All eyes are on the Opec meeting next week, to see if oil producers can agree an output cut. But the weekly Baker Hughes rig count from the US still excites some interest.
In the latest figures, a couple of days early due to Thanksgiving, the report showed 5 gas and oil rigs were added last week to 593. This marks the biggest monthly rise since July.
The news has seen Brent crude, which was slightly up ahead of the figures, slip back around 0.18% to $49.03 a barrel.
On that note it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.
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European markets edge lower
Despite the Dow Jones Industrial Average hitting yet another record, European markets were in a more lacklustre mood. Bond yields jumped after Reuters reported that the European Central Bank was considering lending out more of the bonds it had bought, in an effort to boost liquidity.
In the UK the Autumn Statement was the big economic event. Chris Beauchamp, chief market analyst at IG, said:
The autumn statement will command the headlines, but the broad market impact has been limited. Aside from the hit to estate agents this morning, housebuilders were boosted by Mr Hammond’s plan to build more homes, but the impact was limited. Indeed, while the pound did gain against the US dollar in the period of the statement itself, the gains were rapidly wiped out by a surge in US durable goods orders. The resultant push higher in the dollar sent other currencies lower, indicating that the rally in the greenback is not done yet.
The final scores in Europe showed:
- The FTSE 100 finished down 2.01 points or 0.03% at 6817.71
- Germany’s Dax dipped 0.48% to 10,662.44
- France’s Cac closed down 0.42% at 4529.21
- Italy’s FTSE MIB edged up 0.07% at 16,532.26
- Spain’s Ibex ended down 0.28% at 8627.5
- In Greece, the Athens market added 0.21% to 632.52
On Wall Street, the Dow Jones Industrial Average is currently up 0.15% at 19051, having earlier hit another new record of 19067.
Greece close to concluding bailout talks - Tsipras
Over in Greece prime minister Alexis Tsipras has announced the country is very close to concluding bailout negotiations with creditors. But in a new twist to the debt-stricken nation’s bid to regain economic certainty, core eurozone member states also said that they would cancel talks expected to focus on Greece this Friday. Helena Smith reports from Athens:
The Greek prime minister was in upbeat mood as he predicted that negotiations with creditors would be completed by December 5 a move, he said, that would automatically open the way to crucial debt relief discussions.
Addressing MPs in his leftwing Syriza party, Alexis Tsipras insisted that while his two-party government was implementing its bailout commitments “to the letter” it would never yield to what he described as “absurd demands” creditors were also making over labour reforms.
“We re not going to discuss absurd demands whether they be new measures or, even worse, measures after the [EU] program ends [in 2018].”
Tsipras has seen his popularity ratings plummet as his coalition has forged ahead with unpopular tax hikes, budget and pension cuts, the price of rescue funds to keep the country afloat.
Working on the assumption that conclusion of the review will trigger debt relief talks, Athens is keen to end the negotiations by the time eurozone finance ministers hold their last meeting of the year on December 5.
But Germany’s hardline finance minister Wolfgang Schauble has assiduously attempted to shoot down any such hope, telling German media earlier this week that it would be a disservice to Greece and its reform progress if its monumental debt mountain was cut.
Despite the widely held view that the country’s debt load is at the root of its economic ills, Schauble claimed that Greece would not face a debt repayment problem for the next ten years. The international Monetary Fund has been Athens’ biggest ally in the debt writedown battle, saying it will not sign up to its third €86bn rescue package until the issue is resolved.
Hopes of ending that row were brought to an abrupt halt today when the German finance ministry announced that talks aimed at securing the IMF’s participation in the bailout program would not be going ahead. Finance ministers of core EU countries had been due to meet this Friday to discuss the possible concessions Brussels could offer to bring the Washington-based organization on board.
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Wall Street opens lower after record run
The post-election rally which has taken US markets to new peaks has stuttered in early trading, as a fall in the healthcare sector has taken some of the shine off.
Pharmaceutical companies had been in demand since Donald Trump’s victory, on the basis that the new administration would not bring in Hillary Clinton’s threatened price controls.
But a trial failure for its Alzheimer’s treatment sent shares in Eli Lilly sharply lower, dragging down other companies developing similar drugs.
The Dow Jones Industrial Average is current down 10 points or 0.06%, while the S&P 500 opened down 0.25% and the Nasdaq Composite 0.38%.
Paul Sirani, chief market analyst at Xtrade, said:
After a couple of months in the doldrums, today’s data shows durable goods orders are at their highest since February. This could keep dollar-buying popular and also increase the likelihood of an interest rate hike.
Along with rising inflation and a strong dollar, today’s better than expected numbers are another positive pointer and the Federal Reserve is looking more likely than ever to buckle under increasing pressure to raise rates on December 14th.
The greenback will now be given a breather as markets shut up shop for tomorrow’s Thanksgiving and Friday looks a light day.
US manufactured goods orders rebound in October
Away from the UK autumn statement, there are some strong US figures.
Orders for durable goods - longer lasting products such as computers, toasters and machinery - rebounded in October after a decline in September. They rose 0.4%, in line with expectations, while the September figure was revised from a 1.3% drop to 1.4%. But the recovery suggests that the US economy is strengthening in the fourth quarter, and adds for fuel to the idea that the Federal Reserve will raise interest rates in December.
Meanwhile the number of Americans registering for unemployment benefits rose from a 43 year low last week, up 18,000 to a seasonally adjusted 251,000. But this is still consistent with a tightening jobs market.
A reminder, our politics live blog will be following Chancellor Philip Hammond’s first autumn statement:
German 2-year yield soars after sources tell Reuters ECB looking to lend out more bonds to avert repo market squeeze https://t.co/FFOgVNe9R8 pic.twitter.com/X0uJDCyaGZ
— Dhara Ranasinghe (@DharaRanasinghe) November 23, 2016
Over in Europe again, and Reuters is reporting that the European Central Bank wants to loan out some of the government debt it has bought to provide more liquidity in the bond market. Reuters says:
The European Central Bank is looking for ways to lend out more of its huge pile of government debt to avert a freeze in the 5.5 trillion euro short-term funding market that underpins the financial system, central bank sources told Reuters.
The ECB has bought more than a trillion euros ($1.06 trillion) of euro zone government bonds in a bid to shore up economic growth and inflation in the euro zone. For the most part the bank is holding these bonds.
By doing so, it has taken away the key ingredient for repurchase agreements, or repos, whereby financial firms lend to each other against collateral, typically high-rated government bonds such as Germany’s.
Repo is used by investment funds to finance trading and is regarded by the ECB as a key avenue to transmit its own monetary stimulus to the economy.
A freeze in repo activity risks undoing some of the ECB’s stimulus by hampering lending between financial companies and leaving bond markets vulnerable to sharp selloffs.
To avert this, the ECB wants to make it easier for banks to borrow the bonds that it has bought so that they can be used as collateral for repo loans, the sources said.
The full story is here.
Back with estate agents, and if the letting fees are banned, will this just mean rents go up? Patrick Collinson investigates:
The pensions regulator is currently giving evidence to MPs on, among other things, BHS.
Ahead of the meeting, the chairman of the House of Commons work and pensions committee Frank Field wrote to the regulator asking if Sir Philip Green’s superyacht and other assets could be seized to help plug the gap in the BHS pension fund.
My colleague Graham Ruddick is following the hearing:
Boss of Pensions Regulator says "door remains open" for deal with Sir Philip Green over BHS pension scheme
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
Boss of Pensions Regulator says it would be up to courts to decide if Sir Philip Green had to sell superyacht to support pension scheme...
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
Pensions Regulator confirms it could take assets as part of pension settlement with Green, but these would need property valued
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
Frank Field asking if Green's yacht can be taken is pure PR. Ultimately would only happen if Green chooses to make it part of settlement 1/2
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
or if he has no other cash and assets to raise money for settlement or legal demand so has to include yacht (and he does have the cash) 2/2
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
In other words, Sir Philip Green handing over his yacht to BHS pension scheme is just not going to happen (unfortunately)
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
Only five MPs present for hearing with Pensions Regulator. It may be autumn statement day, but surely could be better....
— Graham Ruddick (@GrahamtRuddick) November 23, 2016
Back with the fall in estate agency shares, and analyst Anthony Codling at broker Jefferies International said:
Our view is that it would not be logical to ban fees outright, for instance inventory checks are usually outsourced to third parties and used to safeguard both landlord and tenant, perhaps these fees should be split.
Credit referencing fees: we think it fair that tenants can demonstrate that they have the ability to pay the rent.
Where fees are possibly unfair are, for instance, blanket fees of £300 to set up a standard tenancy agreement or a £60 additional charge to move in on a Saturday, such fees we believe generate high margins for the agent at the expense of the so called JAM tenants (Just About Managing).
At the moment, Foxtons is down 9.5%, LSL Property is 6.4% lower, Purplebricks has fallen 6%, Countrywide has lost 4.9% and Savills has slipped 1%.
On the corporate front, Thomas Cook has said it will pay a dividend for the first time in five years, and said it did not expect the fall in the pound following the Brexit vote to make foreign holidays more expensive. The news has helped push the travel group’s shares up more than 8%. The full story is here:
Meanwhile United Utilities has reported a 1.4% rise in first half profits to £313m, helped by lower infrastructure spending and new pricing regulations.
Political and economic uncertainty around the Brexit vote was less of a drag on economic growth than expected, Bank of England policymaker Kristin Forbes has said in speech at a JP Morgan conference. Reuters reports:
Forbes - who voted against restarting government bond purchases in August - said central banks should not use uncertainty as an excuse to avoid making decisions or for the BoE to change its approach to setting policy.
But she said uncertainty was hard to measure, and may be currently having less of an effect on Britain’s economy.
“The strength of the UK economy during the period of heightened uncertainty before and after the referendum on EU membership suggests that uncertainty is dragging less on growth than has traditionally occurred,” she said.
One reason could be that some factors which typically fed into economists’ measures of uncertainty - such as negative media reports and an unusually wide range of growth forecasts - played less of a role than thought.
Another was that rises in uncertainty typically led to tighter credit conditions, with businesses and consumers finding it harder to borrow money. This had not happened in Britain after June’s referendum.
It is uncertain whether the positive eurozone manufacturing performance will continue, says Paul Sirani, chief market analyst at Xtrade:
Having continued to post weaker than expected figures throughout the first half of 2016, today’s manufacturing numbers add to the brighter picture for the eurozone’s economic conditions in the last six months.
Eurozone manufacturing has remained surprisingly steady since June’s Brexit vote, with many countries showing signs of growth. Whether this can be maintained when the UK finally triggers Article 50 and begins to execute its formal withdrawal is up for debate.
Concerns in the region also linger with German expansion slowing down. Any further grumblings from the economic power house of Europe would spell tough times ahead for ECB president Mario Draghi.
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IHS Markit chief business economist Chris Williamson said:
The preliminary PMI results for November indicate the sharpest monthly increase in business activity so far this year, with plenty of signs that growth will continue to accelerate.
The PMI readings so far for the fourth quarter point to GDP expanding 0.4%, led by a rebound in German growth to 0.5%. France is also seen to be enjoying its best spell since the start of the year, with the PMIs signalling GDP growth of 0.2-0.3% in the fourth quarter.
What’s especially encouraging to see is the build- up of uncompleted orders, which showed the largest rise since May 2011. Increasing numbers of firms are boosting capacity as a result of the order book backlog, leading to the joint-largest increase in employment seen this side of the global financial crisis.
ECB policymakers will also be pleased to see inflationary pressures are intensifying steadily. Average prices charged for good and services showed the biggest rise for over five years, albeit with the rate of increase being very modest. However, with indicators such as rising backlogs of work and longer supplier delivery times suggesting demand is exceeding supply, price pressures look set to intensify further in coming months.
Eurozone business activity highest this year
Overall business activity in the Eurozone was at its best level since December 2015, according to the latest figures.
IHS Markit’s preliminary composite purchasing managers index came in at 53.8, u from 52.9 in October.
Again it was a strong performance from the service sector which gave a boost to the figures. The services PMI was 54.1 in November, up from 52.8 and better than the expected 53.
#Euro Markit Services PMI Flash at 54.1 https://t.co/rhkAL59yH7 pic.twitter.com/NwqBeVfs3g
— Trading Economics (@tEconomics) November 23, 2016
Manufacturing edged up from 53.5 in October to 53.7, higher than the forecast 53.3.
#Euro Markit Manufacturing PMI Flash at 53.7 https://t.co/8LmfDdIAVS pic.twitter.com/dDycwHPJeG
— Trading Economics (@tEconomics) November 23, 2016
The latest hit to estate agency shares follows a poor performance since the Brexit vote, says Neil Wilson, market analyst at ETX Capital:
News of a ban on charging fees to tenants comes as a hammer blow to embattled estate agents. Shares in estate agents opened sharply lower this morning as the government plans to ban upfront fees charged by letting agents...
Passing on the cost to landlords could drive down fees by improving competition, although estate agents claim they make no money from fees.
Estate agents have suffered since the Brexit vote – shares in Foxtons are still trading down around 30% from their pre-referendum level amid falling client activity. Countrywide stock is now worth a third of what it was in May 2015.
Nov. dip in the German #PMI was slightly disappointing. For now, though, it still points to a renewed pick-up in GDP growth after a weak Q3. pic.twitter.com/Xg6AoG6VjP
— Capital Economics (@CapEconEurope) November 23, 2016
German manufacturing slips but services edge higher
As with the French preliminary PMIs for November, so for Germany, with manufacturing disappointing but services performing better than expected.
The manufacturing PMI came in at 54.4, down from 55 in October and a two month low.
But services rose from 54.2 in October to 55, a six month high.
The Composite output index edged down from 55.1 in October to 54.9.
IHS Markit economist Oliver Kolodseike said:
Although the PMI failed to further build on October’s ten-month high, the latest survey results highlight that Germany’s private sector economy remains in good shape in November. Moreover, the data suggest that economic growth has picked up from the meagre 0.2% rate in the third quarter.
The survey data also signal that a healthy labour market remains one of the mainstays of Germany’s economic upturn. With new order intakes rising sharply, the expansion in workforce numbers was insufficient to prevent a further build-up of unfinished business, however. That said, rising backlogs generally lead to higher future output and it is therefore likely that companies will remain busy in coming months.
Moreover, there are clear signs that price pressures are intensifying further. Input cost inflation reached its highest level in over four-and-a- half years and output prices were raised further which should be welcome news for ECB policymakers who are desperately trying to boost inflation in the region.
European markets open mixed
Despite Wall Street hitting yet new records - the Dow Jones Industrial Average closed above 19,000 for the first time - European markets seem reluctant to follow suit.
The FTSE 100 is certainly taking its cue from the US, climbing 0.67%, with mining shares once more among the gainers.
But Germany’s Dax has dipped 0.075 and France’s Cac is currently down 0.03%.
Agenda: Estate agency shares slump, while markets await eurozone update
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
News that the UK government will ban fees charged by estate agents to cover the supposed administrative costs of families renting their homes has seen shares in the sector slump.
Countrywide is down 6%, Foxtons has fallen 9% and Savills has slipped 1%. Purplebricks has lost more than 4%.
Meanwhile on a busy day for economic news, we are due to get the latest snapshot of activity in the eurozone, with the first estimates of manufacturing and services for November.
France is first out of the blocks, with a better than expected service sector figure helping make up for a dip in manufacturing data. The service sector index rose to a two month high of 52.6 in November from 51.4 the previous month, and better than the 51.9 expected.
But the manufacturing index edged down to 51.5 in November, down from 51.8 in October and compared to a forecast of 51.4.
In the US there are initial jobless claims, manufacturing PMIs and consumer confidence figures.
We are also on the lookout for results from Philip Green’s Arcadia group, and there are also updates from Thomas Cook and United Utilities.
Oh yes, and there is also the small matter of the rest of the Autumn Statement, which is being covered separately in our politics live blog:
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