Donald Trump says he'd probably replace Fed chair Yellen - as it happened

Graeme Wearden(until 2pm) and Nick Fletcher

from on 2016-05-05 16:38 (#1CVGE)

Presumptive presidential nominee says he's 'most likely' to pick a new Fed chair when Yellen's time is up

5.38pm BST

Some reasonable results from the likes of BT helped stock markets recover some poise after the volatile start to trading in May. There were more signs of weakness in the global economy, including disappointing UK services data and US jobs figures. But oil moved higher as supply concerns outweighed news of higher than expected US crude inventories, giving some support to commodity stocks.

But there was little to really enthuse investors ahead of Friday's US non-farm payroll numbers, and the final scores showed:

5.15pm BST

More on Greece, where strikes are set for the weekend and a parliamentary vote on reforms is due on Sunday:

Greek pension and tax bills all but sure to pass on Sun. But Greece & lenders still at odds over extra contingency measures demanded by IMF.

5.02pm BST

Global economic pressures which have dissuaded the US Federal Reserve from raising interest rates again could be waning, according to one of the central bank's policymakers.

St Louis Fed president James Bullard said in a speech in California:

International influences on the U.S. economy have been widely discussed in global financial markets during the last several years. Those factors appear to be waning during the first half of 2016.

Financial stress has fallen according to recent readings. The effects of a stronger dollar appear to be waning.

Evidence from labor markets, inflation readings and global influences suggests the [Federal Reserve's] median projection may be more nearly correct.

Evidence from readings on GDP growth and market-based inflation expectations suggests the market view of the path of the policy rate may be more nearly correct.

*BULLARD: THERE IS PLENTY OF NEW DATA RELEASES BEFORE JUNE FOMC

*BULLARD: FED'S `OPTIONS ARE OPEN AT THIS POINT'

4.39pm BST

Markets are struggling to make any headway ahead of Friday's US non-farm payroll numbers. Chris Beauchamp, senior market analyst at IG, says:

While markets have stabilised after days of losses, there seems little that can revive bullish sentiment as the day heads to its close. Despite an early attempt at a rally, indices remain under pressure, and it looks as if sellers will continue to dominate as the week enters its final session. ...Stocks remain under pressure, and with non-farm payrolls tomorrow the outlook remains resolutely grim.

Further US dollar strength provides the reason for why there is little hope for indices at the present time. After weeks of weakness the impetus to buy the dollar appears too strong to hold back, which would provide a cogent reason for why indices have little ability to move higher. Ahead of non-farm payrolls, the market waits to see if the figure can best the number produced by ADP figures on Wednesday.

4.17pm BST

Meanwhile Greece's unions have called a general strike for Friday and Saturday to protest against the tax and pension reforms due to be debated in parliament over the weekend, Reuters is reporting.

3.29pm BST

Over in Greece, there has been talk of a possible weekend parliamentary vote on pension reforms, ahead of the Eurogroup meeting on Monday. The Syriza government is reportedly meeting on Friday:

SYRIZA's parliamentary group to meet tomrw and discuss upcoming tax & pension legislation, under PM Alexis Tsipras. https://t.co/Z35OutLYTi

3.23pm BST

A solid US non-farms report on Friday could spark a near term revival in the US dollar, says Rob Carnell at ING Bank:

April jobs report might uphold the stagflationary trend in US data. If we can take the latest GDP data at face value, then the first quarter of 2016 saw US activity slide to an almost standstill. Yet, the labour market continues to fare well and was the one bright spot amid a general soft patch last month

Over time, activity and labour data are likely to converge, but right now there is little evidence to untangle how this will play out. Were the April jobs figures to come in on a softer note, then this would endorse the weakness in activity and imply that lagging variables such as employment are also now turning lower. Conversely, if the labour data stays resilient then we will further linger in a state of limbo as either it is the activity data that is the aberration or the lags have yet to kick in. The April jobs report may in fact accentuate the stagflationary trends (soft activity, rising inflation) noted of late:

3.13pm BST

US crude stocks increased by a higher than expected 2.8m barrels last week, according to the Energy Information Administration.

Analysts had forecast a rise of 1.7m barrels. Meanwhile gasoline stocks rose unexpectedly by 536,000 compared to expectations of a 144,000 barrel decline. But stockpiles of distillate, which includes diesel and heating oil, fell by 1.3m barrels, more than the 83,000 decline expected.

2.49pm BST

In the latest pay revolt nearly 24% of shareholders at Reckitt Benckiser voted against the remuneration policy and nearly 18% voted against the remuneration report.

At Ladbrokes 42% voted against the remuneration report.

2.29pm BST

The latest data on US jobs will not give much grounds for optimism for Friday's non-farm numbers, says David Morrison, senior market strategist at Spreadco. He said:

[Weekly jobless claims] have generally been a bright spot over the past few years. They used to come in around the high 300,000s - even topping 400,000 at the end of 2012. But now we are used to seeing claims coming in below 300,000 on a regular basis.

But now traders will focus on the main event which is tomorrow's Non-Farm Payroll release. Early expectations were for an increase of just over 200,000. But the "whisper number" will probably be well below that following yesterday's grim ADP number. Today's jobless claims together with a worse than expected Challenger Job-cut number haven't helped either.

2.17pm BST

More US employment data ahead of Friday's non-farm numbers.

After a jump in the number of US workers laid off last month it is probably no surprise that jobless claims rose last week.

1.37pm BST

Donald Trump also says he'd scrap a swathe of federal regulations which are (he argues) holding back US firms.

He told CNBC:

"We're lowering taxes very substantially and we're going to be getting rid of a tremendous amount of regulations."

1.07pm BST

With the Republican nomination in the bag, Donald Trump is now turning his attention to how he'd run the American economy if he makes it to the White House.

I have nothing against Janet Yellen whatsoever. She's been doing her job, and I have absolutely nothing against her.

I don't know her, but she's a very capable person and people that I know have a very high regard for her.

She's a low interest-rate person, she's always been a low interest-rate person "and I must be honest, I'm a low interest rate person. If we raise interest rates, and the dollar starts getting too strong, we're going to have some very major problems.

Surely the best thing Trump can do at this point is back Yellen. Does he really want the markets to move against him if climbs the polls?

Trump: Nothing against Janet Yellen, but would replace her "when her time is up" https://t.co/KxZLRBjOLN

12.53pm BST

We also have worrying news from America.

Layoffs by U.S.-based companies accelerated in April, sending year-to-date job cuts to the highest level since 2009, a private study reported Thursday.

Domestic companies announced plans to let go 65,141 workers last month, a 35 percent increase from March, according to the report by outplacement firm Challenger, Gray & Christmas .

BREAKING: US job cuts rise to 65,141 in April; 2016 layoffs at 7-year high - Challenger https://t.co/xGFlKQbV4Q

12.23pm BST

Meanwhile in London, the boss of consumer goods group Reckitt Benckiser has apologised over a humidifier steriliser scandal that has claimed around 100 lives.

Rakesh Kapoor, chief executive of Reckitt Benckiser told shareholders at an AGM in central London: "I'm personally very sorry and very much regret that our Oxy product caused harm to people in Korea."

He said the company had "made a mistake" and vowed to ensure that "something like this never happens again". He will meet representatives from one patient group, who were demonstrating outside the AGM, in his office on Friday.

11.20am BST

James Sproule, chief economist at the Institute of Directors, fears the Britain's economy is suffering from more than the Brexit jitters.

Sproule warns:

"These figures will be put down to uncertainty over the EU referendum, but while this may explain part of the fall, we should also consider whether there are underlying factors feeding into a less rosy economic picture.

"The question we must ask is whether growth is built on solid foundations. My concern is that the exceptional period we are living in of low rates and cheap money is not the basis of a sustainable economy. We do not know what the outcome of the referendum will be, or the exact effects on the economy in the short and longer term, but this uncertainty is not an excuse to take our eye off the ball on more fundamental issues of economic sustainability."

Is UK GDP growth heading down to zero? That's what the latest PMI surveys seem to suggest.https://t.co/xhgGOsW6jE pic.twitter.com/sDWTaiYoZO

11.04am BST

With Britain's economy seemingly slowing, there's even less chance of the Bank of England raising interest rates in the next few months.

Some economists are even speculating that the BoE could cut rates this year.

The three Markit/CIPS PMI surveys collectively indicated the weakest rate of expansion since March 2013, with growth slowing across the board. The combined Output Index fell from 53.6 in March to 51.9 in April. The latest reading is consistent with a near-stalling of economic growth, down to just 0.1% in April.

The deterioration in April pushes the surveys into territory which has in the past seen the Bank of England start to worry about the need to revive growth, either by cutting interest rates or non-standard measures such as quantitative easing.

10.27am BST

This chart shows why the weak service sector data probably show that UK growth has slowed sharply.

If, as we expect, the UK votes to remain in the EU, then the growth rate should recover to its trend rate of 0.5% qoq in the second half of the year.

While there are some risks relating to the current account deficit and concerns that households are returning to pre-Lehman borrowing and saving habits, underlying fundamentals are sound.

10.06am BST

With services making up 79% of UK GDP, a three year low in services PMI will have big impact on Q2 growth expectations

10.03am BST

Anthony Cheung of City firm Amplify Trading agrees that the UK economic picture has deteriorated:

UK PMI's showing a worrying picture this week. Manufacturing slows for 1st time since Mar 2013, construction & services dropped to 3yr lows

9.58am BST

Dean Turner, Economist at UBS Wealth Management, agrees that Britain's economy appears to have weakened in April.

And that means growth in the current quarter will be lower than in January-March, when GDP expanded by only 0.4%.

Uncertainty over the EU Referendum is clearly taking its toll on activity and with this backdrop, we expect second quarter GDP growth to dip below the already disappointing first quarter print.

With such subdued levels of growth, we expect the Bank of England will hold fire on interest rates in next week's MPC meeting, and for many months thereafter."

9.48am BST

Britain's services sector makes up around three-quarters of the economy, so this slowdown is pretty worrying.

David Noble, CEO of the Chartered Institute of Procurement & Supply, says June's EU referendum is partly to blame.

"The UK's services sector is stuck between a rock and a hard place. Mounting global economic uncertainty at the top of the supply chain and the reality of the new National Living Wage at the bottom mean that firms are feeling the pinch from both ends. As a result, the sector credited with being the main driver of the UK's economic fortunes appears to be slowing down.

"The looming EU referendum has had a profound effect on the sector, keeping prices relatively stagnant and delaying new orders. At the other end of the supply chain, the National Living Wage has compounded cost increases, resulting in the overall rate of input price inflation hitting a 27-month high. Together, these factors have squeezed margins while fewer than half of businesses expect to grow over the next twelve months.

9.37am BST

Breaking: Britain's service sector's growth has slumped to its lowest level in three years.

Markit, the data firm, says its service sector PMI has fallen to 52.3 in April, down from 53.7 in March.

"The slowdown in the service sector follows similar weakness in manufacturing and construction to make a triple-whammy of disappointing news on the health of the economy at the start of the second quarter.

"The PMI surveys are collectively indicating a near- stalling of economic growth, down from 0.4% in the first quarter to just 0.1% in April.

9.27am BST

Here we go..... Lets see if those forecasts of a small slowdown are accurate.

5mins to UK services PMI
the big news of the day

9.17am BST

UK services #PMI is due at 9:30 am today and it matters because both manufacturing and construction showed weakness #GBP #BoE

9.13am BST

As well as posting stronger profits, BT has announced a 6bn investment in broadband and 4G coverage:

BT to spend 6bn on superfast broadband and 4G rollout as profits boosted by demand for TV & broadband bundles https://t.co/mBinMQlLpT

9.02am BST

You can now buy shares in Britain's luxury chocolate firm, Hotel Chocolat.

8.41am BST

Launching a new print newspaper, in this time of digital revolution, was always a risky move.

So you can understand why Trinity Mirror is pulling its latest offering, The New Day, after seeing sales falling to 30,000. But the speed of the move is a shock - the paper only launched 9 weeks ago.

Although The New Day has received many supportive reviews and built a strong following on Facebook, the circulation for the title is below our expectations.

As a result, we have decided to close the title on 6 May 2016. Whilst disappointing, the launch and subsequent closure have provided new insights into enhancing our newspapers and a number of these opportunities will be considered over time.

8.25am BST

Europe's stock markets have made a nervous start to trading, after two days of losses.

Britain's FTSE 100 is up 15 points, or 0.2%, while Germany's DAX is up 0.3% and the French CAC is flat.

8.11am BST

Turkey's stock markets has plunged by 2% at the start of trading, as investors react to the country's latest political crisis.

Investors are alarmed by reports that prime minister Ahmet DavutoAlo is poised to resign, following a power struggle with president Recep Tayyip ErdoAan.

Turkish Lira Hanging in There After Biggest Decline in 5 Years Amid Political Turmoil #fx #Turkey pic.twitter.com/50NnlJKNef

7.53am BST

Anxiety over a possible global downturn has hit stock markets in Asia again.

Markets seem to be at something of a crossroads at present, waiting for clearer signals on whether U.S. activity will bounce back in the second quarter,".

"If the global economy were to tip into recession at some point, what ammo, precisely, do central banks have left that won't do more harm than good?"

7.40am BST

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

So far this week, the UK economic data has been quite disappointing. Construction firms are growing at the slowest rate in three years, and activity across Britain's manufacturers is actually shrinking again.

Both manufacturing and construction PMI's came in short of expectations with manufacturing slipping into contraction territory for the first time since early 2013.

Given how important the services sector is to the UK economy we really need to see a decent number here or run the risk that we see a growth downgrade next week from the latest Bank of England inflation report. Expectations are for a slight decline to 53.6 from 53.7.

Our European opening calls:$FTSE 6134 up 22
$DAX 9863 up 34
$CAC 4330 up 5$IBEX 8694 up 40$MIB 18038 up 102

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