Anglo shares hit record low; VW lowers CO2 emissions impact - as it happened
Commodity crisis continues to dog Anglo American, as German carmaker releases some rare good news
5.55pm GMT
There was no repeat of Tuesday's commodity driven market rout, but it was still a volatile day. With iron ore and oil prices still weak, shares were under pressure initially. But a biggest than expected fall in US crude stocks sent crude sharply higher, at least for a while, and gave some support to stock markets. After further consideration of the figures, however, investors decided they did not like the news of a weekly increase in distillate fuels, and crude slipped back once more, taking the markets with it.
Anglo American slumped another 14% initially to a new low of 2277p before recovering to close just 1.2% lower while Fresnillo, down 8% at one point after news of a ruptured pipeline at its Saucito mine, ended down just 6p or 0.9%. Overall the scores showed:
4.36pm GMT
Crude prices have come off their best levels on further consideration of the US inventory figures. Yes, commercial crude stocks fell by a higher than expected 3.6m barrels last week, pointing to stronger demand.
But stocks of distillate - diesel fuels and fuel oils - rose from 144.4m barrels to 149.4m.
#Crude has turned lower again after the 3.6m barrel draw in inventories was offset by the sharp build in distillate stocks (5m barrels) ^FR
3.55pm GMT
Commenting on the US crude figures, David Morrison at Spread Co said:
Crude oil inventories as reported by the Energy Information Exchange slumped by 3.6 million barrels for the week ending 4 December. This was far below the prior reading which showed a build of 1.2 million barrels. The consensus market expectation was for an increase of 700,000.
The news led to crude flying higher to the general relief of investors. Persistent weakness in the oil market has weighed on both US and UK stocks. This is due to the major indices heavy weightings of energy stocks and companies who supply services, machinery and infrastructure to the sector.
3.41pm GMT
But despite the drop in US crude stocks, they are still well above last year's levels:
US COMMERCIAL CRUDE STOCKS fell -3.6 million bbl last week but still +105 million bbl above prior-year level pic.twitter.com/LHrU51dI9I
3.39pm GMT
American oil stocks dropped by more than 3.5m barrels to 485.9m last week, a bigger than expected decline which has helped support the crude price.
EIA: #crude oil inventories fell 3.57 million barrels last week. This is more than expected and higher than API's estimate. #WTI jumps ^FR
3.18pm GMT
A Guardian investigation has revealed that Sports Direct, the retail group founded by Newcastle United owner Mike Ashley, has effectively been paying workers below the UK minimum wage.
The full story is here:
Related: Revealed: how Sports Direct effectively pays below minimum wage
2.57pm GMT
The European Central Bank says markets had unrealistic expectations about what stimulus measures the bank would unveil at last week's meeting, said policy maker Ewald Nowotny.
Disappointment at the ECB announcement saw the euro move sharply higher, but Nowotny said the bank's communication was not to blame for the misunderstanding, Bloomberg is reporting.
ECB continues to blame mkts for absurd expectations, not themselves for absurd communication https://t.co/DoXZEIRhZt pic.twitter.com/ss6KdwhajO
2.44pm GMT
US markets have made an uncertain start, with an initial fall at the opening bell.
US stocks open lower; oil, dollar eyed https://t.co/qT6a6zPHul pic.twitter.com/5ol17HpYxH
2.03pm GMT
Here's our full story on Volkswagen, and the news that just 36,000 or so cars have faulty CO2 emissions.
Related: VW says CO2 emissions irregularities affect fewer cars than feared
2.00pm GMT
The City usually likes the sound of job cuts and restructuring, but Anglo American's share price is still deep in the red today (down another 6%).
And that's because analysts fear that axing the dividend, slashing capital expenditure, and losing 85,000 jobs may not be enough to protect Anglo from the mining slump.
In a very competitive environment, Anglo American, as with all mining companies, faces challenges finding and replacing mined reserves.
1.51pm GMT
The Greek stock market has shed almost 2% today, hitting its lowest level in over three years:
*ATHENS'S STOCK INDEX FALLS TO LOWEST INTRADAY SINCE JUNE 2012
1.00pm GMT
Big names continue to pour into ICAP's offices in the City, and around the world, doing their bit for its charity day (see earlier post for details).
The Duke and Duchess of Cambridge are the star turn in London; they've mingled with the traders raising money for a string of good causes.
The Duke v The Duchess at Ping Pong @TeamSportsAid #ICAPCharityDay pic.twitter.com/JuQUrAu6BW
Rugby star @LewisMoody7 showing his support for @BrainTumourOrg at #ICAPCharityDay. pic.twitter.com/rcXzl603S6
Some hands on support with @Borne_CWHC who find ways to prevent premature birth #ICAPCharityDay pic.twitter.com/JJ9SKfz3aA
12.42pm GMT
Royal Bank of Scotland has been fined by Swiss authorities over tax evasion allegations involving its wealth manager arm, Coutts.
German prosecutors are investigating current and former employees of the private bank's Zurich and Geneva offices.
The bank looks after 20bn belonging to 32,000 international customers including sovereigns, celebrities and multimillionaire entrepreneurs. Each must show they have at least 1m in free cash to open an account - and even then they may not be allowed in.
Related: Coutts' Swiss operation faces tax evasion claims
12.02pm GMT
Back in the UK... policymakers at the Bank of England have warned that it is "difficult to predict" how global markets will react to a US interest rate hike.
And that is a worry, given that UK banks are rather exposed to emerging markets; they could suffer if capital surges back into American assets such as the dollar.
Related: Market reaction to US rate rise troubles Bank of England
11.42am GMT
You can see the moment that VW announced that its CO2 emissions problems only affected around 36,000 cars, not 800,000:
11.24am GMT
Newsflash: The Volkswagen emissions scandal may not be as bad as feared.
The Wolfsburg-based carmaker has announced that far fewer vehicles than originally thought have been pumping out more CO2 than claimed, and breaching fuel efficiency figures.
#BREAKING Volkswagen says carbon emission claims proven to be unfounded
"Only a small number of the model variants of new cars will have the catalogue (CO2) figure slightly adjusted," VW said on Tuesday, adding the number of affected cars was equivalent to about 36,000 vehicles.
EIL: Verdacht auf falsche CO2-Angaben griitenteils entkriftet, sagt @Volkswagen, laut @AFP pic.twitter.com/ux85UJqTbN
10.31am GMT
Anglo American's share price has plunged by 90% since its peak in early 2008, before the financial crisis.
It did rally in 2010 and 2011, helped by solid demand from China for its coal and iron ore, as well as platinum and diamonds (Anglo's other main products)
#Commodities Watch: @AngloAmerican down 8% (after 12% yesterday) -- and down an eye-watering 91% from record high pic.twitter.com/jlEioywA9q
10.24am GMT
Anyone who received mining shares from Father Christmas last year has our sympathies.
Anglo American has had it bad this year, down 75% but not the only one. YTD - Lonmin down 95%, Glencore down 73%, BHP Billiton down 47%
10.23am GMT
The slump in Anglo American's shares (-8.5% at pixel time) has dragged the FTSE 100 into the red.
The blue chip index is down 9 points now, hitting its lowest point since 16 November.
Once again the mining sector is dragging the FTSE lower, although not with the aggression seen yesterday.
Worries that Anglo American's actions yesterday might become the template for others in that sector have seen investors running for the exits, as a second day of double-digit falls hit. Cost-cutting and asset stripping have already been exhausted and, as unattractive as it might be, trimming or suspending dividends might be the course of action that others have to follow.
Related: Anglo American slumps another 13%, losing 1.2bn since restructuring news
9.58am GMT
A quick shout-out for ICAP, the City brokerage which is holding its annual charity day today.
The great, the good ( and the not-so good?) will all be manning the phones at ICAP's offices around the globe today. They'll be closing deals, swapping bon mots with traders and trying to raise as much as possible for a range of good causes.
Delighted to welcome Samantha Cameron to #ICAPCharityDay in support of @MulberryBushOrg
#ICAPCharityDay2015 Singapore is delighted to welcome @ Mr President Tony Tan on behalf of President's Challenge! pic.twitter.com/84giflDxge
Thanks @stefanpoleon for the invite to the @ICAPCharityDay... Gloves down for the day mate.
On balance, I think the business would be better if we stay in Europe.
9.27am GMT
Anglo American's slump is deepening. The mining firm's shares have now tumbled by 11% today, meaning it has lost 76% of its value this year.
Anglo-American, once a #mining titan, now worth just $5.6bn -- or about the same as the company that makes Candy Crush.
9.17am GMT
Two interesting developments from China to flag up:
#China's inflation stabilizes BUT producer prices extending declines to a record 45 months. https://t.co/5wq6ShBV7n pic.twitter.com/2ixXrTBhAE
9.01am GMT
Societe Generale's Kit Juckes captures the mood this morning:
Oil prices have stopped falling, at least for now. Commodity markets are quiet even as the press is dominated by their weakness. And there's a dearth of news to drive direction.
8.57am GMT
There's not relief for Anglo American this morning, as the long-established mining group's shares hit fresh lows.
Shares in Anglo have slumped by almost 6%, having tumbled by 12% on Tuesday to its lowest ever level.
Wednesday's FT front page: Commodities rout spurs Anglo to axe payouts and 85,000 jobs #tomorrowspaperstoday pic.twitter.com/oIV76UM4A7
8.40am GMT
After two days of turmoil, there is a sense of calm in the commodities sector today.
Oil. Boing. pic.twitter.com/74et3KOOx4
The decision from OPEC late last week to leave production levels unchanged has left a damaging mark and with investor sentiment continuously weak, the gates have been left wide open for WTI Oil to trade to extremely low levels, the likes of which have not been seen since the beginning of 2009 when prices reached $35.
8.26am GMT
Germany's trade surplus actually rose in October to over a20bn, because imports (-3.4%) fell faster than exports (-1.2%).
German #export growth continues to slow down. Monthly trade surplus still around EUR 20 bn. #Germany #trade pic.twitter.com/fSOqxQTXay
In a slow-growing world that is short aggregate demand, Germany's trade surplus is a problem.
Several other members of the euro zone are in deep recession, with high unemployment and with no "fiscal space" (meaning that their fiscal situations don't allow them to raise spending or cut taxes as a way of stimulating domestic demand). Despite signs of recovery in the United States, growth is also generally slow outside the euro zone. The fact that Germany is selling so much more than it is buying redirects demand from its neighbors (as well as from other countries around the world), reducing output and employment outside Germany at a time at which monetary policy in many countries is reaching its limits.
8.14am GMT
Today's trade data show that Germany's economy is "weakening, but not faltering", argues Carsten Brzeski, ING economist.
During the first nine months of the year, exports to China were down by 2.5% compared with last year's period, showing the negative impact from the ongoing slowdown of the Chinese economy.
At the same time, exports to Russia were slashed further, dropping another 28% on the back of sanctions. On the positive side, exports to the US surged by more than 20%, reflecting the direct impact of the euro weakening.
German exports have become an extremely mixed bag, always up for surprises and full of diverging trends. Due to too many economic slowdowns and geopolitical conflicts around the world, exports will continue having troubles gaining more momentum in the period ahead.
However, as long as the monetary policy divergence on both sides of the Atlantic continues and the ECB continues with QE, exports should remain supportive to growth.
Weakening but not faltering. Quick take on German trade data. https://t.co/2Xr6ayvEkS
7.56am GMT
Germany has kicked the day off with disappointing trade data which suggests Europe's largest economy is suffering from weakening demand at home, and abroad.
German exports fell by 1.2 % month-on-month to a99bn in October (on a seasonally adjusted basis), according to the Federal Statistics Office.
#German trade balance data disappointed - miss on Export and import figure
Bad #Germany trade data indicate a slowdown in Q4.
7.32am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
"If oil goes to $20, we will need to do additional [spending] cuts. Clearly we have shown that we are very willing to cut fiscal spending in line with an oil price at $60, for example.
In order for us to be long-term sustainable [with the] oil price at $40, we need to do additional cuts, but if the oil price goes to $20 we need to do even more cuts."
Related: Oil producers prepare for prices to halve to $20 a barrel
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