Meanwhile the US rig count fell for the fifth week in a row to lows last seen in November 2009, according to Baker Hughes which compliles the data.
BAKER HUGHES U.S. rig count -9 this week to 431 (oil -8 to 343, gas -1 to 88) pic.twitter.com/2kYq8H6RiY
— John Kemp (@JKempEnergy) April 22, 2016
On that note, it’s time to close the blog for the day and indeed the week. Thanks for all your comments, and we’ll be back next week.
And here is some video of the opening remarks from Eurogroup President Jeroen Dijsselbloem at the Ecofin press conference.
And with that the press conference is over. Meanwhile Dijsselbloem has tweeted more on the Panama Papers:
Informal #ECOFIN line to take on #PanamaPapers #EU2016NL https://t.co/2balaG0Nm5 pic.twitter.com/P93Dxt72nb
— Jeroen Dijsselbloem (@J_Dijsselbloem) April 22, 2016
Quesionts, and one on the Greek situation and the need to legislate any contingency measures, which the Greeks had said is not possible.
Dijsselbloem said the institutions will work with the Greek authorities to design the contingency measures. They need to be credible.
[There was mention of a fourth bailout]. Dijsselbloem said this is not about a fourth bailout. This is about if the [proposed] measures do not deliver. “When I look at the latest figures, the Greeks are on track, it is an extra security package. If there are legal constraints, we will design it in a way that delivers... and needs to be legally possible of course.”
Updated
Klaas Knot of De Nederlandsche Bank talked of low carbon economy. Discussed how to help consumers in their decisions by increasing transparency.
Essential that adequate price incentives are available. Better disclosure of climate exposure is needed.
Stress testing should be introduced [in a co-ordinated way]. This could be taken up, for example, by the European systemic risk board.
Updated
Working to get agreement on anti-tax avoidance, hope for agreement in May, says Dijsselbloem.
Also list of non-co-operative jurisdictions.
On money laundering, focus was on terrorist funding, now want more on beneficial ownership and others.
Ministers was speedy implementation of transparency, including Panama.
Panama Papers gave another boost to our agenda to tackle tax evasion and money laundering. Clear view that Europe should lead.
Secondly they discussed strengthening the banking union, with differing views on how to achieve it.
Finally, Panama Papers. Hadn’t initially intended to discuss it. They were also discussed in G20 and last week the G5 took initiative on information on ultimate ownership.
(As George Osborne said earlier ) 28 others joined it, which is a great outcome says Dijsselbloem.
Eurogroup President Jeroen Dijsselbloem said duing lunch, finance ministers discussed the EU budget, and how the financail framework could better respond to unforeseen events.
He mentions in particular the response to challenges like the migration crisis.
The Econfin briefing has just begun and can be seen here.
Markets end week on a downbeat note
A combination of factors has helped push markets lower as the trading week ends, with mixed data from Europe and the US, mining shares lower as metals come under pressure again and the continuing repercussions of the car emissions scandal. The final scores showed:
- The FTSE 100 fell 71 points or 1.11% to 6310
- Germany’s Dax dipped 0.6% to 10,373.49
- France’s Cac closed 0.29% lower at 4569.66
- Italy’s FTSE MIB fell 0.25% to 18,687.04
- But Spain’s Ibex ended up 0.39% at 9232.8
- In Greece, the Athens market added 1.2% to 605.92
On Wall Street, the Dow Jones Industrial Average is currently down 27 points or 0.15%.
Meanwhile Brent crude is up 2.36% at $45.58 a barrel.
The damage done to Volkswagen from the emissions scandal has been revealed in its full year results. Julia Kollewe writes:
Volkswagen has slumped to its first annual loss in more than 20 years after making a €16.2bn (£12.6bn) provision for costs relating to the diesel emissions scandal.
This pushed VW into an operating loss of €4.1bn for 2015, bigger than analysts had expected and the company’s first annual loss since 1993, after a €12.7bn profit in 2014.
The company more than doubled its provision for fixing diesel cars to €16.2bn, a day after announcing plans for the biggest car buyback in history in the US, potentially almost 500,000 vehicles, as part of a deal with the State Department to halt more than 600 class action civil suits.
VW said the provision related to the emissions scandal, “among other things for pending technical modifications and customer-related measures as well as global legal risks”.
The German carmaker stunned the world when it admitted last September that it had installed software in diesel vehicles to cheat emissions tests – potentially affecting a total of 11m cars worldwide.
Chief executive Matthias Müller said: “The current crisis – as the figures presented today also reveal – is having a huge impact on Volkswagen’s financial position. Yet we have the firm intention and the means to handle the difficult situation we are in using our own resources.”
The full story is here:
Here’s our full story on the new £20 banknote:
Turner chosen for £20 banknote
The artist chosen to appear on the next £20 banknote has been revealed by Bank of England governor Mark Carney.
Carney unveiled the winner, chosen after the public nominated a number of artists to appear, at the Turner Contemporary gallery in Margate. Appropriately, it was J M W Turner who will appear on the note, which will enter circulation by 2020.
Updated
UK chancellor George Osborne has been tweeting about new measures agreed to improve tax transparency:
I can announce 20+ countries, including 3 crown dependencies & overseas territories, have committed to exchange data on who owns businesses
— George Osborne (@George_Osborne) April 22, 2016
Good to see unstoppable momentum behind UK-led initiative to fight tax dodging and illicit finance
— George Osborne (@George_Osborne) April 22, 2016
The world is moving quickly towards greater tax & ownership transparency - those that refuse to do the right thing will be named and shamed
— George Osborne (@George_Osborne) April 22, 2016
Updated
Meanwhile on the currency markets the pound has moved sharply higher after a number of polls gave a lead to the Remain campaign in the EU referendum. Sterling rose by more than half a per cent to $1.4425 and added 0.7% to hit a four week high against the euro.
The pound rose 2.3% to a three week high against the yen, helped by the Japanese currency coming under pressure following reports the Bank of Japan was considering expanding its negative interest rate policy to bank loans, and could even cut rates further.
UK rates could "theoretically" go below zero - BoE's Vlieghe
Bank of England policymaker Gertjan Vlieghe has told the Evening Standard that UK rates could theoretically go negative. As part of a profile of the Bank’s newest rate-setter, the subject of interest rates comes up:
But could the Bank of England follow the example of others by cutting interest rates into negative territory if necessary? Vlieghe’s answer is intriguing: “Theoretically, I think interest rates could go a little bit negative.” He says that the Bank would “have to think very carefully” about whether the positive effects would outweigh the downside — as in Switzerland, for example, where mortgage rates went up.
He adds, however: “Even if you are willing theoretically to consider negative interest rates, there is only so far that they can go negative before you start worrying about the thing that central bankers have been worrying about all these years — which is ‘not only am I not getting any interest paid on my money in the bank, it is now potentially going to charge me, in which case I won’t keep my money in the bank, I’ll just take it out and keep it at home’. Once that happens, that is almost certainly negative for the economy because then you undermine the whole bank funding model... so we want to stay well away from that scenario.”
How deep into negative territory could rates go? That depends on the costs to large companies of storing, transporting and insuring huge piles of cash themselves, he argues. “People have tried to come up with how much it costs to do that. I’ve seen estimates in the range of anything from 0.75% and up. Once you start thinking about rates 0.75% negative, companies are going to start taking that seriously. I think the switching point is somewhere around minus 0.5%, minus 0.75%, maybe minus 1%. But I’m also saying I don’t even want to get close to it because I don’t know exactly where it is.”
Dennis de Jong, managing director at UFX.com, said:
A below expectations performance by US manufacturing will be cause for concern, particularly among those who had predicted the sector was heading towards growth.
Optimists pointed to last month’s uptick in new orders as a sign of resurgence. However, pressure from a strong dollar and an uncertain business outlook ahead of a turbulent presidential race appear to be taking their toll.
The challenge for Janet Yellen and her colleagues at the Fed will be to build some momentum for a sector which has stubbornly avoided significant growth in recent months.
US manufacturers report worst month since September 2009
Over to the US, and some weak manufacturing data for April.
The Markit initial reading of the months’s manufacturing PMI fell to its lowest for just over six and a half years, down from 51.5 in March to 50.8 and lower than the 52 level analysts had expected.
Markit said production volumes were close to stagnation amid a slowdown in new business growth, and there was the weakest rise in manufacturing employment since June 2013. Chris Williamson, chief economist at Markit said:
US factories reported their worst month for just over six-and-a-half years in April, dashing hopes that first quarter weakness will prove temporary.
Survey measures of output and order book backlogs are down to their lowest since the height of the global financial crisis, prompting employers to cut back on their hiring.
The survey data are broadly consistent with manufacturing output falling at an annualised rate of over 2% at the start of the second quarter, and factory employment dropping at a rate of 10,000 jobs per month.
With prior months’ survey data pointing to annualized GDP growth of just 0.7% in the first quarter, the deteriorating performance of manufacturing suggests that growth could weaken closer towards stagnation in the second quarter.
The survey responses reveal an increase in business uncertainty in relation to both the economic and political outlook during the month, which is weighing on spending and investment decisions and exacerbating already-weak demand both at home and abroad.
Wall Street opens flat
US investors are in cautious mood in early trading.
- Dow Jones: -0.07% at 17,969.61
- S&P 500: -0.2% at 2,086.71
- Nasdaq: -0.9% at 4,899.89
Tata Steel update
Welsh billionaire Sir Terry Matthews said he might be willing to put some of his own money into a management buyout of Tata’s UK business and the Port Talbot steelworks.
The Guardian’s Graham Ruddick reports:
Matthews said he is “feeling really good” about the prospects of a rescue deal for the steel business, which could save thousands of jobs in the UK.
Matthews, who made his fortune in technology and telecoms, is part of a consortium of public and private sector figures from south Wales supporting a management buyout.
The tycoon said the consortium is still putting its team together and its funding has yet to be finalised, but that he is ready to back the buyout.
“If it makes sensible business and the future looks really good, frankly there will be investors and we already know it,” he told BBC Wales.
“Potentially me too. The fact is, you first put a really good team together, then you fight in an area which has upside. So I am feeling pretty good about it.”
Eurogroup meeting: what we learned
Here is a summary of the main messages coming out of the Eurogroup meeting on Greece.
- Progress has been made on reaching an agreed package of Greek reforms and a Greek debt deal.
- Greece and its lenders are “very close” to reaching a deal on an “upfront” package of measures, worth 3% of GDP.
- Eurogroup also wants Greece to come up with a package of contingency measures, equivalent to 2% of GDP, as an insurance policy if Greece needs to do more to reach its targets.
- The IMF would like the contingency plans to be legislated for, to give them credibility.
- However, the Greek finance minister Euclid Tsakalotos told journalists it would not be possible to legislate for contingency measures, because Greek law would not allow it. He said Greece and its lenders would instead have to find “a commitment mechanism”.
- Greece and its lenders are going to work on a deal over the next few days. If sufficient progress has been made, Eurogroup ministers will meet again on Thursday next week.
- The IMF is ready to dispatch its team back to Athens, to work with Greek officials.
Now that the Eurogroup meeting is over, finance ministers have disappeared into the Econfin meeting (which includes all EU ministers, not just those from the eurozone).
The Panama Papers and EU budget are among the items on the agenda.
Assurances from the Eurogroup that a deal on Greek reform measures and debt is close has done nothing to cheer investors. Most European markets are still down.
HSBC escapes a major revolt over executive pay:
HSBC pay policy gets 96% vote in favour
— Jill Treanor (@jilltreanor) April 22, 2016
#Greece legislating contingency measures will pose huge challenge for governing coalition in power w narrowest of majorities
— Helena Smith (@HelenaSmithGDN) April 22, 2016
Prospect of having 2 vote thru yet more measures will make many MPs in #Greece's governing coalition nervous
— Helena Smith (@HelenaSmithGDN) April 22, 2016
The Greek finance minister, Euclid Tsakalotos, has thrown a bit of a spanner in the works over these contingency measures.
In a separate press conference, he told journalists that within Greek law, there is no possibility of legislating for something that might or might not happen in the future.
Dijsselbloem however seemed adamant the contingency measures would have to be legislated...
Tsakalotos said that while Greece won’t be able to legislate on contingencies, it will engage with the Europeans to find “a commitment mechanism” on measures so that credibility and trust is achieved.
He seemed broadly upbeat after the meeting:
We essentially agreed on the package that was discussed last summer. There are a few technical details left to discuss over the next two days but there wasn’t anybody in that room who challenged the idea that that package hasn’t been done.
Any solution will have to meet two criteria. The first is that within Greek law, you cannot legislate contingently. You cannot say you will do “x” if the state of the world, “y”, is in place in 2018 or 2019.
And the second criterium is whatever solution we find over the next few days must be credible to the creditors, to investors...and to the Greek people.
Whatever solution we arrive at will be done so together with the debt. It is absolutely crucial for us that the whole package on debt and reform gives a clear signal to Greek citizens and to European citizens, and to Greek and international investors, that Greece has turned a corner, that there is a clear runway of exiting the crisis.
Greek bond yields fall on hopes of debt deal
Greek bond yields have fallen following the Eurogroup meeting, on hopes that Greece is close to agreeing a deal with its lenders.
Two year yields fell 52 basis points to 10.46%, while benchmark 10-year yields nudged down by 14 basis points to 8.72%.
Christine Lagarde admits that Eurostat’s data (on Greece’s public finances) was more positive than the IMF expected (and other forecasters, she points out), and that might mean the IMF will have to rethink its calculations.
However, she suggests that Eurostat might have got the numbers wrong...as they have done before...
Updated
Dijsselbloem on how the contingency measures to be put forward by Greece might be legislated:
In order for the contingency measures to be credible, they need to be legislated. Now how that is designed, whether you just legislate a mechanism, or individual measures is yet to be discussed.
Has the Eurogroup given itself too much to do before next Thursday ( when ministers hope to reconvene to discuss progress on Greece), Dijsselbloem is asked.
We will all have to bridge our differences. For some of course, the contingency measures are difficult, and for some debt is a big issue, politically difficult.
But on all sides it was very constructive today and there was an open attitude to cross that bridge.
Dijsselbloem takes a question on the size of the Greek package and contingency measures.
He says the upfront package is worth 3% and is almost complete, while the contingency measures will be worth 2% of GDP, to supplement the main package (“only if necessary”).
The latest figures from Greece have been quite good so there is reason for some optimism.
But to give that extra assurance and confidence, both in the Eurogroup but also outside investors and markets, we are looking for that additional two percentage points.
Christine Lagarde is speaking. The head of the International Monetary Fund says progress on Greece is being made.
She says measures must be “legislated up front, and credible”.
We are confident we can work together well and I have asked my team to be ready to return to Athens right away to continue the work.
It has to work on two legs: the measures on the one leg, and debt sustainability on the other.
Updated
Back at the Eurogroup in Amsterdam, finance ministers support the idea that Greece needs to come up with contingency measures as an insurance policy against “downside risks”.
So that if there is any financial shock and Greece needs to do more, it will be able to do so rapidly.
My colleague Jill Treanor is tweeting from the HSBC annual meeting here.
"We have no desire to do business with criminals anywhere" says HSBC chairman Douglas Flint at HSBC agm
— Jill Treanor (@jilltreanor) April 22, 2016
Panama Papers have highlighted how perfectly legal corporate structures can be abused to facilitate money laundering, says HSBC's Flint
— Jill Treanor (@jilltreanor) April 22, 2016
Dijsselbloem says that Greece will go away and work both on a possible upfront package of measures, and a package of contingent measures.
The Eurogroup will then meet again on Thursday next week (he stresses this is not 100% confirmed yet), to discuss the proposed measures.
We will also have a “serious conversation” about a debt relief package for Greece. He confirms there is “no support [among eurozone finance ministers] for nominal haircuts on the debt”.
Here we go, Dijsselbloem is taking his place.
He jokes about how many press conferences there will be today and tomorrow...three.
The eurozone has weathered global events quite well. Having said that, let’s turn to Greece.
Co-operation between the institutions and Greek authorities has been strong and productive. We believe substantial progress has been made and we are close to agreement. Today we looked at the way to go forward...
The policy package should include a contingent package that should be implemented if necessary to meet the budget surplus targets. The design of that needs further work, what the measures would be and what would trigger it.
Journalists await Eurogroup president Jeroen Dijsselbloem, who is due to give a press conference any minute now.
Live in 10 min: #Eurogroup press conference in Amsterdam w @J_Dijsselbloemhttp://ow.ly/4mYwOJ #EU2016NL
— EU Council Press (@EUCouncilPress) April 22, 2016
HSBC bosses are in for some stick at today’s AGM...
Outside #HSBAagm with @robinhood telling HSBC fat cats to pay their share of tax. pic.twitter.com/QClhEKiQEJ
— Joel Benjamin (@Gian_TCatt) April 22, 2016
Journalists are reporting long queues to get through security:
Long lines to get through security at HSBC AGM. Lucky entrants sporting yellow wristbands pic.twitter.com/PVosQcCBTS
— Marion Dakers (@mvdakers) April 22, 2016
HSBC braced for shareholder anger
HSBC is the latest major corporate to face shareholder contempt at its annual meeting on Friday.
As the Guardian’s Jill Treanor reports, the Panama Papers, executive pay, and boardroom composition are all expected to be high on the agenda.
HSBC prepares for AGM shareholder resistance on executive pay https://t.co/lMqXAa6f5l
— Jill Treanor (@jilltreanor) April 22, 2016
Oil on course for third week of gains
Oil prices are on course to finish up for the third week in a row.
Brent crude oil is currently trading at $44.39 a barrel (down 0.3% on the day). Crude is up more than two-thirds since its early 2016 lows, and traders said sentiment was improving despite a persistent oversupply.
Goldman Sachs said in a note:
While this recent rally has the potential to run further to the upside ... we believe that is not yet driven by a sustainable shift in fundamentals.
Anglo American: we are 'mindful' of shareholder concerns
Mining giant Anglo American has responded to the shareholder revolt staged at Thursday’s annual meeting.
More than 40% of investors voted against the £3.4m pay of the chief executive, Mark Cutifani, in the latest shareholder protest against boardroom excess. The vote was non-binding.
In a statement on Friday, Anglo said it was “mindful” of shareholder concerns about executive pay. The mining company said it would consult with shareholders over the coming months before its next annual meeting in 2017, when a revised pay policy will be put to the vote.
The company said:
Setting executive remuneration in a volatile industry such as mining can be challenging and the remuneration committee intends to again engage with shareholders in order to refine the policy to ensure that it is both appropriate and motivational.
Anglo shares are down this morning - along with other miners - falling 2% to 732p.
Dijsselbloem is expected to give a press conference following the Eurogroup meeting at 11.15 UK time (12.15 in Amsterdam).
We will be reporting his comments, and you should be able to watch the presser live here.
German finance minister Wolfgang Schäuble has been spotted chatting to Mario Draghi, president of the European Central Bank, at the Eurogroup meeting in Amsterdam.
The two men have been involved in a verbal bust up over the amount of stimulus the ECB is pumping into the eurozone economy, as it attempts to kick-start a meaningful recovery and stave off deflation.
Schäuble thinks it has gone too far, with record low rates causing problems for German banks and pensioners.
Here they are today putting their differences to one side... maybe. Dijsselbloem is presumably on hand in case tensions rise...
Updated
Judging by your reader comments below the line, you are not convinced there will be much progress made on Greece in Amsterdam today...
Updated
Back to Amsterdam... You can hear what Eurogroup president Jeroen Dijsselbloem had to say as he arrived for the meeting here.
Among other things, he spoke up for Mario Draghi, president of the European Central Bank, who yesterday fiercely defended the independence of the central bank in the face of German criticism over its stimulus programme.
Draghi’s main point was:
We obey the law, not the politicians, because we are independent.
This is what Dijsselbloem said:
Mr Draghi has to do his work [independently]. That also means we politicians really restrain ourselves. He has to take decisions that are good for the eurozone as a whole within his mandate, and that is exactly what the ECB is doing.
The more we refrain from comments, the more effective he can be.
Updated
Oliver Kolodseike, economist at Markit and author of the flash Germany PMI report, described growth in the private sector in Europe’s largest economy as “unspectacular” and “uninspiring”.
German PMIs: private sector recovery slows
Markit’s surveys for the German manufacturing and services sectors suggest growth in the private sector was the slowest in nine months in April.
It was dragged down by the services sector, with the headline PMI falling unexpectedly to 54.6 in April from 55.1 in March.
Manufacturing was better, rising to 51.9 from 50.7.
Apr #German PMI shows overall manufacturing & services output slowing slightly to 9-month low although was some pick-up in orders & jobs
— Howard Archer (@HowardArcherUK) April 22, 2016
Apple should pay more tax, says co-founder
Steve Wozniak, a co-founder of Apple, has told the BBC the US tech giant should pay more tax.
He said all firms, including Apple, should pay the same 50% tax rate he does.
Wozniak, who founded Apple with Steve Jobs and Ronald Wayne in 1976, told BBC Radio 5 Live’s Wake Up to Money:
I don’t like the idea that Apple might be unfair – not paying taxes the way I do as a person. I do a lot of work, I do a lot of travel and I pay over 50% of anything I make in taxes and I believe that’s part of life and you should do it.
European markets open lower
European investors are lacking cheer this morning, with all major indices in the red:
Combined, the manufacturing and services PMIs suggest the French private sector just about scraped growth in April.
The composite PMI rose to 50.5 from 50 in March, hitting a five-month high.
Jack Kennedy, who compiles the French surveys at Markit, said:
The French private sector economy eked out marginal growth at the start of the second quarter after broadly stagnating on average during the opening three months of the year.
Expansion was centred on the dominant service sector, as manufacturing was weighed down by a sharp drop in incoming new orders.
The PMI data continue to paint a picture of a private sector economy stuck in a weak growth trajectory accompanied by little meaningful job creation.
French PMIs: weak manufacturing but stronger services
The PMI data for the French manufacturing and services sector is a bit of a mixed bag this morning.
French manufacturing activity fell in April at an accelerated rate. The headline PMI index (measuring output, new business, confidence and employment), dropped to an 8-month low of 48.3, from 49.6 in March. Anything below 50 indicates contraction.
It was worse than expected, with economists polled by Reuters predicting the headline manufacturing index would pick up slightly to 49.8.
The services sector fared better in April, with activity rising to a five-month high. The headline services PMI rose to 50.8 - back in expansion territory - from 49.9 in March.
Despite his cheer, Dijsselbloem is already managing expectations about what the Eurogroup will actually achieve today.
Greece is trying to hammer out an agreement with its international lenders to unlock further loans, but Dijsselbloem said it was still early days in the process.
Speaking in Amsterdam, he said:
I’m hearing good news from Athens, so let’s see where we are.
If we make progress on the content of the programme and the next steps then we need to start the discussion on debt. We’re only at the beginning of that discussion, so don’t expect any deals today.
Debt is a discussion we’ve not had before. The only thing we had was a promise that if the Greeks would commit fully and deliver on the programme we would look at, if necessary, further debt measures.
Jeroen Dijsselbloem, the Eurogroup and Ecofin president (and Dutch finance minister), is welcoming his colleagues to the wonderful city of Amsterdam.
Special day! Welcome to all my European colleagues in beautiful @schpvrtmsm. Special meeting place #EU2016NL pic.twitter.com/jSHuSdMEWM
— Jeroen Dijsselbloem (@J_Dijsselbloem) April 22, 2016
The Agenda: eurozone meeting and flash PMIs
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The main event today is the the Eurogroup meeting in Amsterdam, where finance ministers will discuss the latest developments in the Greek debt crisis and try and hammer out a way forward.
The meeting will take place 9am-12pm (local time, 8am-11am UK time) at the Maritime Museum in Amsterdam. Jeroen Dijsselbloem, the Eurogroup (and Ecofin) president will give a press conference when the meeting concludes.
It will be followed by an Ecofin meeting - where ministers from the nine EU countries that are not part of the eurozone will join their colleagues.
On the agenda there is a working lunch on EU budget problems; a session on the Panama Papers; and a session on strengthening the banking union.
We will bring you all the latest developments from Amsterdam throughout the day.
Elsewhere we have the flash manufacturing and services PMIs for Germany and France for April, which will offer the latest indication of how Europe’s two largest economies are doing.
Updated
