Rolling coverage of the latest economic and financial news, including....
Consumer confidence hits three-year low
UK’s largest estate agent issues Brexit earnings warning
Lloyds slashes thousands of jobs ahead of slowdown
Carmakers, surveyors and retailers sound the alarm
5.44pm BST
After the Federal Reserve kept US interest rates on hold and ahead of a decision by the Bank of Japan, stock markets fell back after their recent highs. Falling oil prices and disappointing results from the likes of Royal Dutch Shell and Lloyds Banking Group also hit sentiment. Investors were nervous ahead of the European bank stress test results due on late on Friday. The final scores showed:
4.25pm BST
Markets are in wait and see mode ahead of the Bank of Japan rate decision later, but oil continues to fall on renewed worries about oversupply and weak demand. West Texas Intermediate - the US benchmark has now fallen 20% since its June highs, indicating a bear market.
Meanwhile in the UK the FTSE 100 is down just 7 points while the Dow Jones Industrial Average is 74 points lower after the Federal Reserve kept US interest rates on hold but hinted at possible rises later in the year. Joshua Mahony, market analyst at IG, said:
An unsurprisingly indecisive session in Europe has seen the likes of the FTSE largely flatlining as traders reduced their risk overnight ahead of the week’s risk event from the Bank of Japan. Commodities have enjoyed a particularly volatile second half of this week, with crude continuing to tumble heavily on a global supply glut alongside evidence that fund managers are heavily shorting crude prices.
Tonight’s Bank of Japan meeting has been the focal point of the week despite yesterday’s Fed announcement. One of the main reasons for the post-referendum rally has been the promise of easing from the likes of the ECB, Bank of England and Bank of Japan. With the overnight index swap markets rating the chance of a Bank of England rate cut at 100% next week, it seems like a matter of time until we see some sort of action. However, given that we have seen the post-referendum rally stall after weeks of inaction in Europe, there is a feeling that the FTSE is waiting for some form of stimulus to spark another leg higher.
4.00pm BST
The IMF has been criticised for its handling of the eurozone crisis...by the IMF. Larry Elliott reports:
The IMF’s handling of the financial crisis in the eurozone has been criticised by the organisation’s own independent watchdog in a report that says the fund failed to spot the scale of the problem, was guilty of over-optimistic forecasts and left the impression that it was treating Europe differently.
While accepting that sorting out the problems of Greece, Ireland and Portugal “posed extraordinary challenges”, the IMF’s Independent Evaluation Office (IEO) said the fund had missed the buildup of banking system risks in some countries and shared the widely held “Europe is different” mindset.
Related: IMF's own watchdog criticises its handling of eurozone crisis
3.31pm BST
The vast majority of Irish small to medium enterprises believe Brexit is a threat to their business, writes Henry McDonald in Dublin:
A survey released today by the British-Irish Chamber of Commence found that out of 400 Irish SMEs 262 of them see Brexit as a threat with far fewer envisaging the post-EU future as an opportunity
The research also polled 88 British SMEs who do major business in Ireland. John McGrane, the Director General of the Chamber stressed that the Irish SME sector, which is the largest part of the Republic’s economy, still see the UK as key to their business despite Britain leaving the EU. McGrane said the uncertainty within Irish SME’s over what to do next after the Brexit vote required “joined up support” from both the Irish and British government and their relevant agencies.
3.25pm BST
The expectation of an interest rate cut by the Bank of England continues to put pressure on sterling.
The pound has fallen 1% against the euro, hitting a two week low of 84.48p a euro. Against the dollar it is currently down 0.58% at $1.3142.
3.18pm BST
Back with Brexit, and ratings agency S&P Global says the decision to leave the European Union should have little impact on the UK’s project finance initiative. It said:
We analyse the effect of Brexit on our U.K. portfolio of over 50 rated transactions, in particular the potential repercussions of a higher inflationary environment, weaker economic growth, and the change in the credit quality of revenues and financial counterparties. While we believe that the risks of adverse economic developments in the U.K. have increased, we expect U.K. private finance initiative (PFI) projects will maintain their credit strength.
2.53pm BST
A day after the US Federal Reserve kept interest rates on hold but suggested there could be a possible hike later this year, US stock markets have slipped lower in early trading.
The Dow Jones Industrial Average is down 44 points or 0.22%, while the S&P 500 has slipped 0.29% and Nasdaq 0.14%.
2.40pm BST
Ahead of eurozone GDP figures on Friday, new data from Belgium has shown the country’s economy growing by 0.5% quarter on quarter, despite terrorist attacks and strikes. That compares to 0.2% growth in the first quarter, and analyst expectations of a 0.3% increase. Year on year, the economy grew by 1.4%. Economist Peter Vanden Houte at ING Bank said:
According to the Ministry of Economic Affairs the negative impact of the March 22 terrorist attacks in Brussels on hotels, catering and retail trade amounted to about €180m for the first half of this year. This probably shaved off around 0.1 percentage points from second quarter GDP growth. On top of that, the second quarter saw a rather tense social climate, with several strikes, most notably in public transport. This also weighed on growth.
While the GDP components have not been published yet, the improvement in sentiment in industry seems to point to a positive contribution from investment and export. Residential construction most likely also contributed positively. With the situation on the labour market continuing to improve, consumption has probably also expanded, though some negative impact of the terrorist attacks seems likely.
2.30pm BST
Earlier, US jobless claims rose by more than expected last week, according to the Labor Department.
The number of Americans claiming unemployment benefits grew by 14,000 to 266,000, compared to expectations of an increase to 260,000. The previous week’s level was revised down by 1,000 to 252,000.
1.52pm BST
Over in Paris, an EDF board member has resigned shortly before the energy company announce whether it will push on with plans to build a new nuclear plant at Britain’s Hinkley Point.
Gerard Magnin said the project was risky, and would undermine France’s efforts to develop renewable energy technology.
An EDF board member opposed to Hinkley Point has resigned, which rather suggests that company is going to approve project...
1.28pm BST
Over in America, tech giant Oracle has swooped on cloud computing pioneer NetSuite in a $9.3bn deal.
The deal should boost Oracle’s web services offering; its founder, Larry Ellison, is also NetSuite’s largest shareholder.
It's the summer of self dealing acquisitions. First Elon Musk now Oracle (25% owned by Larry Ellison) buying Netsuite (40% owned by Ellison)
(Although unlike Tesla-Solar City, Oracle-Netsuite makes strategic sense.)
1.04pm BST
Newsflash from Germany: the country’s inflation rate has jumped to 0.4% this month, up from 0.2% in June.
That’s the highest level since January, which should pleas the European Central Bank in its battle to ward off deflation.
The #inflationrate in Germany is expected to be +0.4% in July 2016 #inflation https://t.co/nPg08OtgDi
12.11pm BST
Alex Stubb, Finlands’s former prime minister and finance minister, has warned that it will take a long time for the Brexit drama to play out.
It’s a 1952 moment, when the Coal and Steel Community was created, or 1989 when the Cold War ended.
This is huge for Europe, there’s no denying it.
It’s going to be a long, long process. What we get at the end of the day, I don’t know.
11.51am BST
Eurozone companies have defied the fall in consumer confidence, and are actually a little more optimistic this month.
The EC’s economic sentiment indicator has risen to 104.6 in July from 104.4 in June.
Other persistent worries such as the slowing Chinese economy, the immigration wave, and continued tensions with Russia also seem to made little impact on the confidence of consumers and businesses in the euro area. However, risks are skewed to the downside.”
11.21am BST
Consumer confidence across Europe has fallen this month, driven by a sharp slump in the UK.
That’s according to the European Commission’s monthly healthcheck on consumer morale, which fell to -7.9 this month from -7.2 in June.
CHART: July consumer confidence across Europe. Can you spot who decided to leave the EU? https://t.co/rbGRx2URzL pic.twitter.com/cfdML00qrL
11.03am BST
The dramatic events of the last few weeks have sent some of us staggering towards the drinks cabinet.
Out of Brexit, our focus is really on ensuring that we keep Scotch whisky healthy. The trade agreements in Europe and around the world. You know, Johnnie Walker was in over 100 markets, long before Coca Cola left the shores of America.”
'Protect whisky from Brexit': Diageo tells UK https://t.co/t9lum1uPRU
10.00am BST
More Brexit gloom.
Given the uncertainty surrounding the impact of the Brexit decision on the UK economy and advertising revenue, we are reviewing the number of screens we are deploying until we can evaluate the economic conditions and have improved visibility.
The worst Brexit news yet: there's gonna be less 84" advertising screens in TfL bus stops :-( https://t.co/ufFVfyhyKG
9.47am BST
Union leaders are urging the UK government to act urgently to protect the economy from the impact of the Brexit vote.
TUC General Secretary Frances O’Grady says:
“The growing expectation since the Brexit vote of an economic slowdown seems to be a factor. The government needs to act now to secure jobs and investment before thousands of working people pay the price of Brexit with the loss of their job.
“This announcement is very bad news for workers and their families, and more widely it is a further body blow to the UK economy.
“These are permanent jobs that are being lost. As a country, we can’t afford to lose these jobs in a challenging post-Brexit world.
9.38am BST
As well publishing half year results which reveal job cuts and branch closures, Lloyds Banking Group has also admitted it is being investigated by the Financial Conduct Authority over the way it handles customers facing difficulty paying their mortgages.
“In May, the FCA informed the group that it was commencing an investigation in connection with the group’s mortgage arrears handling. At this stage it is not possible to make an assessment of the outcome of this ongoing review”.
9.14am BST
In another worrying sign, a closely-watched survey of consumer confidence has hit its lowest level in three years after the Brexit vote.
The monthly index conducted by YouGov and the Centre for Economics and Business Research (CEBR) has tumbled to 106.6, the lowest since July 2013, down from 111.3.
“The public are still absorbing the EU referendum result but it is clear that consumer confidence has taken a significant and clear dive.”
More post-Brexit confidence wobbles. YouGov/Cebr sentiment falls to 3-year low https://t.co/1dFqDw5dkF via @charlie_ryan1
8.50am BST
Spain is celebrating the news that the country’s jobless rate has hit its lowest level in six years, before the eurozone crisis began.
However.... one in five adults are still out of work, and the situation could deteriorate if Europe’s economy suffers from Brexit.
The good news: Spanish unemployment rate at a 6-year low.
The bad news: Spanish unemployment rate is still 20%. pic.twitter.com/qJbeekBp8a
8.41am BST
Royal Dutch Shell is one of the biggest fallers on the FTSE 100 this morning, down 3% after posting a 70% tumble in earnings.
8.36am BST
Inchcape, the UK car dealership, has warned that demand for new cars is weakening, due to the Brexit vote.
It told shareholders this morning:
Ahead of the EU referendum, the second quarter New Vehicle market growth rate moderated to 1.0% from 5.1% in the first quarter. We expect this moderation of the New Vehicle market to persist into the second half of 2016.
8.28am BST
Building society Nationwide has reported that house prices were stable in July, rising 0.5% month-on-month.
The average house cost £205,715, 5.2% higher than a year ago.
8.23am BST
Engineering firm Rolls-Royce is also cutting jobs, after reporting an 80% tumble in profits in the first half of 2016.
Rolls-Royce says it's laying off 400 people this year, 200 more than previously announced; 270 have already left, as part of £50m cost cuts
Rolls-Royce says 400 job cuts all senior management roles, half are in the UK; but CEO stresses 'we are not just firing, we are also hiring'
8.18am BST
Today’s losses mean Countrywide has shed a third of its value since the referendum, highlighting how the UK’s property sector will suffer from Brexit.
8.10am BST
It’s a bleak morning in the financial sector too, as Lloyds Banking Group slashes 3,000 jobs.
The bank is speeding up its cost-cutting programme, and closing 200 branches as it enters a “period of uncertainty” following the Brexit vote.
The bank is blaming changes to customer behaviour and anticipated cuts to interest rates following the vote for Brexit last month. Mark Carney, the Bank of England governor, signalled a rate cut would take place during the summer and the City now expects rates will be cut from their 0.5% historic low on 4 August.
Lloyds bank to axe 3,000 jobs and close 200 branches https://t.co/6tk8lm4ncb
How Brexit works: "Lloyds plans 3,000 jobs cull, fresh branch closures after Brexit shock" - https://t.co/iI1TjTZr81
8.04am BST
Shares in Countrywide has dropped by almost 5% at the start of trading, following its Brexit-induced earnings warning.
8.01am BST
Britain’s biggest lettings and estate agent group has issued a stark warning that parts of the country’s property market are weakening, since last month’s referendum,
As we stated in our last Trading Update on 26 April, we took a cautious view of the months leading up to the EU referendum and beyond. In the event, we saw a slowdown in our Retail and London residential businesses and, since the EU referendum result this has become more marked in London, the South East and expensive prime markets.
The rest of the country has fared somewhat better and our Lettings business and mortgage trends have been largely unaffected.
This period of uncertainty will inevitably impact the level of transactional activity in the second half of the year and, although it is too early to quantify accurately, we will not meet last year’s result at the EBITDA level.
7.43am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Related: British economy begins to show signs of post-Brexit slowdown
The UK economy is collapsing and/or booming depending on which newspaper you choose to read. pic.twitter.com/K1hfSSG2Q8
“Near-term risks to the economic outlook have diminished.”
Related: EDF 'to give green light to Hinkley Point project'
A plethora of FTSE earnings reports this morning!
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