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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/aug/30/markets-recover-after-korea-shock-and-ahead-of-us-gdp-business-live
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| Version 1 | Version 2 |
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| Markets recover after Korea shock and ahead of US GDP - business live | Markets recover after Korea shock and ahead of US GDP - business live |
| (35 minutes later) | |
| 8.57am BST | |
| 08:57 | |
| On the market recovery, Connor Campbell, financial analyst at Spreadex, said: | |
| With little yet to come from North Korea’s latest missile launch – including an unusually restrained comment from Donald Trump – the markets felt free to rebound this Wednesday. | |
| The European indices were fairly uniform in their gains after the bell. The FTSE jumped 40 or so points, pushing the index to the upper end of the 7300 to 7400 trading bracket it has found itself in for the last 3 weeks. Alongside the general reversal of yesterday’s losses the FTSE also benefited from Brent Crude’s slight rise; the black stuff is now tickling $52 per barrel having slipped under $51.50 on Tuesday, allowing BP and Shell to pull back from yesterday’s lows. | |
| Over in the Eurozone the situation was much the same, with the DAX and CAC climbing 0.5% to 0.6% apiece. However, unlike in the UK – where a similar rise effectively reclaimed Tuesday’s losses – such growth could only take the tip off of yesterday’s Eurozone plunge. | |
| Tuesday saw the Eurozone’s losses exacerbated by the latest romp from the euro, so the German and French indices will be happy to see the currency has calmed somewhat this Wednesday. Against the dollar it’s down 0.4%, and back below $1.195 having crossed $1.205 during Tuesday’s peak, while against the pound the euro has slipped 0.2% (though sterling is still trapped underneath €1.08). | |
| 8.40am BST | |
| 08:40 | |
| Moody's raises growth forecasts for France, Germany and Italy | |
| Moody’s has raised its growth forecasts for Germany, France and Italy, and says the eurozone can expect “above potential” growth this year and next. But it has lowered its prediction for the US outlook. | |
| In its Global Macroeconomic Outlook it said the eurozone is expected to grow by 2.1% in 2017 and 1.9% in 2018 compared to 1.7% last year. | |
| “Robust survey indicators in euro area countries suggest that growth should accelerate through the rest of the year, while the consumer confidence indicator at a 16-year high bodes well for the consumer-driven recovery,” said Madhavi Bokil, a vice president at Moody’s and author of the report. In detail it says: | |
| Moody’s has revised up Germany’s GDP growth forecasts to 2.2% and 2.0% for 2017 and 2018 respectively. Similarly, Moody’s has raised its forecasts for France to 1.6% for both 2017 and 2018, from 1.3% and 1.4% as the recovery remains on track, driven by net exports and investment. | |
| In Italy, Moody’s expects that the recovery will also continue to benefit from supportive monetary and fiscal policies, as well as stronger growth in the rest of the European Union. Moody’s has revised up its real GDP growth forecast to 1.3% in 2017 and 2018 from 0.8% and 1% respectively. | |
| G20 economies will collectively grow at an annual rate of slightly more than 3% in 2017 and 2018, higher than last year’s 2.6%. With considerable slack remaining in some euro area economies and some emerging market countries, the current pace of growth around 2% in advanced economies and more than 5% in emerging markets is not only sustainable in the near term, there is potential for upside. | |
| As for the US: | |
| Moody’s expects US growth of 2.2% in 2017 and 2.3% in 2018, down from 2.4% and 2.5%, respectively. The revisions in 2017 are a result of weaker performance in the first half of the year. The lower growth forecast for 2018 reflects expectations of a more modest fiscal stimulus than previously assumed. | |
| On actions by central banks, Moody’s says: | |
| Monetary policy in the US should continue to tighten this year and next. Moody’s also expects euro area monetary policy to become less supportive in 2018, provided that the current growth momentum remains intact. The Bank of Japan’s policy stance will likely become less accommodative once the 2% inflation target is reached, which the central bank expects in 2019. | |
| But it warned there were a number of risks, not least the situation with North Korea: | |
| “A significant escalation of any of the situations in Korea, the South China Sea and other areas could have significant negative credit implications for the global economy,” said Elena Duggar, an associate managing director at Moody’s. Other risks include a protectionist turn by the US, and any financial market volatility stemming from sudden changes in market expectation regarding monetary policy tightening. | |
| 8.15am BST | 8.15am BST |
| 08:15 | 08:15 |
| European markets open higher | European markets open higher |
| After Tuesday’s slide in the wake of North Korea’s latest missile launch, European markets are heading higher in early trading. | After Tuesday’s slide in the wake of North Korea’s latest missile launch, European markets are heading higher in early trading. |
| The FTSE 100 is up 0.5%, Germany’s Dax has added 0.7%, France’s Cac has climbed 0.6% and Spain’s Ibex is 0.7% better. | The FTSE 100 is up 0.5%, Germany’s Dax has added 0.7%, France’s Cac has climbed 0.6% and Spain’s Ibex is 0.7% better. |
| 8.03am BST | 8.03am BST |
| 08:03 | 08:03 |
| The pound is having another mixed day, but it is not exactly suffering any dramatic moves so far. | The pound is having another mixed day, but it is not exactly suffering any dramatic moves so far. |
| Against the dollar, sterling has edged down 0.08% to $1.2909 as the US currency steadies after its recent losses. | Against the dollar, sterling has edged down 0.08% to $1.2909 as the US currency steadies after its recent losses. |
| But against the euro, the pound has recovered a little ground, up 0.04% at €1.0793. | But against the euro, the pound has recovered a little ground, up 0.04% at €1.0793. |
| Meanwhile gold - which jumped on Tuesday as investors sought havens for their cash - has dipped $1 to $1307 an ounce. | Meanwhile gold - which jumped on Tuesday as investors sought havens for their cash - has dipped $1 to $1307 an ounce. |
| 7.46am BST | 7.46am BST |
| 07:46 | 07:46 |
| The economic impact of tropical storm Harvey will not be felt until next month’s figures at the earliest, so the US data to be released later will be considered in the light of the next Federal Reserve meeting and the central bank’s interest rate policy. | The economic impact of tropical storm Harvey will not be felt until next month’s figures at the earliest, so the US data to be released later will be considered in the light of the next Federal Reserve meeting and the central bank’s interest rate policy. |
| Expectations of another US rate rise in the near future have receded - part of the reason for the recent weakness in the dollar - but stronger than expected figures today and on Friday with the non-farm payroll numbers could see sentiment change again. | Expectations of another US rate rise in the near future have receded - part of the reason for the recent weakness in the dollar - but stronger than expected figures today and on Friday with the non-farm payroll numbers could see sentiment change again. |
| As it it, the ADP report is expected to show around 185,000 new private sector jobs in August after a 178,000 rise in July. Second quarter GDP is forecast to rise from the initial estimate of 2.6% to 2.7% or even 2.8%. | As it it, the ADP report is expected to show around 185,000 new private sector jobs in August after a 178,000 rise in July. Second quarter GDP is forecast to rise from the initial estimate of 2.6% to 2.7% or even 2.8%. |
| 7.35am BST | 7.35am BST |
| 07:35 | 07:35 |
| Agenda: UK lending figures, German inflation and US growth data in spotlight | Agenda: UK lending figures, German inflation and US growth data in spotlight |
| Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business. |
| Stock markets look a little calmer after Monday’s slide in the wake of North Korea’s provocative missile launch over Japan. Investors took some reassurance from President Trump’s relatively measured response. Stating that “all options are on the table” is a lot less bellicose than promising “fire and fury”, so after an early fall the Dow Jones Industrial Average actually ended in positive territory, up 0.26%. | Stock markets look a little calmer after Monday’s slide in the wake of North Korea’s provocative missile launch over Japan. Investors took some reassurance from President Trump’s relatively measured response. Stating that “all options are on the table” is a lot less bellicose than promising “fire and fury”, so after an early fall the Dow Jones Industrial Average actually ended in positive territory, up 0.26%. |
| The positive mood has filtered through to Asia, with the Hang Seng up 0.94% and the Nikkei 225 0.72% better. So European markets are expected to recover a little of Monday’s lost ground: | The positive mood has filtered through to Asia, with the Hang Seng up 0.94% and the Nikkei 225 0.72% better. So European markets are expected to recover a little of Monday’s lost ground: |
| Our European opening calls:$FTSE 7367 up 29$DAX 12006 up 60$CAC 5062 up 30$IBEX 10258 up 66$MIB 21572 up 164 | Our European opening calls:$FTSE 7367 up 29$DAX 12006 up 60$CAC 5062 up 30$IBEX 10258 up 66$MIB 21572 up 164 |
| But some believe the markets may be too calm, given the tensions with North Korea and the country’s promise of more action in the region. Michael Hewson, chief market analyst at CMC Markets UK, said: | But some believe the markets may be too calm, given the tensions with North Korea and the country’s promise of more action in the region. Michael Hewson, chief market analyst at CMC Markets UK, said: |
| Having seen stock markets in Asia and Europe drop sharply and the traditional haven trades rally in the aftermath of North Korea’s provocative missile launch over Japan earlier this week, it wouldn’t have been a surprise to see US markets follow suit. | Having seen stock markets in Asia and Europe drop sharply and the traditional haven trades rally in the aftermath of North Korea’s provocative missile launch over Japan earlier this week, it wouldn’t have been a surprise to see US markets follow suit. |
| Despite the escalation in tension and the universal condemnation the missile launch has provoked, US markets, despite initially opening sharply lower, rallied strongly in the afternoon session to close the day higher. | Despite the escalation in tension and the universal condemnation the missile launch has provoked, US markets, despite initially opening sharply lower, rallied strongly in the afternoon session to close the day higher. |
| It is true that flare ups on the Korean peninsula are nothing new and previous instances have always resulted in a winding back of tension, and it would appear that US investors have decided that recent events are likely to go the same way, as the markets “muscle memory” of selling the panic and then buying the dip kicked in. | It is true that flare ups on the Korean peninsula are nothing new and previous instances have always resulted in a winding back of tension, and it would appear that US investors have decided that recent events are likely to go the same way, as the markets “muscle memory” of selling the panic and then buying the dip kicked in. |
| In ordinary circumstances this might seem sensible, however the events of the last few weeks can hardly be described as ordinary, which suggests that markets could be being rather naïve that current events can be contained. | In ordinary circumstances this might seem sensible, however the events of the last few weeks can hardly be described as ordinary, which suggests that markets could be being rather naïve that current events can be contained. |
| President Trump of course also has to contend with the devastating floods from tropical storm Harvey, both the damage done and the cost to the US economy. Our live coverage of the impact of the storm is here: | President Trump of course also has to contend with the devastating floods from tropical storm Harvey, both the damage done and the cost to the US economy. Our live coverage of the impact of the storm is here: |
| On top of that, he is expected to give more details of his long awaited tax reform programme. | On top of that, he is expected to give more details of his long awaited tax reform programme. |
| It is also a fairly busy day for data as the month comes to and end. Still with the US, there are second quarter GDP figures and the latest private payroll numbers, which are scoured for clues to Friday’s non-farm payroll numbers. | It is also a fairly busy day for data as the month comes to and end. Still with the US, there are second quarter GDP figures and the latest private payroll numbers, which are scoured for clues to Friday’s non-farm payroll numbers. |
| In the UK there are the latest bank lending and mortgage figures, and in Germany, inflation data for August. | In the UK there are the latest bank lending and mortgage figures, and in Germany, inflation data for August. |
| The Agenda: | The Agenda: |
| 9.30 BST UK consumer credit and mortgage lending (July) | 9.30 BST UK consumer credit and mortgage lending (July) |
| 10.00 BST Eurozone confidence figures (August) | 10.00 BST Eurozone confidence figures (August) |
| 13.00 BST German inflation (August) | 13.00 BST German inflation (August) |
| 13.15 BST US ADP employment data (August) | 13.15 BST US ADP employment data (August) |
| 13.30 BST US GDP (second quarter) | 13.30 BST US GDP (second quarter) |