Wall Street opens lower, Europe extends losses
The gloomy mood is prevailing on both sides of the Atlantic, with investors finding very little to cheer.
A major factor weighing on sentiment is the lack of progress on a trade between the US and China, which is looking increasing unlikely ahead of the 2 March deadline, at which point 25% tariffs will be imposed on Chinese goods imported into America.
US markets have opened lower:
- Dow Jones: -0.5% at 25,050
- Nasdaq: -0.7% at 7,235
- S&P 500: -0.5% at 2,693
This is how it’s looking in Europe:
- FTSE 100: -0.2% at 7,079
- Germany’s DAX: -0.8% at 10,938
- France’s CAC: -0.3% at 4,972
- Italy’s FTSE MIB: -0.5% at 19,390
- Spain’s IBEX: -0.9% at 8,862
- Europe’s STOXX 600: -0.4% at 359
That’s it for today. Thank you for all the comments and have a good weekend. AM
Over in Greece, the country has taken another step forward as it rebuilds its finances. Helena Smith reports:
Almost four years after they were first imposed, capital controls in Greece are finally on their way to being abolished. Greece’s central bank governor Yiannis Stournaras, held talks today with the heads of the country’s five major banks to discuss ending restrictions on business transactions abroad - the last capital control still in place.
The curb - brought into force at the height of the country’s debt crisis in the summer of 2015 as capital flight sparked fears of a run on banks - is now widely viewed as an impediment to commerce.
Banking sources told the Guardian that lifting the restriction would be a key signal of Greece’s return to economic normality. One source said:
It would be very important for the business community. It’s the last one [control] in place. Today’s talks will be followed by others before the government announces the decision.
In a year when it faces elections, Prime minister Alexis Tsipras’ leftist administration is expected to lift the measure imminently.
US futures are down as worries linger about the lack of progress on a trade deal between America and China.
This is how it’s shaping up:
- Dow Jones: -0.6%
- S&P 500: -0.6%
- Nasdaq: -0.8%
Connor Campbell, analyst at the spread betting firm Spread Ex, is not expecting much optimism when Wall Street opens later, as trade fears weigh on sentiment.
The European indices couldn’t shake that sinking feeling on Friday, falling further into the red as the day went on.
Facing a half a percent decline, the Dow Jones is all set to open Friday’s session at 25,050, basically back to where it started the week having hit a fresh 2 month high of 25,400 on Wednesday.
That potential slide comes after Donald Trump admitted any meeting between him and China’s Xi Jinping won’t happen under the trade war ceasefire ceases in early March, casting doubt on the chances of reaching a tariff hike-avoiding deal in time.
As the mood across global markets becomes distinctly subdued, Bloomberg considers whether Fed chair Jerome Powell will do them any favours:
Jay Powell seems hesitant to spook investors with further hikes https://t.co/mbbcMESMGR
— Bloomberg (@business) February 8, 2019
Jeff Bezos profile: the world's richest man who started Amazon in his garage
A blogpost written by Jeff Bezos, the world’s richest man and founder and chief executive of Amazon, is topping all the headlines today.
Bezos accuses the publisher of the National Enquirer of “extortion and blackmail” in a post alleging it threatened to publish revealing personal photos unless the Amazon chief executive publicly affirmed the paper’s reporting was not politically motivated.
Here’s a handy profile of the man who started Amazon in his garage:
Pound on course for its worst week since October
The pound is under pressure again this morning, weighed on by Brexit stalemate and a downbeat assessment of the UK’s economic prospects from the Bank of England.
It is currently down 0.2% against the dollar at $1.2930, and down 0.1% against the euro at €1.1324. Sterling is down more than 1% against both currencies this week, the worst performance since October.
Michael Hewson, chief market analyst at CMC Markets, gives his take on the mood among investors:
After the big declines seen yesterday it’s been a subdued start for markets in Europe this morning as investors take stock with respect to the next moves in the US, China trade talks.
The news that President Trump and Xi won’t be meeting before the March 1st deadline for an increase in tariffs, has raised concerns, in the absence of another extension to the trade truce, that the global economy will struggle to absorb further costs on goods and services.
In a rare dose of good news this week, this morning’s latest German trade numbers showed an improvement in both imports and exports for December, while industrial production in France also rebounded after a poor November. Sadly there was no December rebound for Italy which saw industrial production sink 0.8%, with work day adjusted output falling at its fastest rate since December 2012.
Visa and Mastercard battle it out for payments firm Earthport
In other developments this morning, the takeover tussle for control of cross-border payments firm Earthport has ramped up a notch after credit card giant Visa submitted an improved £247m bid, prompting rival Mastercard to say it was considering whether to improve on the offer.
Visa said early on Friday that it was willing to increase its offer for London-based Earthport, submitting a bid 23% higher than the surprise £198m offer it made over the Christmas period and 12% above a subsequent counter-offer from Mastercard.
Within half an hour of Visa announcing the sweetened terms to the stock market, Mastercard said it was “considering its options” and urged Earthport shareholders to take no further action in response to Visa’s bid for the time being.
Earthport’s shares have risen sixfold since Visa’s initial bid on 27 December and the company was valued at £240m before the market opened on Friday. Shares are currently up 13.6% at 44.1p.
Earthport’s management had previously backed Mastercard’s offer but are now recommending Visa’s bid, the credit card firm’s stock market statement said.
Updated
German exports jump in December
We’ve had some positive trade news this morning, courtesy of Germany.
Exports from Europe’s biggest economy jumped 1.5% in December, easily beating expectations of a 0.2% increase.
Imports increased 1.2%, resulting in a trade surplus of €19.4 billion, up from €18.9bn in November. It provides welcome respite after fears have been mounting in recent weeks that Germany went into recession in the fourth quarter.
Carsten Brzeski, chief economist at ING in Germany:
Today’s trade data is a welcome sign of life, confirming our view that the assessment of the German economy currently needs less black-and-white thinking and is more nuanced.
Some might consider it whistling in the dark, but we remain modestly optimistic for the German growth outlook this year. The labour market is strong and if investment accelerates and there is some fiscal stimulus, the one-off factors which caused the slowdown in the second half of 2018 should also gradually reverse.
European markets follow Wall Street and Asia lower
The subdued mood among investors in the US and Asia has spread to Europe.
Trump’s comments have dealt a blow to hopes that a US/China trade deal might be struck before tariff hikes are imposed on 2 March.
Here are the early scores in markets across Europe:
- FTSE 100: flat at 7,093
- Germany’s DAX: -0.3% at 10,988
- France’s CAC: -0.1% at 4,982
- Italy’s FTSE MIB: -0.2% at 19,449
- Spain’s IBEX: -0.4% at 8,902
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Europe’s STOXX 600: -0.2% at 359
Neil Wilson, analyst at Markets.com, says the latest blow to trade talks doesn’t mean it’s all over:
Two big China trade items knocked back markets yesterday and are likely to weigh on the European session on Friday. First we won’t get a Trump-Xi meeting before tariffs are set to increase on March 2nd. Whilst this is a bit of a blow, it’s not in itself a reason to think trade talks are not going anywhere.
The key trigger for the selling was when White House economic advisor Larry Kudlow sounded a cautious note on trade talks, saying that there is a ‘pretty sizeable distance to go’.
Meanwhile Trump has been named in another spat which is leading the headlines this morning:
Agenda: Trade war fears mount as Trump says China meeting 'unlikely'
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Hopes that the US and China can strike a trade deal before a hike in tariffs is imposed on Chinese goods imported into America were dealt a blow on Thursday.
President Trump said it was “unlikely” that he would meet President Xi Jinping before a 2 March deadline - after which US tariffs on Chinese goods are to increase to 25% from 10%.
Asked on Thursday whether he would meet the Chinese leader, Trump said: “Not yet.” Pressed on whether the two would meet before 2 March, he said “no”.
The remarks have done nothing to cheer investors, with Asian shares falling after the remarks, following Wall Street lower. Recent downgrades to global growth forecasts are also weighing on sentiment.
Jasper Lawler, head of research at London Capital Group:
Up to now the markets have been optimistic about a trade deal being reached, despite little solid evidence. Trump’s stance is now rattling investor nerves just weeks before the deadline.
Chinese markets are still closed for Chinese New Year, re-opening on Monday. However, traders in Hong Kong are returning to their desks and we are starting to see volumes ramp up. The reaction we are seeing is to the deteriorating economic outlook as well as increased concerns over the fragile US – China trade relationship.
We’ll be bringing you all the latest developments.
Updated
