Trump poses a risk to global economy, Fitch warns - as it happened
The ratings agency said President Trump's policies could lead to downgrades for countries with close economic ties to the US
- Markets boosted by Trump's 'phenomenal' tax pledge
- ....pushing Dow to new peak
- Hopes rise that Greece will end deadlock with lenders
- Greek finance minster holds urgent talks in Brussels
5.35pm GMT
Donald Trump's promise of a "phenomenal" tax plan to be unveiled soon has sent most markets higher for the second day, outweighing any worries from Fitch's assessment of the US president as a risk to the global economy.
There has been some divergence, with the US markets hitting new peaks and the UK outperforming European markets, amid worries about Greece and the forthcoming elections in France, the Netherlands and Germany. The final scores showed:
5.30pm GMT
More on Greece from Helena Smith:
Its official: #Greek gov sources saying they are not expecting decisive breakthrough in @tsakalotos meeting w creditor reps today
Since Greek #debt crisis began success govs hv expressed "optimism" re deadlock w creditors but cycle of drama has proved its rarely tt easy
After #ECB's Ewald Nowotny's remarks quite clear tt #Greek crisis rooted as much in disagreement over role of #IMF as Gk reluctance 2 reform
4.53pm GMT
There is no reason why the IMF should be part of the Greek rescue deal, according to ECB member and president of the National Bank of Austria, Ewald Nowotny.
Germany has said the IMF must be part of the Greek solution, but in an interview with Der Standard (in German), Nowotny said:
I do not understand why at the EU level one insists that the fund is on board. This would only be an additional complication, which does not contribute to the solution of the problem.
There is neither economic nor political justification. Greece is a European problem, and Europe will solve it. I fear, politicians deliberately create a crisis scenario, the solution of which is uncertain. Because we do not know the role of the IMF under the influence of Trump's United States.
ECB's Nowotny: No political nor economic justification for the IMF to be part of Greek rescue --Der Standard
4.35pm GMT
So, if the next financial crisis comes, where could it start? Perhaps with car loans. Patrick Collinson reports:
A huge increase in the amounts borrowed by already indebted households in Britain and the US to buy new vehicles is fuelling fears that "sub-prime cars" could ignite the next financial crash.
British households borrowed a record 31.6bn in 2016 to buy cars, up 12% on the year before, said the Finance and Leasing Association on Friday. Nine out of 10 private car buyers are now using personal contract plans (known as PCPs), which have boomed since interest rates fell to historic lows.
Related: Sub-prime cars: are car loans driving us towards the next financial crash?
4.11pm GMT
Markets continue to move higher, more so in the US and UK than in Europe, where investors worry about Greece's debt problems and the uncertainty over the forthcoming elections in France, the Netherlands and Germany.
With the Dow Jones Industrial Average, S&P 500 and Nasdaq all hitting new peaks on the back of Trump's promised tax reforms, Chris Beauchamp, chief market analyst at IG, said:
The final session of the week confirms that the bulls are in charge once again. Yet more record highs for the Dow, S&P 500 and Nasdaq 100 all point to a re-energised rally for stock markets, and while there has been a modest intraday wobble, this has simply provided a fresh chance for some new buyers to hop on board. Investors looked like they had fallen out of love with mining stocks earlier this week, but it appears this too was just a brief period of disillusionment and now the romance is back on... Earnings season is beginning to wind down in the US, but overall the period has not seen any major surprises, and the promise of a Trump tax plan seems perfectly calculated to keep markets on the front foot.
3.18pm GMT
Just in case you thought the latest Greek drama might threaten to come to an early resolution:
Meeting btw institutions + @tsakalotos has started "no deal is expected today" say both Greek and EU officials.
Greek official: No bailout deal expected in meeting today
- Brussels meeting shouldn't be dramatised
3.16pm GMT
On the NIESR data, Paul Sirani, chief market analyst at Xtrade, said:
The NIESR's latest estimate suggests UK economic output accelerated impressively during the three months ending in January, in what is the latest sign of a resilient UK economy.
The post-Brexit Armageddon predicted by so many is still absent, with consistent growth since June's votes leaving economists eating humble pie for now.
3.11pm GMT
Back with the UK, and more signs of improvement in the country's economy after better than expected trade, construction and manufacturing figures earlier.
In the three months to the end of January, the economy grew by 0.7%, according to the National Institute of Economic and Social Research. This compares to a figure of 0.6% in the three months to the end of December. Oriol Carreras, research fellow at NIESR, said:
3.07pm GMT
It seems US consumers are not as confident as had been expected, with Donald Trump's economic policies (not surprsingly) dominating sentiment.
The preliminary University of Michigan consumer sentiment index for February came in at 95.7, compared to forecasts of 97.9 and January's final figure of 98.5. The survey's chief economist Richard Curtin said this could be an early sign for concern about future consumer spending patterns:
Consumer confidence retreated from the decade-peak recorded in January, with the decline centered in the Expectations Index. To be sure, confidence remains quite favorable, with only five higher readings in the past decade.
Importantly, the data do not reflect any closing of the partisan divide. The Michigan survey includes several free-response questions which ask respondents to answer in their own words, without any prompting or proposed answer categories. When asked to describe any recent news that they had heard about the economy, 30% spontaneously mentioned some favorable aspect of Trump's policies, and 29% unfavorably referred to Trump's economic policies.
Moreover, never before have these spontaneous references to economic policies had such a large impact on the Sentiment Index: a difference of 37 Index points between those that referred to favorable and unfavorable policies.
These differences are troublesome: the Democrat's Expectations Index is close to its historic low (indicating recession) and the Republican's Expectations Index is near its historic high (indicating expansion). While currently distorted by partisanship, the best bet is that the gap will narrow to match a more moderate pace of growth. Nonetheless, it has been long known that negative rather than positive expectations are more influential in determining spending, so forecasts of consumer expenditures must take into account a higher likelihood of asymmetric downside risks.
2.43pm GMT
Investors appear to be shrugging off the warnings from Fitch that Donald Trump poses a risk to the global economy. Instead they are still concentrating on the prospect of further stimulus measures after the president promised "phenomenal" news on tax reforms in the next few weeks.
So the Dow Jones Industrial Average hit a new record of 20,232 in early trading, before slipping back to 20,230, still up 58 points or 0.29%. The S&P 500 and Nasdaq Composite also opened at new highs.
2.37pm GMT
More from Valdis Dombrovskis, the EU commissioner responsible for financial stability, financial services and capital markets union, currently on a visit to London.
He hinted in a Q&A session after his speech at Bloomberg's London HQ that the EU could go it alone on Greece should the IMF quit the scene. Our economics correspondent Phillip Inman was there. He says:
Dombrovskis said all parties were close to pressing the button on the next phase of bail out cash for Athens even though the IMF's forecasts for Greek growth and therefore public sector spending surplus were much lower than the EU's.
Nevertheless, he said that the European Stability Mechanism, which has lent a174bn to Greece, has a rulebook and this stresses that it is only preferable and not necessary for parties other than the ESM and European Central Bank to be involved in any rescue.
2.20pm GMT
Fitch says the countries most at risk of a sovereign downgrade are those "with close economic and financial ties with the US that come under scrutiny due to either existing financial imbalances or perceptions of unfair frameworks or practices that govern their bilateral relations".
So that's Canada, China, Germany, Japan and Mexico for starters, "but the list is unlikely to end there," Fitch warns.
2.06pm GMT
Fitch has just issued a warning that President Trump poses a risk to the global economy, raising the prospect that countries will suffer a rating downgrade.
The Trump Administration represents a risk to international economic conditions and global sovereign credit fundamentals. US policy predictability has diminished, with established international communication channels and relationship norms being set aside and raising the prospect of sudden, unanticipated changes in US policies with potential global implications.
The primary risks to sovereign credits include the possibility of disruptive changes to trade relations, diminished international capital flows, limits on migration that affect remittances and confrontational exchanges between policymakers that contribute to heightened or prolonged currency and other financial market volatility.
1.34pm GMT
Yanis Varoufakis, Greece's former finance minister, has been talking to Helena Smith, our correspondent in Athens. She reports:
"Greece is being pressurised yet again to extend and deepen its crisis and become even more unreformable just because the creditors cannot agree with one another on how to deal with the mess they created in 2010," Varoufakis said, referring to the a110bn Athens received in the form of a first bailout.
"India under the British Empire had more power than Greece has today under the third memorandum of understanding (bailout).
Varoufakis said the rescue remedies Greece was being forced to follow was tantamount to giving "cortisone to a cancer patient." The crisis, if snuffed out this time, would be reignited as soon as debt repayments matured again. "Follow the money," he quipped. "Greece's position in the eurozone is impossible without debt restructuring. "
"Grexit is a football being kicked around between [the German finance minister] Dr Schauble and [the German Chacellor] Mrs Merkel. Schauble is determined to kick Greece out and Merkel is determined not to make a decision until she really must," Varoufakis said.
12.53pm GMT
Valdis Dombrovskis, the EU commissioner responsible for financial stability, financial services and capital markets union, is on a visit to London, and has taken a more sophisticated route to issuing the UK with threats of economic disaster. Phillip Inman reports:
In line with other senior Brussels officials, who appear to be less bombastic about the threat to Britain's economy from Brexit, Dombrovskis said that the EU will always be welcoming to British businesses and sees no threat to London's standing as an international financial centre.
Far from being held back by international rules and standards agreed in the last decade - London has been thriving. And regardless of the UK's future relationship with the EU, London will only continue to thrive on the basis of a strong international system.
We very much hope to continue working with all our partners internationally, but this is not only in our hands. What is in the hands of the EU, is to preserve recent reforms and firmly uphold our prudential framework. ["]
Based on strong common international cooperation, the EU has been very open to recognise that our international partners' rules are equivalent and achieve the same objective as ours. But these findings depend very much on the specific conditions of individual sectors and country at the time when the decisions are made. If these conditions change, we will have to reassess the situation.
We are also moving ahead with work to build a single market for capital, a Capital Markets Union. ["] We want to quicken the pace on existing work, such as measures to make business restructuring easier and plans to build a pan European private pensions market. Also to be more ambitious in the areas such as Fintech and sustainable finance. ["] The prospect of Europe's largest financial centre leaving the single market makes our task more challenging, but all the more important.
12.10pm GMT
Greece's borrowing costs have fallen sharply as optimism rises that progress will be made on debt talks with its EU creditors.
Two-year Greek government bond yields fell more than 110 basis points to 8.8%, moving away from seven-month highs above 10% earlier this weeks.
There seems to be a high degree of will to put this issue to bed prior to elections in the eurozone.
12.02pm GMT
Greece's Europe minister, George Katrougalos, has expressed confidence that a deal will be struck between Athens and its creditors to unlock a further wave of funding.
He told journalists on Thursday:
I am optimistic that we can have such an agreement before the Eurogroup of 20 February.
If we had just to deal with the Europeans we would have already completed this review in December. All the delay is due to the ambivalence of the IMF to participate or not to participate .
Mr Schiuble is now an isolated voice in Europe, one of the last defenders of austerity.
Related: Greece hopeful of imminent EU debt deal despite German warning
11.37am GMT
The market is Athens is up 3% as investors appear to be hopeful of a breakthrough between the Greek government and its European creditors.
Reuters is reporting that Greece's eurozone lenders and the International Monetary Fund have reached an agreement on a common stance they will present to Greece, following a rift earlier in the week.
"There is agreement to present a united front to the Greeks," the euro zone official said, adding that the outcome of Friday's meeting with the Greeks was still unclear and it was unclear if Athens would accept the proposals.
"What comes out of it, we will see," the official said.
11.08am GMT
Turning to Greece, finance minister Euclid Tsakalotos has urgently flown to Brussels in an attempt to end the deadlock in stalled talks between the country and its EU-led creditors. Our correspondent Helena Smith reports from Athens:
10.52am GMT
So far Friday has been a day of forecast-beating data from China and the UK.
But investor sentiment is underpinned by comments from President Trump, whose every word is closely scrutinised. He dangled a big carrot on Thursday, promising to reveal "phenomenal" tax plans within a matter of two or three weeks.
[It's going to be] a comprehensive plan, something we haven't seen since 1986 ... It's going to recognize the need to give so many working Americans the relief that they need.
What he wants to do is create a tax climate that not only keeps jobs here but incentivizes companies to want to come here, to grow here, to create jobs here, to bring their profits back here.
10.27am GMT
"It's a boom!"
So says Scotiabank economist Alan Clarke about the flurry of decent UK data today on trade, manufacturing and construction in December.
Yes these are backwards looking since they relate to December. BUT the preliminary Q4 GDP data had made assumptions for how these would perform and those assumptions were far too pessimistic.
The punchline is that other things equal, this points to Q4 GDP being revised UP to 0.7% quarter-on-quarter.
10.08am GMT
The pound has been given a slight boost by the forecast-beating UK data.
Today's UK economic activity data added to other evidence suggesting that the economy maintained a significant amount of momentum at the end of 2016 and implies that growth is becoming more balanced.
The December output figures do provide a base for more balanced growth in 2017. Indeed, we think that the expansion in manufacturing activity will exceed that in services for the first time since 2011, as the manufacturing sector gets a competitive boost from the fall in the pound, but consumer services growth is constrained by rising inflation.
9.50am GMT
Here's how Asia closed:
APAC Closing Prices:#ASX 5720.61 +0.99%#NIKKEI 19378.93 +2.49%#HSI 23574.98 +0.21%#HSHARES 10125.21 +0.50%#CSI300 3414.10 +0.52%
9.49am GMT
Kate Davies, senior statistician at the ONS, is commenting on the UK data. She says there is no evidence that a weaker pound is having an impact on trade:
The UK trade deficit narrowed to 8.6 billion in the final quarter of 2016 as exports of products including oil and aircraft to non-EU countries increased. There was also a notable increase in export sales of gold to overseas buyers. While both exports and imports grew over 2016, there remains little evidence that the weaker pound has had an effect on the trade balance.
Industrial output and the construction sector both remained broadly flat over the final quarter of 2016 but grew in December, with manufacturing growth driven by a strong month for often volatile pharmaceuticals and the expansion in construction led by house and commercial building.
9.39am GMT
The UK economy was in better-than-expected shape in December according to the latest data from the Office for National Statistics.
A quick summary:
9.28am GMT
Just Eat fell 6%, making it the biggest FTSE 250 faller, after chief executive David Buttress said he was stepping down.
It has been a great privilege to work alongside, and then lead, the exceptional team at Just Eat, helping to build the business from the very first restaurant in the UK to the company it is today.
I would like to thank the board for their understanding, and I am very pleased that I will be able to continue to play a role in the future of the business as a non-executive director. This has been one of the best jobs in the world, and I wish my successor all the best when they take on the role.
9.05am GMT
Coming up in less than half an hour we have a flurry of data from the UK's Office for National Statistics.
8.50am GMT
The miners are the FTSE 100's top risers this morning, helped by the strong Chinese trade data which suggested global demand was in decent shape at the start of the year.
8.37am GMT
The FTSE 100 is up 4o points or 0.6% in early trading, at 7,270.
Markets elsewhere in Europe are also higher, with the exception of Italy's FTSE MIB. There are fresh fears surrounding Italy's Banca Monte dei Paschi di Siena, after losses widened in the fourth quarter.
8.26am GMT
Strong trade data from China is also giving investors that Friday feeling.
Exports rose 7.9% in January, easily beating analysts' expectations and following a 6.1% drop in January.
These figures need to be taken with a pinch of salt as annual shifts in the timing of Chinese New Year make year-on-year trade growth highly volatile at the start of each year.
It's likely that much of the pick-up last month was seasonal. Admittedly, the holiday took place earlier this year than last, meaning that more of the disruptions to trade will have fallen in January. But it appears that this was more than offset by the fact that, unlike last year, all of the pre-holiday rush to import goods and meet exports orders fell in January too.
7.59am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Asian markets have made strong gains following new record highs on Wall Street and a stronger dollar. The reason for this renewed investor optimism is the promise of more stimulus in the US.
The move to new record highs in equity markets and surge in the US dollar are symptomatic of a market craving a new stimulus. The risk is that as with most oases they turn out to be an illusion, and given the new President's propensity for melodrama the risk is that this could well be no different.
It is hard to imagine that he will be able to promise anything tangible within a two to three week window, however whatever the realities investors appear happy to take him at his word, as US markets closed well above their previous peaks, while the US dollar index looks set to post its first positive week this year.
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