Rolling coverage of the latest economic and financial news
- Latest: Ryanair cuts capacity by 20% in September and October
- UK financial wellbeing deteriorated in August
- Travel stocks falling again
- Schroders and PWC back home working
Earleir:
And finally… European stock markets have closed tonight with gains in London, but sharp losses in Madrid.
The FTSE 100 ended 37 points higher at 6,127 points, with mining stocks rising but travel stocks dropping.
Related: Ryanair cancels flights on fresh UK quarantine restrictions
Finance ministers from the G7 advanced economies have held a teleconference call today, to discuss their response to the pandemic.
A statement just released by the US treasury says they ‘continue to coordinate’ their timely and effective actions, and have noted the ‘improvement in economic conditions’.
They emphasized the importance of support for the manufacturing and distribution of vaccines and treatments for COVID-19, particularly related to low income countries.
Readout from a Treasury Spokesperson on Secretary Mnuchin’s discussion with G7 Finance Ministers https://t.co/s8KfdYZvmY
After a rather quiet* session, the London stock market is ending the day with a modest rally.
The blue-chip FTSE 100 index is now up 46 points, or 0.75%, at 6137. That means it’s recovered around half of Friday’s quarantine-induced losses.
It was a stodgy session for all bar the FTSE, which benefited from its hefty clique of mining stocks.
With US-China trade talks postponed indefinitely, and covid-19 deaths the wrong side of 170,000, there was little reason for the Dow Jones to avoid a red open. Falling 0.3%, the index was put on the journey back towards 27850, the rally that defined the first half of August continuing to stall.
Gold is having a strong day, up 1.6% or $31 per ounce to $1,975.
Bullion is strengthening after veteran investor Warren Buffett’s Berkshire Hathaway took a stake in producer Barrick Gold.
Gold moves higher on the back of Buffett’s move into Barrick Gold https://t.co/EFuuMyI0CD |https://t.co/iO6kjkPthN ad #forex #trading pic.twitter.com/ijAOo9CiFC
Zoe Bailey of financial planning service Tilney fears that UK households will remain under financial pressure for the next year, with Covid-19 likely to drive up unemployment.
Here’s her take on today’s financial wellbeing report:
“Today’s figures highlight the growing financial concern felt by households this summer, with people’s financial wellbeing falling further in August to 40.8 from the slightly more optimistic 41.5 in July”.
“In recent months, economic turmoil has had a profound impact on UK households and painted a gloomy picture of financial pessimism. With the UK now in a recession, figures from the IHS survey also spells out a further pessimism for the next 12 months, as many will be at further risk of redundancy as spending plummets. And with the Government’s furlough scheme coming to a close in October, people will be thinking ahead to how their income will be affected.
Over in New York, the stock market has risen slightly at the start of trading – back towards their record highs.
The S&P 500 index has gained 10 points, or 0.35, to 3,383.68 points — only 10 points away from its highest level (back in February, before the pandemic).
Because they’re inveitably going to be needed at some point…
S&P all-time closing high: 3386.15
S&P intraday all-time high: 3393.50$SPX
Here’s our full story on Ryanair’s decision to cut flight capacity in the next two months, by Gwyn Topham:
Ryanair is to cancel almost one in five flights from its September and October schedules after a drop in bookings in the last 10 days, as Covid-19 cases have increased in Europe, leading to fresh quarantine restrictions.
Europe’s biggest carrier said forward bookings had “noticeably weakened” and it would take 20% from its capacity to reflect demand, mainly cutting flight frequencies rather than routes.
Related: Ryanair cancels flights on fresh UK quarantine restrictions
Here’s some expert reaction to the slowdown in factory growth in New York state, from Mike McKee of Bloomberg…
#NYFed‘s Empire Index ratifies view that the economy may have stalled, falling to 3.7 in August from 17.2 in July. 34% say business conditions improved, 30% say worsened. Odd because NY #COVID19 case growth is so low in New York.
Meanwhile, manufacturers in the Empire State Manufacturing Survey remain positive about stronger activity over the next six months, but with less optimism than in the previous two surveys. The forward-looking composite index has pulled back from 38.4 in July to 34.3 in August.
Meanwhile in America, the factory recovery has slowed this month.
The closely-watched Empire State manufacturing index, which tracks factories in the New York region, has fallen to 3.7 in August from 17.7 in July.
The @NewYorkFed Empire State #manufacturing index fell 14pts to 3.7 in August.Most sub-indices fell back with new orders contracting slightly. Employment firmed a tad but the workweek declined.
Expectations fell 4pts to 34.3 w/ firms optimistic, but less so than over past 2 mo pic.twitter.com/mlAweKWf3W
In another blow to the UK airline sector, the Evening Standard is reporting that easyJet will close its bases at London Stansted, Southend and Newcastle next month.
The decision comes two months after the budget airline started consultations over whether to stop flying from the three airports.
EasyJet has confirmed plans to close its base at London Stansted airport from September 1, the Standard can reveal.
The budget airline will also close its Southend and Newcastle bases, putting 670 jobs at risk. It is understood the airline discussed the plans with unions today.
Exclusive: easyJet confirms the closure of its bases at Stansted, Newcastle and Southend from September 1, with 670 jobs at risk https://t.co/uGemrbbWs7
Breaking: Budget airline Ryanair has announced it is cutting flights capacity in September and October by almost 20%, after seeing a drop in demand as new travel restrictions are imposed.
“ These capacity cuts and frequency reductions for the months of Sept & Oct are necessary given the recent weakness in forward bookings due to Covid restrictions in a number of EU countries. Any affected passengers in Sept received email notification earlier today advising them of their options. Similar communications will be issued to the small number of affected passengers in Oct later today.
Over the past 2 weeks as a number of EU countries have raised travel restrictions, forward bookings especially for business travel into Sept & Oct have been negatively affected, and it makes sense to reduce frequencies so that we tailor our capacity to demand over the next 2 months.
While UK households struggle, the mood is a little brighter over in Germany.
“The clear and broad-based recovery in macroeconomic performance, which began after the low point in April, will continue.
“The German economy should grow very strongly in the summer quarter of 2020.”
Here’s our news story on the latest moves towards home-working:
Related: PwC and Schroders will allow staff to work from home after Covid crisis
“There’s no question that lockdown has done away with presenteeism. It’s shown many business leaders that their people can be productive, engaged and happy working from home.
Here’s Andy Bruce of Reuters on today’s drop in financial wellbeing:
The financial health of British households deteriorated in August at a faster pace than last month, in an unpromising sign for the economic recovery from the COVID-19 pandemic, a survey showed on Monday.
The Household Finance Index from data company IHS Markit fell to 40.8 in August from 41.5 in July, dragged down by the biggest drop in job security since 2011.
UK household financial health deteriorates at faster pace in August – @IHSMarkit.
“Households were still more pessimistic regarding their
job security than at any other time since April 2011.”https://t.co/zihObp6lfu pic.twitter.com/8URCRaBw83
UK shoppers continue to shun the high street, in another sign that the economy is still suffering from Covid-19.
“The first week of the peak summer holiday period delivered spectacularly hot weather but largely lacklustre footfall performance. Customer activity across UK retail destinations rose marginally from the week before but the uplift was less than a third of the increase recorded in the previous week. It was clearly high streets – where footfall marginally decreased – that subdued the overall result, whilst in shopping centres and retail parks footfall rose from the week before.
“Despite the poor performance across high streets nationally, footfall in coastal and historic town centres rose marginally, undoubtedly due to the school holiday period and hot weather, whilst in regional cities and in London in particular footfall declined.”
The drop in UK financial wellbeing in August shows that households are still suffering economic harm from the pandemic.
And that suggests the UK economy may not rebound strongly this year, after suffering a 20% contraction in April-June.
“The latest survey data highlight a continued strain on the finances of UK households, with the headline figure dipping in August as pressure intensified slightly. The 12-month outlook for finances remained highly negative amid substantial uncertainty surrounding the economic impact of the COVID-19 pandemic.
Incomes from employment fell sharply again, while the survey measure of job security perceptions remained firmly in negative territory as the winding down of the government’s furlough scheme looms.
IHS Markit #UK #Household Finance Index fell back in August after recent improvement. Index dipped to 40.8 (41.5 in July). Marked drop in income from employment & job insecurity high despite being at 5-month low. Expectations for finances rose modestly but still very low
UK household finances have continued to deteriorate as the Covid-19 pandemic pushed the country into a steep recession.
The latest Household Finance index, just released by data firm IHS Markit, shows that household spending fell again this month as take-home pay declined.
August data highlighted another reduction in income received from employment, with the latest decline sharp, despite easing further from May’s record drop.
Troublingly for the UK economic outlook, the survey measure of job security perceptions was also negative amid the ongoing COVID-19 pandemic and a substantial number of redundancies.
Looking into the future was just as gloomy, as households in the UK remained highly pessimistic of their financial wellbeing over the coming 12 months.
Fears of new Covid-19 lockdowns and travel restrictions are hitting shares in airline and hotel operators this morning.
As noted in the week ahead, the number of new Covid-19 cases across Europe is the number one thing to watch in the coming days as it has the potential to send nascent economic recovery into reverse.
A sharp rise in cases in Spain, France and Germany will make traders nervous about new lockdowns and ensure that local equity markets remain volatile. Nevertheless, basic resources stocks registered strong gains in early trade to offset much of the losses elsewhere.
“The negative news piling up on the global economy, relations between China and the US and a seeming second wave of coronavirus makes you wonder what stocks would be doing without the stimulus pledged by governments and central banks.
“Investors will be wary of reaching the point where the announcement of big financial packages no longer acts as a positive catalyst.
Tata Motors has denied reports that it plans to sell its stake in UK carmaker Jaguar Land Rover.
The Indian conglomerate insists that it’s committed to JLR, after talks with the UK government about a possible bailout collapsed. Tata also says that JLR “remains strong”. More here:
Related: Tata Motors denies it plans to sell stake in Jaguar Land Rover
While offices are struggling, the residential housing market is booming.
The UK housing market has had its busiest month in more than 10 years in July, with the traditional summer lull replaced by a flurry of activity from buyers and sellers, according to the property website Rightmove.
Related: Housing market has busiest month in more than 10 years
Property companies are under pressure this morning, amid fresh signs that office life will not be the same after the pandemic.
M&A news: French multinational pharmaceutical company Sanofi is buying US rival Principia Biopharma in a $3.4bn deal.
It is the second and largest acquisition struck by chief executive Paul Hudson since he took over a year ago, and reflects his strategy of focusing on speciality medicines for cancer and rare diseases, rather than the mass-market cardiovascular and diabetes drugs that have traditionally generated its revenues.
With the deal, Sanofi acquires a pipeline of drugs known as BTK inhibitors that may help treat autoimmune disorders by curbing white blood cells known as B-cells from attacking healthy tissue.
European markets are an uninspiring sight this morning.
In London, the FTSE 100 has dipped by 13 points or 0.2%, while there are small gains in Paris (+0.3%) and Frankfurt (+0.1%):
The news on the COVID front has been mixed, with a flare up in a number of European countries raising concerns over a potential second wave, but some optimism on the vaccine front. The market continues to shrug off the recent rise in the number of cases.
Our view remains that the main driver for the market would be expected policy actions and any economic fallouts from renewed lockdowns rather than the rise in the number of cases.
Asia-Pacific markets were rather mixed today, after Japan posted its worst growth figures in decades.
However, China’s market rallied sharply after its central bank pumped more liquidity into the financial system – and the trade talks were postponed.
Chinese markets flying.
Phase one trade talks postponed over the weekend.#A50 15756 +2.86% pic.twitter.com/xvEBV8YzL7
China’s central bank has taken fresh measures to support its economy today.
The People’s Bank of China (PBoC) say it would provide 700-billion-yuan worth of medium-term loans. That’s more than enough to roll over the 550bn yuan injected in recent months, which mature later this month.
Investors are also digesting the news that the United States and China delayed a review of their Phase 1 trade deal.
The two sides were initially slated to talks for Saturday, but this didn’t actually happen.
No new date for the initial six-month compliance review between U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He has been agreed, the sources said.
The officials were expected to hold a videoconference on Saturday, the six-month anniversary of the trade deal’s Feb. 15 entry into force as the coronavirus pandemic began spreading globally.
The slump in Japan’s economy last quarter was mainly driven by a slump in household spending, says Adam Cole of RBC:
Q2 GDP fell 7.8% q/q (non-annualised) – slightly better than expected and leaving Japan as one of the more mildly affected economies in Q2.
As expected, the bulk of the fall in GDP was accounted for by weaker consumer spending.
Japan’s Q2 GDP down a record 7.8% QoQ. Private consumption/external demand both a significant drag. Third straight qtr of contraction—last Oct’s ill-timed consumption tax increase the trigger for the start. Ignore the annualised numbers—drama is good for headlines but misleading.
#Japan‘s #GDP contracted by a staggering 7.8% in Q2, or 27.8% annualized, the biggest decline since records began in 1955. Private consumption fell 28.9% annualized. pic.twitter.com/ZLx04zeX7G
Historically large decline in #Japan GDP. State-of-emergency weighs heavy along with 55% decline in car exports. JPY100,000 cash-handout boosted June consumption but higher infection numbers could hamper quick rebound as consumers remain cautious. And no Olympics to save the day pic.twitter.com/QmW6FkNBZa
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Global markets are subdued this morning, after Japan became the latest country to suffer a historic economic slump due to the Covid-19 pandemic.
some snippets from @TheEconomist on Japan’s 2nd-quarter GDP data. pic.twitter.com/HRWMLWTJ3R
Japan Q2 GDP Posts Biggest Contraction Since Comparable Data Became Available In 1980 – Govt
Private consumption, which accounts for more than half of Japan’s economy, fell 8.2% for the quarter, bigger than analysts’ forecast of a 7.1% drop. Capital expenditure declined 1.5% in the second quarter, less than a median market forecast for a 4.2% fall.
External demand, or exports minus imports, shaved 3.0% off GDP, as the pandemic dampened global demand, the data showed.
Global report: Japan hit by biggest GDP fall in 40 years, Australia suffers deadliest day https://t.co/wptTyYc2Rn
European Opening Calls:#FTSE 6094 +0.06%#DAX 12893 -0.06%#CAC 4968 +0.09%#AEX 561 -0.06%#MIB 20045 +0.09%#IBEX 7173 +0.26%#OMX 1753 -0.04%#STOXX 3305 +0.01%#IGOpeningCall
Asia markets have started the week on a mixed note with the latest Japanese Q2 GDP numbers showing that the world’s third biggest economy contracted by -7.8%, with private consumption sliding -8.2%, both by more than expected. In a development that is even more worrying is that industrial production in June only recovered a modest 1.9% significantly below expectations of 2.7%, and pointing to a weak recovery towards the end of Q2, as we look towards Q3.
As such equity markets here in Europe also look set to open on a mixed note with no clear sense of direction.
Continue reading…Rolling coverage of the latest economic and financial newsLatest: Ryanair cuts capacity by 20% in September and OctoberUK financial wellbeing deteriorated in AugustTravel stocks falling againSchroders and PWC back home workingEarleir:Introduction: Japan suffers worst slump in decadesUS-China trade talks postponed 4.40pm BSTAnd finally… European stock markets have closed tonight with gains in London, but sharp losses in Madrid.The FTSE 100 ended 37 points higher at 6,127 points, with mining stocks rising but travel stocks dropping. Related: Ryanair cancels flights on fresh UK quarantine restrictions 4.10pm BSTFinance ministers from the G7 advanced economies have held a teleconference call today, to discuss their response to the pandemic.A statement just released by the US treasury says they ‘continue to coordinate’ their timely and effective actions, and have noted the ‘improvement in economic conditions’.They emphasized the importance of support for the manufacturing and distribution of vaccines and treatments for COVID-19, particularly related to low income countries. Readout from a Treasury Spokesperson on Secretary Mnuchin’s discussion with G7 Finance Ministers https://t.co/s8KfdYZvmY 3.48pm BSTAfter a rather quiet* session, the London stock market is ending the day with a modest rally.The blue-chip FTSE 100 index is now up 46 points, or 0.75%, at 6137. That means it’s recovered around half of Friday’s quarantine-induced losses.It was a stodgy session for all bar the FTSE, which benefited from its hefty clique of mining stocks.With US-China trade talks postponed indefinitely, and covid-19 deaths the wrong side of 170,000, there was little reason for the Dow Jones to avoid a red open. Falling 0.3%, the index was put on the journey back towards 27850, the rally that defined the first half of August continuing to stall. 3.17pm BSTGold is having a strong day, up 1.6% or $31 per ounce to $1,975.Bullion is strengthening after veteran investor Warren Buffett’s Berkshire Hathaway took a stake in producer Barrick Gold.Gold moves higher on the back of Buffett’s move into Barrick Gold https://t.co/EFuuMyI0CD |https://t.co/iO6kjkPthN ad #forex #trading pic.twitter.com/ijAOo9CiFC 2.54pm BSTZoe Bailey of financial planning service Tilney fears that UK households will remain under financial pressure for the next year, with Covid-19 likely to drive up unemployment.Here’s her take on today’s financial wellbeing report:“Today’s figures highlight the growing financial concern felt by households this summer, with people’s financial wellbeing falling further in August to 40.8 from the slightly more optimistic 41.5 in July”.“In recent months, economic turmoil has had a profound impact on UK households and painted a gloomy picture of financial pessimism. With the UK now in a recession, figures from the IHS survey also spells out a further pessimism for the next 12 months, as many will be at further risk of redundancy as spending plummets. And with the Government’s furlough scheme coming to a close in October, people will be thinking ahead to how their income will be affected. 2.36pm BSTOver in New York, the stock market has risen slightly at the start of trading – back towards their record highs.The S&P 500 index has gained 10 points, or 0.35, to 3,383.68 points — only 10 points away from its highest level (back in February, before the pandemic).Because they’re inveitably going to be needed at some point…S&P all-time closing high: 3386.15S&P intraday all-time high: 3393.50$SPX 2.24pm BSTHere’s our full story on Ryanair’s decision to cut flight capacity in the next two months, by Gwyn Topham:Ryanair is to cancel almost one in five flights from its September and October schedules after a drop in bookings in the last 10 days, as Covid-19 cases have increased in Europe, leading to fresh quarantine restrictions.Europe’s biggest carrier said forward bookings had “noticeably weakened” and it would take 20% from its capacity to reflect demand, mainly cutting flight frequencies rather than routes. Related: Ryanair cancels flights on fresh UK quarantine restrictions 2.09pm BSTHere’s some expert reaction to the slowdown in factory growth in New York state, from Mike McKee of Bloomberg…#NYFed’s Empire Index ratifies view that the economy may have stalled, falling to 3.7 in August from 17.2 in July. 34% say business conditions improved, 30% say worsened. Odd because NY #COVID19 case growth is so low in New York.Meanwhile, manufacturers in the Empire State Manufacturing Survey remain positive about stronger activity over the next six months, but with less optimism than in the previous two surveys. The forward-looking composite index has pulled back from 38.4 in July to 34.3 in August. 1.44pm BSTMeanwhile in America, the factory recovery has slowed this month.The closely-watched Empire State manufacturing index, which tracks factories in the New York region, has fallen to 3.7 in August from 17.7 in July.The @NewYorkFed Empire State #manufacturing index fell 14pts to 3.7 in August.Most sub-indices fell back with new orders contracting slightly. Employment firmed a tad but the workweek declined.Expectations fell 4pts to 34.3 w/ firms optimistic, but less so than over past 2 mo pic.twitter.com/mlAweKWf3W 1.38pm BSTIn another blow to the UK airline sector, the Evening Standard is reporting that easyJet will close its bases at London Stansted, Southend and Newcastle next month.The decision comes two months after the budget airline started consultations over whether to stop flying from the three airports.EasyJet has confirmed plans to close its base at London Stansted airport from September 1, the Standard can reveal.The budget airline will also close its Southend and Newcastle bases, putting 670 jobs at risk. It is understood the airline discussed the plans with unions today.Exclusive: easyJet confirms the closure of its bases at Stansted, Newcastle and Southend from September 1, with 670 jobs at risk https://t.co/uGemrbbWs7 12.47pm BSTBreaking: Budget airline Ryanair has announced it is cutting flights capacity in September and October by almost 20%, after seeing a drop in demand as new travel restrictions are imposed.“ These capacity cuts and frequency reductions for the months of Sept & Oct are necessary given the recent weakness in forward bookings due to Covid restrictions in a number of EU countries. Any affected passengers in Sept received email notification earlier today advising them of their options. Similar communications will be issued to the small number of affected passengers in Oct later today.Over the past 2 weeks as a number of EU countries have raised travel restrictions, forward bookings especially for business travel into Sept & Oct have been negatively affected, and it makes sense to reduce frequencies so that we tailor our capacity to demand over the next 2 months. 12.06pm BSTWhile UK households struggle, the mood is a little brighter over in Germany.“The clear and broad-based recovery in macroeconomic performance, which began after the low point in April, will continue. “The German economy should grow very strongly in the summer quarter of 2020.” 11.53am BSTHere’s our news story on the latest moves towards home-working: Related: PwC and Schroders will allow staff to work from home after Covid crisis “There’s no question that lockdown has done away with presenteeism. It’s shown many business leaders that their people can be productive, engaged and happy working from home. 11.20am BSTHere’s Andy Bruce of Reuters on today’s drop in financial wellbeing:The financial health of British households deteriorated in August at a faster pace than last month, in an unpromising sign for the economic recovery from the COVID-19 pandemic, a survey showed on Monday. The Household Finance Index from data company IHS Markit fell to 40.8 in August from 41.5 in July, dragged down by the biggest drop in job security since 2011.UK household financial health deteriorates at faster pace in August – @IHSMarkit.”Households were still more pessimistic regarding theirjob security than at any other time since April 2011.”https://t.co/zihObp6lfu pic.twitter.com/8URCRaBw83 11.03am BSTUK shoppers continue to shun the high street, in another sign that the economy is still suffering from Covid-19.“The first week of the peak summer holiday period delivered spectacularly hot weather but largely lacklustre footfall performance. Customer activity across UK retail destinations rose marginally from the week before but the uplift was less than a third of the increase recorded in the previous week. It was clearly high streets – where footfall marginally decreased – that subdued the overall result, whilst in shopping centres and retail parks footfall rose from the week before. “Despite the poor performance across high streets nationally, footfall in coastal and historic town centres rose marginally, undoubtedly due to the school holiday period and hot weather, whilst in regional cities and in London in particular footfall declined.” 10.48am BSTThe drop in UK financial wellbeing in August shows that households are still suffering economic harm from the pandemic.And that suggests the UK economy may not rebound strongly this year, after suffering a 20% contraction in April-June. “The latest survey data highlight a continued strain on the finances of UK households, with the headline figure dipping in August as pressure intensified slightly. The 12-month outlook for finances remained highly negative amid substantial uncertainty surrounding the economic impact of the COVID-19 pandemic.Incomes from employment fell sharply again, while the survey measure of job security perceptions remained firmly in negative territory as the winding down of the government’s furlough scheme looms. 10.48am BSTIHS Markit #UK #Household Finance Index fell back in August after recent improvement. Index dipped to 40.8 (41.5 in July). Marked drop in income from employment & job insecurity high despite being at 5-month low. Expectations for finances rose modestly but still very low 10.22am BSTUK household finances have continued to deteriorate as the Covid-19 pandemic pushed the country into a steep recession.The latest Household Finance index, just released by data firm IHS Markit, shows that household spending fell again this month as take-home pay declined. August data highlighted another reduction in income received from employment, with the latest decline sharp, despite easing further from May’s record drop.Troublingly for the UK economic outlook, the survey measure of job security perceptions was also negative amid the ongoing COVID-19 pandemic and a substantial number of redundancies. Looking into the future was just as gloomy, as households in the UK remained highly pessimistic of their financial wellbeing over the coming 12 months. 9.58am BSTFears of new Covid-19 lockdowns and travel restrictions are hitting shares in airline and hotel operators this morning.As noted in the week ahead, the number of new Covid-19 cases across Europe is the number one thing to watch in the coming days as it has the potential to send nascent economic recovery into reverse. A sharp rise in cases in Spain, France and Germany will make traders nervous about new lockdowns and ensure that local equity markets remain volatile. Nevertheless, basic resources stocks registered strong gains in early trade to offset much of the losses elsewhere.“The negative news piling up on the global economy, relations between China and the US and a seeming second wave of coronavirus makes you wonder what stocks would be doing without the stimulus pledged by governments and central banks.“Investors will be wary of reaching the point where the announcement of big financial packages no longer acts as a positive catalyst. 9.26am BSTTata Motors has denied reports that it plans to sell its stake in UK carmaker Jaguar Land Rover.The Indian conglomerate insists that it’s committed to JLR, after talks with the UK government about a possible bailout collapsed. Tata also says that JLR “remains strong”. More here: Related: Tata Motors denies it plans to sell stake in Jaguar Land Rover 9.21am BSTWhile offices are struggling, the residential housing market is booming.The UK housing market has had its busiest month in more than 10 years in July, with the traditional summer lull replaced by a flurry of activity from buyers and sellers, according to the property website Rightmove. Related: Housing market has busiest month in more than 10 years 9.17am BSTProperty companies are under pressure this morning, amid fresh signs that office life will not be the same after the pandemic. 8.59am BSTM&A news: French multinational pharmaceutical company Sanofi is buying US rival Principia Biopharma in a $3.4bn deal.It is the second and largest acquisition struck by chief executive Paul Hudson since he took over a year ago, and reflects his strategy of focusing on speciality medicines for cancer and rare diseases, rather than the mass-market cardiovascular and diabetes drugs that have traditionally generated its revenues.With the deal, Sanofi acquires a pipeline of drugs known as BTK inhibitors that may help treat autoimmune disorders by curbing white blood cells known as B-cells from attacking healthy tissue. 8.35am BSTEuropean markets are an uninspiring sight this morning. In London, the FTSE 100 has dipped by 13 points or 0.2%, while there are small gains in Paris (+0.3%) and Frankfurt (+0.1%):The news on the COVID front has been mixed, with a flare up in a number of European countries raising concerns over a potential second wave, but some optimism on the vaccine front. The market continues to shrug off the recent rise in the number of cases.Our view remains that the main driver for the market would be expected policy actions and any economic fallouts from renewed lockdowns rather than the rise in the number of cases. 8.24am BSTAsia-Pacific markets were rather mixed today, after Japan posted its worst growth figures in decades.However, China’s market rallied sharply after its central bank pumped more liquidity into the financial system – and the trade talks were postponed.Chinese markets flying.Phase one trade talks postponed over the weekend.#A50 15756 +2.86% pic.twitter.com/xvEBV8YzL7 8.18am BSTChina’s central bank has taken fresh measures to support its economy today.The People’s Bank of China (PBoC) say it would provide 700-billion-yuan worth of medium-term loans. That’s more than enough to roll over the 550bn yuan injected in recent months, which mature later this month. 8.07am BSTInvestors are also digesting the news that the United States and China delayed a review of their Phase 1 trade deal.The two sides were initially slated to talks for Saturday, but this didn’t actually happen. No new date for the initial six-month compliance review between U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He has been agreed, the sources said.The officials were expected to hold a videoconference on Saturday, the six-month anniversary of the trade deal’s Feb. 15 entry into force as the coronavirus pandemic began spreading globally. 8.02am BSTThe slump in Japan’s economy last quarter was mainly driven by a slump in household spending, says Adam Cole of RBC:Q2 GDP fell 7.8% q/q (non-annualised) – slightly better than expected and leaving Japan as one of the more mildly affected economies in Q2.As expected, the bulk of the fall in GDP was accounted for by weaker consumer spending. Japan’s Q2 GDP down a record 7.8% QoQ. Private consumption/external demand both a significant drag. Third straight qtr of contraction—last Oct’s ill-timed consumption tax increase the trigger for the start. Ignore the annualised numbers—drama is good for headlines but misleading.#Japan’s #GDP contracted by a staggering 7.8% in Q2, or 27.8% annualized, the biggest decline since records began in 1955. Private consumption fell 28.9% annualized. pic.twitter.com/ZLx04zeX7GHistorically large decline in #Japan GDP. State-of-emergency weighs heavy along with 55% decline in car exports. JPY100,000 cash-handout boosted June consumption but higher infection numbers could hamper quick rebound as consumers remain cautious. And no Olympics to save the day pic.twitter.com/QmW6FkNBZa 7.33am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Global markets are subdued this morning, after Japan became the latest country to suffer a historic economic slump due to the Covid-19 pandemic. some snippets from @TheEconomist on Japan’s 2nd-quarter GDP data. pic.twitter.com/HRWMLWTJ3RJapan Q2 GDP Posts Biggest Contraction Since Comparable Data Became Available In 1980 – GovtPrivate consumption, which accounts for more than half of Japan’s economy, fell 8.2% for the quarter, bigger than analysts’ forecast of a 7.1% drop. Capital expenditure declined 1.5% in the second quarter, less than a median market forecast for a 4.2% fall.External demand, or exports minus imports, shaved 3.0% off GDP, as the pandemic dampened global demand, the data showed.Global report: Japan hit by biggest GDP fall in 40 years, Australia suffers deadliest day https://t.co/wptTyYc2RnEuropean Opening Calls:#FTSE 6094 +0.06%#DAX 12893 -0.06%#CAC 4968 +0.09%#AEX 561 -0.06%#MIB 20045 +0.09%#IBEX 7173 +0.26%#OMX 1753 -0.04%#STOXX 3305 +0.01%#IGOpeningCallAsia markets have started the week on a mixed note with the latest Japanese Q2 GDP numbers showing that the world’s third biggest economy contracted by -7.8%, with private consumption sliding -8.2%, both by more than expected. In a development that is even more worrying is that industrial production in June only recovered a modest 1.9% significantly below expectations of 2.7%, and pointing to a weak recovery towards the end of Q2, as we look towards Q3.As such equity markets here in Europe also look set to open on a mixed note with no clear sense of direction. Continue reading…
