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| European stock markets rise as trade fears fade – as it happened | |
| (35 minutes later) | |
| With this, we are closing the blog for the day. Thank you for all your great comments. We’ll be back tomorrow. | |
| Following an initial dip, the pound has rallied since news broke of the resignation of Brexit secretary David Davis late on Sunday night. He has been replaced by former housing minister Dominic Raab, a Brexit-supporting minister. | |
| Sterling is currently up nearly 0.5% at $1.3349, and steady against the euro. Investors are betting that Davis’ departure won’t endanger the prime minister, and that a “soft” Brexit has become more likely since Friday’s Chequers summit. | |
| Stock markets have begun the week on a positive note, despite rising trade tensions between America and China, which both imposed tariffs on a number of imported goods on Friday. Analysts say that markets brushed aside concerns over the impact on the world economy (as they have known for a month that the tariffs were coming), and were cheered by Friday’s healthy US jobs figures. | |
| Oil prices are climbing on higher global demand and US efforts to block Iranian supplies using sanctions. Brent crude is up 0.8% at $77.71 a barrel while US crude is little changed at $73.82 a barrel. | |
| It is the third day of gains on US stock markets. | |
| Wall Street has opened higher, as expected. | |
| Dow Jones up 0.4% | |
| S&P 500 up 0.4% | |
| Nasdaq up 0.55% | |
| This means Draghi could leave office in November 2019 without ever having hiked interest rates during his eight-year term. | |
| Interest rates in the eurozone will stay on hold for at least another year, as previously signalled. Draghi said: | |
| We expect key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path. | We expect key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path. |
| Draghi also reiterated that the ECB would pare back its monthly asset purchases from €30bn to €15bn and end the programme at the end of December. “This is subject to incoming data confirming our medium-term inflation outlook.” | Draghi also reiterated that the ECB would pare back its monthly asset purchases from €30bn to €15bn and end the programme at the end of December. “This is subject to incoming data confirming our medium-term inflation outlook.” |
| In his speech to the European parliament, ECB chief Mario Draghi has warned that the main risks to economic growth come from trade disputes. | In his speech to the European parliament, ECB chief Mario Draghi has warned that the main risks to economic growth come from trade disputes. |
| As I have said before, downside risks to the outlook mainly relate to the threat of increased protectionism. A strong and united European Union can help reap the benefits of economic openness while protecting its citizens against unchecked globalisation. In leading by example, the EU can lend support to multilateralism and global trade, which have been cornerstones of growing economic prosperity over the past seven decades. But to be successful on the outside, the EU requires strong institutions and sound economic governance at home. | As I have said before, downside risks to the outlook mainly relate to the threat of increased protectionism. A strong and united European Union can help reap the benefits of economic openness while protecting its citizens against unchecked globalisation. In leading by example, the EU can lend support to multilateralism and global trade, which have been cornerstones of growing economic prosperity over the past seven decades. But to be successful on the outside, the EU requires strong institutions and sound economic governance at home. |
| You can read the whole speech here. | You can read the whole speech here. |
| Wall Street is expected to open higher, with investors still cheered by healthy US jobs data published last Friday, which have outweighed concerns over rising trade tensions between Washington and Beijing. Stock market futures are pointing to rises of 0.4% to 0.5% for the S&P 500, the Nasdaq and the Dow Jones. | Wall Street is expected to open higher, with investors still cheered by healthy US jobs data published last Friday, which have outweighed concerns over rising trade tensions between Washington and Beijing. Stock market futures are pointing to rises of 0.4% to 0.5% for the S&P 500, the Nasdaq and the Dow Jones. |
| While we are waiting for ECB chief Mario Draghi’s speech at the European parliament in Brussels (2pm BST), the central bank’s governing council member Ewald Nowotny has warned that trade wars, Brexit and capacity constraints are the main risks for the eurozone economy. | While we are waiting for ECB chief Mario Draghi’s speech at the European parliament in Brussels (2pm BST), the central bank’s governing council member Ewald Nowotny has warned that trade wars, Brexit and capacity constraints are the main risks for the eurozone economy. |
| He told a financial seminar in Zurich: | He told a financial seminar in Zurich: |
| For the eurozone, the Brexit constellation is something we look at. It is mainly a risk for the UK, but it also may pose risks and uncertainties for the eurozone.” | For the eurozone, the Brexit constellation is something we look at. It is mainly a risk for the UK, but it also may pose risks and uncertainties for the eurozone.” |
| Michael Minall, automotive sector specialist at management consultancy Vendigital said that following steady sales declines over the past few years, this admission from Nissan could well mean the death of diesel. | Michael Minall, automotive sector specialist at management consultancy Vendigital said that following steady sales declines over the past few years, this admission from Nissan could well mean the death of diesel. |
| In 2015, VW’s emissions-rigging highlighted the disparity between real-world performance of diesel engine cars and laboratory test results. These latest revelations have once again pushed the issue into the spotlight, at a time when many consumers have also lost confidence in diesel. While the findings of Nissan’s investigation and the immediate impact of the news on automotive suppliers is unlikely to be significant, it certainly represents another nail in the coffin for the diesel car market. | In 2015, VW’s emissions-rigging highlighted the disparity between real-world performance of diesel engine cars and laboratory test results. These latest revelations have once again pushed the issue into the spotlight, at a time when many consumers have also lost confidence in diesel. While the findings of Nissan’s investigation and the immediate impact of the news on automotive suppliers is unlikely to be significant, it certainly represents another nail in the coffin for the diesel car market. |
| In other news, Nissan has admitted that exhaust emissions and fuel economy tests for 19 models in Japan were falsified. | In other news, Nissan has admitted that exhaust emissions and fuel economy tests for 19 models in Japan were falsified. |
| Reuters reports: | Reuters reports: |
| The Japanese carmaker said on Monday it had discovered the testing environments for emissions and fuel economy in final vehicle inspections at most of its factories in Japan were not in line with requirements, and inspection reports were based on altered measurements. | The Japanese carmaker said on Monday it had discovered the testing environments for emissions and fuel economy in final vehicle inspections at most of its factories in Japan were not in line with requirements, and inspection reports were based on altered measurements. |
| “A full and comprehensive investigation of the facts … including the causes and background of the misconduct, is under way,” Nissan said. The problems were found during voluntary compliance checks following an improper vehicle inspection scandal last year. | “A full and comprehensive investigation of the facts … including the causes and background of the misconduct, is under way,” Nissan said. The problems were found during voluntary compliance checks following an improper vehicle inspection scandal last year. |
| In October, a recall of 1.2m vehicles was triggered after Nissan said uncertified inspectors had signed off on final checks for cars sold in Japan. The carmaker blamed staffing shortages for the scandal, which caused annual operating profit to slide. | In October, a recall of 1.2m vehicles was triggered after Nissan said uncertified inspectors had signed off on final checks for cars sold in Japan. The carmaker blamed staffing shortages for the scandal, which caused annual operating profit to slide. |
| Nissan said the latest misconduct did not compromise the safety of the affected models, and mileage readings were in line with levels presented in product catalogues. It was in the process of compiling data for the GT-R sports car to confirm it satisfied safety standards. | Nissan said the latest misconduct did not compromise the safety of the affected models, and mileage readings were in line with levels presented in product catalogues. It was in the process of compiling data for the GT-R sports car to confirm it satisfied safety standards. |
| Returning to trade... China says it will use the funds collected from tariffs charged on imports from the US to help ease the impact of US tariffs on Chinese companies. | Returning to trade... China says it will use the funds collected from tariffs charged on imports from the US to help ease the impact of US tariffs on Chinese companies. |
| The commerce ministry also said it will encourage companies to import more products such as soybeans and cars from other markets. | The commerce ministry also said it will encourage companies to import more products such as soybeans and cars from other markets. |
| Amin Nasser, the chief executive of Saudi Arabia’s state energy giant Saudi Aramco, has warned of an oil supply crunch as investment in shale projects won’t be enough to meet rising demand. | Amin Nasser, the chief executive of Saudi Arabia’s state energy giant Saudi Aramco, has warned of an oil supply crunch as investment in shale projects won’t be enough to meet rising demand. |
| He told the Financial Times in an interview (paid content): | He told the Financial Times in an interview (paid content): |
| Something like shale oil… it is not going to really create a major dent in total global supply requirements up until 2040. | Something like shale oil… it is not going to really create a major dent in total global supply requirements up until 2040. |
| Energy companies are reluctant to invest in longer-term projects that are more costly, and are instead cutting costs and returning money to investors through dividends and share buybacks. | Energy companies are reluctant to invest in longer-term projects that are more costly, and are instead cutting costs and returning money to investors through dividends and share buybacks. |
| Meanwhile, the Church of England has threatened to sell its shares in oil and gas firms that fail to do enough to combat climate change. | Meanwhile, the Church of England has threatened to sell its shares in oil and gas firms that fail to do enough to combat climate change. |
| Church of England threatens to sell its share in oil and gas firms if they're not doing enough on climate change https://t.co/WHZKlLxv8S | Church of England threatens to sell its share in oil and gas firms if they're not doing enough on climate change https://t.co/WHZKlLxv8S |
| Elsewhere, oil prices are climbing on increased global demand and US use of sanctions against Iran to shut out Iranian output. Brent crude, the world benchmark, is 0.8% higher at $77.74 a barrel. | Elsewhere, oil prices are climbing on increased global demand and US use of sanctions against Iran to shut out Iranian output. Brent crude, the world benchmark, is 0.8% higher at $77.74 a barrel. |
| The US wants to reduce oil exports from the world’s fifth-bigger producer of oil to zero by November, which would put pressure on other big producers such as Saudi Arabia to pump more crude. However, Saudi Arabia and other members of the Opec oil cartel have little spare capacity and oil demand has outpaced supply in recent months. US oil output is increasing but is not enough to plug the gap if Iranian exports are blocked. | The US wants to reduce oil exports from the world’s fifth-bigger producer of oil to zero by November, which would put pressure on other big producers such as Saudi Arabia to pump more crude. However, Saudi Arabia and other members of the Opec oil cartel have little spare capacity and oil demand has outpaced supply in recent months. US oil output is increasing but is not enough to plug the gap if Iranian exports are blocked. |