'UK firms more pessimistic about Brexit, Bank of England says - as it happened' diff viewer (2/3)

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UK firms more pessimistic about Brexit, Bank of England says - as it happened	UK firms more pessimistic about Brexit, Bank of England says - as it happened
2018-06-28 16:40:11 UTC	2018-12-29 09:20:23 UTC (6 months later)
Despite Wall Street making a partial recovery by the time European markets closed, this did little to help them.	Despite Wall Street making a partial recovery by the time European markets closed, this did little to help them.
Trade war tensions continued to dominate sentiment, especially in Germany which is heavily dependent on exports. In the UK a weakening pound on doubts about interest rate rises helped the FTSE 100 outperform its peers, given the index is full of overseas earners which benefit from lower sterling. The final scores showed:	Trade war tensions continued to dominate sentiment, especially in Germany which is heavily dependent on exports. In the UK a weakening pound on doubts about interest rate rises helped the FTSE 100 outperform its peers, given the index is full of overseas earners which benefit from lower sterling. The final scores showed:
The FTSE 100 finished virtually unchanged, down just 6.06 points or 0.08% at 7615.63	The FTSE 100 finished virtually unchanged, down just 6.06 points or 0.08% at 7615.63
Germany’s Dax dropped 1.39% to 12,177.23	Germany’s Dax dropped 1.39% to 12,177.23
France’s Cac closed 0.97% lower at 5275.64	France’s Cac closed 0.97% lower at 5275.64
Italy’s FTSE MIB fell 0.58% to 21,432.34	Italy’s FTSE MIB fell 0.58% to 21,432.34
Spain’s Ibex ended down 0.72% at 9589.0	Spain’s Ibex ended down 0.72% at 9589.0
On Wall Street, the Dow Jones Industrial Average is currently down 11 points or 0.05%.	On Wall Street, the Dow Jones Industrial Average is currently down 11 points or 0.05%.
On that note, it’s time to close for the day. Thanks for all your comments and we’ll be back tomorrow.	On that note, it’s time to close for the day. Thanks for all your comments and we’ll be back tomorrow.
Despite other distractions, the current trade tensions between the US and China - and elsewhere for that matter - continue to dominate market sentiment. David Madden, market analyst at CMC Markets UK, said:	Despite other distractions, the current trade tensions between the US and China - and elsewhere for that matter - continue to dominate market sentiment. David Madden, market analyst at CMC Markets UK, said:
Stocks have sold off as trade woes continue. Investors are cashing in on yesterday’s gains, as trade tensions remain alive and well. Investors will want to see progress being made regarding trade negotiations before they hold on to stocks for several days at a time. As a result, markets are finding it difficult to hold on to a rally, which underlines the weak sentiment.	Stocks have sold off as trade woes continue. Investors are cashing in on yesterday’s gains, as trade tensions remain alive and well. Investors will want to see progress being made regarding trade negotiations before they hold on to stocks for several days at a time. As a result, markets are finding it difficult to hold on to a rally, which underlines the weak sentiment.
Wall Street has regained much of its early losses but European markets continue to struggle. Joshua Mahony, market analyst at IG, said:	Wall Street has regained much of its early losses but European markets continue to struggle. Joshua Mahony, market analyst at IG, said:
European markets have led the way lower, with the threat of a breakdown in trade disproportionately hurting stocks in countries which enjoy a sizeable trade surplus with the US. The continued deterioration in the Chinese yuan highlights the influence the Chinese government has upon their exchange rate, with the 5% rise in [dollar/yuan] over the past two months shifting the trade of terms before any tariffs even start to kick in.	European markets have led the way lower, with the threat of a breakdown in trade disproportionately hurting stocks in countries which enjoy a sizeable trade surplus with the US. The continued deterioration in the Chinese yuan highlights the influence the Chinese government has upon their exchange rate, with the 5% rise in [dollar/yuan] over the past two months shifting the trade of terms before any tariffs even start to kick in.
Brexit concerns continue to dominate local sentiment, with sliding consumer and business confidence dragging the pound to a seven-month low against the dollar. However, much of the story is related to the growing prominence of the US dollar, with the greenback likely to continue gaining ground as the trade war continues. With the likes of the EU and China holding huge surpluses in the trade of goods with the US, Trump knows they have more to gain than to lose. The sharp deterioration in German stocks this week is a clear nod to the reliance the country has upon physical exports. Today’s downward revision for first quarter GDP out of the US provided a temporary dent in the dollar resurgence story.	Brexit concerns continue to dominate local sentiment, with sliding consumer and business confidence dragging the pound to a seven-month low against the dollar. However, much of the story is related to the growing prominence of the US dollar, with the greenback likely to continue gaining ground as the trade war continues. With the likes of the EU and China holding huge surpluses in the trade of goods with the US, Trump knows they have more to gain than to lose. The sharp deterioration in German stocks this week is a clear nod to the reliance the country has upon physical exports. Today’s downward revision for first quarter GDP out of the US provided a temporary dent in the dollar resurgence story.
However, while GDP came in at 2%, rather than the 2.2% previously expected, the pathway in US PMI surveys points towards continued upside for US growth despite this short term blip.	However, while GDP came in at 2%, rather than the 2.2% previously expected, the pathway in US PMI surveys points towards continued upside for US growth despite this short term blip.
The continuing trade tensions between the US and China are on investors minds again, pushing US markets lower in early trading. News that Amazon is buying US online pharmacy group PillPack has hit shares in rival drugs companies, adding to the pressure on markets.	The continuing trade tensions between the US and China are on investors minds again, pushing US markets lower in early trading. News that Amazon is buying US online pharmacy group PillPack has hit shares in rival drugs companies, adding to the pressure on markets.
The Dow Jones Industrial Average is currently down 85 points or 0.35% while the S&P 500 opened down 0.03% and the Nasdaq Composite dipped by 0.09%.	The Dow Jones Industrial Average is currently down 85 points or 0.35% while the S&P 500 opened down 0.03% and the Nasdaq Composite dipped by 0.09%.
Haldane also appeared to take issue with the Labour party’s proposal to give the Bank of England a mandate to boost productivity. In his speech Haldane said:	Haldane also appeared to take issue with the Labour party’s proposal to give the Bank of England a mandate to boost productivity. In his speech Haldane said:
It is ... well-known, including from historical experience, that productivity depends importantly on a number of structural features of the economy, including levels of education and skills in the workforce, the quality and quantity of infrastructure and innovation and the scale of financing to companies. Price and financial stability are necessary conditions for rising productivity. But they are far from being sufficient ones.	It is ... well-known, including from historical experience, that productivity depends importantly on a number of structural features of the economy, including levels of education and skills in the workforce, the quality and quantity of infrastructure and innovation and the scale of financing to companies. Price and financial stability are necessary conditions for rising productivity. But they are far from being sufficient ones.
When it comes to those structural features of the economy, central banks do not have the tools to affect lasting change. Central bank tools are cyclical, rather than structural, because their impact on the economy is temporary, not permanent. We do not build schools, colleges, houses, roads, railways or banks. Nor do we finance them. Those tools, rightly, are in the hands either of governments or private companies. So too is the financing of them.	When it comes to those structural features of the economy, central banks do not have the tools to affect lasting change. Central bank tools are cyclical, rather than structural, because their impact on the economy is temporary, not permanent. We do not build schools, colleges, houses, roads, railways or banks. Nor do we finance them. Those tools, rightly, are in the hands either of governments or private companies. So too is the financing of them.
Here’s the chief economist of Pantheon Macroeconomics on Haldane’s comments:	Here’s the chief economist of Pantheon Macroeconomics on Haldane’s comments:
Haldane speech: "data on the consumer since the May MPC meeting has, virtually without exception, bounced back strongly."Hmm...BoE agents report, also released today: pic.twitter.com/9Bvqts3RW6	Haldane speech: "data on the consumer since the May MPC meeting has, virtually without exception, bounced back strongly."Hmm...BoE agents report, also released today: pic.twitter.com/9Bvqts3RW6
Bank of England chief economist Andy Haldane caught many observers off guard last week when he voted for an interest rate rise for the first time.	Bank of England chief economist Andy Haldane caught many observers off guard last week when he voted for an interest rate rise for the first time.
But in a speech in London on the UK’s productivity problem, he said the decision should not have been seen as “surprising or radical.” He said:	But in a speech in London on the UK’s productivity problem, he said the decision should not have been seen as “surprising or radical.” He said:
Voting for a 25 basis point rate rise, a full decade after monetary policy was first placed on an emergency setting, is hardly either surprising or radical. A Bank Rate rise of 25 basis points would still leave monetary conditions in the UK extraordinarily accommodative by any historical metric. And the aim in doing so is to lower the risk of needing to tighten policy less gradually in future and cause a sharper adjustment in the economy.	Voting for a 25 basis point rate rise, a full decade after monetary policy was first placed on an emergency setting, is hardly either surprising or radical. A Bank Rate rise of 25 basis points would still leave monetary conditions in the UK extraordinarily accommodative by any historical metric. And the aim in doing so is to lower the risk of needing to tighten policy less gradually in future and cause a sharper adjustment in the economy.
Truth be told, I would have voted to raise Bank Rate at the MPC’s May meeting had data on the economy held firm. What we saw ahead of that meeting was a string of weak data suggesting consumer spending might be faltering. I believed there was option value in waiting to see if these data signalled the start of a lasting retrenchment by households, or were instead a temporary snow or statistical blip. With only a modest policy tightening needed over a number of years to return inflation to target, there was “no rush”.	Truth be told, I would have voted to raise Bank Rate at the MPC’s May meeting had data on the economy held firm. What we saw ahead of that meeting was a string of weak data suggesting consumer spending might be faltering. I believed there was option value in waiting to see if these data signalled the start of a lasting retrenchment by households, or were instead a temporary snow or statistical blip. With only a modest policy tightening needed over a number of years to return inflation to target, there was “no rush”.
In the event, data on the consumer since the May MPC meeting has, virtually without exception, bounced back strongly. That includes measures of retail spending, consumer confidence and consumer credit. The underlying picture now appears to be one of gently rising household spending. This is being supported by highly accommodative credit conditions and now-positive growth in inflation-adjusted wages.	In the event, data on the consumer since the May MPC meeting has, virtually without exception, bounced back strongly. That includes measures of retail spending, consumer confidence and consumer credit. The underlying picture now appears to be one of gently rising household spending. This is being supported by highly accommodative credit conditions and now-positive growth in inflation-adjusted wages.
And he added (saying he did not want to tempt fate even as he was doing so):	And he added (saying he did not want to tempt fate even as he was doing so):
And then, of course, there is the World Cup. Without wishing to tempt fate, England’s recent sporting success on the football field (and cricket pitch) has probably added to that feel-good factor among England-supporting consumers. The “smile count” on my recent visits to Wales and Scotland was also as high as I can remember, although I suspect that may have been the weather rather than the football.	And then, of course, there is the World Cup. Without wishing to tempt fate, England’s recent sporting success on the football field (and cricket pitch) has probably added to that feel-good factor among England-supporting consumers. The “smile count” on my recent visits to Wales and Scotland was also as high as I can remember, although I suspect that may have been the weather rather than the football.
More from Reuters:	More from Reuters:
Haldane said there would always be some data that disappoints.	Haldane said there would always be some data that disappoints.
“But waiting for something to turn up is not a prudent strategy in life. And waiting for everything to turn up is certainly not a prudent strategy for monetary policy,” he said.	“But waiting for something to turn up is not a prudent strategy in life. And waiting for everything to turn up is certainly not a prudent strategy for monetary policy,” he said.
Most of Haldane’s speech focused on fixing Britain’s abysmal record of productivity growth over the last 10 years.	Most of Haldane’s speech focused on fixing Britain’s abysmal record of productivity growth over the last 10 years.
He said Britain’s institutions should focus more on how to “trickle-down” new technology to the swathes of the economy that have shown only weak growth in productivity.	He said Britain’s institutions should focus more on how to “trickle-down” new technology to the swathes of the economy that have shown only weak growth in productivity.
Stock markets continue to be volatile, with the worries about a potential trade war between the US and China continuing to dominate sentiment.	Stock markets continue to be volatile, with the worries about a potential trade war between the US and China continuing to dominate sentiment.
The FTSE 100 is down 0.35%, Germany’s Dax is down 1.44% and France’s Cac has fallen 0.83%. The UK market is outperforming peers due to further weakness in the pound. Connor Campbell, financial analyst at Spreadex, said:	The FTSE 100 is down 0.35%, Germany’s Dax is down 1.44% and France’s Cac has fallen 0.83%. The UK market is outperforming peers due to further weakness in the pound. Connor Campbell, financial analyst at Spreadex, said:
The FTSE avoided the losses seen over in the Eurozone, largely because of sterling’s ongoing crisis.	The FTSE avoided the losses seen over in the Eurozone, largely because of sterling’s ongoing crisis.
Concerns about a more pessimistic Brexit outlook from the country’s businesses, a lack of faith in Theresa May heading into Thursday’s EU summit, and disappointment at a dovish message from MPC member Jon Cunliffe left the pound in a sorry state. Against the dollar it was at a sub-$1.31, 7 month nadir after falling 0.3%, while against the euro it hit a 7 and a half week low of €1.1305 following a half a percent plunge.	Concerns about a more pessimistic Brexit outlook from the country’s businesses, a lack of faith in Theresa May heading into Thursday’s EU summit, and disappointment at a dovish message from MPC member Jon Cunliffe left the pound in a sorry state. Against the dollar it was at a sub-$1.31, 7 month nadir after falling 0.3%, while against the euro it hit a 7 and a half week low of €1.1305 following a half a percent plunge.