FTSE 100 ends busy week at new closing high
Boom! The FTSE 100 has ended a busy week at a new all-time closing high.
But it’s only a modest rally - the blue-chip index has finished 9 points higher at 7424 points, adding to yesterday’s record close. That’s down on the new record high of 7447 set this afternoon.
Insurance firm Admiral led the risers, up 2%, with medical products maker Convatec and budget airline easyJet close behind.
European markets are showing some gains too. Germany’s DAX also finished 0.1% higher, while the French CAC gained 0.3%.
Investors have taken this week’s US interest rate rise in their stride -- mainly because the Fed reassured them that borrowing costs won’t rise too fast over the next couple of years
Relief that the Dutch far-right ‘only’ came second in Wednesday’s election also made for a good week in the City.
FTSE 💯at new record close for second day after US rate rise. Hip, hip hooray! 🇬🇧🥂#UKshares https://t.co/Hl5osgK22U pic.twitter.com/NBYQbzoz9U
— Andrew Duncan (@andrewsduncan1) March 17, 2017
But there is still plenty for investors to worry about this weekend; Brexit hasn’t gone away, and nor have calls for another Scottish vote on independence.
Plus, who knows what Donald Trump will do next week? His meeting with German chancellor Angela Merkel is underway now, but looks a little awkward...
No handshake. No talking to one another.
— Kyle Griffin (@kylegriffin1) March 17, 2017
That Trump-Merkel pool spray was pretty awkward. —via @MSNBC pic.twitter.com/DIkEyfNJUq
Chris Beauchamp of IG reckons next week should be a little quieter than the last few days - although new UK inflation figures (on Tuesday) will be interesting.
The coming week is a quieter one, at least compared to this one. UK CPI and retail sales will ensure that sterling remains a focus of attention, after the pound rallied from its lows thanks to the Fed meeting.
However, it looks like we are in for a period of quiet, at least where events are concerned. Stocks remain expensive, but index inflows keep supporting the market, and for now there is no sign of a major dip emerging any time soon.
So on that note, let’s wrap up. Hope you have a lovely weekend. GW
Updated
A gobbet of eurozone news: Standard & Poor’s has just reaffirmed Portugal’s credit rating, with a stable outlook:
Ratings On Portugal Affirmed At 'BB+/B'; Outlook Stable
— Mike Bird (@Birdyword) March 17, 2017
🇼 ️🇪️ 🇪️ 🇰 ️🇪️ 🇳 ️🇩️
The OECD has put more pressure on governments to reform their economies, and help more people benefit from faster growth.
Otherwise, the think tank warns, they will continue to lose the support and faith of voters.
My colleage Katie Allen explains:
The report, presented by OECD secretary general Angel Gurria at a meeting of finance ministers from the G20 group of nations in Germany calls on governments to take a long-term view of jobs and skills, infrastructure spending and innovation.
It also calls for more focus on tackling inequality to win back public support for reforms. The group, which covers 35 mainly rich countries including the UK, notes that on average only 40% of OECD citizens trust their governments.
Newsflash: US consumer confidence continues to grow.
That’s according to the University of Michigan, Its monthly consumer sentiment index has jumped to 97.6 in March, from 96.3 in February.
And the ‘current conditions’ index, which asks people how their feel about their financial situation today, jumped by three points to 114.5, the highest reading since November 2000.
The survey also found that Republicans were “much more optimistic” than Democrats about expectations for their finances.
Richard Curtin, director of the University of Michigan consumer survey, says:
The sentiment data has been characterised by rising optimism as well as by rising uncertainty due to the partisan divide.
Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders.”
Confidence Still Rising: pic.twitter.com/QyT53EnDaR
— Michael McDonough (@M_McDonough) March 17, 2017
The FTSE 100 is on track to set a closing high for the second day running (on top of this afternoon’s intraday high).
Henry Croft of Accendo Markets reckons investors are ending the week in good heart:
“Equity markets across the globe are positive as improved risk appetite continues into the weekend, although the pace of gains has slowed as drivers (data/corporate) are light on the ground.
Investors are continuing to digest the multiple central bank monetary policy updates this week, including surprising hawkishness from the Bank of England [on Thursday]”
Footsie 100 hits new record high
Newsflash: Britain’s FTSE 100 just nudged a new alltime intraday high.
The blue-chip index has hit the heady heights of 7447 points, up 30 points today - and two points higher than Thursday’s peak.
Royal Bank of Scotland, the financial institution bailed out by the taxpaper in 2008, is leading the rally - up 2.3% today.
Updated
Ooooh. Bloomberg are reporting that the G20 finance chiefs have removed a reference to climate change from the statement they’ll released on Saturday, at the end of their meeting.
That’s a blow to Germany, the meeting’s host. It hoped to include a section about climate issues, but there appears to be a major disagreement over the issue.
Deputies concluded crafting the communique on Thursday evening, and ministers and central-bank governors will debate the document in the German town of Baden-Baden on Friday. The language may still change before the final version is released the next day.
Germany is using its year as G-20 president to push for the group to support climate protection. That effort has run into resistance from countries including the U.S., China, India and Saudi Arabia, one G-20 official said, speaking on condition of anonymity because the talks were private.
“There can be a way to overcome disagreements today -- that is, not writing about it in the communique,” French Finance Minister Michel Sapin told reporters in the southwestern German spa town on Friday.
“But not writing about it doesn’t mean not talking about it. Not writing about it means that there are difficulties, that there is a disagreement and that we we must work on them in the coming months.
Finance ministers drop reference to climate change in draft G-20 statement, sources say https://t.co/aH3Wu2SNYP pic.twitter.com/UcvyAQKoEJ
— Bloomberg (@business) March 17, 2017
Over in Baden-Baden, G20 finance ministers are trying to hammer out a statement on free trade.
Germany’s finance chief, Wolfgang Schäuble, told reporters that there were some “sensible positions” among delegates on the issue
“I don’t know the exact wording but nobody has raised the issue of protectionism yet and I don’t believe that we have to deal with this a lot,”
“It’s about finding the right wording, it’s about how we phrase the openness of the world trade system in the final communique,.”
(thanks to Reuters for the quotes)
Lukman Otunuga of FXTM Research says the stock market bounce following Wednesday night’s Federal Reserve meeting is fading.
Traders were excited on Wednesday and Thursday that the Fed didn’t predict more rate hikes in 2017 and 2018; today, though, they’re more concerned about the G20 finance ministers meeting in Germany:
Otunuga says:
The “dovish hike” powered stock market rally slightly cooled off during Friday’s trading session with investors turning cautious ahead of the anticipated G20 meeting. Asian shares were mostly mixed as participants weighed on the prospects of fewer US interest rates increases this year.
In Europe, the defensive trading mood slightly pressured equities and the bearish contagion could limit gains on Wall Street this evening. An explosively volatile trading week is slowly coming to an end with investors turning their attention towards the G20 finance meeting which could offer some insights on how world leaders feel about key topics such as protectionism and global growth. With some discussions of currencies also being a possibility, the Greenback could turn volatile if leaders start to discuss the impacts of its resurgence since Trump’s presidential victory.
After a weak start, Europe’s stock markets are now pushing higher.
The FTSE 100 is up 19 points at 7435; a small rise, but only 10 points away from beating yesterday’s all-time intraday high.
After the excitement earlier this week (a US rate hike, a split at the Bank of England), the markets seem to be meandering towards the weekend.
Connor Campbell of Spreadex says:
Looking to the US open and the Dow Jones is set for a quiet start to the session, with the futures suggesting at 10 point rise when the bell rings on Wall Street. Now that the Fed rate raise is done and dusted the Dow may struggle to find any meaningful direction in the coming weeks – that is, of course, unless Donald Trump (who has been relatively quiet of late) unleashes some kind of market-shaking pronouncement.
Eurozone posts trade deficit
The eurozone has posted its first trade deficit in the years.
Imported goods from the rest of the world surged by 17% year-on-year in January, to €164.5bn, according to Eurostat. Exports rose by 13% to €163.9bn.
This left the euro area with a deficit of €600m; the first since January 2014.
The wider European Union posted a trade in goods deficit of €16.2bn in January (partly due to Britain).
That included a large trade deficit with China, but a larger surplus with the United States:
High demand for energy in the winter months helped to cause Europe’s trade deficit, says Howard Archer of IHS Global Insight:
Imports can also be lifted appreciably in the winter months if colder than usual weather leads to a pick-up in energy imports.
However, the weakened traded goods performance in January will make it harder for net trade to contribute positively to Eurozone GDP growth in the first quarter of 2017 after being a drag in the fourth quarter of 2016.
Donald Trump’s man in Baden-Baden, Steven Mnuchin, has met with his Japanese counterpart Taro Aso:
Mnuchin is expected to push G20 ministers not to deliberately weaken their currencies to win export business - something that Trump gets most irate about.
But Aso may not appreciate any criticism; last month he denied that the yen was weak.
Mark Carney is also warning that confidence in the financial sector, and trust in the markets, has been rocked by a series of scandals in recent years.
In his letter to G20 finance chiefs, Carney says the Financial Stability Board is taking steps to make financial benchmarks more trustworthy (after a series of rigging scandals).
It is also bolstering codes of conduct across the industry, and change financial institutions’ governance and compensation structures to reduce misconduct risk.
Carney also hints that simply slapping multi-billion fines on big banks isn’t the only solution; individuals need to be held to account too.
He says:
The work recognises that, while fines and sanctions deter misconduct, preventative measures, including those which increase individual accountability, can also play important roles.
The FSB is promising to:
(i) deliver to G20 Leaders a report drawing together actions taken and recommendations made to address misconduct risk across the various elements of the action plan;
and (ii) publish a consultation paper on the use of compensation tools to address misconduct
Updated
Mark Carney: G20 must complete financial reforms
The world’s financial system risks suffer serious harm if policymakers fail to implement the measures drawn up to avoid a repeat of the financial crisis, Mark Carney has warned.
Carney fired a ‘hurry-up’ towards the world’s top finance ministers and central bankers as the G20 meeting got underway in Germany. He’s pushing them to tackle ‘shadow banking’ (which takes place away from the regulators’ gaze) and risky derivatives trading.
He’s acting in his role as head of the Financial Stability Board (the Bank of England governor is wearing two hats in Baden-Baden this weekend)
He warned that there “a risk of a loss of momentum” in completing, and implementing, international standards. This could lead to fragmented funding and liquidity markets, driving up the cost of finance in the real economy.
Carney concludes:
A decade on from the start of the crisis, the G20 has made substantial progress in building a financial system that is more resilient and better able to fund households and business in sustainable way.
As the global recovery gains strength, now is not the time to risk these hardwon gains.
And here are the FSB’s four priorities to avoid a repeat of the mayhem of 2008.
- Transforming shadow banking into resilient market-based finance, including by addressing structural vulnerabilities in asset management;
- Making derivatives markets safer by progressing the post-crisis reforms to over-the-counter derivatives markets and delivering coordinated guidance on central counterparty resilience, recovery and resolution;
- Supporting full and consistent implementation of post-crisis reforms, including the development of a structured framework for post-implementation evaluation of the effects of reforms; and
- Addressing new and emerging vulnerabilities, including misconduct risks, as well as those stemming from the decline in correspondent banking and from climate-related financial risks
Updated
Some photos from the G20 meeting just landed:
Almost five years after being forced out of Barclays over the Libor rate rigging scandal, Bob Diamond has made a dramatic return to the City.
Diamond has pulled off an audacious takeover of City stockbrokers Panmure Gordon, through his Atlas Merchant Capital in an alliance with the Qatari royal family.
They’re paying a 68% premium for Panmure, which is one of the oldest brokerage in the Square Mile. Analysts believe Diamond could now turn Panmure into a ‘boutique’ investment bank.
In the City, shares in housebuilder Berkeley Group have jumped by 6% this morning after it issued an upbeat trading statement.
Profits will be at the top end of expectations, it said, despite a 16% drop in reservations since the Brexit vote.
But Tullow Oil have slumped by 15%, after it announced plans for a £607m rights issue to tackle its debt burden. The cash call is priced at a 45% discount to last night’s share price, prompting this morning’s slide.
Updated
Belgium’s stock market is pluckily bucking the downward trend this morning:
Markets dip as political drama looms
European stock markets have begun the day on the back foot.
Germany’s DAX is down 0.4% in early trading, as the country prepares to welcome finance ministers and central bank bosses from across the G20.
That dragged the wider Stoxx 600 index down by 0.3%, with France and Spain also in the red.
In London, the FTSE 100 dropped by 8 points after hitting a record closing high of 7415 last night.
Henry Croft, Research Analyst at Accendo Markets, says political drama may drive the markets today:
With this week’s central bank updates and the Dutch election now in the rear view mirror, in focus today will be a multitude of high level political summits.
The US President Donald Trump is hosting the German Chancellor
PresidentAngela Merkel, as the leader of the Eurozone’s engine room meets face to face with the outspoken US chief for the first time since he took office.In Europe, Theresa May will address the Conservative Spring Forum around midday - expect ‘Brexit means Brexit’ soundbites aplenty and potentially some remarks towards the SNP - while the G20 meeting of Finance Ministers in Baden-Baden will likely be headlined by US Treasury Secretary Mnuchin’s first appearance on the global stage (trade in focus?) and, of course, the looming challenge of Brexit.
Updated
The agenda: Happy Spring Equilux
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
City traders are enjoying a brighter commute to the office this morning. It’s the Spring Equilux - when the days start being longer than the nights, and winter gloom becomes but a memory.
Today is the #spring #equilux which means we have 12 hours of daylight and days will now be longer than nights pic.twitter.com/0nuDAAv9C2
— Met Office (@metoffice) March 17, 2017
Confused by #equilux being today when #equinox is only on Monday?
— Mayken Brünings 🏊 (@MaykenAlanna) March 17, 2017
I was too, then I read this:
https://t.co/WDebGJBDF1 via @metoffice
However, this new extra daylight may be wasted on us today, as there’s not too much actually going on.
After rallying yesterday, European stock markets are expected to dip back this morning - as the boost from Wednesday’s Dutch election fades.
Our European opening calls:$FTSE 7406 down 10
— IGSquawk (@IGSquawk) March 17, 2017
$DAX 12061 down 22
$CAC 5009 down 4$IBEX 10171 up 3$MIB 20134 up 24
The economics calendar is a little sparse.
- 10am GMT: Eurozone trade balance for January
- 10am GMT: Eurozone construction output for January
- 2pm GMT: The US consumer confidence report from the University of Michigan
- 5pm GMT: The weekly Baker Hughes count of US oil rigs in operation
Investors may also be watching Washington, where German chancellor Angela Merkel is meeting US president Donald Trump (her visit was delayed by heavy snow on Tuesday).
And G20 finance ministers will begin their two-day meeting in Germany; protectionism and free trade will be high on the agenda.
It’s US Treasury secretary Steven Mnuchin’s first G20 meeting since taking office.
RBC Capital Markets say:
Mnuchin is expected to present a softer tone from the US, shying away from the protectionist message of Trump’s campaign trail.
Updated
