UK economy rebounds with 0.4% growth, but manufacturing shrinks – business live

All the day’s economic and financial news, including new growth figures for the UK and the latest on the House of Fraser crisis

Breaking! The UK economy grew by 0.4% in the second quarter of 2018.

That’s up from 0.2% in the first three months of the year, as the economy got back up to speed after the bad wintery weather.

The pound has fallen to a fresh 13-month low against the US dollar this morning.

Sterling shed three quarters of a cent in nervy trading to hit $1.2740, its lowest level since June 2017.

“The markets have lost confidence in the triumvirate of President Erdogan, his son-in-law as finance minister and the [central bank’s] ability to act as it needs to.”

#TRY | *TURKISH LIRA DROPS TO 6/USD (down more than 12%) – BBG pic.twitter.com/UIpe0XfiaX

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Overnight, we’ve learned that Japan’s economy expanded by 0.5%, thanks to a pick- up in consumer spending. Can the UK match it?

Economists said Japan’s recovery was likely to continue on the back of higher wages and consumer spending, unless trade conflicts with the U.S. worsen. https://t.co/LIo1aHV98e pic.twitter.com/X9oNu9DjXE

Michael Hewson of CMC Markets predicts that the UK economy rebounded strongly in the last quarter:

A decent recovery across construction, manufacturing and services is expected to show 0.4% growth, with the timing of Easter, a Royal Wedding and warm weather set to paint a decent picture of economic activity.

Retail expert Nick Bubb thinks some parts of House of Fraser can still be saved, saying:

Hopes of a “pre-pack” deal to salvage parts of the business (with Sports Direct?) still seem high…

The House of Fraser story is moving fast.

EXCLUSIVE: Sports Direct tycoon Mike Ashley is close to striking a deal to buy House of Fraser. I understand that the Newcastle United FC owner could wrap up an agreement with administrators EY as soon as this morning, although deal has yet to be signed. Full story up soon.

Frank Slevin, chairman of House of Fraser, says he’s hopeful that the company’s future will be sorted out soon.

He told investors this morning:

“This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan.

Despite the very recent termination of the transaction between Cenbest and C.Banner, I am confident House of Fraser is close to securing its future.”

High street chain House of Fraser has confirmed it is appointing administrators after negotiations between investors and creditors failed to reach a “solvent solution.”

The retail chain, which employs over 17,000 people, has been forced to turn to Ernst & Young as administrators after days of negotiations with billionaire tycoons Mike Ashley and Philip Day, and the retail turnaround fund Alteri Investors.

Court hearings are expected to take place at 7:30 am today, at which orders will be sought appointing individuals from Ernst & Young LLP as administrators of each of the Operating Companies with immediate effect.

Significant progress has been made towards completing a sale of the Group’s business and assets. The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment.

The group needs about £50m after C.banner, the Hong Kong-listed owner of Hamleys, pulled out of plans to raise £70m to invest in House of Fraser.

Most industry experts expected any rescue to involve putting House of Fraser into administration to allow a new investor to buy its most attractive stores without taking on loss-making sites. Plum locations include shops in Glasgow as well as Bluewater in Kent, Manchester, Belfast and Meadowhall in Sheffield.

Related: House of Fraser calls in administrators as rescue talks fail

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today we discover how Britain’s economy is faring, when growth figures for the second quarter of 2018 are released.

The second quarter was altogether brighter, with good weather, a Royal Wedding and the World Cup all driving consumer behaviour. The latest ONS retail sales data suggests that food and drink sales have been positively impacted by the sunshine and the football, while spending in pubs also increased by 9.5% year on year in June according to Barclaycard’s consumer analysis.

Not all parts of the UK economy have been making hay in the sunshine however, with big ticket items particularly under pressure. Household appliance sales fell 14.8% in the year to June according to Barclaycard, and the football combined with the warm weather led to a June drop in sales for non-food retailers according to the ONS.

Related: House of Fraser days away from collapse without new funding

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Pound edges higher while oil rises as Iran sanctions restart – business live

Sterling still struggling on fears of a no-deal Brexit but recovers some of Monday’s losses

Sterling is set for continued volatility in the run up to Brexit day next March, according to Thanos Vamvakidis, head of G-10 foreign exchange strategy at Bank of America Merrill Lynch. He told CNBC:

If we don’t get a deal, sterling can be weaker by about 10 percent, (or) even lower. If you get a deal, any deal, …. (sterling) can be up by 10 percent. I don’t think any other currency can have this kind of moves in the next few months.

As expected, markets have got off to a slow start in Europe, but a mainly positive one.

The FTSE 100 is up 0.28%, helped by a rise in commodity stocks following the stronger oil price, while France’s Cac has climbed 0.32% and Germany’s Dax is up 0.48%.

Domino’s Pizza reported another firm set of half-year numbers this morning as the investment in digital, especially mobile, pays off in terms of driving top line sales. There’s still plenty of evidence that shifting consumer habits are supportive and while the hot weather took the shine off the second quarter numbers a little, the World Cup offered some compensation. However, investment in its international expansion weighed on profit growth.

Underlying profits rose 2.5% but on a statutory basis profits were down 10% due to a load of exceptional costs that seem to have mounted: £1.9m from its Warrington supply chain centre, a £2.1m hit from Norway as it transforms Dolly Dimples into Domino’s, £1.4m from joint venture store conversion in Germany and a further £4.2m from tax, amortisation and German Market Access Fee increase charges recognised on the income statement as non-underlying items. Nevertheless the underlying picture remains positive.

The June data for Germany so far has been uniformly weak, says Dr Andreas Rees, economist at UniCredit Bank:

Industrial production declined 0.9% mom, while exports treaded water (yesterday’s new orders: -4.0%). However, in all three cases, the decreases (or stagnation) came after strong rises in the previous month.

Going forward, we expect a moderate acceleration in the industrial sector on average, driven by global trade and solid domestic demand. However, it could become a bumpy ride over the summer months. July, August and sometimes September months are notorious for even more volatility, given the start and end of the vacation period. The usual suspect is the car sector. In the last five years, auto production embarked on a wild rollercoaster four times. Auto companies ramp up their production before the summer holidays with a technical setback following suit one month later. This effect then plays havoc with the headline figures in the corresponding two months.

The disappointing industrial figures from Germany do not necessarily mean the country’s economy is heading for trouble, suggests ING Bank economist Carsten Brzeski:

German industrial production took a hit in June, dropping by 0.9% MoM, from 2.4% MoM in May. On the year, industrial production was still up by 2.5%. The drop in industrial activity was broadly-based. After three strong months, activity in the construction sector also weakened, declining by 3.2% MoM. At the same time, exports held up relatively well, despite the delayed impact from last year’s euro strengthening and trade tensions, remaining flat in June after a 1.8% MoM increase in May. As imports increased by 1.2% MoM, the seasonally-adjusted trade surplus narrowed to 19.3bn euro, from 20.4bn euro in May.

After yesterday’s disappointing new orders data, speculations about an imminent downswing of the German economy have gained new momentum. Intuitively, weak June data can be associated with trade tensions. However, in our view, this intuition is not so straight-forward. The analysis of the German economy requires more nuances. Here is our take on the state of the economy.

2. Looking at bilateral trade data, German exports have gone through a slight structural shift since the start of the year. While the share of German exports to the US is currently lower than in 2017, the share of other Eurozone countries like the Netherlands, Italy or Spain has actually increased.

3. At least in the short run, weakening demand for German products as illustrated by yesterday’s disappointing new orders data could actually bring some relief. Particularly the manufacturing sector has been suffering from severe supply-side constraints, with capacity utilisation at its highest level since early 2008, a high lack of qualified workers and equipment as a limiting factor. Orders books are still richly filled and it would take a while before a protracted decline in demand would show in activity data.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

With growing concerns about a no-deal Brexit in the past couple of days – as warned by such diverse personalities as Bank of England governor Mark Carney and Sir Liam Fox – the pound hit an 11 month low on Monday.

European Opening Calls:#FTSE 7672 +0.10%#DAX 12617 +0.15%#CAC 5486 +0.15%#MIB 21625 +0.21%#IBEX 9730 +0.07%

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UK inflation tipped to rise as wage squeeze bites – business live

All the day’s economic and financial news, including the latest cost of living figures in the UK

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain may be facing a new cost of living squeeze. Inflation figures due out this morning are expected to show that prices rose at a faster rate in June, hitting consumers in the pocket.

The rise in petrol prices in June should ensure that the transport category continued to make a strong positive contribution to UK inflation.

Added to that, a number of pre-announced utility price increases kicked in last month, including a 5.5% rise from the largest energy provider British Gas which came into effect at the end of May.

Related: UK wage growth slides to lowest rate in six months

If you want a longer view, here’s UK unemployment, wage growth and real earnings over past 15 years (TL;DR – unemployment lower than pre-crisis, wages haven’t caught up, higher inflation after Brexit vote almost as bad as crisis for real pay) pic.twitter.com/Sb8mg9oMur

“The unemployment rate is low and expected to fall further. Americans who want jobs have a good chance of finding them.”

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Markets shrug off trade fears but pound falls on Trump Brexit comments – business live

Traders await developments in US-China dispute, while Trump’s talk of no UK-US trade deal hits sterling

The pound continues to slip against the dollar as investors weigh up Donald Trump’s inflammatory comments about Theresa May’s Brexit proposals meaning no UK-US trade deal. It is currently down 0.64% at $1.3119, after hitting a low for the week of $1.3117.

Fiona Cincotta, senior market analyst at City Index, said:

US President Trump has put his counterpart Teresa May in a difficult position this morning saying that a soft Brexit would mean no trade deal between the UK and US. This comes a day after May released a white paper on the UK-Europe relationship after Brexit, offering a softer stance ahead of next week’s vote on a Brexit trade bill.

The UK can’t afford to alienate either the US or the EU, its two largest foreign trade partners, and will not be able to choose an “either-or” solution. Trump’s comments come at a particularly bad time for May who is facing bigger problems as her government is in a precarious balance after the resignations of David Davis and Boris Johnson earlier this week. The pound dropped 0.6% against the dollar following Trump’s remarks.

Connor Campbell, financial analyst at Spreadex, said:

For the second day in a row the markets ignored Donald Trump’s aggressive posturing to rebound, climbing back towards the levels abandoned at the start of the week. Not that there wasn’t at least one casualty of the President’s big mouth…

The FTSE led the way after the bell, the UK index adding another 60 points to re-cross 7700. That’s put the FTSE back in the ballpark of Monday and Tuesday’s 3 and a half week highs, showing the extent to which investors are trying to ignore the ongoing trade war between the US and China unless they specifically have a new threat to deal with.

Only three fallers in the FTSE 100: Randgold Resources as the gold price dips, credit specialist Experian following a trading update and Sky, as investors take some profits after Thursday’s rise on the back of the bid battle between Rupert Murdoch and Comcast for the satellite broadcaster.

As expected, investors continue to push the markets higher as European trading begins.

The FTSE 100 is up 0.68% at 7704, Germany’s Dax has risen 0.45% , France’s Cac has climbed 0.41% while Italy’s FTSE MIB is 0.43% better.

Michael van Dulken at Accendo Markets said the Chinese trade figures were a double edged sword:

[They are] supportive of global growth but backing up Trump’s trade grievances.

More on China’s trade figures, and more fuel for Donald Trump’s dispute with the country. The latest figures show a record trade surplus with the US as Chinese exporters rushed to sell goods to America ahead of the imposition of Trump’s tariffs. Reuters reports:

China’s trade surplus with the United States swelled to a record in June as its overall exports remained solid, a result that could further inflame a bitter trade dispute with Washington.

The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

With Donald Trump focussed on the Nato budget, Brexit and bigging up Boris Johnson, investors have managed to put fears of an escalating trade war behind them for the moment.

The absence of harsh words from the US and China encouraged traders to step into the market and snap up stocks. Investors are getting used to the pattern, whereby equity markets can recover after a big sell-off that was triggered on account of trade tensions. In keeping with recent trends, the US indices held up better than their European counterparts. The S&P 500 hit its highest level since early March and the NASDAQ 100 hit an all-time high. Dealers believe the US is in a stronger position to weather the storm than the rest of the world, and that is why the US equity benchmarks are outperforming.

Steven Mnuchin, the US secretary of the Treasury, revealed that many of the trade talks with China have broken down, however, he confirmed that China is very important in cooperation with North Korea. These remarks suggest the US doesn’t want to be too aggressive with Beijing, which is also giving investors hope.

European Opening Calls:#FTSE 7692 +0.54%#DAX 12549 +0.45%#CAC 5431 +0.46%#MIB 21902 +0.51%#IBEX 9812 +0.46%

It is impressive that exports topped forecasts given that US tariffs on Chinese steel and aluminium kicked in last month. The massive trade surplus that China has with the US is one of the reasons that President Trump instigated the trade spat, and dealers will be keeping an eye on developments.

Trump’s declaration that this softer version of Brexit would mean that a trade deal with the US was “probably” off the table, was a blow to both host Theresa May and the pound, sending sterling tumbling overnight. Let’s not forget that the hope of a quick trade deal with the US was a significant factor in Theresa May’s decision to invite Trump in the first place. Another embarrassment that May could have done without.

Trump’s words of no deal have confirmed the fears of Brexiteers and will have stoked the fire in the hard Brexit camp, making Theresa May’s future in charge look doubtful once more. This fear was reflected in the pound as it dropped sharply in late night trading. With no high impact UK economic data due for release today, pound traders will continue to watch political developments. Trump and May are expected to hold a joint press conference after lunch where they will both be pressed for trade comments. In the absence of any encouraging trade comments, gains in the pound going forward could be limited, and a meaningful move over $1.32 could be doubtful.

Related: Trump trashes May’s Brexit plans and hails Boris Johnson as future PM – live

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Pound’s unexpected robustness may point to underlying strength | Patrick Collinson

Despite UK ‘turmoil’, sterling has never been more stable against the euro

The UK is, President Trump kindly informs us, in turmoil. In Westminster, there is feverish talk of a leadership challenge. The economy is in a state of peak Brexit uncertainty. The trade deficit has worsened yet again. An increasingly bitter trade war is battering Britain’s FTSE-quoted commodity giants.

In the past, sterling, as the barometer of the nation’s international standing, would have collapsed in value in such a crisis. Yet for the last year the pound-euro rate has never been more stable.

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China prepares to impose tariffs on $34bn of US goods – business live

All the day’s economic and financial news, as Beijing readies tariffs on $34bn of US imports as the trade dispute with the US deepens

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Chinese tariffs on $34bn of U.S. goods will take effect from midnight July 6 Beijing time, a person with knowledge of the plan told Reuters, amid worsening trade tensions between the world’s two largest economies.

Washington has said it would implement tariffs on $34billion of Chinese imports on July 6, and Beijing has vowed to retaliate on the same day.

Its Game On… #CHINA TO IMPLEMENT #TARIFFS ON $34 BLN WORTH OF #US GOODS FROM MIDNIGHT BEIJING TIME JULY 6 – SOURCE

European Opening Calls:#FTSE 7579 -0.19%#DAX 12315 -0.28%#CAC 5303 -0.25%#MIB 21739 -0.11%#IBEX 9634 -0.28%

Even if service sector activity is stronger than forecast, it may fail to capture investors’ attention for any significant amount of time. Brexit will be firmly back on the agenda, with the Prime Minister due to hold talks at the Chequers residence this weekend, in the hope of finding a solution to the customs partnership with the EU post Brexit.

Theresa May has made a series of pleas to her bickering party to sort out their differences and to the EU, not to decline the third proposal.

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Tariff fears drag markets down as EU and Trump trade blows – business live

All the day’s economic and financial news, as US president says Europe is “possibly as bad as China”, and EU threatens tariffs on more American goods

City economist Paul Donovan of UBS isn’t impressed by Trump’s claim that Europe is “as bad as China” when it comes to trade.

He says:

US President Trump sounded upset about Europeans selling Americans things Americans want to buy.

The Financial Times reports the EU is threatening to tax a fifth of US exports if the US imposes taxes on consumption of EU autos and auto parts. That would be a trade war. US carmakers are lobbying against the proposed US taxes, showing that tariffs are an outdated concept.

July has started in a “troubled mood”, says Connor Campbell of City firm SpreadEx, as he watches the main European markets slide into the red.

Trump kicked off July by targeting the EU, not China, saying that the region was ‘possibly as bad’ as Beijing in how it treats the US, ‘just smaller’.

This has sent the President’s previous threat of tariffs on EU car imports back to the top of investors’ ‘To Fear’ lists, with the added spice of a report from the Financial Times suggesting the European Union could respond in kind with tariffs of $300 billion on US products.

Financial stocks are also having a bad morning.

The Stoxx 600 banks index, which tracks Europe’s largest banks, has dropped by 1.9% in the first few minutes of trading.

Britain’s FTSE 100 has fallen by 72 points, or almost 1%, at the start of trading.

That takes the blue-chip index of top shares down to 7574 points.

Investors are worried about the stalemate in discussions within Angela Merkel’s Germany coalition government and Trump’s intention to slap China with more tariffs.

In a worrying sign, Chinese factories are suffering from falling export orders.

Data firm Caixin has reported that new export sales at Chinese manufacturing firms shrank last month, for the third month in a row. That may be a signal that Trump’s tariffs are already hurting global trade.

The index for new export orders fell to a low for the year so far and remained in contraction territory, pointing to a grim export situation amid escalating trade disputes between China and the U.S., which led to weak demand across the manufacturing sector.

Asian stock markets are a sea of red today, as traders fret about the prospect of a global trade war.

Every major share index is in the red, and many emerging market currencies are sliding against the US dollar again.

Bad, bad day across Asia. Horrible start to the second half. pic.twitter.com/8Qw3yTlue0

A ramping up of trade war headlines over the weekend, such as a strong warning of retaliation from the EU and a potential currency war with China (US), will ensure that the fear of an all out global trade war is central in trader’s mind, as the session begins on Monday.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

“Look what they do to our farmers, they don’t want our farm products. In all fairness they have their farmers so they want to protect their farmers.

“But we don’t protect ours and they protect theirs.”

Brussels said that an American investigation into whether foreign cars and parts posed a national security risk could plunge the global economy into a full-on trade war, harming employment in the US’s auto sector, which accounts for more than 4m jobs.

In a sign of the EU’s exasperation at Mr Trump’s confrontational trade policy, which has already stoked tensions over steel and aluminium, the document said the move “could result in yet another disregard of international law” by the US. It said imposing the car tariffs would not be accepted by the international community and would “damage further the reputation” of the US.

Monday’s FT: Trump car tariffs threaten to spark full-scale trade war, warns Brussels #tomorrowspaperstoday pic.twitter.com/g8igoU29jc

#FTSE100 called to open -50pts at 7585 pic.twitter.com/frN3hoeXuQ

Related: Merkel’s migration battle: Seehofer ‘announces intention to resign’

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How has the Brexit vote affected the UK economy? This month’s verdict

Each month we look at key indicators to see what effect the Brexit process has on growth, prosperity and trade

‘Brexit is a disaster’ – experts debate the latest economic data
UK economy feels chill from spectre of disorderly Brexit

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