And finally, European stock markets have closed down a little, after a quiet session.
The FTSE 100 lost 23 points, or 0.3%, to finish at 7,655. France’s CAC shed 0.5% while the German DAX dipped by 0.1%.
Geopolitical anxiety is weighing on shares, says David Madden of CMC Markets.
Stocks are broadly lower as dealers remain nervous about the state of global trading relations. European equities have lost ground as the prospect of a full-blown trade war is weighing on investor confidence.
That’s probably all for today...
US house sales drop again
US home sales - the other economic data of note today - are out.
And they show that sales fell in June for the third month running, down 0.6% to an annual rate of 5.38 million units, from 5.41 million in May.
House prices rose, though - with the average price up 5% year-on-year to $276,900.
This suggests a shortage of properties on the market is keeping prices up, leaving some potential buyers unable to get on the housing ladder.
Just in: there was no pick-up in consumer confidence across the eurozone in July, according to the EC’s monthly healthcheck:
In July 2018, the flash estimate of the consumer confidence indicator remained unchanged in the #euroarea (at −0.6), while it increased in the EU (+0.6 points to −0.7) compared to June.
— EU Economy & Finance (@ecfin) July 23, 2018
Press release 👉 https://t.co/actQoRRdli pic.twitter.com/NIdb7esWye
Amazon shares drop after Trump blast
Having blasted president Rouhani, Donald Trump has turned his attention to another adversary - Jeff Bezos.
Trump has tweeted that the “Amazon Washington Post” (er, what?) has “gone crazy” in its recent coverage of him, and repeated his claim that the e-commerce giant isn’t paying the postal service enough.
The Amazon Washington Post has gone crazy against me ever since they lost the Internet Tax Case in the U.S. Supreme Court two months ago. Next up is the U.S. Post Office which they use, at a fraction of real cost, as their “delivery boy” for a BIG percentage of their packages....
— Donald J. Trump (@realDonaldTrump) July 23, 2018
....In my opinion the Washington Post is nothing more than an expensive (the paper loses a fortune) lobbyist for Amazon. Is it used as protection against antitrust claims which many feel should be brought?
— Donald J. Trump (@realDonaldTrump) July 23, 2018
Over the weekend, the Washington Post (owned by Amazon-founder Bezos) reported that Trump was privately frustrated with the slow progress in negotiations with North Korea.
Trump’s attack has knocked Amazon’s share price down by almost 2%:
Amazon shares briefly fall more than 2% after Trump tweets about it again, saying it is 'using' the Post Office as its 'delivery boy' https://t.co/4fZfhTdXrg pic.twitter.com/2wpzOcyljw
— CNBC Now (@CNBCnow) July 23, 2018
Incidentally, that Supreme Court ruling cited by Trump should allow states to collect more sales tax from e-commerce companies. But it could actually be a win for Amazon, analysts say, as the company already collects sales tax on products it sells directly to US citizens.
Updated
Wall Street has opened cautiously, as traders wait for Alphabet (Google’s parent company) to report its results tonight.
The S&P 500 and the Dow Jones industrial average have both dipped by around 0.1%, following the G20’s warning against a trade war.
Stocks open slightly lower before major tech companies report earnings https://t.co/RNHnygztWo pic.twitter.com/WpcETe29Co
— CNBC Now (@CNBCnow) July 23, 2018
In other auto news, Tesla shares have fallen over 3% in pre-market trading in New York, following reports that it had asked supplies for a financial helping hand.
The Wall Street Journal says Tesla has asked some of its suppliers to refund some of its previous spending, as it strives to reach profitability.
The WSJ wrote:
“The Silicon Valley electric car company said it is asking its suppliers for cash back to help it become profitable, according to a memo reviewed by The Wall Street Journal that was sent to a supplier last week.
Tesla requested the supplier return what it calls a meaningful amount of money of its payments since 2016, according to the memo.”
CEO Elon Musk has now confirmed that Tesla is seeking cost reductions from suppliers.
Only costs that actually apply to Q3 & beyond will be counted. It would not be correct to apply historical cost savings to current quarter.
— Elon Musk (@elonmusk) July 23, 2018
Tesla has been burning through its cash pile as it strives to hit its production targets, particularly for its Model 3 vehicle
ActivTrades’ chief analyst Carlo Alberto De Casa says Sergio Marchionne ‘s dramatic resignation from Fiat Chrysler has caught everyone by surprise, even insiders at the auto firm.
He explains how Marchionne rebuilt Fiat’s fortunes, cutting costs (controversially) and boosting revenues
Loved or hated Marchionne is the man who made FCA as we know it today.
It is difficult to imagine FCA and Ferrari without the man and his unique style.
He wore a sweater rather than the traditional suite and a tie as his every day business attire and with is unconventional leadership style he managed to turnaround one of Italy’s biggest – and often most troubled--industrial realities.
Chosen by Umberto Agnelli on his deathbed, Marchionne took the helm of a an almost bankrupt Fiat 14 years ago and turned it into an international powerhouse.
This required sacrifices and controversial decisions, including job cuts and an unpopular ‘denationalization’ of the company. The relationship between Fiat and Italy, as well as its hometown of Turin, has changed, including from a legal and fiscal point of view, being FCA a Dutch company with fiscal domicile in the UK.
The evolution of the company under its guidance is easily summarised in a few numbers: in 2004 when Marchionne took over, Fiat’s revenue was close to €47bn, today its exceeds €140bn. The company profit trebled from €1.5bn in 2004 to €4.4bn in 2017, while the stock market capitalization of the FCA universe spiralled from €5.5bn to €60bn.
After just a weekend to absorb the news markets are now dealing with its consequences. The importance of Marchionne as a leader emerged from the very first minutes after the bell, with FCA, Ferrari and the holding Exor (all these 3 stocks belongs to the FTSE MIB 40, the main basket of the Italian market) opening with heavy losses. Even more under pressure was Ferrari, where Marchionne’s presidency should have continued beyond 2019. But after the initial shock the titles of the Fiat galaxy have started to regain some ground: another sign of Marchionne’s talent: he managed to grow Fiat thanks to his personality, but building a future for the company independent from himself. A future that starts with Jeep, one of the brands that grew the most in recent years, from which the new CEO, Brit Michael Manley, comes from.
Fiat shares slide after Marchionne steps down
Italian-US carmaker Fiat Chrysler is facing a very uncertain future today following the shock resignation of long-serving CEO Sergio Marchionne over the weekend.
It’s a sad tale - Marchionne had run Fiat for over a decade, masterminding the rescue of America’s Chrysler after the financial crisis. Its share price surged on Marchionne’s watch, as he rebuilt Chrysler and also successfully spun off Ferrari, Fiat’s ultra-luxurious brand.
But his stint has ended too soon; complications following shoulder surgery forced Marchionne to step aside over the weekend.
Fiat Chryster’s board have moved quickly, promoting Michael Manley, the head of the group’s Jeep brand, as their new CEO. Manley, aged 54, was born in London and trained as an engineer.
Jeep is one of Fiat’s success stories of the last decade. But Fiat shares have fallen 3.3% today, as investors fret about how the company will cope without Marchionne’s experience, wisdom, and work ethic.
Here's the chart. US carmakers left in the dust, of course. EU performance lifted by parts suppliers. pic.twitter.com/FUycsihix8
— James Mackintosh (@jmackin2) July 23, 2018
Bloomberg’s Tommaso Ebhardt has written a touching account of his time trying (and usually failing) to get an interview with Marchionne.
Here’s a flavour:
It was not easy for Marchionne’s aides and for everyone at the the Italian-American company. He demanded full dedication and had a constant sense of urgency. That cost him some talented executives. Marchionne could also be brutal, which hurt his relationships with CEOs in the industry and with political leaders.
“I don’t have time for BS,” he used to tell me. The son of a policeman, who moved with his family from Italy to a suburb of Toronto at the age of 14, he joined Fiat in 2004 with no experience in the car industry.
Marchionne had planned to retire next year, Ebhardy adds:
At the dinner in Michigan, the night before his last Detroit auto show, he acknowledged the time was coming to spend more time with his partner.
“This business, if you want to do it at least the way I think it should be done, it is all -consuming,” he said, describing 14- and 16-hour days doing everything from approving Super Bowl commercials to deciding on electric cars. “Now I am tired, I want to do something else.”
Great first-person tale by @TEbhardt: How I chased Fiat's chief around the world for 10 years and rode in a racing Ferrari along the way https://t.co/96sEOxExLO via @business pic.twitter.com/7dYQZFlbYu
— Phil Serafino (@PhilSerafino) July 23, 2018
In another blow to Fiat, there are reports that its European chief, Alfredo Altavilla, has stepped down. He was seen as a possible candidate to replace Marchionne, before Manley got the job....
Updated
Germany’s economy is perking up, despite the threat posed by trade tariffs to its export base.
That’s according to the Bundesbank, Germany’s central bank, in its monthly assessment of Europe’s largest economy.
It says:
“The economy has likely showed better momentum in the spring than at the start of the year.
Although it is unlikely that the high growth rates of the past year will be repeated, manufacturing was once again the key economic driving force.”
Germany would welcome a pick-up in growth. GDP only rose by 0.3% in the first three months of this year, down from 0.6% in the final quarter of 2017.
The oil price is creeping higher, following Donald Trump’s blast towards Iranian president Hassan Rouhani a few hours ago.
It’s a fairly modest rally, though; Brent crude is up almost 1% at $73.72 per barrel, which doesn’t suggest the markets are pricing in a new conflict in the Middle East.
Arnaud Masset of Swissquote Bank says investors are remembering how Trump tackled North Korea - furious tweets were followed by encouraging noises, and an all-smiles summit with Kim Jong-un.
Masset explains:
Market participants appeared not too concerned: they are used to Trump’s exaggerations. Last summer he promised “fire and fury” to North Korea: a year later Kim and Donald are best friends and North Korea has not shut down nuclear production
Ryanair is dragging the European markets down, after the budget airline posted a 20% drop in profits.
Worryingly for passengers, Ryanair also warned that recent strikes will probably continue this summer, due to an ongoing dispute over pay and conditions with its pilots and cabin crews.
Ryanair also warned that the risk of a hard Brexit is “ being underestimated.”, helping to send its shares down over 5% this morning.
Rival airline easyJet’s shares are down almost 2%, leading the FTSE 100 fallers in London.
European stock markets are solidly in the red this morning, as traders digest the G20’s warning on trade tensions.
In London the FTSE 100 has lost almost 50 points, or 0.6%, at 7629.
Commodity prices are also dipping, reflecting worries that a trade wars will hit demand for agricultural goods.
Marc Ostwald of ADM Investor Services says investors are focusing on the “unsurprisingly inconclusive G20 meeting”, and Donald Trump’s criticism of the US Federal Reserve for raising interest rates.
In other geopolitical development, Donald Trump has launched a late-night, CAPS-LOCKED blast at Iran:
To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!
— Donald J. Trump (@realDonaldTrump) July 23, 2018
Trump’s ire was sparked after Iranian president Hassan Rouhani warned that the US would regret getting into a conflict with Iran, saying:
“Mr Trump, don’t play with the lion’s tail, this would only lead to regret.”
America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars.”
The financial markets don’t seem to be taking the war of words too seriously, though, says Paul Donovan of UBS:
US President Trump sent out a tweet threatening Iran with all sorts of dire consequences if Iran is mean about the US. The tweet used lots and lots of capital letters. The oil market, understandably reacted – oil prices fell a tiny bit.
It is possible that US President Trump is unfamiliar with Aesop’s fable of the boy who cried “wolf.” After North Korea, markets are less inclined to take the US president seriously.
Newsflash: China has fired a warning shot towards Donald Trump after he threatened to slap tariffs on all its exports to America.
Foreign ministry spokesman Geng Shuang told reporters that threats and intimidation on trade won’t work.
He added that China didn’t need to devalue its currency to aid its exports.
The yuan strengthened a little today, and is trading around 6.778 to the US dollar, up from 6.81 on Friday.
Anti-austerity demonstrators held protests against the G20 and the International Monetary Fund, outside the meeting in Buenos Aires.
There was clear anger about Argentina’s decision to seek a $50bn loan from the IMF, with strict promises to cut spending to bring its deficit down. Unions fear the plan will cost thousands of public sector jobs, and recreate the suffering seen in Greece since its debt crisis began.
Mnuchin: No progress on trade dispute with China
“To jaw-jaw is always better than to war-war”, as Churchill put it.
But the talking at the G20 meeting hasn’t yielded a breakthrough in the Washington-Beijing trade row.
U.S. Treasury Secretary Steven Mnuchin told reports there had not been any “substantive discussions” with China about trade during the gathering in Argentina. He also argued that the ball is now in their court, saying:
“Anytime that they want to sit down and negotiate meaningful changes, I and our team are available.”
Mnuchin also denied that America was being protectionist, insisting that it simply wants trade to be conducted on “fair and reciprocal terms.”
Moscovici: No-one wins in a trade war
The G20 meeting has provided fresh evidence that America and her allies (or ‘foes’, as Donald Trump sometimes sees them) remain split over trade policies.
EU financial affairs commissioner Pierre Moscovici hit out at president Trump’s recent tariffs, warning that no-one would win from a trade war.
He told a press conference after the meeting that:
“Protectionism, I want to insist on that, is good for no one.
“Trade wars are not easy ... they create no winners, only casualties.”
Moscovici also warned that trade disputes could get worse, given the ‘very challenging’ state of global relations.
As he put it:
“These meetings have been taking place in an international context which is very challenging. ... Trade tensions remain high and they threaten to escalate further.
The agenda: G20 warning weighs on markets
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Anxiety over a trade war continues to build, after finance ministers and central bankers warned that the risks facing the global economy are risking.
After a sometimes bruising G20 meeting in Buenos Aires, finance chiefs from the world’s advanced economies cautioned that growth is becoming “less synchronised”.
With inequality rising and geopolitical tensions bubbling away, the G20 fear that the risks to the financial recovery are rising.
The G20 meeting ended with a call for more dialogue to prevent trade disputes -- just a few days after US president Trump rattled the markets by threatening to impose tariffs on all Chinese imports.
The communique declared that:
“Global economic growth remains robust and unemployment is at a decade low,.
“However, growth has been less synchronised recently, and downside risks over the short and medium term have increased.”
The G20 cited a series of risks...
“These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies.
We ... recognize the need to step up dialogue and actions to mitigate risks and enhance confidence.”
These stern words from the G20 are unlikely to deter Trump from pushing his America First agenda, though. So, the threat of a trade war continues to weigh on investors
Asian markets are having a mixed day, with Japan’s Topix down 0.35% and the Australian S&P/ASX 290 down almost 1%.
Shares are also dipping in early trading in London, with the FTSE 100 down 0.35% or 26 points at 7652.
European Opening Calls:#FTSE 7652 -0.36%#DAX 12525 -0.29%#CAC 5387 -0.22%#MIB 21693 -0.46%#IBEX 9707 -0.18%
— IGSquawk (@IGSquawk) July 23, 2018
Jasper Lawler of London Capital Group says:
No progress at the G20 over trade issues means trade jitters are being sent through the markets. Asian equity markets dropped lower as traders took risk off the table, whilst flows into safe haven assets were once again on the increase.
Safe haven Japanese yen was seen extending Friday’s 0.9% gain versus the dollar, whilst gold followed a similar pattern. European futures are also pointing to a lower start after the opening bell.
There’s not much economic data to distract the City today, apart from US house sales and eurozone consumer confidence data this afternoon.
The agenda
- 3pm BST: Eurozone consumer confidence for July
- 3pm BST: US house sales for July
- 6pm BST: Bank of England deputy governor Ben Broadbent speaks to the Society of Professional Economists, London.
Updated
