Wall Street closes
Boom! New York’s stock market has closed for the day, with the Nasdaq at a fresh record high.
The tech-dominated index finished 28 points higher at 7,588, up 0.4%.
The rally was led by some big names, with Amazon up 1.2% and Apple gaining almost 1%.
Wall Street remained in a fairly upbeat mood through the day, as the pleasant surprise of last Friday’s jobs report lingered. With more jobs created in February than expected (more than 300,000!) but little wage inflation (just 2.6% year-on-year), traders remained upbeat about the economy without too much fretting about the pace of interest rate hikes.
However, the Dow ended in the red - down 150 points.
Dow closes more than 150 points lower amid lingering trade-war worries https://t.co/M5y1NkKanX pic.twitter.com/U1TOOvxq0x
— CNBC Now (@CNBCnow) March 12, 2018
That’s all for tonight! GW
Updated
Larry Kudlow could become Trump's top economic advisor
Speculation is growing the CNBC columnist Larry Kudlow could be in line to become Donald Trump’s new chief economic advisor.
Jim Cramer, the famously enthusiastic CNBC presenter, got the ball rolling today by declaring that Kudlow was the leading contender for the seat vacated by Gary Cohn last week.
It would be a slightly surprising move. Kudlow certainly has White House experience, having served in the Reagan administration. But he’s no fan of trade tariffs - the issue that triggered Cohn to quit.
BREAKING: Larry Kudlow is the leading contender to replace Gary Cohn as NEC chair, reports our @jimcramer @CNBC @larry_kudlow
— Carl Quintanilla (@carlquintanilla) March 12, 2018
Still, the idea is gathering momentum. The Wall Street Journal is now reporting that White House officials have “reached out” to gauge Lawrence Kudlow’s interest in the role. They think he could be interviewed this week.
Back in the City, engineering group GKN has formally rejected this morning’s final takeover from Melrose.
Having pondered Melrose’s latest offering (officially worth £8.1bn in cash and shares), GKN has concluded that it still “fundamentally undervalues” it.
Rather pointedly, GKN also points out that the offer isn’t actually worth 467p - partly because the component paid in Melrose shares has fallen in value. Either way, GKN says it’s actually worth 500p per share.
But at least one one City shareholder doesn’t agree.
David Cumming, Chief Investment Officer for Equities at Aviva Investors, says GKN should take the money.
“As shareholders in both Melrose and GKN, we favour Melrose’s proposed measured execution of value rather than GKN’s reactive review of its business structure. Consequently, we believe the interests of shareholders in both companies are best served by accepting Melrose’s raised bid.”
GKN shares have closed down 2% at 424p.....
As European stock markets close for the day, the FTSE 100 index is down slightly at 7,208, a drop of 0.2%.
Germany’s DAX had a better day, up 0.5% in late trading, helping keep the Europe-wide Stoxx 600 in the green.
Wall Street is looking a little choppy; the Nasdaq is holding its record levels, but the Dow has dropped 130 points (0.5%).
Mário Centeno, the new head of the Eurogroup of finance ministers, has given Athens a vote of confidence at today’s meeting in Brussels.
I had a friendly discussion with Greek finance minister Euclid @tsakalotos earlier today. #Greece is making remarkable progress in implementing the programme pic.twitter.com/aPHtKBFjIB
— Mário Centeno (@mariofcenteno) March 12, 2018
That indicates that the eurogroup will decide today that Greece has met the targets to unlock its next aid tranche.
Fawad Razaqzada, market analyst at Forex.com, says investors have rediscovered their appetite for risk today - pushing shares up and propelling the Nasdaq index of tech-focused shares to today’s all-time high.
He explains:
Sentiment improved last week as concerns eased over: (1) nuclear threats from North Korea, (2) the prospects of a trade war, (3) the possibility of sooner-than-expected tightening of monetary conditions in the Eurozone and Japan, and (4) the US economy.
All of a sudden there was unexpected urgency from North Korea to denuclearize and US President Donald Trump has agreed to meet the nation’s leader Kim Jong-un face-to-face by May. This sharply reduced the appeal of safe haven assets like gold and yen, boosting risk-sensitive assets across the board.
Today’s market rally suggests that investors are less worried about a global trade war breaking out - even though president Trump approved steel and aluminium tariffs last week.
The issue hasn’t gone away, though. Over the weekend, Trump suggested he could impose higher levies on European cars - something that would cause major tensions in the EU. He’s now tweeted that he’s pushing Europe to cut their tariffs on American goods.....
Secretary of Commerce Wilbur Ross will be speaking with representatives of the European Union about eliminating the large Tariffs and Barriers they use against the U.S.A. Not fair to our farmers and manufacturers.
— Donald J. Trump (@realDonaldTrump) March 12, 2018
Consumer stocks, technology companies and telecoms firms helped drive the Nasdaq to a new peak of 7,144 points today.
Chipmakers are doing pretty well, with Micron up 6%, Broadcom gaining 3% and NVIDIA rising by 2.5%.
Amazon (+1.1%) and General Electric (+2.2%) are also pushing the US market higher.
Nasdaq hits record high
Ding ding! The Nasdaq index has hit a fresh record high, as trading gets underway on Wall Street.
Shares are rising as the optimism from last week’s strong jobs report lingers at the New York stock exchange.
So, the Nasdaq has jumped by around 0.25% while the Dow Jones industrial average has gained 0.4%.
Reuters ran a great profile of David Solomon back in 2011, which is worth reading today now he’s seemingly inked in for the top job at Goldman. It’s online here.
Here’s a flavour:
The 49-year-old co-head of Goldman Sachs’ (GS.N) investment banking unit is an unassuming banker who moved into junk bonds early in his career and stayed in underwriting, even as other Wall Street businesses grew hotter.
He has been promoted into ever-more senior roles, and now works mostly behind the scenes, making sure that investment banking clients get what they need, that employees are happy and that Goldman’s deal-making machinery operates smoothly. He has been behind some spectacular deals, even if he is not famous for them, and some clients view him as one of the best bankers in the business.
Some Goldman insiders believe that his low-key personality may be just the thing for a firm that has spent two years dodging charges of greed, conflicts of interest and fraud. With Goldman having recently named a third “co-head” of investment banking, these insiders believe that Solomon could be elevated to a more prominent position, putting him in the race for the chief executive job one day.
“Most people see Solomon as being in line for a promotion soon and as a CEO candidate down the line,” said a banker who works closely with him. “Clients love him, we love him — he’s actually a really good guy. Competitors don’t love him necessarily, but they respect him.”....
As David Solomon is named CEO-in-waiting at Goldman Sachs, it's worth revisiting this prescient story by the ever-awesome @LaurenLaCapra https://t.co/OzlclAgBr6
— Dan Wilchins (@danwilchins) March 12, 2018
Solomon lined up to replace Blankfein at Goldman Sachs
Newsflash from Wall Street: Goldman Sachs has just given us a massive hint about who’ll succeed Lloyd Blankfein as their chief executive.
Goldman has announced that one of its co-presidents, Harvey Schwartz, is retiring. Fellow co-president David Solomon, Schwartz’s rival for the top job, will now serve as the “sole president”.
On Friday, the Wall Street Journal reported that Blankfein could step down by the end of the year, and that the bank wasn’t looking beyond Schwartz and Solomon for his successor.
Three days later, and Schwartz leaving unexpectedly - leaving Solomon seemingly in a prime position for the prestigious CEO’s job.
MORE: David Solomon will become sole president of Goldman, putting him in line as the successor to CEO Lloyd Blankfein. Harvey Schwartz will retire from the firm https://t.co/LfBk5idFC3 pic.twitter.com/Bw4LGL2wej
— TicToc by Bloomberg (@tictoc) March 12, 2018
In a statement, Blankfein says:
Harvey has been a mentor to many, and his influence has made an indelible impact on generations of professionals at Goldman Sachs. I want to thank Harvey for all he’s done for the firm.”
“I look forward to continuing to work closely with David in building our franchise around the world, serving our expanding client base and delivering strong returns for our shareholders.”
But how long will they be working closely together? On Friday, Blankfein tweeted that there wasn’t an official announcement about his future....
It's the @WSJ's announcement...not mine. I feel like Huck Finn listening to his own eulogy.
— Lloyd Blankfein (@lloydblankfein) March 9, 2018
Solomon joined Goldman Sachs as a partner in 1999. Before that, he worked at Bear Stearns and Drexel Burnham Lambert - the investment bank which pioneered the use of junk bonds for corporate takeovers under Michael Milken (who was jailed for securities fraud).
Bloomberg’s Tracy Alloway reckons it’s game, set and match to Solomon.
Soloman wins. pic.twitter.com/xz5hEpu9Tc
— Tracy Alloway (@tracyalloway) March 12, 2018
Also can you imagine what went down at Goldman over the weekend?
— Tracy Alloway (@tracyalloway) March 12, 2018
IoD: Staff showed 'real courage' over Lady Judge allegations
The Institute of Directors has also revealed that more than a dozen employees came forward with allegations against the IoD’s chair.
Stephen Martin, the organisation’s director general, revealed a string of staff came forward to give evidence when it launched a probe into the allegations against Lady Barbara Judge - whose resignation following claims she made racist and bullying comments has plunged the business lobby group into crisis.
Martin said the staff showed “real courage and real strength” to speak-out against Judge, 71, who is one of the most senior figures in British business.
Speaking to today’s Open House conference this morning, Martin said the departure of its chair and two other non executive directors last Friday will have “alarmed” members of the lobby group, but that it was its duty to investigate “when very serious allegations are being made”.
Martin told delegates:
“We could not shy away from this duty, particularly given over a dozen staff came forward with allegations. This showed real courage and real strength from those employees.”
Martin has been accused of secretly recording a private meeting with Judge, breaching her trust and compromising the investigation into her personal conduct. The former chair has also argued she was not able to respond to the claims as part of the probe, which was carried out on behalf of the IoD by the law firm Hill Dickinson.
Martin insisted on Monday that the investigation was “full and it was fair… everyone had the opportunity to be heard including those accused of wrongdoing.”
He added that the IoD would “learn and change” from the furore, which comes at a time when the business elite is being forced to reassess its approach to diversity and equality in the wake of the Presidents Club scandal and the Me Too movement.
“I believe in the organisation’s mission to promote good corporate governance. Despite the events of the last few days, I still believe in this mission, if anything, I believe in it more than ever,”
Malta's PM on Brexit
The prime minister of Malta is warning UK business leaders that Brexit will hurt the British economy.
Speaking at the Institute of Director’s “Open House” conference in London, Joseph Muscat is warning that the end result of Brexit can’t be better than EU membership.
The biggest threat to the UK economy, he adds, is that the country’s dominant services sector is disrupted by Brexit.
Leaving the single market will hurt Britain’s ‘comparable advantage’ in services, Muscat says, even though he predicts London and Brussels will reach a trade deal on services.
But...he also reckons that predictions of an exodus from the City of London were over-estimated.
Joseph Muscat (Prime minister of Malta) sharing his views on #brexit #iodOpenhouse pic.twitter.com/hgmKALuFAV
— Prof Tazeeb Rajwani (@Tazeeb) March 12, 2018
Updated
Just in: Another 78 workers at collapsed outsourcer Carillion have lost their jobs.
The Official Receiver, which took over the company when it was liquidated to months ago, says it was unable to find them ‘ongoing employment’.
In better news, 305 jobs have been saved, as new suppliers have taken on various facilities management, defence and construction contracts.
This means that the Receiver has saved 8,521 jobs, and made 1,536 redundancies. That leaves around 9,000 staff nervously awaiting news....
The US stock market is expected to rally today, as traders remain upbeat following last Friday’s strong jobs data.
The Dow Jones industrial average is being called up around 100 points, or 0.4%, to 25,437 points, adding to Friday’s 440-point jump.
The news that America’s economy created more jobs than expected last month, while workers’ pay rose slower than hoped, is cheering Wall Street - and calming some worries about future interest rate increases.
Connor Campbell of SpreadEx says:
Investors were greeted with a blockbuster non-farm number AND a worse than forecast wage growth reading, a combination that allowed the markets to celebrate the US economy without having to fear the hawkish implications of an earnings increase.
Dow futures point to triple-digit gains at the open after jobs report https://t.co/dL4CupXCKL
— CNBC (@CNBC) March 12, 2018
Updated
Takeaway app group Just Eat has slumped by over 4% this morning, to the bottom of the FTSE 100, after a downgrade from Deutsche Bank.
Deutsche slashed their recommendation to sell, having been left unimpressed by Just Eat’s new plan to expand its delivery operations (rather than just passing on an order and letting the restaurant deal with it).
Deutsche warns that the delivery market is already “overcrowded” (with Uber Eats, Deliveroo and suchlike competing for the honour of transporting a pad thai or pepperoni pizza to your door).
Just Eat made a sensational dash into the FTSE 100 late last year, after its value overtook established blue-chip firms like Sainsbury’s. Enthusiasm seems to be cooling, though, as Fiona Cincotta of City Index explains:
Whilst the food delivery giant has had a phenomenal rise over the past few years, concerns the success story might be coming to an end are refusing to budge.
Just last week JustEat announced 2017 losses of £76 million compared to pre-tax profits of £91 million, coupled with today’s downgrade and market participants are looking elsewhere to invest their cash.
Updated
UK credit card spending drops again
Credit card company Visa has reported that UK consumers cut back on credit last month -- a sign that Britain’s economy remains fragile.
Card spending fell by 1.1% in February, following a 1.2% drop in January. This means the first quarter of 2018 is on track to be the “worst on record”, Visa says
Samantha Seaton, CEO of financial advice service Moneyhub, reckons consumers are feeling less confident, as inflation is still outstripping pay rises.
Household finances are still being squeezed from every direction and there appears to be no immediate end in sight. Wages aren’t rising fast enough to keep up with prices, borrowing looks likely to increase with another interest rate rise, and there remains a lot of uncertainty around what the reality of Brexit is going to be.
Melrose raises takeover bid for GKN
Shares in Britain’s GKN have jumped by 2% this morning as the takeover battle for the long-established engineering firm took another twist.
Turnaround specialist Melrose has hiked its takeover offer for GKN to £8.1bn, having seen its first offer of £7.4bn rebuffed.
Melrose is urging GKN investors to back this “final offer”, saying that its attempts to “engage in constructive discussions have been refused by the GKN Board”.
Melrose also criticises GKN’s new deal to merge its Driveline division with US auto-engineer Dana (which may scupper Melrose’s advances).
In a letter to shareholders, Melrose suggests its takeover offer is the more patriotic option. Chairman Christopher Miller says:
On the one hand you can join us on a journey of value creation by investing in a UK listed manufacturing powerhouse worth over £10 billion today and receiving £1.4 billion of cash.
On the other hand your Board is attempting a hasty fire-sale of GKN businesses before they have been given a chance to reach their potential and with damaging consequences, we believe, for all stakeholders.
The potential transaction with Dana, if it is allowed to go ahead in the last quarter of this year, would leave you with a minority stake in a foreign listed group run by a Dana management team based in Ohio.
Shares in GKN have risen to 442p, below Melrose’s new offer of 467p.
Updated
A solid start to the trading week in Europe:
European stock markets are joining the rally, as a new trading week dawns.
In London, the FTSE 100 has gained 20 points (0.3%) to 7245 points, as traders take their cue from Asia’s rally overnight.
Germany’s DAX is stronger, gaining 0.9%, while Portugal is up 0.8%.
Hussein Sayed, Chief Market Strategist at FXTM, says Friday’s strong US jobs report is helping to offset worries about a trade war.
The 313,000 additional jobs took economists and markets by surprise as the figure exceeded even the highest expectations of 300,000 noted in a Reuters survey. Although employees may not like the 0.1% rise in average hourly earnings, employers liked it and markets loved it.
This is simply because the modest increase in wage growth indicates that the Federal Reserve will continue to have some sort of slack in the labour market to deal with and thus keep the Fed on course for three rate hikes in 2018 instead of four. After all, the combination of robust economic data and limited inflation has been a key factor in keeping the bull market alive.
London’s housing market looks particularly soggy when compared to Lancashire.
Prices in the North West have gained 4.6% in the last year, including a 16% surge in Blackburn and a 10.3% rise in Warrington.
This is Money have made a neat chart showing the details.
This chart from Bloomberg shows how London’s housing market is now lagging the rest of the UK.
2016’s EU referendum is partly responsible, they add:
London prices fell 0.8% in January alone, equivalent to almost 5,000 pounds, showing the weakness that was present for much of last year continued into 2018. The market has been hurt by slower growth and faster inflation since the Brexit vote, while the Bank of England has signaled it needs to continue raising interest rates.
London house prices slide as Brexit uncertainty bites
House prices in parts of London that were once at the epicentre of the UK property boom have fallen as much as 15% over the past year, in fresh evidence of the impact of the EU referendum.
New figures from Your Move, one of the UK’s biggest estate agency chains, reveal that the average home in Wandsworth – which includes much of Clapham, Balham and Putney – fell by more than £100,000 in value over the last 12 months (from £805,000 to £685,000).
Other London boroughs are also showing steep price falls. In Southwark, south London, the average price has dropped from £666,000 to £585,000 in 12 months, while prices have pegged back in Islington, north London, from £750,000 to £684,000.
Average prices across the capital have fallen by 2.6% over the last year - the steepest decline since the aftermath of the financial crisis in 2009.
More here:
Introduction: markets cheered by US jobs report
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Investors are in confidence mood this morning, after the latest US jobs report smashed forecasts.
Markets in Asia have jumped overnight, and European shares are likely to rally when trading begins this morning. That follows a strong finish on Wall Street last week, where the Dow Jones industrial average jumped by 440 points.
Friday’s Non-Farm Payroll was a blowout -- showing that 313,000 jobs were created in America last month, compared to a forecast of 205,000.
Unfortunately for workers, pay grew by just 0.1% during the month, taking the annual rate down from 2.9% to 2.6%.
That takes some pressure off the US Federal Reserve to hike US interest rates, though, which is also good for stocks.
So.... the Japanese stock market has jumped by 1.5% this morning, China are up 0.5%, and India has gained around 1%.
European Opening Calls:#FTSE 7239 +0.20%#DAX 12423 +0.62%#CAC 5307 +0.61%#MIB 22875 +0.57%#IBEX 9753 +0.69%
— IGSquawk (@IGSquawk) March 12, 2018
It’s been seen as a ‘Goldilocks’ jobs report, as Jasper Lawler of London Capital Group explains:
A relief rally boosted Asian stock markets overnight, after Friday’s US jobs report hit all the right notes. The impressive number of jobs created versus the weaker than forecast wages data meant that the strengths and weakness of the report whetted risk appetite perfectly.
The economy is clearly booming but future inflation concerns have eased following January’s report, allowing the stock markets to charge higher.
Also coming up today....
Eurozone finance ministers will meet in Brussels for a eurogroup meeting. They’ll discuss Greece’s bailout, and probably sign off on Athens’ next bailout payment.
And in London, the Institute for Directors is holding a business festival, called “Open House”, where delegates can immerse themselves in “all matters facing leadership today”.
Alas, delegates won’t be able to learn from the IoD’s chair, Lady Judge, as she resigned last week amid allegations of bullying and racist comments.....
The agenda:
- All day: IoD Open House conference
- 2pm GMT: Eurogroup meeting
Updated
