Wall Street hits record high after US GDP is revised up –business live
America's economy grew faster than thought in July-September, despite the trade war with China
Earlier:
- John Deere profit warning
- European stocks at four-year high
- Chinese factory profits plunge 9.9%
- Worst monthly slide since 2011 (apart from Jan-Feb)
4.52pm GMT
Finally, the UK stock market has ended the day higher.
The blue-chip FTSE 100 closed 26 points up at 7,429, 0.5% higher, at its best level in two months.
On one level, it's possible to interpret markets, and indeed the President of the United States as enjoying the moment. Negotiators are in the "final throes of a very important deal" and talks appear to be "going well". Donald Trump is "holding it up" to ensure it's the best it can be. The White House isn't breaking into a sweat. A similar mood is wafting through markets.
At some point, fairly soon, such sentiment may turn out to be ludicrous. After 'phase one' is done and dusted, and when longer-term, more comprehensive, complex and contentious aspects of the trading relationship must be addressed in more detail. 'Phase-one' hitches may look like a walk in the park by comparison.
3.06pm GMT
A quick recap.
3.02pm GMT
Just in: US personal spending rose by 0.3% in October, in line with forecasts.
But pending home sales fell by -1.7%, much worse than the 0.2% rise expected. We learned yesterday that house prices were rising across US cities, but it appears that a shortage of properties is hurting.
Pending home sales fall 1.7% in October, as housing shortage worsens https://t.co/iRA4oyMXDu
2.53pm GMT
Pharmaceutical firm Pfizer is the biggest rise on the Dow, up 1% in early trading.
Goldman Sachs (+0.6%), Apple (+0.5%) and Walmart (+0.44%) are also helping to push the index to its latest record high, with Nike and JP Morgan close behind.
2.39pm GMT
Boom! Wall Street has hit a fresh record high in early trading in New York, helped by today's growth report.
2.26pm GMT
Greg Daco of Oxford Economics has dug into today's US growth report:
US #GDP revised +0.2pt to 2.1% in Q3:
- #consumer spending at strong 2.9% but services only 1.7%
- #business invest plunged 2.7%: worst since Q4 '15
- #residential invest 5.1% rebound after 6 Qs decline
- drag from #trade 0.1ppt
- boost from inventories +0.2ppt
- gov spend +1.6% pic.twitter.com/nJTWpTo0v4
US corporate #profits +$4.6bn in Q3, following +$75.8bn in Q2, driven by domestic nonfinancial corporate profits & profits from abroad.
Profits are down 0.8% from last year while margins remain compressed at 9.7% of GDP - having declined nearly continuously for nearly 5 yrs pic.twitter.com/TCyNDe749v
2.24pm GMT
The US has cemented its position as the fastest-growing member of the G7 in the last quarter, thanks to today's GDP upward revision.
But that's not terribly impressive, given the lacklustre growth in both the eurozone and Japan.
2.00pm GMT
Today's GDP revisions suggest there's less danger of a US recession.
But despite growth being revised up, economists and investors are still cautious about the economic picture.
Real #GDP growth slowed to 2.1% y/y in Q3: weakest in 3 yrs.
Economic slowdown from 3% growth was anticipated, but has come more rapidly.
Business #investment 1.3% y/y is weakest since '16. Still represents key risk to outlook, especially if accompanied by inventory correction pic.twitter.com/amd2bJO7pS
Q3 #GDP details show higher than estimated print partly due to inventory building / slower pace of investment decline. Consumer component un-revised at +2.9%. All in, few outright positives ^KO
8:30AM ET U.S. data dump came in better than expected.
Q3 GDP revised up to 2.1% is impressive, as are those weekly jobless claims numbers. Solid rebound durable goods orders is especially encouraging.
U.S. economy continues its solid growth run. No recession to see here. pic.twitter.com/fHkmTdIK2y
The pace of US GDP growth in Q3 was revised upwards from +1.9% to +2.1%. The main change came from inventory build-up, so doesn't really alter the overall picture.
1.52pm GMT
The latest US jobless data is also stronger than expected.
Just 213,000 Americans signed on for unemployment benefit last week, down from 228,000 in the previous seven days.
1.51pm GMT
In a further boost, US durable goods orders jumped by 0.6% in October.
That's much better than the 0.5% contraction which economists expected, following a 1.4% decline in September.
1.45pm GMT
Today's US growth report is "a decent result under the circumstances, as the economy continues to outpace many of its peers", says Craig Erlam, senior market analyst at OANDA Europe.
1.41pm GMT
Newsflash: America's economy grew faster than previously though in the third quarter of this year.
New data show that GDP grew at an annualised rate of 2.1% in July-September -- the equivalent of just over 0.5% during the quarter.
Business fixed investment was revised to show a 1% drop instead of 1.3%. The change in the value of inventories or unsold goods was raised to $79.8 billion from $69 billion.
Exports rose a bit faster at 0.9% and imports advanced 0.8% instead of 0.4% as initially reported.
Some key changes in GDP pic.twitter.com/QxlwZMMGPT
1.33pm GMT
Back in the UK, Capital Economics have issued an interesting research note on how next month's election could move the markets, and affect the economy.
1.04pm GMT
Despite Deere's gloominess, Wall Street could hit a new all-time high when trading begins in 90 minutes.
US Opening Calls:#DOW 28158 +0.14%#SPX 3148 +0.27%#NASDAQ 8414 +0.33%#RUSSELL 1627 +0.32%#FANG 2886 +0.49%#IGOpeningCall
12.46pm GMT
Looking ahead, Deere & Co is also bracing for equipment sales to fall significantly next year.
Here's the details:
Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment are forecast to decline 5 to 10 percent for fiscal-year 2020, including a negative currency-translation effect of 1 percent. Industry sales of agricultural equipment in the U.S. and Canada are forecast to be down about 5 percent, driven by lower demand for large equipment. Full-year industry sales in the EU28 member nations are forecast to be approximately flat as are South American industry sales of tractors and combines. Asian sales are forecast to be about the same as the prior year. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about flat.
Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are anticipated to be down 10 to 15 percent for 2020, with foreign-currency rates having an unfavorable translation effect of 1 percent. The outlook reflects slowing construction activity as well as the company's efforts to manage dealer inventory levels. In forestry, global industry sales are expected to be in line with the previous year.
12.41pm GMT
Deere has also reported a 9% drop in adjusted operating profits in the last year, partly due to lower earnings from equipment sales.
That also suggests the trade war, which cut sales of US soybeans to China, has deterred farmers from buying new tractors.
"John Deere's performance reflected continued uncertainties in the agricultural sector."
12.23pm GMT
Just in: The firm behind John Deere tractors and combine harvesters has issued a profit warning, and blamed the US-China trade war.
"Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment.
Deere shares slide 4.3% premarket after company issues profit warning for fiscal 2020 https://t.co/JASb2VSHM6
11.52am GMT
Global stock markets are creeping close to a record high today.
The MSCI all-country world index is now 0.4% shy of its previous peak, thanks to the rally in Europe and (most of) the Asia-Pacific region today.
11.34am GMT
What happened to volatility?!
The financial markets feel unnaturally calm and still at present -- and that's because volatility has slipped to unusually low levels.
BORING:
Vol in every asset class is at least half a standard deviation below its one-year average
(stocks, Treasuries, high yield, oil, FX) pic.twitter.com/STZjM4B3WN
11.05am GMT
The UK's FTSE 100 index is up 10% so far this year, while the EU-wide Stoxx 600 has gained 21.5%.
And a new poll by Reuters shows that many investors expect the rally to run on in 2020, as fears of a global recession ease.
Latest #Reuters #poll on #global #equity #markets - Further to run for global #stocks, but #trade salve needed: Reuters poll https://t.co/BDCcbOKXqS
10.22am GMT
Shares in smaller UK companies are also pushing higher today.
The FSTE 250 index of medium-sized listed firms has jumped another 79 points, or 0.38%, to 20,944 -- its highest level since August 2018.
10.12am GMT
British American Tobacco is the top riser in London today, despite a slowdown in its e-cigarettes division.
9.42am GMT
Mining stocks are rallying this morning, despite the slump in Chinese factory profits.
Trade war optimism seems to be outweighing anxiety over China. And that's pushed the Stoxx 600 index to a new four-year high.
Enduring optimism the US can reach an interim trade deal with China has helped investors overlook disappointing Chinese economic data. The steepest fall in Chinese industrial profits in eight months suggest China is still feeling the heat from the trade war on top of a more widespread growth slowdown. Inventors can stomach a slowdown in China if they see an endpoint via the phase one trade deal. If the deal doesn't materialise and the data out of China continues to weaken, then things could go south quickly.
Wednesday's top early risers are Asia-focused HSBC alongside mining shares, which all stand to benefit from China striking a trade deal with the US. UK domestic companies are marred in election uncertainty - that explains the relative under performance of UK vs European shares this year
9.22am GMT
Britain's FTSE 100 has hit a two-month high this morning, as election worries push the pound down.
The blue-chip index has gained 38 points, or 0.5%, to 7441, its highest point since late September.
9.00am GMT
China's stock market has lost ground today, as the sharp drop in factory profits worried investors.
8.32am GMT
As is his wont, Donald Trump has been talking up the prospects of a trade deal with China.
He told reporters at the White House last night that a breakthrough was imminent... but also implied that Beijing needs to calm the situation in Hong Kong first.
"We're in the final throes of a very important deal, I guess you could say one of the most important deals in trade ever. It's going very well but at the same time we want to see it go well in Hong Kong."
8.24am GMT
Commodity prices have been hammered by the slide in Chinese factory profits.
Iron ore and steel prices have both fallen today, on fears of falling demand.
Benchmark Dalian iron ore futures prices, for January 2020 delivery, dived as much as 2.6% to 639 yuan ($90.78) per tonne and closed at 642 yuan per tonne.
The most traded construction steel rebar on the Shanghai Futures Exchange, declined 1.2% to 3,596 yuan a tonne.
8.10am GMT
These charts from Bloomberg show clearly how Chinese factory earnings have deteriorated rapidly this year:
8.01am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
As the trade war between Beijing and Washington drags on, Chinese factories are being hit hard -- fuelling concerns that the world's second-largest economy is losing momentum.
Ouch! #China's industrial #profits were down 9.9% YoY in October, the biggest decline since records began in 2011. pic.twitter.com/Eikn0C7E4C
Chinese economy heading into Q4 evidently still struggling. Here Oct industrial profits down almost 10% on yr, worse since 2011. And debt rising still, do fin ratios getting worse. Irony that China just raised to 33.7% MSCI as > 200 new stocks admitted https://t.co/XsckAeWa6g
"The big drop in October profits suggests the real economy is still facing plenty of difficulties.
Profit growth is expected to stay negative for a period of time in the future, likely prompting authorities to unveil more growth-boosting measures in a gradual and restrained way."
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