PS: If you’d like to learn more about Mark Pollock, please start here:
Updated
And that is all from us for tonight. Back in the morning. GW
Davos isn’t just about greedy bankers and scheming politicians.
Tonight, the press pack are hearing from Mark Pollock, who became the first blind man to reach the South Pole in 2009. The next year, he fell from a second floor window, broke his back, and is paralysed.
He’s currently explaining how he’s been working with pioneering doctors who are working on spinal cord injuries and seeking a cure for paralysis.
Impossible? Not if you listen to Pollock, whose resolve and optimism is quite, quite gripping.
He believes a cure is possible, saying:
The next big step for mankind is to take the first step after paralysis.
And he’s shown us videos of how he has worked with scientists to get his own body working again (we just saw him bend his left leg, thanks to an array of wiring).
Pollock’s message is that, in the 4th industrial revolution, biotechnology and genetic engineering could help a new wave of pioneers to redefine what it means to be human (I’m paraphrasing him).
Google him, please, and find out more about what he’s doing. It sounds pretty important.
Updated
An intriguing theme has emerged around this year’s Davos - the Falklands Islands.
Argentina’s new president, Mauricio Macri, has declared that he wants to rebuild his country’s relationship with the UK, more than thirty years after the Falklands War.
Macri is going to meet with David Cameron at Davos; we’ll be poised for that.
The awards ceremony is over, and delegates are fanning out across the Congress Centre, and beyond, ready for tomorrow’s action.
"Corporate greed cannot determine the results of climate protection" Leonardo di Caprio@wef2016 pic.twitter.com/CDKu7b9PyS
— Anita Gupta (@dpdhl_gupta) January 19, 2016
DiCaprio announces that his foundation is making a new £15m donation to help protect fragile ecosystems.
This includes rainforests in Sumatro, and protecting other rainforsts from the palm oil industry.
DiCaprio: Keep fossil fuels in the ground
And finally, Leonardo DiCaprio is picking up a Crystal Award for his work on environmental issues and climate change.
The Hollywood actor tells delegates at Davos thatworld leaders took an important first step in Paris with their agreement to reduce carbon emissions. But there’s much more to do.
The Paris agreement was a call to action, but it falls to all of us to help fight against the “irreversible damage” that climate change will cause.
We simply cannot afford the greed of the oil industry to determine the future of humanity.
Enough is enough, you know better, the world knows better. History will put the blame for this devastation firmly at their feet.
And DiCaprio insists that fossil fuel reserves must be left where they are.
Climate change cannot be stopped unless fossil fuels are left in the ground.
The next Crystal award goes to Chinese actor Yao Chen.
She’s known as the Queen of Weibo, with 78 million followers on the social media site (there’s an audible gasp in the audience).
Chen is being recognised for her work raising awareness of the refugee crisis, visiting migrant communities in countries such as Philippines, Thailand, Ethiopia, Lebanon and Pakistan.
Chen thanks aid organisations, the UN, and her husband for his support, and talks about how helping other people is important; it helps to meet the needs of the helper too.
Updated
America’s poorest communities could be changed forever if they could spawn the next technology giant, will.i.am continues. That’s the long-term goal of his foundation.
Davos hands Crystal awards to Chen, DiCaprio, Eliasson and will.i.am
Hilde Schwab, who co-founded WEF with her husband Klaus, has the floor in Davos.
She’s announcing the winners of the Crystal Awards - WEF’s annual prizes for people who have gone the extra mile to make the world better (no, they don’t give them to Wall Street bankers)
This year’s winners are actors Yao Chen and Leonardo DiCaprio, artist Olafur Eliasson, and musician and entrepreneur will.i.am.
Hilde explains that Eliasson has helped create and strengthen communities by building large-scale installations and designs.
Next comes Will.i.am (of the Black Eyed Peas, younger readers) is being recognised for his work bringing educational opportunist to the underpriviliged. His I am Angel foundation has helped keep young people in education and out of
Will.i.am is now on stage, joking that he grew up near gangs in the ghettos of America but he was more scared of his mother than the gangs so he kept out.
But turning serious, he says he wants kids to aspire to be the next Steve Jobs, the next Bill Gates, and fix the world’s problems rather than waiting for governments to do it for them.
One of Davos’s many curious traditions is a habit of ringing cowbells when a keynote session is about to start.
And that ding-ding noise in the distance means the opening ceremony is getting underway.
Updated
Back at the cancer moonshot talk, Joe Biden has called on the public to do their bit to help tackle the illness. It won’t be easy, or cheap.
I'm going to be asking the public for a lot more money and cooperation on the #cancermoonshot: Vice President Biden https://t.co/hN3bFBtO7t
— World Economic Forum (@Davos) January 19, 2016
UBS chairman: We've moved to a lower-growth economy
As well as warning about the impact of automation, Axel Weber, chairman of UBS, is discussing today’s latest downgrade of global growth forecasts by the IMF.
It was like groundhog day, he say, as the IMF had downgraded its forecasts nine times.
“It’s a sign we have moved to a lower growth economy.”
Weber adds that the problem isn’t so much cyclical as structural. The low growth, low inflation and low interest environment was likely to remain, he said.
UBS chairman Axel Weber says politicians need to address the rising inequality that the robot revolution will cause:
Jill is tweeting the details:
Countries such as Singapore, Switzerland, the UK and the US will be comparatively better off from automation, says UBS at Davos
— Jill Treanor (@jilltreanor) January 19, 2016
Alex Webber, UBS chairman, says in Davos it is up to policy makers to tackle the rise in inequality that will be caused by more automation
— Jill Treanor (@jilltreanor) January 19, 2016
Webber of UBS says the rise in inequality will take place not just between developing and developed countries but also within countries
— Jill Treanor (@jilltreanor) January 19, 2016
UBS: Richest will get most from the robot revolution
While Biden was demanding more progress on cancer, Swiss bank UBS has been presenting a new report into the fourth industrial revolution.
And you may be unsurprised to hear that UBS reckons the richest will benefit most from new technologies such as robots, AI, 3D printing, and all those cutting-edge systems.
Why? Because firms will be able to use robots to squeeze out low-paid workers, boosting their profit margins at the expense of the poorest.
Here’s the story, by Jill Treanor:
VP Biden says every cancer centre should share a record of its own data to researchers #WEF16
— Hemin Lihony (@lihony) January 19, 2016
Biden challenges cancer researchers to share data
Joe Biden is now challenging the experts on the panel, who includes top cancer researchers from the US and beyond, to share their data better.
Big data, he insists, is the key to this moonshot.
What would happen if I asked all of you who have data..... to get together in one room. Could that make sense, to talk to each other?...
No-one dares to object.
Well, in that case I’m going to do it, Biden grins. Not for the cameras, but for my own knowledge, and to make faster progress.
Updated
Some reaction to Joe Biden’s words:
The goal is to break through barriers and deliver treatments for millions of people: Vice President Biden https://t.co/xeNTvyRbhs #wef"
— Chinmoy Das (@DasUwsb) January 19, 2016
Exciting to hear @VP Biden talk about @AACR Project GENIE at the cancer moonshot panel in #Davos today. Learn more: https://t.co/SmUI58KPtT
— Josh Goldstein (@joshgoldstein1) January 19, 2016
Here’s another photo from the cancer moonshot talk:
“The first thing about solving a problem is addressing the impediment.” @VP Biden #cancer #wef2016 pic.twitter.com/6DOZZGAaAZ
— Charles Sawyers (@CharlesSawyers) January 19, 2016
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Data is absolutely crucial to Joe Biden’s cancer moonshot:
@Davos VP Biden calls for coordinatd action on cancer. Data, data standards and data access heavily emphasised. #health #informatics #WEF16
— David Rowlands (@Rowlands_DHWA) January 19, 2016
When Joe Biden talks about a cancer moonshot, he is harking back to the Apollo landings, and John F Kennedy’s declaration that America would put a man on the moon before the end of the 1960s.
This battle is different, though, partly because Biden doesn’t think the Federal government can do all the work.
Part of our role is to get out of the way, so the real experts can make the progress we need, the vice-president tells his audience at Davos.
But we will also do everything we can at the federal level to help.
Updated
Cancer has touched nearly all of us in some way, Joe Biden points out - few families have avoided experiencing it.
And every year, 14 billion people are diagnosed with cancer, 8 million die from it.
That total, of course, includes Beau Biden, the vice-president’s son who died of brain cancer last year.
Updated
Davos: Joe Biden calls for cancer moonshot
Hello from Davos, where this year’s World Economic Forum is getting underway.
Not without a few hitches, though. It’s bumper-to-bumper traffic out there, as business leaders, politicians, policy advocates and the media make the annual trek to WEF.
And even the vice-president of the United States, Joe Biden, got caught in the jam; it made him around 30 minutes late for a meeting with top scientists to push for a ‘moonshot’ to find a cure for cancer.
The vice-president apologises profusely and charmingly - but he doesn’t need to; everyone here knows how Davos is a logistical nightmare this time of year. And his mission is so important that it’s well worth waiting a few minutes.....
Joe Biden - der erste Termin auf dem #wef16 in @davos Fight against cancer pic.twitter.com/ezsd5N0Voc
— Carsten Knop (@carstenknop) January 19, 2016
And then it’s down to business, with Biden explaining why he believes the world can make huge progress in the next few years.
President Obama and I don’t want small change, he insists - we want a Quantum Leap.
Biden says:
We are at an inflection point - a lot has been achieved in the last decade or less.
We have seen amazing advances in science, immunology.
Genomics is being leveraged in ways that weren’t possible even six years ago.
VP Biden adds that it’s vital to ensure that researchers have access to all the data available, as every cancer centre keeps a record of its own data.
Tapping this treasure trove is vital to speeding the process towards finding a cure for cancer.
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Summary: markets rise on China GDP, pound falls after Carney
On a busy day and ahead of the start of the Davos conference, here’s a quick recap of events:
- Chinese GDP shows a slowdown....
- ...but markets move higher on hopes for further central bank stimulus
- UK inflation hits an 11 month high
- ... but Bank of England governor Mark Carney rules out early rate rise
- ....which sends the pound sharply lower
- Meanwhile the IMF cuts its global growth forecasts
- The oil market could drown in oversupply says the International Energy Agency
On that note, we’ll close for the moment. But Graeme Wearden will be back later with the first reports from this year’s Davos gathering.
Wall Street opens higher
US markets have followed the example of Europe, and are moving sharply higher in early trading.
The Dow Jones Industrial Average is currently 148 points or 0.9% higher, while the S&P 500 has climbed around 1%.
Chinese GDP figures prompted talk of further stimulus measures to support the world’s second largest economy, while positive results from Bank of America and Morgan Stanley added to the upbeat mood.
Here’s a horrifying thought. There could be more plastic in the sea than fish in just over three decades. Ahead of Davos, Graeme Wearden reports:
As a record-breaking yachtswoman, Dame Ellen MacArthur has seen more of the world’s oceans than almost anyone else. Now she is warning that there will be more waste plastic in the sea than fish by 2050, unless the plastics industry cleans up its act.
According to a new report issued by the Ellen MacArthur Foundation at the World Economic Forum on Tuesday, new plastics will consume 20% of all oil production within 35 years, up from an estimated 5% today.
Plastics production has increased by twentytimes since 1964, reaching 311m tonnes in 2014, the equivalent of more than 900 Empire State Buildings, the report says, and it is expected to double again in the next 20 years, and almost quadruple by 2050.
Despite this growing demand, just 5% of plastic goods are actually recycled effectively, while 40% end up in landfill and a third leak into fragile ecosystems such as the world’s oceans.
The full story is here:
Mark Carney’s caution on interest rates is justified, says our economics editor Larry Elliott:
Mark Carney is half way through his five-year term as governor of the Bank of England. Judging by his latest remarks on the state of the economy he could go back to Canada in the summer of 2018 and still not have raised interest rates.
The governor’s speech was notable for its dovish tone. Six months ago, in a speech in Lincoln, he said the decision on whether to increase the cost of borrowing would come into sharper relief around the turn of the year. That was seen as an indication that a tightening of policy would be announced sooner rather than later.
Well, the turn of the year has arrived, Carney has decided that the time is not yet ripe for a rate rise. Marching the markets up to the top of the interest rate hill only to march them down again has become a bit of a habit.
For all that, the governor’s caution is justified. Carney said a “powerful set of forces” - some domestic, some global, some long-lasting, some cyclical - had combined to keep interest rates at their record low rates since the Great Recession ended in 2009.
Read the full analysis here:
On the pound’s decline today, David Lamb, head of dealing at the forex group Fexco, said:
The prospect of a UK interest rate rise hasn’t been kicked into the long grass. The Governor hoofed it right out of the park.
Mark Carney’s prediction - made last summer - that we would have greater clarity on interest rates at the start of 2016 has been completely overtaken by events. Six months on, the prospects for UK interest rates remain as clear as mud.
Even though UK inflation crept up a notch to a paltry 0.2% in December, tumbling oil prices will continue to drag down prices. Against a backdrop of extreme Chinese volatility and slipping rates of both growth and wages in the UK, none of the stars are aligned for a rate rise any time soon.
With a UK rate hike now receding into the distance once again, monetary policy in London and Washington will continue to move in opposite directions.
As a result the pound has tumbled against the dollar, and it is even slumping against the euro too.
The combination of skittish equity markets and the vanishing prospect of a rate hike means investor appetite for sterling is eroding - and as a result the pound’s gradual slide is likely to continue.
As a mortgage holder i'd quite like to buy #Carney a pint as someone thinking about going to the US this summer he should buy me one #GBPUSD
— Alastair McCaig (@AMcCaig_IG) January 19, 2016
Sterling hits seven year low
And the pound is still falling:
#Carney sends #GBPUSD to 1.4207, lowest since Mar 2009 Just in case GBP bulls got excited abt that CPI
— Ashraf Laidi (@alaidi) January 19, 2016
Updated
Answering questions, Carney said the Bank was picking up uncertainty around political events, but investment intentions remained robust.
He also indicated that rates could rise before the consumer price index hit 2%:
BoE’s Carney: Could See Rate Hike Before Inflation Hits 2%
— Live Squawk (@livesquawk) January 19, 2016
Spot in this chart of today’s movement of the pound against the dollar when Carney started speaking and suggesting now is not the time to raise rates:
Updated
We need a new measure for the BoE - odds of Carney getting to the end of his 5yr term (Summer 2018) without a hike.
— Mike Bird (@Birdyword) January 19, 2016
The governor of the Bank of England has warned that the UK faces “a powerful set of forces” preventing policymakers from raising interest rates and the date of the first rise is still uncertain, writes Phillip Inman.
Mark Carney said the plunge in oil prices had dragged down inflation and postponed the date of a rise from the current 0.5%, though he refused to indicate when the central bank would make its first move.
Carney said: “Monetary policy will continue to depend on economic prospects and not the calender.”
But his gloomy outlook, which also highlighted the rapid slowdown in China and the recent turmoil in global markets, is likely to be seen as delaying the first increase in rates since 2008 until at least the end of this year or possibly 2017.
This will force many of the City’s investment banks to tear up their own forecasts, which have pencilled in a rise in the summer or Autumn.
Updated
Now is not the time to raise UK rates - Carney
Bank of England governor Mark Carney wants to see faster growth and stronger inflation before raising interest rates, with no set timetable for an increase.
In a speech at the Queen Mary University of London, he said global and domestic growth had proved weaker than he expected in the middle of last year, when he predicted a decision on rates would come into sharper relief by early 2016. He said:
Well the year has turned, and, in my view, the decision proved straightforward: now is not yet the time to raise interest rates.
This wasn’t a surprise to market participants or the wider public. They observed the renewed collapse in oil prices, the volatility in China, and the moderation in growth and wages here at home since the summer and rightly concluded that not enough cumulative progress had been made to warrant tightening monetary policy.
You can follow his speech live here.
Updated
Oil back over $30 a barrel
And now oil is back over $30 a barrel, despite the International Energy Agency warning of continuing oversupply.
Brent crude has jumped 5.7% to $30.18, helped by strong oil demand from China. There is also the hope of more stimulus from the Chinese authorities following the latest GDP figures, which showed a slowdown in growth.
Updated
Stock markets continue to move higher following the Chinese GDP data, and despite higher than expected UK inflation and the IMF cutting its global growth forecasts.
The FTSE 100 is currently up nearly 1.9%, while Germany’s Dax is 2% higher and France’s Cac has climbed 2.3%.
In the US the futures are showing a 250 rise on the Dow Jones Industrial Average. As a reminder the US markets were closed on Monday, and fell sharply in the previous session on the tumbling oil price.
Crude is now up 4.7% at $29.9 a barrel.
Updated
And here are the IMF comments on markets and China, courtesy of Reuters:
Global financial markets seem to be overreacting to falling oil prices and China, the chief economist of the International Monetary Fund said on Tuesday.
Maurice Obstfeld also said it was critical that China is clear about its overall policy strategy, including its currency.
“It’s not a stretch to suggest that (markets) may be reacting very strongly to rather small bits of evidence in an environment of volatility and risk aversion,” Obstfeld said in a news conference held after the IMF cut its global growth forecasts for the third time in less than a year.
Updated
The IMF has commented on the prospect of Britain leaving the EU:
Obstfeld on Brexit: Hard to factor in something v speculative at this point. & econ effects v uncertain. We haven’t done an analysis yet.
— Ed Conway (@EdConwaySky) January 19, 2016
Here’s the UK Treasury welcoming the day’s inflation figures:
Read our spokesperson quote in response to @ONS's CPI #inflation release pic.twitter.com/b8tyaoZybc
— HM Treasury (@hmtreasury) January 19, 2016
The IMF is giving more details of its global outlook. Its chief economist Maurice Obstfeld said there were clearly deflationary pressures in the eurozone, and he expected the European Central Bank to ease further as further data comes in.
*IMF EXPECTS ECB TO RESPOND TO GROWING DEFLATIONARY PRESSURE
— lemasabachthani (@lemasabachthani) January 19, 2016
He added that the US recovery appeared to be weaker than the Federal Reserve was expected when it raised interest rates in December.
And he played down the recent market turmoil:
Obstfeld: “financial markets have been known to overreact in the past. Not a stretch to say may be overreacting to small pieces of evidence”
— Ed Conway (@EdConwaySky) January 19, 2016
He said the IMF did not see some of the extreme negative scenarios that the markets seemed to be anticipating.
He added that a falling oil price would help consumers, so it was not an unmitigated negative.
Updated
UK house prices are at a 10 month high, according to the Office for National Statistics:
ONS report UK house prices rose 0.8% m/m in Nov, pushing y/y rate up to 10-month high of 7.7%. We expect prices to rise 6% in 2016
— Howard Archer (@HowardArcherUK) January 19, 2016
London resurgent? House price growth across UK regions in the year to November. pic.twitter.com/XQNlbtThrj
— RBS Economics (@RBS_Economics) January 19, 2016
Updated
Meanwhile the ZEW confidence index showed a downbeat mood among German analysts and investors in the wake of the recent market turmoil.
With any slowdown in China likely to knock the German export market, the ZEW think tank said economic sentiment fell from 16.1 in December to 10.2 in January. But this was higher than a Reuters estimate of 8.2.
Eurozone inflation at 0.2%
In the eurozone, inflation has come in at 0.2% year on year in December, in line with expectations. The month on month figure was flat. November’s year on year figure was revised down from 0.2% to 0.1%. That is a long was short of the European Central Bank’s 2% target despite the stimulus package the central bank has instituted. Dennis de Jong, managing director at UFX.com, said:
Today’s inflation figures suggest that ECB President Mario Draghi’s renewed stimulus plan isn’t yet having the desired effect, and the two per cent target is still a long way off.
Record low oil prices, alongside volatility in China and elsewhere, have taken their toll on major economies the world over and the Eurozone is no different. With a stimulus programme in effect and no real room to manoeuvre interest rates further, Draghi is running out of options.
Draghi must hope that any extra cash in the pockets of consumers due to low oil prices goes straight back into the economy to spur growth.
Back with UK inflation, and Howard Archer at IHS Global Insight expects a UK rate rise in August:
With consumer price inflation still only 0.2% in December, there is certainly little immediate pressure on the Bank of England to start raising interest rates.
We believe it is pretty unlikely that the Bank of England will raise interest rates (from 0.50% to 0.75%) until at least August – given the increased probability that inflation will stay lower for longer and a current more uncertain growth outlook. Indeed, there is a very real chance that the Bank of England could delay raising interest rates until the fourth quarter of 2016.
Our current belief that the Bank of England will most likely edge interest rates up from 0.50% to 0.75% in August is based on the assumption that economic growth will be reasonable over the first half of 2016, earnings growth sees some renewed pick-up amid a tightening labour market and consumer price inflation trends gradually up.
Even if the Bank of England does delay interest rates beyond August, we doubt it will delay acting until 2017 - barring a major slowdown in UK growth.
Updated
IMF cuts global growth forecasts for next two years
The International Monetary Fund has reduced its growth forecasts in its latest update on the global economy. Our economics editor Larry Elliott reports:
[The IMF] has added to concerns about the health of the global economy by cutting its growth forecasts for the next two years and warning that recovery from the financial crisis could be derailed altogether if key challenges are mishandled.
The Washington-based body said world output would be 0.2 points lower in 2016 and 2017 compared with forecasts made just three months ago – and that the risks to its predictions were to the downside.
In an update to its World Economic Outlook, the IMF said growth was put at 3.4% this year and 3.6% in 2017. It said central banks should continue to boost growth and that finance ministries should bolster investment spending where possible. It also warned that a “tide of refugees” was putting the EU under strain and that action was needed to ensure that migrants could find jobs.
Full story here:
Updated
The inflation figures, along higher than expected, should not put pressure on the Bank of England to raise rates, said James Knightley at ING Bank:
December UK headline consumer price inflation has come in at 0.2% year on year, up from 0.1% in November and is the fastest rate of price increase since January 2015. Meanwhile the core rate of inflation (excluding food and fuel) rose 1.4% year on year versus a consensus forecast of 1.2%. This was also the highest inflation rate since January last year.
The details show air fares contributed positively (up 26.8% year on year! Sea fares were up 20.3%) – note that the transportation component was the only one of 12 CPI sub components to actually increase. It showed transport prices swinging from -2.1% year on year to -0.2%. However, food prices saw intensifying deflation, as did clothing, furniture, recreation and culture. Therefore, today’s pick-up in inflation (particularly core) can’t really be viewed as suggesting the story regarding inflation has changed much. After all, transportation prices will fall back again next month given what has happened to fuel costs.
Given that inflation remains so soft and with tomorrow’s UK labour report set to show a further slowing in the pace of wage growth, the Bank of England is under no pressure to respond. Moreover, the Brexit uncertainty poses clear risks for growth, particularly through the investment and hiring channels, which will more than offset concerns about inflation risks from sterling’s recent falls. As such we see little prospect of BoE action ahead of the EU referendum, which seems set for June/July. We continue to have November as the probable start point for UK rate hikes, assuming the UK votes to remain an EU member state.
The pound has moved to its day’s highs against the dollar and euro, as the UK inflation figures came in higher than expected.
Sterling touched $1.4340, up from $1.4320 before the data, while against the euro it strengthened from 76p to 75.82p.
Other measures of UK inflation were also stronger than expected with RPI rising 1.2% vs. 1.0% expected and HPI +7.7% vs. 7.3% y/y #FX ^FR
— FOREX.com (@FOREXcom) January 19, 2016
Our report on inflation, from Patrick Collinson:
There was a surprise rise in the UK’s inflation rate to 0.2% in December, the first month since January 2015 in which the rate has exceeded 0.1% according to the Office for National Statistics.
Transport costs, particularly air fares, and to a lesser extent motor fuels, were the main contributors to the rise, said the ONS.
These were partly offset by downward pressure on prices for alcohol and tobacco along with food and non-alcoholic beverages partially offset the rise.
Monthly inflation has been between -0.1% and 0.1% for the past eleven months, helped by plunging commodity prices.
More here:
And here’s the trend for CPI:
Here’s a breakdown of the inflation data:
Rise in air fares helps lift inflation figures
Movements in transport costs, particularly air fares and to a lesser extent motor fuels, were the main contributors to the rise in the rate. Downward pressures from prices for alcohol and tobacco along with food and non-alcoholic beverages partially offset the rise.
Updated
UK inflation highest since January 2015
The UK consumer price index has risen 0.1% in December on a month on month basis, in line with forecasts. But the year on year figure of 0.2% is the highest since January 2015, and higher than expectations of a 0.1% rise.
Updated
Oil supply glut to continue - IEA
The crude oil market will continue to be oversupplied until at least late 2016, according to the International Energy Agency. It said the market “could drown in oversupply.”
With unseasonably warm weather and rising supply - not least from Iran now sanctions have been lifted - will continue to put pressure on crude prices. The IEA said global oil demand fell to a one year low of 1m barrels a day in the fourth quarter of 2015, down from 2.1m in the previous three months.
In its latest monthly report the IEA left its estimate of global demand growth for 2016 at 1.2m barrels a day. The IEA said (quote courtesy Reuters):
We conclude that the oil market faces the prospect of a third successive year when supply will exceed demand by 1m barrels a day and there will be enormous strain o the ability of the oil system to absorb it efficiently.
Brent crude, which was earlier up 3%, is now 2.5% higher at $29.29 a barrel.
Updated
A couple of positive comments on the Chinese GDP figures.
Rain Newton-Smith, CBI director of economics, said:
These figures paint a picture of a Chinese economy which is slowing and rebalancing, but still making a huge contribution to the global economy.
In recent weeks, financial markets have struggled to digest this situation, alongside further weakness in oil prices. While direct links between the UK and China are relatively small, the spill-over effects from China’s economic slowdown, alongside continued volatility in financial markets, amplify the downside risks to growth in the UK.
Nevertheless, it’s important not to be too downbeat about China or emerging markets more generally. With household incomes up by 7%, and online retails sales growing by 33% last year, China represents a lucrative market for British business.
Meanwhile James Sinclair at corporate finance house Clearwater International said:
Much will be made of the fact that this is China’s weakest growth in a quarter of a century: Intense volatility in the stock market and the cycle of industrial overcapacity and sluggish external demand have had policymakers looking over their shoulder for a good while.
But we don’t see this as the toppling of an economic giant. Instead, there is a rapidly different business environment forming in China. The overall trend for consumer spending is far from grim, and the surging middle class is at the heart of this consumption boom. While consumers are boosting demand for imported goods, there are Chinese companies working in the opposite direction, and redefining what Chinese exporters look like.
With the growth of entrepreneurism and innovation in the country, we can expect to see many other Chinese companies both threaten existing industry structures and open up new spaces. By the end of the decade, we still expect China to be one of the leading cross-border investors, and given the patterns we have seen, this is a trend we see no sign of stopping.
More on UK inflation. lya Spivak, currency strategist at DailyFX, said:
The core year-on-year inflation rate is expected to register at 1.2% in December, unchanged from the prior month. Leading survey data hints downward price pressures may have waned however, opening the door for an upside surprise. Such an outcome may breathe a big of life into rate hike speculation, offering a lift to the British pound. Follow-on comments from Bank of England governor Mark Carney represent a bit of wild card and may either amplify or undermine the initial post-CPI response, depending on the central bank chief’s tone.
Carney's speech in focus for interest rate clues
Despite Bank of England governor Mark Carney saying in the middle of last year that it should be clearer by now when UK interest rates should be increased, that is not at all the case.
Recent weak data and the current market turmoil that many analysts do not expect any move until much later this year, if at all. Bank of England policymaker Gertjan Vlieghe seemed to concur on Monday, saying ultra low rates could be here to stay for some years.
So Carney’s speech later at the University of London will be closely watched for any hints as to the timing of any rate rise.
Still on the corporate front, one of the day’s biggest gainers in the UK market so far is Ocado.
The online grocer is up 11% following a revival of talk that Amazon could be interested in a takeover to boost its own fledgling food business.
Unilever, which makes everything from Dove soap to Pot Noodle, is expecting trading condtions to be tougher and more volatile this year.
The company beat analysts forecasts with full year sales up 4.1%, despite negligible growth in developmed markets and weakness in emerging markets.
Full story here:
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As the markets hold onto their early gains, analyst Tony Cross at Trustnet Direct said:
A shortfall in Chinese GDP data for 2015 – and accompanying hopes that this will be the catalyst for further stimulus measures from Beijing – is the key driver here, and it’s the natural resources stocks that are leading the charge. Whilst some upside is probably warranted – not least given the protracted falls we’ve accrued of late – the question as always is just how sustainable these gains will prove to be. The news of weak growth has obviously done nothing to lend support to oil prices, but bargain hunting and a mounting belief that Opec’s over supply of the market will now reign in higher cost production is also helping crude edge higher. A break back above $30/barrel here could prove instrumental in cementing a degree of confidence in the wider market.
David Morrison at Spreadco said it will be key to see if markets can maintain their earlyi momentum:
How this now plays out could be very instructive. If equities can hold on to early gains then we could finally build some upside momentum and reverse last year’s losses. But if this rally fades, as did all the attempts last week, then that could signal that we’re entering a fully blown bear market.
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Ahead of the latest EU inflation number and the ZEW confidence figures, Germany has reported a 0.2% year on year rise in its consumer price index.
Morning. Soft news on #Germany today. Final Dec. HICP confirmed at just +0.2%yy, while Jan. ZEW at 10GMT may show falling investor optimism.
— Capital Economics (@CapEconEurope) January 19, 2016
Oil price recovers
Following a move below $28 a barrel on Monday in the wake of Iran’s promise to increase exports now sanctions have been lifted, crude prices have regained some ground. Brent is now up 3% at $29.44 a barrel, following strong oil data from China where demand in 2015 was at a record 10.32m barrels a day, up 2.5% from the previous year.
European shares open sharply higher
Following on from Asia, European stock markets have moved higher in early trading.
The FTSE 100 has jumped 1.7% or 102 points to 5881.92 while Germany’s Dax is up 2.1%, France’s Cac 1.9% and Spain’s Ibex 1.7%.
The Chinese data is behind the moves. With the GDP figure was just shy of the government’s targets, investors are betting on more stimulus from the central bank to give the world’s second largest economy a lift.
So mining shares are among the leading risers, with Glencore and Anglo American both up around 8%.
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Key themes for Davos
Ahead of the World Economic Forum’s annual conference which begins this evening, my colleague Graeme Wearden has looked at the eight key themes, ranging from the rise of the robots to market turmoil and medicine:
For UK inflation, most analysts expect the CPI figure to come in at 0.1% but RBC Capital Markets goes a little higher:
RBC forecasts CPI inflation at 0.3% year on year in December 2015, up from 0.1% year on year in November. However, as last time, we acknowledge that the risk to the forecast is to the downside as the continued decline in the petrol price has reduced the base effects that were due to kick in on the back of oil price declines at the end of 2014. For RPI inflation, we look for the annual rate to hold at 1.1% year on year. Beyond the monthly print, the message remains that even if inflation does get near 1% year on year soon, there are limited prospects in 2016 for it taking another leg up from there and moving towards the 2% target.
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As well as China’s stock markets moving higher, the Nikkei and Hang Seng are also in positive territory, up 0.5% and 1.75% respectively. So Europe is expected to follow suit:
Our European opening calls: $FTSE 5843 up 63 $DAX 9664 up 142 $CAC 4243 up 54 $IBEX 8548 up 79 $MIB 18897 up 210
— IGSquawk (@IGSquawk) January 19, 2016
Introduction: Chinese slowdown starts busy economic day
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
On a busy day for economic news, China has kicked things off with news of the slowest GDP growth in 25 years. The figure of 6.9% growth for the year was not far from the government target but prompted talk of new stimulus measures, and gave some support to the Chinese stock market. The CSI300 index rose 2.95% while the Shanghai composite was 3.2% higher. Here is our report on the Chinese GDP numbers:
Michael Hewson, chief market analyst at CMC Markets UK, said:
This morning’s latest Chinese economic data hasn’t really shed any new light on an economy that we know is slowing down. The latest fourth quarter GDP data came in at 6.8%, the slowest pace in 25 years and slightly below consensus expectations, while December industrial production slid back to 5.9% from 6.2% in November, no real surprise given recent weak PMI readings. Retail sales were slightly disappointing coming in at 11.1%, slipping back from 11.2% and breaking a sequence of consecutive monthly improvements since last March. While these numbers are slightly disappointing they don’t point to a sharp slowdown, however it does raise the question as to what further steps to stimulate the economy policymakers will take in the coming weeks.
Elsewhere in the run up to Davos, the International Monetary Fund releases its latest growth forecasts. There are also UK and EU inflation figures, as well as a speech from Bank of England governor Mark Carney. Here are the timings:
- 9.30 GMT UK inflation
- 10.00 GMT Eurozone inflation
- 10.00 GMT ZEW consumer confidence index
- 10.00 GMT IMF’s World Economic Outlook
- 12.00 GMT Mark Carney speech
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