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| Wall Street rallies, as UK wage growth accelerates – business live | Wall Street rallies, as UK wage growth accelerates – business live |
| (35 minutes later) | |
| Connor Campbell of City firm SpreadEx sums up the day: | |
| With confidence lifted by a pair of strong earnings updates from Goldman Sachs and Morgan Stanley, the Dow Jones showed signs of getting its mojo back after the bell. The US index surged 280 points as the session got underway, rocketing above 25500 having neared 25100 on Monday. | |
| These gains helped feed into the European markets, with the DAX and CAC both shooting up 1%. This despite the unresolved budget issues between Italy and the EU. Not content with sparring with Theresa May and her Brexit negotiators, Jean-Claude Juncker has suggested that the Italian government have a slim chance of getting their controversial budget approved, with the President of the European Commission claiming the EU would ‘revolt’ it Italy got its own way. | |
| While its peers raced off into the distance, the FTSE was left panting behind, only able to add 20 or so points as the day went on. That’s because the pound, ignoring the ongoing Brexit uncertainty, rose around half a percent against both the dollar and the euro, boosted by a better than forecast, 9 year high wage growth reading. There are plenty more chances for the FTSE to get its revenge, however, not only with Wednesday’s inflation and Thursday’s retail sales data, but the impending, hugely important mid-week summit between EU leaders. | |
| Britain’s FTSE 100 index has closed 30 points higher at 7059, as today’s wave of optimism sends shares up. | Britain’s FTSE 100 index has closed 30 points higher at 7059, as today’s wave of optimism sends shares up. |
| However, the rally was held back by currency effects - the strengthening pound pulls down the value of multinational companies’ earnings. | However, the rally was held back by currency effects - the strengthening pound pulls down the value of multinational companies’ earnings. |
| US stocks are pushing higher too! | US stocks are pushing higher too! |
| The S&P 500 and the Dow have both gained 1.5%, as Wall Street tries to recover some of last week’s 4% slide. | The S&P 500 and the Dow have both gained 1.5%, as Wall Street tries to recover some of last week’s 4% slide. |
| European stocks are romping higher in late trading, sending the Stoxx 600 index of the region’s largest companies up 1.5%. | European stocks are romping higher in late trading, sending the Stoxx 600 index of the region’s largest companies up 1.5%. |
| Goldman and Morgan Stanley are giving the markets a lift, agrees Michael Hewson of CMC Markets. | Goldman and Morgan Stanley are giving the markets a lift, agrees Michael Hewson of CMC Markets. |
| He reckons recent US interest rate hikes are helping the banks, but also making life tougher for retailers: | He reckons recent US interest rate hikes are helping the banks, but also making life tougher for retailers: |
| Morgan Stanley posted Q3 profits of $1.17c a share, well above estimates of $1.03c, while Goldman Sachs also blew past expectations coming in at $6.28c a share, $0.90c above consensus. There was some weak spots on the fixed income side, however by and large the numbers painted a fairly positive outlook. | Morgan Stanley posted Q3 profits of $1.17c a share, well above estimates of $1.03c, while Goldman Sachs also blew past expectations coming in at $6.28c a share, $0.90c above consensus. There was some weak spots on the fixed income side, however by and large the numbers painted a fairly positive outlook. |
| These sorts of numbers should be expected given the higher interest rate environment and higher fees from M&A, however we also need to see similar sorts of activity in areas that reflect consumer discretionary spending, which could be impacted by higher rates. | These sorts of numbers should be expected given the higher interest rate environment and higher fees from M&A, however we also need to see similar sorts of activity in areas that reflect consumer discretionary spending, which could be impacted by higher rates. |
| On the retail front things are a little more concerning, given this week’s news from Sears, while this morning’s announcement from Wal-Mart could also be a cause for concern. The company downgraded its earnings outlook for 2019 citing the impact of higher costs in absorbing its acquisition of India’s Flipkart for $16bn. It also warned that sales growth in its e-commerce division would be 5% lower in 2019 than this year, with growth of 35% expected, below this years expected 40% rise. | On the retail front things are a little more concerning, given this week’s news from Sears, while this morning’s announcement from Wal-Mart could also be a cause for concern. The company downgraded its earnings outlook for 2019 citing the impact of higher costs in absorbing its acquisition of India’s Flipkart for $16bn. It also warned that sales growth in its e-commerce division would be 5% lower in 2019 than this year, with growth of 35% expected, below this years expected 40% rise. |
| U.S. stocks surged at the open Tuesday, with the Dow up 200+ points following strong quarterly results from Morgan Stanley, Goldman Sachs, and Johnson & Johnson. Netflix is expected to report after the bell today. https://t.co/I8W17UAWJW | U.S. stocks surged at the open Tuesday, with the Dow up 200+ points following strong quarterly results from Morgan Stanley, Goldman Sachs, and Johnson & Johnson. Netflix is expected to report after the bell today. https://t.co/I8W17UAWJW |
| The rally is back on! | The rally is back on! |
| Shares have opened higher on Wall Street, as investors try to put last week’s turmoil behind them. | Shares have opened higher on Wall Street, as investors try to put last week’s turmoil behind them. |
| The Dow has jumped by 233 points, or 0.9%, with the Nasdaq streaking 1.2% higher. | The Dow has jumped by 233 points, or 0.9%, with the Nasdaq streaking 1.2% higher. |
| Today’s decent results from Morgan Stanley and Goldman Sachs seem to be shoring up confidence in New York. | Today’s decent results from Morgan Stanley and Goldman Sachs seem to be shoring up confidence in New York. |
| European markets are pushing higher too, as traders regain their risk appetite (for the moment, anyway...) | European markets are pushing higher too, as traders regain their risk appetite (for the moment, anyway...) |
| Let’s not get carried away, though.... oh too late! | Let’s not get carried away, though.... oh too late! |
| Breaking -- Dow Jumps 230 Points as Earnings Give the Blue-Chip Index a Boost. More on https://t.co/o6IinmgxZm pic.twitter.com/gbllCpuCr4 | Breaking -- Dow Jumps 230 Points as Earnings Give the Blue-Chip Index a Boost. More on https://t.co/o6IinmgxZm pic.twitter.com/gbllCpuCr4 |
| In another boost to confidence, America’s factories have expanded their output for the fourth month in a row. | In another boost to confidence, America’s factories have expanded their output for the fourth month in a row. |
| US industrial production rose by 0.3% in September, boosted by gains in manufacturing and mining, beating forecasts of 0.2% growth. That’s down on August’s 0.4%. | US industrial production rose by 0.3% in September, boosted by gains in manufacturing and mining, beating forecasts of 0.2% growth. That’s down on August’s 0.4%. |
| The Federal Reserve also said manufacturing output increased 0.2% in September after rising 0.3% in August. | The Federal Reserve also said manufacturing output increased 0.2% in September after rising 0.3% in August. |
| US industrial production rose 0.3% in Sept, vs 0.2% increase expected https://t.co/QUX1DjqEWQ | US industrial production rose 0.3% in Sept, vs 0.2% increase expected https://t.co/QUX1DjqEWQ |
| Britain is getting a new £50 note, but the big question is who should be on it? | Britain is getting a new £50 note, but the big question is who should be on it? |
| Speculation is bubbling away today about which famous Brit should appear on the back of the note, which will be made out of flexible plastic polymer [the Queen has a monopoly on the front]. | Speculation is bubbling away today about which famous Brit should appear on the back of the note, which will be made out of flexible plastic polymer [the Queen has a monopoly on the front]. |
| Ladbrokes have issued odds, putting former Labour PM Clement Attlee and Crimean war heroine Mary Seacole as joint favourites: | Ladbrokes have issued odds, putting former Labour PM Clement Attlee and Crimean war heroine Mary Seacole as joint favourites: |
| Who else should we add to the betting?Bank of England say: "UK characters who are widely admired and who have made an important contribution to our society and culture. We also avoid fictional characters, or people who are still living". pic.twitter.com/Fcjslqpthg | Who else should we add to the betting?Bank of England say: "UK characters who are widely admired and who have made an important contribution to our society and culture. We also avoid fictional characters, or people who are still living". pic.twitter.com/Fcjslqpthg |
| Noor Inayat Khan is another strong candidate. She served in Britain’s Special Operations Executive as a wireless operator in occupied France in the second world war, before being captured, shackled for months, and later killed at Dachau concentration camp. | Noor Inayat Khan is another strong candidate. She served in Britain’s Special Operations Executive as a wireless operator in occupied France in the second world war, before being captured, shackled for months, and later killed at Dachau concentration camp. |
| As the Mirror reported back in August: | As the Mirror reported back in August: |
| She had become the first female radio operator to infiltrate occupied Paris, posthumously awarded the Croix de Guerre and the George Cross. | She had become the first female radio operator to infiltrate occupied Paris, posthumously awarded the Croix de Guerre and the George Cross. |
| But Noor’s story has been largely overlooked, becoming a footnote in history. | But Noor’s story has been largely overlooked, becoming a footnote in history. |
| It wasn’t until 2012 that a memorial bust of Noor went up in London’s Gordon Square – not only the first statue to an Indian woman in Britain, but the first to any Muslim. | It wasn’t until 2012 that a memorial bust of Noor went up in London’s Gordon Square – not only the first statue to an Indian woman in Britain, but the first to any Muslim. |
| She was one of only three women in Winston Churchill’s secret army, the Special Operations Executive (SOE), to be awarded the George Cross, and the other two – Violette Szabo and Odette Hallowes – have had films made about their lives. | She was one of only three women in Winston Churchill’s secret army, the Special Operations Executive (SOE), to be awarded the George Cross, and the other two – Violette Szabo and Odette Hallowes – have had films made about their lives. |
| A petition has been set up to promote Inayat Khan’s case, and it’s got Conservative MP Tom Tugendhat’s backing too: | A petition has been set up to promote Inayat Khan’s case, and it’s got Conservative MP Tom Tugendhat’s backing too: |
| The new £50 could have anyone on it, I’m backing Noor Inayat Khan. She volunteered for SOE, served bravely as an agent in occupied Europe, was eventually captured and murdered. A Muslim, a woman, a hero of WW2. This would celebrate her courage and all SOE https://t.co/AyRA0DmzlD | The new £50 could have anyone on it, I’m backing Noor Inayat Khan. She volunteered for SOE, served bravely as an agent in occupied Europe, was eventually captured and murdered. A Muslim, a woman, a hero of WW2. This would celebrate her courage and all SOE https://t.co/AyRA0DmzlD |
| Writer Emily Poole has some other good suggestions for the Bank of England to consider: | Writer Emily Poole has some other good suggestions for the Bank of England to consider: |
| Emmeline Pankhurst, Ada Lovelace, Beatrix Potter, Helen Sharman, Mary Seacole, Audrey Hepburn, Millicent Fawcett | Emmeline Pankhurst, Ada Lovelace, Beatrix Potter, Helen Sharman, Mary Seacole, Audrey Hepburn, Millicent Fawcett |
| Those results from Goldman Sachs and Morgan Stanley are giving the markets a much-needed boost. | Those results from Goldman Sachs and Morgan Stanley are giving the markets a much-needed boost. |
| Wall Street is now expected to open higher, with the Dow Jones industrial average called 150 points or 0.6% higher. | Wall Street is now expected to open higher, with the Dow Jones industrial average called 150 points or 0.6% higher. |
| Europe is already catching a bid, with almost all the main indices pushing higher. The only laggard is Britain’s FTSE 100, which is being pulled down by the stronger pound. | Europe is already catching a bid, with almost all the main indices pushing higher. The only laggard is Britain’s FTSE 100, which is being pulled down by the stronger pound. |
| Also just in: one of Goldman Sachs key trading divisions has just suffered a chunky drop in takings. | Also just in: one of Goldman Sachs key trading divisions has just suffered a chunky drop in takings. |
| Net revenues at Goldman’s Fixed Income, Currency and Commodities (FICC) operation shrank by 10% year-on-year to $1.31bn in the last quarter, its latest financial results show. | Net revenues at Goldman’s Fixed Income, Currency and Commodities (FICC) operation shrank by 10% year-on-year to $1.31bn in the last quarter, its latest financial results show. |
| Goldman pins the blame on “an environment characterised by low client activity amid low levels of volatility.” | Goldman pins the blame on “an environment characterised by low client activity amid low levels of volatility.” |
| Investment banking did better, with net revenues rising by 10% year-on-year to $1.98bn. | Investment banking did better, with net revenues rising by 10% year-on-year to $1.98bn. |
| So overall, profits beat forecasts. David Solomon, Goldman’s new CEO (and a career investment banker) says: | So overall, profits beat forecasts. David Solomon, Goldman’s new CEO (and a career investment banker) says: |
| “We delivered solid results in the third quarter driven by contributions from across our diversified client franchise. Year-to-date earnings per share is the highest in our history and year-to-date return on equity is the highest in nine years, notwithstanding our continued investment in growth opportunities. | “We delivered solid results in the third quarter driven by contributions from across our diversified client franchise. Year-to-date earnings per share is the highest in our history and year-to-date return on equity is the highest in nine years, notwithstanding our continued investment in growth opportunities. |
| We remain well positioned to continue delivering for our clients and shareholders.” | We remain well positioned to continue delivering for our clients and shareholders.” |
| Here’s some early reaction: | Here’s some early reaction: |
| Goldman Sachs made a banker its CEO, instead of a trader, and its first earnings report investment banking beats and trading disappoints. Transition complete. | Goldman Sachs made a banker its CEO, instead of a trader, and its first earnings report investment banking beats and trading disappoints. Transition complete. |
| A bad quarter for Goldman's FICC business to disappoint expectations as new CEO David Solomon -- an investment banker by background -- takes the reins...$GS #commoditieshttps://t.co/s2atuxl9W3 pic.twitter.com/2rAtPGREOO | A bad quarter for Goldman's FICC business to disappoint expectations as new CEO David Solomon -- an investment banker by background -- takes the reins...$GS #commoditieshttps://t.co/s2atuxl9W3 pic.twitter.com/2rAtPGREOO |
| Just in: Profits at Wall Street bank Morgan Stanley have jumped by 19%. | Just in: Profits at Wall Street bank Morgan Stanley have jumped by 19%. |
| MS posted earnings of $2.11bn in the last quarter, or $1.17 per share. That’s up from 93 cents per share last year, and up from forecasts of $1.01 per share. | MS posted earnings of $2.11bn in the last quarter, or $1.17 per share. That’s up from 93 cents per share last year, and up from forecasts of $1.01 per share. |
| The company’s equity trading desk, bond traders, and investment banking division all posted higher-than-expected earnings, despite market jitteriness. | The company’s equity trading desk, bond traders, and investment banking division all posted higher-than-expected earnings, despite market jitteriness. |
| Chief executive James Gorman says: | Chief executive James Gorman says: |
| “We produced strong results across the franchise. Despite the seasonal summer slowdown in the third quarter, we reported solid revenue and earnings growth.” | “We produced strong results across the franchise. Despite the seasonal summer slowdown in the third quarter, we reported solid revenue and earnings growth.” |
| Here’s some early reaction: | Here’s some early reaction: |
| Morgan Stanley's dealmakers are on a roll: The bank reports the sole rise in investment banking fees across Wall Street so far, traders also beat expectations. Shares are up in early trading. $MS | Morgan Stanley's dealmakers are on a roll: The bank reports the sole rise in investment banking fees across Wall Street so far, traders also beat expectations. Shares are up in early trading. $MS |
| Morgan Stanley beats earnings in a now-predictable, even boring, way: everything sorta worked. Wealth mgmt hits record revenues, trading & investment banking hold up. https://t.co/9ex6PJNWuJ $MS | Morgan Stanley beats earnings in a now-predictable, even boring, way: everything sorta worked. Wealth mgmt hits record revenues, trading & investment banking hold up. https://t.co/9ex6PJNWuJ $MS |
| Sterling has jumped by half a cent this morning, following today’s unexpectedly strong wage growth. | Sterling has jumped by half a cent this morning, following today’s unexpectedly strong wage growth. |
| This has pushed the pound up to $1.321, recovering last week’s Brexit-induced losses. | This has pushed the pound up to $1.321, recovering last week’s Brexit-induced losses. |
| Neil Birrell, chief investment officer at Premier Asset Management, explains why: | Neil Birrell, chief investment officer at Premier Asset Management, explains why: |
| “Wages in the UK are growing at a rate not seen since January 2009. Average earnings, excluding bonuses, rose 3.1% in the three months to August. Unsurprisingly unemployment stayed at its low of 4%. It’s interesting that productivity, however, remains less robust and any pick up could lead to some concerns about inflation. | “Wages in the UK are growing at a rate not seen since January 2009. Average earnings, excluding bonuses, rose 3.1% in the three months to August. Unsurprisingly unemployment stayed at its low of 4%. It’s interesting that productivity, however, remains less robust and any pick up could lead to some concerns about inflation. |
| “This is all a continuation of the current trend, but it does reinforce the fact that there are bright spots in the UK economy. It’s unlikely that interest rate expectations will change as a result of the data, particularly with the overhang of Brexit. Markets are unlikely to be significantly impacted by this, given broader concerns, but sterling will gain some support.” | “This is all a continuation of the current trend, but it does reinforce the fact that there are bright spots in the UK economy. It’s unlikely that interest rate expectations will change as a result of the data, particularly with the overhang of Brexit. Markets are unlikely to be significantly impacted by this, given broader concerns, but sterling will gain some support.” |
| Faster earnings growth might encourage the Bank of England to raise interest rates sooner, to prevent inflation being pushed up. Higher interest rates make it more profitable to hold sterling, thus the pound goes up. | Faster earnings growth might encourage the Bank of England to raise interest rates sooner, to prevent inflation being pushed up. Higher interest rates make it more profitable to hold sterling, thus the pound goes up. |
| However, it’s hard to see the BoE tightening policy quickly, at least until Brexit is resolved: | However, it’s hard to see the BoE tightening policy quickly, at least until Brexit is resolved: |
| #UK wage growth has really motored along over the summer as firms increasingly encounter skill shortages. That'll keep the #BoE on a tightening track - but #Brexit 'no deal' uncertainty makes a rate hike v unlikely before March 2019 pic.twitter.com/7OMj2IpO0c | #UK wage growth has really motored along over the summer as firms increasingly encounter skill shortages. That'll keep the #BoE on a tightening track - but #Brexit 'no deal' uncertainty makes a rate hike v unlikely before March 2019 pic.twitter.com/7OMj2IpO0c |
| Fastest growth in pay since 2009 much reason for cheer, given lost decade for household incomes but real pay still rising half as fast as pre-crisis norm | Fastest growth in pay since 2009 much reason for cheer, given lost decade for household incomes but real pay still rising half as fast as pre-crisis norm |