has a view:Nomura’s Jordan Rochester has a view:
It opens up the possibility for the market that he could go down the more toxic route which is becoming more protective on trade. Therefore it’s quite prudent for investors that the dollar is a bit softer.It opens up the possibility for the market that he could go down the more toxic route which is becoming more protective on trade. Therefore it’s quite prudent for investors that the dollar is a bit softer.
UpdatedUpdated
at 12.34pm GMTat 12.34pm GMT
10.17am GMT
10:17
Saunders in one line:
BoE policymaker Saunders saying unemployment will probably stay low this year but we shouldn't expect that to mean wage growth picks up much
10.10am GMT
10:10
The BoE’s Michael Saunders is also highlighting the shift in recent years in Britain’s labour market to a gig economy and more self-employment.
In the last five years, the numbers of people that are self-employed has risen by 14%, the number of agency workers is up by about 30%, and the number of businesses registered in the UK is up by 40%.
There has been also been the expansion of zero hours contracts and the “gig economy”. Among people in work, the proportion that are full-time employees (ie not self-employed, not part-time, not in a temporary job) remains well below pre-recession levels.
Of course, some people may prefer flexible work structures or seek to reinvent their career through self-employment. But, given that on average these less secure forms of work are also less well-paid, the expansion of contingent work probably also reflects the erosion of secure and well-paid jobs from technological gains and greater emphasis on cost control.
Updated
at 10.13am GMT
9.58am GMT
09:58
Saunders suggests the prospects for wage rises in the UK are not great:
BoE's Michael Saunders speech asking why wage growth slow despite low unemployment https://t.co/4OqvuUXxJ9 pic.twitter.com/6h7IUVYkta
9.55am GMT
09:55
Bank of England’s Saunders: rise in unemployment will be limited
Michael Saunders, external member of the Bank of England’s Monetary Policy Committee, is speaking at a Resolution Foundation in London.
Saunders said the jobless rate may not rise as high this year as the Bank was forecasting in the November inflation report. Policymakers predicted the jobless rate would rise to 5.4% by the end of 2017 from a current 11-year low of 4.8%,
Economic growth has recently been stronger than expected.
Rather than the rise in unemployment forecast in the November inflation report, it seems quite possible to me that the jobless rate will stay below 5% this year.
9.28am GMT
09:28
Conor Campbell, financial analyst at Spreadex, points out that the weak trade data from China is limiting the FTSE’s gains this morning:
After squeaking to a fresh peak last night, making it a record 11 consecutive sessions of closing highs, the FTSE quickly began to build above 7300 this Friday.
The FTSE likely could have managed something a bit more robust this morning if it weren’t for weak data from China weighing on the miners. With Chinese exports seeing their biggest yearly drop since 2009, down 7.7% across 2016, and imports falling a troublesome 5.5%, the likes of Rio Tinto and Antofagasta found themselves in the red as Friday got underway.
Over in the Eurozone there wasn’t really much to work with, though this didn’t stop the DAX and CAC rising by 0.4% and 0.5% respectively.
9.17am GMT
09:17
Mitchells and Butler and Fortnum & Mason have a merry Christmas
On the corporate front it’s a bit calmer this morning following Retail Super Thursday yesterday. (You can read a handy round-up of how the various retailers performed over Christmas here.)
There have been a few updates this morning:
Pub group Mitchells and Butler had a merry Christmas, with like-for-like sales growth of 4.7% in the four weeks to 7 January 2017. In the first quarter overall (covering the 15 weeks to 7 Jan), like-for-like sales were up 1.7%. More here.
Fortnum & Mason were another Christmas winner, as shoppers flocked to the upmarket department store for hampers, caviar and white truffles. Like-for-like sales rose 16% in the five weeks to 1 January.
Things appear less rosy at Countrywide. The estate agent said it expected to report a 6% fall in transactions for 2016 and predicted a further slowdown in 2017.
Updated
at 9.22am GMT
8.45am GMT
08:45
FTSE hits new record high
The FTSE 100 has hit a new record high and is on course to extend its longest ever winning streak. The index is currently up 27 points or 0.4% at 7,320.
Europe’s major markets are all higher this morning:
FTSE 100: +0.4% at 7,320
Germany’s DAX: +0.4% at 11,570
France’s CAC: +0.5% at 4,887
Italy’s FTSE MIB: +1.2% at 19,387
Spain’s IBEX: +0.3% at 9,439
8.34am GMT
08:34
Over in the currency markets, one-week sterling volatility jumped to the highest since early November as Theresa May prepares to give a speech on Brexit on Tuesday, hitting 14.275 according to Reuters.
It is expected to be a major speech from the prime minister outlining her plans for Britain’s exit from the European Union. As economists at Investec note, the speech “will almost certainly have implications for sterling”.
The pound is currently up 0.2% against the dollar at $1.2181.
8.14am GMT
08:14
Also coming up....
Michael Saunders, an external member of the Bank of England’s Monetary Policy Committee, will be giving a speech later this morning at the Resolution Foundation in London. Economists and investors will be looking for any clues on the latest thinking at Threadneedle Street.
Traders and economists will also be looking out for US retail sales (13.30 UK time), for signs of how the broader economy was performing at the end of 2016.
And of course we’ll be monitoring the markets to see whether the FTSE 100 can extend its record run of rises...the indication from early trading is yes, with the index up 29 points at 7,321.
Updated
at 8.14am GMT
8.08am GMT
08:08
Biggest drop in Chinese exports since 2009
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Trade data from China has disappointed, with exports falling 7.7% in 2016, the biggest drop since 2009. Imports fell 5.5%.
The weaker-than-expected performance will raise fears that global demand is slowing, in Europe and elsewhere.
Another major concern is the prospect of a trade war between China and the US, once Donald Trump is in the White House. The president-elect has already signalled he will take a tough stance against China.
Julian Evans-Pritchard, China economist at Capital Economics, says it is difficult to see any improvement in China’s trade position any time soon:
Looking ahead, it’s hard to see conditions becoming much more favourable to Chinese trade than they already are. Further upside to economic activity, both in China and abroad, is probably now limited given declines in trend growth.
Instead, the risks to trade lie to the downside – the likelihood of a damaging trade spat between China and the US has risen in recent weeks following Trump’s appointment of hardliners to lead US trade policy.
Updated
at 8.10am GMT