Photograph: Emmanuel Dunand/AFP/Getty Images
Closing summary
Markets have been in more upbeat mood this morning, boosted in part by some stronger-than-expected manufacturing data from China this morning.
All of Europe’s major markets are in firmly positive territory, and Wall Street has open higher.
It is looking less rosy for the pound, which was unable to hold on above $1.29 after Michel Barnier, the EU’s chief Brexit negotiator, raised fresh concerns about how talks are going. The pound is currently down 0.4% against the dollar at $1.2871.
Over in France, supermarket group Carrefour issued a profits warning, prompting a heavy share sell-off. Shares are currently down 14%.
Eurozone inflation picked up to 1.5% in August from 1.3% in July, while the jobless rate was unchanged at 9.1% (in July).
In the UK, the big corporate news was that online gambling firm 888 was handed a record £7.8m fine by the regulator for failing to protect vulnerable customers.
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, stepped up his argument for an immediate rise in UK interest rates.
On that note we’ll close up for the day. Thank you for all the comments and please join us again tomorrow. AM
Wall Street rises in early trading
US markets have maintained the upbeat sentiment in European markets with Wall Street climbing higher in early trading:
- Dow Jones: +0.3% at 21,958
- S&P 500: +0.2% at 2,464
- Nasdaq: +0.4% at 6,390
US weekly jobless claims hold steady
Over in the US, initial jobless claims have come in slightly below expectations.
There were 236,000 new claims for jobless benefits in the week ending 26 August - 1,000 more than in than in the previous week - according to the US Labor Department figures.
It was a little below the 237,000 forecast by economists.
Tomorrow is the big day for US jobs data, with the closely watched non-farm payrolls report for August to be published at 13.30 (BST).
Economists polled by Reuters are forecasting that 180,000 were added this month, following 209,000 in July.
Weekly Jobless Claims Beat Consensus Ahead of Big Monthly Report - https://t.co/cDQ4XhpoWM
— Richard Baris (@Peoples_Pundit) August 31, 2017
Shilen Shah, bond strategist at Investec Wealth & Investment, says Barnier’s comments have longer term implications for UK assets:
The risk of no transitionary agreement seems to have increased today given the strong word’s from Barnier, the EU chief Brexit negotiator.
His not unexpected comments has led to a modest weakening in sterling, however it also increases the chance of the UK exiting the EU in a disorderly fashion.
The key hazard for markets is that today’s disagreement is an indicator of where future negotiations are heading, with the danger that the risk-premium on UK assets will widen if the talks implode with no agreement.
Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee is feeling the effects of the weaker pound today:
Pound will buy less than 0.95 euros at Heathrow this morning. #Brexit and ultra-low interest rates have really trashed our currency.
— Andrew Sentance (@asentance) August 31, 2017
Here is our full story on the latest round of Brexit talks:
Barnier's Brexit comments send pound lower
The pound’s losses have widened against the dollar and it is now down 0.5% at $1.2856.
Sterling has been knocked further since Michel Barnier, the EU’s chief Brexit negotiator, said that no “decisive progress” had been achieved after the third round of talks in Brussels.
He told a news conference:
Over the course of this week we have made a number of useful clarifications on a number of points, for instance the status of border workers.
However, we did not get any decisive progress on any of the principle subjects, even though on the discussion we had about Ireland - that discussion was fruitful.
Updated
European markets have extended gains this afternoon. Here are the latest scores:
- FTSE 100: +0.7% at 7,414
- Germany’s DAX: +0.6% at 12,074
- France’s CAC: +0.7% at 5,092
- Italy’s FTSE MIB: +1% at 21,717
- Spain’s IBEX: +0.8% at 10,327
- Europe’s STOXX 600: +0.8% at 374
German jobless total falls in August
German data this morning showed that the number of people out of work in Europe’s largest economy fell by 5,000 in August to 2.53m.
It disappointed expectations, with economists forecasting a bigger fall of 6,000.
Rainer Sartoris, economist at HSBC, said the fall in German unemployment was slowing:
The slowdown in the pace of falling unemployment is likely linked to more and more refugees starting to search for a job, as they exit training courses (e.g. language courses). This trend is likely to continue over the coming quarters, which could constrain a further improvement in the number of unemployed.
Over in Greece, tourism is helping to boost economic sentiment according to the eurozone’s statistics agency, Eurostat. It comes as the country prepares to further ease capital controls. Helena Smith reports from Athens:
Reaping the dividends of a bumper tourism season, Greece saw its economic sentiment indicator rise to 99 points this month from 98.2 points in July. While the index is still in negative territory - optimism is only measured at 100 points - it was the strongest in 12 months and is being interpreted as another turning point for the eurozone’s weakest economy.
In another sign of growing confidence in the Greek economy, the leftist-led government is to allow bank depositors to withdraw more of their savings as of tomorrow (September 1st). The move will see the cap on withdrawals being increased by 7% to €1,800 a month. As part of the relaxation, opening of new accounts will be facilitated for farmers, companies and freelancers.
The restrictive measures were imposed at the height of the country’s debt crisis in the summer of 2015 amid fears of a run on banks. However, it has not been lost on many that total annual withdrawals will actually amount to less. Under the new “relaxed” rules, depositors will be able to withdraw €21,600 euro a year, compared with €21,840 under the old rules.
Updated
Carrefour shares plunge on profit warning
French supermarket group Carrefour has suffered a heavy share sell-off this morning after a profit warning from the retailer spooked investors.
Shares are currently down nearly 15%, putting the company on track for its biggest daily fall in 20 years.
Carrefour reported weaker-than-expected first-half results and warned that full-year profits could fall by 12%.
The retailer’s new chief executive, Alexandre Bompard, had this to say:
Our 2017 results will be impacted by our first-half performance and an operating environment that will remain difficult in the second half in some countries.
The negative news from Carrefour spread throughout the supermarket sector, making UK grocers among the biggest fallers on the FTSE 100:
- Tesco is down 1.3% at 180p
- Morrisons is down 0.7% at 244p
- Sainsbury’s is down 0.6% at 234p
The retail index has been among the worst performers in Europe this year as competition and structural pressures mount.
Paul Harper, equity analyst at DNB Bank, says its partly down to Amazon:
It’s been a tough time for the sector, with the more macro theme that Amazon is slowly eating everyone’s lunch, though that’s not the case in Europe to the same extent as the US.
Another problem is that the retail sector is relatively highly priced, so there’s not really much room for disappointment.
Peter Vanden Houte, chief economist for the eurozone at ING, said higher-than-expected inflation in the region would give ammunition to those members of the European Central Bank’s governing council who favour tighter policy.
He is not convinced, however:
The hawks within the governing council will argue that deflationary pressures have now clearly disappeared. But given the risk that an overshoot of the euro exchange rate could push inflation back below 1.5%, caution remains warranted in removing monetary policy accommodation.
We believe that the ECB will announce a “dovish tapering” in October, giving the markets the impression that quantitative easing could be lengthened into the second half of next year, if need be. At the same time we think that a deposit rate hike is not to be expected before the end of 2018.
Eurozone unemployment holds steady at 9.1%
Unemployment in the single currency bloc was unchanged in July at 9.1% - the lowest since February 2009. It compared with a jobless rate of 7.7% in the wider EU.
The number of unemployed people in the eurozone rose by 73,000 in July, to 14.86m, according to the Eurostat figures.
Here is how it looks across the European Union:
Updated
Eurozone inflation picks up
Eurozone inflation rose to 1.5% in August, from 1.3% in July, according to a “flash estimate” from Eurostat.
It was higher than the 1.4% rate forecast by economists, and the main driver of the rise was energy, with prices up 4% year-on-year.
Here is the breakdown:
Core inflation - which strips out food and energy - was unchanged at 1.3% in August. Economists predicted a slight dip to 1.2%.
The pound has slipped below $1.29, and is currently down 0.2% at $1.2896.
Thu Lan Nguyen, a currency strategist at Commerzbank, says concerns about the way Brexit talks are going are weighing on the pound:
Brexit uncertainty continues to weigh on sterling, and if there is a protracted spell of weakness then policymakers may come out to support the currency as it pushes up headline inflation.
Against the euro, the pound is down 0.4% at €1.0832.
The top FTSE 100 risers this morning are dominated by mining companies, which tend to benefit from data that signals strong demand from China.
London open: Stocks edge higher as China PMI lifts mining sector https://t.co/6Hq3q3bvOU via @DigitalLookNews
— Mike van Dulken (@Accendo_Mike) August 31, 2017
European markets rise across the board
All major European markets are up this morning, boosted by stronger-than-expected manufacturing growth in China, positive US data, and easing tension over North Korea.
Here are the latest scores:
- FTSE 100: +0.5% at 7,400
- Germany’s DAX: +0.5% at 12,064
- France’s CAC: +0.3% at 5,072
- Italy’s FTSE MIB: +0.4% at 21,581
- Spain’s IBEX: +0.6% at 10,305
- Europe’s STOXX 600: +0.4% at 372
Here is our full story on the speech by Michael Saunders, Bank of England policymaker, in Cardiff:
Pound holds steady at $1.29
Michael Saunders’ latest call for a rise in rates has failed to lift the pound this morning.
Sterling is down 0.2% against the dollar but is still holding on above $1.29 at $1.2902.
Saunders’ comments will come as a surprise to few, after his vote for a hike at the last two meetings, but the exchange rate is also reflective of dollar strength. Stronger-than-expected US data on Wednesday has raised investor expectations that the Federal Reserve will raise rates again before the end of the year, sending the dollar broadly higher.
The pound meanwhile is also down -0.2% against the euro this morning, at €1.0850.
Bank of England's Saunders: UK needs rate rise now
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, has stepped up his argument that the UK needs an immediate rise in interest rates.
Predicting that inflation would hit 3% in the coming months (well above the Bank’s 2%) target, Saunders told an audience in Cardiff:
Our foot no longer needs to be quite so firmly on the accelerator in my view. A modest rise in rates would help ensure a sustainable return of inflation to target over time.
He said that raising rates now would allow a more gradual pace of hikes, making it easier for people to adjust to higher borrowing rates.
There are considerable advantages to acting early enough to allow a gradual rise in interest rates. It is fully 10 years since the MPC last tightened monetary policy.
Many borrowers have never faced a rate hike. It would be preferable to have the space to move gradually, observing the effects as we go. If we get behind the curve, we lose that space.
Saunders has voted for a 0.25 point rise in rates – from a current all-time low of 0.25% - at the last two meetings of the MPC.
He has yet to convince the majority of his colleagues, with only one other MPC member - Ian McCafferty - joining him in the vote for a rise.
In response to the Gambling Commission’s fine, 888 said:
It was never 888’s intention to benefit financially from this technical failure and we have completed a detailed process to identify all affected customers.
The group is refunding customers who were able to continue playing when they should have been excluded across 888’s platforms.
The Gambling Commission said 888’s record £7.8m fine for failing to protect thousands of vulnerable customers will be divided in the following way:
- a £3.5m repayment of deposits made by self excluded customers (whose accounts were left accessible)
- a £62,000 compensation payment to the employer from whom money was stolen by a problem gambler (that 888 failed to spot/stop)
- a further £4.25m will be paid to a socially responsible cause to invest in measures to tackle gambling-related harm
Sarah Harrison, chief executive at the Gambling Commission:
Safeguarding consumers is not optional. This penalty package of just under £8m reflects the seriousness of 888’s failings to protect vulnerable customers.
The 888 sanction package will ensure those affected don’t lose out, that the operator pays the price for its failings via a sum that will go to tackling gambling-related harm, and that independent assurance will be given to see that lessons are learnt.”
Online gambling firm 888 fined record £7.8m
888, one of Britain’s biggest online gambling firms, has been fined a record £7.8m by the regulator for failing to protect thousands of vulnerable customers.
An investigation by the Gambling Commission found that over 7,000 customers who had chosen to “self exclude” (people who flag that they wish to stop gambling for at least six months) were still able to access their 888 accounts due to a technical failure.
It meant that vulnerable customers were able to deposit £3.5m into their accounts, and then continue to gamble, for over 13 months.
888 also failed to spot “visible signs” of problem behaviour from one individual, which was so significant it resulted in criminal activity, the watchdog said.
That particular customer staked over £1.3m, including £55,000 stolen from their employer. During a 13 month period the customer gambled on average 3-4 hours a day.
Updated
The agenda: Chinese factory growth, eurozone inflation and Bank of England speech in focus
Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business.
Growth in China’s manufacturing sector accelerated unexpectedly in August, reassuring global investors that the world’s second largest economy is still growing at a decent pace.
China’s official manufacturing PMI index rose to 51.7 in August from 51.4 in July, confounding economists’ expectations for a small decline. (Anything above 50 signals growth.)
Along with stronger Q2 growth and jobs figures from the US on Wednesday, the Chinese PMI figures are expected to lift investor sentiment after a torrid week of heightened tensions over North Korea.
Markets on both sides of the Atlantic rose on Wednesday – largely because of a relatively measured response from President Trump - and European markets are expected to open higher this morning:
Our European opening calls:$FTSE 7378 up 13
— IGSquawk (@IGSquawk) August 31, 2017
$DAX 12043 up 40
$CAC 5076 up 19$IBEX 10280 up 35$MIB 21573 up 69
Also coming up today:
- 08.25 BST Speech by Michael Saunders, member of the Bank of England’s Monetary Policy Committee
- 08.45 BST German unemployment (August)
- 10.00 BST Eurozone ‘flash estimate of inflation (August)
- 13.30 BST US weekly jobless claims
Updated
