Double-dip fears hit markets; US consumer confidence and UK retail sales drop – as it happened

Graeme Wearden

from on 2020-10-27 17:51 (#59JKZ)

Rolling coverage of the latest economic and financial news

5.49pm GMT

Time for a quick recap

Fears that the Covid-19 pandemic will drag major European economies back into recession this winter have hit stocks across the region today.

5.32pm GMT

The FTSE 100 hit its six-month closing low shortly after the government reported that a further 367 people have died within 28 days of a positive Covid-19 test

This brings the UK total to 45,365.

4.52pm GMT

All the major European stock markets have closed sharply lower, with Covid-19 anxiety driving Germany's DAX to a four-month low.

The Stoxx 600 index has closed down 0.8%, at a one-month low, adding to Monday's slide.

European Closing Bell

European bourses remain sick.

Dax down 0.85% at four-month low

Cac 40 down 1.58%

Stoxx down 0.80% at one-month low

Ftse 100 down 0.94%

Ibex down 2.20%

European stock markets sold off again as worries about the health crisis have become more entrenched.

Yesterday was a brutal session for equities as the jump in Covid-19 cases in Europe and the US, plus tougher restrictions, hammered traders' confidence in the markets. Today, things started out on a relatively quiet note, especially for the FTSE 100, but the coronavirus fears resurfaced. US index future pushed lower in advance of the cash trading in New York and that weighed on sentiment on this side of the Atlantic.

4.47pm GMT

Ouch. Britain's blue-chip stock index has just hit its lowest closing point in six months, as Covid-19 woes hit stocks again.

The FTSE 100 ended the down 63 points, or 1.1%, at 5,728 points. That's its lowest close since late April (although it was briefly lower last week).

4.21pm GMT

The drop in US consumer confidence this month doesn't bode well for Donald Trump's chances of re-election...especially with incomes being squeezed and Covid-19 cases on the rise.

So argues James Knightley of ING, who has also spotted that consumer morale weakened in some key states.

There were some interesting moves on the individual state data that could potentially have a bearing on next week's election.

The numbers can be choppy, but a 20 point drop in Florida, a 21 point fall in Michigan and a 25 point fall in Pennsylvania - key swing states that will determine the outcome of the Presidential election - offer little encouragement for Donald Trump.

We've seen a marked fall in US consumer confidence expectations, particularly in the 'swing states' that Donald Trump must win if he's going to be reelected. https://t.co/RvDxvAjWcd

3.13pm GMT

The Harry Potter publisher, Bloomsbury, has reported its most profitable first half in more than a decade, after a nation tiring of box sets fuelled a lockdown boom in book sales.

The company furloughed staff as the coronavirus crisis forced the publishing industry to shut down, but has seen a remarkable change in fortune as the pandemic has persisted.

2.52pm GMT

Anxiety over the global economy hasn't prevented another major tech merger.

This time, Advanced Micro Devices has agreed to buy rival Californian chipmaker Xilinx for $35bn. The all-stock transaction taking the value of semiconductor dealmaking to over $100bn this year, according to the FT, which explains:

AMD's deal, its largest acquisition to date, will boost its ambitions to become a data centre powerhouse and create a combined company with 13,000 engineers and more than $2.7bn in annual research and development spending.

The AMD-Xilinx deal is of interest to us who follow infra software/hardware, software intersections. Xilinx makes FPGAs, which are used in SmartNICs. And SmartNICs are putting the networking stack closer to app architectures with service mesh as the layer that touches both.

2.31pm GMT

That fall in US consumer confidence hasn't improved spirits in the markets.

The Dow Jones industrial average is now down 0.5%, or 143 points at 27,542, on top of the 650 points lost on Monday.

2.09pm GMT

Newsflash: US consumer confidence has dipped this month - with Americans reporting that they are less optimistic about future prospects.

The Conference Board's index of US consumer morale, just released, has slipped to 100.9 from 101.3 in September.

US OCTOBER CONSUMER CONFIDENCE INDEX 100.9 (CONSENSUS 102.0) VS SEPTEMBER REVISED 101.3 (PREVIOUS 101.8) - CONFERENCE BOARD

US CONSUMER PRESENT SITUATION INDEX 104.6 IN OCT VS SEPT REVISED 98.9 (PREVIOUS 98.5) - CONFERENCE BOARD

JOBS HARD-TO-GET INDEX 19.9 IN OCT VS SEPT REVISED 20.3 (PREVIOUS 20.0)

CONSUMER EXPECTATIONS INDEX 98.4 IN OCT VS SEPT REVISED 102.9 (PREVIOUS 104.0)

US 1-YEAR CONSUMER INFLATION RATE EXPECTATIONS 5.6 PCT IN OCT VS SEPT 5.7 PCT - CONFERENCE BOARD

1.57pm GMT

Speaking of fading stimulus hopes.....

Big GDP projected. Pelosi only looking to Bail Out badly run Democrat Cities. Tap, Tap, Taping us along. She has little interest in helping out the people".

1.40pm GMT

America's housing market continues to roar away, with strong demand and limited supply overcoming economic weakness and politicla uncertainty.

Prices across the US jumped by 5.7% per year in August, up from 4.8% in July, according to the latest S&P/Case-Shiller index. That's the strongest gain since July 2018.

US House Prices rose by the most (5%+) in two years in August. pic.twitter.com/9VYdOGL5TK

Phoenix, Seattle and San Diego reported the highest annual gains among the 19 cities in August. Phoenix led the way with a 9.9% price increase, followed by Seattle with an 8.5% increase and San Diego with a 7.6% increase.

Chicago, New York City and San Francisco saw the smallest annual home price gains in August.

1.36pm GMT

So much for the Wall Street bounceback.

After its worst day in a month, the Dow Jones industrial average has dipped by another 0.2% or 58 points to 27,626.

1.22pm GMT

European stock markets are dropping back into the red again....

Europe sliding further on Tuesday: Stoxx -0.5%, DAX -0.49%, CAC -1.05%, UK-FTSE -0.27%.

perhaps Mr. Market is thinking that big durables number, the biggest of Trump's presidency, makes stimulus a little less urgent

12.43pm GMT

Just in: US durable goods sales have defied today's gloomy tone, by growing faster than forecast.

Sales of long-lasting items like electronics, kitchen appliances, cars and sports equipment jumped by 1.9% last month, up from 0.4% in August.

US Durable Goods Orders continue to move higher, although September numbers are still slightly lower than February numbers. The shortfall comes entirely from Transportation.
The 12-month cumulative data seems to have bottomed. pic.twitter.com/t9JG0kkO2c

big beat on durables, could see that gaudy GDP Q3 estimate come up even more

12.20pm GMT

Sales at construction equipment manufacturer Caterpillar have slumped by nearly a quarter in the last three months.

Caterpillar Inc today announced third-quarter 2020 sales and revenues of $9.9 billion, a 23% decrease compared with $12.8 billion in the third quarter of 2019. The decline was primarily due to lower sales volume driven by lower end-user demand for equipment and services.

Third-quarter 2020 profit per share was $1.22, compared with $2.66 profit per share in the third quarter of 2019. Profit per share in the third quarter of 2020 included pre-tax remeasurement losses of $77 million, or $0.12 per share, resulting from the settlements of pension obligations. Profit per share benefited from lower than expected taxes in the quarter.

12.00pm GMT

European stock markets are fighting back from their earlier lows.

The FTSE 100 is now slightly higher (up 11 points at 5,795), as the futures market signals that Wall Street will open higher. But there are still small losses in France, Italy and Germany today.

Choppy morning in Europe

EUROPE'S STOXX 600 ERASES LOSSES, LAST FLAT ON THE DAY

11.54am GMT

The drop in retail sales this month suggests the latest round of Covid-19 restrictions are hitting consumers, warns Bloomberg.

Retail sales fell at the fastest pace since June this month, a fresh sign that the U.K.'s fragile economic recovery is faltering. Demand at department stores and clothing outlets slumped, while grocery sales flatlined for the first time since the height of the national lockdown, according the Confederation of British Industry.

A bleak outlook among retailers saw them cut orders with suppliers for an 18th month, even as they prepare for the traditionally busy Christmas shopping period.

New signs the U.K.'s fragile economic recovery is faltering because of Covid-19 https://t.co/UWdjf5JBB1

11.39am GMT

The CBI also reports a drop in car sales this month:

After three months of rising sales, motor traders reported falling volumes in the year to October (-32%, from +24%). Sales volumes are expected to fall again next month (-16%).

11.24am GMT

The CBI have tweeted the key points from their latest healthcheck on UK retailers:

Retail sales fell in the year to October, at the fastest pace since June. Retailers expect sales to drop at a broadly similar pace next month. pic.twitter.com/7oj3VVWZbD

Grocery volumes were flat following five months of strong growth. Across non-food retail categories, department stores, clothing and other normal goods' were among those reporting falling sales, while retailers of furniture, DIY and recreational goods reported strong growth.

Internet sales growth picked back up to its long run average pace, standing in contrast to the headline fall in sales volumes. This reflects the broader trend of strong growth in online shopping reported since June. pic.twitter.com/hu6iQy5KI5

Orders placed upon suppliers fell at the fastest pace since June, marking the 18th consecutive month of decline. Orders are expected to fall at an even faster pace next month. pic.twitter.com/qLNkZJCoq9

11.16am GMT

Just in: UK retail sales have fallen this month, suggesting the economy is losing momentum as Covid-19 cases rises.

The CBI's latest distributive trades survey shows that a majority of retailers reported that sales were weaker than normal this month, indicating the biggest drop in sales since June.

The fall in retail sales in October is a warning sign of a further loss of momentum in the economy as coronavirus cases pick up and restrictions are tightened across many parts of the country.

It's no surprise that sales have dipped despite no new direct restrictions on retail in England, as the evidence from earlier in the year suggests consumers become more cautious as case numbers rise.

11.05am GMT

European politicians and officials have been hinting that fresh Covid-19 restrictions will be needed if infection rates continue to climb.

Belgium's health ministry spokesman Yves Van Laethem told Belgian broadcaster RTBF last night that a decision on returning to lockdown would need to be taken by the end of the week.

It will be necessary to decide by this weekend if we should go into total lockdown."

The additional measures should be targeted, temporary and focussed. And they should be taken as uniformly as possible across Germany and be generally understandable,"

So far, our country has fared quite well during the coronavirus pandemic and it will be decided in the coming weeks whether it will stay that way. It's in our hands."

10.40am GMT

Hotel operator Whitbread is also suffering badly from the pandemic, despite managing to reopen almost all its UK sites by the end of July.

Given the fast-changing nature of the COVID-19 environment in which we are operating, and increased levels of local and regional lockdowns, near-term visibility remains limited.

However, as the situation evolves, Premier Inn remains well-placed to capitalise on the enhanced structural growth opportunities that will exist, driving attractive returns on investment in the long-term.

10.17am GMT

UK bar operator Revolution is closing six sites permanently, due to the slump in sales since tighter restrictions were imposed.

Given the latest Government restrictions under which the Group is operating, the Group's trading outlook is uncertain and based on all the information and commentary available, the Board now anticipates that the important Christmas trading period will be severely compromised and any return to near normal levels will not be possible before next Spring at the very earliest.

9.59am GMT

Here's our news story on how BP's earnings have improved as the oil price picked up:

9.43am GMT

Europe's stock markets are now at a one-month low, taking their losses for 2020 to 15%.

9.32am GMT

European equities are extending their losses, with the Stoxx 600 index now down 0.8%.

In Paris, the CAC 40 index is now down 1.5%.

Macron will first meet with ministers in the defence council on Tuesday morning, the Elysee said.

Then throughout the day the French Prime Minister Jean Castex will meet with the leaders of opposition political parties and parliamentary groups, followed by a meeting with union leaders on Tuesday evening.

It's never a good sign when Macron calls a special security council meeting on the Covid-19 crisis... but he's just called for two in the next two days, the Elysee has announced. Given daily cases topped 52,000 yesterday we can expect new measures... https://t.co/AdKyO8wTfa

9.10am GMT

Here's our news story on HSBC's latest results, and its hint that it could start charging for basic banking services (such as current accounts, potentially) in some markets.

8.58am GMT

The Covid-19 pandemic has driven Spain's unemployment rate higher.

Statistics body INE has reported that the jobless rate jumped to 16.26% in July-September, up from 15.3% in April-June.

JUST IN: Spain's unemployment rate rises to 16.2%

The rate does not include furloughed workers and other people who do not meet certain technical criteria, meaning the true figure is significantly higher.

The number of unemployed people in the country surged by 355,000 from the previous quarter to 3.72 million, marking the biggest quarterly jump since 2012, the data showed.

8.37am GMT

European stock markets have opened gingerly after Monday's selloff, with small losses across the board.

In London, the FTSE 100 is down 15 points or 0.24% at 5,780 - close to its lowest closing point in five months. Although BP and HSBC are among the risers, that's being cancelled out by falling retailers - with DIY chain Kingfisher losing 2.1%, Next are down 2%.

German Chancellor Angela Merkel convened her task force yesterday and it was reported she plans to present a lockdown light" plan which would see bars, restaurants and public events shut in order to minimise a second wave. Furthermore, shops would remain open and schools would not have to close under the new plan.

Meanwhile, Italy's new rules went into effect yesterday after Prime Minister Conte approved the government's plan to limit hours for bars and restaurants as well as shutting down gyms and entertainment venues. Italians have also been asked not to travel under the new restrictions, which are currently in place until November 24.

8.22am GMT

A couple of the City's largest listed companies are propping up the market this morning.

Banking giant HSBC has jumped 5% to a two-month high at the start of trading, after beating profit forecasts today.

The ongoing impacts of the COVID-19 pandemic continue to create a volatile and challenging trading environment. The gradual recovery in oil demand seen since the spring looks set to continue, led by strengthening demand in Asia.

The refining margin outlook remains challenging, given record high inventory levels and a leveling off in demand recovery for gasoline and jet fuel due to COVID-19."

8.10am GMT

Anxiety over the Covid-19 pandemic weighed on some Asia-Pacific markets today.

Australia's S&P/ASX 200 index slumped by 1.7%, while South Korea's Kospi 200 fell 0.5% and the Hong Kong Hang Seng lost 0.6%.

Investors are unnerved by the surging number of covid cases which are dampening the economic recovery outlook. News on Monday that talks over a coronavirus relief package have slowed could keep the lid on gains, although House Speaker Nancy Pelosi remains upbeat that an agreement can still be made before the US elections.

Given that talks have been deadlocked for months and that the elections are less than a week away this seems a rather ambitious expectation.

8.00am GMT

Berenberg Bank has predicted that Europe's economy could shrink again in the current quarter if tighter measure are imposed to combat the pandemic.

In a new report, they warn that the situation has worsened considerably since late August. Economic stagnation in October-December already looks likely - with near-term risks ever more tilted to the downside" in the coming weeks.

As the days are getting shorter and colder, the Eurozone and the UK are reporting record numbers of confirmed SARS-CoV-2 infections and a much slower but still serious rise in medical complications and deaths.

In response to renewed restrictions and rising nervousness, forward looking surveys and some concurrent indicators of economic activity have started to come down, ending the rebound that had commenced in May.....

7.29am GMT

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

The surge in Covid-19 cases around the world, notably Europe, has also sapped confidence, increasing fears of a double-dip" scenario....

Exploding Covid-19 infections across the country could yet dent the American fourth-quarter comeback. Looked at in conjunction with Europe's situation, there are severe threats to the consumption side of the global recovery.

For all the talk about China, it is essential to remember when America gets Covid-19, the rest of the world gets sent to the isolation facility.

European Opening Calls:#FTSE 5802 +0.18%#DAX 12225 +0.39%#CAC 4819 +0.06%#AEX 547 +0.24%#MIB 19018 +0.38%#IBEX 6844 +0.69%#OMX 1779 +0.20%#STOXX 3112 +0.22%#IGOpeningCall

It's risk-off because Covid cases are rising and with curfews across Europe meaning economic dangers now lurk in the dark.

So, with the governments worldwide under pressure to tighten social mobility restrictions after a pick-up in new daily covid-19 cases, an effective vaccine candidate and even a partial stimulus bill and then topped up post-election cannot come quickly enough.

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