IMF warns that Europe's economy is weak, as US productivity slides – business live
Rolling coverage of the latest economic and financial news
- US productivity in surprise fall
- HP shares surge on Xerox takeover talk
- Eurozone PMI shows weak economy
- Introduction: German factory orders rise
- Softbank pays price for WeWork debacle
5.21pm GMT
Finally, a rather uneventful day's trading is over in the City.
The FTSE 100 closed just 8 points higher at 7,396.
4.49pm GMT
Growth across the world's companies has hit its lowest level in nearly four years.
That's according to October's PMI surveys, released over the last few days:
Global private sector growth eased further in October, with the headline output index posting at its joint-lowest since February 2016 (50.8 - Oct, 51.1 - Sept). The upturn in new orders slowed as hiring fell and optimism remained subdued. More: https://t.co/3doNtbotCz pic.twitter.com/aIApHMTbpc
4.46pm GMT
Some good news:
Related: Devon's Appledore shipyard close to reopening
3.44pm GMT
The International Monetary Fund has issued a fresh warning that Europe's economy has weakened this year.
In its new Regional Economic Outlook for Europe, the IMF points out that growth has slowed this year.
For most of the region, the slowdown remains externally driven. However, some signs of softer domestic demand have started to appear, especially in investment. Services and domestic consumption have been buoyant so far, but their resilience is tightly linked to labor market conditions, which, despite some easing, remain robust. Expansionary fiscal policy in many countries and looser financial conditions have also supported domestic demand.
On balance, Europe's growth is projected to decline from 2.3% in 2018 to 1.% in 2019. A modest recovery is forecast for 2020, with growth reaching 1.8%, as global trade is expected to pick up and some economies recover from past stresses.
The European Economic Outlook shows that growth is projected in 2019 to decline in most European countries and only modestly recover in 2020. Learn more about the Regional Economic Outlook of Europe #REOeurope https://t.co/sjIVTg9ZSv pic.twitter.com/JUcIEEiSYN
Countries with ample fiscal space should take measures to boost potential output, while countries with elevated debt and deficit levels should generally proceed with fiscal consolidation. This would also help address external imbalances.
Given elevated downside risks, contingency plans should be at the ready for implementation in case these risks materialize, not least because the scope for effective monetary policy action has diminished.
3.38pm GMT
Just in: America stockpiled a lot more crude oil than expected last month.
Stocks of refined hydrocarbon products, such as gasoline, fell.
US DoE Crude Oil Inventories (W/W) 01-Nov: 7929K (est 2000K; prev 5702K)
- Distillate (W/W): -622K (est -1250K; prev -1032K)
- Cushing (W/W): 1714K (prev 1572K)
- Gasoline (W/W): -2828K (est -2000K; prev -3037K)
- Refinery (W/W): -1.70% (est 0.7%; prev 2.5%)
U.S CRUDE OIL INVENTORIES ACTUAL: 7929K VS 5702K PREVIOUS; EST 2000K
3.27pm GMT
City news: Jupiter has named fund management veteran Nichola Pease as its new chairman -- despite her husband, Crispin Odey, betting against the company.
Pease is an experienced financial executive, having run JO Hambro Capital Management and served on the board of Schroders, one of Jupiter's rivals, since 2012.
"Jupiter is an exceptional firm with a high-quality team and an ambitious strategy to build the business over the next five years. I look forward to joining the Board at a very exciting time for the business."
Related: Nichola Pease to join firm husband's hedge fund is betting against
3.03pm GMT
Shares in ride-sharing firm Uber have hit a fresh record low today, as some company insiders get the chance to sell.
It's six months since Uber floated, meaning the lock-up period preventing some insiders and early investors from cashing in has just expired.
.@uber down another 5% following yesterday's rout. Now worth $45bn, as early investors are allowed to sell for first time pic.twitter.com/3iL80Mm33h
2.37pm GMT
Ding ding! Shares in Hewlett-Packard have surged by 17% at the start of trading in New York.
Traders are enthused by the prospect of a takeover move from smaller rival Xerox (see earlier post).
Highlight: "The idea that Xerox, a much smaller company than HP, would then be taking over HP is kind of out there - there's really no firm idea on how they would actually finance this," @danielhowley says about Xerox and HP deal. https://t.co/Jb7k9twFHf pic.twitter.com/vuLF8l5mnm
2.16pm GMT
Eek! US productivity has suffered its biggest decline in four years.
Labor Department figures show that the economic output per hour of US workers fell by 0.3% in July-September, the largest drop since late 2015.
Capital Economics: 0.3% annualized decline in US nonfarm #productivity in Q3 left the annual growth rate at 1.4%, still slightly above the previous five-year average, but it illustrates that the acceleration in productivity growth that began last year is already fading." #usecon
The Trump administration promoted its 2017 corporate tax cut as a policy that would raise productivity by encouraging businesses to invest in more computers, machinery and other equipment.
Productivity did pick up in the first half of this year after growing modestly in 2018, but it now appears to be dropping back to the slow growth that has occurred since the Great Recession ended.
Bad, bad, bad | The 0.3% decline in non-farm productivity in Q3 "left the annual growth rate at 1.4% ... acceleration in productivity growth that began last year is already fading ... still no sign of a breakout from the weak post-crisis trend in productivity growth" - @CapEconUS
1.58pm GMT
Over in Berlin, the government is trying to cool suggestions that it supports a deposit insurance scheme to protect eurozone savers from a bank collapse.
Yesterday, finance minister Olaf Scholz appeared to back the idea of a common scheme to protect savers' deposits.
"The need to deepen and complete European banking union is undeniable. After years of discussion, the deadlock has to end.
Of course, this is better than a German finance minister opposing deposit insurance, but it is a long list of preconditions. Aligning bankruptcy rules may be the poison pill... pic.twitter.com/5j5CO4ADU0
1.32pm GMT
The US president wants to take the credit for the stock market rally:
Stock Markets (all three) hit another ALL TIME & HISTORIC HIGH yesterday! You are sooo lucky to have me as your President (just kidding!). Spend your money well!
1.25pm GMT
It could be a quiet day on Wall Street, judging by these opening calls:
US Opening Calls:#DOW 27509 +0.07%#SPX 3076 +0.02%#NASDAQ 8211 +0.02%#RUSSELL 1599 +0.03%#FANG 2758 +0.15%#IGOpeningCall
1.07pm GMT
Back in London, shares in communications group BT have slumped after it lost a key contract.
Virgin Media has dropped BT as its mobile network provider in favour of Vodafone, and is promising new services such as super-fast mobile broadband.
"In theory, customers shouldn't see any disruption when they are moved over from late 2021, and users won't need to change their SIM cards.
"The agreement means that Virgin Media customers will get to enjoy Vodafone's 5G network, which launched more than three months ahead of BT's 5G technology.
12.52pm GMT
Over in New York, shares in tech firm Hewlett-Packard have surged almost 9% as print rival Xerox ponders an audacious takeover.
Xerox is considering making a cash-and-stock offer for HP, which has a market value of about $27 billion, according to people familiar with the matter. The copier maker's board discussed the possibility Tuesday, the people said.
There is no guarantee Xerox will follow through with an offer or that one would succeed. HP, which installed a new chief executive just last week, is more than three times the size of Xerox and any bid would be at a premium to its current stock price, the people said.
12.07pm GMT
Although markets are quiet today, the mood has changed in recent days.
Investors want to believe good news - especially equity market investors. Subject to the ever-erratic newsflow on a "phase one" deal in the Sino-American trade dispute, such a deal would obviously remove a short-term "downside risk" for the global economy.
Investors also are looking at incoming economic data and hoping that the global economic downturn is bottoming out."
11.09am GMT
Marks & Spencer's CEO Steve Rowe has faced the press (by phone) to explain why profits have slumped 17%, with yet another drop in clothing sales.
Rowe, who was appointed in 2016, has admitted that the company failed to execute its strategy well enough (as with the 'Jeansgate' debacle, when it didn't stock enough pairs of trousers worn by TV presenter Holly Willoughby)
M&S boss Steve Rowe says on news call that 18 months of transformation in clothing and home has been 'lost'. 'We underperformed because of our own execution.'
Steve Rowe, M&S boss, calls clothing division "the thorn in our shoe". Says that while market was difficult the retailer's underperformance was because of its own execution issues. He has since taken control of clothing division after Jill McDonald was ousted after "jeansgate"
M&S boss Steve Rowe says election not affecting trade but picture hard to read because consumer behaviour is very volatile.
10.57am GMT
European stock markets are very subdued this morning.
Despite the pick-up in German factory orders, the Frankfurt markets is slightly lower this morning.
APAC Closing Prices:#ASX 6660.2 -0.55%#NIKKEI 23303.82 +0.22%#HSI 27688.64 +0.02%#HSHARES 10860.86 -0.15%#CSI300 3984.88 -0.45%
10.50am GMT
UJ shopping centre owner Intu has sent shivers through the property sector, by warning that it expects rental income to fall sharply this year.
Although new lettings and rent reviews are still positive overall, CVAs in the period were slightly worse than expected and the political and economic uncertainty is causing customers to delay new lettings, with letting activity in the third quarter slower than forecast and at a lower level than 2018.
We anticipate that like-for-like net rental income for 2019 will be down by around 9 per cent, with more than half the reduction coming from the impact of CVAs such as Arcadia and Monsoon.
10.23am GMT
More from Ofcom:
Update: Ofcom just announced that Jonathan Oxley, group director of competition and board member, will be interim CEO as Sharon White is leaving at the end of November.
10.03am GMT
Just in: Eurozone retail sales are a little stronger than expected in September:
Eurozone Retail Sales M/M (Sep) rise 0.1%, exp: 0%
Eurozone Retail Sales Y/Y (Sep) rise 3.1%, exp: 2.4%
EuroZone Sept Retail Sales comes in at 3.1% y/y (f'cast 2.5%) vs 2.7% in Aug
9.52am GMT
Related: Japanese tech investor Softbank hit by huge quarterly loss
9.37am GMT
Newsflash: Ofcom has chosen Melanie Dawes, one of the UK's most senior civil servants, as its next CEO.
My colleague Mark Sweney has the scoop:
The 53-year-old, the most senior female in the civil service, is currently permanent secretary at the ministry of housing, communities and local government, which she took over from Bob Kerslake in 2015.
The UK media and telecoms regulator's selection panel, led by the Ofcom chairman Lord Burns, is ready to appoint Dawes who is understood to be keen to take up one of the biggest regulatory jobs in Britain.
Related: Ofcom selects Melanie Dawes as chief executive
9.32am GMT
The eurozone economy continues to be dragged back by manufacturing gloom.
Data firm Markit reports that the eurozone's private sector barely grew last month (despite the pick-up in German factory orders reported this morning).
Weakness was centred on the manufacturing economy, where another marked fall in new orders was recorded, whilst there was also a sharp reduction in foreign demand.
Overall exports were down for a thirteenth successive month, with the rate of decline amongst the sharpest in the series history.
There remained a divergence between the manufacturing and service sectors during October. Whereas manufacturing firms recorded a ninth successive month of declining production, service sector companies indicated further growth, albeit at the second-weakest rate since January.
Good news for Eurozone's business morale:
Germany 's services #PMI rises to 51.6 in October, more than expected 51.2
France 's services PMI rises to 52.9, as expected
Italy 's services PMI rises to 52.2, more than expected 51.0@graemewearden
9.10am GMT
Back in the UK, Marks & Spencer has admitted it is "making up for lost time" after yet another poor performance in clothing sales (down 5.5% in the last six months)
M&S suffered some serious supply chain problems this year, leading to empty shelves and racks (and the sacking of fashion boss Jill McDonald). Today, CEO Steve Rowe has insisted it is seeing "a positive response" from shoppers, and suggested clothing sales are turning around.
Related: Marks & Spencer profits plunge as clothing sales continue to fall
9.01am GMT
To Masayoshi Son's credit, he isn't ducking the WeWork issue.
Speaking to journalists in Tokyo, SoftBank's CEO admits that he blundered by pumping so much money into the office rental company, which had to be bailed out last month.
"The perception is that SoftBank is being dragged down into the quagmire of WeWork."
"I am looking back with true regret about the mistaken investment moves that I have made."
In a presentation, Son said WeWork was losing money from initial construction and design costs but, with time, property will become profitable.
A reporter asked how WeWork was an internet company when it was real estate, a question that has been on many minds on WeWork. But Son said internet technology is incorporated into WeWork's concept. WeWork focuses on offering office space to startups.
SoftBank chief Masayoshi Son cannot stop talking about WeWork.
Seriously, 45mins into his presentation and most of the time is devoted to justifying his double-down on office rentals.
He's barely touched on Uber, Slack, ByteDance, Didi.
Like a dog with a bone. He can't let it go
Talk about salesmanship!
We didn't bail out WeWork. We cut the price to 1/4 of the cost.
8.34am GMT
Today's huuuge loss is actually SoftBank's first quarterly loss in 14 years.
Softbank just reported results. It was a "WTH" type of operating loss. At 700B, loss was way bigger than even the most bearish estimate. pic.twitter.com/YM0loUO58n
Masayoshi Son is finally disclosing the damage from SoftBank Group Corp.'s bets on WeWork and Uber Technologies Inc.
The Japanese investment powerhouse on Wednesday reported its first quarterly operating loss in 14 years -- about $6.5 billion --after writing down the value of a string of marquee investments. It swallowed a charge of 497.7 billion yen ($4.6 billion) for WeWork, whose spectacular implosion turned the once high-flying shared-office startup into a Silicon Valley punchline.
8.26am GMT
SoftBank Group, the Japanese tech investor, has slumped to a massive quarterly loss after the valuations of US companies WeWork and Uber plunged, my colleague Jasper Jolly writes.
Related: Neumann has escaped the WeWork debacle. But Softbank may not
8.14am GMT
Economists are hailing today's rise in German factory orders.
Oliver Rakau of Oxford Economics says the 1.3% monthly increase is 'solid', but may not prevent the economy falling into recession.
German factory orders up solidly driven by non eurozone & by core orders. Mechanical engineering & Auto up, the prev. weak spots. Still more stabilisation than pick up all told. But I'll take it. Weak turnover a bad omen for Sep IP though raising likelihood of negative Q3 GDP. https://t.co/A35ssexazw
*GERMAN SEPT. FACTORY ORDERS RISE 1.3% M/M; EST 0.1%
Not sure what all the fuss is about. Everything seems perfectly fine with German manufacturing. Won't be surprised if this gives Bund bears & $EUR bulls a bit of hope. This has been the EZ growth weak spot. Another data beat pic.twitter.com/HY93WAHrFl
A rebound in German factory orders is adding to signs that the euro-area economy has passed the worst of its recent troubles.
Demand rose 1.3% in September, far exceeding estimates of a 0.1% gain. The first increase in three months was driven by a solid pickup in investment and consumer goods, with demand from outside the euro area providing a particular boost.
German factory orders rise for the first time in three months https://t.co/YzsjgolEiX pic.twitter.com/MLqI8A9KhM
7.41am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
German Factory Orders rose by 1.3% in September (from -0.6%). Second highest reading in a year.
Domestic orders increased by 1.6% and foreign orders rose 1.1% in September 2019 on the previous month. New orders from the euro area were down 1.8%, new orders from other countries increased 3.0% compared to August 2019.
In September 2019 the manufacturers of intermediate goods saw new orders decrease by 1.5% compared with August 2019. The manufacturers of capital goods showed increases of 3.1% on the previous month. For consumer goods, a rise in new orders of 0.8% was recorded.
SoftBank numbers are out. They're horrendous:
2Q operating loss: 703.3 Bln Yen
2Q Vision Fund loss: 970.4 Bln Yen
One-time WeWork writedown: 497.7 Bln Yen
(Note: even without WeWork, the Vision Fund was down a heap)