UK growth hits six month low
The UK economy grew by 0.3% in the three months to November, down from 0.4% in the three months to October and the weakest in six months.
On a monthly basis, GDP rose by 0.2% in November, which was an improvement on October’s 0.1% growth.
Neil Wilson, analyst at Markets.com, says the FTSE’s break through the 7,000 mark is significant:
FTSE 100 is testing 7,000 again, showing a firm bounce from the key test at 6,700 which it has survived. The area around 7,000 is the 38% retracement of the rally from the 2016 lows to the 2018 highs.
It’s also an area where we saw a lot of choppiness last November and is likely to form a key resistance point. The indicators appear quite bullish with the index breaking free from downtrend resistance and through its 50-day moving average on the close yesterday, which has proved a very sticky area of resistance throughout the recent downtrend.
FTSE hits 7,000 after boost from Fed’s Powell
European investors have started the day with moderate cheer, with all major indices edging higher in early trading.
The FTSE is back above the 7,000 mark for the first time in 2019, up 57 points or 0.8%.
It follows a turnaround on Wall Street on Thursday, with the Dow down sharply after a gloomy update from the department store Macy’s, which had disappointing sales over Christmas and lowered its earnings guidance for 2018.
The Dow then recovered after comments by Jerome Powell, chair of the Federal Reserve, who signalled the central bank might be prepared to hit the pause button on further US rate hikes.
Here’s how its looking across Europe:
- FTSE 100: 0.8% at 7,000.29
- Germany’s DAX: 0.3% at 10,949.72
- France’s CAC: 0.3% at 4,818.01
- Italy’s FTSE MIB: 0.3% at 19,354.55
- Spain’s IBEX: 0.4% at 8,890.90
- Europe’s STOXX 600: 0.4% at 350
Flybe rescued by Virgin and Stobart in cut-price deal
Struggling airline Flybe has recommended to shareholders a £2.2m takeover offer from a consortium led by Virgin Atlantic, which is part-owned by the billionaire Sir Richard Branson.
The consortium, which also includes infrastructure firm Stobart Group and investment house Cyrus, are offering just 1p per share. That’s a hefty discount compared with Flybe’s closing price of 16.38p, and shares have plunged 90% this morning to 1.7p.
Flybe put itself up for sale in November after a profits warning that outlined the extent of its woes, as it struggled to cope with rising fuel costs, currency volatility and political uncertainty.
If the deal goes ahead, Virgin and co will inject £100m into Flybe, broken down into a £20 working capital loan and £80m to invest.
Economists polled by Reuters are expecting the ONS figures later this morning to show Britain’s manufacturing sector grew by 0.3% in November.
But as we saw yesterday with Jaguar Land Rover and Ford axing thousands of jobs, car manufacturers in particular are struggling.
Michael Hewson , chief market analyst at CMC Markets, says the figures could well come in below expectations, following in the footsteps of Germany and France:
Concerns about a slowdown in the UK economy will focus on a different sector today with the release of the latest manufacturing and industrial production numbers for November. We’ve already seen some ugly numbers out from Germany and France this week raising concerns that Germany could fall into recession in Q4.
If the weak economic environment in Europe is any guide the UK could well cop some of the fallout from that, with the sharp decline in oil prices also weighing on the UK oil and gas sector.
UK industrial production is expected to rise 0.3%, while manufacturing production is expected to rise 0.4% after some sharp declines in October. It should be remembered that similar positive projections were expected for this week’s German and French numbers so a sharp miss to the downside can’t be ruled out.
Investors await UK growth figures for signs of a slowdown
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
UK growth figures at 9.30am will provide the latest insight into how the economy is faring as Brexit looms. It’s not expected to be pretty, with City economists pencilling in growth of just 0.1% in November.
If economists are correct, the quarterly rate of growth will slow to 0.3% from 0.4%.
The Office for National Statistics will also publish growth estimates for the major output sectors of the economy (services, manufacturing and construction), which will provide further clues on how sections of the economy are performing.
We already know that November was a terrible month for retailers (the worst on record according to Sports Direct boss Mike Ashley), but how is the rest of the economy holding up?
- 9.30am GMT: UK monthly GDP for November
- 9.30am GMT: UK services, industrial production, manufacturing output and construction output for November
- 9.30am GMT: UK trade figures for November
- 1.30pm GMT: US inflation data for December