UK retail sales stabilise; German confidence rises; Hong Kong shares surge - as it happened

Graeme Wearden

from Economics | The Guardian on 2019-11-25 14:56 (#4VMAC)

Rolling coverage of the latest economic and financial news

Latest: IFO survey shows German economy picking up
Hang Seng index has jumped 1.5% today
Pro-democracy party triumphs
Full story: Hong Kong voters deliver landslide victory for pro-democracy campaigners

2.56pm GMT

Time for a quick recap.

Hong Kong, 452/452 seats counted.

District Council political camps:

Pro-Beijing: 59 (-239)

Pro-democracy: 388 (+262)

Unaligned: 5 (-2)#HongKongElections pic.twitter.com/qT58xwLFnC

2.41pm GMT

Shares in eBay have jumped 2.6% in early trading in New York, as traders welcome the sale of StubHub.

But Uber is having a difficult day, with shares down almost 2% after London authorities refused to renew its licence (pending an appeal....).

2.37pm GMT

More takeover news:

Online auction site Ebay has agreed to sell its online ticketing subsidiary StubHub to rival reseller Viagogo in a $4.05bn deal.

"It has long been my wish to unite the two companies. I am so proud of how StubHub has grown over the years and excited about the possibilities for our shared future."

1.58pm GMT

US farmers must be getting desperate for a trade war breakthrough.

Data released today show that Chinese imports of American soybeans have hit a three-month low -- with Brazil taking up some of the slack.

#China's inbound #soybean shipments from #US slumped to 1.15 mln tons in Oct from 1.73 mln tons in Sept, lowest in 3 months, customs data show.

China bought 3.8 mln tons soybeans from Brazil, the largest supplier, down from 4.79 mln tons in Sept and 6.53 mln tons last Oct.

1.37pm GMT

Optimism of a breakthrough in the US-China trade war is continuing to lift markets.

In London the FTSE 100 is now 70 points higher at 7396, its highest level in nearly a week.

1.19pm GMT

LVMH's capture of Tiffany's today (see earlier post) shows that the luxury end of retail is still hot, despite the global slowdown.

Here's Kate Swaine, partner at legal firm Gowling WLG:

It is interesting to witness further consolidation across the luxury goods sector, following hot on the heels of Michael Kors' 2018 purchase of Versace.

At a time when the retail market is challenging, the luxury end of the sector has proved resilient to the slowdown in economic growth. This purchase demonstrates the appetite for investment and expansion even at the heights of the sector.

12.53pm GMT

Gareth Shaw, Head of Money, Which?, fears TSB customers will lose out once it shuts 86 of its branches across the UK:

"Bank customers are still enduring almost daily IT glitches, which is why everyday banking services and access to cash - which is a vital back-up - must be protected. The next government should urgently intervene with legislation that protects access to cash for as long as it is needed.

12.44pm GMT

Britain's financial sector continues to shed staff at a heady rate, as banks try to slash costs and keep up with technological changes.

Today the ace is hovering over TSB, which is planning to shut 86 branches - one in seven of its estate - just six years after being spun out of Lloyds.

12.22pm GMT

Uber's CEO, Dara Khosrowshahi, has hit out at Transport for London's decision not to renew his company's licence.

He insists Uber has made 'fundamental' changes, and will fight the ruling.

We understand we're held to a high bar, as we should be. But this TfL decision is just wrong. Over the last 2 years we have fundamentally changed how we operate in London. We have come very far - and we will keep going, for the millions of drivers and riders who rely on us.

My statement on TfL's Uber decision. pic.twitter.com/h8tiQeFQBH

11.47am GMT

The improved CBI retail sales report could be a sign that shoppers will hit the high street with gusto this Christmas.

So argues Howard Archer of the EY Item Club:

The CBI survey offers the retailers genuine hope that consumers are prepared to loosen their purse strings for the critical Christmas period; and suggests that some of the recent lacklustre sales performance has been due to consumers taking a breather before splashing out over the festive season. The survey indicates that retailers are relatively upbeat about the Christmas sales outlook for sales with a balance of +21% expecting sales volumes to be up year-on-year in December. This was the first positive expectations balance since June

It also may well be that some consumers have recently held back on their retail sales, waiting for Black Friday price cuts and promotions in the latter part of November. However, the evidence of recent years suggests that Black Friday tends to have more of an impact in distorting the timing of retail sales rather than boosting them overall.

Improved #CBI #distributive trades survey shows sales balance up to 7-month high of -3%; balance of +8% of #retailers see sales good for time of year, Retailers pretty upbeat about December prospects. Much-needed better indication for #UK #economy for Q4 https://t.co/R5Dr5W25vd

11.19am GMT

Confirmation that retailers are reluctant to invest:

Retail investment intentions for the year ahead fell for the sixth consecutive quarter and at a faster pace than last quarter. Wholesalers' investment intentions, meanwhile, were unchanged from August, remaining at their weakest since the financial crisis #DTS pic.twitter.com/bwV6o1AuqL

11.18am GMT

Here's Anna Leach, CBI Deputy Chief Economist, on today's retail survey:

"Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year. Actual sales have also stabilised and have nudged above average for the time of year. And employment has stopped falling after three years of decline.

But Brexit uncertainty continues to weigh on investment plans for the year ahead which remain weak.

11.06am GMT

Just in: The downturn in UK retail may be bottoming out, just in time for Christmas.

The CBI's monthly survey of British retailers has found that sales were "broadly unchanged" in November, ending a six-month run of falling demand.

#UnitedKingdom CBI Distributive #Trades at -3 https://t.co/eN7RNV1reg pic.twitter.com/hLSNp2I5yD

10.40am GMT

Uber shares drop 6% in premarket after regulator strips it of London license

10.37am GMT

Uber has hit back, saying it is "extraordinary and wrong" of TFL not to renew its London licence.

The company says it has audited all its London drivers in the last two months, and is setting up a new "facial matching" process to protect passengers.

Uber says it will appeal

"TfL's decision not to renew (the) licence in London is extraordinary + wrong"

"Over the last 2 months we have audited every driver in London. We will be introducing a new facial matching process, which we believe is a 1st in London taxi/private hire."

10.14am GMT

Fans of Uber shouldn't delete the app quite yet, though.

If Uber appeals this morning's ruling (which surely it will), it can keep operating in the UK capital through the extra-busy Christmas period.

Uber loses its licence in London " but will likely still keep operating as it appeals (we can repeat this cycle endlessly it seems) https://t.co/10WkzERjLL

But obvs Uber will appeal, and during the appeal they can continue to operate, and during the appeal they'll update security...and so on for the rest of our lives

10.10am GMT

Here's the full story on Uber getting the red card in London.

10.09am GMT

Alarmingly, TFL says that at least 14,000 Uber journeys were carried out by unauthorised drivers, who managed to upload their photos into other drivers' accounts.

That allowed them to appear to be legitimate Uber operatives (who would have been through its vetting procedure). But they could actually have been uninsured, and a potential safety risk.

10.06am GMT

NEWSFLASH: Ride-hailing service Uber has been refused a new licence to operate in London.

Transport for London has concluded that Uber is not a fit and proper company to hold a licence to operate private hire vehicles in the capital.

#Breaking Uber has not been granted a new licence to operate in London after "several breaches that placed passengers and their safety at risk" were identified, Transport for London said

10.01am GMT

Economist Daniel Lacalle points out that Germany's economy still looks weak, even if business conditions are improving:

Germany November's Ifo Business Climate Index still shows a significant weakness and suggests GDP growth will remain poor. pic.twitter.com/o4lOZhnLPd

9.47am GMT

Carsten Brzeski, chief economist at ING Germany, says the economy appears to be bottoming out - but not recovering strongly.

Here's his take on this morning's rise in business confidence:

Germany's most prominent leading indicator, the Ifo index, just added more evidence to a tentative bottoming out of the German economy. The Ifo index increased to 95.0 in November, from 94.7 in October. This is the third month in a row with an increasing Ifo index, after 17 drops in 21 months. In November, both the current assessment and expectations component increased. However, before anyone gets overly cheerful, the headline number is still not even back at its July level.

It is part of Germany's new economic modesty to appreciate a tiny increase in the Ifo index. Better than another disappointment. However, while today's Ifo index suggests that the economy, and above all, the manufacturing sector, could be in a phase of bottoming out, a sharp rebound is not yet near.

9.42am GMT

Thee pick-up in German business optimism, after a largely torrid year, is welcome, say trading platform BP Prime:

Good news for #Germany 's business morale:

Business expectations rise to 92.1 in Nov but less than expected92.5
Current Assessment rises to 97.9, as expected#Ifo business climate index rises to 95.0, from previous 94.7 and as expected@graemewearden

"Die deutsche Konjunktur zeigt sich widerstandsfihig", meldet das @ifo_Institut. Der Geschiftsklimaindex steigt leicht, von 94,7 auf 95,0 Punkte. @welt pic.twitter.com/yg7K7bQPnS

9.32am GMT

The key points from IFO's healthcheck on Germany:

IFO Comments;
-Manufacturing still stuck in recession.
-Mfg firms planning further production cutbacks
-The signs are there that business will be very good this Christmas (assuming we're talking retail sector)
-Econ is showing resilience
-Expects 0.2% GDP in Q4.

9.31am GMT

IFO reckons that this Christmas will be "very good" for German businesses, following today's pick-up in confidence.

It predicts that the economy will grow by 0.2% in the current quarter, following the 0.1% growth in Q3, led by consumer spending, construction, and the government.

"Companies tell us that industrial order backlogs are still not satisfactory,"

9.14am GMT

Newsflash: German business morale has risen this month, after Europe's largest economy surprisingly avoided falling into recession.

The Munich-based IFO Institute has just reported that its business climate index has risen to 95.0, up from 94.7 in October (revised slightly higher this morning).

Latest German business sentiment gives no pos surprise. Headline Ifo came exactly in line w/expectations at 95, small increase from Oct's 94.6, due to modest rise in expectations component of 92.1 vs 91.6 in Oct. IFO institute notes that manufacturing still stuck in recession. pic.twitter.com/bcsqhp984h

9.03am GMT

China's Global Times newspaper is reporting that Beijing and Washington are "very close" to a phase one trade deal.

It also criticised "negative" media reports claiming that the negotiations are in trouble.

#TradeWar update: Contrary to negative media reports, China and the US are very close to the phase one trade deal, and China remains committed to continuing talks for a phase two or even a phase three deal with the US, on equal footing, experts close to the Chinese govt told GT. pic.twitter.com/W0CiBSSp0s

8.59am GMT

8.24am GMT

European stock markets are starting the new week on the front foot too.

Here's the opening moves:

We've had progress in an important area - China has appeared to relent to a degree on intellectual property, a key sticking point to the talks thus far. Beijing on Sunday said it will increase penalties for IP violations, and lower the bar for criminal proceedings to be brought in cases of alleged IP theft.

This could be an important step forward, but we as ever will only believe it when we see it. The focus is on agreeing some kind of phase one deal before the Dec 15th deadline for about $150bn in tariffs to raise.

8.16am GMT

Deal news: The luxury group behind fashion chain Louis Vuitton and champagne maker Moit Hennessy has swooped on jewellery chain Tiffany & Co.

The acquisition of Tiffany will strengthen LVMH's position in jewelry and further increase its presence in the United States.

We are delighted to have the opportunity to welcome @TiffanyAndCo to the LVMH family. Bernard Arnault. https://t.co/XigkCgwGPG pic.twitter.com/3UqfyLZ6Wq

8.08am GMT

Before the Hong Kong election got underway, China made an intriguing concession on intellectual property protection.

Beijing said it would raise the penalties for violating IP rights, and make it easier to bring claims of alleged infringement. This has been a key demand from Washington during the ongoing trade talks.

8.05am GMT

All the major Asia-Pacific markets are higher today, following the Hong Kong election results.

The Hang Seng is the best performer (+1.5%), followed by South Korea's KOSPI (+1%), China's CSI300 (+0.7%), and Australia's S&P/ASX 200 (+0.3%).

Naturally, the Hang Seng is hypersensitive to trade-war developments, and the weekend's positive news on that front has boosted Hong Kong stocks. But on top of that, the market seems to have taken kindly to the weekend's Hong Kong's district council election results, which saw pro-democracy candidates capture significant gains.

More importantly, the weekend's vote past without a major escalation in street violence between police and protesters.

7.57am GMT

The election results are a turning point, and "a slap on the cheek" for Hong Kong CEO Carrie Lam's administration, say political analysts.

My colleague Verna Yu explains:

Pro-democracy politicians took control of nearly all of the city's 18 district councils in what analysts said was a unanimous vote of no confidence in the government.

Joseph Cheng, retired political science professor at the City University of Hong Kong, said Hong Kong people had seized the opportunity to express their dissatisfaction in the government and wanted to put pressure on the government to respond to their political demands.

7.40am GMT

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

And the HangSeng index shoots out of the gate at the open #CarrieLam #HKDCElections #HKDCElection #Beijing #DemocracyForHK #hk #hongkong #HongKongProtests #hangseng #markets pic.twitter.com/2dmiPLJWCk

Risk assets have opened favourably in the wake of a sensational voter turn out in Hong Kong, where the pro-democracy camp was headed for a stunning victory.

And what's equally remarkable is that 71 % of registered voters cast their ballots, suggesting it will be difficult for Beijing to ignore these results for fear of greater international condemnation in the court of the public opinion. The people have spoken, and now the ball is in Beijing court.

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