Brent crude falls below $70; eurozone inflation hits five-year low
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Version 0 of 1. 6.42pm GMT18:42 |￣￣￣￣￣￣￣￣￣￣ | | OIL IS A LEVERED | BET ON GLOBAL | GDP EXPECTATIONS | ＿＿＿＿＿__________| (\__/) || (•ㅅ•) || / づ 6.40pm GMT18:40 A late update -- the sell-off in the oil price is picking up pace tonight. The price of a barrel of Brent crude has dropped under the $70 per barrel, for the first time since May 2010. New York crude is also on the slide. Massive selling hit into the floor close with WTI crude down $7.54 to $66.15, down 10.23% on the session. Ouch. 4.40pm GMT16:40 European stock markets ended the day flat, as investors divested the implications of the oil price slide (great for consumers, tricky for central bankers, bad for vulnerable producers, end of an era for Opec?). Chris Beauchamp of IG sums it up: It it looks like the power of OPEC to maintain a balance in the market has been severely weakened, if not broken entirely. Supply gluts are set to stay with us into 2015, and the geopolitical ramifications will be felt throughout the globe, not least in relation to Russia and Putin’s attempts to reconstruct a Moscow-led sphere of influence. Europe closes flat after CPI data, oil stocks fall http://t.co/9lPCJhxQLS IG closing market comments - energy stocks hit around the globe: https://t.co/NlMpJBCgE5 2.54pm GMT14:54 Afternoon summary Time for a recap: Falling energy prices have helped to drag inflation across the eurozone down to a five-year low. The euro area consumer price index rose by just 0.3% annually in November, with energy prices tumbling by 2.5% over the last year. Economists urged the European Central Bank to react to the tide of disinflation with fresh stimulus action; UBS’s former chief economist, George Magnus, though, argues that we should welcome lower oil prices -- they will, after all, give consumers more firepower: Lots of drivel, incl from eminent ecos, that lower oil prices=bad news re deflation, Europe, coming crash.Ok, lets get 'em back to $120 asap The latest unemployment figure also show the eurozone economy is in a bad way. The jobless total rose by around 60,000 last month, leaving the rate stuck at 11.5%. In Italy, the unemployment rate spiked to 13.2%, a record high. Bundesbank chief Jens Weidmann, though, is refusing to change his position; he told an audience in Berlin that central banks don’t have an “Aladdin’s Lamp” to fix the situation. The slump in the oil price has hit energy stocks on both side of the channel, and driven down the Russian ruble to a record low. Over in Brussels, EC officials have given France and Italy more time to comply with the stability and growth pact Full story: Brussels defers punishing France and Italy for breaking eurozone rules And retailers on both sides of the Atlantic have been busy with Black Friday mania. There have been scuffles, fights over cheap TVs and general mayhem at some stores - and the police aren’t happy: Very disappointing that major stores did not learn lessons from last year - our officers have enough to do already We have another liveblog here with all the details: Black Friday shoppers fight for bargains - live updates 2.44pm GMT14:44 Greece has reached a deal with its creditors after weeks of disagreement over its 2015 budget plans, according to media reports. Details are vague, but it could be enough to get the troika back to Athens to review the state of play. Helena Smith reports from Athens: At the eleventh hour prime minister Antonis Samaras’ two-party coalition appears to have come to some agreement with the country’s “troika” of creditors at the EU, ECB and IMF. Officials say Greece agreed to roll back on several of its “red lines” after Samaras worked the phones last night. The leader cut the deal after conversing with European Commission president Jean Claude Juncker, German chancellor Angela Merkel, ECB president Mario Draghi, IMF managing director Christine Lagarde and EU Economic commissioner Pierre Moscovici, all of whom emphasized that it was imperative international inspectors returned to Athens ASAP. Samaras, is currently in behind-door discussions with his deputy, Evangelos Venizelos, and it remains to be seen how the socialist leader will react to the news. Venizelos had repeatedly ruled out concessions that would further hit austerity blighted Greeks. Local media reports suggest that Samaras has agreed to further cut pensions – abolishing all for those under the age of 62, the crossing of a huge “red line” if true. The changes will be put to parliament on December 7 – in time for the last euro group meeting of the year in Brussels on December 8th when Athens hopes to discuss its “post-bailout” era. Government officials said Athens was also in discussion about extending its economic adjustment programme with creditors for “technical reasons.” Earlier today, Moscovici announced that the European commission was eager to see auditors return to Athens to complete their economic review imminently. “The government must swiftly take all the necessary measures so that the ongoing program is complete,” he said. GREECE UPDATE: Moscovici urges Athens to 'take necessary measures,' make way for troika's return http://t.co/UqLYf5jOuT via @ekathimerini 1.34pm GMT13:34 Canada’s economy grew by 0.7% in the third quarter of this year, data just released shows. That’s slower than in April-June, when GDP expanded by 0.9%.l, but beats forecasts. Canada Q3 GDP Advanced 2.8% Annualized, Beating Market Expectations and the Bank of Canada Forecast It matches Britain’s growth too, but means Canada lagged behind the US (which grew by almost 1% during the quarter). 1.10pm GMT13:10 Weidmann: We don't have an Aladdin's Lamp to rub The European Central Bank’s hawk-in-chief, Jens Weidmann, has rejected calls for a new monetary stimulus programme. The head of the Bundesbank also insisted that Germany should not abandon its fiscal plans. Weidmann told an audience in Berlin that there’s no “Aladdin’s Lamp” that can be rubbed vigorously to cure Europe’s ills. Monetary policy cannot magically raise a country’s growth potential for a sustained period of time, Weidmann argued, saying:. “One must be clear that central banks do not have an Aladdin’s Lamp that you just have to rub to make all wishes come true. “In particular, it is an illusion to think that one can raise the growth potential of an economy for the long term or create jobs sustainably with the means of monetary policy.” That suggests he won’t be bounced into a full-blown QE programme next week. Weidmann said the tumble in the oil price is effectively a stimulus boost of its own, as it will give eurozone consumers more cash to splash. Buba's Weidmann says drop in #Oil prices is like ‘Mini Stimulus’ plan. And suggestions that Germany should ditch its plan to balance its budget this year were slapped down: “Calls for a public fiscal stimulus plan in Germany to boost the eurozone economy are amiss.” Dow Jones has more details. Updated at 1.11pm GMT 12.39pm GMT12:39 Caxton FX: Spectre of Stagnation looms over the ECB This morning’s fall in eurozone inflation to a five-year low has not spooked the financial markets. The euro has gained around 0.15% against the US dollar today, to $1.248 against the US dollar. There’s little action in the bond market either (are traders being distracted by Black Friday?!) Edward Knox, currency analyst for Caxton FX, says the inflation data “hasn’t come as a major surprise to the market”. However.... This won’t however lessen the concern felt by ECB policy members as the downward trend for inflation continues unabated. Falling energy prices have been a large source of this deflationary pressure in the 18-nation bloc, and yesterday’s landmark decision by OPEC to not cut production will likely see energy prices fall further still. With this is mind, and the ‘spectre of stagnation’ still looming all eyes will turn to next week’s ECB monthly policy meeting to see what action is taken. That’s a reference to Bank of England governor Mark Carney’s recent warning that “the spectre of economic stagnation” was haunting Europe, and threatening the UK..... Updated at 12.41pm GMT 12.22pm GMT12:22 Over in America, traders are rousing themselves from their post-Thanksgiving torpor and heading back to Wall Street. At least, some are. Many have awarded themselves a four-day weekend by taking today off too. But those who do struggle in are expected to drive down energy stocks, in response to the oil price slide: 12.11pm GMT12:11 European markets wince after Opec refuses to cut The prospect of a glut of oil seeping across the global economy has hit energy firms hard today, driving European stock markets into the red. More than $32bn has been wiped off the European oil and gas sector, according to Reuters data. Investors are reacting to the prospect of the oil price falling further, as Opec continues to produce its 30 million dollars per day. Bill Hubard, chief economist at Markets.com, explains: “We are seeing continued oversupply,” “I think $70 a barrel will be the new norm. We could see oil go considerably lower.” Brent crude is currently $72.80/barrel, and New York crude is around $69/barrel, close to the four-year-plus lows set this morning. In London, the selloff has knocked 40 points off the FTSE 100. Edinburgh-based engineering firm Weir Group, which has interests in oil and shale exploration, is leading the fallers, down over 8%. 11.52am GMT11:52 If you strip out all the volatile factors, such as energy, food, alcohol & tobacco, then core eurozone inflation was unchanged this month at +0.7%. Eurostat has more details here. 11.37am GMT11:37 Danae Kyriakopoulou, CEBR economist, says “the time has come” for the ECB to start a sovereign bond-buying quantitative easing programme. Kyriakopoulou explains how the weak inflation and high unemployment are two sides of the same euro: The main contributions to weakening price growth are coming from food and energy prices – energy prices fell by 2.5% year-on-year in November, today’s data showed. These are hardly the type of goods that consumers can decide to forgo in the expectation that they will be cheaper in the near future. Even so, weak demand and elevated unemployment are also playing a part in keeping inflation subdued – which is why inflation in the Eurozone is so much lower that other advanced markets such as the US and the UK where the energy and food price dynamics are largely similar. It’s hard to see the ECB’s hawkish members being bounced into full-blown QE next week. But if inflation falls much lower, the pressure could be intensive by the early 2015... 11.21am GMT11:21 This chart, via the CEBR, shows how inflationary pressures in the eurozone have been falling for the last two years, while the unemployment rate has stuck stubbornly high. 11.21am GMT11:21 Over in Brussels, the new European Commission has given France and Italy some breathing space to hit European budget targets. Our correspondent Ian Traynor reports that Paris and Rome have got until next spring to deliver on their pledges of sweeping changes to labour markets and other structural reforms. “As a new commission, we’re not seeing it as a priority to punish countries,” Valdis Dombrovskis of Latvia, the new commission vice-president in charge of the euro, told The Guardian and other European newspapers. Fines still possible for #France? "All options on the table," @VDombrovskis says. Sounds like how #Pentagon used to talk about #Iran! 11.11am GMT11:11 Just in - Brazil has pulled out of recession, narrowly. GDP rose by a meagre 0.1% in the third quarter of 2014, having shrunk in the first six months of this year. The economy is still 0.2% smaller than a year ago. Brazil's economy grows 0.1% in Q3; out of recession but only just. #gdp #brasil #economy @BBCBusiness 11.00am GMT11:00 Berenberg: ECB must start buying corporate bonds Holger Schmieding of Berenberg has warned that euro inflation will remain below the ECB’s target “for as far as the eye can see”. Schmieding had been relatively optimistic about the eurozone economy until recently. Speaking on Bloomberg TV, Schmieding blamed Russia’s military action in Ukraine for derailing the recovery. That hit business confidence in Germany hard, he says. So, from growing at 2%, German’s economy was dragged to a near-standstill. The European Central Bank should react to the drop in inflation by buying corporate bonds, starting at next week’s meeting, he argues. The ECB is currently buying up asset-backed securities (bundles of bonds, basically) in an attempt to stimulate lending and expand the money supply. But it could widen the programme to include debt issued by companies. Updated at 11.00am GMT 10.42am GMT10:42 The fall in eurozone inflation is bad, although not unexpected, news for the ECB, says Howard Archer of IHS Global Insight. The only crumb of comfort for the ECB – and it is not much of one – is that November’s renewed drop in inflation was entirely due to an increased year-on-year drop in energy prices. There is likely to be more of that on the way given the slump in oil prices! 10.27am GMT10:27 EU unemployment rate stuck at 11.5% Behind the headline jobless rate of 11.5% are stark differences in unemployment across the eurozone. The lowest unemployment rates were recorded in Germany (4.9%) and Austria (5.1%), and the highest in Greece (25.9% in August 2014) and Spain (24.0%). Unemployment rates have fallen in 22 countries over the last year, but actually increased in five, highlighting how the eurozone economy is struggling. The biggest increases over the last 12 months were recorded at opposite ends of the eurozone; in Italy (12.3% to 13.2%), and Finland (8.3% to 8.9%). 10.18am GMT10:18 There are currently 24.413 million men and women out of work across the European Union, Eurostat says. That’s the population of Netherlands and Switzerland put together. And in the eurozone, there are 18.395m out of work. And the totals have got bigger this month; partly due to seasonal factors, I guess. Eurostat reports that the number of persons unemployed increased by 42 000 in the EU28 in October, and by 60 000 in the euro area. Updated at 10.27am GMT 10.10am GMT10:10 There’s no respite in Europe’s jobless crisis. The unemployment rate was unchanged at 11.5% last month, partly due to the rise in Italy’s jobless rate (see earlier) 10.06am GMT10:06 The drop in eurozone inflation isn’t sharp enough to force dramatic new action from the European Central Bank next week, reckons Frederik Ducrozet of Credit Agricole. No sovereign QE for Christmas then. Updated at 10.08am GMT 10.02am GMT10:02 Falling energy prices were the main factor dragging eurozone inflation down month. They’ve shrunk by 2.5% over the last year -- and are likely to keep falling given Opec’s decision. Euro area annual inflation down to 0.3% in November 2014 - flash estimate from #Eurostat http://t.co/ztBKMdqwgZ pic.twitter.com/YdZx7EvbrB 10.01am GMT10:01 Eurozone inflation falls to 0.3% Breaking: The eurozone has slipped closer to deflation. Prices across the single currency rose by just 0.3% this month, compared to November 2013, down from 0.4% a month ago. 9.54am GMT09:54 The surge in Italy’s unemployment rate today is a grim reminder that its economic situation has worsened over the last year: A creepy chart --> unemployment rate in Italy (Oct 2014) pic.twitter.com/QDVxZtzhkK 9.51am GMT09:51 And here’s why the Russian stock market is sliding: Russian GDP seen -3% next year with oil at $70. Or almost -6% at $50. Forecasts from @RencapMan: pic.twitter.com/oX1S0Xx5dX 9.49am GMT09:49 The Russian stock market is also feeling the Opec blues this morning. The RTS index has tumbled by 3.4% this morning, in a broad-based selloff, following warnings that the weak oil price will trigger a deep recession this year: Russian RTS index. #splat pic.twitter.com/tOZqN9p6de Updated at 9.51am GMT 9.37am GMT09:37 Russia Economy Minister Says Will Lower 2015 Oil Price Forecast -- Interfax >> horse. bolted. etc 9.35am GMT09:35 Newsflash from Moscow -- the economy minister has said that Russia’s oil price forecast for 2015 will be cut, following yesterday’s Opec meeting. 9.22am GMT09:22 Italian unemployment surges to record high Bad news from Italy... the country’s jobless rate has jumped to a new record high. The Italian jobless rate jumped to 13.2% last month, as its recession continues to wreck havoc in its economy. This is the first time it’s been over 13% since records began in 1977. Statistics body Istat reports that the number of people in employment fell by 0.2%in October, to 22.374m. The unemployment total surged by 2.7%, to 3.410. And young people remained in the firing line -- the youth unemployment rate rose to 43.3%, from 42.5% last month. Oof…. *ITALIAN OCT. UNEMPLOYMENT RATE RISES TO RECORD 13.2% FROM 12.9% Italian unemployment rises above 13% for the first time since records began in 1977: pic.twitter.com/RPvq5xQKJB Updated at 9.23am GMT 9.09am GMT09:09 Ruble hits record low Back in the financial markets, the Russian ruble has slumped to new record lows as the impact of Opec’s price war hits home. The ruble slumped to the brink of 50 rubles to the US dollar this morning. Russia is a big loser from Opec’s decision not to cut production levels. It needs the oil price to be at least $90 per barrel for its industry to be profitable, so Brent crude’s slump to $71.89 is seriously bad news for Moscow. City firm Renaissance Capital reckons that Russia’s economy will suffer a deep recession next year: At $70 oil, Renaissance Capital sees Russia shrinking 3% in 2015 but the RUB to strengthen from here https://t.co/QtlLY0nccT Updated at 9.09am GMT 8.41am GMT08:41 What has Britain become? Take away people's jobs and give them cut price Dysons - and make them into a circus show for those who disdain consumerism. 8.39am GMT08:39 There were some frankly unpleasant scenes at Asda’s Wembley branch a few minutes ago, as these video clips from the FT’s Kadhim Shubber show: Well this is awful #BlackFriday https://t.co/WwCyu1x6f1 Fights breaking out #BlackFriday https://t.co/r5jT1spiKj Lady down #BlackFriday https://t.co/ruJ5XnXasM 8.33am GMT08:33 I’m not sure this Black Friday frenzy is doing much for UK productivity: Now crazy queues to pay.. pic.twitter.com/GFWLoSBwDM 8.31am GMT08:31 Over in Wembley, Asda just threw open the doors at its store for Black Friday. My colleague Sarah Butler is there, and reports that more than 400 people were queuing - one arrived at 1am., and another admitted crying off work sick. There were even cheerleaders (not the weather for it) Bonkers.. That is all.. pic.twitter.com/CzO6RM69i4 Devish been queuing from 6am and says he reckons he'll spend £500 to £600. "Guess I'll be a bit late for work".. pic.twitter.com/z9in2V2gjr 8.26am GMT08:26 Online shopping may let you avoid the cold, but there’s no escape from the queues: Currys PC World know what the British want from Black Friday! a 28 minute virtual queue on its website. Wait in line. At least there’s no danger of pushing in.... 8.10am GMT08:10 Walmart records second busiest online sales day ever US retail giant Walmart has recorded its second-highest online sales day ever, as Americans flocked to buy bargains during Thanksgiving. Walmart just reported that 22 million shoppers raced to its stores yesterday. And Laura Phillips, senior vice president of merchandising, Walmart U.S, didn’t hold back on the hyperbole, declaring that last night was ‘awesome’. We saw lines for tablets and TVs snaking throughout the stores, and with our exclusive 1-Hour Guarantee, customers left happy. Unlike in North London and Manchester, where the police were called.... The most popular items were tablet computers, televisions, children’s clothes and and video games and consoles. And, Disney Frozen Snow Glow Elsa dolls were one of the top toys of the night. Phillips added: We sold enough food storage containers to hold 4.5 million pounds of Thanksgiving leftovers and we sold enough towels to line the banks of the Mississippi River*. *- maybe that’s another American tradition.... 7.56am GMT07:56 Nationwide: UK house price growth slows Building society Nationwide has reported that the UK housing market continues to slow down this month. Prices rose by 0.3% in November, down from 0.5% in October. That pulled the annual rate of house price inflation down to 8.5%, from 9.0% a month ago. Robert Gardner, Nationwide’s chief economist, says the housing market continued to “soften” this month, despite unemployment continuing to fall. The number of mortgages approved for house purchase in September was almost 20% lower than at the start of this year, he points out, adding: “Forward looking indicators, such as new buyer enquiries point to further softness in the near-term. However, if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead.” 7.40am GMT07:40 Police: Keep calm on Black Friday Britain’s police forces are urging UK shoppers to calm down, having been called to several stores already today as people wrestle for a Black Friday bargain. At least two people arrested at #BlackFriday sales events already this morning. Keep calm people! *POLICE CALLED TO SEVEN TESCO STORES IN MANCHESTER ON 'BLACK FRIDAY' SCUFFLES 7.36am GMT07:36 Black Friday: Scuffles and queue-jumping at UK stores The latest American tradition to cross the Atlantic, Black Friday, got off to a bang, a few shoves and several phone calls to the police today. British retailers have embraced the US habit of offering ‘unmissable bargains’ the day after Thanksgiving, sending hordes of consumers racing to stores which opened as early as midnight. My colleague Rupert Neate was dispatched to North-East London, where disgruntled shoppers reported queue-jumping was rife; some even had TVs ripped from their hands amid the scrum. He writes: More than a dozen police officers attended the Tesco store on Glover Drive, Upper Edmonton, as scuffles broke out between eager and frustrated shoppers. Customers were seen tearing down cardboard hoardings put in place to hold back sale items until the stroke of midnight. Tesco delayed the sale of its most popular sale items – TVs – for almost an hour until police brought the situation under control. One officer was overheard criticising the manager for failing to ensure adequate security and suggested the sale should be suspended altogether. Full story: Black Friday sales: police attend supermarkets amid scuffles 7.25am GMT07:25 The Agenda: Disinflation, disinflation, disinflation Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business. Disinflation, disinflation, disinflation. That’s the mantra today, after the oil price slumped to its lowest levels in over four years. Opec’s decision yesterday to effectively launch a price war, rather than cut its supplies, is a boost to millions of consumers and many businesses across the globe. But it does pose a taxing problem for central bankers, as they try to stimulate weak economies and avoid deflation. At 10am we get the latest eurozone inflation figures, and unemployment too, and they are expected to show that Europe fell closer to deflation this month. The annual inflation rate is tipped to fall from 0.4% to just 0.2%, while the jobless rate could remain at 11.5%. The oil price has fallen again this morning, with Brent crude hitting $71.5 per barrel -- down from as high as $78 yesterday before Opec’s meeting: Oil price plunges after Opec split keeps output steady Brent and WTI keep falling in the wake of the Opec no cut decision. pic.twitter.com/4zVegIkq2R Michael Hewson of CMC Markets reckons Mario Draghi must have been a little gutted when Opec voted to leave production levels at 30 million barrels per day: The new reality is the US one of the largest oil producers in the world which they weren’t beforehand, and as such the balance of power has shifted with OPEC, Russia and the US as the largest producers of crude oil, which means that OPEC now only control about one third of global oil production. As such we could well see Brent prices drop towards $60 a barrel, a level that Rosneft chief Igor Sechin suggested could be seen early next year, and a level that could well cause some major financial problems to some US shale producers as well as a lot of OPEC members. Not forgetting Russia, of course.... Also coming up today.... It’s Black Friday, which means UK shoppers have been racing to the stores in search of a bargain. There are already reports of scuffles and queue-jumping, and a Tesco store has been closed. If your going to Tesco Silverburn, don't bother. Police have shut it down due to fighting over #BlackFriday sales. There’s also Nationwide’s latest house price survey (just released, more on all that shortly..) |