German recession fears grow after industrial output shrinks – business live | Business | The Guardian

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German recession fears grow after industrial output shrinks – business live | Business | The Guardian

All the day’s economic and financial news, as Germany’s factories suffer a 4.7% annual drop in output. Skip to main content The Guardian – Back to home Support The Guardian Contribute Subscribe Contribute Search jobs Sign in My account Comments & replies Public profile Account details Emails & marketing Membership Contributions Digital Pack Sign out Search switch to the International edition switch to the UK edition switch to the US edition switch to the Australia edition current edition: International edition News Opinion Sport Culture Lifestyle Show More News World news UK news Science Cities Global development Football Tech Business Environment Obituaries Opinion The Guardian view Columnists Cartoons Opinion videos Letters Sport Football Rugby union Cricket Tennis Cycling F1 Golf US sports Culture Books Music TV & radio Art & design Film Games Classical Stage Lifestyle Fashion Food Recipes Love & sex Health & fitness Home & garden Women Men Family Travel Money What term do you want to search? Search with google Make a contribution Subscribe International edition switch to the UK edition switch to the US edition switch to the Australia edition Search jobs Dating Holidays Digital Archive The Guardian app Video Podcasts Pictures Newsletters Today’s paper Inside the Guardian The Observer Guardian Weekly Crosswords Facebook Twitter Search jobs Dating Holidays Digital Archive Business Economics Banking Money Markets Project Syndicate B2B More Business live Business Germany recession fears grow, but trade war optimism boosts markets – as it happened
All the day’s economic and financial news, as Germany’s factories suffer a 4.7% annual drop in output
Latest: Trump’s trade war tweet Introduction: German industrial output slumped in November
Analysts: Recession risks have increased
ING: German economy still strong Minister: Don’t badmouth Germany Updated
An aircraft jet engine at the Rolls-Royce aircraft engine factory in Berlin, Germany. Photograph: Sean Gallup/Getty Images Graeme Wearden
Tue 8 Jan 2019 21.11 GMT First published on Tue 8 Jan 2019 07.43 GMT
Share on Facebook Share on Twitter Share via Email Key events Show 9.11pm GMT 21:11 Wall Street closes higher 2.50pm GMT 14:50 Wall Street jumps 1.27pm GMT 13:27 Trump: Talks with China are going well 1.04pm GMT 13:04 Eurozone confidence falters 8.36am GMT 08:36 Economy minister: Don’t badmouth Germany 8.00am GMT 08:00 ING: Recession risk has “clearly increased” 7.36am GMT 07:36 Introduction: German industrial output shrinks Live feed Show 9.13pm GMT 21:13
PS:
World Bank warns of wider no-deal Brexit fallout Read more Facebook Twitter Google plus 9.11pm GMT 21:11
Wall Street closes higher
A trader works on the floor of the New York Stock Exchange (NYSE) today. Photograph: Brendan McDermid/Reuters
And finally, the US stock market has closed higher for the third day running.
The Dow Jones industrial average gained 256 points, or 1.1%, to finish the day at 23,788. The S&P 500 and the Nasdaq both also picked up roughly 1%.
Wall Street remains hopeful that the US and China will strike a trade deal soon, with president Trump tweeting earlier that talks are going very well.
CNBC (@CNBC) Tuesday was another strong day on Wall Street as investors become cautiously optimistic about trade talks between the U.S. and China. The Dow closed more than 250 points higher, with the S&P gaining .9%. pic.twitter.com/3QlnR2aYQN
January 8, 2019 Goodnight! GW
Facebook Twitter Google plus 9.10pm GMT 21:10
Uh oh. The World Bank has just cut its growth forecasts.
In a new report, the World Bank has warned that dark clouds are gathering menacingly over the global economy.
It now expects global growth to slow to 2.9% this year, down from 3% in 2018, dipping again to 2.8% in 2020.
Significantly, it expects that both the US and China will slow over the next couple of years, as Beijing’s structural reforms kick in and Donald Trump’s tax cuts fade.
World Bank (@WorldBank) NEWS: Our latest Global Economic Prospects report says that in 2019, the world will see solid but slower growth due to softening of #globaltrade and manufacturing: https://t.co/KRjSkXqjXE #WBGEP2019 pic.twitter.com/N4BstrhLcC
January 8, 2019 Facebook Twitter Google plus 8.49pm GMT 20:49
Bloomberg has the lowdown on what’s moving on Wall Street today, with the main indices up around 1% in late trading.
All major indexes were higher, led by the small-cap Russell 2000 Index for a second day.
The S&P 500 Index gained, as transportation companies, telephone stocks and technology hardware makers pushed the benchmark higher.
Financials were only major industry group to decline. Boeing Co. helped lift large-caps with a strong fourth-quarter delivery report. PG&E Corp. was the biggest decliner, dropping 10 % amid reports that the California utility giant is considering bankruptcy.
Facebook Twitter Google plus 7.46pm GMT 19:46
High rise buildings in Potsdamer Platz, Berlin Photograph: Iain Masterton / Alamy/Alamy
Brexit uncertainly is clouding over the UK economy, but today’s data suggests Germany , not Britain, is more likely to slide into recession in the months ahead.
Our economics editor, Larry Elliott, says:
News that German industrial production fell by 1.9% in November came as a nasty shock. The stock response to the contraction in the third quarter was that it was due to the tightening up of European vehicle emission standards which led to one-off problems for its carmakers that would quickly be overcome.
While the bounce-back has been delayed rather than cancelled, Europe’s biggest economy faces significant headwinds. The growth spurt generated by monetary stimulus from the European Central Bank has run its course.
It’s not Brexit Britain most likely to suffer recession. It’s Germany Read more Facebook Twitter Google plus 6.35pm GMT 18:35
Traders working on the floor of the New York Stock Exchange (NYSE) today Photograph: Brendan McDermid/Reuters
Hopes of a trade war breakthrough are keeping shares higher in New York.
The Dow is currently up 0.8%, or 191 points, at 23,723. The broader S&P 500 index of US companies is 0.6% higher, on track for its third daily rise in a row.
Investors are speculating that markets could be heading higher, following the heavy losses at the back end of 2018.
Some are making comparisons with 2016, when early losses were followed by strong gains.
Jeffrey Schulze, investment strategist at ClearBridge Investments, has pointed out several similarities ( via Marketwatch ):
If you think what was plaguing the market at that time, you had a strong dollar that was choking off not only U.S. earnings but also the global economy. Oil was plunging…You had a Fed that was ending quantitative easing and they were projected to do four rate hikes in 2016. and then lastly you had very weak Chinese economic data.”
Facebook Twitter Google plus 6.18pm GMT 18:18
In other news, Brexit may mean millions of pound of lost revenue for telecoms giant BT.
Our Brussels bureau chief Dan Boffey explains:
BT is facing a post-Brexit battle to maintain access to a number of multimillion-pound EU contracts and avoid the premature termination of a £24m deal with the European parliament.
The BT Group has won a slew of contracts with the EU’s institutions in the last decade worth more than £150m.
But the potential for the EU to scrap “sensitive” contracts such as that struck with BT was raised during a recent meeting of EU officials and senior MEPs discussing Brexit preparations, according to leaked minutes obtained by the Guardian. The risk to the EU in honouring contracts and allowing the BT Group to provide telecommunications services, when the UK is no longer an EU member state, was said to require examination.
More here:
BT could lose millions of pounds of EU contracts after Brexit Read more Facebook Twitter Google plus 5.22pm GMT 17:22
Trade Optimism Trumped Weak European Economic Sentiment today, says Fiona Cincotta of City Index.
She explains
Global markets bounced higher on Tuesday as optimism grows over a US – Sino trade deal. A strong Asian session spilled into Europe , although markets pared gains as Wall Street opened owing to increasing tech concerns.
US and China extending trade talks for another day has been interpreted as a positive sign by the markets. Whilst no reason was given for the extension, Trump’s tweet that the talks “were going very well” was sufficient to lift sentiment boosting appetite for riskier assets such as stocks, whilst safe haven gold declined.
With US and China working to resolve their issues, the Fed promising to remain flexible and the US economy firing on all cylinders it is easy to see why sentiment is on the up. Obviously, this is not the end of US – China trade tensions by a long shot, ad there will almost certainly be further bumps and twists along the way but for now the markets are happy with the slow steady progress which it perceives has been achieved.
Even the Dax rallied, gaining 0.5% despite this morning’s dismal factory data, she adds.
This comes hot on heels of downbeat German factory orders, which dropped by -4.3% in November. These are the latest signs that the eurozone economy is slowing, as trade tensions sap momentum for the powerhouse of Europe.
Facebook Twitter Google plus 4.54pm GMT 16:54
Britain’s FTSE 100 index of top shares has closed 50 points higher at 6861 points, a gain of 0.75% today.
Optimism that Beijing and Washington are making progress in their trade negotiations lured investors into buying shares, following the recent sell off.
Many traders are still anxious, though, as this chart shows:
DailyFX Team Live (@DailyFXTeam) FTSE 100: The percentage of traders net-long is now its lowest since Sep 19 when FTSE 100 traded near 7343.4. https://t.co/8uGQ7iiKO5 pic.twitter.com/mR1klOf9uC
January 8, 2019 Facebook Twitter Google plus 3.08pm GMT 15:08
Top US banker Jamie Dimon has added to the optimism on Wall Street, by suggesting that investors got carried away with recession fears in recent weeks.
CNBC has the details:
Markets from equities to high-yield bonds that have been flashing warning signs are probably an overreaction to slowing growth rather than a precursor of imminent recession, according to J.P. Morgan Chase CEO Jamie Dimon .
“I think markets are overreacting to short-term sentiment around a whole bunch of complex issues,” Dimon said in a Fox Business interview released Tuesday. He quickly added that the market moves were a “rational response” to slower growth and the U.S.-China trade dispute.
CNBC (@CNBC) Jamie Dimon says that recent market moves don’t mean a recession is on the immediate horizon. https://t.co/1RTaevT5Yc
January 8, 2019 Facebook Twitter Google plus 2.56pm GMT 14:56
Reuters’ Jamie McGeever tweets:
Jamie McGeever (@ReutersJamie) The S&P 500 is course for a positive first 5 days trading of the year. If the “5-Day Rule” holds, there’s an 80% chance it will close the 2019 up. Is this a useful guide, or mumbo jumbo?
COLUMN-Back to school, keep an eye on the “5-Day Rule” https://t.co/GDOUHmds5u pic.twitter.com/oMZrqRXm98
January 8, 2019 Facebook Twitter Google plus 2.53pm GMT 14:53
US stocks are now trading at a three-week high, Bloomberg flags up.
Facebook Twitter Google plus 2.50pm GMT 14:50
Wall Street jumps Boom! The New York stock market has opened higher, as traders try to claw back recent losses.
The Dow Jones industrial average has jumped by nearly 300 points, or over 1%, at the open. Hopes of a trade war breakthrough are lifting technology stocks.
CNBC Now (@CNBCnow) Dow jumps more than 270 points in early trading amid renewed trade optimism; Amazon rallies 2.5% https://t.co/VMRV7lFxZw pic.twitter.com/FOvFLms9Kj
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