The breakdown of the rig figures shows oil rigs falling by 11, gas rigs by 1 and miscellaneous rigs rising by 1 to give the total decline of 11 for the week.
The total is the lowest since November 2009, as oil companies continue to be cautious despite the revival in crude in recent days, with Brent around its highest levels for the year. The Baker Hughes figures showed:
Brent is currently 0.46% lower at $47.92 a barrel.
On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back next week.
The number of US oil rigs drilling has dropped for the sixth week in a row.
According to data from Baker Hughes, the number of rigs dropped by 11 to 420.
European shares on the slide
The strength of the yen after the Bank of Japan decided on Thursday to delay any further stimulus measures has helped push stock markets sharply lower on the last trading day of the month. The final scores showed:
- The FTSE 100 fell 1.27% or 80.51 points to 6241.89
- Germany’s Dax has dropped 2.73% to 10,038.97
- France’s Cac closed 2.82% lower at 4428.96
- Italy’s FTSE MIB finished down 1.98% at 18,600.56
- Spain’s Ibex ended 2.62% lower at 9025.7
- In Greece, the Athens market dipped 0.15% to 583.65
On Wall Street, the Dow Jones Industrial Average is currently 122 points or 0.69% lower.
S&P warns on Brexit risk for UK and says referendum will be close call
Standard and Poor’s has kept its UK credit rating at AAA, but with a negative outlook due to the risks of Britain leaving the European Union in what it expects to be a close referendum vote. It said:
In our opinion, the possibility that the U.K. could leave the European Union (EU) as a consequence of a planned “leave or remain” referendum set for June 23, 2016, represents a significant risk to the U.K. economy, in particular to its large financial services sector and exports.
If the U.K. were to leave the EU, it may make financing its twin deficits more difficult, particularly its large current account deficit, which stood at 5.2% in 2015.
A vote to leave would also likely lead to demands for another referendum on Scottish independence, leading to further uncertainty.
It said the negative outlook reflected the possibility of at least a one in three chance of a downgrade over the next two years. It added:
A vote to leave is likely to hurt confidence, investment, and GDP growth, and is likely to have a negative effect on public finances. As a consequence, a U.K. departure from the EU (or “Brexit”) would likely lead us to lower the long-term sovereign credit rating.
We believe that, having left the EU (the destination for about 44% of U.K. goods and services exports), the U.K. would largely lose its capacity to influence the EU’s policies for key sectors, including financial services.
In our opinion, the loss of the U.K.’s EU membership could also put at risk important external financing sources for the U.K.’s large current account deficit. The U.K.’s current account deficit stood at 5.2% of GDP in 2015 (the highest in several decades), down only slightly from the 2014 figure of 5.1%. In the fourth quarter of 2015, the deficit stood at an annualized 7% of GDP, the largest deficit since quarterly records began in 1955.
In a worst-case scenario, a Brexit could also diminish sterling’s role as a global reserve currency, which has been a significant support for our ‘AAA’ rating on the U.K.
That said, our affirmation of the rating reflects our assumption that, by a small majority, the referendum will deliver a vote to remain in the EU, as well as our opinion that the U.K. benefits from its large, diversified, and open economy, exhibits high labor- and product-market flexibility, and enjoys credible monetary policy.
Updated
Commodity stocks have been some of the main gainers in the past month. Tony Cross at Trustnet Direct said:
Recapping the month, it’s been the miners that have shone as commodity prices appear to be moving away from the dark days seen at the start of the year and some stability is returning to the market. Anglo American is up 40% on the month, whilst a number of the sector peers have added 15%-20% too. The index may be comprehensively off the highs we touched just 10 days ago, but without the boost from commodity stocks, the picture for April would have looked a whole lot bleaker.
A June rise in US interest rates looks a little unlikely, and not just because of the uncertain US economic data:
Unless the polls show no real chance of #Brexit I just can't see the Fed hiking eight days before Europe could explode.
— Ian Shepherdson (@IanShepherdson) April 29, 2016
Oil prices have flattened out, with Brent crude now up just 0.1% at $48.2 a barrel.
But they are still on track for their biggest monthly gain in seven years, helped by a weaker dollar and signs of a dip in US production. The increase also came despite Opec’s inability to agree a cap on output at January’s levels to tackle the current supply glut.
And here’s a chart of the consumer sentiment index:
The survey’s chief economist Richard Curtin said:
Consumer sentiment continued its slow decline in late April due to weakening expectations for future growth, although their views of current economic conditions remained positive. All of the April decline was in the Expectations component, which fell by 4.8% from one month ago and by 12.6% from a year ago and by 14.7% from its January 2015 peak. The retreat from the 2015 peaks was evident across a wide range of expectations about prospects for the national economy.
The size of the decline, while troublesome, is still far short of indicating an impending recession. The decline is all the more remarkable given that consumers’ assessments of current economic conditions, including their personal finance, have remained largely unchanged at very positive levels during the past year. This divergence may reflect the strength of the consumer relative to the business sectors, and may have been exacerbated by growing uncertainty about the economic policies advocated by various presidential candidates. Overall, the data indicate that inflation-adjusted personal consumption expenditures will grow by 2.5% in 2016.
Weak US consumer confidence figures
US consumer confidence is at its weakest since September last year, according to a new survey.
The University of Michigan consumers sentiment index has fallen from 91 in March to 89 in April, below estimates of a level of 90.
Updated
More downbeat US data.
The Chicago purchasing management index has come in at 50.4 in April, compared to 53.6 in the previous month and expectations of a level of 53.
Philip Uglow, chief economist of compilers MNI Indicators, said:
This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April. Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year.
Updated
Wall Street opens lower
US markets have followed other global bourses lower, with the Dow Jones Industrial Average down 46 points or 0.2% in early trading.
Markets remain nervous as the yen hits an 18 month high, on concerns that the Bank of Japan may hold fire on any further stimulus measures after disappointing investors at this week’s meeting.
With mixed performances so far from the latest company reporting season - Apple being a notable casualty - markets are looking fairly fragile again. The FTSE 100 is down 0.9% while German and French markets are both down around 2%.
Stronger than expected eurozone growth figures have done little for equities, but helped push the euro higher.
Opec’s oil output in April rose by 170,000 barrels month on month to 32.64m barrels, according to a Reuters survey.
The rise, bringing the level close to January’s record high, was led by Iran, Iraq and the United Arab Emirates. There were declines reported by Kuwait following a strike, Nigeria and Venezuela with Saudi Arabian output little changed from March.
Opec and other producers have so far failed to agree proposals to cap output at January’s levels in an effort to combat the current supply glut.
Brent crude is currently up 0.4% at $48.34 a barrel, not far off the $50 a barrel level which a number of companies including BP believe will bring back some stability to the sector.
European markets in the red
Traders across Europe have given a resounding shrug to the eurozone’s growth figures.
All the main stock markets are down today, with the FTSE 100 shedding 56 points (0.8%). The French and German markets are both deeper in the red, losing around 1.5%.
Royal Bank of Scotland are the biggest faller, down almost 5% now, after reporting a fresh heavy loss.
And the tech sector is looking jittery, after billionaire investor Carl Icann revealed he had ditched his stake in Apple.
Chris Beauchamp of IG says:
For tech shares, April has indeed been ‘the cruellest month’, and while the sector as a whole is still up since the February lows, it looks like any further market rally for US shares may well have to contend without support from these high-growth names.
Swiss bank UBS has upgraded its forecast for eurozone growth this year.
It now expects the region to expand by 1.6% in 2016, up from 1.4%, following the news that growth has doubled to 0.6%.
Reinhard Cluse, UBS economist explains:
While temporary factors, including weather, may partly explain this outcome, today’s reading nevertheless comes as a rather positive surprise when considering the difficult external environment at the beginning of the year.
Today’s GDP report contains less detail than usual, as Eurostat have produced it within 30 days of the quarter’s end, not the usual 45 days.
Tomas Holinka, economist at Moody’s Analytics, reckons the growth rate could prove to be too optimistic, once more data comes in:
“The euro zone economy was at a better shape at the beginning of this year than expected. The quarterly growth accelerated to 0.6% in the three months to March, from 0.3% in the previous quarter.
Although this preliminary number might be revised down in coming months, the growth definitely surprised on the upside. Yet weakening U.S. and emerging market economies, the influx of migrants, and a possible U.K. exit from the EU are key risks to the region’s economy.”
Bert Colijn, economist at ING, says he’s “astonished” that eurozone growth has doubled to 0.6%:
The first months of the year were tumultuous with large stock market declines, growth concerns in the US, China and many emerging markets and plummeting confidence among businesses and consumers. Clearly, businesses and consumers have not acted on their gut feelings.
While the US and UK are suffering from a strong dollar and a possible Brexit, the Eurozone saw a marked acceleration.
This jump in eurozone growth comes at a good time, given worries over Brexit, political uncertainty in Spain, and the renewed tensions in Greece.
But Alasdair Cavalla of the Centre for Economics and Business Research urges caution:
This is the fastest rate of output growth since Q1 2015 for the Eurozone and its timing is propitious given the numerous sources of anxiety for the continent.
However, false dawns have been common since the financial crisis and nowhere more so than in Europe. Country-level figures revealed the French economy is finally getting into gear, showing a 0.5% rise.
It’s taken the eurozone a long, long time to reach its pre-crisis levels again.
As this chart shows, its post-Lehman recovery was knocked off course in 2011 by the debt crisis:
OFFICIAL: Euro-area GDP has finally recovered pre-crisis levels! Gap now closed, 3 years after UK, 6 years after US. pic.twitter.com/az5OJ6LrSV
— Maxime Sbaihi (@MxSba) April 29, 2016
Despite this stronger growth, the eurozone has fallen back into negative inflation.
Prices across the single currency bloc fell by 0.2% this month, Eurostat reports, having been flat in March.
It’s mainly due to cheap oil, with energy prices falling 8.6% compared with April 2015.
Service sector prices have risen by 1%, while food, alcohol & tobacco costs 0.8% more and industrial goods prices are up 0.5%.
So: unemployment is falling, the economy is growing MUCH better than expected BUT no inflation in sight. It just gets easier for the #ECB
— Alessandro Speciale (@aspeciale) April 29, 2016
Eurozone unemployment hits lowest since 2011
In another boost, unemployment across the euro area has hit a new four and a half-year low.
The eurozone unemployment rate dropped to 10.2% in March, down from 10.4% in February, and the lowest recorded since August 2011.
Unemploment across the wider EU dropped to 8.8%, a near seven-year low.
Here’s some detail:
Among the Member States, the lowest unemployment rates in March 2016 were recorded in the Czech Republic (4.1%) and Germany (4.2%). The highest unemployment rates were observed in Greece (24.4% in January 2016) and Spain (20.4%).
Unemployment has fallen in 25 European countries in the last year, but rose in Finland and Austria. This suggests that the European recovery is finally gaining traction. However, there is a lot of catching up to do - in America, the jobless rate is 5%
Eurozone economy finally over pre-crisis peak
The eurozone has finally recovered all the economic output lost when the collapse of Lehman Brothers triggered the biggest financial crisis in generations.
But it’s been a bumpy ride, and Spain and Italy have yet to reach this milestone:
Euro area GDP above pre-crisis levels (Q1 2008) for the first time. pic.twitter.com/nmqZksvf3M
— Frederik Ducrozet (@fwred) April 29, 2016
This is the strongest eurozone growth rate in a year.
The wider EU expanded by 0.5% during the last quarter.
Eurozone smashes forecasts with 0.6% growth.
The eurozone grew by 0.6% in the first three months of 2016.
That’s twice as strong as in the previous three months, and much stronger than expect.
Better-than-expected growth in France and Spain helped the eurozone to beat forecasts, and grow faster than the UK (which expanded by 0.4% last quarter).
Euro area GDP +0.6% in Q1 2016, +1.6% compared with Q1 2015 #Eurostat https://t.co/QWfttA4QF0 pic.twitter.com/YZHQRUeXzv
— EU_Eurostat (@EU_Eurostat) April 29, 2016
BOOM euro area GDP up by 0.6% QoQ in Q1. Germany probably stronger-than-expected too.
— Frederik Ducrozet (@fwred) April 29, 2016
Updated
Advertising giant WPP has thrown more fuel on the fire of excessive pay, by handing its boss, Sir Martin Sorrell, a pay packet of almost £71m.
Over £62m of the remuneration package comes from WPP’s long-term incentive plan, but Sorrell is also getting £7.6m in base salary, short-term bonuses and other rewards.
Sorrell has built WPP into a global titan over several decades, so deserves a lot of credit for the company’s success. But still, expect some criticism - this is the second biggest payday for a UK boss ever.
Updated
More encouraging news: Italy’s unemployment rate has hit its lowest rate in over three years.
Figures just released show that the Italian jobless rate dipped to 11.4% in March, from 11.6% percent in February.
#Italy jobless rate falls to lowest since 2012 on recovery pace https://t.co/YIiMWnjxPT via @ltotaro pic.twitter.com/K0mUjh520u
— Zoe Schneeweiss (@ZSchneeweiss) April 29, 2016
Philippe Waechter, chief economist at Natixis Asset Management, also believes the rise in French growth will help Francois Hollande:
Waechter says (via the FT):
“There is a stronger situation in the labour market and that will create strong momentum this year...
It’s perfect timing for Hollande.”
French finance minister hails growth figures
The acceleration in French growth to 0.5% is good news for Francois Hollande, the embattled president.
And finance minister Michel Sapin has declared that the government’s economic plans are paying off. saying:
“This is solid growth.
Output is increasing and translating into more jobs and a drop in unemployment.”
On Wednesday, France posted its biggest fall in unemployment in 15 years, after hitting a string of record highs.
Shares in airlines group IAG have dropped by over 4% this morning after it warned that March’s Brussels terror attacks have hit sales.
IAG, which owns British Airways, is cutting back its growth plans after seeing weaker demand from high-margin business-travellers.
We have been expecting Q1 2016 #Eurozone #GDP growth of 0.4% q/q, but now wonder if it could beat this. #Germany likely saw decent growth
— Howard Archer (@HowardArcherUK) April 29, 2016
The eurozone may have grown faster than expected in the last quarter.
Economists had forecast growth of 0.4%. But with France and Spain both beating expectations (and Germany not reporting GDP yet), we might get a higher number in 90 minutes time....
#French (+0.5%qq) and #Spanish (+0.8%) Q1 GDP figs point to upside risks to consensus forecast of +0.4% for #euro-zone fig at 10am BST.
— Capital Economics (@CapEconEurope) April 29, 2016
Spain grows by 0.8%, again
Spain has racked up another quarter of strong economic growth, despite the political turmoil that has gripped the country this year.
Spanish GDP rose by 0.8% in the first quarter of 2016, matching the previous three months. Its economy has now been growing for almost three years:
#Spain #GDP Growth Rate QoQ Flash at 0.8% https://t.co/6Ti9o01Wz8 pic.twitter.com/PkFDL3CsKL
— Trading Economics (@tEconomics) April 29, 2016
That’s slightly faster than the 0.7% which economists had expected, suggesting that Spain shrugged off the deadlock since last December’s inconclusive election.
Updated
Austria's growth beats forecasrts
Breaking: Austria’s economy grew by 0.4% in the first three months of this year.
That beats the 0.3% growth reported in the October-December quarter, and is the best result in more than two years.
#Austria #GDP Growth Rate QoQ Flash at 0.4% https://t.co/KoSPtIuVxm pic.twitter.com/ZcHIBSu6UJ
— Trading Economics (@tEconomics) April 29, 2016
Reuters has more details:
- Exports rose 0.8%, up from 0.7% in Q4 2015
- Imports increased 0.9%, down from 1.1% quarter.
- Gross investment rose 1.0%,
- household consumption grew 0.2%
- state consumption was up 0.3%.
Updated
Oil hits 2016 high
The oil price has just hit its highest level of the year.
Brent crude is now trading at $48.30 per barrel, up 0.3% this morning.
Three months ago, it was changing hands at just $28 per barrel, dragged down by oversupply fears and the weakening global economy.
European stock markets are expected to fall this morning, despite France’s better-than-expected growth figures.
Investors are jittery following a late selloff on Wall Street last night (the Dow Jones fell 1%).
There have been fresh losses in Asia overnight too.
Lack-lustre performances in New York & Asia may take European stocks lower at the opening - FTSE -43, DAX -82, CAC -38 courtesy of IG 5.20am
— David Buik (@truemagic68) April 29, 2016
Updated
German retail sales tumble
Disappointingly, Germany isn’t reporting its growth figures this morning.
Instead, it has just released some alarmingly weak consumer spending figures.
Retail sales slumped by 1.1% in March, compared to February, which is the biggest monthly fall in 18 months. Economists had expected growth of 0.4%
It could be a sign that Germany’s domestic economy is weakening, adding to concerns that its exporters will suffer from the global slowdown.
Early Easter depressed German retail sales, but growth is slowing, and likely will continue to do so in Q2. pic.twitter.com/f69ddkhY6o
— Claus Vistesen (@ClausVistesen) April 29, 2016
More reaction to France’s growth figures:
Good news for the economy of France as GDP rises by 0.5% in the first quarter https://t.co/imQPkpHeRS #Euro #ECB
— Shaun Richards (@notayesmansecon) April 29, 2016
FRANCE: Good Q1 GDP performance (+0.5%) mainly due to catch-up in household consumption after Paris attacks. Investment rebound confirmed.
— Maxime Sbaihi (@MxSba) April 29, 2016
This chart confirms that domestic spending (in red) drove the French economy forwards in the last quarter:
GFCF (gross fixed capital formation) - a measure of business investment, also rose.
Trade had a negative impact on growth, though; imports rose by 0.5% while exports fell by 0.2%.
Fred Ducrozet of private Swiss-bank Pictet agrees that the French growth figures are encouraging:
French Q1 GDP puts carryover for 2016 at 1.0%. Government target (1.5%) easily on track. Good news continue following unemployment drop.
— Frederik Ducrozet (@fwred) April 29, 2016
We won't get details from other flash GDP reports but France a case in point: € domestic momentum has legs.
— Frederik Ducrozet (@fwred) April 29, 2016
France’s strong performance means the eurozone may economy finally have recovered all the damage caused in the financial crisis.
Euro-area just needs a 0.18% QoQ growth in Q1 for GDP to FINALLY recover pre-crisis levels. Verdict this morning. BBG consensus has +0.4%.
— Maxime Sbaihi (@MxSba) April 29, 2016
France grows by 0.5%
The French economy has smashed expectations, by growing by 0.5% in the last quarter.
That’s the best quarterly growth rate in a year, up from just 0.3% in October-December.
It suggests France is recovering from the trauma of November’s terrorist attacks.
#France #GDP Growth Rate QoQ 1st Est at 0.5% https://t.co/g86YPz4vxd pic.twitter.com/5uoamFNNX7
— Trading Economics (@tEconomics) April 29, 2016
INSEE, the French stats body, reports that French household spending is “recovering strongly”, rising to 1.2% from -0.1% three months ago.
Capital expenditure rose to 0.9%, from 0.7%, suggesting companies are a little more confident.
In short, a good start to Eurozone GDP day....
Reaction to follow...
Updated
The agenda: A deluge of European data
Good morning.
We’re about to get a major healthcheck on the European economy.
For starters, it’s Eurozone GDP day, when a swathe of European countries report their growth figures for the last quarter.
Economists predict that the single currency region may have expanded by 0.4% in January to March, up from 0.3% in the previous quarter.
That would match Britain’s performance, and comfortably beat the US (which expanded by a mere 0.13% in the last quarter).
But it still wouldn’t be fast enough to create the millions of extra jobs Europe needs.
On top of that, we’re also getting new inflation and unemployment figures, so it’s going to be busy.....
Here’s how the morning might unfold (all times provisional)
-
France GDP: 6.30am BST / 7.30am CEST
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Spain GDP: 8am BST / 10am CEST
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Austria GDP: 8am BST / 10am CEST
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The eurozone GDP: 10am BST / 11am CEST
- Eurozone inflation for April: 10am BST / 11am CEST
- Eurozone unemployment for March: 10am BST / 11am CEST
Updated
