US trade deficit hits three-year low; Rolls-Royce record sales - as it happened
Rolling coverage of the latest economic and financial news, including a tale of two carmakers
- Latest: US boosts exports, cuts imports
- Trade gap with China shrinks
- Rolls-Royce posts best year ever
- Sales up 25%, with demand up around the globe
- Aston Martin: Profits have slumped this year
- Aston shares tumble after 'very disappointing' year
6.19pm GMT
Finally, here's Reuters' take on the US trade figures:
The U.S. trade deficit fell to a more than three-year low in November as imports declined further, likely weighed down by the Trump administration's trade war with China, and exports rebounded, suggesting the economy ended 2019 on solid footing.
The Commerce Department said on Tuesday the trade deficit decreased 8.2% to $43.1 billion, the smallest since October 2016. The percentage drop was the largest since January.
5.39pm GMT
Germany's stock market had a stronger day than its UK counterpart, with the Dax index gaining 0.75%.
Optimism that the US-China trade deal will be signed next week lifted German exporters, says Fiona Cincotta of City Index:
The FTSE was outperformed by the Dax, which has more to gain from the US - China trade talks. Data from Europe's largest economy has also been supportive with the retail sales, the service sector and retail sales all beating expectations this week, yet the euro has weakened - good news for Germany's multinationals and exporters.
5.28pm GMT
After a calmer day than yesterday, the FTSE 100 has closed just 1 point lower at 7,574.
4.19pm GMT
Back on Rolls-Royce..... it appears that strong demand for customised luxury vehicles boosted sales last year.
The number of cars designed to customers' specifications hit a new high in 2019, it says, keeping its "Bespoke" division busy catering for their whims.
The Bespoke collective at the home of Rolls-Royce in Goodwood, West Sussex, comprises several hundred creative designers, engineers and craftspeople," the company said. "These highly talented men and women take enormous pride in fulfilling unprecedented levels of customer requests for bespoke personalisation and delivering on beautiful individual commissions such as the Rose Phantom."
The Rose Phantom was requested by Swedish billionaire Ayad al-Saffar, who asked Rolls-Royce to fill the interior with roses. More than 1m embroidered satin stitches were needed to create a fantasy rose garden interior with an entanglement of greenery, flowers, and butterflies.
Related: Rolls-Royce enjoys record sales thanks to 264,000+ SUV
3.11pm GMT
In another boost to the US economy, growth across America's services sector has accelerated.
The non-manufacturing PMI index, calculated by ISM, has jumped to 55.0 for December, up from 53.9 in November. That shows faster growth, and could mean the US economy is strengthening.
#US ISM non-manufacturing PMI (Dec) 55.0 v 54.5 exp. (prev 53.9)
Highest since August$USD pic.twitter.com/VCBoapa9Lj
Here's the summary from ISM pic.twitter.com/xiIrGDEr5T
3.04pm GMT
Today's US trade figures show that Donald Trump's tough stance with China is paying off, argues James Knightley of ING.
And that means other countries should be nervous, as it could encourage the White House to launch more trade disputes.
Looking geographically, the numbers suggest that President Trump's tough stance with China has paid dividends. Based on the January-November data, it looks as though the US is on course to run its smallest trade deficit with China since 2016 - the US-China deficit looks set to contract nearly $70bn in 2019 versus 2018.
However, we continue to see a significant amount of substitution (although not be as much as the deficit with China has shrunk) given the US deficits with both Mexico and the EU will hit new all-time highs - the deficit with the EU is on course to increase by $8bn while the deficit with Mexico is set to increase by $21bn.
The US trade numbers suggest that President Trump's tough stance with China has paid dividends, says @Knightleyecohttps://t.co/pbBRJbeCeI
2.55pm GMT
Ding ding! The New York stock exchange is open.
But despite today's strong trade figures, stocks are dipping. The Dow has dropped by 107 points to 28,595, or 0.35%, as investors worry about Middle East tensions.
2.31pm GMT
American firms exported more heavy duty machinery (capital goods), cars and consumer products in November.
That helped to narrow the trade gap, points out Greg Daco of Oxford Economics:
US #trade deficit shrinks to narrowest since Oct 2016: -3.8bn to $43.1bn in November.
> Exports +0.7% driven by capital gds, autos and consumer gds
> Imports -1.0% (3rd consec decline) driven by capital goods (aircraft, semi, comput), consumer gds (cell phones) & ind supplies pic.twitter.com/rSf9No524y
Change in US year-to-date Imports (through November) 2019 vs 2018 with
China -15.2%
Canada -0.8%
Mexico +3.6%
Japan +1.5%
Germany +1.1%
Vietnam +34.2%
Taiwan +18.9%
India +5.9%
South Korea +4.4%
Supply chains are shifting.
2.24pm GMT
Just in: America's trade deficit has hit a three-year low, as the trade war with China hits imports.
The gap between US imports and exports shrank by 8.2% to $43.1bn in November, the Commerce Department says, down from $46.9bn in October. That's the lowest monthly deficit since October 2016.
The rupture to the Keystone pipeline caused a sharp fall in crude oil imports from Canada. Meanwhile, the continued decline in consumer goods imports partly reflects slower consumption growth, but it has probably also been driven by the continued unwinding of stockpiling ahead of the tariffs on China imposed back in September.
*U.S. NOV. GOODS TRADE GAP WITH CHINA IS AT SIX-YEAR LOW - BBG
12.42pm GMT
Even Sony is taking an interest in the car industry.
Sony has unveiled their new electric concept car called as the Vision-S.
But before you think Sony is getting into the car business, well, they are clear that their focus is on their bread and butter - entertainment, and that is the highlight of the Vision-S. pic.twitter.com/tzQfEo7lgj
a Sony surprised crowds at #CES2020 by unveiling an electric car prototype: the Vision-S #SonyCES pic.twitter.com/8E2EB5FNQI
12.18pm GMT
Here's our updated news story on Aston Martin's profits shocker:
Related: Aston Martin warns on profits after 'very disappointing' year
The company is pinning its hopes on the new DBX sports utility vehicle, for which it has received 1,800 orders since the launch in late November. It hopes the 158,000 SUV will widen its appeal to wealthy women - nearly all its current customers are men. It will start delivering the DBX in the April to June quarter.
Palmer said the rapid rise in orders had been "significantly better than any other previous models". Aston Martin will also launch an open-top Vantage Roadster in the spring.
12.05pm GMT
Morrison's isn't the only UK supermarket to struggle over Christmas.
New industry figures suggest that the Big Four UK supermarkets all suffered falling sales over the festive period, as shoppers continue to flock to discount chains such as Lidl and Aldi. More here.
Big four supermarkets lose Christmas sales as 'Boris bounce' fails to appear https://t.co/K3fMMYTe2U
11.51am GMT
Britain's FTSE 100 is having a more subdued day than the rest of Europe, up just 0.15% or 12 points at 7,587.
This is a fair set of results from Morrisons, which is not as bad as some analysts had been expecting. The dip in like-for-like sales (excluding fuel) of 1.7 percent in the 22 weeks to the 5th January reflects the exceptionally tough trading conditions in the run up to Christmas 2019 and, in particular, the timing of the general election, which may have discouraged consumer spending.
"Morrison's 'fix, rebuild and grow' strategy has delivered strong results in recent years, but there was a setback in September last year when the company reported its first underlying fall in sales since 2016. This further fall in like-for-like sales will be concerning for shareholders.
11.33am GMT
After yesterday's nervous trading, Europe's stock markets are recovering some ground today as investors watch for developments in the US-Iran crisis.
Germany's DAX is the best performer, up 1.1%, led by by consumer groups such as Adidas (+2.2%). BMW, which owns Rolls-Royce, is also among the top risers - up 1.7% today.
Signs that global growth may stabilise in early 2020 have calmed fears that the current slowdown in the world economy will morph into a full-blown global recession. Activity data over recent months have mostly evolved as we expected, and some uncertainties have ebbed. As a result, we have lowered our estimate of the probability of a global recession in 2020 to 25% from 30% previously.
But while we are a little more confident that global growth will pick up beyond Q1, we still expect the improvement to be steady and unspectacular. Recent economic data has not been uniformly positive, and while US-China trade concerns have receded, apprehension over a US-Iran conflict has filled the void.
Despite rising geopolitical tensions, US data continue to point toward steady momentum entering 2020 as trade, fiscal & monetary policy risks have been reduced. Downside risks to our 1.7% #GDP forecast remain, but skew is less pronounced.
> Lower #recession odds for 2020 to 25% pic.twitter.com/uRnGyzn65S
10.45am GMT
Investors who trusted Neil Woodford with their savings should take a deep breath before reading on.....
10.21am GMT
We also have new retail sales data, showing that eurozone consumers have raised their spending.
Retail sales jumped by 1.0% in November, and were 2% higher than a year ago.
Euro area #RetailTrade +1.0% in November 2019 over October, +2.2% over November 2018 https://t.co/7D18Aqt7XT pic.twitter.com/dDLQ1gPvtK
#Eurozone #CPI rises +1.3% MoM and YoY in December, as expected. Retail sales rises +1.0% MoM in Nov, more than exp. +0.6%. It seems the Eurozone economy is exit the stagnation phase. This should make the #ECB monetary policy stance more hawkish in 2020@graemewearden
10.08am GMT
Just in: inflation across the eurozone has risen to 1.3%, driven by higher food prices.
Eurostat reports that food prices jumped 2% year-on-year last month, with services costing 1.8% more.
Euro area #inflation up to 1.3% in December 2019: food +2.0%, services +1.8%, other goods +0.4%, energy +0.2% - flash estimate https://t.co/tQyfaOSw8S pic.twitter.com/Ofbu9r5M1N
Bad news for the ordinary Euro area resident as food prices rise at an annual rate of 2% . Central bankers who apparently do not need to eat like to ignore this sort of thing #ECB https://t.co/uMcDirrkOC
9.51am GMT
Aston Martin' is "one of the biggest flops on the stock market in living memory", says Russ Mould, investment director at AJ Bell.
He's deeply unimpressed that its share price has tumbled from 19 to below 5 since it floated 15 months ago -- adding that there's nothing in today's trading statement to improve its "tarnished reputation".
"The big question is why wealthy people aren't buying its luxury cars. Working for this company should be a marketeer's dream but the team responsible for attracting customers clearly haven't got the formula right.
"Aston Martin has previously talked about relying too heavily on its ties to the James Bond franchise. Once the latest film had been released, the hype died down and so did the number of people talking about the brand. Efforts to refresh the brand with more of an emotional angle don't appear to have had the desired effect.
9.29am GMT
Back on Rolls-Royce.... and its chief executive has warned that Britain needs to ensure smooth trading with the EU after Brexit:
Rolls-Royce CEO Torsten Mi1/4ller-i-tvis tells me the UK election 'removed some uncertainty' around Brexit and says 'that's great'.
Rolls-Royce CEO Torsten Mi1/4ller-i-tvis tells me imports and exports for the automaker need to be 'frictionless' in a UK-EU trade deal.
And would Rolls-Royce build cars away from the UK if a trade deal with the EU isn't favourable?
Rolls-Royce CEO Torsten Mi1/4ller-i-tvis tells me, 'there are no plans to move somewhere else, that's for sure.'
9.01am GMT
Neil Wilson of Markets.com reckons Aston Martin has been forced to slash prices due to weak demand, saying:
Heavy discounting when buyers can see multiple models on the forecourt is impossible to avoid.
This is a drop in the ocean though and for sure Aston needs to raise cash in some way. The bond market looks unpalatable but even an equity raise could prove tricky. The rationale to go private is impossible to resist - the brand still has the cache to make it appealing.
If it was a horse... they would shoot it. https://t.co/r7t0yBmmzJ pic.twitter.com/EsZVcvDnpA
8.40am GMT
Cat Rutter Pooley of the Financial Times says Aston Martin's "car crash" of a stock market float has got even worse.
She writes:
This morning's unscheduled trading update is a doozy. Adjusted earnings before interest tax depreciation and amortisation - the luxury carmaker's preferred earnings measure - is expected to be just 130m-140m in 2019. FactSet reports a consensus estimate of 200m. Adjusted ebitda margins will be between 12.5 per cent and 13.5 per cent. Back in July (another profit warning), Aston guided to a figure of 20 per cent for the year.
The list of reasons for the latest profit warning are long. Wholesale sales have fallen 7 per cent year-on-year, with Europe underperforming. Core retail sales increased, but customers needed more financing support to persuade them to buy. The cheaper Vantage model made up more of the sales mix.
8.25am GMT
Shares in Aston Martin have plunged by over 11% at the start of trading in London.
That pulls them down to 462p, from 520p last night, dragging the company's value down to just over 1bn.
8.06am GMT
Aston Martin is explaining what went (badly) wrong in 2019 now, on a call with analysts and investors (and my colleague Julia Kollewe).
CEO Andy Palmer is talking up the prospects for its new sport utility vehicle.....
Shocking profit warning from Aston Martin: sees 2019 profits at 130m-140m, roughly half of 2018 levels; but CEO highlights surge in orders for new DBX SUV to 1,800 since Nov launch - 'significantly better than any other previous models'
Aston Martin CEO Andy Palmer: had to discount more heavily than planned and pay higher volume bonuses to dealers, to sell cars in Europe after slump in demand
7.57am GMT
The City is about to give Aston Martin a serious kicking:
Aston Martin seen -25%
7.55am GMT
Newsflash: Aston Martin, another storied carmaker, has hit shareholders with a stinging profits warning.
"From a trading perspective, 2019 has been a very disappointing year. Whilst retails have grown by 12%, our best result since 2007, our underlying performance will fail to deliver the profits we planned, despite a reduction in dealer stock levels.
We are taking a series of actions to manage the business through this difficult period. This will include a cost saving programme alongside a focus on returning dealer stock levels to those more normally associated with a luxury company; winning back our strong price positioning is a key focus.
7.45am GMT
The secret to Rolls-Royce's success is that it's more of a luxury goods maker than a carmaker.
So says chief executive Torsten Mi1/4ller-i-tvis, who told the BBC's Wake Up To Money programme that its customers approach cars rather differently than the masses:
"We are not really in the car business, we are in the luxury goods business,"
"All of our clients have multiple cars in their garages. It is more that you look for something that's very special. We are famous for bespoke so you can basically customise a Rolls-Royce to build your own masterpiece and I think that has attracted quite a lot of clients worldwide."
7.37am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
In its first full year of availability, Cullinan exceeded even the highest expectations raised by its successful launch. The world's pre-eminent super-luxury SUV has become the fastest-selling new Rolls-Royce model in history.
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