Germany shrugs off VW crisis, but UK factory orders and US home sales fall - as it happened
Rolling economic and financial news, as German bosses are more optimistic about future prospects but UK factories suffer and US home sales disappoint
5.46pm GMT
The euphoria following hints of more QE from the European Central Bank and news of a Chinese interest rate cut has worn off at the start of the new week. Ahead of some key events - UK GDP, the latest US Federal Reserve meeting, eurozone inflation and Apple results - investors turned cautious once more. There was some disappointing economic data, from UK manufacturing to US new home sales, although German confidence figures came in better than expected, enabling the Dax to outperform other stock markets. The final scores showed:
5.29pm GMT
France has reported one of the biggest falls in its jobless numbers since before the financial crisis began.
The number of people out of work fell by 23,800 in September to 3,547,800. This was down 0.7% month on month, but up 3.1% on a year earlier. The number of jobless young people dropped for the fourth month in a row.
5.18pm GMT
In the UK, TalkTalk shares have slumped more than 12% in the wake of last week's cyber attack on the company.
Since the news was announced that the attack could have led to the theft of personal data from its 4m customers, some 360m has now been wiped off the company's value.
5.00pm GMT
Despite some differences and more work needing to be done, Greece and its creditors are making progress in talks to allow the country to receive its next batch of bailout funds, Associated Press reported:
Greece and its bailout creditors remain divided over how to toughen foreclosure laws, a European Union official said Monday, though the overall talks on getting the country the next batch of loans are on track.
Valdis Dombrovskis, a European Commission vice-president for the euro, said Greece has already done many reforms, quickly. But he warned "there is no time to lose. There is a need to work very actively to modernize the Greek state and economy."
There is no time to lose. Lot to do and much effort on-going. Successful 1st review will be a key step for #Greece to return to growth.
Greece has committed to broad reforms, savings and tax hikes to secure its third bailout package from its European partners. Bailout creditors are currently reviewing the government's compliance with the measures they had agreed upon before paying the country a a2bn loan installment.
Greece is under pressure to lower the income and wealth criteria based on which non-compliant borrowers' primary residences enjoy protection.
About 40% of all Greek bank loans are now in serious arrears, as successive income cuts over more than five years have left borrowers struggling to repay. At the heart of the issue are housing loans.
The left-led government says it wants protection for borrowers whose homes are worth up to a300,000, and who earn up to a35,000 a year, about 75% of those affected. It says the creditors' counter-proposal protection for homes worth up to a120,000 would expose nearly 80% of borrowers to the threat of foreclosure.
3.59pm GMT
Spanish prime minister Mariano Rajoy has called a general election for 20 December, in the hope that a recovery in the economy would see his party returned to power. Associated Press reports:
Rajoy said he had fulfilled a promise made on taking office in 2011 by reducing sky-high unemployment and spurring economic growth.
He said the country had gone from being threatened with needing a bailout to one of full confidence among investors and from record unemployment to a situation of job creation.
3.50pm GMT
Global markets are edging lower, with the weak US home sales dampening sentiment. But the real market moving events come later in the week. Spreadex analyst Connor Campbell said:
It is likely that today is a mere moment of respite between last week's market-moving announcements from the European Central Bank and the People's Bank of China and the wave of important figures and earnings releases still to come before October ends (including the mid-week peak of the latest Federal Open Market Committee statement).
On Tuesday alone there is the preliminary third quarter GDP number for the UK, US consumer confidence and durable goods figures and arguably the most anticipated release of the entire earnings season in the form of Apple's fourth quarter results.
3.15pm GMT
The Bank of England will not raise rates until the second quarter of next year, according to a poll of economists by Reuters.
This is later than previously thought: two weeks ago in a similar poll, economists believed a rate rise would come in the first quarter.
2.34pm GMT
More mixed US data.
The Dallas Fed manufacturing index of business activity for October has come in at -12.7, compared to -9.5 in September and forecasts of an improvement to -6.5.
2.15pm GMT
The home sales figures have helped push Wall Street lower, with the Dow Jones Industrial Average now down 30 points.
2.15pm GMT
Biggest miss in New Home Sales relative to expectations since August 2013. $ITB $XHB
2.08pm GMT
There are signs that the US housing market may be cooling off.
New single-family home sales fell 11.5% to a near one year low in September after two months of gains, according to the US Commerce Department. The seasonally adjusted annual rate of 468,000 units was the lowest level since November 2014 and well below expectations of 550,000.
Disruption in new home sales will definitely influence Fed decision on rates.
2.02pm GMT
Worries about the US government reaching its debt ceiling if Congress does not vote to raise it seem overdone, according to ratings agency Moody's. In a new report it said:
Failure to raise the US government's statutory debt limit before the Treasury has exhausted the "extraordinary measures" that it is using to fund the government's spending, does not mean that the US is about to default on its debt.
US Treasury Secretary Jacob Lew told Congress earlier this month that the government will have exhausted the measures in place to fund the government by, or around, November 3. Without an agreement to raise the statutory debt limit by then, the Treasury will be forced to begin cutting expenditures to ensure that its spending matches its income.
"Even if the debt limit is not raised, we believe the government will order its payment priorities to allow the Treasury to continue servicing its debt obligations," says Moody's Senior Vice President Steven Hess.
However, the risk that Congress will fail to raise the debt limit in time to prevent this scenario is small, Moody's says in a report entitled "Debt Limit Deadline Next Week Does Not Imply Debt Default."
1.48pm GMT
US markets have opened virtually unchanged, with investors remaining cautious ahead of the latest US Federal Reserve meeting this week. Almost no one expects any movement on interest rates this month - there is no scheduled press conference for a start. But economists will be looking for clues about the Fed's current thinking as to whether it will move at the December meeting. That debate still seems finely balanced.
Markets are also a little hesitant ahead of a big week for technology company results, including Apple.
1.42pm GMT
Time for a very quick recap:
The Chinese five year plan, which is currently being formulated by China's top leadership, may play down growth targets for 2016-2020, since despite the vigorous efforts of the government the Chinese economy has failed to pick up.
"The uncertainty whether the proposed minority government will be tolerated by the parliament had a negative impact on the country's bonds."
1.26pm GMT
Portuguese government bonds are coming under some pressure today as investors react to the unfolding political crisis in Lisbon.
While most eurozone bonds have strengthened today, Portugal has gone the other way, pushing up the yield (or interest rate) on its 10-year debt from 2.37% to 2.45%.
Often, there is no right or obvious answer to the question, "who won the election?". But if Cavaco Silva's decision is wrong, then it will be righted automatically by the actions of Parliament in less than a fortnight's time.
If that happens, the alarmists will have been proven wrong. Unfortunately, attention will likely have moved on.
Very clear & convincing explanation (to me, at least) of what has actually happened in Portugal, by @chrishanretty : https://t.co/NUYGSaG6J5
RE #PortugalCoup - IT'S NOT A COUP FFS pic.twitter.com/n0BidFjOty
12.18pm GMT
Sam Tombs of consultancy firm Pantheon Macroeconomic fears that UK factories will continue to struggle because of the strong pound.
He's created a chart showing how exports fall after the the pound strengthens (the inverted left-hand scale, shifted forwards nine months).
No surprise CBI ITS weak; it always is in Oct. Still conditions in man. are awful; strong yet to have full effect: pic.twitter.com/wcGGQ3FPGg
The chart shows that the worst is not over for the manufacturing sector; sterling's further appreciation over the last year will continue to depress export orders until mid-2016, at least.
11.41am GMT
IHS economist Howard Archer is alarmed by the drop in UK factory orders reported by the CBI:
This is a thoroughly disappointing survey through and through which indicates that manufacturers' struggles are intensifying as a moderation in domestic demand adds to a still weakening export outlook.
Persistent and seemingly deepening manufacturing weakness is very worrying for hopes that UK growth can ultimately become more balanced and less dependent on the services sector and consumer spending.
11.27am GMT
More signs that UK manufacturers are having a tough time as they contend with China's downturn and a stronger pound.
"Manufacturers have been struggling with weak export demand for several months, because of the strength of the pound and subdued global growth. But now they're also facing pressure back home as domestic demand is easing."
11.14am GMT
Germany's central bank reckons that the country's economy remains "quite strong", despite signs that growth slowed in the last three months.
Bundesbank monthly report (Oct): Despite slower Q3, German economic growth is quite strong.
11.08am GMT
Former hedge fund boss Magnus Peterson has just been banned from the City, over one of the biggest rogue trading scandals of recent years.
"Mr Peterson defrauded investors who should have been able to trust him. Over a prolonged period he purposely used investors' money to prop up his business, and then lied in order to cover up his deception."
10.51am GMT
Back in the City, UK telecoms group TalkTalk is the biggest faller on the stock market after suffering a major cybercrime attack last week.
TalkTalk shares have slumped by around 9.5% this morning. Last week, the firm admitted that customers' personal and financial details could have been stolen by cybercriminals who breached its security systems.
"Nobody is perfect. God knows, we've just demonstrated that our website security wasn't perfect - I'm not going to pretend it is - but we take it incredibly seriously.
"On that specific vulnerability, it's much better than it was and we are head and shoulders better than some of our competitors and some of the media bodies that were throwing those particular stones."
Related: TalkTalk boss says cybersecurity 'head and shoulders' above competitors
Front page of @CityAM today may be @Hariboconomics' finest hour. pic.twitter.com/Ay3ZCSr5Xd
9.55am GMT
IFO economist Klaus Wohlrabe has confirmed that Germany's auto industry is shrugging off the revelations that VW deliberately cheated on emissions tests.
Speaking to Reuters about today's IFO report, Wohlrabe pointed out that business expectations and the assessment of current conditions in the sector had both improved this month.
The German automobile industry appears to be unfazed by the VW scandal.
9.47am GMT
German business leaders aren't frightened by the crisis at Volkswagen, and the slowdown in emerging markets, explains Carsten Brzeski of ING.
Here's his analysis on today's IFO report:
Surprised but not frightened? German businesses showed an interesting reaction to the recent series of uncertainties and turmoil. In fact, the reaction can be summarized as impressed but not frightened.
Germany's most prominent leading indicator, the just released Ifo index dropped to 108.2 in October, from 108.5 in September. The first drop since June this year. Interestingly, the drop was exclusively driven by a weaker assessment of the current situation. The expectation component, on the other side, increased to 103.8, from 103.3, continuing its recent positive trend and actually reaching the highest level since June last year.
Suprised but not frightened? Quick take on today's Ifo index. https://t.co/GgnAev19aS
9.37am GMT
The euro is slightly higher following the IFO survey:
#BREAKING German Oct IFO confidence 108.2 Vs est 107.8 pic.twitter.com/JE4YZ7f4kW
9.29am GMT
Today's German business confidence survey shows Europe's powerhouse economy remains in decent health, say City experts.
Economist Frederik Ducrozet is encouraged by the rise in business expectation this month:
German IFO expectations - one of the most reliable forward-looking indicators - rose for the 2nd consecutive month in October.
Separate IFO index for services set a new record high in October. Best summary of the state of the German economy. pic.twitter.com/BrkWVymQQ5
#Germany's Ifo: Volkswagen scandal no impact on German Auto industry. Business climate in Auto industry rose in Oct. pic.twitter.com/RTDhUHvjeM
Resilient IFO survey minimizes downside risks on German outlook. Current assessment down but expectations up. Domestic factors remain strong
9.17am GMT
Business conditions in Germany have fallen this month, according to the latest survey of corporate confidence in Europe's latest economy.
The IFO thinktank has just reported that current conditions in the German economy have deteriorated this month, for the first time in four months.
#Germany surprises on the upside: Oct Ifo business climate drops less than exp to 108.2 from 108.5; Forecast 107.8, shrugged off VW scandal.
9.07am GMT
Speaking of carmakers...Japan's Toyota has overtaken Germany's Volkswagen to become the world's largest carmaker.
Toyota has reported that it sold almost 7.5 million cars in the third quarter of 2015, while VW sold 7.43m.
9.02am GMT
Shares in French carmaker Peugeot are down 2% this morning, after reporting a 4.4% drop in sales in China and South East Asia.
8.55am GMT
Advertising titan WPP is among the biggest fallers in London, down around 2%, despite reporting a 3.3% rise in net sales in the last six months.
Country specific slowdowns in China and Brazil and geopolitical issues remain top of business leaders' concerns. The continuing crisis in the Ukraine and consequent bilateral sanctions, principally affecting Russia, continued tensions in the Middle East and North Africa and the risk of possible exits from the European Community, driven by further political and economic trouble in Greece, top the agenda.
If you are trying to run a legacy business, at one end of the spectrum you have the disrupters like Uber and Airbnb and at the other end you have the cost-focused models like 3G in fast moving consumer goods, and Valeant and Endo in pharmaceuticals, whilst in the middle, hovering above you, you have the activists led by such as Nelson Peltz, Bill Ackman and Dan Loeb, emphasising short-term performance.
Not surprising then, that corporate leaders tend to be risk averse.
8.47am GMT
As predicted, Europe's stock markets have fallen into the red this morning.
The FTSE 100 has shed arounds 33 points, or 0.5%, as Tony Cross of Trustnet Direct, explains:
It has been a surprisingly muted overnight session in Asia with markets showing little reaction to Friday's rate cut news out of China.
London's FTSE-100 is failing to find any inspiration off the back of the news either, with the vast majority of stocks mired in red ink shortly after the open.
The FTSE, falling by around 25 points soon after the bell, was weighed down by (what else?) its mining and oil stocks, with investors seemingly less sure about the Chinese rate cut than they were last Friday
8.28am GMT
By cutting interest rates, China's central bank risks creating further instability in a global economy that is already hooked on ultra-cheap money and regular hits of stimulus.
As our economic editor Larry Elliott explains, such stimulus measures may already be less effective too:
Problem number one is that by deliberately weakening their exchange rates, countries are stealing growth from each other. Central banks insist that this does not represent a return to the competitive devaluations and protectionism of the 1930s, but it is starting to look awfully like it.
Problem number two is that the monetary stimulus is becoming less and less effective over time. There are two main channels through which QE operates. One is through the exchange rate, but the policy doesn't work if all countries want a cheaper currency at once. Then, as the weakness of global trade testifies, it is simply robbing Peter to pay Paul.
Related: Why China's interest rate cut may be bad news for the world economy
8.19am GMT
Copper, a classic measure of the health of the global economy, hasn't benefitted much from China's rate cut. It's only up by 0.2% this morning.
China's surprise rate cut sent emerging-market stocks higher, while copper was little changed on growth concerns. pic.twitter.com/XICaKZx2F3
8.14am GMT
China is also in the spotlight today as top communist officials gather to hammer out its 13th five-year plan, setting the country's economic programme until 2020.
Premier Li Keqiang has already indicated that slower growth is on the agenda, by declaring that Beijing will not "defend to the death" its target of 7% growth (which was narrowly missed in the third quarter of 2015).
"We have never said that we should defend to the death any goal, but that the economy should operate within a reasonable range."
China's leaders gather in Beijing this week to formulate the 13th five-year plan pic.twitter.com/Qx4ap6rTGL
8.11am GMT
With China easing monetary policy last week, and the ECB expected to follow suit in December, it could soon be Japan's turn to stimulate its economy again....
Nikkei ends up 0.7% at 18947.12 as #China and #ECB pave way for more easing by Bank of #Japan. pic.twitter.com/cB4i8KZ2HE
8.08am GMT
No jubilation in Hong Kong either, where the Hang Seng index just closed 0.2% lower.
8.04am GMT
Investors in Asia have given China's interest rate cut a cautious reception overnight, but there's no sign of euphoria.
In Shanghai, the main index of Chinese shares rose by just 0.5%, or 17 points, to 3430. Although Friday's stimulus move has been welcomed, traders are also worrying about whether China is still going to suffer a hard landing.
Gains in shares fading after China boosts stimulus. Barclays& @blackrock say measures underscore economic weakness pic.twitter.com/QnFER9RlOK
"But the market appeared to be in correction after it rose a lot in October, and some investors sold stocks on the short-lived rise from the rate cuts. So overall, the market stayed stable today."
Related: Asian stocks rise after China rate cut as Beijing leaders thrash out reforms
7.50am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we'll find out whether business confidence in Germany has been badly hit by the Volkswagen saga, and the slowdown in emerging markets.
Our European opening calls: $FTSE 6427 down 17 $DAX 10798 up 4 $CAC 4920 down 3 $IBEX 10488 up 12 $MIB 22720 down 16
Continue reading...