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FTSE 100 hits new record as pound falls - live FTSE 100 hits new record as pound falls - live
(35 minutes later)
2.15pm GMT
14:15
Greek transport workers strike as creditors demand cuts
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:
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.
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.
1.59pm GMT
13:59
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
1.35pm GMT1.35pm GMT
13:3513:35
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 GMT1.32pm GMT
13:3213:32
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.
1.26pm GMT1.26pm GMT
13:2613:26
The Dow Jones Industrial Average is also expected to open higher and could even breach the 21,000 barrier.The Dow Jones Industrial Average is also expected to open higher and could even breach the 21,000 barrier.
1.24pm GMT1.24pm GMT
13:2413:24
FTSE 100 hits new peakFTSE 100 hits new peak
The FTSE 100 has hit a record intra-day high, up 1.24% at 7354.24.The FTSE 100 has hit a record intra-day high, up 1.24% at 7354.24.
The previous intra-day record was 7354.14 on 16 January this year, and the previous record close was 7337 on 13 January.The previous intra-day record was 7354.14 on 16 January this year, and the previous record close was 7337 on 13 January.
Global markets generally have been boosted by the calmer tone of Donald Trump’s address to Congress, even though there was little new detail on his plans for infrastructure spending and tax reforms.Global markets generally have been boosted by the calmer tone of Donald Trump’s address to Congress, even though there was little new detail on his plans for infrastructure spending and tax reforms.
But the FTSE 100 in particular has been helped by weakness in sterling, which lifts the profits of its overseas earners.But the FTSE 100 in particular has been helped by weakness in sterling, which lifts the profits of its overseas earners.
The pound has been hit by weaker than expected UK manufacturing data earlier, which makes any interest rate rise from the Bank of England unlikely in the near future, as well as an increase in the dollar as the chances of the Federal Reserve increasing US borrowing costs grow stronger.The pound has been hit by weaker than expected UK manufacturing data earlier, which makes any interest rate rise from the Bank of England unlikely in the near future, as well as an increase in the dollar as the chances of the Federal Reserve increasing US borrowing costs grow stronger.
1.16pm GMT1.16pm GMT
13:1613:16
German press cartoonists are already busy drawing wheelbarrows of banknotes, but remember that Q1 2017 may be "peak" inflation o/a yoy oil. https://t.co/mt3JRo4oFJGerman press cartoonists are already busy drawing wheelbarrows of banknotes, but remember that Q1 2017 may be "peak" inflation o/a yoy oil. https://t.co/mt3JRo4oFJ
1.08pm GMT1.08pm GMT
13:0813:08
#German HICP #inflation up to 2.2% in Feb (1.9% in Jan) as higher y/y rises in energy (up to 7.2% from 5.9%) & food (up to 4.4% from 3.2%)#German HICP #inflation up to 2.2% in Feb (1.9% in Jan) as higher y/y rises in energy (up to 7.2% from 5.9%) & food (up to 4.4% from 3.2%)
Rise in #German HICP #inflation to 2.2% in Feb (high since Aug 2012 & above ECB target rate) will highly likely fuel tensions with #ECB (1Rise in #German HICP #inflation to 2.2% in Feb (high since Aug 2012 & above ECB target rate) will highly likely fuel tensions with #ECB (1
UpdatedUpdated
at 1.10pm GMTat 1.10pm GMT
1.03pm GMT1.03pm GMT
13:0313:03
German inflation hits a four and a half year highGerman inflation hits a four and a half year high
German inflation rose further in February, up 2.2% on the year after a 1.9% rise in January.German inflation rose further in February, up 2.2% on the year after a 1.9% rise in January.
This is the highest annual inflation rate since August 2012 and puts the country ahead of the European Central Bank’s target of just under 2%. Higher energy and food costs were the main reason for the rises.This is the highest annual inflation rate since August 2012 and puts the country ahead of the European Central Bank’s target of just under 2%. Higher energy and food costs were the main reason for the rises.
But with elections due, the news is likely to see renewed calls in the country for the ECB to call an end to its loose monetary policy.But with elections due, the news is likely to see renewed calls in the country for the ECB to call an end to its loose monetary policy.
12.35pm GMT12.35pm GMT
12:3512:35
Back with the FTSE 100 and although it has not yet reached its intraday record of 7354, it could hit a new closing high if it ends around its current levels.Back with the FTSE 100 and although it has not yet reached its intraday record of 7354, it could hit a new closing high if it ends around its current levels.
It is now up 1.13% at 7345, which is above the record close of 7337 achieved on 13 January.It is now up 1.13% at 7345, which is above the record close of 7337 achieved on 13 January.
UpdatedUpdated
at 12.39pm GMTat 12.39pm GMT
11.51am GMT11.51am GMT
11:5111:51
With François Fillon, the conservative French presidential candidate, saying he will stay in the race despite now facing embezzlement charges (he denies all allegations), there has been some reaction:With François Fillon, the conservative French presidential candidate, saying he will stay in the race despite now facing embezzlement charges (he denies all allegations), there has been some reaction:
#France risk spread over #Germany rises as Francois Fillon stays in French presidential election race. pic.twitter.com/Iif1nGoflJ#France risk spread over #Germany rises as Francois Fillon stays in French presidential election race. pic.twitter.com/Iif1nGoflJ
UpdatedUpdated
at 12.55pm GMTat 12.55pm GMT
11.34am GMT11.34am GMT
11:3411:34
On the rising markets and falling pound, Connor Campbell, financial analyst at Spreadex, said:On the rising markets and falling pound, Connor Campbell, financial analyst at Spreadex, said:
A resurgent Trump rally gathered pace as Wednesday progressed, the European indices ignoring a mixed bag of manufacturing data.A resurgent Trump rally gathered pace as Wednesday progressed, the European indices ignoring a mixed bag of manufacturing data.
The FTSE barrelled towards a fresh all-time high this morning, rising more than 50 points to lurk just below 7350. It’s its best price in a month and a half, and one that paid no attention to the fact that the UK’s manufacturing PMI unexpectedly fell from 55.7 in January to 54.6 in February. That fact didn’t slip past the pound, however. Sterling has spent the last few session suffering in comparison to the Trump-swelled, rate hike-eyeing dollar, and today was no different, the currency shedding another 0.3% against the greenback to leave it firmly under $1.24 (something that no doubt helped out the FTSE).The FTSE barrelled towards a fresh all-time high this morning, rising more than 50 points to lurk just below 7350. It’s its best price in a month and a half, and one that paid no attention to the fact that the UK’s manufacturing PMI unexpectedly fell from 55.7 in January to 54.6 in February. That fact didn’t slip past the pound, however. Sterling has spent the last few session suffering in comparison to the Trump-swelled, rate hike-eyeing dollar, and today was no different, the currency shedding another 0.3% against the greenback to leave it firmly under $1.24 (something that no doubt helped out the FTSE).
Like their UK counterpart, the DAX and CAC also benefited from a weakened currency this Wednesday. With the euro down half a percent against the dollar, the German and French indices were given the green light to go big, both surging 1.3% as the day went on even despite a slight downward revision to the month’s region-wide manufacturing reading.Like their UK counterpart, the DAX and CAC also benefited from a weakened currency this Wednesday. With the euro down half a percent against the dollar, the German and French indices were given the green light to go big, both surging 1.3% as the day went on even despite a slight downward revision to the month’s region-wide manufacturing reading.
This optimism should continue into the afternoon, with the Dow Jones set to open just above 20900 for the first time in its history. The US index actually has a fair amount of data to deal with this Wednesday, including the Fed-favourite core PCE price index and the Markit and ISM manufacturing PIMs. This leaves the Dow in an interesting position – while Trump is currently the main driving force behind the market’s movements, as the month goes the potential Fed rate-hike in March is only going to gain more prominence, something that could put pressure on the index’s current highs.This optimism should continue into the afternoon, with the Dow Jones set to open just above 20900 for the first time in its history. The US index actually has a fair amount of data to deal with this Wednesday, including the Fed-favourite core PCE price index and the Markit and ISM manufacturing PIMs. This leaves the Dow in an interesting position – while Trump is currently the main driving force behind the market’s movements, as the month goes the potential Fed rate-hike in March is only going to gain more prominence, something that could put pressure on the index’s current highs.
11.29am GMT11.29am GMT
11:2911:29
Pound near six week low against the dollarPound near six week low against the dollar
Meanwhile sterling has fallen to a near-six week low against the dollar, falling as low as $1.2323 and boosting the FTSE 100’s overseas earners.Meanwhile sterling has fallen to a near-six week low against the dollar, falling as low as $1.2323 and boosting the FTSE 100’s overseas earners.
The currency has been reacting to the weaker than expected UK manufacturing figures - pushing the chances of a rate rise even further into the distance - as well as the strength of the dollar as the Fed does look likely to increase borrowing costs, perhaps as soon as this month.The currency has been reacting to the weaker than expected UK manufacturing figures - pushing the chances of a rate rise even further into the distance - as well as the strength of the dollar as the Fed does look likely to increase borrowing costs, perhaps as soon as this month.
There are also the concerns about the prospect of a Scottish referendum and the continuing uncertainty over Brexit.There are also the concerns about the prospect of a Scottish referendum and the continuing uncertainty over Brexit.
After an early rise against the euro, sterling is flat against the single currency at €1.1701.After an early rise against the euro, sterling is flat against the single currency at €1.1701.
UpdatedUpdated
at 12.28pm GMTat 12.28pm GMT
11.19am GMT11.19am GMT
11:1911:19
Trump address continues to lift markets, with FTSE heading towards new peakTrump address continues to lift markets, with FTSE heading towards new peak
Markets continue to be boosted by the calmer tone of Donald Trump’s address to Congress, along with a - generally - positive picture of the manufacturing sector in February.Markets continue to be boosted by the calmer tone of Donald Trump’s address to Congress, along with a - generally - positive picture of the manufacturing sector in February.
The FTSE 100 is up 1% at 7336, heading close towards its intra-day high of 7354 achieved on 16 January.The FTSE 100 is up 1% at 7336, heading close towards its intra-day high of 7354 achieved on 16 January.
Germany’s Dax is up 1.42% and France’s Cac 1.45%, despite the continuing concerns over the French presidential election.Germany’s Dax is up 1.42% and France’s Cac 1.45%, despite the continuing concerns over the French presidential election.
Meanwhile US futures are suggesting an 88 point opening for the Dow Jones Industrial Average, which dipped at the close on Tuesday after 12 days of rises.Meanwhile US futures are suggesting an 88 point opening for the Dow Jones Industrial Average, which dipped at the close on Tuesday after 12 days of rises.
Commodity shares were lifted by Trump’s repeating his plans for $1bn of infrastructure spending, with the Stoxx 600 basic resources index up 1.9%.Commodity shares were lifted by Trump’s repeating his plans for $1bn of infrastructure spending, with the Stoxx 600 basic resources index up 1.9%.
Building materials group CRH is the biggest riser in the FTSE 100 after a 10% rise in earnings. As the largest building materials business in North America, it is well placed to benefit from Trump’s spending proposals, although it said this was more likely to have an impact in the medium rather than short term.Building materials group CRH is the biggest riser in the FTSE 100 after a 10% rise in earnings. As the largest building materials business in North America, it is well placed to benefit from Trump’s spending proposals, although it said this was more likely to have an impact in the medium rather than short term.
UpdatedUpdated
at 11.23am GMTat 11.23am GMT