German factory orders tumble; US trade deficit narrows - as it happened

[NadiaWits]

German factory orders tumble; US trade deficit narrows - as it happened

Rolling coverage of the latest economic and financial news, as Germany’s manufacturers struggle againLatest: US trade deficit has narrowedGerman factory orders slumped 1.6% in DecemberOrder books were 7% lower than 12 months agoEconomy ministry: Industry is in a weak patchDeutsche Bank: Recession is coming 4.51pm GMT Time for a recap.Fears over the health of Germany’s economy are mounting, after it suffered its biggest drop in factory orders since 2012. Orders plunged 7% in December compared to a year ago, as German manufacturers suffered from falling demand from overseas. 4.51pm GMT After a largely uneventful day, Britain’s FTSE 100 has closed down 4 points at 7,173, a minuscule dip of 0.06%.In Frankfurt, the DAX shed 0.4%.Barratt Developments and Redrow revealed solid first-half numbers today. Barratt’s saw revenue and profit before tax rise by 7.2% and 19.1% respectively. The net cash position increased by 133%, and operating margin improved by 130 basis points to 19.2%. It is impressive that margins improved in an environment of higher wages and material costs. Barratt’s confirmed that forward sales increased by 7.3%, and the full-year outlook remains in line with the board’s expectations. Redrow also put in a solid performance in the first-six months. Pre-tax profit for the six-month period jumped to record levels, and group revenue ticked up by 9%. Legal completions rose by 12%, and the order book ticked up by 11%. Some investors are cautious of the UK property market due to cooling prices and uncertainty surrounding Brexit, but Redrow and Barratt Developments have shown the market the industry is still strong. 3.59pm GMT Over on Wall Street, the Dow has dipped by 40 points in quiet trading to 25,371 points.Two gaming companies are having a bad day. Take-Two Interactive Software has plunged 14% after the maker of Grand Theft Auto and Red Dead Redemption 2 posted results which weren’t as strong as analysts hoped.Electronic Arts stock is on pace for its worst day since Oct. 2008, according to Dow Jones Market Data. It is also the worst performer in entire S&P 500 today $EA 3.18pm GMT Ratings agency S&P has warned that the UK’s credit rating will come under pressure if it leaves the European Union without a deal next month.In a new report, S&P says it still expects an orderly exit, as this is in the best interests of the UK and the EU.S&P: Risk Of No Deal Brexit Remains High -No Deal Brexit Does Not Yet Warrant Becoming Base Case“In the case of no deal, where short-term disruption proves to be material enough to undermine competitiveness and operational performance, then downgrades could occur, particularly for certain non-financial corporates.”Our current negative outlook on the ‘AA’ sovereign rating on the U.K. reflects our view of the risk of sustained economic weakness and a deterioration in government finances if merchandise and services exports from the U.K. lose access to key European markets, external financing diminishes, or sterling’s status as a reserve currency comes under pressure. Downward pressure could build on the ratings under a scenario where the likelihood of a “disorderly” Brexit appears more apparent. We define a “disorderly” Brexit as one that would either significantly limit U.K. manufacturing and services access to key European markets or subject them to tariffs and nontariff barriers high enough to reduce their ability to compete.The most exposed sectors are automotive, leisure, retail, real estate, aerospace and defence, and transport infrastructure. 2.40pm GMT In other trade news, US treasury secretary Steven Mnuchin has announced that he will travel to Beijing next week to resume negotiations with China.Mnuchin will be accompanied by United States Trade Representative Robert Lighthizer, and other officials. It’s a new attempt to reach a breakthrough before March - the deadline before the US hikes tariffs on Chinese imports.“Ambassador Lighthizer and myself and a large team are on our way to Beijing next week. We are committed to continue these talks.We’re putting in an enormous amount of effort to try to hit this deadline and get a deal. So that’s our objective.”Steven Mnuchin says trade talks 'very productive' so far, confirms he's headed to Beijing next week https://t.co/NqaIXXtNCm 2.29pm GMT Well, quite....Interesting to see how an 'economic boom' is one in which import demand dives 2.9% while exports recede by 0.6% the same month. Never a good sign when two-way trade moves into reverse. 2.28pm GMT This narrowing of the US trade gap is a win for Donald Trump, argues CNBC:US trade deficit narrows much more than expected in a win for Trump https://t.co/Oehz8hOXvf 1.53pm GMT Newsflash: America’s trade deficit with the rest of the world has narrowed, due to a big drop in imports.The gap between imports and exports narrowed to $49.3bn in November, the Census Bureau reports, down from $55.7bn in October.November ‘18 #trade #deficit down 11.5% to $49.3b. #Exports down 0.6% to $209.9b. #Imports down 2.9% to $259.2b. https://t.co/IeSYeEdI0d #Census pic.twitter.com/iSmFTvAWMaTrade data for Nov (delayed) just published. Cell phone imports to the US -23%, or -$2.3bln, is 29% of change in goods trade. Not exactly a healthy decline in trade deficit. pic.twitter.com/W21UqD5mDnNovember ‘18 #petroleum deficit ($0.6b) was the lowest on record, accounting for only 1.3% of the overall #trade #deficit. For historical trade data, go to: https://t.co/UuCv60yPcd #Census pic.twitter.com/vVaHV4gMry 1.37pm GMT No early fireworks expected on Wall Street today:US Opening Calls:#DOW 25370 -0.12%#SPX 2730 -0.23%#NASDAQ 7007 -0.20%#IGOpeningCall 1.36pm GMT It’s been a rather underwhelming day in the markets. The FTSE 100 is now flat, while Germany’s DAX has shed 0.5%.Lukman Otunuga, research analyst at FXTM, suspects a sell-off could be looming.Stocks in Asia witnessed another muted session today as many markets in the region remain closed for the Lunar New Year holiday.In Europe, shares got out of the wrong side of the bed thanks to weak earnings from French banking group BNP Paribas and disappointing data from Germany. While Wall Street has the potential to extend gains this afternoon on strong corporate earnings and cautious optimism over US-China trade talks, the medium- to longer-term outlook for equity markets tilts to the downside.Since Powell backtracked and the PBOC stepped up liquidity injections, global money supply has roundtripped to March 18 levels.Forget earnings or macro. This is why markets have rallied. pic.twitter.com/ANxj0EcdD1 1.03pm GMT The eurozone slowdown comes at a tricky time for the European Central Bank.The ECB only just ended its stimulus programme of buying bonds with newly-created money, and has suggested it could start raising interest rates from their current record lows this summer.With German factory orders dropping -7% yoy for the biggest year on year drop since 2012 it is time for the ECB to go to negative rates to stimulate the economy.Oh. pic.twitter.com/CdqqODIeaA 12.34pm GMT Emerging stock markets have made a good start to 2019; Brazil is up over 10%, Mexico has gained 6.5% and China is 5% higher.That’s due to a pick-up in risk appetite after last autumn’s sell-off. Signs that central bankers are turning more dovish has also boosted shares.Time to call a pause on the emerging market rally, says Morgan Stanley. Total returns over the last 3 months have been "aggressive" - approaching 10% - and risks of a correction in DM risk assets are building. pic.twitter.com/V2xeX3IgNL 12.26pm GMT Overnight, tech giant Apple revealed that its retail boss - Angela Ahrendts - is leaving.Ahrendts was recruited (at no small expense!) from luxury fashion chain Burberry. She played a key role over the last few years as Apple turned itself into a trillion dollar company last year, while earning twice as much as CEO Tim Cook himself.Ahrendts’ replacement, Deirdre O’Brien, has a more typically Apple history: she joined the company 30 years ago and is already the vice-president of the people department at the company.The Apple retail arm, which covers its online and brick-and-mortar stores, has been a jewel in the crown throughout the period, with Ahrendts a regular fixture at press conferences to share successes such as new flagship locations, popular live events and free tutorials for new buyers. Related: Angela Ahrendts quits as head of Apple retail  12.00pm GMT Recent German manufacturing data do not paint a pretty picture:That does not look good. #German #Factory #Orders disappoint in December. Outlook for the industrial production is deteriorating. pic.twitter.com/4AfL9DkbDm 11.31am GMT Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, has now weighed in on this morning’s dire German factory orders.He says the 1.6% month-on-month decline was a “nasty headline”, adding: “Across sectors, weakness in capital and intermediate goods were the primary drivers, especially on the export side to non-eurozone countries. By contrast, new orders for consumer goods rebounded strongly across the board, pointing to a revival in the auto sector towards the end of the year.“The year-over-year rate was depressed by base effects from a very strong finish to the year in 2017, but the message remains clear: German manufacturing is suffering.” 11.17am GMT Europe’s competition authorities have just derailed a massive planned merger between trainmakers Alstom and Siemens, triggering a massive political row.Antitrust commissioner Margrethe Vestager has ruled that allowing France’s Alstom and Germany’s Siemens to combine would have created a near monopoly in the European train-making market.We need signalling systems to keep us safe & very high speed trains for climate friendly transport. @SiemensMobility and @Alstom are champions in rail industry. Without remedies the merger would have resulted in higher prices, less choice & innovation, so the merger is blocked.“The Commission prohibited the merger because the companies were not willing to address our serious competition concerns.”“It’s going to serve China’s economic and industrial interests.”Am I wrong to think this will make it significantly harder for Vestager to secure French support for a commission presidency bid? https://t.co/otYVW2AbX4 10.53am GMT Ocado’s shares have now slumped by 7.5% since it warned that the fire at its Andover distribution centre was worse than first feared.That wipes more than £500m off the value of the company, leaving it firmly stranded at the bottom of the FTSE 100 leaderboard. Related: Ocado says fire at warehouse will hit sales growth and orders  10.01am GMT German carmaker Daimler has reported that net profits almost halved in the last quarter of 2017, as the diesel crisis hurt demand.Daimler’s earnings were scraped by the cost of developing new, greener, technologies for electric vehicles.“For Daimler, 2018 was a year of strong headwinds,” said CEO Dieter Zetsche, presenting his last annual results before handing off to successor Ola Kallenius at the May 21 shareholder meeting. He said that “we cannot and will not be satisfied” with lower profit margins. He added that the company was coming up with plans to increase profitability though declined to indicate what steps might be taken.  9.40am GMT More reaction to today’s German data:Uh-oh! #Germany's factory orders are down a whopping 7% YoY in December. Germany is not of out the #recession woods yet! pic.twitter.com/ojUqd0OCUPGermany jumped out of the frying pan into the fire... Construction PMI (January) 50.7 vs. 53.3 prior ! #Germany #EURUSD #DAX 9.36am GMT Britain’s watchdogs have been showing their teeth this morning.The Advertising Standards Authority’s (ASA) has banned gambling ads that ran in ITV’s I’m a Celebrity … Get Me Out of Here app for breaking rules designed to protect children from being encouraged to bet. Related: I'm a Celebrity … app maker forced to pull gambling adverts  9.28am GMT Here’s our news story about the crackdown on travel sites who use unscrupulous tactics to scare people into making holiday bookings: Related: Hotel booking sites forced to end misleading sales tactics When booking sites tell you a hotel was "booked four times in the last day", did you know that they mean "for any dates", not just the ones you're looking for? Or that if you saved "£50 by booking here", that may be compared to a completely different rate? https://t.co/rCErv5oJum 9.11am GMT More bad news from Germany -- growth across its building sector almost fizzled out last month.Data firm Markit says its German construction PMI (which measures activity across the sector) fell to just 50.7, down from 53.3 in December. That’s worryingly close to stagnation (50.0).The fact that growth in total industry activity slowed down more than new orders, which remained comparatively robust, suggests that it wasn’t necessarily a demand-driven slowdown and that severe bad weather probably did cause some disruption to actual work on the ground during the opening month of the year. 8.46am GMT European stock markets have opened in the red, after this morning’s woeful German factory orders.In Frankfurt, the DAX index of Germany’s top companies has lost 0.3%, with Daimler down almost 2% and Deutsche Bank down 1.5%.Unfortunately the fire which started yesterday morning in a corner of the ambient grid was not contained as we believed, and last night expanded. Whilst we are informed by the Fire Brigade that it is now under control, during the night part of the roof collapsed and there has been substantial damage to the majority of the building and its contents.  8.40am GMT Today’s grim factory orders data come just hours after Deutsche Bank warned that Germany is probably heading for recession.In a new report, Deutsche economists wrote:“The start of the German economy into 2019 has been a major disappointment so far.“The development of several key cyclical indicators is telling us that the German economy is drifting towards recession right now.”Deutsche Bank Says German Economy Is Drifting Toward Recession https://t.co/XVXggfXLrx 8.04am GMT German factory orders “took a nosedive” in December, says economist Carsten Brzeski of ING ruefully, adding:The inventory build-up in recent months, as well as the recent drops in order books, suggest that any rebound of industrial activity in Germany will be slow and sluggish. 7.56am GMT Germany’s economy ministry doesn’t see much cheer in today’s factory orders, saying:“The decline in orders in December suggests that the weak phase in industry will continue for now.The latest sentiment indicators also point to muted momentum at the start of the year.” 7.54am GMT The decline in German factory orders was mainly due to weaker demand for abroad. Orders from outside the eurozone plunged by 5.5% month-on-month in December, while domestic orders dipped by 0.6%. 7.43am GMT Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. #Germany Dec #Manufacturing Orders:*M/M: -1.6% v 0.3%e (largest ⬇ since June 2018)*Y/Y: -7.0% v -6.7%e (largest ⬇ since June 2012) pic.twitter.com/PRZVSnoPXSThe Recession word is getting louder. #Germany's Industrial Order dropped 1.6% in Dec m/m vs a gain of +0.3% expected. Capital goods orders fall 2.5% m/m. pic.twitter.com/J4cA5gmyNQInterserve has announced an epic debt-for-equity swap which saves the company but massively dilutes existing shareholders:“the shares issued through the Placing and Open Offer will account for 97.5% of the ordinary share capital of Interserve”https://t.co/kxdbJbPzSX Related: Cabinet Office voices concern over Interserve rescue deal  Continue reading...

Source: German factory orders tumble; US trade deficit narrows - as it happened