Britain's factory growth hits three-year high; Greece reaches bailout deal - as it happened
All the day's economic and financial news, including new PMI healthchecks on the world's factory sectors and the latest on Greece's debt talks
Earlier:
6.02pm BST
Despite a raft of uncertainties - Apple's results later on, the two day US Federal Reserve meeting, US jobs data on Friday, the continuing concerns over Brexit and this weekend's final round of the French election - European markets maintained a calm tone throughout the day. Sentiment was helped by the agreed deal between Greece and its creditors as well as positive results from the likes of BP and pharmaceuticals group Shire. In the US, Wall Street shrugged off a poor set of car sales figures for April. Chris Beauchamp, chief market analyst at IG, said:
UK and European markets have put in a decent performance this afternoon, which is perhaps ironic given the public falling out between London and Brussels over the weekend, but in the US all is calm, and not just in a 'pre-Apple results' sense of the word.
Across markets the talk is of how the volatility index is at multi-year lows; like many much-lauded indicators in technical analysis, this piece of fundamental data will be used in defence of both the bullish and the bearish case. The latter will argue that this state of affairs cannot go on, and that something has to give, while the former will point out that it is reflective of the resilience of this bull market, and that investor flows into equities will mean that this state of affairs will persist for a while yet.
4.32pm BST
Not everyone is convinced that Greece's problems have been resolved by this latest deal:
Even if the IMF does eventually participate in the 3rd Greek bailout, "Grexit" fears will not go away for good:https://t.co/mms10hl6XM pic.twitter.com/qD8GGMBkeT
3.55pm BST
After the first 100 days of Donald Trump's presidency, what next? Economist Rob Carnell and his colleagues at ING Bank have been looking ahead to the next 100 days. They say:
The first 100 days of Trump have been clouded with regime uncertainty, which has seen markets temper their reflation optimism. But in the absence of a spike in global risk aversion, we see enough supportive factors to prevent a full post-election unwind. Looking at the next 100 days of Trump, there are two reasons why we think this could be as good as it gets for the dollar: (1) a more watered-down Trump policy regime and (2) real interest rates in the US staying lower for longer.
One of the major issues facing investors is determining which Trump policy paradigm will prevail over the next 100 days. The reality is that all possibilities remain on the table. To shed some clarity, we present four paths that we think global markets could take over the course of 2017.
3.04pm BST
The Dow has come off its best levels, up just 5 points now after disappointing April car sales from the likes of Ford and General Motors.
Weaker-than-anticipated #auto sales numbers (3 out of 4 Cos) add to narrative on soft economic patch -- & ahead of 2-day #FOMC meeting. #Fed
2.43pm BST
As the US Federal Reserve begins its latest two day monetary policy meeting, Wall Street has opened higher, with Nasdaq hitting another new record.
The Dow Jones Industrial Average is currently up 37 points or 0.19% while the Nasdaq Composite opened 0.15% higher and the S&P 500 added 0.17%.
This week's announcement should be fairly sleepy, lacking in pomp with no press conference, no updated dot plots, or new growth forecast. Our bias is for a slightly softer statement given the recent run of macro data that saw lower inflation, a lower ISM, weak Q1 GDP growth and soft March payrolls. The urgency to tighten has diminished, though June is still a decent bet with a 70% market-assigned probability.
2.14pm BST
The deal between Greece and its creditors clears one hurdle for the International Monetary Fund to take part in the country's bailout but debt relief is still needed, the fund said.
In a joint statement with Greece's lenders, it said: "The Greek authorities have confirmed their intention to swiftly implement this policy package. This preliminary agreement will now be complemented by further discussions in the coming weeks on a credible strategy for ensuring that Greece's debt is sustainable."
1.42pm BST
Associated Press have send over some photos from Athens today.
One shows a long queue of people waiting to receive food from an organisation helping impoverished Greeks:
1.36pm BST
The Wall Street Journal have a good explanation on why today's Greek bailout deal could be rather significant.
They say:
"This could be the beginning of the last phase in Greece's crisis," says Panos Tsakloglou, economic professor who represented Greece in eurozone finance meetings in 2012-14.
Tuesday's agreement will release around a7 billion payment without which Greece would be insolvent by July. But more important, it sets the conditions for talks-possibly by the end of May-with creditors on a deal to lengthen the maturity and lower payments on Greece's debt.
12.39pm BST
Sterling got a lift from today's unexpectedly strong UK manufacturing figures, and some analysts think there's more to come.
The pound has gained almost half a cent to $1.2928, not far off last week's six-month high.
There are three reasons why we expect GBP to outperform:
1) the inflation premium in GBP is starting to look over-stretched;
It's been nearly a year since the Brexit vote and a lot of the negative implications of Brexit have been widely discussed. So unless the EU starts clarifying its Brexit position as "cliff edge or nothing", the political noise on its own may not be enough to drive GBP another leg lower from here.
12.23pm BST
Over in Athens, the government's spokesman is defending the bailout agreement:
Government spo Tzanakopoulos argues measures approved will lead to "not one euro of austerity" because cuts are offset by benefits #Greece pic.twitter.com/fB3vw63Qse
A necessary, balanced and viable deal which will reinforce the economy's stability acc to #Greece's gov spox #debt #pensions #eurogroup pic.twitter.com/BokooFbR0Y
11.04am BST
Back in Greece, the main opposition leader has accused the leftist-led government of condemning the country to a "fourth memorandum" (bailout agreement).
Kyriakos Mitsotakis, head of the centre right New Democracy party, slammed prime minister Alexis Tsipras for his mishandling of negotiations with creditors.
"In order to stay in power, he [Tsipras] has committed the country to a fourth memorandum that will impoverish society, particularly the middle class."
Opposition leader Mitsotakis: Tsipras government got Greeks more austerity without any additional funding #Greece #Bailout pic.twitter.com/FCYVwEHzY2
10.48am BST
European commissioner Pierre Moscovici has issued a statement hailing Greece's agreement with its creditors.
He's confident that eurozone finance ministers will back it and unlock bailout funds. But they must also now turn their attention to Greece's huge debt pile.
"The agreement reached overnight in Athens on the Greek Stability Support Programme is a very positive development following months of complex negotiations.
These new efforts agreed by the Greek authorities open the way for a rapid conclusion of the second review. The swift implementation of these commitments should enable the Eurogroup to endorse this agreement at its next meeting.
My statement on agreement reached overnight in Athens: https://t.co/FSgr1tdG6B #Greece
10.23am BST
The head of the eurogroup, which oversees Greece's bailout, has welcomed the deal agreed with creditors overnight.
Jeroen Dijsselbloem also confirmed that talks can now begin on making Greece's debt 'sustainable' (Athens hopes this means significant debt relief......)
Welcomes preliminary agreement between institutions & #Greece on a policy package (1)
This will now be complemented by discussions in the coming weeks on a credible strategy for ensuring that Greece's debt is sustainable (2)
10.21am BST
Here's more reaction to the impressive UK manufacturing report, from Mike Rigby, Head of Manufacturing at Barclays:
"The UK economy as a whole may have made a sluggish start to the year but following a solid first quarter, manufacturing continues to grow with healthy order books and encouraging levels of new investment and employment.
Despite some easing, inflationary pressures will continue to take their toll on factory gate prices and ultimately manufacturers' margins, however, the weakness in sterling and an improving global outlook continue to provide export opportunities for the sector.
"Record order books and high export levels are undoubtedly a positive sign, but it's clear UK manufacturers are nervous about Brexit and the fallout from the upcoming General Election.
"Leaving the EU on World Trade Organisation terms in 2019 could hit industry hard, cutting annual year-on-year turnovers by -1.0 per cent across the sector, and pushing up UK insolvencies across all sectors by 15 per cent. Manufacturers need reassurance from the Government that this will not happen, so it's unsurprising to see them sit on their hands.
10.16am BST
Just in: unemployment across the eurozone is at its lowest level since April 2009, in another sign that Europe is recovering.
The euro area jobless rate came in at 9.5% in March, matching February's level.
Euro area unemployment at 9.5% in March: lowest rate since April 2009. EU at 8.0% - lowest since Jan 2009 #Eurostat https://t.co/pXUWiFkXg6 pic.twitter.com/pnNcDgZeRj
In March 2017, 3.883 million young persons (under 25) were unemployed in the EU28, of whom 2.727 million were in the euro area.
Compared with March 2016, youth unemployment decreased by 439 000 in the EU28 and by 268 000 in the euro area. In March 2017, the youth unemployment rate was 17.2% in the EU28 and 19.4% in the euro area, compared with 19.1% and 21.3% respectively in March 2016. In March 2017, the lowest rate was observed in Germany (6.7%), while the highest were recorded in Greece (48.0% in January 2017), Spain (40.5%) and Italy (34.1%).
10.07am BST
The bad news in today's flurry of PMI surveys is that Greece's factory sector is still shrinking....
Greece sees further declines in manufacturing output, new orders, buying levels and employment https://t.co/dBMJue7K8Q #PMI pic.twitter.com/eaTYwbvd8d
10.04am BST
Economists are cheering the news that Britain's manufacturing growth has hit a three year high (according to Today's punchy PMI report).
Ms Lee Hopley, Chief Economist at EEF, says the manufacturing sector is in "rude health":
"Following the strong first quarter for manufacturing today's PMI confirms that lift off continued at the start of the second, with the surge in the pace of expansion partly thanks to the resilience of the UK order pipeline and the fact the global economy is investing again.
"Against all expectations nine months ago, UK manufacturing appears to be in rude health, having navigated significant exchange rate swings and rising input costs, companies are capitalising on the upswing in the world economy and pressing ahead with some new investments. While all the indicators are pointing to the potential of another year of decent growth for manufacturing, the importance of a comprehensive and enduring industrial strategy for the UK must not get lost in the noise of election campaigning."
"The manufacturers we're speaking to are confident but cautious and even the prospect of a general election in five weeks' time does not seem to have worried them unduly given the result will mean a government in power until 2022. This mood appears to be reflected in the PMI data.
"While the pound remains weak and is undoubtedly pushing up import costs, we are seeing a spike in businesses seeking support to export and capitalise on overseas buyers' appetite for goods priced in sterling.
Manufacturing in the UK seems to be finally benefiting from post-EU Ref GBP weakness
9.36am BST
Breaking! Britain's factory sector performed unexpectedly well in April.
The UK manufacturing PMI has surged to 57.3, up from 54.2 in March, and much stronger than economists had expected.
"The UK manufacturing PMI sprung back to a three year high in April after a brief blip in March. Spring has ushered in green shoots of growth with April marking the ninth consecutive increase in manufacturing employment. The calling of a snap election has failed to dampen the spirits of industry with output growing at the fastest rate in three months.
"While the major political parties debate how best to leave Europe, British manufacturers have continued to increase their exports to the continent. A weaker pound has kept British products competitive on the world stage and encouraged the twelfth successive rise in manufacturing exports.
9.09am BST
Breaking: The eurozone factory sector recorded its fastest growth in six years last month, as its recovery gathers pace.
Data firm IHS Markit reports that output, new orders and employment all jumped at this fastest rate since 2011.
"Companies are benefitting from the historically weak euro, improved growth in key export markets, rising domestic demand and ongoing central bank stimulus including record-low interest rates.
"Optimism about the year ahead meanwhile appears unaffected by political worries, with the first four months of 2017 seeing confidence remaining elevated at the highest level since the future output series started in 2012.
9.01am BST
Germany's manufacturing sector also did well in April.
It's PMI came in at a lofty 58.2, just down on March's six year high of 58.3.
8.59am BST
France's manufacturing sector is enjoying a "resurgence", reports Markit.
Its PMI has risen to a healthy 55.1 in April , from 53.3 in March.
Frances manufacturing resurgence continues!
PMI 55.1 vs exp 55.1; prev 55.1 pic.twitter.com/1TUCs8y5ni
8.56am BST
Boom! Italy's factory sector has posted its fastest growth in six years.
Companies reported a "sharp and accelerated increase" in output and new orders last month, according to Markit, which encouraged them to keep hiring more staff.
8.51am BST
Greece's government debt is jumping in value, on the back of the bailout deal reached overnight in Athens.
The yield on five-year Greek bonds has fallen to around 6.1%, the lowest since October 2014. That means that their price has risen in value, as investors see Greek debt as a safer bet.
#Greece's 10 Y government bond yield is approaching now Y2K level. Down from crisis high of 27% to 6% level. #EUR pic.twitter.com/gQncvtUnwx
8.39am BST
European stock markets have opened higher, amid relief that Greece is now unlikely to default on its debts this summer.
The news that Athens has agreed to further austerity cuts and reforms, paving the way for debt relief talks, has cheered investors.
Still to come is Tuesday morning's main focus - the UK's latest manufacturing PMI. Analysts are once again expecting the figure to trip backwards, this time from 54.2 to 54.0 month-on-month; that would take the reading to a 5 month low, and continue the downward spiral that has been in place since 2017 began. The pound would likely bear the brunt of this drop, meaning, if those estimates are accurate, the currency's current losses may only widen as the day goes on.
Over in the Eurozone there was even more to deal with; not only has the region got its own wave of manufacturing PMIs, investors are also processing news of a breakthrough in the Greek bailout negotiations AND the latest polls from the French presidential election race. The latter appears to be what is driving the CAC's trading, the French index jumping 0.3% as Emmanuel Macron kept a 22 point lead over Marine Le Pen - admittedly, down from the 26 point lead seen last week.
8.28am BST
Spain's factory sector also grew at a faster pace last month, according to data firm IHS Markit.
Spain Manufacturing PMI (Apr) comes in at 54.5 exp: 54.4
This should help to support confidence that the current sequence of growth can be sustained as the year progresses.
8.18am BST
Elsewhere in the eurozone, Ireland's factory sector has posted stronger growth last month.
8.12am BST
After a marathon 12 hours of negotiations, the Greek finance minister Euclid Tsakalotos announced in the wee hours that Athens had finally concluded a second compliance review.
"We have yet to see the details of this agreement but what we know is that it will mean further cuts.
There will be a lot of strikes and a general 24-hour lockdown when the measures are brought to parliament for vote be that on May 12 or May 17."
8.06am BST
This chart show how Greece has taken a step closer to debt relief, by agreeing to new austerity and reforms overnight:
Greece chose the blue path (finally). Next red/blue turn is up to Merkel.
Best chance to end the bailout saga at last. h/t @MacroPolis_gr pic.twitter.com/l7jLKNiJ7X
There had been persistent doubts #Greece & lenders would get this far. Next up: Vote on new measures in Parlt & discussion on debt relief https://t.co/Lgxe6lIuGt
Government's Skourletis says agreement with bailout lenders a "painful compromise" #Greece #Bailout
Deal: Pension cuts, tax increases, high surpluses. Additional benefits for poor #Greece #Bailout pic.twitter.com/YkvkXzQ0d5
7.53am BST
After months of deadlock, Greece and her creditors appear to have finally reached an agreement on its bailout programme.
"There is white smoke" the negotiation is finished with agreement on all the issues.
Under the accord, Greece commits to further fiscal cuts-after its current bailout ends-through pension reductions equaling around 1% of gross domestic product in 2019, and a similar amount in 2020 from a reduction in the threshold for paying personal income tax.
7.42am BST
Manufacturing PMI Day has got off to a bad start in China.
Summary of China's Caixin Manufacturing PMI pic.twitter.com/B820Bc0mlk
7.28am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we're learning how the world's factories performed in April.
The final manufacturing PMI numbers from Spain, Italy, France and Germany are expected to remain fairly resilient at 54.3, 55.9, 55.1 and 58.2 respectively....
Of more concern is the fact that in recent months UK manufacturing PMI's have been drifting lower, and not higher. Today's April manufacturing PMI number is expected to come in at 54, down from 54.2, and weaker for the fourth month in a row since December's 56.1. While 54 is still a decent number the trend has been in the opposite direction to the recent trend in Europe.
Related: German finance minister hails progress in Greek economic reforms
European markets opening call @LCGTrading #FTSE +21 pts at 7225#DAX +27 pts at 12465#CAC +8 pts at 5275
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