Eurozone posts fastest growth on record; FTSE 100 suffers worst week since June – as it happened

France, Germany, Spain and Italy have all posted record rises in GDP, but the region is still below its pre-pandemic levels

And finally… here’s our economics editor Larry Elliott on this week’s grim markets, and today’s record-breaking GDP figures from the eurozone:

Related: European stock markets suffer worst week since June

ExxonMobil has warned it may write down the value of its US shale assets by up to $30bn (£23.2bn) following a steep drop in global energy prices which has led to the oil giant’s third consecutive quarterly loss.

The US oil and gas producer told investors it plans to reassess its North America gas business over the coming months, which could lead to impairment charges as high as $25bn to $30bn if it changes its long-term strategy.

Related: ExxonMobil warns of $30bn writedown of shale assets amid energy price slump

Here’s a chart showing how the FTSE 100 has just posted its second-worst week since March:

Correction: Sorry, got my maths garbled there.

The Stoxx 600 index is down 5.6% this week — which roughly equals its worst week since March.

On the week…

Stoxx 600 -5.6%, worst since March
FTSE 100 -4.8%, worst since June
DAX -8.6%, worst since March

Despite a late revival, European stock markets have suffered their joint worst week in seven months.

The Stoxx 600 has tumbled by 5.6% this week, as rising alarm over the Covid-19 pandemic triggered fresh lockdown measures in Germany and France.

Britain’s FTSE 100 has ended a turbulent week with a whimper.

The blue-chip index has closed for the day, down 4 points at 5577 (a drop of 0.08% today).

Twitter is having a particularly grim day, down 20% after underwhelming Wall Street with its third-quarter results last night.

That’s a surprising reaction in some ways — Twitter beat forecasts with earnings of 19 cents per share, against forecasts of 6 cents. Revenues were much stronger than forecast too ($936m vs $777m expected).

Down 20% today folks… Happy Friday! Twitter shares plummet after user growth falls short https://t.co/EMumLqS7Rp via @nypost

Investors could be forgiven for running for cover, given the drama that awaits us next week.

Not only the presidential election, but central bank action in the UK and US….and an escalating pandemic across the globe

Next week is one of those ridiculously stacked periods that sees 4 or 5 headline stories all jostle for investors’ attention. Of course, there’s the election on Tuesday, the aftermath of which will run well beyond Wednesday due to a) the way mail-in votes are being counted in certain states, and b) the potential resistance Trump will put up if he loses.

Alongside that there’s a likely stimulus-expanding Bank of England meeting at Thursday lunchtime, a post-election Fed statement on Thursday evening, and October’s nonfarm jobs report on Friday. And that’s not to mention the ever-present coronavirus lockdown concerns that have so wrecked the markets in the past few days.

This candlestick formation chart shows how European stock markets are about to post their biggest weekly drop since the spring tumble:

Anxiety over the second wave of Covid-19, allied with pre-election jitters, means stock markets have suffered their worst week since the March crash.

The Europe-wide Stoxx 600 is down 0.5%, taking its weekly losses to over 6%, as the lockdowns in Germany and France sparked a wave of selling.

Wall Street sell-off gains steam, Dow falls 450 points and heads for its worst week since March pic.twitter.com/RBJrmYZZnH

MSCI’s broad gauge of stocks in developed and emerging markets around the world fell 1. 5 per cent on Friday, leaving it down 5.7 per cent this week, its heaviest sell-off since concerns about coronavirus gripped markets in March.

The selling comes against a backdrop of renewed virus-related lockdowns across much of Europe and the upcoming US presidential election that has sparked an uptick in stock volatility.

Global equities markets on course for worst week since March tumult https://t.co/mRy61uKzrt

Losses are accelerating on the New York stock exchange, as anxiety over the pandemic and the presidential election mount

The Dow is now down 492 points, or 1.8%, at 26165, which means it has lost over 2,000 points since the start of the week.

Related: Amazon third-quarter earnings soar as pandemic sales triple profits

Sentiment remains cagey owing to concerns about the pace of the economic recovery due to the rapid rise in new virus restrictions and the delay in US stimulus talks, not to mentioned Brexit and US election uncertainties. The US is also dealing with a surge in coronavirus cases, and if the world’s largest economy goes into another lockdown, or some form thereof, then things may get uglier for risk assets. Another risk is the potential for a messy, contested, presidential election outcome, which together with disappointment over a much hoped-for stimulus bill means there is an increased risk we may see heightened volatility.

So, in recent days, investors have been forced to reassess their optimistic projections on economic recovery and some growth stocks. But is there more selling to come in light of the above macro concerns and the disappointing reaction to the big US tech earnings last night?

The Financial Times points out that Spain has been lagging behind its European partners since the Covid-19 crisis began – a trend confirmed by today’s GDP reports.

The eurozone’s largest economies diverged in their performance — Germany’s economy expanded by 8.2 per cent on a quarterly basis while France grew by 18.2 per cent. Italy reported growth of 16.1 per cent and Spain’s output was up 16.7 per cent.

That left France’s economic output 4.1 per cent below its pre-pandemic level while Germany was down 4.2 per cent and Italy was 4.5 per cent smaller. Spain was harder hit, with a 9.1 per cent gap from pre-pandemic levels — reversing its position as one of the fastest growing economies in the eurozone before the virus struck.

Back in London, NatWest bank is still the top FTSE 100 riser (+5.5%) after surprising the City by returning to profit:

Related: NatWest warns of challenging times ahead despite return to profit

With the election looming, and Covid-19 cases at record levels, Wall Street has opened cautiously.

The Dow Jones industrial average has dipped by 63 points, or 0.24%, to 26,595.

Apple reported fourth-quarter earnings on Thursday that slightly exceeded Wall Street expectations, but the company did not offer investors any guidance for the quarter ending in December. https://t.co/XVAJe6mJit pic.twitter.com/AaeqURAoff

In a busy day for economic news, we also have some Canadian growth figures to chew through.

Canada’s economy grew by 1.2% in August – a decent pace, but slower than the sizzling 3.1% expansion seen in July. It leaves the Canadian economy around 5% smaller than before the pandemic.

BREAKING: Statistics Canada says the pace of economic growth slowed in August as the GDP grew 1.2 per cent, compared with a 3.1 per cent rise in July.

The agency says overall economic activity was still about five per cent below the pre-pandemic level in February.

Mexico has also emerged from its Covid-19 slump.

Growth across the Mexican economy surged by 12% in July-September, a very strong performance -but that still leaves GDP around 8.6% smaller than a year ago.

In Mexico, @INEGI_INFORMA published 3Q20 GDP, showing a 12.0% q/q increase (-8.6% y/y). By sectors, industry posted the largest recovery at +22.0% q/q (-8.8% y/y), with services also rebounding +8.6% q/q (-8.8% y/y) pic.twitter.com/Py65RbsHlc

The record growth across the eurozone last quarter is an encouraging sign, even though the second-wave of Covid 19 will dampen the recovery.

So argues Florian Hense of Berenberg… although he also suspects Italy’s revival will take some time

Q3 is history. Countries across Europe are tightening restrictions to contain the second wave of Covid-19. Economic activity is likely to contract in the Eurozone in Q4.

But the record-breaking 12.7% qoq rebound in Q3 GDP – after a dramatic -15.1% slump relative to Q4 2019 illustrates the potential that the Eurozone economy can rebound fast once the second wave is brought under control again through restrictions, medical progress and – at the latest – the advent of spring.

The eurozone actually grew faster than the US in the last quarter – at 12.7%, versus 7.4%.

[America likes to report ‘annualised GDP’, but on that metric the eurozone expanded by over 50% in the last quarter!]

“The bad news is that Europe is now experiencing a surge in infections. Authorities have responded in a mixture of ways intended to limit contact, which is likely to slow economic activity in the fourth quarter.

“Yesterday’s communication from the ECB strongly hinted at more easing by the end of the year, which shows that the downside risks to the economic outlook mentioned by Ms Lagarde a few months ago are now beginning to crystallise. Even though there are large uncertainties regarding how the epidemiological picture will evolve in the future, a double dip in economic activity in the Eurozone is now looking possible.”

Bloomberg has spotted that eurozone finance ministers have been trying to sound optimistic about growth prospects, despite obvious anxiety over the second wave of Covid-19 cases:

German Economy Minister Peter Altmaier confirmed that the government still expects a slightly less severe contraction this year than previously feared. GDP may shrink 5.5% versus a September prediction for 5.8%. The new forecasts, which include the latest virus restrictions, see growth of 4.4% in 2021.

Spanish Economy Minister Nadia Calvino expressed optimism over the recovery path, even though uncertainty remains high. “The priorities continue to be the same — working in a coordinated way in Spain and in Europe to tackle the pandemic and continue to support businesses and families.”

The good and the bad in the euro-area economy were on display on Friday. 3Q GDP surged almost 13% in a post-lockdown rebound, but separate figures highlighted the ECB’s long struggle to revive inflation https://t.co/ycLXJBzXqm pic.twitter.com/MVjN4mDSgA

The latest eurozone inflation figures are also out, and show that consumer prices fell by 0.3% year-on-year in October.

It’s mainly due to cheaper energy costs, following the slump in oil prices since the pandemic struck.

Euro area #inflation at -0.3% in October 2020: food +2.0%, services +0.4%, other goods -0.1%, energy -8.4% – flash estimate https://t.co/7mwRhierar pic.twitter.com/WLd4N3qfW2

Robert Alster, CIO at wealth manager Close Brothers Asset Management, warns that the eurozone could enter a new downturn this winter.

That will put more pressure on the European Central Bank to expand its stimulus programme before the year is over, he explains.

“This positive EU GDP data comes against a backdrop of surging virus cases and a feeling of déjà vu.

“Whilst Europe’s two largest economies, France and Germany, report positive growth, they approach winter in the midst of another stringent lockdown. Spain and Italy are also imposing further restrictions. These dark economic clouds are likely to squash any green shoots of recovery in the services sector as fears of a double dip recession take hold. In truth, the current outlook is starting to look at odds with the ECB’s prediction that the Eurozone’s economy will grow back to its pre-crisis level by the end of 2022.

Bad news: unemployment across the eurozone has reached its highest level in over two years — despite the pick-up in growth over the summer.

Eurostat reports that the number of people unemployed in the euro area jumped by 75,000 in September, to 13.612 million. That’s an increase of 1.3 million in the last year.

The surge in growth across Europe came as offices, factories, pubs, shops and restaurants reopened, and people took much-needed holidays.

This chart highlights just how fast the eurozone grew in July-September — dwarfing the recovery from the financial crisis of 2008.

Newsflash: The eurozone has surged back to growth after its spring shutdown, with the fastest expansion in its history.

These were by far the sharpest increases observed since time series started in 1995, and a rebound compared to the second quarter of 2020, when GDP had decreased by 11.8% in the euro area and by 11.4% in the EU.

When Harold Macmillan (possibly) warned that “Events, dear boy, events” knocked governments off course, he probably didn’t have a global pandemic in mind.

Or the eurozone (in those days, Britain was trying unsuccessfully to join the EEC, before Charles De Gaulle crushed prime minister Macmillan’s hopes).

GDP numbers for Q3 are out today (QoQ)

France +18.2%
Spain +16.7%
Italy +16.1%
Austria +11.1%
Germany +8.2%

So exceptional and yet so largely irrelevant…

Not much heterogeneity between Germany, France and Italy as regards the Q3 GDP level. But Spain is a clear laggard. pic.twitter.com/GRlfW2MoTJ

Now it’s Portugal’s turn to surge back to growth.

#Portugal #GDP Growth Rate QoQ Prel at 13.2% https://t.co/o9PhlMR2av pic.twitter.com/qdV9OBcLnM

#Portugal #GDP Growth Rate year-on-year Prel at -5.8% https://t.co/mUIwlblc6b pic.twitter.com/VYmXIUd2qk

Germany’s economy minister, Peter Altmaier, has told reporters that the record growth achieved in the summer provides a cushion for the future.

But, Altmaier also warns that the full recovery may take until 2o22.

Economic activity in Germany should continue at a moderate pace, Economy Minister Peter Altmaier said on Friday, adding that a full recovery from the COVID-19 pandemic should occur in 2022 at the latest.

“We have managed to save many jobs during this pandemic,” Altmaier told a news conference after figures showed Europe’s largest economy expanded by a record 8.2% in the third quarter after an unprecedented drop of almost 10% in the previous three months.

GERMAN ECONMIN ALTMAIER SAYS GOOD Q3 SHOWS ECONOMY IS IN SHAPE TO GROW EVEN DURING PANDEMIC

Q3 GIVES US CUSHION, WE ARE REMAINING CAUTIOUS THOUGH

WE CONTINUE TO EXPECT MODERATE BUT POSITIVE DEVELOPMENT OF ECONOMY

Newsflash: Germany’s economy has also returned to growth after the first wave of Covid-19 cases eased.

Gross domestic product in the 3rd quarter of 2020 up 8.2% on the previous quarter. Economic performance still 4.2% below pre-crisis level, however. Read more: https://t.co/D7CfPYedh5 #GDP pic.twitter.com/PSGQxY4QL1

Newsflash: Italy’s economy grew by 16.1% in the last quarter, much stronger than expected.

New figures from statistics body ISTAT show that Italian GDP rebounded sharply in July-September, as the EU’s third-largest economy recovered from its Covid-19 slump.

Italy Q3 GDP comes in at 16.1%, exp: 11.1%, prev: -13%

#Italy #GDP Growth Rate QoQ Adv at 16.1 https://t.co/4KYXd8Q0GK pic.twitter.com/zjZVgYO9ld

These forecast-beating growth figures from France and Spain haven’t cheered investors this morning.

European stock markets have lurched lower, as the second-wave of Covid-19 cases fuels fears of a new downturn.

France’s Q3 GDP was significantly better than forecast recording a record 18.2% growth in the July – Sept period, after -13.7% contraction in the Q2. Expectations had been for 15.4% growth. However, with France back in national lockdown, these figures are already out of date.

French consumer spending in September declined a worse than forecast -5.1%, much worse than the -1% decline forecast.

Austria has also returned to growth, new data show.

The Austrian economy rebounded by 11.1% in the third quarter, think tank Wifo said on Friday, citing a rise in consumer demand and a recovery in the service sector, as coronavirus-related restrictions were eased.

The rebound could not fully offset the decline caused by the pandemic, Wifo, which compiles data for the government, added.

Newsflash: Spain has joined France in posting faster-than-expected growth figures.

#Spain #GDP Growth Rate QoQ Flash at 16.7% https://t.co/MUSK1wytp8 pic.twitter.com/8kD2ytkyVb

In the UK, house prices have accelerated again – but a slowdown may be looming as unemployment jumps.

Nationwide has reported that annual house price growth rose to 5.8% in October, the highest rate since January 2015. They jumped 0.8% this month alone, as the current stamp duty holiday continues to drive demand.

“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.

Marc Brütsch, chief economist at Swiss Life, also fears France’s economy will disappoint in the final three months of this year:

GDP in #France recovers by 18.2% through the third quarter. That’s stronger than consensus view according to Blommberg (15.0%) and also our own estimate (17.6%).

Unfortunately, Q4 will come in weaker than estimated until recently. pic.twitter.com/EDJd1z4Bmm

In a worrying sign, German retail spending fell more than expected in September.

The Federal Statistics Office reports that retail sales dropped 2.2% last month, a bigger fall than expected.

Germany ‘s retail sales fell by -2.2% MoM in September, much more than expected -0.8%, hinting cold autumn for German (and possibly Eurozone) consumption@graemewearden

German retail sales dropped quite sharply in September (-2.2% m/m). Tentatively, I’d say that the boost from the VAT cut is fading with emerging consumer caution maybe adding a bit, too. But food & online sales kept overall turnover 6.5% above last year’s level. pic.twitter.com/2sn3nmYEb4

Nadia Gharbi, senior economist at Pictet Wealth Management, says the French economy has bounced back from its Q2 slump – although it’s still smaller than before the pandemic:

In Q3, GDP bounced back (+18.2% q-o-q after -13.7% q-o-q) in France. All components of domestic demand rebounded.
GDP remained well below its pre-crisis level (-4.1%) https://t.co/5LlTwlzz5z pic.twitter.com/dAFYuTTh02

The French Q3 GDP report easily exceeded even the highest forecast similar to yesterday’s Belgian number. Could become the theme of the day before we remember that lockdown-November is just around the corner. pic.twitter.com/cb282bnVmS

#French #GDP rose 18.2% quarter-on-quarter in third quarter as #economy opened up after #COVID restrictions. Followed contraction of 13.7% q/q in Q2 & 5.9% q/q in Q1. But still down 4.3% year-on-year in Q3 & in danger of renewed q/q contraction in Q4 due to renewed restrictions

France’s finance minister, Bruno Le Maire, has warned that the fourth quarter of 2020 will be difficult.

Speaking on France Inter radio, Le Maire says the French economy is expected to contract by 11% in 2020.

*FRENCH FINANCE MINISTER LE MAIRE SPEAKS ON FRANCE INTER RADIO – BBG
*LE MAIRE: FRENCH ECONOMY TO CONTRACT 11% IN 2020

FRANCE’S FINANCE MIN. LE MAIRE: I SEE AN 11% CONTRACTION IN THE FRENCH ECONOMY IN 2020.

Spending by consumers and government lifted the French economy back to growth in the third quarter, INSEE explains.

Household consumption expenditure jumped +17.3% in Q3, and was only 2.1% lower than a year ago.

Newsflash: France has got eurozone GDP day up and running, by posting stronger than expected growth for the third quarter of the year.

In Q3 2020, GDP in volume terms bounced back: +18.2% after –13.7% in Q2 2020. Nevertheless, GDP remained well below the level it had before the health crisis: measured in volume, compared to its level in Q3 2019 (year-on-year), GDP of Q3 2020 was 4.3% lower.

French GDP +18.2% Q/Q above the 15.4% forecast, marking a recovery from the Q2 fall of -13.7%. But fears are growing that Q4 will now see a 3-4% hit from fresh lockdowns #coronavirus #france

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Template for today’s GDP data: strong rebound in 3Q by XX, after historic slump in 2Q. Due to new lockdown measures, a contraction in 4Q by YY looks unavoidable. #Eurozone

This week there has been turmoil in European stock markets on account of the jump in the number of new Covid-19 cases and the rise in the hospitalisation rates.

The real damage to market sentiment was on the back of the stricter restriction in countries like Spain, Italy, France and Germany. Broadly speaking, the eurozone’s economic rebound was cooling – the manufacturing and services reports have disappointed.

European Opening Calls:#FTSE 5510 -1.29%#DAX 11381 -1.87%#CAC 4491 -1.72%#AEX 527 -1.40%#MIB 17575 -1.66%#IBEX 6298 -1.77%#OMX 1692 -1.41%#STOXX 2906 -1.81%#IGOpeningCall

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