European shares hit by worries over Greece and Italy, as US confidence dips – as it happened

Graeme Wearden

from on 2017-05-30 16:16 (#2R6Q0)

Finance minister insists Athens isn't planning to waive its next loan, as he pushes creditors for debt relief

5.16pm BST

Europe's stock markets have closed for the night, with the main indices losing ground.

The FTSE 100 and German DAX both fell by around 0.25%, while France's CAC shed 0.5%.

Talk that Italy will spice up Europe's political landscape again with its own snap election is unsettling the idea that Europe is now free of populist risk in 2017. Former Italian Prime Minister Renzi has suggested Italy could hold simultaneous elections with Germany in September. Not to be left out, Greece may opt out of its next bailout if debt relief deal isn't struck, adding to the potential for market disruption.

European assets need the three pillars of stronger economic data, higher political risk in the US and reduced political risk in Europe to outperform. Italy and Greece could are holding the sledgehammer that could knock down one of those three pillars.

Amazon shares topped $1,000 for the first time https://t.co/4cSYaxqvpg pic.twitter.com/DQJ1AIH4I0

Momentum traders clearly still think that the likes of Facebook and Amazon can go higher, however, with the Nasdaq 100 having gained almost a fifth so far this year.

Amazon has surpassed the $1000 mark this afternoon, an event that would mark the top in the market perfectly, but one that probably won't. There seems to be no shortage of investors willing to jump on board this bandwagon.

In the post-referendum world, all political developments need to be viewed through a Brexit prism and an argument can be made that a hung parliament which delivered or held out the prospect of a softer-Brexit coalition of the left-of-centre parties (Labour/Lib Dems/SNP) might actually be sterling positive."

3.55pm BST

Here's some reaction to the US consumer confidence report, from Patrick Chovanec, chief Strategist at Silvercrest Asset Management.

Conference Board US consumer confidence gauge has fallen from its post-election highs, but still relatively strong at 117.9 for May. pic.twitter.com/XHo5Zb8wTg

Conference Board US consumer confidence gauge shows buying plans are negative for autos and appliances, as well as housing.

3.50pm BST

Just in: US consumer confidence has fallen, raising concerns that the Trump Bump may be fading.

The monthly measure of consumer morale, from the Confidence Board, fell to 117.9 from 120.3 in April.

#US consumer confidence may have peaked, as #Trump seems unable to deliver on his economic promises (still very high level though!) pic.twitter.com/4RpyCIzUYt

The index is still consistent on past form with consumption growth rising to over 4% annualised in the second quarter. Meanwhile, the current conditions index edged up in May, and is close to a 16-year high.

The details of the survey highlight that labour market conditions remain exceptionally tight. The balance of consumers reporting that jobs are easy to find remains high, and is consistent with the unemployment rate falling below 4% in the months ahead. Meanwhile, the net balance expecting their incomes to rise points to wage growth accelerating to around 3% annualised by the end of the year.

3.10pm BST

Amazon has just smashed another stock market landmark, as its surging rally continues.

Shares in the e-commerce, web streaming and cloud computing giant have just hit $1,000 for the first time ever.

Amazon shares break above $1,000 for the first time ever https://t.co/B5GfLEINJ3 pic.twitter.com/Iv1xLzIl93

2.58pm BST

Shares have dipped on Wall Street at the start of trading, as the New York stock market follows Europe's lead.

Energy companies are under some pressure, after Goldman cut its oil price forecasts. It now expects Brent crude to average $55.39 per barrel this year, down from a previous estimate of $56.76/barrel.

Dow drops 45 points at the open. S&P 500 and Nasdaq are off slightly. Energy stocks are slipping as oil weakens. https://t.co/A9OlUXl3FI

2.19pm BST

The Greek prime minister's office is reporting that Alexis Tsipras has hit the phones in calls aimed squarely at putting across Greece's desire for some sort of debt agreement at the next euro group meeting on June 15.

The prime minister Alexis Tsipras spoke yesterday with the German chancellor Angela Merkel and the French president Emmanuel Macron, and just a little while earlier he had a telephone discussion with European Council president Donald Tusk.

The prime minister conveyed the position of the Greek side of the need for a clear solution to the issue of Greek debt and everyone agreed they would continue to work ahead of the euro group on 15 June."

2.17pm BST

Newsflash: US house prices are rising at their fastest pace in almost three years.

Prices across 20 key US cities jumped by 5.9% year-on-year in March, with low supply helping to keep prices buoyant.

Home prices up 0.9% SA in March per #Case-Shiller.
20-city index up 5.9% y/y
March's 195.39 reading highest in 9 1/2 yrs.@FoxBusiness pic.twitter.com/O7f9FsRoG9

Home values are increasing at more than double the pace of average hourly earnings, making it more difficult for many people to afford to buy a home.

A steady job market has bulked up demand among many would-be buyers, but there are fewer properties on the market. Sales listings have plummeted 9 percent over the past year to 1.93 million, according to the National Association of Realtors.

1.53pm BST

Back in Athens, a government official has told my colleague Helena Smith that Greece "is not threatening anyone" over its bailout deadlock.

He reiterated Euclid Tsakalotos's comments this morning, saying:

"There is no risk of default and please don't make it seem as if there is one.

"It is already on a path ... it is already moving."

1.27pm BST

We have good news for German shoppers -- inflation in the eurozone's largest economy has hit a five month low.

Feeding doves. WIth German headline inflation at 1.4%, pressure on #ECB to start tapering should further ebb away.

Your daily dose of mental German economic data: economy at full employment; inflation *just* 1.4% https://t.co/RSe1dWv6Q5 pic.twitter.com/OkUsZRqojt

12.10pm BST

Greece's finance minister has hit back at claims that Athens might waive its next bailout payment, a move which would trigger a new summer debt crisis.

"Bild has distorted what I said yesterday.

"What I did say is that the disbursement (of bailout money) was not an issue, because all sides agreed that we have kept to our commitment.

11.16am BST

The threat of a "coalition of chaos" has been a major factor in Theresa May's election campaign, as she urges voters to trust her to negotiate Brexit.

But JP Morgan have argued that a centre-left alliance could actually be positive for the pound, if it steered Britain towards a softer exit from the EU.

A hung parliament would in more normal circumstances be viewed as quite negative for the British pound [GBP] - that was very much the experience of the 2015 election when GBP was braced for one of a myriad of potential coalition permutations only for GBP to jump by 3% once David Cameron secured an improbable narrow majority.

But in the post-referendum world, all political developments need to be viewed through a Brexit prism and an argument can be made that a hung parliament which delivered or held out the prospect of a softer-Brexit coalition of the left-of-centre parties (Labour/Lib Dems/SNP) might actually be GBP positive.

10.45am BST

Eurozone economic confidence remains close to its highest level since the financial crisis, new figures show, despite a dip this month.

The European Commission's eurozone economic sentiment index fell to 109.2 in May, down from 109.7 in April, dragged down by a drop in service sector confidence

10.21am BST

Investors are blaming Mario Draghi, head of the European Central Bank, for the euro's weakness this morning.

Draghi's dovish appearance before the European Parliament yesterday are dragging on the single currency, despite the better economic news from France today.

The euro has seen a difficult start to the week as it was hurt by fears over Greek debt, the prospect of an early Italian election and comments from ECB President Mario Draghi suggesting continued monetary support for the Eurozone.

It is Draghi's comments in particular that have led the currency to slip, as increasing signs of economic recovery including positive data releases have led to analysts hoping that the ECB's dovish policies may be narrowed down. After Macron helped the shared currency to rally, investors would have been hoping for the euro's good fortunes to continue. Just as it is with the pound, political uncertainty has made the euro volatile, and analysts will be hoping that more stability lies ahead for the euro as events continue to develop."

9.44am BST

Sweden's economy had a disappointing start to this year, new GDP figures show.

The Swedish economy grew by 0.4% in January-March, down from 0.7% in Q4 2016, and only half as fast as expected.

9.39am BST

Here's some reaction to this morning's upbeat French economic data:

Shinny happy French people? Consumer confidence rises above its long-term average (100) for the 1st time since 2007. https://t.co/46i529DNdX pic.twitter.com/3Ifzbw6ZGQ

3X good news on #France as Q1 #GDP #growth hiked to 0.4% q/q (0.3%), May consumer confidence best since Aug 07 & Apr consumer spending +0.5%

.@MarkJDeen French consumer confidence highest since 2007 indeed as economic optimism grows (except for big ticket purchases). pic.twitter.com/XF2qt92scR

9.24am BST

New inflation figures how that consumer prices across Germany rose at a slower rate this month:

Early German CPI looking weak. Brandenburg 1.4% in May, down from 1.8% in April. Bavaria 1.4% from 1.9%, Hesse 1.7% from 2.1%

3 more German states CPI and national inflation still expected at around 1.5%. Some pockets of weakness in core goods/services.

8.57am BST

European stock markets have fallen in early trading, putting them on track for their fourth day of losses.

Worries over Greece's bailout, a possible early Italian general election, and Mario Draghi's cautious comments about the eurozone recovery are all weighing on shares.

The FTSE was one of the worst performers after the bell, plunging more than half a percent to lurk just above 7500.

A 1% drop from copper - the metal is now at its worst price in a week and a half - weighed on the index's mining stocks, while the ongoing British Airway's chaos is hurting its parent IAG, which fell 3.5% as the session got underway. The UK banks were also all in the red, taking their cue from their Italian counterparts, which plunged on early election fears.

8.47am BST

This morning's selloff has wiped around 500m off IAG's market capitalisation.

8.36am BST

Shares in British Airways' parent company have slumped to the bottom of the London stock market this morning, after a long weekend of disruption.

International Airlines Group's shares fell by 4% at the start of trading, as investors try to calculate the cost of the IT problems that disrupted hundred of flights.

Even if you give BA the benefit of the doubt it still looks bad, if their systems are not strong enough to withstand a power surge, then this sort of thing could happen again, which could add downward pressure to the IAG stock price.

Although cost cutting has been good for the share price in the last year, it will come back to bite IAG if it stops them from doing what they are supposed to do: fly passengers to their destinations.

8.23am BST

Greece's government has scrambled to deny Bilt's report that it might default on its next debt repayment in July.

Reuters has the details:

A Greek government spokesman denied a German newspaper report on Tuesday that it was considering opting out of a loan repayment in July if lenders could not agree on debt relief.

"It is not true," government spokesman Dimitris Tzanakopoulos told Reuters. "There will be a solution on June 15."

#Greece denies report it may opt out of July debt repayment https://t.co/yv8FLISK2w

8.09am BST

Newsflash: France's economy is growing faster than first estimated.

Statistics body INSEE has reported that French GDP expanded by 0.4% in January-March, up from the 0.3% first estimated.

French first quarter GDP revised up (investment) & consumer confidence highest since 2007, the year Sarkozy took office: pic.twitter.com/mQC4VSQWYv

8.01am BST

Growing concerns over Greece's bailout programme are weighing on the euro this morning.

The European single currency has shed almost 0.5% to $1.113, on concerns that Athens and its creditors may not reach an agreement over its bailout programme in time.

"We can't accept a deal which is not what was on the table.

What was on the table was if Greece carried out its reform package then creditors would ensure that there would be a clear runway through clarity for debt."

#Greece (3) | May Opt Out of Next Payment Without Debt Deal - Bloomberg (citing Bild) pic.twitter.com/DuKFicoLiY

7.48am BST

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

The pound is dipping in early trading today as anxiety over next month's general election continues to build.

Survation Poll. CON 43% LAB 37% LDEM 8% UKIP 4%...

Survation poll leaked out early: Con 43% (nc) Lab 37% (+3). Labour on higher than Con at 2015 Election &Con lead narrower than 2015 Election

Our European opening calls:$FTSE 7537 -0.15%
$DAX 12628 -0.01%
$CAC 5317 -0.30%$IBEX 10865 -0.18%$MIB 20777 -0.03%

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