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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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| Wall Street rallies as Fed governor cites 'risks' ahead - business live | |
| (35 minutes later) | |
| Newsflash: Federal Reserve Bank of New York President John Williams has said that the central bank could reassess its interest rate policy and balance sheet reduction in the new year if the economy slows. | |
| Williams told CNBC that: | |
| “We are listening, there are risks to that outlook that maybe the economy will slow further.” | |
| That could be a signal to the markets not to panic, after the Fed predicted two interest rate hikes in 2019 -- more than investors expected. | |
| William’s comments are going down well on the New York stock exchange -- the Dow is now up 350 points, or 1.55%. at 23,210. | |
| Dow extends jump, up more than 315 points after Fed's John Williams says on CNBC that balance sheet runoff is not inflexible & that the Fed could reevaluate its view in 2019 https://t.co/xCFzj3PnR4 pic.twitter.com/1Qp1FWGHbt | |
| European stock markets are ending the week on a low note. | |
| The Stoxx 600 is down 0.33%, on track for a new two-year closing low. | |
| Guy Foster, Head of Research at Brewin Dolphin, said: | |
| “The market has been weak during the final quarter of 2018, as volatility has picked up. We see this as a symptom of monetary policy being tightened at an accelerating pace, which occurred simultaneously across the world’s major economies. That has drawn liquidity away from global equity markets, causing stocks to fluctuate further from their fundamental valuations than they had when monetary policy was loose. However, in our view, interest rates and bond yields still represent poor compensation for risk relative to equities. | |
| Oil is also suffering in the rout, with Brent crude down 2% at just $53.26 per barrel, That’s its lowest level since September 2017 -- a boost to consumers. | |
| Foster explains how a weak oil price can help the global economy: | |
| “Meanwhile, falls in energy costs will act as an effective tax cut to consumers and businesses around the world, as it did during the last bout of volatility in 2016. Lower cost inflation should therefore set the stage for a recovery in economic activity and further profit growth into 2019. | |
| Capital Economics also believe the US Federal Reserve blundered on Wednesday when it raised American interest rates to up to 2.5%. | |
| They say: | |
| The clear view in financial markets in the wake of the December FOMC meeting is that any further rate hikes over the coming months are likely to be reversed in 2020. | |
| Our long-held forecast is that a sharp slowdown in economic growth next year will prompt the Fed to cut rates by 75bp in the first half of 2020, more than markets are currently pricing in. | |
| Bloomberg’s Lisa Abramowicz explains why Wall Street is worried about Washington gridlock.... | Bloomberg’s Lisa Abramowicz explains why Wall Street is worried about Washington gridlock.... |
| Traders don't really care about the impending government shutdown, but they're worried about what such gridlock means for the debt-ceiling battle early next year. https://t.co/ruHQVJSaww | Traders don't really care about the impending government shutdown, but they're worried about what such gridlock means for the debt-ceiling battle early next year. https://t.co/ruHQVJSaww |
| Ding ding! Wall Street is open for business, on the final day of a brutal week for stocks,. | Ding ding! Wall Street is open for business, on the final day of a brutal week for stocks,. |
| The Dow Jones industrial average has risen by around 0.5% in early trading, or 121 points to 22,981. | The Dow Jones industrial average has risen by around 0.5% in early trading, or 121 points to 22,981. |
| It’s still more than a thousand points down for this week, though, or over 4%. | It’s still more than a thousand points down for this week, though, or over 4%. |
| The prospect of the US federal government shutting down tonight, if the Senate won’t approve funding for Donald Trump’s wall, is casting a shadow over the New York stock exchange. | The prospect of the US federal government shutting down tonight, if the Senate won’t approve funding for Donald Trump’s wall, is casting a shadow over the New York stock exchange. |
| Wall Street bank sums up the mood in pre-open note: "Sentiment still miserable; more Washington chaos" | Wall Street bank sums up the mood in pre-open note: "Sentiment still miserable; more Washington chaos" |
| A trillion here, a trillion there, and eventually all these stock market losses add up.... | A trillion here, a trillion there, and eventually all these stock market losses add up.... |
| GLOBAL STOCK MARKET CAP LOSS SINCE JANUARY IS $16.7 TRILLION - BAML | GLOBAL STOCK MARKET CAP LOSS SINCE JANUARY IS $16.7 TRILLION - BAML |
| New economic data just released has confirmed that the US economy grew pretty steadily in the third quarter of 2018. | 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%. | 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. | 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 | 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 |