Next shares dive as sales miss City forecasts – business live

British manufacturing strengthened in October, but the City faces up to 75,000 job losses after Brexit

• BoE on impact of Brexit
• UK manufacturing output rose last month
• British factories are doing well, say experts

Earlier:

• Introduction: Next warns of 'extremely volatile' trading
• High street sales fell a 'sickening' 7.7%
• Shares drop almost 8% in early trading

6.17pm GMT

Commenting on the Fed decision, Kully Samra, UK managing director of Charles Schwab, said:

A widely expected move from the Fed with market consensus anticipating one further rate hike in December. A more aggressive Fed could have posed a problem for equities, but for now the Fed's methodical approach to monetary policy tightening is reassuring investors and ensuring the continuation of the bull run.

The Fed has an important balancing act to play as it slowly continues to normalise monetary policy by gradually lifting interest rates and unwinding its bloated balance sheet. We expect earnings season to propel stocks to further gains. However, signs of inflation and the potential of a melt-up do pose some risks. The US economy's outlook is also bolstered by broadly strengthening global economic growth and the continued rise in global earnings may support further stock market gains.

6.14pm GMT

One key point from the Fed statement. It says "economic activity has been rising at a solid rate despite hurricane-related disruptions." In September it said economic activity "has been rising moderately so far this year."

This slightly more positive comment adds to the idea of a rate rise in December.

6.05pm GMT

Note that language re: future rate increases stayed *exactly* the same. Suggests they see no reason to hold off in December.

#Fed #FOMC statement is "ham on rye". Boring! While there was no mention of Dec rate hike, it's coming next month https://t.co/lcmQCRGCMX

6.04pm GMT

And here's a comparison of today's Fed statement with the September comments:

FOMC November statement: redline comparison to Sept pic.twitter.com/ZHo1WTs27p

6.02pm GMT

The Fed's statement says:

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

6.00pm GMT

Breaking News:

The Federal Reserve has kept US interest rates on hold, as expected, but left open the prospect of an increase at its December meeting.

5.44pm GMT

Here's ING from earlier today on the Fed:

As ever, subtle word changes matter when it comes to the #Fed today. These are our scenarios: https://t.co/9f5rXa476r pic.twitter.com/bZsZbHZDD0

5.15pm GMT

The Federal Reserve's latest interest rate decision is due in less than an hour, and while no change is expected this time round, analysts will be looking for clues as to whether a rise is nailed on for December.

Given the relatively strong economic data recently, this seems fairly probable, but the observers will be looking out for clues from the nuances of the accompanying statement.

The Fed's monetary policy decision would typically be one of, if not the most important event of the week but that may not be the case today. For one, it's extremely unlikely that any change in interest rates will be announced, with December remaining far more likely for the final hike of the year. With Chair Janet Yellen not making an appearance after the announcement, we instead have to rely on the accompanying statement for clues as to whether another hike in December is still planned.

Moreover, with Donald Trump poised to announce who will succeed Yellen from February on Thursday, investors may take the statement with a pinch of salt when considering interest rates beyond the end of the year. All things considered, not only is today's announcement not the biggest market event this week, it's unlikely to even be the most important Fed event.

Today's focus will no doubt fall on the Fed, with the penultimate FOMC meeting of the year happening just a day before Trump announces his pick for the Fed chair. With markets widely expecting to see Trump opt for Jerome Powell, there is no doubt that Janet Yellen will want to deliver the three rate hikes that were initially set out in the dot plot at the turn of the year. While today's meeting may not bring the kind of volatility and excitement of tomorrow's Bank of England announcement, today is a key determinant of market expectations as we seek to narrow down exactly how likely a rate hike is for December.

The first is Jerome Powell, who has served as a Fed Governor since 2012, and who is seen as the favourite. Prior to that he was Assistant Secretary and Under-Secretary of the Treasury under President George H.W. Bush. Before that he was a lawyer and investment banker in New York.

The second candidate often mentioned is John Taylor, who was Treasury Under-Secretary for International Affairs, 2001- 2005, and who developed the Taylor Rule, discussed below, as a means of describing the way in which the Fed sets interest rates.

4.56pm GMT

As US investors await the latest Federal Reserve interest rate decision, most European markets have ended the first day of the new month on a positive note.

Buoyed by weakness in the euro after last week's European Central Bank meeting, French, German and Italian markets have closed in positive territory, with Germany's Dax in particular playing catch up after Tuesday's public holiday. Spain's Ibex, however, has edged lower on profit taking after its recent gains, which were prompted by fading fears about the Catalan independence demands.

3.54pm GMT

The main focus for US investors is the Federal Reserve meeting later - widely expected to keep rates on hold but hit at an increase in December - and Thursday's announcement of Donald Trump's pick for the next Fed chair.

Meanwhile the US economic data continues to be strong. As well as the reasonable manufacturing data, there were also some positive jobs numbers, ahead of Friday's official non-farm payroll numbers.

It was a pretty strong afternoon for US data. The ADP non-farm employment change reading hit 235k, sharply higher than last month's 110k, to set up a potentially massive 'official' number on Friday, while the final Markit manufacturing PMI for October came in a tad higher than forecast at 54.6. Only the ISM manufacturing figure disappointed, and even then, at 58.7, it was a more than respectable number.

The dollar was the main beneficiary of all this (the Dow Jones lost roughly a third of its early gains, though after rising 100 points it's still at a fresh all time high). The greenback reversed its initial losses against the pound to climb 0.1%-0.2%, sending cable back below $1.33, while against the euro it jumped 0.2%. This reaction was assumedly related to the hawkish-tinge of the day's data, with investors hoping the Federal Reserve tees up a December rate hike with this evening's statement.

3.45pm GMT

Estate agent Jones Lang LaSalle has just published its latest forecasts for UK house price growth in the next five years. It has pencilled in an average of 2.5% growth a year - down from an average of 6.9% in the last 20 years.

The firm is predicting a big shift to a more stable housing market with "more moderate UK house price growth over the next five to ten years" - despite Brexit.

Brexit will not get in the way of a more stable and healthy UK housing market.

In central London we expect demand for new developments to remain muted but steady over the next two years until the Brexit road becomes clearer. A bedrock of demand will continue from domestic owner-occupiers supported by a steady stream of international buyers and investors.

3.16pm GMT

Britain's retail sector continues to be rattled by Next's warning that trading is 'extremely volatile'.

These results are a reflection of the wider issues facing the retail sector. Investors continue to face challenges to their spending power as well as the structural shift to online shopping.

Moreover, the vagaries of the British weather have only proved to be a hindrance. We have in general been fairly pessimistic towards the retail sector and nothing has really changed that sentiment.

2.48pm GMT

Over in Greece finance minister Euclid Tsakalotos has announced that Athens is likely to make at least four market forays before its current bailout programme expires next year.

"The issue is to have access to markets when we exit the programme,"

2.31pm GMT

America's factory sector appears to be in good health, says Michael Pierce of Capital Economics.

Here's his take on today's manufacturing data:

The small drop back in the ISM Manufacturing Index in October from a 13-year high is little to worry about, and still suggests that manufacturing output will rebound in the fourth quarter. The drop back in the headline index, from 60.8 to 58.7, took it back almost exactly in line with its value in August.

Perversely, some of the decline in the index this month reflects an unwinding of hurricane effects.

2.04pm GMT

ISM's rival US manufacturing survey is also out, and it suggests growth slowed but remained very strong:

*U.S. OCTOBER ISM MANUFACTURING INDEX FALLS TO 58.7; EST. 59.5

1.52pm GMT

Breaking: America's factory sector is expanding at its fastest rate since January.

Markit's US manufacturing PMI rose to 54.6 in October, up from 53.1 in September. That's comfortably over the 50-point mark separating expansion from contraction.

US Markit Manufacturing PMI Final (Oct) 54.6 (Prev. 54.5) pic.twitter.com/gOXn0eQ7xq

ADP reported U.S. private-sector payrolls up 2.08% in the year through October, fastest pace of growth since March 2016

1.33pm GMT

Wall Street traders have held a moment's silence as a mark of respect for those who were killed in Tuesday's truck attack in New York.

.@nyse and @Nasdaq observe a moment of silence after the New York City terror attack. pic.twitter.com/58Z2qlog9U

1.22pm GMT

Labour MP Wes Streeting says the government must heed the warning that 75,000 City jobs could be lost through Brexit, and avoid a 'hard' departure from the EU.

"It's clear that British companies are already preparing to shift jobs abroad as a result of Brexit. Our economy is being damaged now, with growth slowing and prices rising, and the situation is set to get worse as a hard and destructive Brexit gets closer.

"Only by keeping Britain in the Single Market can the Government reassure financial services firms and stem job losses. But they have made an ideological choice to wrench our country out of the world's biggest trading area.

12.45pm GMT

Back in the House of Lords, Bank of England deputy governor Jon Cunliffe has warned that the regulation of financial clearing houses could suffer after Brexit.

These clearing houses sit between investors, settling trades, and (hopefully) avoiding financial contagion breaking out.

"You have to make sure you don't end up with multiple hands on the steering wheel and multiple feet on the brake."

"By far the best fix would be for something to be included in the withdrawal bill. There would have to be bilateral agreement to fix this on both sides."

11.59am GMT

Despite fears over Brexit's impact on Anglo-Irish trade, Ireland's consumer exports to the UK are up by 12%, it emerged today.

"In a crowded market such as Britain, knowing your market is essential before targeting buyers and while there are similarities between Irish and British consumers, in a business context there are vital differences, such as continuous and new and developing routes to market which must be recognised.

11.38am GMT

Back in the City, Next's shares ares still down over 7% after this morning's disappointing sales update.

That, by my maths, wipes 540m off the company's market capitalisation, from 7.17bn to around 6.6bn.

Investors took fright on Thursday after Next reported a fall in high street sales and warned trading was "extremely volatile" ahead of its crucial Christmas selling period.

Next shares fell by 8%, making it the biggest loser on the FTSE 100, after the clothing retailer said sales at its shops fell by 7.7% in the three months to 29 October. Thanks to a 13.2% increase in Directory sales, including online, total sales for full-price items rose by 1.3% over the quarter.

Related: Next shares slump as it warns over 'extremely volatile' sales

11.12am GMT

Another deputy governor, Jon Cunliffe, tells the Lords committee that City firms will assume a "worst case" scenario on Brexit, unless they can see what the final 'end framework' of a deal will be.

Simply agreeing a transition period, with no clarity about what the final agreement might be, isn't enough.....

BOE's Cunliffe: UK-based financial firms will assume worst case if there is more Brexit transmission time with no clear end framework. $GBP.

BoE's Cunliffe: UK-Based Financial Firms Will Assume Worst Case If There Is Just More Brexit Transition Time, And No Clear End Framework

BOE Cunliffe tells Lords firms cannot afford to keep waiting for Brexit transition deal. BOE Woods says transition is wasting asset.

10.33am GMT

Over at the House of Lords, Sam Woods, deputy governor of the Bank of England, has told peers that 10,000 City jobs could be lost on "day one" after Brexit.

Watch live: EU Cmttee quiz @BankofEngland Deputy Governors Jon Cunliffe & Sam Woods on #Brexit & #financialservices: https://t.co/7O7wnzTo1h

10.28am GMT

Today's news highlights the dilemma facing the Bank of England's policymakers, as they try to decide whether to raise interest rates tomorrow.

10.18am GMT

Importantly, UK factories which produce consumer goods are lagging behind the rest of the sector, according to today's report.

Markit says:

Intermediate and investment goods producers both saw rising production volumes backed up by strong and accelerated intakes of new business.

Conditions seemed less firm in the consumer goods category, however, as growth of new orders eased to a seven-month low and business optimism to its weakest level in the year-to-date.

9.58am GMT

The news that Britain's manufacturers grew at a faster pace in October has cheered industry experts and City economists.

Here's some snap reaction:

"It's good to see the manufacturing sector holding strong and steady in October, buoyed up by an increase in new orders from the domestic market and improving on last month's results.

While trade from export markets slowed slightly, orders from overseas continued to rise for the 18th month supported by a robust global economy. The pound's fluctuating performance may have had some bearing on the softening in export orders, but there were continuing good levels of demand from Europe and the USA so no cause for concern.

"The UK manufacturing sector has recorded another month well above the magic 50 mark that signifies growth and continues to perform well.

"While the ongoing Brexit negotiations are causing uncertainty, recent CBI data shows orders and outputs are above historic levels, and similar trends are seen in exporting data. Firms' plans for investment in innovation remain strong, as does spending on training and development.

"Month after month, manufacturing continues to hold its own delivering growth levels that keep the sector in positive territory. Although demand from both home and overseas markets remains robust, manufacturers will have half an eye on what the MPC decides to do tomorrow and the potential impact an interest rate rise would have on sterling.

They will also be looking ahead to the Autumn Statement and what that may bring by way of a boost for the sector and I suspect many will be looking for R&D tax credits to feature and encourage a much needed increase in investment."

"The Prime Minister will be pleased to see an above-expectations hike in manufacturing output in October, particularly after a bigger than expected fall the month prior.

"British business is still trying to balance Brexit uncertainty against a weak currency-led boost to exports, but with the sterling creeping upwards of late, foreign demand may not hold for long.

"While UK exports have increased in recent months, levels have yet to reach the heights that the devalued Sterling and strengthening economic performance in the Eurozone and global markets promised. Clearly, British manufacturers are prioritising profit margins over exports.

"The lack of visibility over the future direction of Brexit negotiations is holding back major investment initiatives in the sector that might have boosted productivity. Without a clearer picture to support those decisions, there are concerns that UK manufacturing will fall behind in the global technology race and struggle to compete.

9.49am GMT

The UK manufacturing PMI report has pushed the pound over $1.33 for the first time in two weeks.

Cable rallying on UK manufacturing PMI beat pic.twitter.com/KSQ32llLV6

9.36am GMT

Breaking! UK factories grew faster than expected last month, thanks to a surge in new orders.

Data firm Markit reports that manufacturing output and new order growth remained robust in October, suggesting that the weak pound is helping factories.

The UK manufacturing sector started the final quarter of the year on a solid footing. Production and new order volumes continued to rise at robust rates, as companies benefited from strong domestic market conditions and rising inflows of new export business.

Price pressures remained elevated, however, with rates of inflation in input costs and output charges both accelerating and staying well above historical series averages.

"UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again.

9.27am GMT

Retail analyst Nick Bubb says the 7.7% slide in Next's high street sales over the last quarter is 'sickening'.

He writes:

If such a distinguished guru as Simon Wolfson of Next finds it impossible to read the underlying sales trends, because of the volatility of the weather, then what are we mere mortals to do?...

Some people in the City expected full-price sales to be nearly 4.5% up in Q3, driven by Next Directory, but the outcome was only +1.3%, with Next Retail down a sickening 7.7% and Next Directory up 13.2%

9.18am GMT

Global Data retail analyst Patrick O'Brien wonders whether Next's online ordering system can help:

Next shares down 8%. Store sales -7.7%, but online +13.2%. Is click & collect boost enough to stop store closures?https://t.co/mfjgK8h2Ly

Results from Next - third quarter full price sales were 1.3% than the same time last year, but year to date sales were down by 0.3%

9.00am GMT

The stock market can be cruel at times.

So says George Salmon, Equity Analyst at Hargreaves Lansdown:

Next's third quarter performance is actually better than what we've seen from the group so far this year, but with many expecting a much stronger showing, the shares still took a tumble.

While the recent investment in digital marketing seems to have helped the Directory division rediscover its mojo, Next's high street stores saw an almighty slump this quarter. A particularly weak October means the group enters the all-important Christmas period with less momentum than it would have liked.

Shareholders in Marks & Spencer, for example, might now be a bit more nervous ahead of next week's half year numbers.

8.50am GMT

Connor Campbell of SpreadEX says it's turning into an "ugly, ugly morning for Next".

He says recent positive noises from the company have "come back to haunt" Next, as today's sales figures have punctured the optimism that had built up recently.

While Q3 total sales grew 1.3%, an improvement on the 2.2% decline seen in the first half of the year, that was lower than the 2.9% growth expected as the firm warned on the 'extremely volatile' sector landscape.

Similarly, though Directory sales rocketed 13.2% higher, retail (i.e. high street) sales plunged a far worse than estimated 7.7%, leading Next to revise its annual pre-tax profit forecasts from 687m-747m to 692m-742m.

8.25am GMT

Shares in Next have tumbled by almost 8% at the start of trading.

They've slumped to the bottom of the FTSE 100 leaderboard, down 368p at 45.52.

8.19am GMT

UK high street retailer Next has spooked the City by missing its sales forecasts and warning that trading is "extremely volatile".

Next, one of the country's key retailers, has reported that sales at its stores shrank by 7.7% in the three months to 29th October.

Ouch!#Next third quarter retail sales fall 7.7%, compared to estimates of a 3.7% decline

Sales performance has remained extremely volatile and is highly dependent on the seasonality of the weather.

In August and September sales were significantly up on last year, as cooler temperatures improved sales of warmer weight stock. The change in sales trend came at precisely the same time UK temperatures became warmer than last year.

Week by week sales volatility makes it very hard to determine any underlying sales trend. We believe the most reliable guide to sales for the balance of the year are the full price sales for the year to date, which are down -0.3%.

Next: 13.2% rise in Directory sales masks 7.7% fall in Retail sales Q3 - autumn arrived early in store as well as across the country pic.twitter.com/LHXLsW6aJn

Despite a terrible October, Next have maintained their central profit guidance for the full year

7.45am GMT

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

Earlier in the day investors will want to pay attention to the Manufacturing PMI release from the UK which comes a day before tomorrow's Bank of England meeting on monetary policy.

The pound has gained considerably over the past two days as expectations are set for the BoE to hike rates this month and today's PMI release could set the stage for more gains.

There was a loss of momentum generally last month in many of the activity sub-components of these surveys but the manufacturing sector is looking the most buoyant.

Following #Nationwide reporting prices up 0.2% m/m & 2.5% y/y in Oct, we see #UK #house #prices muted through Q4 2017, up 2-3% over 2018

#Today: Chinese #PMI, #Eurozone #inflation surprises again on the downside, busy day in US with #FOMC meetinghttps://t.co/b5pEao7633 pic.twitter.com/8XkWRAu5PC