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| Investors await signal on fresh ECB economic stimulus – business live | Investors await signal on fresh ECB economic stimulus – business live |
| (32 minutes later) | |
| There are some punchy statements on a possible German recession coming through after the Ifo survey. | |
| VP Bank analyst Thomas Gitzel, via Reuters, said: | |
| The most important German economic indicator suggests that the German economy is heading towards a recession. | |
| More Reuters from Ifo president Clemens Fuest: the German economy is navigating troubled waters and companies are less satisfied with their current business situation. | |
| The Ifo sub-index for the manufacturing sector posted its biggest drop since February 2009 – the height of the financial crisis. | |
| That echoes purchasing managers’ index data yesterday which also had economists talking of a recession risk. | |
| The euro just hit its lowest level since the end of May, with all the signs pointing towards monetary easing to come from the European Central Bank. | |
| Looser monetary policy generally correlates with a less valuable currency. With investors all but certain that the ECB has rate cuts in its sights, the main question is when and how fast the cuts will come. | |
| Against the US dollar the euro is down by 0.1%, and it previously hit lows of $1.1120 last seen on 30 May. | |
| It will be too late for the ECB’s interest rates decision, but the latest measure of German business confidence from the influential Ifo Institute shows that morale has sagged more than expected in July. | |
| The closely followed measure fell to a reading of 95.7 – well below the consensus expectations of 97.1. | |
| Given the barrage of economic data suggesting that the European economy is weakening, the Ifo survey was never going to be the tipping point, but it gives another reason for Mario Draghi to strike a dovish tone in the press conference later. | |
| Boris Johnson is planning to set out his “priorities for government” in his first appearance as prime minister in the house of commons – at about 10:30am BST. | Boris Johnson is planning to set out his “priorities for government” in his first appearance as prime minister in the house of commons – at about 10:30am BST. |
| Perhaps he can shed some more light on what will be happening by 31 October, the Brexit deadline. | Perhaps he can shed some more light on what will be happening by 31 October, the Brexit deadline. |
| Following Business Qs, there will be one government oral statement in the @HouseofCommons today:The Prime Minister - Priorities for Government | Following Business Qs, there will be one government oral statement in the @HouseofCommons today:The Prime Minister - Priorities for Government |
| People in the UK are braced for the continued heatwave, but predicted temperatures of 39 degrees Celsius will be good news for one company: Unilever. | People in the UK are braced for the continued heatwave, but predicted temperatures of 39 degrees Celsius will be good news for one company: Unilever. |
| The consumer goods giant, which makes brands such as Ben & Jerry’s, Magnum and Popsicle ice creams, today reported that it was held back by the rain as it reported weaker than expected sales growth. It said: | The consumer goods giant, which makes brands such as Ben & Jerry’s, Magnum and Popsicle ice creams, today reported that it was held back by the rain as it reported weaker than expected sales growth. It said: |
| Market growth in Europe and North America was held back by the impact of weather on ice cream sales. | Market growth in Europe and North America was held back by the impact of weather on ice cream sales. |
| At the other end of the scale to Nissan, Volkswagen has bucked the recent trend of struggling carmakers with a 30% jump in operating profits in the second quarter. | At the other end of the scale to Nissan, Volkswagen has bucked the recent trend of struggling carmakers with a 30% jump in operating profits in the second quarter. |
| While sales fell, the German carmaker managed to increase its market share as it focused on SUVs, the increasingly popular vehicles which also happen to have higher profit margins. | While sales fell, the German carmaker managed to increase its market share as it focused on SUVs, the increasingly popular vehicles which also happen to have higher profit margins. |
| Operating profit came in at €5.13bn (£4.6bn) for the quarter, up from €3.94bn in the same period last year. | Operating profit came in at €5.13bn (£4.6bn) for the quarter, up from €3.94bn in the same period last year. |
| In the first six months of the current financial year, the sales revenues of the Volkswagen Group grew by 4.9% to €125.2bn compared with the first half of 2018. | In the first six months of the current financial year, the sales revenues of the Volkswagen Group grew by 4.9% to €125.2bn compared with the first half of 2018. |
| VW has gone through the wringer in recent years after its “dieselgate” scandal, in which it cheated in emissions tests. However, it has recently performed better than expected in a tough environment. | VW has gone through the wringer in recent years after its “dieselgate” scandal, in which it cheated in emissions tests. However, it has recently performed better than expected in a tough environment. |
| Frank Witter, the VW board member responsible for finance, said: | Frank Witter, the VW board member responsible for finance, said: |
| In the first half of the year, the Volkswagen Group performed very well in a generally weaker overall market. The development of sales revenue and profit in the first six months is gratifying. We also confirm our outlook for the Volkswagen Group for the year as a whole. | In the first half of the year, the Volkswagen Group performed very well in a generally weaker overall market. The development of sales revenue and profit in the first six months is gratifying. We also confirm our outlook for the Volkswagen Group for the year as a whole. |
| Meanwhile, Metro Bank’s shares are down by 16% after hitting a record low this morning following the resignation of founder Vernon Hill as chairman last night. | Meanwhile, Metro Bank’s shares are down by 16% after hitting a record low this morning following the resignation of founder Vernon Hill as chairman last night. |
| Metro Bank has been under the cosh in recent months after a mischaracterisation of loans was found by the Bank of England. That error was compounded by a response that raised questions over the governance of the lender. | Metro Bank has been under the cosh in recent months after a mischaracterisation of loans was found by the Bank of England. That error was compounded by a response that raised questions over the governance of the lender. |
| Hill will still hold a non-executive director role at the company he founded in 2010. | Hill will still hold a non-executive director role at the company he founded in 2010. |
| Metro Bank to replace founder Vernon Hill as chairman | Metro Bank to replace founder Vernon Hill as chairman |
| Cobham shares have surged by 35% after the bid from private equity firm Advent. | Cobham shares have surged by 35% after the bid from private equity firm Advent. |
| Japanese carmaker Nissan has announced 12,500 job cuts worldwide – more than the 10,000 previously reported – as profits plunged by 98.5% in the first quarter of its 2019 financial year. | Japanese carmaker Nissan has announced 12,500 job cuts worldwide – more than the 10,000 previously reported – as profits plunged by 98.5% in the first quarter of its 2019 financial year. |
| Operating profit fell to only 1.6bn Japanese yen (£11.8m), from 109bn yen the previous year, Nissan said. | Operating profit fell to only 1.6bn Japanese yen (£11.8m), from 109bn yen the previous year, Nissan said. |
| Revenue dropped by 12.7% in its first financial quarter to 2.4bn Japanese yen. | Revenue dropped by 12.7% in its first financial quarter to 2.4bn Japanese yen. |
| In its statement Nissan did not say whether its Sunderland plant would be affected by the job cuts, although the BBC reported yesterday that this was not thought likely by union sources. | In its statement Nissan did not say whether its Sunderland plant would be affected by the job cuts, although the BBC reported yesterday that this was not thought likely by union sources. |
| Nissan will reduce its global production capacity by 10% by the end of the 2022 fiscal year. | Nissan will reduce its global production capacity by 10% by the end of the 2022 fiscal year. |
| In line with production optimizations, the company will reduce headcount by roughly 12,500. Furthermore, the company will reduce the size of its product lineup by at least 10% by the end of fiscal year 2022 in order to improve product competitiveness by focusing investment on global core models and strategic regional models. | In line with production optimizations, the company will reduce headcount by roughly 12,500. Furthermore, the company will reduce the size of its product lineup by at least 10% by the end of fiscal year 2022 in order to improve product competitiveness by focusing investment on global core models and strategic regional models. |
| The FTSE 100 has risen by 0.2% at the opening bell. Top risers include ITV for a second day and miner Anglo American – although neither has gained more than 2% in early trading. | The FTSE 100 has risen by 0.2% at the opening bell. Top risers include ITV for a second day and miner Anglo American – although neither has gained more than 2% in early trading. |
| Across Europe, the Euro Stoxx 600 is up by 0.6%, led by France’s Cac 40, up 0.7%, and Italy’s FTSE MIB, up by 0.35%. Germany’s Dax gained 0.4%. | Across Europe, the Euro Stoxx 600 is up by 0.6%, led by France’s Cac 40, up 0.7%, and Italy’s FTSE MIB, up by 0.35%. Germany’s Dax gained 0.4%. |
| 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. |
| Boris Johnson has started his reign as prime minister with a brutal cabinet cull. He promised on Tuesday to steal leadership rival Jeremy Hunt’s ideas, but he did not want him in his cabinet. In the top jobs are chancellor Sajid Javid, home secretary Priti Patel and foreign secretary Dominic Raab. Keen Brexiteer Andrea Leadsom is head of the business department, and will likely strike a somewhat different tone to predecessor Greg Clark. | Boris Johnson has started his reign as prime minister with a brutal cabinet cull. He promised on Tuesday to steal leadership rival Jeremy Hunt’s ideas, but he did not want him in his cabinet. In the top jobs are chancellor Sajid Javid, home secretary Priti Patel and foreign secretary Dominic Raab. Keen Brexiteer Andrea Leadsom is head of the business department, and will likely strike a somewhat different tone to predecessor Greg Clark. |
| “Revenge” is the word on our main story this morning. You can read about it in all its gory detail here, as Britain prepares for what could be the hottest day ever. | “Revenge” is the word on our main story this morning. You can read about it in all its gory detail here, as Britain prepares for what could be the hottest day ever. |
| Barring any early interventions on Brexit from Johnson (and it’s tricky to see at this point how he could take a harder line on a no-deal Brexit than he already has) the major economic news for the day will almost certainly be the European Central Bank’s latest monetary policy announcement. | Barring any early interventions on Brexit from Johnson (and it’s tricky to see at this point how he could take a harder line on a no-deal Brexit than he already has) the major economic news for the day will almost certainly be the European Central Bank’s latest monetary policy announcement. |
| And, oh, how times change. A year ago most economists believed that ECB president Mario Draghi would preside over at least one interest rate hike during his time in the chair. Now those same economists are weighing whether the ECB’s rate-setting governing council will today signal an intention to cut interest rates at its next meeting in September – or whether it could take the plunge today with a new round of economic stimulus. | And, oh, how times change. A year ago most economists believed that ECB president Mario Draghi would preside over at least one interest rate hike during his time in the chair. Now those same economists are weighing whether the ECB’s rate-setting governing council will today signal an intention to cut interest rates at its next meeting in September – or whether it could take the plunge today with a new round of economic stimulus. |
| “The case for further ECB easing was reinforced yesterday by the release of weaker than expected eurozone PMI surveys for July,” said Lee Hardman, a currency analyst at MUFG Bank. | “The case for further ECB easing was reinforced yesterday by the release of weaker than expected eurozone PMI surveys for July,” said Lee Hardman, a currency analyst at MUFG Bank. |
| It is another disappointing signal for the ECB whohad previously hoped that growth would begin to pick up in the second half of this year. They are now becoming increasingly resigned to a more protracted economic slowdown. | It is another disappointing signal for the ECB whohad previously hoped that growth would begin to pick up in the second half of this year. They are now becoming increasingly resigned to a more protracted economic slowdown. |
| The ECB response could involve a smaller rate cut than usual, and even a reacceleration of quantitative easing, the bond purchases which have been such a big feature of monetary policy in the last decade. | The ECB response could involve a smaller rate cut than usual, and even a reacceleration of quantitative easing, the bond purchases which have been such a big feature of monetary policy in the last decade. |
| Chances of a rate cut today have risen substantially after this week's PMIs and BLS. But the bigger question is about QE - watch out for Draghi's comments about (SPF) inflation expectations. https://t.co/Rna7GM07Qf | Chances of a rate cut today have risen substantially after this week's PMIs and BLS. But the bigger question is about QE - watch out for Draghi's comments about (SPF) inflation expectations. https://t.co/Rna7GM07Qf |
| Draghi leaves the ECB on 31 October, meaning he will probably have gone through eight years in which the central bank has provided constant stimulus to the eurozone economy. | Draghi leaves the ECB on 31 October, meaning he will probably have gone through eight years in which the central bank has provided constant stimulus to the eurozone economy. |
| Back in the UK, there is some big corporate news in the defence sector, as Cobham – the Dorset-based maker of military and civilian aerospace systems – is snapped up by US private equity group Advent International for £4bn. The 165p per share offer represents a 50.3% premium to the average share price for the last three months. | Back in the UK, there is some big corporate news in the defence sector, as Cobham – the Dorset-based maker of military and civilian aerospace systems – is snapped up by US private equity group Advent International for £4bn. The 165p per share offer represents a 50.3% premium to the average share price for the last three months. |
| The agenda | The agenda |
| 9am BST: Germany Ifo business confidence (July) | 9am BST: Germany Ifo business confidence (July) |
| 11am BST: UK CBI distributive trades (retail) survey (July) | 11am BST: UK CBI distributive trades (retail) survey (July) |
| 12:45pm BST: European Central Bank (ECB) interest rate decision | 12:45pm BST: European Central Bank (ECB) interest rate decision |
| 1:30pm BST: ECB press conference with Mario Draghi | 1:30pm BST: ECB press conference with Mario Draghi |
| 1:30pm BST: US durable goods orders (June) | 1:30pm BST: US durable goods orders (June) |