European markets boosted by stronger than expected data from China and US after a week of tensions centred on North Korea
- Pound slips on uncertainty over Brexit talks
- Carrefour shares plunge on profit warning
- Eurozone inflation picks up; unemployment steadies
- Bank of England policymaker urges interest rate rise
- Gambling firm 888 fined record £7.8m for failing to protect customers
German data this morning showed that the number of people out of work in Europe’s largest economy fell by 5,000 in August to 2.53m.
It disappointed expectations, with economists forecasting a bigger fall of 6,000.
The slowdown in the pace of falling unemployment is likely linked to more and more refugees starting to search for a job, as they exit training courses (e.g. language courses). This trend is likely to continue over the coming quarters, which could constrain a further improvement in the number of unemployed.
Over in Greece, tourism is helping to boost economic sentiment according to the eurozone’s statistics agency, Eurostat. It comes as the country prepares to further ease capital controls. Helena Smith reports from Athens:
French supermarket group Carrefour has suffered a heavy share sell-off this morning after a profit warning from the retailer spooked investors.
Shares are currently down nearly 15%, putting the company on track for its biggest daily fall in 20 years.
Our 2017 results will be impacted by our first-half performance and an operating environment that will remain difficult in the second half in some countries.
It’s been a tough time for the sector, with the more macro theme that Amazon is slowly eating everyone’s lunch, though that’s not the case in Europe to the same extent as the US.
Another problem is that the retail sector is relatively highly priced, so there’s not really much room for disappointment.
Peter Vanden Houte, chief economist for the eurozone at ING, said higher-than-expected inflation in the region would give ammunition to those members of the European Central Bank’s governing council who favour tighter policy.
He is not convinced, however:
The hawks within the governing council will argue that deflationary pressures have now clearly disappeared. But given the risk that an overshoot of the euro exchange rate could push inflation back below 1.5%, caution remains warranted in removing monetary policy accommodation.
We believe that the ECB will announce a “dovish tapering” in October, giving the markets the impression that quantitative easing could be lengthened into the second half of next year, if need be. At the same time we think that a deposit rate hike is not to be expected before the end of 2018.
Unemployment in the single currency bloc was unchanged in July at 9.1% – the lowest since February 2009. It compared with a jobless rate of 7.7% in the wider EU.
The number of unemployed people in the eurozone rose by 73,000 in July, to 14.86m, according to the Eurostat figures.
Eurozone inflation rose to 1.5% in August, from 1.3% in July, according to a “flash estimate” from Eurostat.
It was higher than the 1.4% rate forecast by economists, and the main driver of the rise was energy, with prices up 4% year-on-year.
The pound has slipped below $1.29, and is currently down 0.2% at $1.2896.
Thu Lan Nguyen, a currency strategist at Commerzbank, says concerns about the way Brexit talks are going are weighing on the pound:
Brexit uncertainty continues to weigh on sterling, and if there is a protracted spell of weakness then policymakers may come out to support the currency as it pushes up headline inflation.
The top FTSE 100 risers this morning are dominated by mining companies, which tend to benefit from data that signals strong demand from China.
All major European markets are up this morning, boosted by stronger-than-expected manufacturing growth in China, positive US data, and easing tension over North Korea.
Here are the latest scores:
Here is our full story on the speech by Michael Saunders, Bank of England policymaker, in Cardiff:
Michael Saunders’ latest call for a rise in rates has failed to lift the pound this morning.
Sterling is down 0.2% against the dollar but is still holding on above $1.29 at $1.2902.
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, has stepped up his argument that the UK needs an immediate rise in interest rates.
Our foot no longer needs to be quite so firmly on the accelerator in my view. A modest rise in rates would help ensure a sustainable return of inflation to target over time.
There are considerable advantages to acting early enough to allow a gradual rise in interest rates. It is fully 10 years since the MPC last tightened monetary policy.
Many borrowers have never faced a rate hike. It would be preferable to have the space to move gradually, observing the effects as we go. If we get behind the curve, we lose that space.
In response to the Gambling Commission’s fine, 888 said:
It was never 888’s intention to benefit financially from this technical failure and we have completed a detailed process to identify all affected customers.
The group is refunding customers who were able to continue playing when they should have been excluded across 888’s platforms.
The Gambling Commission said 888’s record £7.8m fine for failing to protect thousands of vulnerable customers will be divided in the following way:
Safeguarding consumers is not optional. This penalty package of just under £8m reflects the seriousness of 888’s failings to protect vulnerable customers.
The 888 sanction package will ensure those affected don’t lose out, that the operator pays the price for its failings via a sum that will go to tackling gambling-related harm, and that independent assurance will be given to see that lessons are learnt.”
888, one of Britain’s biggest online gambling firms, has been fined a record £7.8m by the regulator for failing to protect thousands of vulnerable customers.
Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business.
Growth in China’s manufacturing sector accelerated unexpectedly in August, reassuring global investors that the world’s second largest economy is still growing at a decent pace.