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You can find the current article at its original source at https://www.theguardian.com/business/live/2018/dec/21/stock-market-sell-off-continues-as-growth-fears-hit-confidence-business-live
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| Markets keep falling; UK current account deficit widens - business live | Markets keep falling; UK current account deficit widens - business live |
| (35 minutes later) | |
| New economic data just released has confirmed that the US economy grew pretty steadily in the third quarter of 2018. | |
| Q3 GDP growth has been revised down very slightly to an annualised rate of 3.4%, from 3.5%. | |
| That’s more rapid than the UK, whose quarterly growth of 0.6% equates to 2.4% on an annualised basis. It’s nearly three times as fast as France. | |
| U.S. GDP grew 3.4% in third quarter instead of 3.5% https://t.co/HzPI58gA2Q | |
| Lukman Otunuga, Research Analyst at FXTM, says risk-taking is off the menu this Christmas, as investors digest Donald Trump’s threat to shut down the US government: | Lukman Otunuga, Research Analyst at FXTM, says risk-taking is off the menu this Christmas, as investors digest Donald Trump’s threat to shut down the US government: |
| The pain felt across global equity markets intensified today as growing fears of a U.S. government shutdown crippled risk sentiment. | The pain felt across global equity markets intensified today as growing fears of a U.S. government shutdown crippled risk sentiment. |
| It has been a remarkably terrible trading week for financial markets amid concerns over rising U.S. interest rates, decelerating global growth, Brexit uncertainty and chaos in Washington. The absence of appetite for risk was clearly reflected in Asia this morning as stocks closed broadly lower. In Europe, shares are trading in a depressed fashion and this negative mood is likely to infect Wall Street this afternoon. With geopolitical risk factors weighing heavily on investor confidence, financial markets remain at threat of concluding 2018 on a risk-off tone. | It has been a remarkably terrible trading week for financial markets amid concerns over rising U.S. interest rates, decelerating global growth, Brexit uncertainty and chaos in Washington. The absence of appetite for risk was clearly reflected in Asia this morning as stocks closed broadly lower. In Europe, shares are trading in a depressed fashion and this negative mood is likely to infect Wall Street this afternoon. With geopolitical risk factors weighing heavily on investor confidence, financial markets remain at threat of concluding 2018 on a risk-off tone. |
| Two days after the Federal Reserve raised US interest rates, a growing band of investors reckon the Fed will be forced to CUT in 2020. | Two days after the Federal Reserve raised US interest rates, a growing band of investors reckon the Fed will be forced to CUT in 2020. |
| Market-based probability of #Fed cutting rates in 2020 gaining momentum pic.twitter.com/Qn6BdtVC8B | Market-based probability of #Fed cutting rates in 2020 gaining momentum pic.twitter.com/Qn6BdtVC8B |
| That suggests pessimism over the outlook for the American economy, amid chatter of a slowdown, or even a recession. | That suggests pessimism over the outlook for the American economy, amid chatter of a slowdown, or even a recession. |
| Wall Street is expected to suffer further losses when trading begins in a couple of hours. | Wall Street is expected to suffer further losses when trading begins in a couple of hours. |
| The S&P 500 is being called down 0.5% in the futures market, as investors worry that the US government could face a partial shutdown. | The S&P 500 is being called down 0.5% in the futures market, as investors worry that the US government could face a partial shutdown. |
| The US Senate is expected to reject a finance bill that includes $5.7bn funding for a wall on the Mexican border -- as long-demanded by Donald Trump. That’s because the measure needs a 60 votes to pass, and the Republicans only have 51 seats at present. | The US Senate is expected to reject a finance bill that includes $5.7bn funding for a wall on the Mexican border -- as long-demanded by Donald Trump. That’s because the measure needs a 60 votes to pass, and the Republicans only have 51 seats at present. |
| President Trump is awake and tweeting that he would refuse to sign the spending bill unless the Senate passes the bill (which was rapidly reworked yesterday) | President Trump is awake and tweeting that he would refuse to sign the spending bill unless the Senate passes the bill (which was rapidly reworked yesterday) |
| No matter what happens today in the Senate, Republican House Members should be very proud of themselves. They flew back to Washington from all parts of the World in order to vote for Border Security and the Wall. Not one Democrat voted yes, and we won big. I am very proud of you! | No matter what happens today in the Senate, Republican House Members should be very proud of themselves. They flew back to Washington from all parts of the World in order to vote for Border Security and the Wall. Not one Democrat voted yes, and we won big. I am very proud of you! |
| The Democrats, whose votes we need in the Senate, will probably vote against Border Security and the Wall even though they know it is DESPERATELY NEEDED. If the Dems vote no, there will be a shutdown that will last for a very long time. People don’t want Open Borders and Crime! | The Democrats, whose votes we need in the Senate, will probably vote against Border Security and the Wall even though they know it is DESPERATELY NEEDED. If the Dems vote no, there will be a shutdown that will last for a very long time. People don’t want Open Borders and Crime! |
| Shutdown today if Democrats do not vote for Border Security! | Shutdown today if Democrats do not vote for Border Security! |
| These tweets are from yesterday, but they largely sum up the mood in the markets today: | These tweets are from yesterday, but they largely sum up the mood in the markets today: |
| “The tone [this am] isn’t so much bullish or bearish but rather defeated and demoralized. The Fed on Wed was the SPX’s last hope for 2018 and with the decision disappointing there isn’t a single towel not now lying on the mat, bloodied and exhausted.” - JPM trading note | “The tone [this am] isn’t so much bullish or bearish but rather defeated and demoralized. The Fed on Wed was the SPX’s last hope for 2018 and with the decision disappointing there isn’t a single towel not now lying on the mat, bloodied and exhausted.” - JPM trading note |
| There it is. pic.twitter.com/tHaYzt0FcI | There it is. pic.twitter.com/tHaYzt0FcI |
| Back in the financial markets, shares are deeper in the red as the sell-off gathers pace. | Back in the financial markets, shares are deeper in the red as the sell-off gathers pace. |
| All the European indices are now down today, hitting new two-year lows. | All the European indices are now down today, hitting new two-year lows. |
| Mihir Kapadia CEO and Founder of Sun Global Investments, says gloom is everywhere as a grim week draws to a close. | Mihir Kapadia CEO and Founder of Sun Global Investments, says gloom is everywhere as a grim week draws to a close. |
| “As Christmas approaches, market sentiment remains very negative. Global stocks have had a terrible December (S&P 500 and Dow are down 10% and 12% in in the month) as issues such as the ongoing US-China trade dispute as well as the prospect of a US government shutdown have added to the pessimism. | “As Christmas approaches, market sentiment remains very negative. Global stocks have had a terrible December (S&P 500 and Dow are down 10% and 12% in in the month) as issues such as the ongoing US-China trade dispute as well as the prospect of a US government shutdown have added to the pessimism. |
| Following a slide on Wall Street in yesterday’s session, Asian markets have traded lower, with European stocks following suit on opening. | Following a slide on Wall Street in yesterday’s session, Asian markets have traded lower, with European stocks following suit on opening. |
| *EURO STOXX 50 EXTENDS LOSSES, SET TO ENTER BEAR MARKET | *EURO STOXX 50 EXTENDS LOSSES, SET TO ENTER BEAR MARKET |
| Economist Sam Tombs has spotted another warning sign in today’s data dump: | Economist Sam Tombs has spotted another warning sign in today’s data dump: |
| Remember those kind strangers who invested in the U.K. #DespiteBrexit? Well, they aren't any longer. Investment in the UK by non-residents fell in Q2 and Q3. We still need the finance (current account deficit = 5% of GDP), but we now have to sell overseas assets to pay for it pic.twitter.com/JTwJ0rVU0d | Remember those kind strangers who invested in the U.K. #DespiteBrexit? Well, they aren't any longer. Investment in the UK by non-residents fell in Q2 and Q3. We still need the finance (current account deficit = 5% of GDP), but we now have to sell overseas assets to pay for it pic.twitter.com/JTwJ0rVU0d |
| There’s been quite a deluge of UK data this morning. | There’s been quite a deluge of UK data this morning. |
| The latest national accounts (the growth figures) and public finances (borrowing) were both being released, plus breakdowns of business spending and consumer trends. | The latest national accounts (the growth figures) and public finances (borrowing) were both being released, plus breakdowns of business spending and consumer trends. |
| Our cup runneth over..... rather too messily for the FT’s Chris Giles: | Our cup runneth over..... rather too messily for the FT’s Chris Giles: |
| Having waded through all these releases from @ONS today, there has to be a better way of releasing this information - the number of clicks needed is absurd - sometimes it's vital to go to the PDF, others not - crazy- far too much information for one dayPlease think again | Having waded through all these releases from @ONS today, there has to be a better way of releasing this information - the number of clicks needed is absurd - sometimes it's vital to go to the PDF, others not - crazy- far too much information for one dayPlease think again |
| At the very least - ONS could have scheduled public finances on a different day to national accountsBoth are complicated releases | At the very least - ONS could have scheduled public finances on a different day to national accountsBoth are complicated releases |
| The split of quarterly national accounts from the sectoral accounts is unhelpful. A balanced set of GDP figures on one day in one release is what users needBusiness investment details, flow of funds, balance of payments can be done on different days. That would be helpful | The split of quarterly national accounts from the sectoral accounts is unhelpful. A balanced set of GDP figures on one day in one release is what users needBusiness investment details, flow of funds, balance of payments can be done on different days. That would be helpful |
| I have made these points before to @ONS and was told it was useful feedback and they would think again. (That was September 2017)But it is becoming clear that "think again" meant "la la la, we're not listening"Sometimes you wonder who ONS think they are trying to serve | I have made these points before to @ONS and was told it was useful feedback and they would think again. (That was September 2017)But it is becoming clear that "think again" meant "la la la, we're not listening"Sometimes you wonder who ONS think they are trying to serve |
| Still, here’s what we’ve learned: | Still, here’s what we’ve learned: |
| Real UK gross domestic product (GDP) is estimated to have increased by an unrevised 0.6% in Quarter 3 (July to Sept) 2018, while real GDP growth in 2017 has been revised up from 1.7% to 1.8%. | Real UK gross domestic product (GDP) is estimated to have increased by an unrevised 0.6% in Quarter 3 (July to Sept) 2018, while real GDP growth in 2017 has been revised up from 1.7% to 1.8%. |
| Households, corporations and government all continue to be net borrowers in Quarter 3 2018, borrowing or running down their savings to finance their spending and investment, financed by the rest of the world being a net lender to the UK. | Households, corporations and government all continue to be net borrowers in Quarter 3 2018, borrowing or running down their savings to finance their spending and investment, financed by the rest of the world being a net lender to the UK. |
| The current account deficit widened to 4.9% in the latest quarter, financed primarily by a net inflow of portfolio investment, mainly reflecting equity investment, while there has been a divestment of the net acquisition of financial assets and the net incurrence of financial liabilities in each of the last two quarters. | The current account deficit widened to 4.9% in the latest quarter, financed primarily by a net inflow of portfolio investment, mainly reflecting equity investment, while there has been a divestment of the net acquisition of financial assets and the net incurrence of financial liabilities in each of the last two quarters. |
| Better news: Britain’s budget deficit (the gap between government spending and income) has narrowed. | Better news: Britain’s budget deficit (the gap between government spending and income) has narrowed. |
| The UK borrowed £7.2bn to balance the books last month, £900m less than in November 2017. That’s the smallest deficit for any November since 2004. | The UK borrowed £7.2bn to balance the books last month, £900m less than in November 2017. That’s the smallest deficit for any November since 2004. |
| This means that the UK has borrowed £32.8bn so far this year, £13.6bn less than in the same period in 2017, and the lowest year-to-date for 16 years. | This means that the UK has borrowed £32.8bn so far this year, £13.6bn less than in the same period in 2017, and the lowest year-to-date for 16 years. |
| It’s a brighter picture than the current account deficit..... | It’s a brighter picture than the current account deficit..... |
| Festive cheer for #Chancellor as November budget deficit (measured in terms of Public Sector Net Borrowing excluding Banks) narrowed to £7.2bn from £8.1bn a year earlier; lowest November shortfall for 14 years. Also helping #Hammond October’s deficit was revised down markedly (1 | Festive cheer for #Chancellor as November budget deficit (measured in terms of Public Sector Net Borrowing excluding Banks) narrowed to £7.2bn from £8.1bn a year earlier; lowest November shortfall for 14 years. Also helping #Hammond October’s deficit was revised down markedly (1 |
| Howard Archer of EY Item Club is concerned by today’s data: | Howard Archer of EY Item Club is concerned by today’s data: |
| Disappointing & potentially worrying news saw #UK #current #account deficit widen markedly to 2-year high of £26.5bn (4.9% of GDP) in Q3 from £20.0bn (3.8% of GDP) in Q2 & £17.8 bn (3.4% of GDP) in Q1. This was the largest deficit for 2 years | Disappointing & potentially worrying news saw #UK #current #account deficit widen markedly to 2-year high of £26.5bn (4.9% of GDP) in Q3 from £20.0bn (3.8% of GDP) in Q2 & £17.8 bn (3.4% of GDP) in Q1. This was the largest deficit for 2 years |
| Another alarming development: UK real household disposable income stagnated in the last quarter, even though earnings rose. | Another alarming development: UK real household disposable income stagnated in the last quarter, even though earnings rose. |
| The ONS reports that inflation and increased payments of self-employment tax offset strong wage growth in July-September. This meant households didn’t actually have any more money to spend | The ONS reports that inflation and increased payments of self-employment tax offset strong wage growth in July-September. This meant households didn’t actually have any more money to spend |
| This squeeze forced people to borrow more money to make ends meet. | This squeeze forced people to borrow more money to make ends meet. |
| As a result, the UK households saving ratio fell to its joint third lowest on record to 3.8%, down from 4.1% in the previous quarter. | As a result, the UK households saving ratio fell to its joint third lowest on record to 3.8%, down from 4.1% in the previous quarter. |
| Households spent more than they earned in Q3 2018, for the eighth quarter in a row https://t.co/pM6VG3RTgW pic.twitter.com/xGcuVb0Ko2 | Households spent more than they earned in Q3 2018, for the eighth quarter in a row https://t.co/pM6VG3RTgW pic.twitter.com/xGcuVb0Ko2 |
| The slump in business spending suggests bosses are unwilling to buy new warehouses, offices and machinery until they have clarity about Brexit. | The slump in business spending suggests bosses are unwilling to buy new warehouses, offices and machinery until they have clarity about Brexit. |
| This chart, from the ONS, shows how UK business investment contracted last quarter -- by 1.1% to £46.9bn. | This chart, from the ONS, shows how UK business investment contracted last quarter -- by 1.1% to £46.9bn. |
| Over the last 12 months, business investment has declined by 1.8%. It has contracted for three quarters in a row; the first time in a decade. | Over the last 12 months, business investment has declined by 1.8%. It has contracted for three quarters in a row; the first time in a decade. |
| Some early reaction to the UK’s disappointing balance of payments: | Some early reaction to the UK’s disappointing balance of payments: |
| Are the benefits of sterling's post-referendum depreciation wearing off? UK current account is heading deeper into deficit. 4.9% of GDP in Q3 https://t.co/KF7cenxCKE pic.twitter.com/BAEO4Prpw2 | Are the benefits of sterling's post-referendum depreciation wearing off? UK current account is heading deeper into deficit. 4.9% of GDP in Q3 https://t.co/KF7cenxCKE pic.twitter.com/BAEO4Prpw2 |
| UK current account in surplus for the first....just kidding. It's a deficit. And a big one. -4.9% of GDP as both trade & income deficits widen. Services trade bedind the widening trade deficit, while on the income side, it was foreign-owned UK companies repatriating profits. pic.twitter.com/lUbPqOKy9z | UK current account in surplus for the first....just kidding. It's a deficit. And a big one. -4.9% of GDP as both trade & income deficits widen. Services trade bedind the widening trade deficit, while on the income side, it was foreign-owned UK companies repatriating profits. pic.twitter.com/lUbPqOKy9z |
| Ouch! Britain’s current account deficit has widened to its worst level in over two years. | Ouch! Britain’s current account deficit has widened to its worst level in over two years. |
| New figures show that the gap between what the UK trades with the rest of the world, plus investment flows, widened by £6.6bn to £26.5bn in July to September. | New figures show that the gap between what the UK trades with the rest of the world, plus investment flows, widened by £6.6bn to £26.5bn in July to September. |
| That’s 4.9% of gross domestic product (GDP) – the largest deficit recorded since Quarter 3 2016 in both value and percentage of GDP terms. | That’s 4.9% of gross domestic product (GDP) – the largest deficit recorded since Quarter 3 2016 in both value and percentage of GDP terms. |
| This effectively measures the flow of money in and out of the UK. | This effectively measures the flow of money in and out of the UK. |
| So what went wrong? According to the Office for National Statistics, there are two main causes: | So what went wrong? According to the Office for National Statistics, there are two main causes: |
| UK’s trade balance worsened - a drop in the service sector surplus pushed the trade deficit up by £1.8bn to £8.8bn | UK’s trade balance worsened - a drop in the service sector surplus pushed the trade deficit up by £1.8bn to £8.8bn |
| The primary income balance deficit worsened by £3.6bn to £11.1bn, as foreign investors received larger profits on their UK assets. | The primary income balance deficit worsened by £3.6bn to £11.1bn, as foreign investors received larger profits on their UK assets. |
| Good news! Britain was one of the best-performing major economies in the last quarter. | Good news! Britain was one of the best-performing major economies in the last quarter. |
| Bad news! That’s not as impressive as it sounds.... | Bad news! That’s not as impressive as it sounds.... |
| UK GDP growth unrevised at 1.5%y/y (or 0.6%q/q) in the third quarter of 2018. UK the third fastest growing of the G7 economies in Q3 behind the US and Canada, but since 5 of the 7 make up the slowest growing OECD economies, that's not a high bar. pic.twitter.com/Q9wTptlcJv | UK GDP growth unrevised at 1.5%y/y (or 0.6%q/q) in the third quarter of 2018. UK the third fastest growing of the G7 economies in Q3 behind the US and Canada, but since 5 of the 7 make up the slowest growing OECD economies, that's not a high bar. pic.twitter.com/Q9wTptlcJv |
| Not a good sign for 2019 growth... | Not a good sign for 2019 growth... |
| UK business investment fell 1.1% in Q3. Third fall in a row - the first time we've had three successive quarters of shrinking biz investment since the financial crisis pic.twitter.com/dRHA3v5gFa | UK business investment fell 1.1% in Q3. Third fall in a row - the first time we've had three successive quarters of shrinking biz investment since the financial crisis pic.twitter.com/dRHA3v5gFa |
| Today’s GDP report also show that Britain’s services sector grew by 0.5% in the last quarter (revised up from 0.4%). | Today’s GDP report also show that Britain’s services sector grew by 0.5% in the last quarter (revised up from 0.4%). |
| Industrial production rose by 0.6% (revised down from 0.8%) and construction grew by 2.3% (revised up from 2.1%). | Industrial production rose by 0.6% (revised down from 0.8%) and construction grew by 2.3% (revised up from 2.1%). |
| Business investment fell, though, by 1.1%. | Business investment fell, though, by 1.1%. |
| The Office for National Statistics has confirmed that the UK economy grew by 0.6% in the third quarter of this year, matching earlier estimates. | The Office for National Statistics has confirmed that the UK economy grew by 0.6% in the third quarter of this year, matching earlier estimates. |
| That’s a relief; there were concerns that growth could have been downgraded. | That’s a relief; there were concerns that growth could have been downgraded. |
| It’s been a tough year for stock pickers. | It’s been a tough year for stock pickers. |
| Britain’s stock market has shed around 13% of its value this year, taking a bite out of many portfolios. | Britain’s stock market has shed around 13% of its value this year, taking a bite out of many portfolios. |
| Russ Mould, AJ Bell Investment Director, explains: | Russ Mould, AJ Bell Investment Director, explains: |
| “For the year to date, just six of the 39 industrial groupings which make up the FTSE All-Share are showing a gain and the best performer, Technology Hardware, has a market cap of less than £1 billion, so it is so small as to be barely relevant. | “For the year to date, just six of the 39 industrial groupings which make up the FTSE All-Share are showing a gain and the best performer, Technology Hardware, has a market cap of less than £1 billion, so it is so small as to be barely relevant. |
| Here’s the damage: | Here’s the damage: |