Rolling business coverage as IMF chief says rising US interest rates and Chinese slowdown are creating uncertainty
11.32am GMT
Financial markets remain sluggish, with just one more trading day to go this year.
The FTSE 100 index is down 25 points, or 0.4% at 6289.04. The eurozone is a bit more mixed; the Dax is still in the red by 46 points, a 0.5% fall, whilst the CAC has made a bit of a comeback, with a 5 point increase.
With Brent Crude now even closer to falling back below the $37 per barrel mark (only needing to drop around 10 cents to break that barrier with the US crude inventories still to come) the FTSE had a battle on its hands this morning...
The index still has to deal with a sliding supermarket sector, however, with Ocado Group dropping another 5% after yesterday’s announcement from Amazon that the online giant would be expanding its UK grocery delivery service Pantry.
11.01am GMT
Deflation eased in Spain in December, to 0.1% from 0.4% in November, suggesting inflation across the eurozone could inch higher in December, economists say.
.. and up from -0.9% y/y in October, a.substantial jump as base effects kick in, more important than "till negative" https://t.co/TF9oLltURV
11.00am GMT
Spain received a record 64.6m foreign tourists in the eleven months to November, 4.8% more than in the same period in 2014, according to official data.
Most of them came from the UK (14.97m, up 4.1%), followed by France (10.9m, up 8.9%) and Germany (9.86m, down 0.8%).
10.53am GMT
Apple has reached a €318m settlement with Italy’s tax office, Italian newspaper La Repubblica reported.
Italy’s tax office said it had reached a deal with the American tech giant in a dispute over taxes but declined to comment on details. La Repubblica reported hat Apple agreed to pay €318m.
Apple has agreed to our request.”
10.32am GMT
Contactless card transactions now account for one in 10 card payments in Britain – the first time that milestone has been passed.
Figures from the UK Cards Association show there were 120.5m contactless card payments in October in the UK. This equates to 10.3% of all card transactions – up from 3.7% a year ago.
With one in 10 card payments now contactless, it’s clearly the preferred way to pay for millions of consumers. The rise in the contactless limit to £30 earlier this year means there are now even more opportunities to make a fast, easy and secure contactless payment.”
9.36am GMT
RBS Economics have done this handy graphic showing regional variations in house prices this year.
How did house prices do this year? Depends where you live. London soared, Scotland fell. Latest figs from Nationwide pic.twitter.com/Noc8VFrlGY
9.31am GMT
In London, shares in online grocer Ocado have fallen sharply for a second day, after a Guardian story sparked concerns over growing competition from a rival service at online giant Amazon.
Ocado shares fell nearly 8% in early trading and are now down 6.5% at 304.6p.
9.21am GMT
Ukraine plans to continue talks with Russia in January over a $3bn Eurobond which Kiev has threatened not to repay, Ukrainian finance minister Natalia Yaresko said today, Reuters reported.
Ukraine has included the two-year bond, which matured on 20 December, in external commercial debt it is restructuring to shore up its war-torn economy. But Russia has refused to accept these terms, arguing the bond is an official country-to-country loan, not commercial debt.
9.13am GMT
China’s foreign exchange regulator said that it would improve its policy reserves and contingency plans to curb risks from abnormal cross-border capital flows.
The country’s outstanding foreign debt totalled $1.53 trillion at the end of September, down from $1.68 trillion at the end of June, the State Administration of Foreign Exchange said.
China understood to have suspended cross-border yuan operations of at least 2 foreign banks https://t.co/4dg3tXG6Ue pic.twitter.com/32QDivjkVS
9.03am GMT
In the film Groundhog Day, Bill Murray plays a weatherman who finds himself in a time loop reliving the same events. Well anyone involved in the oil industry must think they’ve joined Bill in the film. The end of this year feels remarkably similar to the end of last year, with oil prices collapsing again, writes independent City analyst Louise Cooper.
Currently the price of a barrel of Brent crude is $37, a fall of 35% since the summer. A year ago, in December 2014, crude cost more - about $65 - but it had also fallen around 35% since the summer. And for both 2014 and 2015, the final collapse of the crude price was caused by a disorderly meeting of the oil producing cartel, OPEC, at the beginning of December, Cooper notes.
If this Oil Groundhog Year continues, then oil companies are likely to repeat last year’s reaction to cheaper crude: announcing large cost cutting, slashing investment and issuing profit warnings. The oil firms announced this at the same time as releasing their 2014 full year results in January, February and March. If the oil prices stays at $37, they may well be forced to do the same in the opening months of next year.
Last week Shell released the documentation for investors for its merger with BG Group. The most telling fact was that Shell is assuming an oil price of $50 in 2016 and $65 in 2017. The majority of city analysts are also as optimistic that oil prices will rise from current levels. According to Bloomberg the average Brent crude forecast is still $54 in 2016 and $61 in 2017.
However all these forecasts look extremely high in the context of a current oil price of just $37. The problem is that the crude price fall has been so quick, the oil industry has been slow to adjust, just like last year. And the city analysts that scrutinise the industry are also “behind the curve”. They are all playing catch up again.
I am old enough to remember $9 oil (in December 1998) and during most my early career in the 1990s, Brent cost between $18 and $20. Adjusting for inflation would take Brent to about the current level. It may be that the high oil price of up to and over $100 of recent years that was the aberration and we are just returning to the longer term lower price.
Analysts at ExaneBNP Paribas warned recently that for global oil firms there is a “clear risk of dividend cuts which is far from fully priced into the shares”. Adding that the “European oil sector will be paying dividends out of debt until 2018 at the earliest”...
8.55am GMT
There is a theory that all IPOs are priced between 10% and 20% below their intrinsic value and the latest performance statistics back up this thinking. We calculate the average share price gain for all IPOs [in London] in 2015 is 11.4%, writes Daniel Coatsworth at Shares magazine (£).
Average share price return from all IPOs on London market in 2015 was 11.4%. Read my analysis: https://t.co/Bjovy4GQ96
8.41am GMT
European stock markets are trading lower this morning, as weak commodity prices are weighing on miners and energy companies.
Yesterday stock markets around the world put in a strong performance, buoyed by a near-3% rise in the price of Brent crude.
8.32am GMT
Veteran investor Warren Buffett is headed for his worst year relative to the rest of the US stock market since 2009, with shares in his conglomerate Berkshire Hathaway down 11% so far this year, the Financial Times reports. Berkshire has been hit by the commodities slump.
The underperformance comes in Mr Buffett’s Golden Anniversary year at the helm, when he told investors for the first time that they should judge his record based on Berkshire’s share price, rather than just the book value of the company, which had been his preferred yardstick for decades.
Mr Buffett urged them to make that judgment based on the long term, rather than on a single year, reflecting investing mentor Benjamin Graham’s view that the stock market may be a “weighing machine” in the long run, but in the short term it is a “voting machine”.
8.26am GMT
Howard Archer, chief European and UK economist at IHS Global Insight, has looked at the Nationwide house price figures.
The stronger Nationwide data for December reinforce our belief that house prices are likely to see solid increases over the coming months. We expect house prices to rise by around 6% over 2016 amid healthy buyer interest (supported by largely decent fundamentals) and a shortage of properties.”
8.17am GMT
Returning to Lagarde’s comments, she wrote in a guest article for Handelsblatt:
In many countries the financial sector still has weaknesses and in emerging markets the financial risks are increasing. All that means global growth will be disappointing and uneven in 2016.”
8.02am GMT
We have done a big piece on oil – “Recession, retrenchment, revolution? Impact of low crude prices on oil powers” from our correspondents around the world. Take a look.
A glut of oil, the demise of Opec and weakening global demand combined to make 2015 the year of crashing oil prices. The cost of crude fell to levels not seen for 11 years – and the decline may have further to go.
There have been four sharp increases in the price of oil in the past four decades – in 1973, 1979, 1990 and 2008 – and each has led to a global recession. By that measure, a lower oil price should be positive for the world economy, with lower fuel costs for consumers and businesses in those countries that import crude outweighing the losses to producing nations.
7.53am GMT
UK house prices rose 4.5% year-on-year in December, up from November’s annual growth rate of 3.7%, according to Nationwide. It expects the housing market to strengthen further next year, even if the Bank of England starts hiking borrowing costs from next summer as expected.
Nationwide chief economist Robert Gardner said:
As we look ahead to 2016, the risks are skewed towards a modest acceleration in house price growth, at least at the national level, despite the likelihood of interest rate increases from the middle of next year.”
7.45am GMT
Good morning and welcome back to our live blog covering financial markets and business and economics news from around the UK and the world.
Christine Lagarde, managing director of the International Monetary Fund, has warned that global growth will be disappointing next year. Writing in German newspaper Handelsblatt, she said the prospect of rising interest rates in the US and the economic slowdown in China are contributing to uncertainty.
Knightsbridge is central London's worst performing housing market of 2015, with 6% fall https://t.co/eqWuPeDEHU pic.twitter.com/JsQMwNghdn
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