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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Korean summit plans cheer markets as Paul Ryan calls for 'surgical' tariffs - as it happened

An electronics stock indicator in Tokyo.
An electronics stock indicator in Tokyo. Photograph: Kazuhiro Nogi/AFP/Getty Images

Frederick Reimer, center, works with fellow traders on the floor of the New York Stock Exchange today.
Frederick Reimer, center, works with fellow traders on the floor of the New York Stock Exchange today. Photograph: Richard Drew/AP

And finally, Wall Street has ended the day pretty much where it started it.

The Dow closed just 9 points higher at 24,884, as traders watched to see how the to-ing and fro-ing over tariffs will play out.

Paul Ryan’s call for ‘surgical’ tariffs, targeting countries who dump steel on America, confirms he’s not happy with Donald Trump’s plans and wants to water them down.

But it’s also a sign that some form of protectionist policies are heading our way. If so, a trade war can’t be discounted....

On that cheery note - goodnight! GW

Barry Gardiner MP, shadow Secretary of State for International Trade, is calling for the UK government to take a tougher line over Trump’s tariffs.

Gardiner (a member of the opposition Labour party) says strong action is needed:

“President Trump has made clear his appetite for a trade war. It started with Bombardier, and has now moved on to steel and aluminium. We are seeing a real threat to thousands of British jobs linked to UK exports to the US. On top of that there is a risk that other steel exporting countries try to reroute their surplus capacity from the US into the UK.

“We need strong government action now, including at a multilateral level through the WTO, before entire sectors of UK industry are left wondering who’s next.”

European markets close

Ding! European stock markets have closed, with cautious optimism pushing shares higher.

The FTSE 100 ended the day up 30 points at 7,146, up 0.4%.

Germany’s DAX gained 0.2%, but the standout performer was Italy’s FTSE MIB which jumped by 1.75%.

Fiona Cincotta, market analyst at City Index, says the prospect of North and South Korea holding a summit next month boosted risk appetite in the markets:

North Korea has agreed to refrain from carrying out any further missile tests, whilst engaging in dialogue with South Korea. North Korea has also expressed an interest in holding talks with the US. These comments were made by Kim Jong Un to South Korea’s national security chief in what can only be described as a complete change in tune from the rogue nation.

The growing opposition to Donald Trump’s tariffs from, among others, Gary Cohn and Paul Ryan is also soothing investors, she adds:

Fears over a trade war appear to be abating as opposition to the measures, even from with Trump’s own party are increasing. Whilst trade war fears haven’t been completely erased, its fair to say that there are increasing doubts as to whether Trump will be able to go ahead with such a risky economic policy.

However.... The US stock market isn’t quite as cheerful; the main indices are in the red as New York heads for lunch...

The markets after the European close
The markets after the European close Photograph: Thomson Reuters

Wall Street’s early rally is fizzling out. The Dow is now down 130 points, or 0.5%, having been up over 100 points at the open.

TRADE WARS: What the experts say

Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management, has warned the markets not to get complacent about the dangers of a trade war:

“While the deficit with China was the initial focus of much of Trump’s ire, the real casualties of the proposed trade tariffs on steel and aluminium would be Canada and Mexico – both close allies. This may be part of a wider negotiating tact, flexing muscles in the run up to NAFTA negotiations. However, steel and aluminium import volumes make up little of the overall deficit, hence the actual economic impact of these tariffs is likely to be minimal. But the ripple effect is as yet unknowable if it causes further retaliation beyond words.

Moreover, if these tariffs are a precursor to tougher trade relations with China, which alone accounts for over half to the US trade deficit, then this friction could have economic consequences.

“At the moment markets largely seem unaffected, but if the war of words turns into actual tariffs and a trade war, markets are likely to react sharply. What began as campaign trail bombast, now risks undermining the success of the administration’s biggest achievement to date – better economic growth as a result of tax reforms.Let’s hope the globalists in the Trump administration prevail over the trade warriors.’

John Higgins of Capital Economics says emerging markets could be badly hit:

Donald Trump’s bite may yet match his bark. In this case, we would expect the US dollar to rebound against the Mexican peso and the currencies of many other emerging economies, despite their weaker direct trade ties with the US.

Admittedly, the US president’s attitude to trade is not the only influence on the exchange rates of emerging market currencies. This can clearly be seen in the case of the Korean won. It has appreciated by more against the greenback so far this month than any other currency in the Fed’s broad dollar index, amid signs of a thawing of relations between North and South Korea.

But more generally, renewed concerns about a global trade war would almost certainly hit demand for “risky” emerging market currencies again, as it did initially after Trump’s inflammatory “tweets”. What’s more, it is likely that the prices of many commodities would fall back once more, adversely affecting some emerging market countries’ terms of trade.

The flipside would probably be a renewed strengthening of the Japanese yen and the Swiss franc, which are perceived to be “safe havens”. These were two of the biggest beneficiaries against the US dollar at the very outset of March, but they have since given back much of their gains.

In another twist, Trump’s treasury secretary, Stephen Mnuchin, has just declared that Mexico and Canada could be exempted from new steel and aluminium tariffs.

Testifying to Congress, Mnuchin says that Canada wouldn’t be subject to them... IF the NAFTA trade deal is successfully renegotiated.

There’s growing speculation that Gary Cohn, Donald Trump’s top economic advisor, could quit the White House over the tariffs row.

Cohn, a former president of Goldman Sachs, is fighting a rearguard action against Trump’s plan -- calling in US business leaders who firms would be hit if steel and aluminium imports were costlier.

Bloomberg reports that Trump suspects that Cohn could walk if he can’t change the president’s mind....

President Donald Trump has told advisers that he believes economic adviser Gary Cohn will leave his White House job if Trump decides to go forward with tariffs on imported steel and aluminum, people familiar with the matter say.

Cohn has mounted a last-ditch effort, along with other administration officials and some Republican lawmakers, to head off steep tariffs that threaten to unleash a global trade war.

Cohn has been summoning executives from U.S. companies that depend on the metals to meet this week with Trump to try to blunt or halt the tariffs, according to those familiar with the meeting planning. It’s unclear whether Cohn’s moves would be enough to change the president’s mind.

In a classic Trump move, the president has added to the mystery by tweeting that he’s always looking to shake-up his staff in search for ‘perfection’ (aim high, Mr President!)

More here:

Here’s a chart putting January’s fall in US factory orders into context:

Paul Ryan: Tariffs should be 'surgical'

Paul Ryan
Paul Ryan Photograph: Bloomberg TV

Newsflash: Top Republican Paul Ryan has called for ‘surgical’ tariffs to be imposed on countries who are dumping steel and aluminium on the US economy.

Speaking to reporters in Washington, House speaker Ryan says Donald Trump is right to point out that “some abuse” is occurring.

Some countries, such as China, are dumping steel at unfairly low prices, he says.

But rather than a blanket tariff, Ryan argues that America needs a ‘smart’ approach. Tariffs should be targeted so they focus on this ‘legitimate’ problem, rather than covering all countries, he said.

As Ryan puts it:

There clearly is dumping and trans-shipping of steel and aluminium. That’s absolutely happening. There’s a big overcapacity problem. Let’s go and focus on that. Let’s focus on the abusers of that.

That’s why we think the proper approach is a more surgical approach, so we do not have unintended consequences”.

In other words, this could avoid the risk of triggering a global trade war, and tit-for-tat retaliation from the European Union or Canada, for example.

Just in: US factories have suffered their biggest drop in orders in six months.

New orders for US-made goods shrank by 1.4% in January, new figures from the Commerce department show. That’s the worst performance since last July, and follows a 1.8% gain in December.

The decline was mainly driven by transport orders, which shrank 10% thanks to a drop in demand for civilian aircraft (a fairly volatile market).

Stripping out transport, and the underlying orders were up by 0.4% - compared to 0.8% in December.

The markets may be up, but there’s no escape from Brexit anxiety.

Today’s warning comes from the head of carmaker Vauxhall, who has warned that the lack of clarity over Britain’s exit from the EU threatens the future of its Ellesmere Port factory in North West England.

Carlos Tavares, chief executive of French parent PSA, told the BBC that the lack of clarity over Brexit is “a big concern”, and could threaten Ellesmere Port’s chances of getting more work after 2021.

Tavares adds:

“We cannot invest in a world of uncertainty.

No one is going to make huge investments without knowing what will be the final competitiveness of the Brexit outcome.”

Wall Street opens higher

The New York stock market has just opened....and stocks are rising.

The Dow has gained 80 points, or 0.3%, and there are similar gains on the S&P 500 and the Nasdaq.

The opening of Wall Street

Traders are encouraged by the news that North and South Korea have agreed to hold a summit next month. As some of the geopolitical risk within the markets falls, shares rise and the US dollar dips.

Wall Street is also reacting to speculation that Donald Trump could be persuaded not to implement tariffs on steel and aluminium - in the face of opposition from other countries and criticism from domestic politicians including US House speaker Paul Ryan.

Fawad Razaqzada, market analyst at Forex.com, says:

Risk appetite has improved on headlines North Korea has expressed a willingness to talk about denuclearization, according to South Korea. The North is apparently willing to discuss surrendering its nuclear weapons and freeze nuclear and missile programmes if it begins direct talks with the US. This is a dramatic easing of tensions. It follows a visit by senior South Korean politicians. Now it has emerged that Kim Jong-un will be meeting South Korean president Moon Jae-in in late April.

Meanwhile fears over Donald Trump’s imposition of tariffs on imports of steel and aluminium have also eased after top Republicans advised against the plan.

The US president has poured a little cold water over the markets’ enthusiasm, warning that the breakthrough between North Korea and South Korea could be ‘false hope’.

Here’s political scientist Ian Bremmer of Eurasia Group on the Korean breakthrough:

Oil is also rallying, on hopes of detente between the two Koreas.

Brent crude has gained almsot 1% to $66.09 per barrel.

Here’s my colleague Benjamin Haas in Gangneung, South Korea, on the breakthrough with North Korea today that has cheered the markets.

North Korea is willing to discuss relinquishing its nuclear weapons, and will freeze its nuclear and missile programmes if it begins direct talks with the US, in a dramatic easing of tensions following a visit by senior South Korean politicians.

The country’s leader, Kim Jong-un, will also meet his South Korean counterpart, president Moon Jae-in, in late April in the first summit of its kind in over a decade, Seoul’s presidential office said. The two leaders will meet at Panmunjom, the only part of the highly militarised border where the North and South have any kind of contact.

North Korea pledged to not use conventional or nuclear weapons against its neighbour, despite frequent threats from Pyongyang. The two sides have remained in a technical state of war since the end of the 1950-53 Korean war.

“The North side clearly affirmed its commitment to the denuclearisation of the Korean Peninsula and said it would have no reason to possess nuclear weapons should the safety of its regime be guaranteed and military threats against North Korea removed,” a South Korean presidential spokesman said, according to the Yonhap news agency.

“The South and the North have agreed to set up a hotline between their leaders to allow close consultations and a reduction of military tension, while also agreeing to hold the first phone conversation before the third South-North summit.....

More here:

The South Korean won is getting a big boost - gaining 1.1% against the US dollar following the reports of a breakthrough with North Korea.

Markets jump on Korean summit plans

The US dollar has suddenly slumped, and Wall Street futures have rallied, following reports that North and South Korea have agreed to hold a summit next month.

This would be the first such summit in a decade, and could signal that relations between Seoul and Pyongyang are thawing.

According to media reports, North Korea has also agreed to suspend all weapons testing during the summit in April.

And in what could be a very significant move, North Korea has reportedly indicated that it could be willing to dispose of its nuclear technology.

South Korean President Moon Jae-in’s office says (via Bloomberg):

“North Korea has clearly expressed its intention for denuclearlization on the Korean peninsula, and if there is no military threat, and North Korea’s regime security is promised, they have clarified that there is no reason to hold nuclear weapons.”

The prospect of tensions easing between North Korea and South Korea, and with the United States, has had an immediate impact on the markets.

The US dollar has fallen against other currencies -- typically a sign that investors are less nervous. It’s lost half a cent against the pound, to $1.39.

The US stock market is also expected to jump when it opens later today.

Updated

Beast from the East takes bite out of John Lewis sales

Oxford Street in central London.
Oxford Street in central London. Photograph: Facundo Arrizabalaga/EPA

Department chain John Lewis has given us an insight into the damage caused by last week’s disruptively snowy weather.

Total sales for the week slumped by 14.4% on the same period last year, the company says, despite “an incredible effort to support trading” by its staff.

Electricals and Home Technology sales were down 6.3%, however heating products were up 265% on this week -- perhaps caused by households whose boilers failed in the big freeze.

Sales of tumble dryers were up too, as families struggled with an avalanche of wet clothing.

But every snowcloud has a silver lining -- sales of hats, gloves and scarfs with sales up 38%. Sales of boots were also up 36% compared to last year.

A round of applause for City AM please....

After three hours of trading, Europe’s stock markets are holding onto their early gains.

The FTSE 100 is up 71 points, or 1.01%, at 7,187 - extending yesterday’s recovery from Friday night’s 14-month low.

Italy’s stock market is now leading the charge, up 1.4%, despite the political deadlock created by Sunday’s general election.

Miles Eakers, Chief Market Analyst at Centtrip, predicts that the recovery will continue - if fears of a trade war continue to ebb away.

“Global stock markets continue to trade within their medium-term trading range after another sell-off last week.

“We expect they will continue to rise as fears of a trade war have subsided and there is some optimism that a Brexit transitional deal will be reached. Meanwhile, the Italian election had no major surprising outcomes, but the strong support for North League will unnerve the European Central Bank with its Eurosceptic stance.

“As risk appetite has returned, we expect the Pound and the Euro will strengthen against the US Dollar.”

Italian government bonds are also strengthening, even though populist parties secured around half the votes on Sunday.

EU 'proposes retaliatory tariffs against US goods

Back to trade war fears..... and Bloomberg is reporting that the EU is drawing up its retaliation if Donald Trump imposes tariffs on steel and aluminium.

Levi’s jeans, bourbon and US motorbikes are all on the list of products that could be slapped with a 25% tariff.....

Here’s the details:

The European Union is preparing punitive tariffs on iconic U.S. brands produced in key Republican constituencies, raising political pressure on President Donald Trump to ditch his plans for taxing steel and aluminum imports.

Targeting €2.8bn ($3.5bn) of American goods, the EU aims to apply a 25 percent tit-for-tat levy on a range of consumer, agricultural and steel products imported from the U.S. if Trump follows through on his tariff threat, according to a list drawn up by the European Commission and obtained by Bloomberg News.

The list of targeted U.S. goods -- including motorcycles, jeans and bourbon whiskey -- sends a political message to Washington about the potential domestic economic costs of making good on the president’s threat.

More here.

Brewdog 'highlights gender inequality' with new beer for girls

Craft beer group BrewDog is facing a backlash this morning after launching a new beer for female drinkers dubbed Pink IPA.

It’s their normal Punk IPA, but bottled in a pretty pink label. It’ll be sold at a 20% discount in BrewDog bars to those who identify as women - to highlight the gender pay gap.

Why, I hear you cry, would anyone do this?

BrewDog say it’s “a send-up of the lazy marketing efforts targeting the female market”, and their way of helping to tackle inequality.

It is also promising to donate 20% (the gender pay gap in the UK) of its proceeds from bottled Pink IPA and Punk IPA to causes that fight against gender inequality.

Sarah Warman, BrewDog’s Global Head of Marketing, says the company wants to help get more women into the beer-making industry.

She adds:

“Sexism in the beer industry is rife. We can no longer ignore that its existence prevents plenty of incredible women joining our eclectic and exciting industry. There is a long history of products that pander and patronise through harmful, sexist stereotypes and vulgar imagery, and we’re rallying to put an end to this nonsense.

The love of beer is not gendered. Beer is universal. Beer is for everyone.”

However, launching a pink beer for girls, even ironically, may not be the best way forwards.

BrewDog is already getting a savaging on social media, including from Labour MP Jo Stevens:

Here’s City AM’s Alys Key....

..and writer Chloe Combi:

But... Daniel Pryor of the Adam Smith Institute likes the idea

Updated

Probe launched into Co-op Bank

Newsflash: The UK government has launched an investigation into the way the Co-operative Bank was regulated in the aftermath of the financial crisis.

The probe will focus on Co-op’s failed attempt to take over more than 600 branches from Lloyds. That bid collapsed in early 2013 when the problems on Co-op’s balance sheet came to light.

Here’s Reuters’ take:

The British government on Tuesday asked the Prudential Regulation Authority (PRA) to investigate its oversight of Cooperative Bank, in an independent review aimed at shedding light on how the troubled lender was supervised during 2008 and 2013.

It said the investigation would focus on the Cooperative Bank’s failed bid for 632 branches of Lloyds Banking Group in 2013.

The PRA said it supported the call to launch an independent review of its supervision during a disruptive period for the bank, which was later found to suffer from significant funding problems and poor corporate governance.

“Since it was established in 2013, the PRA has been committed to learning the lessons of the past and the findings of this review will help the PRA meet its objectives in the future”, the regulator said in a statement.

Co-op Bank's ‘Crystal Methodist’ banned over inappropriate conduct

Paul Flowers in 2017
Paul Flowers in 2017

Paul Flowers, the former Co-op Bank chairman who was dubbed the ‘Crystal Methodist’ after being caught in a drugs scandal in 2013, has been banned from working in the City.

The Financial Conduct Authority has ruled that Flowers had shown “a lack of fitness and propriety required to work in financial services”.

Flowers’ chairman-ship of the Co-op Bank was not a great success. The bank was taken over by hedge funds after a massive black hole opened in its accounts. He also suffered a fearful grilling before MPs, where he revealed he didn’t know the size of the Bank’s assets.

He fell from grace after being filmed apparently counting out £300 to buy cocaine and crystal meth in a drugs deal. He was later convicted of possession, which let to his dismissal as a minister by the Methodist Church.

But, perhaps surprisingly, Flowers hasn’t been banned for these failings. Instead, the FCA has sanctioned him for misusing his Co-op email account and mobile phone for, err, adult services.

In a ruling published this morning, the FCA says that Flowers:

  • used his work mobile telephone to make a number of inappropriate telephone calls to a premium rate chat line in breach of Co-op Group and Co-op Bank policies; and
  • used his work email account to send and receive sexually explicit and otherwise inappropriate messages, and to discuss illegal drugs, in breach of Co-op Group and Co-op Bank policies despite having been previously warned about his earlier misconduct.

The parliamentary session on the GKN takeover is underway - it’s being streamed live here. We’ll keep an ear on it.....

MPs call for GKN takeover to be blocked

A GKN Group sign at its headquarters in Redditch, Worcestershire.

A group of cross-party MPs has urged business secretary Greg Clark to block the proposed £7bn hostile takeover of the British engineering company GKN by turnaround specialist Melrose.

That ratchets up the tensions ahead of this morning’s session at parliament, where Melrose and GKN bosses will face MPs.

Angela Monaghan explains:

Ahead of this select committee appearance by executives from both companies on Tuesday, the 16 MPs asked Clark to intervene in order to prevent a “world class” industrial company from being “dismembered”, relating to concerns that Melrose would break the 259-year-old company into pieces before selling it off.

“A takeover of GKN by Melrose is highly likely to mean the break-up of GKN, and the selling on – and possible disappearance – of several of its constituent important components including its aerospace, driveline, powder metallurgy and additive divisions,” the MPs wrote, according to the Financial Times.

UK insolvencies set to jump in 2018

Britain is facing a sharp jump in business failures, according to a new report from trade insurer Euler Hermes.

Euler Hermes warned overnight that the number of insolvencies in the UK will increase by +8% in 2018. That follows a 5% rise in 2017, as firm struggle to cope with rising costs and falling consumer confidence.

It says:

The UK will experience the second largest rise in business failures of any of the major global economies this year as uncertainties about Brexit become more pronounced.

While China is expected to suffer a 10% jump in insolvencies, the picture is brighter in Europe.

France (-7%), Germany (-4%), Netherlands (-5%) and Belgium (-5%) are all expected to see a drop in business failures, thanks to the strengthening European economy.

Insolvency predictions

A jump in insolvencies can have a serious knock-on effect on the wider economy, as firms lay off staff and default on payments to suppliers.

Milo Bogaerts, Chief Executive, Euler Hermes UK and Ireland, explains:

The rise in insolvencies has the potential to start a domino effect of overdue or non-payment which, as we have seen in recent months, can impact large companies and smaller suppliers throughout entire supply chains.

At the same time, two possible base rate increases (+50bp to 1%) this year may progressively translate into higher interest costs for companies and households. Monitoring client and supplier payment behaviour is key given the high levels of uncertainty, company debt and thin corporate margins in some sectors.

Worryingly, Euler Hermes predicts that UK corporate investment will shrink by up to 3% in the run up to Brexit in 2019, as firms hunker down.

Smurfit Kappa fights takeover bid

A cardboard box

There’s a frisson of takeover action in the City this morning.

Shares in packaging firm Smurfit Kappa have soared by almost 20% after it received a takeover bid from US rival International Paper Company.

Smurfit - described by the FT as “Europe’s largest cardboard box maker” - has firmly rejected the approach, claiming it doesn’t reflect its full value.

Liam O’Mahony, Chairman of Smurfit Kappa, says the company would be better off remaining independent. He says:

“The Board of Smurfit Kappa has unanimously rejected this unsolicited and highly opportunistic Proposal. It does not reflect the Group’s true intrinsic business worth or its prospects.

Shares in rival packaging firms, such as Mondi and DS Smith, have also jumped this morning as investors anticipate a wave of mergers and consolidation across the sector.

Updated

Hakan Samuelsson of Volvo

The president and CEO of Volvo has warned that it could abandon expansion plans in America, if Donald Trump triggers a trade war.

Volvo has just built a new car-making plant in South Carolina, which employs four thousand people.

Speaking at the Geneva Motor Show, Hakan Samuelsson told Bloomberg TV that half the cars build in Carolina are exported -- so effectively Volvo has already created 2,000 jobs in America that could have gone elsewhere.

Volvo had been planning to expand the plant to create another 2,000 jobs, but Samuelsson warns that this could be at risk.

If we cannot trade freely, you question can you really employ two thousand extra people?

Samuelsson added that it’s “too early to speculate”, but insists that protectionism should be resisted.

If you think it through, everyone will see that it’s beneficial for everyone to trade freely.

We believe in free trade and it’s good for everybody.

European markets rally in early trading

A risk-on feeling has pushed European stock markets higher in early trading.

Investors are putting trade war fears, and the inconclusive Italian election, behind them (for now, anyway).

Germany is leading the charge, up 1.27%, with the UK’s FTSE 100 up almost 1%. In Milan, the Italian FTSE MIB has gained 1% too.

march06europe1
European stock markets in early trading Photograph: Thomson Reuters

Connor Campbell of SpreadEx says the City is reassured to see top Republicans, such as speaker Paul Ryan, break with Trump and oppose a trade war.

While this signals yet more destabilising discord for the President, investors’ primary focus was on the tariff-blocking obstacles created by Ryan and co., and their relief was immediate to see.

There’s relief in the markets that other world leaders haven’t retaliated against the US over the planned tariffs on steel and aluminium.

In particular, Beijing has taken a cautious stance, with Chinese officials insisting they don’t want a trade war with America.

That’s helping to push shares higher today. But Konstantinos Anthis, head of research at ADS Securities, warns that this situation may not last.

On the back of this pause in trade tensions, currencies and equities are able to breathe easier with the major European currency pairs and the US equity markets leading the gains, which has started the week on a positive footing.

However, this respite from risk aversion should be treated as just a break and traders need to remain cautious until we get a clear response from China, and the Eurozone, to Trump’s protectionist decision.

The agenda: Markets rally as trade war fears ebb

A display showing the Nikkei Stock Average in Tokyo.
A display showing the Nikkei Stock Average in Tokyo. Photograph: Kimimasa Mayama/EPA

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The financial markets are rebounding today, as fears over an imminent global trade war recede.

Investors are betting that president Trump will back away from triggering a protectionist clash that would hurt global growth. With top Republicans like Paul Ryan criticising Trump’s proposed tariffs, hope is building that a compromise will be found.

Hussein Sayed, Chief Market Strategist at FXTM, explains:

Investors seem to believe that President Trump is using his “Art of the Deal” skills to get a better trade deals with the rest of the world or, as Ray Dalio, the Bridgewater Associates founder, wrote on Monday: “what is happening now is more for political show than for real threatening.”

Trump tweeted yesterday that “Tariffs on steel and aluminum will only come off if new & fair NAFTA agreement is signed”. This confirms my belief that this mess will likely end up with Mexico, E.U. and China taking a less protectionist stance, rather than the U.S. taking a stronger one.

So after several days of losses, Asian markets are rebounding with Japan’s Nikkei jumping by almost 2%. Hong Kong is up over 2%, with China’s main markets gaining 1%.

European markets are also heading for gains, with Britain’s FTSE 100 rallying up to 60 points in early trading.

However, investors should still be cautious. As the World Trade Organisation warned yesterday, a global trade war could leave the world in a “deep recession”.

The takeover battle for British aerospace and automotive company GKN will also be in the spotlight today.

MPs will quiz managers from GKN, and from Melrose over its takeover bid, plus union leaders, amid concerns that the ‘world-class’ company could be broken up.

The agenda

  • 9.30am GMT: Business, Energy and Industrial Strategy Committee holds hearing into GKN takeover
  • 3pm GMT: US factory orders

Updated

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