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Markets slide on Trump and terror concerns - business live Markets slide on Trump and terror concerns - business live
(35 minutes later)
11.29am BST
11:29
European markets are showing little signs of recovering.
The FTSE 100 is now down around 1% or 72 points, Germay’s Dax is down 0.5%, France’s Cac has lost 1.1% and Spain’s Ibex is 1% lower. Connor Campbell, financial analyst at Spreadex, said:
There was no let-up this Friday morning, the European indices continuing to fall in the aftermath of yesterday’s atrocities in Spain.
Though the likes of easyJet and IAG – which had both been down more than 3% early in the session – saw their losses reduce by a half and a third respectively, the FTSE itself only got worse as the day went on.
Sterling, on the other hand, benefited from the issues in the US and the Eurozone... It is important to point out, however, that the pound is still seriously struggling against the latter (the currency is trapped below €1.10) and has begun to flag against the former, falling from an early August, 11 month high of $1.326 to its current sub-$1.29 levels.
Looking to this afternoon and the Dow Jones is set to open flat at 21750 when the bell rings on Wall Street. While it would appear that the Dow is, perhaps understandably, avoiding the kind of losses seen in Europe, that’s in part because it suffered its own 1.2% plunge yesterday evening. After months of the dollar bearing the brunt of the Trump-chaos the US indices finally seem to be turning on the President, likely due to the fact that the North Korea and Charlottesville controversies have helped kick the market-lifting infrastructure and tax promises further into the distance.
11.02am BST11.02am BST
11:0211:02
Yen in demand as dollar weakensYen in demand as dollar weakens
The yen’s position as a haven in times of uncertainty has helped push the Japanese currency higher against the dollar.The yen’s position as a haven in times of uncertainty has helped push the Japanese currency higher against the dollar.
The combination of the latest terror attacks and continuing concerns about the stability of Donald Trump’s presidency has seen the yen gain 0.5% against the dollar.The combination of the latest terror attacks and continuing concerns about the stability of Donald Trump’s presidency has seen the yen gain 0.5% against the dollar.
Meanwhile the euro gained ground after Thursday’s losses when the minutes from the European Central Bank warned of an overshoot in the single currency.Meanwhile the euro gained ground after Thursday’s losses when the minutes from the European Central Bank warned of an overshoot in the single currency.
The pound is currently virtually unchanged against the euro at €1.0975 but up 0.19% against the dollar at $1.2887.The pound is currently virtually unchanged against the euro at €1.0975 but up 0.19% against the dollar at $1.2887.
10.48am BST10.48am BST
10:4810:48
Here are the eurozone construction figures:Here are the eurozone construction figures:
Euro area construction -0.5% in June over May; +3.4% over June 2016 #Eurostat https://t.co/rqx06LzPaO pic.twitter.com/kGnLJhwqSeEuro area construction -0.5% in June over May; +3.4% over June 2016 #Eurostat https://t.co/rqx06LzPaO pic.twitter.com/kGnLJhwqSe
10.25am BST10.25am BST
10:2510:25
More on the fall in airline shares. British Airways owner International Airlines Group and low-cost carrier easyJet are both down around 2%, albeit off their lows, following the Spanish terror attacks. Joshua Mahony, market analyst at IG, said:More on the fall in airline shares. British Airways owner International Airlines Group and low-cost carrier easyJet are both down around 2%, albeit off their lows, following the Spanish terror attacks. Joshua Mahony, market analyst at IG, said:
Unsurprisingly we are seeing the airlines leading the FTSE lower this morning, in the aftermath of yesterday’s terrorist attack in Barcelona. In London, Paris and now Barcelona, the terrorist attacks over recent years have taken place in the three most visited cities in Europe, with inevitable implications for numbers over the coming year. With Turkish tourism numbers finally coming back, the focus on top European cities will arguably be a bigger hit to low cost European carriers if people decide to stay away.Unsurprisingly we are seeing the airlines leading the FTSE lower this morning, in the aftermath of yesterday’s terrorist attack in Barcelona. In London, Paris and now Barcelona, the terrorist attacks over recent years have taken place in the three most visited cities in Europe, with inevitable implications for numbers over the coming year. With Turkish tourism numbers finally coming back, the focus on top European cities will arguably be a bigger hit to low cost European carriers if people decide to stay away.
10.06am BST10.06am BST
10:0610:06
S&P keeps AA rating on South KoreaS&P keeps AA rating on South Korea
With the Spanish attack and Donald Trump’s widely-reviled response to the events at Charlottesville, last week’s concerns about North Korea have been overtaken for the moment.With the Spanish attack and Donald Trump’s widely-reviled response to the events at Charlottesville, last week’s concerns about North Korea have been overtaken for the moment.
But ratings agency S&P reckons there is nothing much to worry about anyway. Repeating its AA rating on South Korea, it said:But ratings agency S&P reckons there is nothing much to worry about anyway. Repeating its AA rating on South Korea, it said:
Although geopolitical tensions have risen of late in the Korean peninsula, we believe a direct armed conflict is unlikely.Although geopolitical tensions have risen of late in the Korean peninsula, we believe a direct armed conflict is unlikely.
[North Korea] appears to have achieved significant improvements in its weapons technology in the past few months. Nevertheless, we view the likelihood of the North Korean regime provoking a major armed conflict on the peninsula to be low. This is based on our opinion that such an event would very likely destabilise North Korea politically and bring no benefit to the country.[North Korea] appears to have achieved significant improvements in its weapons technology in the past few months. Nevertheless, we view the likelihood of the North Korean regime provoking a major armed conflict on the peninsula to be low. This is based on our opinion that such an event would very likely destabilise North Korea politically and bring no benefit to the country.
But it did warn:But it did warn:
That said, the risk of an unintended military conflict has risen from a low level. We believe the ruling elite of [North Korea] is rational and has a strong sense of self-preservation. Still, after ratcheting up tensions with little to show for it, the regime could underestimate the risks of a more dramatic provocation in the hope of winning some concessions. On the other side, the U.S. may be less patient in responding to North Korean provocations than before, now that it views the country as being close to achieving inter-continental nuclear strike capability. In this situation, a miscalculation by either side of this standoff could spark a direct military conflict.That said, the risk of an unintended military conflict has risen from a low level. We believe the ruling elite of [North Korea] is rational and has a strong sense of self-preservation. Still, after ratcheting up tensions with little to show for it, the regime could underestimate the risks of a more dramatic provocation in the hope of winning some concessions. On the other side, the U.S. may be less patient in responding to North Korean provocations than before, now that it views the country as being close to achieving inter-continental nuclear strike capability. In this situation, a miscalculation by either side of this standoff could spark a direct military conflict.
However it is positive on the South Korean economy:However it is positive on the South Korean economy:
Korea’s record of steady economic growth has generated a prosperous economy, a high degree of fiscal and monetary flexibility, and a solid external position.Korea’s record of steady economic growth has generated a prosperous economy, a high degree of fiscal and monetary flexibility, and a solid external position.
We are affirming our ‘AA’ long-term and ‘A-1+’ short-term sovereign credit ratings on Korea.We are affirming our ‘AA’ long-term and ‘A-1+’ short-term sovereign credit ratings on Korea.
The stable outlook reflects our expectations that geopolitical risks in the Korean peninsula will not escalate over the next two years beyond what we observed since the last leadership transition in [North Korea] in 2011.The stable outlook reflects our expectations that geopolitical risks in the Korean peninsula will not escalate over the next two years beyond what we observed since the last leadership transition in [North Korea] in 2011.
And South Koreans will know how to celebrate this news:And South Koreans will know how to celebrate this news:
UpdatedUpdated
at 10.27am BSTat 10.27am BST
9.57am BST9.57am BST
09:5709:57
Gold is not the only haven gaining ground in the wake of the latest terror attack and the concerns about Donald Trump’s presidency. Arnaud Masset of Swissquote Bank said:Gold is not the only haven gaining ground in the wake of the latest terror attack and the concerns about Donald Trump’s presidency. Arnaud Masset of Swissquote Bank said:
Investors are switching to risk-off mode, fleeing into safe haven assets. Gold reversed early-week losses, rising more than 2% since Tuesday. Demand for treasury bonds soared. 10-year German Bund yields dipped to 0.40%, while the 2-year slid to -0.71%. So did demand for higher yielding currencies such as the Aussie and the Kiwi. AUD/USD rose 0.45% while NZD/USD was up 0.50%. The Japanese yen was up 0.40%.Investors are switching to risk-off mode, fleeing into safe haven assets. Gold reversed early-week losses, rising more than 2% since Tuesday. Demand for treasury bonds soared. 10-year German Bund yields dipped to 0.40%, while the 2-year slid to -0.71%. So did demand for higher yielding currencies such as the Aussie and the Kiwi. AUD/USD rose 0.45% while NZD/USD was up 0.50%. The Japanese yen was up 0.40%.
9.28am BST9.28am BST
09:2809:28
Gold is moving higher as investors seek havens in the wake of the current uncertainties. The precious metal is up $6 an ounce to $1293, its highest level since early June.Gold is moving higher as investors seek havens in the wake of the current uncertainties. The precious metal is up $6 an ounce to $1293, its highest level since early June.
9.16am BST9.16am BST
09:1609:16
Here’e the eurozone current account for June:Here’e the eurozone current account for June:
#Euro Current Account at €28.1B https://t.co/iWgeVfiiuR pic.twitter.com/SKMnzcAPAH#Euro Current Account at €28.1B https://t.co/iWgeVfiiuR pic.twitter.com/SKMnzcAPAH
9.03am BST9.03am BST
09:0309:03
It may be a summer lull in the business world in many ways but there are still a few key events to come, so here’s a quick preview of next week from IHS Markit:It may be a summer lull in the business world in many ways but there are still a few key events to come, so here’s a quick preview of next week from IHS Markit:
Next week's economic diary includes the flash #PMI surveys for the US, Eurozone & Japan plus UK #GDP. Read more here https://t.co/53Tv6QHZBB pic.twitter.com/VFRkCcoAXHNext week's economic diary includes the flash #PMI surveys for the US, Eurozone & Japan plus UK #GDP. Read more here https://t.co/53Tv6QHZBB pic.twitter.com/VFRkCcoAXH
8.44am BST8.44am BST
08:4408:44
Here’s Neil Wilson, senior market analyst at ETX Capital, on the fall in airline shares:Here’s Neil Wilson, senior market analyst at ETX Capital, on the fall in airline shares:
Airlines bore the brunt of a risk-off turn on the open, with shares in Ryanair, IAG, Air France KLM, Lufthansa and EasyJet all slumping following the terror attacks in Spain. As we’ve seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings. Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be a tough patch for the industry.Airlines bore the brunt of a risk-off turn on the open, with shares in Ryanair, IAG, Air France KLM, Lufthansa and EasyJet all slumping following the terror attacks in Spain. As we’ve seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings. Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be a tough patch for the industry.
Airlines are already dealing with a price war and several have warned about the second half. The attacks in Spain will do nothing to help and should hit earnings, although we won’t know to what extent until the quarterly updates come in.Airlines are already dealing with a price war and several have warned about the second half. The attacks in Spain will do nothing to help and should hit earnings, although we won’t know to what extent until the quarterly updates come in.
Falling demand is not going to help falling fares. Ryanair thinks average fares will decline by 8% in the second half. The industry is good at competing away any margin accretion by creating more capacity. Now firms will probably have to contend with lower demand in key Spanish routes.Falling demand is not going to help falling fares. Ryanair thinks average fares will decline by 8% in the second half. The industry is good at competing away any margin accretion by creating more capacity. Now firms will probably have to contend with lower demand in key Spanish routes.
IAG and EasyJet both shed 3% in early trading, while Ryanair was 5% lower on the open before paring losses. These were the biggest fallers as European stocks took a nose dive after US stocks dived yesterday on concerns about the Donald Trump presidency. On a risk-off day, the only risers are miners and insurers.IAG and EasyJet both shed 3% in early trading, while Ryanair was 5% lower on the open before paring losses. These were the biggest fallers as European stocks took a nose dive after US stocks dived yesterday on concerns about the Donald Trump presidency. On a risk-off day, the only risers are miners and insurers.
But if the lesson from previous terror attacks is anything to go by, whilst airlines and maybe some luxury goods stocks can expect to see earnings hit, the broader market is capable of rebounding reasonably quickly.But if the lesson from previous terror attacks is anything to go by, whilst airlines and maybe some luxury goods stocks can expect to see earnings hit, the broader market is capable of rebounding reasonably quickly.
8.40am BST8.40am BST
08:4008:40
The Spanish market, inevitably, is also among the losers. The Ibex is currently down 1.1%, but has recovered a little from its worst levels.The Spanish market, inevitably, is also among the losers. The Ibex is currently down 1.1%, but has recovered a little from its worst levels.
8.28am BST8.28am BST
08:2808:28
It is no wonder investors are shying away from equities, says David Morrison, senior market strategist at SpreadCo:It is no wonder investors are shying away from equities, says David Morrison, senior market strategist at SpreadCo:
European equities and US stock index futures have begun today’s session on the back foot. This follows yesterday’s sharp sell-off on Wall Street which saw the major indices log some of their biggest daily losses so far this year.European equities and US stock index futures have begun today’s session on the back foot. This follows yesterday’s sharp sell-off on Wall Street which saw the major indices log some of their biggest daily losses so far this year.
The move mimics that from last week. Back then investors dumped equities after President Trump responded to North Korea’s threat to fire missiles towards Guam with a couple of bellicose tweets.The move mimics that from last week. Back then investors dumped equities after President Trump responded to North Korea’s threat to fire missiles towards Guam with a couple of bellicose tweets.
This time round investors have a clutch of excuses for cutting their exposure to equities. Most immediately is the apparent melt-down of the Trump administration as policymakers and insiders rush to damn the president for his comments over the violence at Charlottesville. The concern is that Trump has managed to alienate so many people now that he will never garner the support to push through his promised agenda of tax cuts, regulatory reform and infrastructure spending.This time round investors have a clutch of excuses for cutting their exposure to equities. Most immediately is the apparent melt-down of the Trump administration as policymakers and insiders rush to damn the president for his comments over the violence at Charlottesville. The concern is that Trump has managed to alienate so many people now that he will never garner the support to push through his promised agenda of tax cuts, regulatory reform and infrastructure spending.
Secondly, there are the Spanish terrorist atrocities to consider, something which unnerves confidence in the current febrile atmosphere.Secondly, there are the Spanish terrorist atrocities to consider, something which unnerves confidence in the current febrile atmosphere.
Thirdly, there’s every chance that geopolitical tension builds again as the US and South Korea undertake military manoeuvres in the Pacific next week.Thirdly, there’s every chance that geopolitical tension builds again as the US and South Korea undertake military manoeuvres in the Pacific next week.
Finally, the second quarter earnings season is drawing to a close with a raft of disappointing retail numbers. All-in-all, this seems like a good time to book profits, cut back one’s equity exposure and wait for a better opportunity to reinvest.Finally, the second quarter earnings season is drawing to a close with a raft of disappointing retail numbers. All-in-all, this seems like a good time to book profits, cut back one’s equity exposure and wait for a better opportunity to reinvest.
8.25am BST8.25am BST
08:2508:25
Renewed worries about tourism in the wake of the Barcelona attacks have sent the European travel and leisure sector index down 1.4% in early trading.Renewed worries about tourism in the wake of the Barcelona attacks have sent the European travel and leisure sector index down 1.4% in early trading.
8.04am BST8.04am BST
08:0408:04
European markets open lower with airlines among the losersEuropean markets open lower with airlines among the losers
Following the Barcelona attacks, markets have opened sharply lower.Following the Barcelona attacks, markets have opened sharply lower.
The FTSE 100 is down 0.66%, with airlines easyJet and International Airlines Group leading the fallers on fears about the effect the attacks may have on tourism.The FTSE 100 is down 0.66%, with airlines easyJet and International Airlines Group leading the fallers on fears about the effect the attacks may have on tourism.
Germany’s Dax is down 0.8%, France’s Cac 0.9% and Italy’s FTSE MIB 0.95% lower.Germany’s Dax is down 0.8%, France’s Cac 0.9% and Italy’s FTSE MIB 0.95% lower.
UpdatedUpdated
at 8.07am BSTat 8.07am BST
7.59am BST7.59am BST
07:5907:59
Regulators give green light to Heineken purchase of Punch pubsRegulators give green light to Heineken purchase of Punch pubs
Even this early in the day, Heineken directors may well be raising a glass after the Competition Commission gave the go-ahead to the company’s £403m purchase of 1,900 pubs from Punch Taverns.Even this early in the day, Heineken directors may well be raising a glass after the Competition Commission gave the go-ahead to the company’s £403m purchase of 1,900 pubs from Punch Taverns.
There were concerns about the impact on the ranges of cider and beer supplied to pubs in 33 local areas, but the regulator has accepted Heineken’s proposals to sell pubs in the affected areas.There were concerns about the impact on the ranges of cider and beer supplied to pubs in 33 local areas, but the regulator has accepted Heineken’s proposals to sell pubs in the affected areas.
7.38am BST7.38am BST
07:3807:38
Agenda: Investors take profits as uncertainty returns to marketsAgenda: Investors take profits as uncertainty returns to markets
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The recent brief revival in stock markets has come to a grinding halt, as Donald Trump’s presidency descends into further confusion and the Barcelona attacks revive terrorism fears.The recent brief revival in stock markets has come to a grinding halt, as Donald Trump’s presidency descends into further confusion and the Barcelona attacks revive terrorism fears.
In the US, Wall Street suffered its second biggest drop of the year, with the Dow Jones Industrial Average 1.24% lower - its largest one day fall in three months - the S&P 500 off 1.54% and Nasdaq Composite down nearly 2%. In Asia the Nikkei 225 was down more than 1% and the Hang Seng 0.5% lower. European markets are also expected to open down:In the US, Wall Street suffered its second biggest drop of the year, with the Dow Jones Industrial Average 1.24% lower - its largest one day fall in three months - the S&P 500 off 1.54% and Nasdaq Composite down nearly 2%. In Asia the Nikkei 225 was down more than 1% and the Hang Seng 0.5% lower. European markets are also expected to open down:
Our European opening calls:$FTSE 7353 -0.48%$DAX 12140 -0.52%$CAC 5116 -0.59%$IBEX 10369 -0.72%$MIB 21669 -0.55%Our European opening calls:$FTSE 7353 -0.48%$DAX 12140 -0.52%$CAC 5116 -0.59%$IBEX 10369 -0.72%$MIB 21669 -0.55%
The negative reaction to Trump’s response to the events in Charlotteville continued with a third business panel scrapped, casting more doubt on the president’s ability to push through any of his infrastructure or tax proposals. So investors were already pulling out of equities and into havens such as the Swiss franc, the yen and gold, and the slide intensified once the news of the Spanish attacks began filtering through.The negative reaction to Trump’s response to the events in Charlotteville continued with a third business panel scrapped, casting more doubt on the president’s ability to push through any of his infrastructure or tax proposals. So investors were already pulling out of equities and into havens such as the Swiss franc, the yen and gold, and the slide intensified once the news of the Spanish attacks began filtering through.
On Trump, Michael Hewson, chief market analyst at CMC Markets UK, said:On Trump, Michael Hewson, chief market analyst at CMC Markets UK, said:
For several months US markets have managed to give President Trump the benefit of the doubt with respect to the implementation of some form of fiscal or tax reform, particularly since he appeared to have the support of the business community, and for the most part, many in the Republican Party.For several months US markets have managed to give President Trump the benefit of the doubt with respect to the implementation of some form of fiscal or tax reform, particularly since he appeared to have the support of the business community, and for the most part, many in the Republican Party.
This confidence appears to be slowly melting away given recent events that have taken place in the aftermath of Charlottesville, as US politics descends into parody.This confidence appears to be slowly melting away given recent events that have taken place in the aftermath of Charlottesville, as US politics descends into parody.
The mass resignations from the President’s business advisory councils followed by their dissolution, and the subsequent heavy criticism from fellow Republicans appears to show a US President more isolated than at any time in his short Presidency....With support peeling away from all sides, investors appear to be coming to the conclusion that the US President is likely to find it even more difficult to achieve anything close to what was expected than was the case at the beginning of this year. This of course then begs the question as to whether he’ll be able to achieve anything at all, at a time when the political cost of continuing to support him rises with each passing day and each tweet storm.The mass resignations from the President’s business advisory councils followed by their dissolution, and the subsequent heavy criticism from fellow Republicans appears to show a US President more isolated than at any time in his short Presidency....With support peeling away from all sides, investors appear to be coming to the conclusion that the US President is likely to find it even more difficult to achieve anything close to what was expected than was the case at the beginning of this year. This of course then begs the question as to whether he’ll be able to achieve anything at all, at a time when the political cost of continuing to support him rises with each passing day and each tweet storm.
Otherwise it is a fairly quiet end to the week in terms of economic newsOtherwise it is a fairly quiet end to the week in terms of economic news
Agenda:Agenda:
9.00 BST Eurozone current account9.00 BST Eurozone current account
10.00 BST Eurozone construction output10.00 BST Eurozone construction output
15.00 BST University of Michigan consumer confidence15.00 BST University of Michigan consumer confidence
18.00 BST Baker Hughes weekly rig count18.00 BST Baker Hughes weekly rig count
Meanwhile our live blog on the Spanish attacks is here:Meanwhile our live blog on the Spanish attacks is here:
UpdatedUpdated
at 7.48am BSTat 7.48am BST