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| FTSE 100 hits new record as pound falls, while Dow reaches 21,000 - as it happened | |
| (35 minutes later) | |
| 3.06pm GMT | |
| 15:06 | |
| Global markets are continuing to benefit from a renewed Trump bounce following the President’s address to Congress, while the prospect of higher interest rates in the US is boosting bank shares. | |
| The Dow Jones Industrial Average is currently up 245 points or 1.18% at 21,057, while the FTSE 100 has jumped 1.55% to 7375 and is heading for a record close. | |
| In Germany the Dax is up 1.58% while France’s Cac has climbed 1.98%. | |
| Neil Wilson, senior market analyst at ETX Capital, said: | |
| Snimal spirits have taken over. As expected, the Dow Jones has soared through the 21,000 mark just over 3 weeks after breaking the 20,000 level for the first time. It’s the quickest time ever to 1,000-point milestone, beating the record set in 1999. But this looks a bit different to the dotcom boom and bust as we are dealing with a complete reversal in fund allocation in the form of a major shift away from bonds to equities. | |
| Today’s boost is all down to the president’s speech to Congress last night. Trump’s rallying call to reignite the American spirit has produced the desired effect on the markets, pushing stocks to fresh all-time highs. Indeed it’s because of Trump that we are here – the prospect of stronger growth, lower taxes, more spending and higher earnings is like a magic cocktail for equities. Of course details of tax reforms will be crucial – there is still the scope for disappointment as markets are pricing in a huge surge in corporate earnings. | |
| The dollar is also soaring – something Trump doesn’t really want as it harms US exporters more than any tariff – as expectations rise that the Federal Reserve will raise short-term interest rates at its March meeting. | |
| On that note, it’s time to close up for the day. Thanks for all your comments, and we’ll be back tomorrow. | |
| 3.02pm GMT | |
| 15:02 | |
| US manufacturing beats expectations - ISM | |
| Unlike the slightly disappointing Markit US manufacturing survey, the ISM report has come in better than expected. | |
| The ISM manufacturing activity index reached 57.7 in February, up from 56 in January and better than the 56.2 analysts had been forecasting. This is the highest level since August 2014, and adds to the growing expectation that a US interest rate rise could be imminent. | |
| 2.50pm GMT | |
| 14:50 | |
| US Markit Manufacturing PMI Comes in at 54.2 vs prev 54.3, with domestic demand offsetting subdued exports. pic.twitter.com/k8U9YBvzhc | |
| 2.48pm GMT | 2.48pm GMT |
| 14:48 | 14:48 |
| And the first manufacturing survey for February came in slightly lower than expected. | And the first manufacturing survey for February came in slightly lower than expected. |
| The Market final purchasing managers index was 54.2 compared to forecasts of a figure of 54.4 and an initial reading for the month of 54.3. It shows a slowdown from the 55 figure recorded in January. | |
| Updated | |
| at 2.51pm GMT | |
| 2.39pm GMT | 2.39pm GMT |
| 14:39 | 14:39 |
| 21 club. Dow tops 21,000 for first time. This hat is soooo late January. pic.twitter.com/v5KTAYwuTZ | 21 club. Dow tops 21,000 for first time. This hat is soooo late January. pic.twitter.com/v5KTAYwuTZ |
| 2.33pm GMT | 2.33pm GMT |
| 14:33 | 14:33 |
| Wall Street opens sharply higher with Dow above 21,000 | Wall Street opens sharply higher with Dow above 21,000 |
| As investors react favourably to Donald Trump’s address to Congress, US markets have followed the lead from their counterparts elsewhere and opened in a positive mood. | As investors react favourably to Donald Trump’s address to Congress, US markets have followed the lead from their counterparts elsewhere and opened in a positive mood. |
| The Dow Jones Industrial Average has jumped above 21,000 for the first time, adding 201 points or 0.95% to 21,013 while the S&P 500 rose 0.79% and the Nasdaq Composite 0.85% at the open. (This is the quickest time the Dow has taken to climbe 1000 points, having gone through 20,000 only in January) | |
| The prospect of a US interest rise this month seems to have increased following comments from members of the Federal Reserve, which has given a lift to the banking sector. | The prospect of a US interest rise this month seems to have increased following comments from members of the Federal Reserve, which has given a lift to the banking sector. |
| The market moves come ahead of the two manufacturing surveys due shortly, from Markit and then ISM. | The market moves come ahead of the two manufacturing surveys due shortly, from Markit and then ISM. |
| Updated | |
| at 2.57pm GMT | |
| 2.15pm GMT | 2.15pm GMT |
| 14:15 | 14:15 |
| Greek transport workers strike as creditors demand cuts | Greek transport workers strike as creditors demand cuts |
| Helena Smith | Helena Smith |
| Over in Greece a 24-hour strike by transport workers has unleashed traffic chaos in Athens and put further pressure on the leftist-led government as creditors step up demands for a new package of cuts worth 2% of GDP. Helena Smith reports: | Over in Greece a 24-hour strike by transport workers has unleashed traffic chaos in Athens and put further pressure on the leftist-led government as creditors step up demands for a new package of cuts worth 2% of GDP. Helena Smith reports: |
| As spring approaches, public sector workers are stepping up pressure on prime minister Alexis Tsipras’ government with increased industrial action. After seeing the Acropolis closed by protesting guards last week, Greeks woke up to a 24-hour hour strike by metro, tram and urban rail employees across the capital today. | As spring approaches, public sector workers are stepping up pressure on prime minister Alexis Tsipras’ government with increased industrial action. After seeing the Acropolis closed by protesting guards last week, Greeks woke up to a 24-hour hour strike by metro, tram and urban rail employees across the capital today. |
| Workers, who will stage a similar walkout on Friday, are up in arms over legislation allowing the cash-starved Athens transport organisation (OASA) to make commercial use of stations. Arguing that the law is the first step to privatization, they claim it will ultimately undermine the public character of the transit network and hurt consumers. | Workers, who will stage a similar walkout on Friday, are up in arms over legislation allowing the cash-starved Athens transport organisation (OASA) to make commercial use of stations. Arguing that the law is the first step to privatization, they claim it will ultimately undermine the public character of the transit network and hurt consumers. |
| Protests against further pension cuts have also been announced by doctors working in state-run hospitals with a nationwide 24-hour walk-out planned tomorrow. In a proclamation released at lunchtime, the Panhellenic Doctors Association called on medics in the public and private sector to participate in the mass display of opposition against reduced pensions and increased contributions. The decision to unify pension funds would, they said, only exacerbate the paring back of desperately needed resources for the health sector. At 11%t of GDP, the IMF argues that Greece spends more on pensions than almost any other state. | Protests against further pension cuts have also been announced by doctors working in state-run hospitals with a nationwide 24-hour walk-out planned tomorrow. In a proclamation released at lunchtime, the Panhellenic Doctors Association called on medics in the public and private sector to participate in the mass display of opposition against reduced pensions and increased contributions. The decision to unify pension funds would, they said, only exacerbate the paring back of desperately needed resources for the health sector. At 11%t of GDP, the IMF argues that Greece spends more on pensions than almost any other state. |
| The protests come as Greek officials spoke of a wealth of differences with creditors who this week resumed stalled bailout negotiations in Athens. Acknowledging that headway had yet to be made on the counter measures the government hopes to install to offset the impact of further tax and pension reforms, the Greek finance minister Euclid Tsakalotos told parliament on Tuesday that nothing was agreed until everything was agreed and that austerity was far from over. | The protests come as Greek officials spoke of a wealth of differences with creditors who this week resumed stalled bailout negotiations in Athens. Acknowledging that headway had yet to be made on the counter measures the government hopes to install to offset the impact of further tax and pension reforms, the Greek finance minister Euclid Tsakalotos told parliament on Tuesday that nothing was agreed until everything was agreed and that austerity was far from over. |
| 1.59pm GMT | 1.59pm GMT |
| 13:59 | 13:59 |
| Sterling is now down 0.7% at $1.2293: | Sterling is now down 0.7% at $1.2293: |
| Quite the nose dive in the pound GBPUSD - 170 points off yesterday's highs. Six week support coming in at 1.2250: pic.twitter.com/G6bU9RRp4J | Quite the nose dive in the pound GBPUSD - 170 points off yesterday's highs. Six week support coming in at 1.2250: pic.twitter.com/G6bU9RRp4J |
| 1.35pm GMT | 1.35pm GMT |
| 13:35 | 13:35 |
| In the markets, the FTSE 250 mid-cap has followed the lead of the FTSE 100 and also hit a new peak. | In the markets, the FTSE 250 mid-cap has followed the lead of the FTSE 100 and also hit a new peak. |
| The 250 has climbed nearly 0.8% to 18,915, beating the previous peak of 18,864. | The 250 has climbed nearly 0.8% to 18,915, beating the previous peak of 18,864. |
| 1.32pm GMT | 1.32pm GMT |
| 13:32 | 13:32 |
| Back with the German inflation figures, and economist Carsten Brzeski at ING Bank says the figures are food for critics of the European Central Bank: | Back with the German inflation figures, and economist Carsten Brzeski at ING Bank says the figures are food for critics of the European Central Bank: |
| Based on the results of six regional states, German headline came in at 2.2% year on year in February versus 1.9% YoY in January. Based on the harmonised European definition (HICP), and more relevant for ECB policy-making, headline inflation also came in at 2.2% year on year; the highest level since August 2012... | Based on the results of six regional states, German headline came in at 2.2% year on year in February versus 1.9% YoY in January. Based on the harmonised European definition (HICP), and more relevant for ECB policy-making, headline inflation also came in at 2.2% year on year; the highest level since August 2012... |
| With German headline inflation at/above the magical 2% level, new complaints against the ECB’s loose monetary policy and new media headlines are likely to emerge; though with little impact on next week’s ECB meeting. Obviously, increasing inflation – no matter what the drivers are – combined with low interest rates leads to even more negative real interest rates and hurts savers. Based on the central bank’s main policy rate and headline inflation, one has to go back to the 1970s to find similar negative levels of the real interest rate. At the same time, however, the common German reflex to criticize the ECB and call for an end of QE is, in our view, overblown. | With German headline inflation at/above the magical 2% level, new complaints against the ECB’s loose monetary policy and new media headlines are likely to emerge; though with little impact on next week’s ECB meeting. Obviously, increasing inflation – no matter what the drivers are – combined with low interest rates leads to even more negative real interest rates and hurts savers. Based on the central bank’s main policy rate and headline inflation, one has to go back to the 1970s to find similar negative levels of the real interest rate. At the same time, however, the common German reflex to criticize the ECB and call for an end of QE is, in our view, overblown. |
| First of all, there is very little the ECB can do about an increase in inflation, almost exclusively driven by energy and food prices. Developments of core inflation will determine future ECB action. | First of all, there is very little the ECB can do about an increase in inflation, almost exclusively driven by energy and food prices. Developments of core inflation will determine future ECB action. |
| Secondly, even in an economy operating at full employment and which is most advanced in the current cycle, underlying inflationary pressure remains low; illustrated by the drop in core inflation. | Secondly, even in an economy operating at full employment and which is most advanced in the current cycle, underlying inflationary pressure remains low; illustrated by the drop in core inflation. |
| Thirdly, even if German inflation was to exceed 2% sustainably, it is simply a mathematical prerequisite for the inflation in the entire Eurozone to also get close to 2%. Nothing the ECB should do about. | Thirdly, even if German inflation was to exceed 2% sustainably, it is simply a mathematical prerequisite for the inflation in the entire Eurozone to also get close to 2%. Nothing the ECB should do about. |
| Fourthly, the current increase in headline inflation in the Eurozone is broadly in line with the ECB’s own projections. As the ECB has often stressed: these projections are conditional on full implementation of QE until the end of 2017. | Fourthly, the current increase in headline inflation in the Eurozone is broadly in line with the ECB’s own projections. As the ECB has often stressed: these projections are conditional on full implementation of QE until the end of 2017. |
| Finally, the ECB conducts monetary policy for the entire Eurozone and not for the best student in class. | Finally, the ECB conducts monetary policy for the entire Eurozone and not for the best student in class. |
| The German push for early tapering will continue. However, contrary to the situation at the beginning of the year, it seems as if the debate at the ECB has been taken off front pages and media headlines to discussions behind closed doors. Recent statements of German central bankers seem to hint at a slightly changed strategy of the internal critics of the ECB’s current policy. The partly loud and outspoken criticism has given way to a more subtle tone. Last week, ECB board member Lautenschläger even started to praise increasing inflation, only to add that it would enable the ECB to reach its goals. | The German push for early tapering will continue. However, contrary to the situation at the beginning of the year, it seems as if the debate at the ECB has been taken off front pages and media headlines to discussions behind closed doors. Recent statements of German central bankers seem to hint at a slightly changed strategy of the internal critics of the ECB’s current policy. The partly loud and outspoken criticism has given way to a more subtle tone. Last week, ECB board member Lautenschläger even started to praise increasing inflation, only to add that it would enable the ECB to reach its goals. |
| On the eve of the first two important elections in the Eurozone, the ECB will in our view choose not to distort the market with tapering rumours. If and when the elections in the Netherlands and France manage to reduce political uncertainty, the ECB could already give first hints at 2018 tapering this summer. | On the eve of the first two important elections in the Eurozone, the ECB will in our view choose not to distort the market with tapering rumours. If and when the elections in the Netherlands and France manage to reduce political uncertainty, the ECB could already give first hints at 2018 tapering this summer. |
| Such a timing would help mitigate ECB bashing in the upcoming German election campaign. It seems that at least German central bankers are willing to keep their verbal powder dry until then. | Such a timing would help mitigate ECB bashing in the upcoming German election campaign. It seems that at least German central bankers are willing to keep their verbal powder dry until then. |