Eurozone growth rises to 0.5%; Trump adviser claims euro 'grossly undervalued'- as it happened
All the day's economic and financial news, including new growth and unemployment data from the eurozone
Earlier:
- Eurozone growth and inflation both jump
- Eurozone unemployment rate falls to 9.6%
- Inflation soars in Spain, and France
- Markets nervous over Trump
6.06pm GMT
Time for a recap.
The new US administration has opened up a new front against Europe, accusing Germany of unfairly profiting from the "grossly undervalued" euro. Peter Navarro, who heads up Donald Trump's new National Trade Council, made the comments in an FT interview today.
5.42pm GMT
Despite a busy day for economic and corporate news, the actions of the Trump administration were once again at the forefront of investors minds. The fallout of Trump's ban on travel, his firing of the acting attorney general, followed by the attack on the euro and Germany by his top trade advisor, have all added to the mood of growing uncertainty. Some unimpressive updates have not helped. Chris Beauchamp, chief market analyst at IG, said
A double whammy in the form of misses for the Chicago PMI and consumer confidence on the economic front, plus a poor set of numbers from economic bellwether UPS, have resulted in a continuation of yesterday's risk-off atmosphere. Only in London is the mood more optimistic, where once again it is the FTSE's mining contingent that is helping to [support] the index.
4.10pm GMT
It's probably no surprise that market volatility is on the rise after the first few days of the Trump presidency. And after a dip on Monday it is back up again:
The Vix is climbing again after weaker US economic data and more messages from the Trump administration, any move above 15 is worth noting.
3.33pm GMT
Despite the drop in US consumer confidence, it is still at fairly high levels. Paul Sirani, chief market analyst at Xtrade, said:
Although slightly down on last month's historic high US consumer confidence remains strong in the face of uncertainty.
The US economy is enjoying robust numbers at the moment and Fed Chair Janet Yellen will likely be inching closer to the first of three possible interest rate rises this year.
3.18pm GMT
That didn't last long...
US consumer confidence has dropped, having spiked in the aftermath of the US election victory.
Conference Board says the spike in % of U.S. consumers expecting higher incomes in December following the election unwound this month pic.twitter.com/W8KAts0R2G
3.07pm GMT
Over to Greece where deadlocked talks with creditors keeping the debt-stricken country afloat have once again raised the spectre of Grexit and the need for contingency plans.
"There should be no taboos when we're talking about the nation's fate. We have come to a point where the populace has run out of stamina. I believe we need an in-depth political and national discussion that has not taken place in seven years and, of course, this discussion needs to start in parliament."
"Italy may leave. If that happens Greece should hide behind it and leave at the time."
2.45pm GMT
Over in New York, Wall Street has opened lower as investors continue to watch political developments closely, and nervously.
Although some of the selling momentum experienced yesterday throughout the stock markets has cooled down, the market headlines across the globe continue to be dominated by the executive order from Donald Trump to ban certain nationals from entering the United States.
While it has to be taken into account that the record moves seen in the stock markets last week would increase the risks of some investors being tempted to take profits from positions, there is no doubting that this move from Trump has caused outrage across the globe and such actions represent a risk to the market sentiment.
2.22pm GMT
Reuters have helpfully published Angela Merkel's response to Peter Navarro's criticism:
"Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did that before the euro existed.
"Because of that we will not influence the behaviour of the ECB. And as a result, I cannot and do not want to change the situation as it is."
1.50pm GMT
City experts aren't convinced by Peter Navarro's comments about the euro:
Now FT reports Trump's top trade adviser accusing Germany of using a "grossly undervalued" euro to exploit the US and its EU partners 2/2
Which of course is hogwash because it isn't Germany ms currency to influence or manage https://t.co/UBdCZTmgNi
Anyone claiming that the euro is an "implicit Deutsche Mark" has missed 5 years of #ECB policies shaped against the will of the Bundesbank.
ridiculously wrong comment of the day from #Navarro >
Navarro says Germany is benefiting from gross undervalued euro -FT@realDonaldTrump
1.29pm GMT
Newsflash: German chancellor Angela Merkel has responded to Peter Navarro's attack.
She says that Germany cannot influence the value of the euro, and that the country has always pushed for the European Central Bank to be independent.
*MERKEL SAYS DOESN'T WANT TO INFLUENCE EURO EXCHANGE RATE
Merkel response over weak Euro claim - Germany can't influence Euro and has always called on ECB to have independent policy
1.00pm GMT
Does Peter Navarro have a point, when he claims Germany is exploiting other countries through its cheap currency?
Well.... Germany posted a record trade surplus in 2015, and will probably do the same when 2016's numbers are added up. Cheap currencies boost exports, and no-one would argue that the euro would be more valuable if you removed the weaker members from the currency bloc.
Worth noting that many of Obama's eco aids (@Austan_Goolsbee?) held a similar view, but back when EURUSD at 1: 1.35. https://t.co/ZCqUIT9V15
12.47pm GMT
The prospect of a currency spat between the US and the eurozone has pushed the euro up against all major currencies.
The single currency is up 0.7% against the dollar now, to $1.0764, after Trump adviser Peter Navarro claimed it was "grossly undervalued".
12.09pm GMT
Peter Navarro's attack on Germany over the euro shows that the Trump administration are concerned about countries who run a trade surplus with the US.
Speaking on Bloomberg TV a moment ago, Citigroup global econonomics director Ebrahim Rahbari says that "talking about a currency is much easier than taking specific measures".
11.51am GMT
Hold onto your hats, folks.
The Financial Times is reporting that one of Donald Trump's advisers has hit out at Germany, saying it gets an unfair advantage due to the weakness of the euro.
Germany is using a "grossly undervalued" euro to exploit the US and its EU partners, Donald Trump's top trade adviser has said in comments that are likely to trigger alarm in Europe's largest economy.
Peter Navarro, the head of Mr Trump's new National Trade Council, told the Financial Times the euro was like an "implicit Deutsche Mark" whose low valuation gave Germany an advantage over its main partners. His views suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties.
Dollar is trading lower in the wake of these comments: Trump trade adviser accusing Germany of manipulating currency https://t.co/2qu7sxB4Qi
11.30am GMT
Here's some early reaction to the news that eurozone growth and inflation have risen, while the unemployment rate has hit a new seven-year low.
In the Eurozone GDP figures have been released this morning. Inflation in Spain has increased to 3% as has the cost of living in France, up by 1.4%; while the broader EU CPI measure jumped to 1.8% largely driven by a jump in energy prices.
The French economy grew 1.1% in 2016 slightly less than expected but despite this Michel Sapin, the French minister of finance, insisted the French economy is still moving in the right direction and reducing unemployment.
#Eurozone headline inflation accelerates, big surprise in #Spain and #France. Good for #EUR. Decision time for #ECB #Draghi ahead. pic.twitter.com/GOgAfPX0Ho
In 2016 #Eurozone #economy grew faster than #US, for the first time since the crisis. #Trump #Brexit #ECB #BOE #Fed pic.twitter.com/XPSmxeHTl1
A fresh and intricate new conundrum has reared its ugly head for Mario Draghi this morning as the pressure of a significant uplift in German inflation has pushed the Eurozone figure up to 1.8% for January.
The renown 'powerhouse' of the Eurozone is now putting significant pressure on the ECB President as euro-sceptics are quickly pointing out that stimulus measures are falling far short of creating a balanced and improved bloc state. Whilst GDP saw an uplift this morning, as well as a diminishing Unemployment rate also posted, inflation has, and will be for the foreseeable future, the focus.
The ECB has been wont to point out that core inflation remains a problem and the uptick in prices might not last. And again this remains stubbornly below the headline figure at just 0.9%.
No cause for the ECB to tighten monetary policy just yet but refreshingly upbeat figures nonetheless. The data is improving in Europe but there is as yet no sign of anything other than monetary policy divergence between the Fed and European Central Bank. Greece's debt problems won't go away and political risks are abundant.
10.59am GMT
The eurozone didn't manage to match Britain's economy, though.
UK GDP grew by 0.6% in the last three months of 2016, and by 2.2% during the year.
10.45am GMT
The eurozone outperformed the United States last year.
Today's growth figures show that the eurozone expanded by 1.8% in 2016; last Friday, we learned that America only grew by 1.6%.
10.32am GMT
Eurozone politicians will be delighted to see the region's jobless rate fall to 9.6% (not 9.8% as I mistyped earlier, sorry).
This is the lowest rate recorded in the euro area since May 2009.
10.24am GMT
Important point: eurozone core inflation (which strips out food and energy) was only 0.9% this month, rather than the headline figure of 1.8%.
That's little comfort to households facing a cash squeeze, but it does give the European Central Bank a good reason not to be bounced into changing monetary policy.
"Headline inflation is clearly picking up in the Eurozone, but a lot of that is linked to energy price base effects (+8.1% compared with +2.6% in December). As highlighted in their most recent press conference, the ECB itself is willing to look through these transient gains.
As such, we believe that it is too early to call for any sort of further "tapering" in the region, especially ahead of a very busy political agenda.
The eurozone's headline inflation rate is at a 4-year high but core inflation is still lagging behind. https://t.co/eB5pQv6Z0T pic.twitter.com/csR7WN8nXR
10.18am GMT
Growth up, inflation up, unemployment down....
The Euro Area economy right now. pic.twitter.com/1xzCmF443V
10.07am GMT
On an annual basis, the eurozone grew by 1.8% last year - up from 1.5% in 2015.
Euro area GDP +0.5% in Q4 2016, +1.8% compared with Q4 2015: preliminary flash estimate from #Eurostat https://t.co/8krAFeAw45 pic.twitter.com/yyci1wEQU7
10.05am GMT
My Reuters machine is gasping for air as a burst of newsflashes ripple out from the eurozone, giving new insights into the European economy.
New growth figures show that the euro area grew by 0.5% in the last three months of 2016, up from 0.4% in the previous quarter.
Euro area inflation up to 1.8% in January 2016; the highest since February 2013: see flash estimate from #Eurostat https://t.co/X0q2tkKeDb pic.twitter.com/C3KvvIEnqn
Wow - Eurozone inflation jumps to 1.8% in Jan, near ECB target of 2%. Unemployment also at seven year low - @AFP
9.47am GMT
The latest unemployment news from Italy is rather disappointing.
9.23am GMT
The US dollar is poised to suffer its worst start to any year since 2008.
President Trump's travel ban - and his associated decision to fire the acting Attorney General - dominates sentiment and remains good for Treasuries, the yen (and gold), but bad for bonds and the dollar.
How long will market sentiment to be affected? How far can the dollar and yields fall on this? I'm not sure serious analysis is possible, and I don't trust my gut instincts on something as far from the usual state of affairs, but my bias is still that we'll get back to the Trump economic program, and the implications for Fed policy, before too long.
8.59am GMT
Newsflash: Germany's jobs market remains as strong as ever.
The unemployment total in Europe's largest economy has fallen again this month, by 26,000 people, to 2.605m.
*GERMAN JAN. UNEMPLOYMENT FALLS ADJUSTED 26,000; EST. 5,000 DROP
*GERMAN JAN. ADJUSTED JOBLESS RATE AT 5.9%; EST. 6.0%
8.42am GMT
UK online supermarket group Ocado is the best performing stock across Europe, jumping by 6.5%.
Management will have to put up with more questions from the City today about the failure to deliver an Overseas deal in the analysts meeting at 9.30am"
8.35am GMT
European stock markets have opened nervously, following those losses in Asia overnight.
It's been an interesting start to the week, with protests against President Trump's immigration ban dominating market news and reaction. Trump's use of executive power has not stopped with immigration; on Monday he signed a new order that will cap business regulation.
While politics took centre stage at the start of the week, earnings from Apple and Exxon on later today, along with a flurry of central bank meetings this week will be critical for determining what matters more to markets right now: politics or economics.
8.19am GMT
Back to GDP....and Austria has posted another quarter of solid growth.
#Austria: Economy ends 2016 on a solid footing. 4Q16 GDP growth at 0.5% QoQ
8.08am GMT
Newsflash: Inflation in Spain has surged this month, to 3% on an EU-harmonised basis.
The cost of living in France has accelerated too, jumping from 0.8% to 1.6% .
*FRENCH JAN. EU-HARMONIZED CPI RISES 1.6% Y/Y; EST 1.2%
French HICP inflation jumps to 1.6% YoY in January (from 0.8%), adding upside risks to the euro area figure to be released this morning.
7.54am GMT
Asian stock markets have had another poor day, as fears about Donald Trump's actions continue to rile investors.
Related: Trump fires Sally Yates after acting US attorney general contradicted travel ban
Investors are becoming worried as it appears as if he was setting fire to geopolitical risks that already exist.
7.31am GMT
We don't have any growth figures from Germany today. Instead, we've got a nasty fall in retail spending.
7.19am GMT
Outgoing French president Francois Hollande will surely be pleased that the economy is growing, but his successor still faces a big challenge:
The problem with the French economy? Not growing fast enough to close its output gap. It's all positive but also weak. Same old, same old.
7.11am GMT
German journalist Gesche Wi1/4pper points out that France's growth during 2016 was weaker than hoped, at just 1.1% for the year.
France: GDP growth only 1,1% in 2016, below expectations of French government which predicted 1,4%. https://t.co/pvaKVVE9cF via @Boursorama
FRANCE: GDP up 0.4% in 4Q, but overall 2016 performance (+1.1%) is weaker than 2015 (+1.2%). Same for 2017. My take: https://t.co/59iVCDd9l9 pic.twitter.com/eq6SOQVUlv
Sweden, US stellar performers. Dutch growth accelerating, French GDP growth stays mediocre. Suspiciously little volatility in Spain GDP. pic.twitter.com/AX09AcnclR
6.49am GMT
France has got Eurozone GDP Day off to a good start, by reporting that its economy accelerated in the last three months of 2016.
French GDP expanded by 0.4% in the October-December quarter, twice as fast as in July-September. This suggests that France's recovery from the financial crisis continues, despite the uncertainty created by the Brexit vote last summer.
6.39am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.
We'll be looking at Europe's economy this morning, as new data are released showing how the eurozone is performing.
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