Eurozone smashes forecasts with 0.6% growth, markets hit by strong yen – as it happened
Europe's economy has posted its fastest growth in a year, as France and Spain beat expectations, but US data disappoints
- Strong yen helps send markets lower
- S&P warns of risks of Brexit
- Weak US consumer confidence figures
- Eurozone growth rate doubles
- Jobless rate down too
- French government hails growth figures
- Spain expands by 0.8% despite political deadlock
6.27pm BST
The breakdown of the rig figures shows oil rigs falling by 11, gas rigs by 1 and miscellaneous rigs rising by 1 to give the total decline of 11 for the week.
The total is the lowest since November 2009, as oil companies continue to be cautious despite the revival in crude in recent days, with Brent around its highest levels for the year. The Baker Hughes figures showed:
6.03pm BST
The number of US oil rigs drilling has dropped for the sixth week in a row.
According to data from Baker Hughes, the number of rigs dropped by 11 to 420.
5.33pm BST
The strength of the yen after the Bank of Japan decided on Thursday to delay any further stimulus measures has helped push stock markets sharply lower on the last trading day of the month. The final scores showed:
5.16pm BST
Standard and Poor's has kept its UK credit rating at AAA, but with a negative outlook due to the risks of Britain leaving the European Union in what it expects to be a close referendum vote. It said:
In our opinion, the possibility that the U.K. could leave the European Union (EU) as a consequence of a planned "leave or remain" referendum set for June 23, 2016, represents a significant risk to the U.K. economy, in particular to its large financial services sector and exports.
If the U.K. were to leave the EU, it may make financing its twin deficits more difficult, particularly its large current account deficit, which stood at 5.2% in 2015.
A vote to leave is likely to hurt confidence, investment, and GDP growth, and is likely to have a negative effect on public finances. As a consequence, a U.K. departure from the EU (or "Brexit") would likely lead us to lower the long-term sovereign credit rating.
We believe that, having left the EU (the destination for about 44% of U.K. goods and services exports), the U.K. would largely lose its capacity to influence the EU's policies for key sectors, including financial services.
4.30pm BST
Commodity stocks have been some of the main gainers in the past month. Tony Cross at Trustnet Direct said:
Recapping the month, it's been the miners that have shone as commodity prices appear to be moving away from the dark days seen at the start of the year and some stability is returning to the market. Anglo American is up 40% on the month, whilst a number of the sector peers have added 15%-20% too. The index may be comprehensively off the highs we touched just 10 days ago, but without the boost from commodity stocks, the picture for April would have looked a whole lot bleaker.
4.08pm BST
A June rise in US interest rates looks a little unlikely, and not just because of the uncertain US economic data:
Unless the polls show no real chance of #Brexit I just can't see the Fed hiking eight days before Europe could explode.
3.46pm BST
Oil prices have flattened out, with Brent crude now up just 0.1% at $48.2 a barrel.
But they are still on track for their biggest monthly gain in seven years, helped by a weaker dollar and signs of a dip in US production. The increase also came despite Opec's inability to agree a cap on output at January's levels to tackle the current supply glut.
3.09pm BST
And here's a chart of the consumer sentiment index:
3.05pm BST
The survey's chief economist Richard Curtin said:
Consumer sentiment continued its slow decline in late April due to weakening expectations for future growth, although their views of current economic conditions remained positive. All of the April decline was in the Expectations component, which fell by 4.8% from one month ago and by 12.6% from a year ago and by 14.7% from its January 2015 peak. The retreat from the 2015 peaks was evident across a wide range of expectations about prospects for the national economy.
The size of the decline, while troublesome, is still far short of indicating an impending recession. The decline is all the more remarkable given that consumers' assessments of current economic conditions, including their personal finance, have remained largely unchanged at very positive levels during the past year. This divergence may reflect the strength of the consumer relative to the business sectors, and may have been exacerbated by growing uncertainty about the economic policies advocated by various presidential candidates. Overall, the data indicate that inflation-adjusted personal consumption expenditures will grow by 2.5% in 2016.
3.04pm BST
US consumer confidence is at its weakest since September last year, according to a new survey.
The University of Michigan consumers sentiment index has fallen from 91 in March to 89 in April, below estimates of a level of 90.
2.48pm BST
More downbeat US data.
The Chicago purchasing management index has come in at 50.4 in April, compared to 53.6 in the previous month and expectations of a level of 53.
This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April. Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year.
2.47pm BST
US markets have followed other global bourses lower, with the Dow Jones Industrial Average down 46 points or 0.2% in early trading.
Markets remain nervous as the yen hits an 18 month high, on concerns that the Bank of Japan may hold fire on any further stimulus measures after disappointing investors at this week's meeting.
2.23pm BST
Opec's oil output in April rose by 170,000 barrels month on month to 32.64m barrels, according to a Reuters survey.
The rise, bringing the level close to January's record high, was led by Iran, Iraq and the United Arab Emirates. There were declines reported by Kuwait following a strike, Nigeria and Venezuela with Saudi Arabian output little changed from March.
1.56pm BST
Traders across Europe have given a resounding shrug to the eurozone's growth figures.
All the main stock markets are down today, with the FTSE 100 shedding 56 points (0.8%). The French and German markets are both deeper in the red, losing around 1.5%.
Related: RBS reveals 1bn loss and Swiss inquiry into Coutts subsidiary
For tech shares, April has indeed been 'the cruellest month', and while the sector as a whole is still up since the February lows, it looks like any further market rally for US shares may well have to contend without support from these high-growth names.
1.27pm BST
Swiss bank UBS has upgraded its forecast for eurozone growth this year.
It now expects the region to expand by 1.6% in 2016, up from 1.4%, following the news that growth has doubled to 0.6%.
While temporary factors, including weather, may partly explain this outcome, today's reading nevertheless comes as a rather positive surprise when considering the difficult external environment at the beginning of the year.
12.15pm BST
Today's GDP report contains less detail than usual, as Eurostat have produced it within 30 days of the quarter's end, not the usual 45 days.
Tomas Holinka, economist at Moody's Analytics, reckons the growth rate could prove to be too optimistic, once more data comes in:
"The euro zone economy was at a better shape at the beginning of this year than expected. The quarterly growth accelerated to 0.6% in the three months to March, from 0.3% in the previous quarter.
Although this preliminary number might be revised down in coming months, the growth definitely surprised on the upside. Yet weakening U.S. and emerging market economies, the influx of migrants, and a possible U.K. exit from the EU are key risks to the region's economy."
11.47am BST
Bert Colijn, economist at ING, says he's "astonished" that eurozone growth has doubled to 0.6%:
The first months of the year were tumultuous with large stock market declines, growth concerns in the US, China and many emerging markets and plummeting confidence among businesses and consumers. Clearly, businesses and consumers have not acted on their gut feelings.
While the US and UK are suffering from a strong dollar and a possible Brexit, the Eurozone saw a marked acceleration.
11.36am BST
This jump in eurozone growth comes at a good time, given worries over Brexit, political uncertainty in Spain, and the renewed tensions in Greece.
But Alasdair Cavalla of the Centre for Economics and Business Research urges caution:
This is the fastest rate of output growth since Q1 2015 for the Eurozone and its timing is propitious given the numerous sources of anxiety for the continent.
However, false dawns have been common since the financial crisis and nowhere more so than in Europe. Country-level figures revealed the French economy is finally getting into gear, showing a 0.5% rise.
11.10am BST
It's taken the eurozone a long, long time to reach its pre-crisis levels again.
As this chart shows, its post-Lehman recovery was knocked off course in 2011 by the debt crisis:
OFFICIAL: Euro-area GDP has finally recovered pre-crisis levels! Gap now closed, 3 years after UK, 6 years after US. pic.twitter.com/az5OJ6LrSV
10.43am BST
Despite this stronger growth, the eurozone has fallen back into negative inflation.
Prices across the single currency bloc fell by 0.2% this month, Eurostat reports, having been flat in March.
So: unemployment is falling, the economy is growing MUCH better than expected BUT no inflation in sight. It just gets easier for the #ECB
10.31am BST
In another boost, unemployment across the euro area has hit a new four and a half-year low.
The eurozone unemployment rate dropped to 10.2% in March, down from 10.4% in February, and the lowest recorded since August 2011.
Among the Member States, the lowest unemployment rates in March 2016 were recorded in the Czech Republic (4.1%) and Germany (4.2%). The highest unemployment rates were observed in Greece (24.4% in January 2016) and Spain (20.4%).
10.19am BST
The eurozone has finally recovered all the economic output lost when the collapse of Lehman Brothers triggered the biggest financial crisis in generations.
But it's been a bumpy ride, and Spain and Italy have yet to reach this milestone:
Euro area GDP above pre-crisis levels (Q1 2008) for the first time. pic.twitter.com/nmqZksvf3M
10.18am BST
This is the strongest eurozone growth rate in a year.
The wider EU expanded by 0.5% during the last quarter.
10.04am BST
The eurozone grew by 0.6% in the first three months of 2016.
That's twice as strong as in the previous three months, and much stronger than expect.
Euro area GDP +0.6% in Q1 2016, +1.6% compared with Q1 2015 #Eurostat https://t.co/QWfttA4QF0 pic.twitter.com/YZHQRUeXzv
BOOM euro area GDP up by 0.6% QoQ in Q1. Germany probably stronger-than-expected too.
10.01am BST
Advertising giant WPP has thrown more fuel on the fire of excessive pay, by handing its boss, Sir Martin Sorrell, a pay packet of almost 71m.
9.33am BST
More encouraging news: Italy's unemployment rate has hit its lowest rate in over three years.
Figures just released show that the Italian jobless rate dipped to 11.4% in March, from 11.6% percent in February.
#Italy jobless rate falls to lowest since 2012 on recovery pace https://t.co/YIiMWnjxPT via @ltotaro pic.twitter.com/K0mUjh520u
9.10am BST
Philippe Waechter, chief economist at Natixis Asset Management, also believes the rise in French growth will help Francois Hollande:
Waechter says (via the FT):
"There is a stronger situation in the labour market and that will create strong momentum this year...
It's perfect timing for Hollande."
9.08am BST
The acceleration in French growth to 0.5% is good news for Francois Hollande, the embattled president.
"This is solid growth.
Output is increasing and translating into more jobs and a drop in unemployment."
8.52am BST
Shares in airlines group IAG have dropped by over 4% this morning after it warned that March's Brussels terror attacks have hit sales.
8.49am BST
We have been expecting Q1 2016 #Eurozone #GDP growth of 0.4% q/q, but now wonder if it could beat this. #Germany likely saw decent growth
8.29am BST
The eurozone may have grown faster than expected in the last quarter.
Economists had forecast growth of 0.4%. But with France and Spain both beating expectations (and Germany not reporting GDP yet), we might get a higher number in 90 minutes time....
#French (+0.5%qq) and #Spanish (+0.8%) Q1 GDP figs point to upside risks to consensus forecast of +0.4% for #euro-zone fig at 10am BST.
8.20am BST
Spain has racked up another quarter of strong economic growth, despite the political turmoil that has gripped the country this year.
Spanish GDP rose by 0.8% in the first quarter of 2016, matching the previous three months. Its economy has now been growing for almost three years:
#Spain #GDP Growth Rate QoQ Flash at 0.8% https://t.co/6Ti9o01Wz8 pic.twitter.com/PkFDL3CsKL
8.07am BST
Breaking: Austria's economy grew by 0.4% in the first three months of this year.
#Austria #GDP Growth Rate QoQ Flash at 0.4% https://t.co/KoSPtIuVxm pic.twitter.com/ZcHIBSu6UJ
7.59am BST
The oil price has just hit its highest level of the year.
Brent crude is now trading at $48.30 per barrel, up 0.3% this morning.
7.38am BST
European stock markets are expected to fall this morning, despite France's better-than-expected growth figures.
Investors are jittery following a late selloff on Wall Street last night (the Dow Jones fell 1%).
Lack-lustre performances in New York & Asia may take European stocks lower at the opening - FTSE -43, DAX -82, CAC -38 courtesy of IG 5.20am
7.20am BST
Disappointingly, Germany isn't reporting its growth figures this morning.
Early Easter depressed German retail sales, but growth is slowing, and likely will continue to do so in Q2. pic.twitter.com/f69ddkhY6o
7.07am BST
More reaction to France's growth figures:
Good news for the economy of France as GDP rises by 0.5% in the first quarter https://t.co/imQPkpHeRS #Euro #ECB
FRANCE: Good Q1 GDP performance (+0.5%) mainly due to catch-up in household consumption after Paris attacks. Investment rebound confirmed.
7.04am BST
This chart confirms that domestic spending (in red) drove the French economy forwards in the last quarter:
6.54am BST
Fred Ducrozet of private Swiss-bank Pictet agrees that the French growth figures are encouraging:
French Q1 GDP puts carryover for 2016 at 1.0%. Government target (1.5%) easily on track. Good news continue following unemployment drop.
We won't get details from other flash GDP reports but France a case in point: a domestic momentum has legs.
6.48am BST
France's strong performance means the eurozone may economy finally have recovered all the damage caused in the financial crisis.
Euro-area just needs a 0.18% QoQ growth in Q1 for GDP to FINALLY recover pre-crisis levels. Verdict this morning. BBG consensus has +0.4%.
6.36am BST
The French economy has smashed expectations, by growing by 0.5% in the last quarter.
That's the best quarterly growth rate in a year, up from just 0.3% in October-December.
#France #GDP Growth Rate QoQ 1st Est at 0.5% https://t.co/g86YPz4vxd pic.twitter.com/5uoamFNNX7
6.24am BST
Good morning.
We're about to get a major healthcheck on the European economy.
Continue reading...