Wall Street falls 1%; Europe outpaces UK and US with strongest GDP growth in a decade - as it happened
All the day's economic and financial news, including new eurozone growth figures
- Latest: Amazon, JP Morgan and Buffett pile into healthcare
- Eurozone growth hits decade high
- Eurozone grew by 2.5% in 2017; UK only managed 1.8%
- Spain keeps growing
- France sparkles with best growth since 2011
- Markets hit by correction fears
6.05pm GMT
The sell-off on Wall Street is getting worse.
The Dow Jones Industrial Average now down 368 points or 1.4%, while the S&P 500 is down around 1%.
If the S&P 500 closes down 1% today, it will be the FIRST time in 165 calendar days.$SPX $SPY $VOO -> https://t.co/eOcGCIVBBu
5.25pm GMT
With falling bond prices and concerns that shares may be overvalued after their recent record run, stock markets suffered a severe sell-off.
Investors have become nervous amid growing signs that central banks - whose supportive monetary policies have helped markets hit new peaks - are beginning to pull the plug on cheap borrowing and hefty bond buying programmes.
5.16pm GMT
Dow off over 330 points. https://t.co/7HBgVXvoLF pic.twitter.com/4AUFO9YwnF
4.31pm GMT
There is little sign of a recovery on Wall Street, with falling bond prices and a drop in heathcare stocks pushing markets lower. The Dow Jones Industrial Average is now down around 288 points or just over 1%.
David Madden, market analyst at CMC Markets UK, says another factor for the US market decline is concern about what the Federal Reserve will say tomorrow at the end of its two day meeting:
Profit taking is rife on Wall Street as the hefty declines last night has spooked traders and now the selling has intensified. Investors have been concerned about the US stock market being overbought for some time, and now it seems the jitters are setting in.
The chatter is the Federal Reserve will raise growth and inflation expectations, and that is pushing up US government bond yields, which are now at a rate that is attractive to investors. The jump from stocks to bonds could continue until we hear from the US central bank tomorrow.
4.21pm GMT
Despite Goldman Sachs talking of a possible market correction, not everyone agrees.
Joshua Mahony, market analyst at IG, says Donald Trump's State of the Union address later could give a renewed lift to flagging markets:
The global stock selloff has persisted into a second day, with overnight losses in Asia giving way to widespread selling in Europe and the US.
Interestingly, with gold and the yen gaining ground over recent weeks, there has clearly been an underlying risk-off move waiting to rear its head.
3.52pm GMT
Away from the markets, and Bank of England governor Mark Carney is appearing in front of the House of Lords economic affairs committee.
He is being quizzed on forecasting (timely, given the latest Brexit forecast confusion).
3.49pm GMT
As markets continue to wobble, Spreadex financial analyst Connor Campbell said:
The US open was not a welcome sight for the European indices, with an ugly start from the Dow Jones infecting the FTSE et al.
The Dow Jones plunged a stomach-churning 300 points after the bell, hitting an 8 day low of just under 26150 as investors stared down the barrel of an incredibly hectic rest of the week. There's the unknown of this evening's State of the Union address from Donald Trump; the first Fed meeting of the year on Wednesday, with rising bond yields suggesting something hawkish; and a non-farm Friday that may become even more important than normal dependant on what the central bank say mid-week.
3.23pm GMT
Healthcare names leading the decline following reports Amazon, Berkshire Hathaway and JPMorgan are joining forces, planning to create a healthcare company with the aim of cutting healthcare costs pic.twitter.com/KidYFmByEn
Buffett, Bezos, and Dimon are teaming up to cut healthcare costs and the market is straight up scared:$ESRX -10%$MET -7%$CVS -6%$CI -6%$ANTM -4%$UNH -4%$HUM -4%$CAH -4%https://t.co/9uINZ02HK4
3.13pm GMT
The Dow Jones Industrial Average is now down 300 points, which puts it on course for its biggest one day fall since May last year.
Added to Monday's 177 point decline, it would be the biggest two day points fall since June 2016 after Britain voted to leave the EU.
3.08pm GMT
US consumer confidence remains strong, according to a new report from the Conference Board.
Its confidence index climbed to 125.4 in January from 1 revised figure of 123.1 in the previous month. Analysts had been expecting 123.1. (The survey was taken before this week's decline on Wall Street of course.)
3.05pm GMT
The decline on Wall Street has meant the falls in Europe have accelerated.
The FTSE 100 is now down nearly 1%, Germany's Dax has dropped 0.9% and France's Cac has fallen 0.8%. Trevor Greetham, head of multi asset at Royal London Asset Management, said:
Global stock markets dipped on Tuesday on concerns about rising US interest rates and high equity valuations.
This sell-off doesn't come as a surprise. Investor sentiment has been getting very frothy, with our composite sentiment indicator hitting its highest reading since March 2017 this week.
3.00pm GMT
The worst performer in the Dow is, unsurprisingly, United Healthcare:
Of the 230 point current drop on the Dow Industrials so far in early trade, ~ 85 pts of it is just UnitedHealth $UNH on heels of Amazon, Berkshire & JPMorganChase headlines on healthcarehttps://t.co/CB4e48e7D3
Related: Amazon and Warren Buffett to create 'reasonable cost' healthcare company
2.37pm GMT
US markets have come under renewed pressure, as investors face the prospect of rising interest rates and the withdrawal of central banks' bond buying programmes.
With bond prices falling ahead of the latest Federal Reserve decision (no move is expected yet but there is a growing expectation of at least three more rises this year) the Dow Jones Industrial Average has fallen 230 points or 0.9% in early trading.
The rise in global sovereign bond yields has unsettled investors and hit riskier assets. US 10s are holding above 2.7%, while the 30-year T note is approaching 3%.
Certainly the dynamics have shifted in bond markets. Central banks are either out of the market or buying fewer bonds. The Fed is now in the business of selling not buying. The ECB seems to be teeing up a short taper that could see QE end in September, which is a shade earlier than most anticipated back in December. The BoJ is also tilting towards normalisation, albeit much more slowly.
2.23pm GMT
Ahead of Wall Street opening, Lukman Otunuga, research analyst at FXTM, said:
Global equity bulls failed to make an appearance during Tuesday's trading session as higher U.S. bond yields and caution ahead of the Federal Reserve meeting weighed heavily on sentiment.
World shares were under renewed selling pressure today with Asian shares tumbling lower during early trade, following Wall Street's steep declines overnight. In Europe, equities tumbled amid the lack of appetite for risk. With Wall Street suffering its largest drop in more than four months on Monday, U.S. stocks could remain pressured by the negative sentiment this afternoon.
#Dow futures needs to hold this support to prevent an even deeper fall. Looks heavy in this time frame. overshoot quite likely even if index ultimately recoups ^KO pic.twitter.com/NNqFMqvzUe
2.03pm GMT
The futures selloff is gathering a little steam https://t.co/7HBgVXvoLF pic.twitter.com/ncjc6KGG0x
1.50pm GMT
PwC also made this chart, showing how the eurozone outperformed other major economies last year:
1.46pm GMT
Getting back to the eurozone growth figures...Barret Kupelian, senior economist at PwC, says:
"The good news keeps on coming from the Eurozone, which grew at a quarterly rate of 0.6% in the last quarter of 2017. Even though this is slightly slower than the previous quarter, the fuller picture for 2017 is overwhelmingly positive, with growth in the Eurozone ahead of the UK, US and Japan.
"Taking a more historical look at the growth track record of large advanced economies, the Eurozone can now boast holding the title of the fastest growing large advanced economy four times since the financial crisis compared to three times for the US and the UK and once for Japan.
In our main scenario projection, we expect the Eurozone to grow by at least 2%, marking its strongest two-year streak since the global financial crisis."
1.33pm GMT
Economists are continuing to welcome today's French GDP figures, which showed a strong pick-up in business investment.
This is from Emily Mansfield of the Economist Intelligence Unit (GFCF = gross fixed capital formation, or the purchase of new assets)
French Q4 GDP numbers are out, and show that GFCF has finally surpassed its 2008 level, after lagging the recovery in the rest of the economy pic.twitter.com/ni6Jb6GBls
#French Q4 2017 real GDP growth came stronger led by business investment and net exports. We expect GDP growth to continue improving in 2018 supported by strong investment sentiment. pic.twitter.com/E9mHp4bCvw
1.07pm GMT
The selloff continues! Wall Street is heading for a second day of losses, as heathcare companies are hit by the surprise arrival of Amazon in their sector...
Are stocks ready to make it two losing sessions in a row? DJIA futures now down over 200 points, with Amazon/Berkshire/JPM deal piling on the pain for healthcare stocks. https://t.co/1uYrJWATOZ pic.twitter.com/2j5O0DiPn5
12.29pm GMT
Investors in US healthcare firms may need a lie-down, possibly with a cold flannel....
Absolute bloodbath in insurance and pharmacy stocks in premarket after #Amazon, Berkshire, JPMorgan announce plans to start a healthcare company https://t.co/fEBbqaaBpl pic.twitter.com/C6uNyeqFta
12.25pm GMT
In other news....retail giant Amazon, Warren Buffett's Berkshire Hathaway and Wall Street titan JPMorgan have announced a curious tie-up.
The three companies are going to create a not-for-profit company to give their own staff high-quality and transparent healthcare.
"The ballooning costs of healthcare act as a hungry tapeworm on the American economy.
Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country's best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes."
JUST IN: UnitedHealth shares down 4.2 percent premarket after Amazon, Berkshire Hathaway, JPMorgan to partner on healthcare. $UNH pic.twitter.com/Yks5QH05nF
11.29am GMT
Pan Pylas of Associated Press has a good take on today's growth figures:
The eurozone economy, for so long a source of uncertainty, has enjoyed its best year in a decade, clear evidence it has broken out of its prolonged and acute debt crisis that raised fears about the very survival of the euro currency.
In its first estimate for the fourth quarter, Eurostat, the European Union's statistics agency, said Tuesday that the eurozone expanded by 0.6 percent in the October-December period from the three months before.
11.17am GMT
Another chart showing how the eurozone outpaced its major rivals last year:
The Eurozone rules! #GDP pic.twitter.com/bJ40RGIzFD
10.54am GMT
ING's Bert Colijn is also impressed that the eurozone grew by 2.5% during 2017.
He writes:
Economic growth has shifted to a substantially faster growth path over the course of 2017, and current GDP data confirms that. Eurozone growth for 2017 as a whole was stronger than many advanced markets, like the US and UK for example.
While detailed breakdowns have yet to be released, it seems that the Eurozone economy continues to fire on all cylinders. Investment has yet to recover from the crisis fully but has been an essential contributor to growth during the year.
Eurozone GDP rounds up a very strong year, but ING's @BertColijn says the big question is if the strong euro will offset the effects of improving external demandhttps://t.co/tGa3DZmJCI
10.51am GMT
Analysts at Ulster Bank are hopeful that the eurozone will continue to grow robustly in 2018.
Eurozone GDP rose 0.6% q/q in Q4 (in line with consenus) following 0.7% in both Q3 and Q2 - consistent with a very strong 2.5% in 2017 as a whole following 1.8% in 2016, while the latest data suggest that very positive momentum is being sustained in the early stages of 2018 pic.twitter.com/moMAUanyUO
10.39am GMT
Jacob Deppe, Head of Trading at online trading platform, Infinox, is impressed by Europe's growth last year:
"Anything the US economy can do the Eurozone economy can do, slightly better it seems.
"This is the best economic growth the Eurozone has seen since before the Global Financial Crisis.
10.34am GMT
We now have confirmation that Europe and America both grew much faster than Britain last year.
Economists Rupert Seggins has tweeted a handy chart:
Economic growth in 2017 (Q4/Q4 % change):
UK: 1.5%
US: 2.5%
Euro Area: 2.7% pic.twitter.com/86zcfYdZpA
Solid expansion continues: Q4 17 #eurozone #growth at 0.6% q/q, leaving 2017 annual euro area GDP growth at 2.5%, highest since 2007. No contribution breakdown yet, but slowdown in Q4 potentially due to lower positive contribution from net exports due to #EUR headwind. pic.twitter.com/Cj4BR7lGLi
10.15am GMT
NEWSFLASH: The eurozone and the wider EU have both posted their strongest annual growth since the financial crisis.
New GDP figures from Eurostat confirm that the European recovery remains on track, with annual growth of 2.5% during 2017 in the EU and the narrower single currency block. That's the strongest annual growth in a decade.
9.59am GMT
Economists are concerned by the rise in UK consumer borrowing:
The UK unsecured credit boom which we have been assured is slowing in fact accelerated to an annual rate of 9.5% in December #BoE
Food for thought for the @bankofengland MPC next week. Mortgage approvals lowest since Jan 2015, but unsecured consumer credit reverses recent slowdown with 1.52bn of new borrowing in December (+9.5% YoY). V difficult balancing act for UK policymakers pic.twitter.com/wOQ5ct62q4
9.36am GMT
Breaking; The number of new mortgages approved in Britain has hit its lowest in almost three years.
Just 61,039 mortgages were signed off in December, a drop of over 3,000 compared to November. That's the smallest number since January 2015.
#UnitedKingdom Mortgage Approvals at 61.04K https://t.co/xjNGJUUXea pic.twitter.com/cYefMMRst2
9.29am GMT
Poland's economy accelerated last year, according to new data.
Poland's GDP expanded by 4.6% in 2017, up from 2.9% in 2016.
9.25am GMT
Mining companies are leading the selloff today:
Rubbish start for the miners https://t.co/R1IxsL7EzZ pic.twitter.com/2Xxayru8rg
8.50am GMT
Europe's major stock markets have all fallen this morning, despite the solid growth figures from France and Spain.
Goldman warns of a market correction as S&P 500 & MSCI World have entered their longest period w/o correction of >5%. Says bear market risks low. Says drawdowns within bull markets of 10% or more are not uncommon. Goldman finds 22 since 1945. pic.twitter.com/ujghn9JqLP
8.31am GMT
Some reaction to the Spanish growth data:
Spanish economy grew by more than 3% (again!) in 2017. Still 1% away from full capacity but output gap is narrowing fast. Should be closed by early 2019, after France but way before Italy. Spain now entering a 'slowdown' phase after stellar years. My take: https://t.co/9KXNyued1l pic.twitter.com/cdIcrCvq0y
8.13am GMT
Newsflash: Spain's economy grew by 0.7% in the final quarter of 2017.
8.05am GMT
Update: the pound is slipping lower.
GBPUSD back below 1.40; it really had no business above that level
7.52am GMT
The most encouraging part of the French growth report is that business investment has risen sharply.
This means French firms have boosted their spending on equipment, offices and factories - a sign that they're more confident about their future prospects.
French GDP growth was 1.9% in 2017, highest since 2011. All about domestic demand although net exports have started to contribute positively at the end of the year. pic.twitter.com/j7LybYjTkl
The big story in France (and the euro area), is investment. Up 9% in two years, and back above pre-crisis levels for the first time in Q4-17. pic.twitter.com/6JVz5AIIRP
7.40am GMT
Brexit worries are weighing on the pound again this morning.
Sterling has shed half a cent against the US dollar, to $1.402, after leaked government papers showed that Britain's economy would be worse off under all three likely Brexit scenarios.
The document suggested that chemicals, clothing, manufacturing, food and drink, and cars and retail would be the hardest hit and every UK region would also be affected negatively in all the modelled scenarios, with the north-east, the West Midlands and Northern Ireland facing the biggest falls in economic performance.
Related: Brexit would damage UK growth, says leaked cabinet report
7.19am GMT
France is benefitting from President Emmanuel Macron's election win and the upturn in the global economy, says Bloomberg.
They add:
Macron's government is currently working with unions and business lobbies to overhaul France's job training system, and will move on to unemployment insurance in coming months.
Finance Minister Bruno Le Maire plans a major economy law for the spring that aims to further loosen restrictions on businesses, as well as increase profit-sharing plans for employees.
French economy sustains momentum, has its best year since 2011 https://t.co/Uz89HfQlCS pic.twitter.com/iFtwnKumXy
6.51am GMT
Newsflash: France's economy grew by 0.6% in the last three months.
French revival? GDP up 1.9% in 2017, highest since 2011 ...4Q GDP +2.4% on year thanks mainly to business investment #macron #france
6.36am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we learn if Europe's economic recovery is on track.
Opening calls
FTSE100 is expected to open 46 points lower at 7,625
DAX is expected to open 99 points lower at 13,225
CAC40 is expected to open 34 points lower at 5,487
After such a promising end to last week where the Dow rallied 200 points to a fresh record close, trading on Monday couldn't have been more different. US stocks experienced a spectacular reversal and plummeted overnight, as the US 10 year treasury yield pushed relentlessly higher. Concerns are starting to enter the market that inflation could be catching up and higher interest rates could pour cold water on the bull run.
As the US treasury bond sell off depended, US treasury yields shot up to a peak of 2.73%, the highest level since 2014.The Dow dumped 177 points in its worst trading day so far this year and the S&P dived 0.7%.
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