European markets edge higher but FTSE dips
Hopes that Germany could yet form a coalition government after the Social Democrats held out the prospect of talks to break the current deadlock gave some support to European markets. But a stronger euro limited the gains, while UK shares dipped marginally as the pound moved higher against the dollar. The final scores showed:
- The FTSE 100 finished down 7.6 points or 0.1% at 7409.64
- Germany’s Dax rose 0.39% to 13,059.84
- France’s Cac climbed 0.2% to 5390.46
- Italy’s FTSE MIB edged up 0.08% to 22,416.31
- Spain’s Ibex ended up 0.21% at 10,053.5
- In Greece, the Athens market added 0.36% to 723.18
On Wall Street, the Dow Jones Industrial Average has closed up 32 points or 0.14% in a shortened trading session. The US markets were helped by a strong performance from Amazon on Black Friday sales hopes.
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back on Monday.
Updated
Here’s the latest Barclaycard update on Black Friday, and there’s another new record.
So far there has been an 8% increase in the amount spent compared to the same day last year, and Barclaycard processed a record 998 transactions a second between 1pm and 2pm. That beats the previous record of 976 set an hour earlier.
In Greece Black Friday has brought euphoria but also protests with unions denouncing the “foreign-imported” tradition as a “black day” for workers, reports Helena Smith :
While scenes of savvy shop buyers rushing to pick up goods at bargain prices were recorded in major Greek cities, employees were just as quick to denounce Black Friday as a commercial ploy.
Protesting outside the labour ministry in Athens, the Association of Shop employees called the custom – being marked in Greece for a second year – as an affront to workers’ rights. Contracts had been openly flouted in the face of the foreign imported fiesta, said unionists, demanding that employers “pay overtime to workers and fines be imposed.”
In the main commercial hubs of Athens and Thessaloniki, protestors are gathering this afternoon to demonstrate against “the unpaid and uninsured overtime … and hunger wages.” Employers were getting away with yet more exploitation by adopting a custom that amounted to outright “fraud”.
A stronger euro has seen European markets come off their best levels, while a rise in the pound against the dollar has left the FTSE 100 lingering in negative territory. Connor Campbell, financial analyst at Spreadex, said:
The prospect of political progress in Germany buoyed the euro on Friday afternoon, while the dollar continued to move lower.
The news that Angela Merkel and her CDU-CSU party are set to meet with their former Social Democrat coalition partners acted as a pick me up for the euro, which surged 0.6% to a 2 month high against the dollar, while taking another 0.3% off the pound, pushing sterling to its worst price in more than a week. These gains took the edge off the DAX’s own growth, with a 1% lunchtime surge halving to 0.5%; still, this keeps the German index above 13000, a level its struggled with for the past few sessions.
As for the dollar, its drop against the euro was joined by a 0.4% decline against the pound, with cable climbing above $1.335 to hit its best price since the start of October. There are a few things dragging the greenback lower: a pair of weaker than forecast flash manufacturing and services PMIs; Wednesday’s cautious Fed meeting minutes, which cast doubt not on a December rate rise, but the pace of any subsequent hikes; and a series of bearish notes from analysts, including those at Nomura and Morgan Stanley. Add on a Thanksgiving hangover and it was a grey Black Friday for the currency.
The FTSE, meanwhile, continued to trail its peers – not just the Eurozone, but the Dow Jones, which rose 0.2% after the bell – dipping 0.1% as the day went on. Multiple times this year the UK index has got trapped around the 7400 mark, with the FTSE facing a momentum-less run in to Christmas.
The weaker than expected US data has undermined the dollar.
The pound is now up 0.35% against the US currency at $1.3351, while the euro is also strengthening against the greenback:
🇺🇸🇪🇺#EURUSD has broken 1.19 today, the highest level since September, driven by strong #German #IFO (and #euro data in general), #SPD negotiation willingness and weaker than expected #US data pic.twitter.com/YQYKkc0MRv
— Danske Bank Research (@Danske_Research) November 24, 2017
Dennis de Jong, managing director of UFX.com, said:
Donald Trump and his economic advisors will be concerned with the latest Markit survey coming in below expectations, after what has been a fairly robust upward trajectory since the start of the year.
The president has had some significant knockbacks in implementing promised infrastructure plans, and it would be no surprise to see him continue to lay the blame with foreign firms undercutting the US sector.
US industry has lost global market share in recent years, with labour-intensive, low-cost countries and knowledge-based, tech-led economies picking US jobs off at both ends of the manufacturing spectrum. Policy makers, not to mention the president himself, will be looking to address this as a priority.
US manufacturing and service sectors slip in November
US manufacturing slipped back in November but still showed a strong level of growth, according to the latest snapshot.
The IHS Market initial manufacturing PMI came in at 53.8, down from 54.6 in October and below expectations of a rise to 54.8.
The services PMI fell from 55.3 to 54.7 in November while the composite PMI dipped from 55.2 to 54.6.
Chris Williamson, chief business economist at IHS Markit said:
US businesses reported another month of solid growth in November, putting the economy on course for a reasonable, though by no means stellar, fourth quarter. Current PMI readings are broadly consistent with GDP growing at an annualised rate of just over 2%.
There was also good news on hiring, with a slight uptick in employment growth meaning the surveys are indicating non-farm payroll growth of just over 200,000 in November.
Both input costs and selling price inflation picked up, suggesting the upturn is feeding though to higher price pressures, though some of the manufacturing price hikes were attributable to the short-term effects of the hurricane-related supply chain disruptions.
An upturn in new order inflows means we can expect a strong end to the year, though prospects for 2018 remain more mixed. Although expectations about the year ahead slipped lower in the service sector, future optimism hit a two-year high in manufacturing, suggesting the goods-producing sector may start to make a stronger contribution to the economy in coming months.
Updated
JUST IN: Macy's shares extend premarket gains after CEO's comments on holiday sales on CNBC, now up 3.5 percent $M pic.twitter.com/cOUsHCYoiZ
— Reuters Business (@ReutersBiz) November 24, 2017
Wall Street opens higher
After a day off for Thanksgiving, US markets have started off in a positive mood.
Helped by higher oil prices and rising retail shares on Black Friday, the Dow Jones Industrial Average is currently up 37 points or 0.16% while the S&P 500 opened 0.17% higher and the Nasdaq Composite added 0.13%. Both the S&P and Nasdaq have hit new peaks.
Black Friday transactions hit record high
According to Barclaycard, there has been a 4% increase in the amount spent on debit and credit cards by 1pm today compared to last Black Friday.
That includes high street and online sales, and also other spending such as buying a pint of milk.
With sales picking up as the day progresses after a slow start, Barclaycard also says it processed a record 976 transactions a second between 12pm and 1pm. Last year’a Black Friday peak was 791 transactions per second. Paulette Rowe, managing director of Barclaycard Payment Solutions, said:
Early data suggests that shoppers have once again embraced Black Friday, with many taking advantage of the discounts on offer. The value spent is growing at a slightly slower rate than the number of transactions, indicating consumers may be opting to buy more goods at a lower price rather than investing in a handful of higher-value items. Nevertheless, it’s ‘so far, so normal’ on the high street and retailers will likely be encouraged by the results.
Updated
Back with Black Friday, and here is a gallery of pictures from around the world:
Meanwhile US retail shares are moving higher in premarket trading ahead of the official Wall Street opening, with Macy’s up 1.1%, J C Penney 2.5% better and Best Buy 0.9% better.
US oil prices reach two year high
Oil prices are on the rise ahead of a key Opec meeting next week.
Brent crude is up 0.19% to $63.67 a barrel, while West Texas Intermediate jumped nearly 1.5% to a more than two year high of $58.91. Part of the increase is due to the partial shutdown of a pipeline linking Canada with the US after an oil spill, reducing the usual 590,000 barrels a day supply.
Meanwhile the Opec meeting is widely expected to extend its agreement to curb supplies beyond the original March end date, although Russia’s position on the idea is a little unclear.
Analysts at S&P have raised their 2018 price target for Brent crude to $55 a barrel but kept their WTI target at $50, saying, “We anticipate that global oil supply is likely to broadly match consumption in the first half of 2018, assuming the Opec cuts are maintained.”
S&P added:
We recognize the typical volatility of these market indicators, as demonstrated during 2017. We also note the persistence of a wider differential of $6 per barrel (/bbl) between Brent and WTI recently, although we believe this differential is likely to be nominally smaller in 2018. We base our long-term price assumptions mostly on fundamental analysis including assessments of the marginal cost of oil and gas production, as well as supply and demand fundamentals, for example
We continue to expect Brent and WTI to be range-bound in 2018. We note that Brent has been trading above $60/bbl since Oct. 27, 2017, having closed at that price on Sept. 25 for the first time since July 2015. As present, futures prices remain above $60/bbl until November 2018. We believe the price increases reflect ongoing OPEC production cuts, supply disruptions, and temporary production declines as well as positive market sentiment about demand. Shipments from northern Iraq were reportedly lower in October and production from several other regions was down as well. However, we assume these specific supply issues will be addressed in coming months. What’s more, we believe that continuing production growth may marginally exceed consumption growth in 2018.
Tucking into some lunch at your desk, perhaps after a dash to Pret or Greggs? If so (and even if not!), then get your teeth into the history of Britain’s UK sandwich industry.
Guardian Long Read: How the sandwich consumed Britain
Honestly, it’s a great read.
I'll read anything @samknightwrites writes but this piece of business history is exceptional https://t.co/MSH5CJKt4c
— John Gapper (@johngapper) November 24, 2017
However magical you'd have thought a Guardian longread on sandwiches could be, the reality of it is a hundred times greater https://t.co/Ap2HWHhZzY
— Tara Mulholland (@tara_mulholland) November 24, 2017
Amazon workers strike over pay
Over in Germany, Amazon workers have gone on strike in protest against pay at the e-commerce giant.
The walkout has hit half a dozen Amazon distribution sites in Germany, as staff demand better wages.
Workers at its main distribution hub in Italy are also on strike, potentially disrupting activities on Black Friday.
Associated Press has more details:
In Germany, Ver.di union spokesman Thomas Voss said some 2,500 workers were on strike at Amazon facilities in Bad Hersfeld, Leipzig, Rheinberg, Werne, Graben and Koblenz.
In a warehouse near Piacenza, in northern Italy, some workers walked off the job to demand “dignified salaries.”
The German union has been leading a push since 2013 for higher pay for some 12,000 workers in Germany, arguing Amazon employees receive lower wages than others in retail and mail-order jobs. Amazon says its distribution warehouses in Germany are logistics centers and employees earn relatively high wages for that industry.
The strikes in Germany are expected to end Saturday.
The Italian action, a one-day strike, was hailed by one of the nation’s umbrella union leaders, the UIL’s Carmelo Barbagallo, as having “enormous symbolic value because it’s clear that progress, innovation and modernity can’t come at the expense and the interests of workers.”
Here are more photos, from the city of Leipzig today:
Updated
If you are risking Black Friday, know your rights!
Hannah Maundrell, Editor in Chief of money.co.uk, explains:
“Be a savvy shopper instead of a bargain hunter. Work out a plan of attack: make a list, set a budget and hunt for the cheapest place to buy. Never checkout without checking if you can save even more with a voucher code – often found by signing up to newsletters or on retailer’s social media sites.
If you buy something online which you find cheaper elsewhere next week, don’t worry, you have 14 days to return it and get a full refund no questions asked.
“Double check your refund rights before you part with your cash and if you’re buying something that costs over £100, pay with a credit card because you can go to your credit card company for a refund if something goes wrong.
The drop in UK consumer confidence comes as people in America and the rest of Europe are feeling more optimistic.
This chart, from Kallum Pickering of Berenberg, shows how UK consumer morale has fallen behind other advanced economies recently:
Pickering says:
After eight years of a recovery that had occasionally been punctured by the euro crisis, a hiccup in emerging markets and gyrations in oil prices, households are becoming increasingly confident. Consumer confidence in the US and the Eurozone has risen above pre-Lehman peaks, with the Brexit-stricken UK serving as the exception to the rule.
Even in the UK, where households are suffering from a temporary real wage squeeze due to the Brexit-related drop in trade-weighted sterling and the resulting rise in import costs, consumer confidence remains broadly in line with its long-term average.
Economist Sam Tombs has analysed this morning’s mortgage approval figures, and concluded that the market is cooling....
And so the downturn in mortgage lending begins. Approvals by the main banks down 2.6% m/m in Oct. Leading indicators point to bigger falls ahead: pic.twitter.com/6cnbJpVjCX
— Samuel Tombs (@samueltombs) November 24, 2017
Despite the entertaining lack of a rush on Oxford Street at 7am, Currys PC World says its having its busiest Black Friday ever - on the Internet.
Online traffic via mobile devices is up 14% on last year, apparently, with TV and gaming consoles particularly popular.
Robert Gordon, CEO of Hitachi Capital, isn’t surprised that UK consumers are more pessimistic:
“Job security, stagnating pay and rising inflation are all putting the squeeze on consumers, so it’s no surprise that consumer confidence has dipped to a new low
Black Friday couldn’t have come quickly enough for retailers, and it will be interesting to see if the weekend’s sales are as robust this year as they have been in previous years.
The Financial Times has spotted that UK households withdrew money from their tax-free savings accounts at the fastest rate on record in October.
It’s another sign that people are feeling the pinch, as falling real wages continue to bite.
The FT’s Nicholas Megaw explains:
New data from UK Finance suggest households have been saving less and borrowing more in an effort to maintain spending habits in the face of rising prices and falling real wages.
The total amount held in cash ISA accounts fell by £1.5bn, the sixth straight month of declines and the biggest monthly withdrawal on record in data going back to 2006.
UK households tap savings at fastest rate ever https://t.co/85L82AWgzP
— fastFT (@fastFT) November 24, 2017
UK shoppers are right to be wary of Black Friday ‘bargains’, according to industry experts.
Gemma Butler, associate director of marketing at the Chartered Institute of Marketing, says ‘wise consumers’ will keep their wallets and purses closed.
She warns:
Widespread price fluctuation, fraud risk and misreporting of prices are understandably of concern to consumers, whilst the pressure to offer incredible deals does seem to have led some marketers to abandon best practice.
Black Friday? Slack Friday, more like.
It appears that UK shoppers (sensibly) decided to stay in bed rather than queue in the dark to pick up some bargains.
On Oxford Street in London, one solitary shopper hovered nervously outside Curry’s PC World, before the doors were flung open with a flourish.
And the doors are open.... the rush came and went (quickly) #BlackFriday @BBCLondonNews @BBC_HaveYourSay pic.twitter.com/jkUjFnhwMo
— Frankie McCamley (@Frankie_Mack) November 24, 2017
It’s a similar scene online, as my colleague Sarah Butler explains:
The number of shoppers online between midnight and 7am dived 24% on last year according to e-commerce trends service PCA Predict after an 11% rise in shopping over the previous week.
“This longer sales period has shifted the emphasis away from Black Friday being a major retail event in its own right, towards becoming part of a pre-Christmas mini season or “Golden Quarter” for retailers,” said Chris Boaz, head of marketing of PCA Predict.
Evidence of a slow start in the UK to the US-inspired discount day, was also seen on the high street as retail experts pointed empty stores at chains which had opened early to prepare for queues of bargain hunters.
Quite a contrast with three years ago, when there were scuffles at branches of Tesco and Sainsbury as customers scrambled for a bargain.
High street chain Next doesn’t seem to be taking Black Friday terribly seriously either...
Don’t panic! Next investors it’s just old summer stock on sale on Black Friday in my local store. pic.twitter.com/3LNuti1nsG
— Zoe Wood (@zoewoodguardian) November 24, 2017
Not sure why Next even bothered blowing up balloons given halfheartedness of offers. Maybe deals are better in other stores... pic.twitter.com/i3gxn9ec4N
— Zoe Wood (@zoewoodguardian) November 24, 2017
UK mortgage approvals hits 13-month low
Just in: UK mortgage approvals have hit their lowest level since September 2016.
Banks approved 40,488 loans for house purchases in October, down from 41,576 in September.
However, there was a big jump in the number of households who remortgaged their homes, ahead of this month’s interest rate rise.
UK mortgage approvals drop to 40,488 in October (41,576 prev.) but a big jump in remortgages to a 9-year high of 34,000 as households anticipated BoE interest rate increase pic.twitter.com/nKZLaYW89F
— Simon French (@shjfrench) November 24, 2017
Credit card lending growth also slowed, , in another sign that UK people are being more cautious about economic prospects.
German business confidence soars as economy booms
German business confidence has jumped again, in a sign that the European recovery is sizzling away.
In a stark contrast with Britain’s worried consumers, bosses in Europe’s largest economy are very upbeat despite the collapse of coalition talks this month.
The monthly gauge of German business confidence leaped to 117.5 this month, the highest level in many decades.
Firms’ expectations of current conditions dipped a little, but they’re very optimistic about their future prospects.
Ifo chief Clemens Fuest says:
“Sentiment among German businesses is very strong,”
“This was due to far more optimistic business expectations. The German economy is on track for a boom.”
Better than expected November German business confidence report from IFO. Business climate rose to 117.5 in November from 116.8 in October on the back of an improvement in the expectations component. pic.twitter.com/CJedTIyZrr
— UlsterBank Economics (@UB_Economics) November 24, 2017
The Ifo (Germany's most comprehensive business survey) knows no political crisis. https://t.co/SjaucHLETl pic.twitter.com/F3FcFyfNcm
— Maxime Sbaihi (@MxSba) November 24, 2017
The German IFO index is at its highest level since October 1969. Expectations highest in 7 years ‘only’. pic.twitter.com/Mp6zokKuP1
— Frederik Ducrozet (@fwred) November 24, 2017
Updated
Sports Direct: We owe Mike's brother £11m
UK retailer Sports Direct has called a shareholder meeting, to vote on whether to pay £11m to the brother of founder Mike Ashley.
An internal review of links between Sports Direct and John Ashley has concluded that he had actually been underpaid for several years.
John Ashley’s company, Barlin, was paid by Sports Direct to handle deliveries overseas. That arrangement was ended earlier this year, amid concern over corporate governance at Sports Direct.
However, the review into the links found that John Ashley had unfairly missed out on significant bonuses and pay awards.
Mike Ashley plans to abstain on the vote, and says he actually expects independent shareholders to oppose the payout. But to him, it’s a matter of principle....
It’s important for me to say that if John had owed £1 to Sports Direct, I would have ensured any sum was repaid in full. I hope shareholders will therefore be reassured that everything is in order and that any concerns are laid to rest.”
The meeting is on 13th December, at Sports Direct’s headquarters in Shirebrook.
Updated
There’s not much drama in the European stock markets this morning.
Britain’s FTSE 100 has dropped by 15 points, or 0.2%.
BoE's Tenreyro: Brexit means nothing's ruled out on interest rates
With excellent timing, Bank of England policymaker Silvana Tenreyro has said that future interest rate moves will largely be dictated by Brexit.
In an interview with Bloomberg, Tenreyro explained that nothing could be ruled out in the Brexit era - a hint that rate cuts or hikes could be on the agenda.
“People up until recently thought that Brexit meant monetary policy would remain highly accommodative and interest rates would stay low forever.
But Brexit might present other challenges that require the opposite. It might require an adjustment either way, and it’s not obvious. That’s something to be prepared for.”
Tenreyro, who joined the Bank’s Monetary Policy Committee this summer, also explained that the MPC doesn’t know how the economy will react to Britain’s exit from the EU.
“Brexit will likely affect the supply side of the economy,.
“We don’t know how the demand side will respond. It depends on how households and companies react to the new normal, to the new potential. Shocks can hit the economy one way or the other and we will have to respond to that.”
Exclusive: BOE's Silvana Tenreyro rules out nothing on interest rates in U.K.'s Brexit-era economy https://t.co/9JSdlI9L8x via @jillianfward @fergalob pic.twitter.com/3P2oMAaWK4
— Forward Guidance (@ecoeurope) November 24, 2017
Tenreyro - 2 more hikes over 3y seems reasonable, but Brexit means @bankofengland has to be ready for shocks in either direction. Growth will be modest, but she sees signs of domestic CPI pressure. https://t.co/1quTaRc3p6
— Fergal O'Brien (@fergalob) November 24, 2017
Updated
Pay squeeze dominates the papes
UK consumers won’t feel any more confident after reading today’s front pages.
Several newspapers are leading on yesterday’s warning that Britain face a two-decade long pay squeeze. The Institute for Fiscal Studies reckons that we will be earning around £750 per year less in 2022-23 than in 2007-08, in real terms (adjusted for inflation).
As economics editor Larry Elliott put it:
Unless the economy performs better than expected, the IFS now thinks Britain is in danger of losing not just one, but getting on for two decades of earnings growth. This would be the equivalent of earnings being lower when John Major left Downing Street in 1997 than when Margaret Thatcher began 18 years of Conservative rule in 1979. Historically, it is without precedent.
UK prospects:
— Paul Johnson (@paul__johnson) November 23, 2017
Wage growth-grim
Growth-grim
Debt-grim
-And then #Brexit
Tomorrow's Guardian pic.twitter.com/pqxy2NgC1g
THE INDEPENDENT: "Britons face two decades without a pay rise" #tomorrowspaperstoday #bbcpapers pic.twitter.com/4WWrVfIE4o
— Helena Lee (@BBCHelenaLee) November 23, 2017
THE TIMES: "Adverts fund paedophile habits" #tomorrowspaperstoday #bbcpapers pic.twitter.com/gLaLxXRtRs
— Helena Lee (@BBCHelenaLee) November 23, 2017
Today’s survey shows a “big decline” in UK consumer confidence this month, according to Stephen Harmston, head of YouGov reports.
Harmston adds:
There have been falls across the board – from how secure people feel in their jobs to what they think house prices will do – and the increased cost of living has put a big squeeze on people’s household finances.
Overall, these are a gloomy set of consumer confidence figures.”
This chart confirms that people are becoming edgier, particularly about their own household finances.
The agenda: UK consumer confidence drops to Brexit low
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
UK consumers are feeling at their gloomiest since the immediate aftermath of the EU referendum last June.
Pessimism is mounting over household finances, property prices, job security and business activity, according to a new survey from YouGov and the Centre for Economics and Business Research.
Their monthly index of consumer confidence dropped sharply this month, from 109.3 to just 106.6.
That’s the same level as immediately after the Brexit vote, and the first monthly fall since June 2017.
Christian Jaccarini, economist at the CEBR, says consumer confidence suffered a series of blows this month, including the Bank of England’s decision to raise interest rates to 0.5%.
The first interest rate hike in over a decade triggered fears that higher borrowing costs will compound the inflation-induced squeeze on household incomes.
Simultaneously, higher rates and a housing market in slowdown are warning signals for many homeowners, who fear house price growth may be further dampened. With these economic headwinds set to persist, and the OBR forecasting a weaker growth, households are understandably worried.”
With these storm clouds gathering, shoppers may be reluctant to splash out in the sales today. That would be a blow to retailers who are pinning their hopes on a good Black Friday.
Here’s the agenda
- 9am GMT: German IFO survey of business confidence
- 9.30am GMT: UK mortgage approvals numbers for October, from UK Finance (formerly the BBA)
- 2.45pm GMT: US manufacturing and services PMI reports
Updated
