Recession fears grow as eurozone factories stumble and China's exports fall - as it happened

Stock markets are down again as weak eurozone factory output and Chinese trade woes worry investors

• Latest: Eurozone industrial production shrank 1.7% in November
• Worst decline in almost three years.
• Introduction: China's exports fell 4.4% in December
• Biggest fall in exports in two years as slowdown gathers pace
• But US-China trade surplus hits a record

4.51pm GMT

And finally, UK stocks have ended the day in the red.

The FTSE 100 index has closed 63 points lower at 6,855, down 0.9%.

3.48pm GMT

Donald Trump's optimism over a China trade deal (see here) hasn't prevented shares dropping on Wall Street.

The major indices are lower today as sentiment has been soured by the Chinese trade figures. The fall in Chinese exports will be welcomed by the Trump administration as it will be seen as a sign that the trade war strategy is working. Also, the gloomy import numbers show that the Chinese economy is slowing, and that might prompt Beijing to soften its stance with regards trade relations.

3.20pm GMT

Today's gloomy trade and factory output data has given investors plenty to worry about, as my colleague Richard Partington explains:

Fears are growing over the state of the global economy after China recorded a shock plunge in exports, while European factory output slumped by the biggest margin in almost three years.

In a sign of the world economy reaching a tipping point, official figures showed that Chinese exports dropped by 4.4% in December, in the largest fall since 2016, on the back of faltering demand in most of its key markets. Imports also slipped by 7.6% to reflect waning demand at home.

Related: Global economy fears grow as China and eurozone slump

3.17pm GMT

Reminder: The US and China only have until the end of February to reach a trade deal.

Otherwise, president Trump will hike the tariff on over $200bn of Chinese imports from 10% to 25%, probably triggering fresh retaliation from Beijing.

On China: President Trump believes that we will get a deal. US Trade Sources say even though the USTR is out of money today.. negotiators working without pay. Chinese have been briefed that the shutdown will not affect timeline. March 1st is deadline or increased tariff's added.

3.04pm GMT

Newsflash: Donald Trump has predicted that the US and China will reach a deal to end the trade war.

China wants to negotiate.... I have a great relationship with president Xi.

2.59pm GMT

Elsa Lignos of RBC Capital Markets has dug into today's Chinese trade slowdown data.

She's spotted that imports from the US slumped by a third in December, while imports from Brazil surged.

Unsurprisingly, China's imports from the US have been hit hardest - flat in September, -2%y/y in Oct, -25%y/y in Nov and now -36%y/y in December (-$6bn) and Brazil appears to be the major beneficiary, with Chinese imports up over 40%y/y (+$2bn).

2.47pm GMT

US bank Citigroup has shown the impact of last autumn's market turmoil.

"A volatile fourth quarter impacted some of our market-sensitive businesses.

Citi CFO on Q1 trading: "We have seen improvements in trading conditions, volatility has somewhat moderated both equity prices and yields have shown sign of stabilisation."

2.14pm GMT

If you're just tuning in, here's a chart showing the weak Chinese trade data that spooked markets overnight (exports down 4.4% in November, imports down over 7%).

"China's exports slumped in December as a rush of orders to beat expected tariffs showed signs of fading and as domestic buyers succumbed to a worsening economic outlook."https://t.co/7cep0UpMI7 pic.twitter.com/stRfpqiQPJ

1.20pm GMT

The US stock market is expected to drop around 1% when trading begins in 70 minutes time.

The surprise drop in Chinese exports and the worse-than-expected eurozone factory output, is weighing on Wall Street - as the US government shutdown drags on.

US Opening Calls:#DOW 23793 -0.83%#SPX 2574 -0.82%#NASDAQ 6534 -1.02%#IGOpeningCall

Europe's Chinese concerns only ramped up as Monday went on, with the Dow Jones set to fret after the bell rings on Wall Street.

Given that the commodity sector is rightly edgy every time some bad news comes out of Beijing, it stands to reason that the oil and mining-heavy FTSE was the worst hit of the major indices. As Brent Crude lost 1.5%, and copper dropped 1.3%, the FTSE fell back under 6850 thanks to a 1% slide, the likes of BP, Shell, Anglo American and Antofagasta causing the brunt of the decline.

1.00pm GMT

Simon Rabinovitch of The Economist has pointed out that the US-China trade gap has widened substantially since Donald Trump became president:

Caveats aplenty: strong US imports reflect strong US growth; weak Chinese imports reflect China's slowdown; some Chinese exports were front-loaded before feared tariffs. All of which is to say: this is a fine reminder of the foolishness of Trump's focus on the bilateral deficit.

12.13pm GMT

Political turmoil in Greece has intensified.

Bank shares dropped 3.8% this morning as investors digested the spectre of renewed political instability in the euro zone's most fragile member state.

Much will depend on how Tsipras "interprets" the vote which analysts believe he will win - if by a slim margin.

Related: Greek government in crisis over Macedonia name deal

12.04pm GMT

Alastair Neame, senior economist at the Centre for Economics and Business Research, says eurozone manufacturers are struggling as the global economy slows,

As a major exporter, the state of the global economy matters to Eurozone manufacturers. The trade dispute that erupted during the summer between the US and China has dragged down global trade growth and has spilled over into wider supply chains.

Although temporary factors like new emissions standards may be affecting car production, the rise of protectionism and uncertainty are likely to have a long lasting impact on the sector's fortunes."

11.14am GMT

Newsflash: The OECD thinktank has just warned that growth momentum is "easing" in most major economies.

In a new assessment of the world's largest economies, the OECD says the biggest declines coming in France and Britain.

In the United States and Germany, the tentative signs of easing growth momentum, that were flagged in last month's assessment, have been confirmed with easing growth momentum remaining the assessment for Canada, the United Kingdom and the euro area as a whole, including France and Italy.

10.52am GMT

European stock markets have fallen deeper into the red, following the disappointing fall in eurozone factory output.

Britain's FTSE 100 is now down 66 points, or almost 1%. Italy's FTSE MIB has shed 1.25%, while Germany's DAX is 0.75% lighter.

10.42am GMT

Bert Colijn, senior eurozone economist at Dutch bank ING, fears that some of Europe's largest economies could suffer a recession soon.

He says November's decline in industrial production sinks hopes that growth picked up at the end of 2018:

Fears of a technical recession in large Eurozone economies are mounting as industrial production in November provided a harsh reality-check for economists.

The third quarter slowdown to just 0.2% GDP growth was expected to be followed by a bounce back in Q4, but the evidence is mounting that this is unlikely. Surveys have been dismal throughout the quarter, and actual production data is now confirming that bleak view on the Eurozone economy. Industrial production declined by -1.7% month-on-month in November and by -3.3% compared to November last year.

10.23am GMT

This sharp fall in eurozone industrial production suggests the world economy faltered in the last few months, warns Teis Knithsen of Kirk Kapital:

Something happened to the global economy in Q4 #1: Euro area industrial production fell by 1.7% in November, down 3.3% y/y. pic.twitter.com/RbGDznRMw1

10.14am GMT

Ireland suffered the biggest drop in industrial production in November, down by 7.5% month-on-month.

That was followed by Portugal (-2.5%), and Germany and Lithuania (both down 1.9%).

10.09am GMT

#Eurozone industrial production in November is worse than expected, and expectations were pretty bad pic.twitter.com/DGbvdfC78y

10.07am GMT

On an annual basis, eurozone industrial production was 3.3% lower than in November 2017 - a hefty fall.

10.06am GMT

Newsflash: Factories across the eurozone have suffered their biggest plunge in output in almost three years, in another sign that the world economy is slowing.

Industrial production across the euro area shank by 1.7% in November, data body Eurostat just reported.

In the euro area in November 2018, compared with October 2018, the production of capital goods fell by 2.3%, durable consumer goods by 1.7%, intermediate goods by 1.2%, non-durable consumer goods by 1.0% and energy by 0.6%.

In the EU28, the production of capital goods fell by 1.6%, intermediate goods by 1.1%, durable consumer goods by 1.0%, non-durable consumer goods by 0.6% and energy by 0.5%.

9.58am GMT

Patrick Zweifel, chief economist at Pictet Asset Management, argues that China needs to strike a trade deal quickly, and also implement more growth-friendly policies.

. #China export growth plunged in Dec (Y/Y) while momentum gradually declined further, reaching a pace in line with what export orders would point to in 5-month time

. 2 implications for Beijing: i) more eager to strike a deal ii) more aggressive measures to stabilise growth pic.twitter.com/LIgV6cd0DH

9.29am GMT

This chart highlights how China's export growth took a tumble last month, with the worst decline in two years:

9.15am GMT

China's economy will probably slow sharply this year, taking a bite out of global growth, reckons Neil Shearing of Capital Economics.

He writes:

Both fiscal and monetary policy have been loosened over the past few months and this should start to feed through to the real economy by the second half of this year. However, the scale of the stimulus so far has been more limited than in 2015-16, and the effect on activity is likely to be correspondingly smaller.

All of this means that, while China's economy isn't facing an imminent collapse, neither is it in a particularly good place. Growth in 2019 is likely to be weaker than in 2018 and this will play a significant role in the coming global slowdown. We estimate that slower growth in China will shave about 0.2%-points off world GDP growth this year compared to 2018.

Another worrying sign for the economy of China as exports fell 4.4% year on year in December and even worse imports fell 7.6% as that hints at a domestic slowdown.

The money supply data in China confirmed the overall weakening trend seen in 2018 albeit a minor bounce was seen as M2 growth rose from 8% in November to 8.1% in December

8.52am GMT

European stock markets have all fallen in early trading, as China's weak trade performance last month spooks investors.

In London the FTSE 100 has dipped by nearly 30 points, or 0.4%. Mining stocks are among the fallers, reflecting concerns that Chinese demand for iron ore, copper etc is fading.

8.38am GMT

Today's trade data also shows that China's soybean imports fell by 7.9% during 2018.

8.29am GMT

Ophir Gottleib of financial analyst group Capital Market Laboratories argues that its time for Washington and Beijing to end the trade war, before the situation worsens.

Breaking News

* China's exports were *down* 4.4% year over year for Dec vs estimates of *up* 5.4% (@Selerity )

* China to U.S. current account balance largest in more than a decade for 2018.
-

Opinion: Trade War has a reason to end.

8.19am GMT

Copper and aluminium prices are falling today, as China's weak trade figures spook the sector.

Stephen Innes of trading firm OANDA says:

The December trade figures are hammering commodity markets lower as this data drives home just how negative of an impact trade war is having on the Chinese economy, and perhaps the global economy too.

8.11am GMT

Investors are alarmed by the 4.4% tumble in China's exports last month, says Naeem Aslam of Think Markets:

He fears Donald Trump's trade war is bringing the Chinese economy to its knees.

The Chinese trade numbers released today got all the alarm bells ringing once again.

If you ever need any evidence that how the trade spat can impact the country's economic health then this number is clearly a major factor here. The lower export number also means that lower jobs which means another direct impact on the economy.

8.03am GMT

What was that about trade wars being "good and easy to win", Mr President?

Despite exports slumping in December, China's overall trade surplus with the US for 2018 swelled to $323bn - the highest on record.

Exports to the U.S. rose 11.3% on-year in 2018, while imports from the U.S. to China rose a meagre 0.7% over the same period.

China's overall trade surplus for 2018 was $351.76 billion, the government said. Exports in the whole of 2018 rose 9.9% from 2017 while imports grew 15.8% over the same period, official dollar-denominated data showed.

7.43am GMT

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

"This is not just due to the trade war and tariffs. On top of those, the major drag is slowing global demand."

This morning's numbers showed that far from improving the trade picture deteriorated further with exports declining 4.4%, as the global economic picture became more worrying. Much more concerning for an economy supposedly rebalancing away from big industry the import data slowed as well, reflecting a sharp slowdown in internal demand sliding 7.6%, missing expectations of a 4.5% rise.

Disappointment over this mornings data has seen Asia markets slip back and will see European markets open lower this morning.

Chinese trade slumped in December as trade war hit, though the picture for the whole of 2018 was rosier:
-exports rose by 9.9% in 2018 in dollar terms to $2.48 trillion
-imports surge 15.8%, leaving trade surplus of $351.8 billion https://t.co/2jFh8oyXkO

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