Doubts linger over US-China trade deal, but Dow hits record high – as it happened

Rolling coverage of the latest economic and financial news, as experts express concerns over Donald Trump's Phase One trade deal with China

• German industry: the gloom continues
• Trump: It's the biggest deal ever
• Expert: China has won
• Dow hits record high
• China pledges to spend extra $200bn on US goods
• Farmers disappointed as soybean prices fall

5.22pm GMT

Finally, European stock markets have not felt any trade war optimism today.

The FTSE 100 is underperforming against its Continental counterparts as healthcare and consumer stocks have lost the most ground. Broadly speaking, volatility in Europe has been low in the wake of the US-China trade deal having been signed yesterday.

The interim trade agreement between the two largest economies in the world took a long time to be hammered out, so now dealers are wondering what will be the next big story to move the markets. Bullish sentiment has been in short supply, but then again, the bears have been quiet too.

5.21pm GMT

Oxford Economics have just published their assessment of the US-China trade deal signed yesterday.

5.12pm GMT

A late newsflash: The United Nations has warned that the global economy is weak -- which will undermine efforts to tackle the climate emergency.

The warning comes in a new report, just released. My colleague Richard Partington has read it, and reports:

The world economy risks suffering a sharp slowdown in 2020 that would derail international efforts to tackle the mounting climate emergency and heightened poverty around the world, the United Nations has warned.

In a flagship report ahead of the annual gathering of world leaders in Davos next week, the international governmental organisation sounded the alarm that trade tensions between major countries threatened to serve as a brake on growth, with damaging consequences for sustainable development.

4.11pm GMT

Donald Trump has now claimed that US farmers are delighted with his trade deal, and have also benefitted from the tariffs on Chinese goods.

The farmers are really happy with the new China Trade Deal and the soon to be signed deal with Mexico and Canada, but I hope the thing they will most remember is the fact that I was able to take massive incoming Tariff money and use it to help them get through the tough times!

Gotta love a little socialism distribution of wealth. Take tariffs proceeds paid by US companies (not China) and redistribute to farmers in states that Trump needs to win in 2020. Trump is a master at sales and marketing. https://t.co/JAukWsklV8

3.10pm GMT

Breaking! Ryanair has launched a stinging attack on the UK government's rescue of regional airline Flybe.

In a strongly worded letter, Ryanair's CEO Michael O'Leary says the deal (which reportedly to include a delay to its air passenger duty bill) violates competition law and state aid rules.

"This Government bailout of the billionaire owned Flybe is in breach of both Competition and State Aid laws. The Flybe model is not viable which is why its billionaire owners are looking for a state subsidy for their failed investment.

The reason why Flybe isn't viable is because it cannot compete with lower fare services from UK regional airports on domestic and EU routes provided by Ryanair, Easyjet, BA and others; and it cannot compete with lower cost road and rail alternatives on many smaller UK domestic routes. If Flybe fails (as it undoubtedly will once this Government subsidy ends) then Ryanair, Easyjet, BA and others will step in and provide lower fare flights from the UK regional airports, as we already have to make up for the recent failure of Thomas Cook Airways.

2.52pm GMT

The S&P 500, which covers a broader range of US companies than the Dow, has also hit a record high -- up 14.96 points at 3,304.

The tech-focused Nasdaq has also romped to a record high, up 0.57% at 9,311.

2.46pm GMT

Wall Street has opened at a new record high, as the bull market shows no signs of running out of energy.

US Opening Calls:#DOW 29155 +0.39%#SPX 3304 +0.42%#NASDAQ 9080 +0.46%#RUSSELL 1697 +0.77%#FANG 3355 +0.24%#IGOpeningCall

2.36pm GMT

Breaking: The outgoing Bank of England governor has a new job - helping to save the planet.

The combination of these critical meetings and the UK's global leadership in financial services provides a unique opportunity to address climate change by transforming the financial system.

To seize it, all financial decisions need to take into account the risks from climate change and the opportunities from the transition to a net zero economy. The UK has a plan to do just that, and I look forward to working with the private sector, HM Government, the Bank of England and all stakeholders to help make this promise of sustainable finance a reality.

2.21pm GMT

Donald Trump isn't bowing to critics of his trade deal.

The president has just tweeted that the Phase One agreement with China is "one of the greatest trade deals ever made" (despite not really addressing America's major concerns about China).

One of the greatest trade deals ever made! Also good for China and our long term relationship. 250 Billion Dollars will be coming back to our Country, and we are now in a great position for a Phase Two start. There has never been anything like this in U.S. history! USMCA NEXT!

2.10pm GMT

The eurozone economy is looking a little brighter today, despite the gloom in German factories.

1.54pm GMT

Breaking: US retail sales have risen, and the number of Americans signing on for jobless benefit has fallen.

In news that will please Donald Trump, retail sales jumped by 0.3% in December. They rose by a healthier 0.7% if you strip out cars purchases, suggesting that consumers continued to spend over the festive period.

US Retail Sales (M/M) Dec 0.3% (est 0.3%; prevR 0.3%; prev 0.2%)
-US Retail Sales Ex. Auto (M/M) Dec 0.7% (est 0.5%; prev 0.1%)

1.31pm GMT

Financial analyst and journalist Louise Cooper has analysed the US-China trade deal, and concluded that Xi Jinping and Liu He have done Donald Trump up like a kipper.

She reckons that most of China's 'concessions' actually suit Beijing jolly nicely (you can read the agreement here).

In a trade agreement of just 46 written pages, four pages are for dairy and infant formula! That is extraordinary. And it reflects Beijing's concerns not the interests of America!

FYI China had a baby milk formula scandal over a decade ago that saw Chinese babies die. 22 Chinese companies were involved and still now Chinese parents don't trust Chinese made formula:

This section is two pages long because many American companies will decide it is a worthwhile trade to do this. And it is very difficult to police. Which company would complain to Washington if they knew their complaint would get back to Beijing and they may be restricted from operating in the country for years?

I believe this trade agreement reflects the man. His inability to read much documentation, his short attention span, his inability to look into detail. But still to believe in his own brilliance and expertise.

my thoughts on Trump's trade deal..
Beijing dominated.

Trump got little.https://t.co/E4AxbezdqT

12.52pm GMT

Just in: Wall Street bank Morgan Stanley has just beat expectations.

BREAKING: Morgan Stanley Q4 Earnings:

-Revenue: $10.9B (est $9.48B)
-Net Interest Income: $1.43B (est $1.03B)
-Investment Banking Revenue: $1.70B (est $1.41B)
-FICC Sales & Trading Revenue: $1.27B (est $944.4M)

Very Solid Numbers From $MS

Shares +1.7% PM. pic.twitter.com/OBuzNUH2bi

12.20pm GMT

Back in the UK, my colleague Rob Davies has another fascinating scoop into Britain's gambling industry:

The brothers who own high street bookmaker Betfred are making millions from a business that provides treatment for health problems, including gambling addiction for public sector staff, the Guardian can disclose.

Betfred's owners, the billionaire Tory party donors Fred and Peter Done, also own Health Assured, which holds dozens of government contracts to provide staff health and wellbeing programmes.

This is unbelievable... Great scoop from a@ByRobDaviesa(C) - Betfred owners make millions from company treating gambling addicts https://t.co/2eN71coVuA

11.50am GMT

Germany's industrial heartland is still locked in recession, according to a fresh warning from its manufacturers.

Dieter Kempf, president of the BDI industry body, told its annual conference today that there is no sign of an upturn, following a grim 2019.

"Industry remains stuck in recession, there are no signs for the sector bottoming out."

BDI'S KEMPF CALLS ON GERMAN GOVERNMENT TO IMPLEMENT MASSIVE INVESTMENT PROGRAMME IN INFRASTRUCTURE OVER NEXT 10 YEARS TO BOOST GDP GROWTH

Stark words from #German Industry Group BDI this morning:
"German industry is stuck in recession, no signs of bottoming out" + call on German government to cut corp taxes and implement massive investment programme in infrastructure over the next 10yrs to boost GDP

10.42am GMT

Economist Rupert Seggins has helpfully crunched today's UK credit conditions survey:

1. A few bits from today's BoE credit conditions survey for 2019 Q4. In the mortgage market, banks were making credit more available (in pursuit of market share objectives) while demand fell a bit. pic.twitter.com/ksgUOJHRO8

2. Some further signs that consumer credit growth continued decelerate. Both availability and demand fell in Q4. Expectations for Q1 are that demand will pick up while availability will be tightened further. pic.twitter.com/1TimnH0rGX

3. And it's good to see that mortgage default rates fell in Q4 and are expected to fall further in Q1 2020. Overall unsecured default rates were broadly unchanged, although the BoE did record a rise in default rates on non-credit card borrowing. pic.twitter.com/9ALPLjxlex

10.41am GMT

Getting back to the US-China trade deal.... and Chinese officials have been denying that the agreement is a damp squib.

Foreign Ministry spokesman Geng Shuang told reporters that the Phase 1 agreement was good for both countries and the world, playing down concerns that China hasn't got much out of the deal.

An editorial in the Global Times, a tabloid run by the People's Daily, stated that debating "about who had lost or gained is shallow."

"We urge individuals and forces to exercise some restraint in their nitpicking of the agreement and bad-mouthing future trade negotiations," it wrote.

10.35am GMT

The Bank of England's latest survey of credit conditions is out, and shows that demand for loans fell in the last quarter.

Demand for credit cards, mortgages and corporate loans all fell in the last three months -- a sign that households and companies were nervous ahead of December's election and the Brexit deadline later this month.

9.55am GMT

Recruitment firm Hays is also among the fallers, down 3.3%, after hitting investors with a profits warning.

Hays suffered a 4% drop in fees in the UK and Ireland, with demand for permanent workers down sharply. It blamed "economic and political uncertainty" for deterring firms from hiring new staff.

"Growth slowed markedly in December, driven by specific events in key markets: general strikes in France, tragic Australian bushfires and the UK election. Each event impacted markets already facing challenging economic conditions and low business confidence.

Germany weakened further, with economic uncertainties driving increased client cost controls.

The bushfires in Australia are a tragic and unprecedented situation and our first priority is the safety and well-being of our colleagues, temps and clients. We will do everything we can to provide any support that they need at this very difficult time.

Net fees in Australia & New Zealand (ANZ) declined by 7%, versus a tough growth comparative. Having been broadly sequentially stable in October and November, the Perm market slowed materially in December, with sentiment heavily impacted by the bushfires.

9.20am GMT

Crumbs. Pearson's share price has hit its lowest level since the financial crisis a decade ago, after this morning's downbeat trading update.

At 555p, they're a third of their value back in 2015, when it also owned the Financial Times (since sold to Japanese firm Nikkei).

In all that time, under the stewardship of CEO John Fallon, and the sale of the FT in 2015 to Nikkei for 844m, the share price has pretty much gone one way, from record highs in March that year, to over 60% lower today, which suggests that while the Pearson management team may have had a strategy for the business, investors were less than convinced, and judging by this morning's reaction to yet another profits warning, remain to be so.

9.10am GMT

Whitbread has joined Pearson at the bottom of the FTSE 100 leaderboard, down 5% this morning.

The UK political & economic environment remains uncertain and the sustained industry inflation continues.

It remains difficult to predict business confidence in the short-term and its impact on the market.

8.52am GMT

Shares in Pearson have plunged by 10% this morning after the educational publishing giant disappointed the City.

Investors are unimpressed that profits will only reach the bottom of Pearson's guidance (around 590m), as the company continues to struggle with the move away from physical books in favour of digital.

"We have secured flat revenue this year and delivered operating profit within the guidance range, with much weaker sales in US Higher Education Courseware offset by a strong performance in the broader 76% of Pearson.

8.49am GMT

There's no trade deal bounce in Europe this morning.

The stock markets have opened cautiously, with the FTSE 100 up by just 3 points or 0.05%. There are some big movers in the City, though....

8.34am GMT

Cecilia Malmstrim, the former EU Trade commissioner, says the global economy will continue to suffer from the tariffs on US and Chinese goods.

Concerning US China deal. De-escalation is good but very few tariffs are actually being reduced. Managed trade not in line with multilateral norms and not really good for the economy either.

8.30am GMT

Rating agency Moody's has given the Phase One trade deal a modest welcome, but warned that relations between Washington and Beijing could flare up again.

Michael Taylor, managing director of Moody's Investors Service Credit Strategy, says:

The agreement could help boost bilateral exports by the two economies and lead to an improvement in business confidence as well as investment.

"But the details of the agreement suggest that there remains considerable scope for friction between the two sides."

"We believe the agreement underpins a positive outlook for risk assets, especially emerging market stocks. But it is also important for investors to understand the limitations of the deal.

So we see the deal as representing a partial calming rather than an end to trade tensions."

8.22am GMT

Despite being around 92 pages long, the US-China trade deal is still vague on some key issues.

The National Farmers Union, which represents almost 200,000 American farmers, is disappointed that there's not more detail about exactly what extra products will be purchased.

Without more concrete details, we are deeply concerned that all of this pain may not have been worth it.

Given the numerous deals that have been reached and then breached in the past two years, we are also sceptical."

"It's just big numbers thrown around."

US-China trade deal is so thick that it needed this massive hair clamp to keep it together pic.twitter.com/0WVznYcHPQ

8.17am GMT

American farmers may be feeling glum today.

Soybean prices have fallen to a one-month low since the details of the US-China trade deal were published. Wheat and corn prices are down too.

A lot of American farmers are going to be disappointed with this trade agreement. Soybean prices are plummeting after the deal failed to include a specific $ amount for China's purchases of U.S. soy. All this just a few months before planting season! pic.twitter.com/0lyl3R2jnK

7.52am GMT

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

Related: US and China sign Phase One trade deal, but experts are sceptical - as it happened

"The Phase-one deal will help maintain world peace, stability and prosperity. US and China can work together to achieve win-win relationship despite differences in politics, economic model."

New China - US trade targets : these are *additional to the 2017 baseline
which were (per GS ) :
- manufactured: $107bn
- ags : $19bn
- energy:$4bn (roughly)
- services : $56bn pic.twitter.com/ae9n9r3Oxv

Related: Trump signs China trade pact and boasts of 'the biggest deal ever seen'

In an election year, President Trump can present this as a win for US manufacturers and producers.

He also retains leverage on China in any future trade deals that might be negotiated. Issues around China's Intellectual Property "theft" and its security risk to the US economy have been kicked into a subsequent agreement which is unlikely to be signed before the US Presidential election.