Rolling coverage of the latest economic and financial news
- Latest: US initial jobless claims higher than expected
- European markets hit three-month low
- ONS: 12% of UK workers on furlough
- Ryanair’s O’Leary warns of job cuts risk
- Introduction: Growth fears abound
And finally, European stock markets have ended the day down around 1% – as economic worries and rising Covid-19 cases weigh on stocks.
The Stoxx 600 shed 3.77 points to 355.76, its lowest close since mid-June. It’s now lost more than 3% this month, as the pandemic has hit countries across Europe,
Covid-19 cases in Europe have increased sharply recently, and are now running at record highs in several countries, including France, Spain and the Netherlands.
However, so far, even in France – perhaps the most impacted country in this wave – hospitalisations and fatalities are running at around 10% of the peak levels seen in the spring. Taken together with the higher levels of testing and lower positivity rates, this suggests that the current actual level of COVID-19 infections might be well below the levels experienced in the spring. Nonetheless, the rapid spread of the virus is a concern.
Morrisons has become the first large UK supermarket to reinstate rationing on items such as toilet roll and disinfectant after the tightening of coronavirus measures.
The supermarket chain said on Thursday it had introduced a purchase limit of three on a small range of products to ensure they were “available for everyone”.
America’s housing market continues to shrug off the Covid-19 crisis, and high unemployment.
Sales of new single-family homes in August have hit their highest level in 14 years, new data shows.
New home sales continue to surge, breaking the 1 million mark for the first time since 2006. Sales were especially strong in the Midwest and South per @uscensusbureau data out today. pic.twitter.com/6chL0aGA9F
The New York stock market has opened lower, amid gloom over the rise in new jobless claims last week.
Sentiment appears very weak with the downside bias in favour. With economic indicators failing to deliver lift-off and stimulus apparently off the table before the election, there needs to be a positive catalyst to get the bulls back in the game.
Otherwise with election risks and a worsening outlook for the recovery, we need to consider further losses as we approach the election.
In a worrying development, the number of Americans filing new claims for unemployment benefits unexpectedly increased last week.
The initial claims total has jumped to 870,000 for last week, up from 866,000 a week earlier. Economists had expected it would fall, to around 840,000
United States Initial Jobless Claims came in at 870K, above forecasts (843K) in September 18
I think the trend in initial and continuing claims is consistent with a hockey-stick recovery.
It will take many more months for employment to go back to pre-Covid levels, but it still looks like a recovery. pic.twitter.com/EAsltjJJ2x
Initial #unemployment claims +4k to 870k (SA) & +29k to 825k (NSA) in w-e Sep19
> PUA claims (NSA): 630k (-45k)
> Total UI+PUA: still very high 1.5mn (NSA) new claimants!
>> The climb is long & plateaus are unavoidable, but this plateau is worrisome pic.twitter.com/eXE9inDvVq
initial UI claims for regular. state programs wk ending 9/19:
actual: 825 k
seasonally adj: 870 k
4-wk avg (SA): 878 k
year ago 4-wk avg: 213 k
PUA 630 k
Hello again: here are the key points from Rishi Sunak’s jobs announcement:
Rishi Sunak is updating MPs now on his plan to protect jobs… follow it live here:
After a slow start, the pound is now pushing higher against the US dollar and the euro as traders prepare for Rishi Sunak to outline his Winter Economy Plan.
Sterling has gained almost half a eurocent to €1.096, and a third of a cent to $1.276.
“The financial markets have largely welcomed Chancellor Sunak’s speech, sparking a short surge in trading activity. However, this will likely be short lived, and I anticipate a general retreat to safe haven assets and cash savings as investors look to hedge against market uncertainty.
In the coming weeks, I expect to see a weakening pound on ongoing Brexit risks and rising demand for gold once the recent bout of US dollar strength subsides.
Just in: UK retail sales growth has hit a 18-month high, according to the CBI’s latest distributive trades survey.
Grocers drove the expansion, with the overwhelming majority reporting rising sales volumes. But clothing and department store sales remained notably weak.
The survey – of 123 companies, including 56 retailers – also revealed that, on average, retail sales were seen as 8% lower than would have been expected in ‘normal’ conditions without a pandemic.
But beneath that number, there was a huge diversity of experience. For example, sales of household furniture were 39% higher than normal, DIY & hardware sales were up 20% and groceries were up 10%, while sales of clothing were down 40% and department store sales were down 23%.
The Covid-19 appears to have boosted the UK’s pet industry, with the lockdown letting people spend more time with furry or feathered friends.
Demand for pets jumped on account of the lockdown so Pet At Homes services are likely to be in high demand for months ahead.
Historically, pet owners typically continue to spend generously on their pets even if there is an economic downturn so that should bode well for the company.
Back in the markets, the FTSE 100 has recovered some of its earlier losses and is now 35 points lower at 5864 points [still down 22% this year, but above Monday’s two-week low].
Housebuilders are among the risers, with Persimmon and Barratt Development up over 3%. That reflects hopes that Rishi Sunak’s new Winter Economy Plan, to be announced in a couple of hours, will prevent mass redundancies and a slump in growth.
Norway’s central bank chief has warned that the rise of Covid-19 cases, at home and abroad, are raising economic risks.
Oeystein Olsen was speaking after the Norges Bank left interest rates on record lows, and indicated that they won’t rise for two years.
The cautious tone from Norway’s central bank today suggests the krone will remain the most vulnerable G10 currency in falling marketshttps://t.co/uRf4lBtvWX
The Office for National Statistics has reported that more than 10% of the UK workforce are on partial or full furlough leave, highlighting the need for more wage support from Rishi Sunak today.
It’s latest survey of the economic impacts of the coronavirus found that:
12% of the workforce were on partial or full furlough leave.
The survey data has now been weighted to be representative of all businesses in the UK, including smaller businesses, which are less likely to have been trading than larger businesses
‼️ Proportion of UK businesses still trading revised down to 84% from 97%, according to @ONS
Result of including more smaller businesses in the data. pic.twitter.com/08IGh1rVXr
The IFO institute has reported that German business confidence picked up this month. Its business climate index has risen to 93.4, from 92.5.
But that’s still lower than a year ago, and Katharina Utermöhl warns that the situation could worsen in the next few months:
#ifo survey: Upward trend intact in Sep (except services) but slowing.
At 93.4 the Feb pre-crisis peak is within reach fueled by buoyant expectations.
‼️Mind the risk of a sentiment setback in Q4 as the recovery will resemble more stop-and-go traffic than a smooth journey. pic.twitter.com/kAJ7vkkjVM
Credit rating agency S&P has slashed its economic growth forecasts for Britain on Thursday, and warned that a no-deal Brexit would be particularly ‘detrimental’.
It now expects GDP to contract by almost 10%, followed by a near-8% recovery in 2021.
The firm said it expected UK GDP to now drop 9.7% compared to its previous forecast of an 8.1% fall in June, while next year’s rebound would be 7.9% versus 6.5% previously.
It added however that “a hard Brexit leading to new import and export tariffs, as well as non-tariff trade barriers” would add another layer of challenge for European companies, and be “especially detrimental for the UK economy”.
Over in France, businesses are more anxious about the future.
Statistics body INSEE’s monthly gauge of company morale has risen to 92 from August’s 90, reaching its highest level since February (but still below average).
In September 2020, the balance of opinion on activity for the three last months has strongly improved again and has reached its long-term average. However, the balance on the general outlook of the sector’s activity has weakened slightly this month. This balance remains below its average level.
Business managers remain rather pessimistic about their own prospects for the next three months: the balances on expected activity and expected demand have decreased slightly again and have moved away from their average.
The boss of Ryanair has warned that hundreds of thousands of jobs will be lost across the aviation industry, unless the UK government provides more employment support and changes its flight restrictions.
Inevitably for my airline and most other airlines flying to and from the UK it would mean literally hundreds of thousands of job loses this winter.
“We want to keep our pilots and cabin crew employed and paid and we are going to have to have huge government assistance for that, otherwise I’m afraid they’re all going to go on unpaid leave for the winter,”
Boris Johnson promised us a world-leading test and tracing system. It’s a shambles, like many of the other promises he and his government have offered us.
They’re always launching an app, some other useless initiative….
Shares in cinema chain Cineworld have plunged 17% to a six-week low after it warned that new restrictions on social gatherings would hurt its business badly.
Cineworld reported a £1.3bn loss for the last six months, having recently reopened 561 of its 778 sites. It told shareholders that it could need to raise more money if the government forces it to close down again.
There can be no certainty as to the future impact of Covid-19 on the group,.
If governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity.”
European stock markets have hit their lowest level since mid-June.
The Stoxx 600, which track Europe’s largest six hundred companies, has fallen 1.2% in early trading to 355 points – a three-month low.
The deep sell off on Wall Street is spreading over into Europe, wiping out gains from the previous session. European bourses are a sea of red as risk off dominates amid rising concerns over resurging coronavirus infections and its potential to derail the fragile economic recovery.
Wall Street experienced a sharp decline after a series of warnings from the US Federal Reserve. Federal Chair Jerome Powell reiterated that the US economy still had a long way to go before recovery weighed on sentiment. His comments were supported by Fed Vice Chair Richard Clarida who considers the US economy to be in a “deep hole”.
Nearly every stock on the FTSE 100 index has fallen, at the start of trading in London.
The blue-chip index has lost 77 points, or 1.3%, to 5821.
Rising virus infections, new lockdowns, a slowing economic recovery, stalled US stimulus talks and election uncertainty knocked all the Asia-Pacific markets overnight.
Seoul’s Kospi 200 was worst hit, sliding by 2.3%, as tensions rose over the killing of a South Korean official in North Korea.
Months of mind-boggling gains in global equities have come to a juddering halt this month, with expectations that the wall of cash from governments and central banks would jumpstart a rebound quickly fading.
“Markets are digesting and grappling with this idea that the growth expectations that investors have might not materialise,” said Lauren Goodwin, at New York Life Investments.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Anxiety over the health of the global economy is weighing on markets today, as Covid-19 restrictions threaten to derail the fragile recovery.
On the virus it’s beginning to feel a bit like March-lite. In France, it was announced by Health Minister Veran last night that the country would be divided into “zones” by alert level and they would empower local authorities to tighten restrictions before a state of emergency would be declared within them. Marseille, the second largest city in the country and the Carribbean Island of Guadeloupe are the only “maximum” level zones today. The minster also announced that bars and restaurants in the Paris region as well as other major cities will close at 10pm, similar to the rules recently laid out in the UK. Attendance at large public events will be cut down to 1,000 from 5,000, while small gatherings over 10 people are banned in those “maximum” level areas.
Meanwhile in Germany, the foreign minister Heiko Maas went into quarantine as a result of one of his security detail having the virus, even though an initial test on Maas came up negative. Germany also issued travel warnings to more parts of France. Elsewhere, China will ease restrictions on entry of some foreign nationals as the country said foreigners holding residence permits for work, personal matters and reunions will be allowed to enter China starting September 28.
“We need to stay with it… The recovery will go faster if there is support coming both from Congress and the Fed.”
Stocks fell sharply on Wednesday as Wall Street’s September struggles continued, with tech shares sliding once again. Here’s how the major averages performed:
– The Dow fell 525 points.
– The S&P 500 lost 2.37%.
– The Nasdaq dropped 3%. https://t.co/HSViZBJEFs pic.twitter.com/wWyzkrkXjW
Reporter: “Win, lose or draw in this election, will you commit here today for a peaceful transferal of power after the election?”
President Trump: “We’re going to have to see what happens.” pic.twitter.com/h5RF3dKPD1