Closing summary
Thursday was always going to be a hard act to follow after the dramatic events which sent the pound tumbling against the euro and the dollar and triggered a major sell-off of UK-focused shares.
Sterling has not fully recovered its losses, but it has had a much better day, particularly against the dollar.
The pound is currently trading up 0.7% against the dollar at $1.2860, and is roughly flat against the euro at €1.1274.
Having escaped the Thursday sell-off, the FTSE 100 is down 0.6% at 6,996.94, in line with all major European indices.
The more domestically focused FTSE 250 is off 0.5% at 18,573.94.
Investors are bracing themselves for the twists and turns to come, as Theresa May fights to keep her Brexit plan on the table amid mounting opposition from MPs in her own party.
On that note, we’ll close up. Thank you for reading the blog and for all the comments, do join us again on Monday.
Wall Street fall on opening bell
US markets have opened lower:
- Dow Jones: -0.4% at 25,196
- S&P 500: -0.5% at 2,717.65
- Nasdaq: -1% at 7,188.42
Tech stocks are under pressure - hitting the Nasdaq in particular - after disappointing earnings from chip maker Nvidia.
Updated
Data just out shows US industrial production grew by just 0.1% in October, following a 0.2% increase in September.
Manufacturing output was slightly stronger, up 0.3% over the month, in line with September’s growth according to the Federal Reserve.
Manufacturing increased despite a 2.8% fall in car production.
US futures are down, as traders digest a combination of weaker corporate earnings and trade tensions.
US Opening Calls:#DOW 25168 -0.49%#SPX 2715 -0.59%#NASDAQ 6822 -1.02%#IGOpeningCall
— IGSquawk (@IGSquawk) November 16, 2018
Pound builds on gains, European markets fall
The pound has recovered further ground against both the euro and dollar:
- +0.4% at €1.1320
- +0.5% at $1.2843
Equity traders are feeling less chirpy, with all major European markets down this afternoon:
- FTSE 100: -0.7% at 6,987.15
- Ireland’s ISEQ: -0.4% at 5,934.01
- Germany’s DAX: -0.3% at 11,316.97
- France’s CAC: -0.5% at 5,010.33
- Italy’s FTSE MIB: -0.4% at 18,826.70
- Spain’s IBEX: -0.3% at 9,044.50
- Europe’s STOXX 600: -0.2% at 357.59
Away from Brexit, the other B-word is almost upon us... Black Friday.
The annual bargain shopping event is an import from America which traditionally falls on the day after Thanksgiving, meaning Black Friday falls on 23 November this year.
But that hasn’t stopped Amazon and a host of other retailers to fire the starting gun a week early. The online retailing giant, and chains including Argos and Currys PC World have lined up discounts on tens of thousands of products – from large-screen 4K HD TVs, wireless speakers, headphones to laptops - in a bid to entice shoppers from today.
According to the consultancy GlobalData, UK consumers are expected to spend £10.4bn during the Black Friday sales, which is 3.1% more than in 2017.
Markets reduce bets on 2019 UK rate hike
The chances of the Bank of England raising interest rates in 2019 have dropped according to traders.
Money markets are now pricing in an 86% chance of a rate hike next year, down from 90% on Thursday.
Before Thursday - and the wave of ministerial resignations over Theresa May’s draft Brexit agreement - a rate rise before 2020 was fully priced in.
Here are the biggest FTSE fallers this morning as it currently stands:
FTSE 100 dips into the red
The FTSE 100’s earlier gains have evaporated as investors remain cautious against a backdrop of heightened political and Brexit uncertainty.
Britain’s leading index is down 7 points or 0.1% at 7,031.35, underperforming its European peers and with RBS and the house builders among the biggest losers for a second day.
The domestically-focused FTSE 250 is just about hanging on, up 12 points or 0.1% at 18,674.57.
David Madden analyst at CMC Markets, gives his take on how the markets are playing out:
Stocks in Europe have bounced back today, but some of the major indices have given up some of the early gains. Theresa May had a disastrous day yesterday, and investors are still on edge over the political situation in the UK.
Politics is also in focus in Italy as Rome and Brussels are still locked in a stand-off over the budget. For the time being, Brexit will grab more attention in the media, but the Italian problem could spark another round of the eurozone debt crisis.
Sterling has received a boost from reports that Michael Gove will not be resigning as environment secretary, despite turning down the job of Brexit secretary.
The pound is up 0.3% against both the euro and the dollar, at €1.1306 and $1.2807 respectively.
In less encouraging news for Prime Minister Theresa May, bookmaker William Hill has stopped taking bets on the year that she will leave office...
Eurozone inflation ticks up to 2.2% in October
Annual inflation in the eurozone picked up to 2.2% in October, from 2.1% in September according to the statistics office Eurostat.
It was no surprise, unchanged from the “flash” estimate published by Eurostat at the end of October.
Energy prices, services, and food, alcohol and tobacco prices all contributed to the slightly higher inflation rate.
Here is how inflation rates compared last month across the EU:
Carsten Brzeski, chief economist of ING in Germany, says that Draghi opened the door for a longer period of low interest rates.
When ECB President Maro Draghi gives a speech four weeks ahead of a crucial policy meeting, it is always worthwhile listening closely.
It is too early to read any real changes in the ECB’s anticipated path for monetary policy beyond the end of the net-QE purchases. However, Draghi at least just sent a clear signal of the ECB’s willingness to err on the side of caution when it comes to the first rate hike.
The risk that Draghi could go down in European history books as the first ECB president who never hikes rate is increasing.
Draghi also took a very thinly veiled pop at Italy, which is pressing ahead with plans to increase spending despite its huge debt pile and major opposition from the EU.
To protect their households and firms from rising interest rates, high-debt countries should not increase their debt even further and all countries should respect the rules of the Union.
Updated
Mario Draghi: weaker trade threatens eurozone growth
Mario Draghi, president of the European Central Bank, has delivered the keynote speech at the European Banking Congress in Frankfurt.
Striking a fairly cautious note, Draghi said that while a number of one-off factors had weighed on eurozone growth during the year - such as disruption to car production caused by new emissions tests - there were longer term factors to consider.
He cited a slowdown in trade as a risk:
Insofar as world trade stabilises at a lower level, its drag on growth could also be temporary. But there are two conditions that could make it longer-lasting.
The first is if trade uncertainty rises and dampens euro area export performance, in particular owing to protectionism.
The second condition is if uncertainty about external demand spills over into domestic demand through confidence and investment channels.
While reiterating the ECB’s intention to stop bond purchases by the end of the year, he also appeared to soften the Bank’s message about the pace of tightening, saying there was so far little pass-through from higher wages to inflation. That is likely to push back intentions for the timing of the first rate hike.
Draghi said:
The nature of this forward guidance is contingent on economic developments and therefore acts as an automatic stabiliser. If financial or liquidity conditions should tighten unduly or if the inflation outlook should deteriorate, our reaction function is well defined. This should, in turn, be reflected in an adjustment in the expected path of future interest rates.
Updated
FTSE gains narrow after expectations of a confidence vote rise
Gains in both the FTSE 100 and FTSE 250 have narrowed on reports that it is looking likely Theresa May will face a confidence vote (triggered if Conservative MPs submit 48 letters to the chair of the backbench 1922 Committee).
The FTSE 100 is up 17 points or 0.3% at 7,055.26, while the FTSE 250 is up 0.2% at 18,694.71.
Confidence vote in PM now "likely" as Tory whips told to return to London - Sky sources https://t.co/SQCVXcDf47 pic.twitter.com/c3YwgGlgDQ
— Sky News (@SkyNews) November 16, 2018
Connor Campbell, analyst at Spreadex, says the pound is mirroring Theresa May in “a display of (potentially brief) Brexit resilience.”
He explains:
The pound is a bit like Theresa May at the moment. Seriously bruised by the fallout of the Brexit draft deal, shaken by a series of high profile resignations, but, for the time being (and however misguidedly), emboldened by a sense of resilience.
All this is to say that sterling avoided another round of losses as Friday got underway. Of course, it is still very early in the day, with some key figures yet to fully reveal their allegiances. Most pressing, perhaps, is Michael Gove, the man who has reportedly rejected an offer to take over as Brexit Secretary because he would not be able to renegotiate the divorce deal.
This leaves the prominent Leaver in a sticky situation, with rumours circulating that he may already have one foot out of the door, despite having provided support for May during Wednesday’s marathon Cabinet sesh.
The FTSE 250 is also up this morning, climbing 0.8% to 18,810 after Theresa May vowed to fight on with her Brexit plan, despite major opposition from within her own party.
It doesn’t reverse all of Thursday’s losses, but the firms listed in the UK-focused index will be relieved nonetheless.
FTSE 100 rises 50 points in early trading
Trading is underway across Europe and the FTSE 100 is up 50 points, or 0.7% in early trading.
The index of the biggest UK-listed companies was spared the major sell-off on Thursday, largely because so many of the top 100 firms have a large proportion of earnings abroad.
The UK focused firms were hit hard however, wiping billions off the market value of house builders and banks.
Here’s how it looks across Europe at the moment:
- FTSE 100: +0.7% at 7,086.59
- Ireland’s ISEQ: +1.3% at 6,036.19
- Germany’s DAX: +0.7% at 11,435.61
- France’s CAC: +0.7% at 5,069.27
- Italy’s FTSE MIB: +0.5% at 18,993.71
- Spain’s IBEX: +0.4% at 9,111.40
- Europe’s STOXX 600: +0.6% at 360.63
Pound steadies but traders brace for more Brexit volatility
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The pound has steadied this morning after a shocker of a day on Thursday which saw the currency plunge 1.9% against both the euro and the dollar, to lows of €1.1247 and $1.2722 respectively.
Traders sold off sterling at a rapid rate as they digested the resignation of cabinet ministers Dominic Raab and Esther McVey, countless rumours of further potential resignations and, the prospect of a vote of no-confidence in the Prime Minister.
Equity markets across Europe also fell sharply, with Irish stocks under particular pressure. UK-focused firms in the FTSE 100 suffered heavy losses - although the index itself closed up 4 points - and the domestic-focused FTSE 250 fell 1.3%.
As Friday gets underway, politicians, investors and commentators are braced for another dramatic day - which may or may not materialise.
As things stand the pound is steady, up 0.2% against the dollar at $1.2795 and roughly flat against the euro at €1.1280.
Things looked similarly calm at this point yesterday...
Also coming up:
- 8.30am: Mario Draghi, president of the ECB, gives a keynote speech in Frankfurt
- 10am: Eurozone inflation data for October
- 2.15pm: US industrial production figures for October
Updated
