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Shares fall in US and Europe again amid fears over trade, oil and rates – business live Stock markets volatile amid fears over trade, oil and rates – business live
(35 minutes later)
Last week’s market sell-off was partly due to worries that the global economy is slowing.
And Capital Economics has added to those concerns, by predicting that the next recession could be closer than previously thought.
Neil Shearing, their chief economist, believes it will be triggered in America, as the Federal Reserve raises rates to calm inflation (as Donald Trump has warned).
Shearing writes:
The next global downturn is likely to come much sooner than the current consensus anticipates – indeed, we think that world GDP growth is already peaking in this cycle and that it will slow relatively sharply in 2019-20.
The downturn itself is likely to be led by the US, where higher interest rates will begin to weigh on rate-sensitive sectors of the economy, and China, which is undergoing a structural slowdown.
And while we anticipate that the next global downturn will be relatively short and mild compared to previous cycles, there is a long and growing list of threats that mean there is a significant risk of a sharper adjustment.
The newswires are reporting that Janet Yellen, the former chair of the US Federal Reserve, has criticised Donald Trump for his attacks on her predecessor, Jerome Powell.The newswires are reporting that Janet Yellen, the former chair of the US Federal Reserve, has criticised Donald Trump for his attacks on her predecessor, Jerome Powell.
Nick Timiraos of the Wall Street Journal has the details:Nick Timiraos of the Wall Street Journal has the details:
Yellen on Trump's attacks last week: "It is not a desirable thing for a president to comment so explicitly on monetary policy.... Obviously presidents can speak out if they choose to and give their opinion about policy. There’s no law against that. But I don’t think it’s wise."Yellen on Trump's attacks last week: "It is not a desirable thing for a president to comment so explicitly on monetary policy.... Obviously presidents can speak out if they choose to and give their opinion about policy. There’s no law against that. But I don’t think it’s wise."
Yellen: "I don’t believe that President Trump's comments will change what the Fed is doing."Yellen: "I don’t believe that President Trump's comments will change what the Fed is doing."
Yellen also cited the danger that the US economy is running too hot, and also cautioned that the US trade dispute with China could hurt the global economy.Yellen also cited the danger that the US economy is running too hot, and also cautioned that the US trade dispute with China could hurt the global economy.
Yellen: “I am worried about the economy overheating.”Yellen: “I am worried about the economy overheating.”
Yellen: 3% growth feels great but because I don’t think this is sustainable over the long run. Growth needs to slow. The Fed will need to be “skillful and lucky” to achieve a soft landing after 2019.Yellen: 3% growth feels great but because I don’t think this is sustainable over the long run. Growth needs to slow. The Fed will need to be “skillful and lucky” to achieve a soft landing after 2019.
Yellen: We are seeing a tight labor market, but firms have more market power than they used to and are resisting wage increases. Global competition and outsourcing means labor’s bargaining power is not enough to push this up at an aggressive pace.Yellen: We are seeing a tight labor market, but firms have more market power than they used to and are resisting wage increases. Global competition and outsourcing means labor’s bargaining power is not enough to push this up at an aggressive pace.
Yellen: "This is an economy that is more or less at full employment." She's running through all of the labor market data--quits, difficulty of hiring workers, household confidence surveys--that girds her thesis. "There's not a vast pool likely of labor out there."Yellen: "This is an economy that is more or less at full employment." She's running through all of the labor market data--quits, difficulty of hiring workers, household confidence surveys--that girds her thesis. "There's not a vast pool likely of labor out there."
Yellen: Trade is a concern. The trade dispute with China looks to be escalating and could become more intense. I don't know what the endgame is. Many countries, not just US, are concerned about China's demand for technology transfer and restrictions they put on foreign investmentYellen: Trade is a concern. The trade dispute with China looks to be escalating and could become more intense. I don't know what the endgame is. Many countries, not just US, are concerned about China's demand for technology transfer and restrictions they put on foreign investment
Yellen: For China, this is a negative and it is perhaps already showing up in their data. Many east Asian countries from Korea to Malaysia that supply Chinese goods could face repercussions. "It's a grave concern for those countries."Yellen: For China, this is a negative and it is perhaps already showing up in their data. Many east Asian countries from Korea to Malaysia that supply Chinese goods could face repercussions. "It's a grave concern for those countries."
Back in New York, the sell-off is gathering momentum. The Nasdaq tech index is now down 1%.Back in New York, the sell-off is gathering momentum. The Nasdaq tech index is now down 1%.
Pharmaceuticals giant AstraZeneca has frozen investment in the UK until it knows what’s happening with Brexit, according to the firm’s chairman.Pharmaceuticals giant AstraZeneca has frozen investment in the UK until it knows what’s happening with Brexit, according to the firm’s chairman.
Leif Johansson told French newspaper Le Monde that the UK-Swedish firm has activated its contingency plans. It is now stockpiling medicines at national borders and has duplicated some of its UK operations in Sweden.Leif Johansson told French newspaper Le Monde that the UK-Swedish firm has activated its contingency plans. It is now stockpiling medicines at national borders and has duplicated some of its UK operations in Sweden.
Johansson, whose company has operations in Cambridge and Macclesfield, adds:Johansson, whose company has operations in Cambridge and Macclesfield, adds:
We have also stopped investing in the UK.We have also stopped investing in the UK.
More here.More here.
The chimes of the opening bell are ringing out across Wall Street, teeing up a fresh week’s trading.The chimes of the opening bell are ringing out across Wall Street, teeing up a fresh week’s trading.
Traders are edgy following the worst week since March, and in the face of rising tensions around Saudi Arabia.Traders are edgy following the worst week since March, and in the face of rising tensions around Saudi Arabia.
And...shares are dipping in early trading. The Dow Jones industrial average has shed 20 points, or 0.1%, while the Nasdaq is 0.3% lower.And...shares are dipping in early trading. The Dow Jones industrial average has shed 20 points, or 0.1%, while the Nasdaq is 0.3% lower.
Big tech stocks, including Facebook, Netflix and Amazon, are among the big fallers:Big tech stocks, including Facebook, Netflix and Amazon, are among the big fallers:
Back in London, the FTSE 100 has struggled back from his morning’s six-month low. It’s now up 19 points , or 0.3%, at 7015.Back in London, the FTSE 100 has struggled back from his morning’s six-month low. It’s now up 19 points , or 0.3%, at 7015.
But the FTSE 250 index, which contains smaller UK companies, is having a worse day. It’s down 199 points, or 1%, at 18,774, partly due to those nasty profit warnings from SuperDry and ConvaTec this morning.But the FTSE 250 index, which contains smaller UK companies, is having a worse day. It’s down 199 points, or 1%, at 18,774, partly due to those nasty profit warnings from SuperDry and ConvaTec this morning.
The weak US retail sales growth in September has surprised City economics and investors - here’s some early reaction:The weak US retail sales growth in September has surprised City economics and investors - here’s some early reaction:
Interesting retail sales print. Bounce in auto sales, but big dip in restaurant spending--at odds with consumer income growth.Looks like return to trend after some overheating.Bloomberg Eco Surprise Index hasn't been below zero in more than a year; may be changing. pic.twitter.com/E5xvEpMxUuInteresting retail sales print. Bounce in auto sales, but big dip in restaurant spending--at odds with consumer income growth.Looks like return to trend after some overheating.Bloomberg Eco Surprise Index hasn't been below zero in more than a year; may be changing. pic.twitter.com/E5xvEpMxUu
advanced report showing quite the downturn in retail food services spending pic.twitter.com/PbU0siMuwIadvanced report showing quite the downturn in retail food services spending pic.twitter.com/PbU0siMuwI
Retail sales in the #US disappoint markets points to the softer course of US economyRetail sales in the #US disappoint markets points to the softer course of US economy
Just in: Americans spent less in restaurants and malls than expected last month.Just in: Americans spent less in restaurants and malls than expected last month.
US retail sales only rose by 0.1% in September, much weaker than the 0.6% growth which economists had expected.US retail sales only rose by 0.1% in September, much weaker than the 0.6% growth which economists had expected.
This is partly due to a 1.8% fall in spending at restaurants and bars, the biggest drop since December 2016.This is partly due to a 1.8% fall in spending at restaurants and bars, the biggest drop since December 2016.
That wiped out a 0.8% surge in car purchases. Clothing sales rose by 0.5%, while online and mail-order shopping jumped by 1.1%.That wiped out a 0.8% surge in car purchases. Clothing sales rose by 0.5%, while online and mail-order shopping jumped by 1.1%.
Such a big drop in spending in bars and eateries could worry economists - it may signal that US consumers are cutting back. However, it could also be due to one-off factors, such as the hurricanes which hit the US last month.Such a big drop in spending in bars and eateries could worry economists - it may signal that US consumers are cutting back. However, it could also be due to one-off factors, such as the hurricanes which hit the US last month.
Hmmm US retail sales miss in September. Hurricane effects?Hmmm US retail sales miss in September. Hurricane effects?
Two more top US executives have pulled out of Saudi Arabia’s ‘Davos in the desert’ event, over the disappearance of Jamal Khashoggi.Two more top US executives have pulled out of Saudi Arabia’s ‘Davos in the desert’ event, over the disappearance of Jamal Khashoggi.
Blackstone’s Stephen Schwarzman and BlackRock’s Larry Fink have both withdraw from the high-profile Saudi Arabian investment conference taking place later this month (with a shrinking guest list).Blackstone’s Stephen Schwarzman and BlackRock’s Larry Fink have both withdraw from the high-profile Saudi Arabian investment conference taking place later this month (with a shrinking guest list).
Over the weekend, the CEO of JP Morgan and the chairman of Ford both cancelled, as the furore over Khashoggi’s disappearance intensified.Over the weekend, the CEO of JP Morgan and the chairman of Ford both cancelled, as the furore over Khashoggi’s disappearance intensified.
Other top bosses are still weighing up their next move -- but I suspect we’re reaching where attending the event is more controversial than finding a previous engagement in the diary (or even subsequent one...)Other top bosses are still weighing up their next move -- but I suspect we’re reaching where attending the event is more controversial than finding a previous engagement in the diary (or even subsequent one...)
Bank of America's CFO says they are "still evaluating" whether to participate in the Saudi conference next week. Via @MoiseNoiseBank of America's CFO says they are "still evaluating" whether to participate in the Saudi conference next week. Via @MoiseNoise
Britain’s shadow foreign secretary, Emily Thornberry, has called for Britain to rethink its relationship with Riyadh too:Britain’s shadow foreign secretary, Emily Thornberry, has called for Britain to rethink its relationship with Riyadh too:
We should not be in league with a brutal dictatorship that beheads its own citizens for standing up for their rights, which rains down airstrikes on civilian areas in Yemen with no concern for innocent children, and that thinks it can assassinate dissident journalists in other countries with impunity. We must apply the same standards to countries such as Saudi Arabia, Israel and Egypt that we apply to Iran, Russia and Syria.We should not be in league with a brutal dictatorship that beheads its own citizens for standing up for their rights, which rains down airstrikes on civilian areas in Yemen with no concern for innocent children, and that thinks it can assassinate dissident journalists in other countries with impunity. We must apply the same standards to countries such as Saudi Arabia, Israel and Egypt that we apply to Iran, Russia and Syria.
Where any of them abuse human rights and breach international humanitarian law, we must be prepared to call it out in the same measure, rather than treating it as one rule for our supposed friends and another for our supposed enemies.Where any of them abuse human rights and breach international humanitarian law, we must be prepared to call it out in the same measure, rather than treating it as one rule for our supposed friends and another for our supposed enemies.
Just in: Bank of America has beaten Wall Street forecasts, which might calm some investors’ nerves.Just in: Bank of America has beaten Wall Street forecasts, which might calm some investors’ nerves.
The second-largest US bank make profits of 66 cents per share in the last quarter, ahead of the 62 cents expected by analysts.The second-largest US bank make profits of 66 cents per share in the last quarter, ahead of the 62 cents expected by analysts.
Revenues grew by 4%, as Bank of America benefitted from higher interest rates and recent US tax cuts.Revenues grew by 4%, as Bank of America benefitted from higher interest rates and recent US tax cuts.
Chief executive officer Brian Moynihan sounds upbeat, declaring:Chief executive officer Brian Moynihan sounds upbeat, declaring:
“Responsible growth, backed by a solid U.S. economy and a healthy U.S. consumer, combined to deliver the highest quarterly pre-tax earnings in our company’s history.”“Responsible growth, backed by a solid U.S. economy and a healthy U.S. consumer, combined to deliver the highest quarterly pre-tax earnings in our company’s history.”
More UK retail gloom:More UK retail gloom:
Fashion accessories retailer Claire’s is considering a raft of store closures in the UK, according to a report on the Press Association.Fashion accessories retailer Claire’s is considering a raft of store closures in the UK, according to a report on the Press Association.
The US stock market is expected to lose ground when trading begins in three hours.The US stock market is expected to lose ground when trading begins in three hours.
The futures market is indicating the Dow Jones industrial average will shed 106 points, or 0.4%, at the open.The futures market is indicating the Dow Jones industrial average will shed 106 points, or 0.4%, at the open.
New retail sales figures (at 1.30pm UK time) and financial results from Bank of America could both move the markets.New retail sales figures (at 1.30pm UK time) and financial results from Bank of America could both move the markets.
The main Asian stock markets have all closed in the red today.The main Asian stock markets have all closed in the red today.
Japan fell by almost 1.8%, Hong Kong lost 1.5%, Shanghai shed 1.4% and Australia finished 1% lower (our earlier summary has more details)Japan fell by almost 1.8%, Hong Kong lost 1.5%, Shanghai shed 1.4% and Australia finished 1% lower (our earlier summary has more details)
APAC Closing Prices:#ASX 5837.1 -0.99%#NIKKEI 22271.3 -1.87%#HSI 25445.06 -1.38%#HSHARES 10144.34 -1.50%#CSI300 3126.45 -1.40%APAC Closing Prices:#ASX 5837.1 -0.99%#NIKKEI 22271.3 -1.87%#HSI 25445.06 -1.38%#HSHARES 10144.34 -1.50%#CSI300 3126.45 -1.40%