All the day’s economic and financial news, as investors welcome the prospect that Francois Fillon could beat Marine Le Pen in next year’s presidential election.
ECB’s Draghi says governments need to step up reforms
Markets bolstered by Fillon and Merkel
Fillon’s election success pushes euro higher
Introduction: What will be in the UK autumn statement?
Politics Live: Theresa May at the CBI conference
6.14pm GMT
A rising oil price, along with political developments in France and Germany, has helped push European stock markets into positive territory on the first trading day of the week.
The prospect that Francois Fillon could beat Marine Le Pen in next year’s French presidential election has given investors some comfort, as has Angela Merkel’s announcement she was running for a fourth term as German chancellor.
6.13pm GMT
On the effect of the US election on the euro area economic outlook, Draghi said it is too early too now.
But he said, as with the UK referendum vote, the reaction in the markets was significant to start with, but then muted. Markets have shown their resilience, helped by the actions of in the first case the Bank of England, then the ECB.
6.09pm GMT
ECB president Mario Draghi is now responding to the comments of MEPs.
He says he understands the concerns about the bank’s unconventional measures, and says there are some risks. But he says they do not see an asset price bubble developing.
5.59pm GMT
Here’s the full Reuters report on the comments from ECB board member Benoît Cœuré on the bank not contemplating buying stocks as part of its QE programme.
5.31pm GMT
Away from the ECB and back to the CBI’s annual conference in London, where Labour leader Jeremy Corbyn has begun addressing delegates.
Follow his speech on our politics live blog from here.
5.30pm GMT
Meanwhile, while ECB president Mario Draghi is listening to the various comments - often negative - on the bank’s annual report, executive board member Benoît Cœuré has also been speaking.
According to Reuters, he said that at some point the ECB would scale down its stimulus programme but not yet. And there was never any discussion about buying stocks as part of the QE programme.
5.07pm GMT
A number of MEPs are lining up to point out the problems in the eurozone and criticise some of the ECB’s policies, while saying growth is still fragile.
4.38pm GMT
Draghi has begun speaking, apologising for his late arrival due to transport problems [we’ve all been there...]
You can follow the session here.
4.30pm GMT
European Central Bank president Mario Draghi has defended the bank’s monetary policy actions once more, and repeated his calls for governments to step up their own reforms to boost growth.
And he said the bank needed to continue its supportive policies to bring inflation close to its target.
The euro area recovery continues to proceed at a moderate, but steady, pace. It has shown remarkable resilience to adverse developments and uncertainties emanating from the global environment...
Our monetary policy measures since June 2014 have been a key factor behind these positive developments. Asset purchases, targeted longer-term refinancing operations (TLTROs) and low policy rates have strongly supported the recovery...
However... our monetary policy support has to be accompanied by decisive action from other policy areas.
In fact, we continue to face a number of structural challenges that are holding back a more dynamic expansion of the euro area economy. So the right policies need to be designed to address existing vulnerabilities and challenges and, ultimately, secure higher sustainable growth for the euro area...
3.43pm GMT
The jump in the pound took the attention away from events in Europe, and also pushed the FTSE 100 lower after a bright start. Connor Campbell, financial analyst at Spreadex, said:
After a morning of euro strength, following the double whammy of Merkel’s announcement she will run for a fourth term as Chancellor and Francois Fillon’s right-wing primary win causing potential problems for the unpleasant Marine Le Pen, out of nowhere focus shifted to the pound this afternoon. While it might be a case of scrambling around for a narrative to explain a rather sudden movement, it appears that May’s (attempted) reassurances that the government is working to avoid a Brexit ‘cliff edge’ for businesses, comments that perhaps suggest a transitional deal, have caused sterling’s resurgence.
And what a resurgence it was, with the pound rocketing more than 1% higher against the dollar and 0.8% against the euro; its performance against the latter is especially remarkable given that it was nearly half a percent in the red earlier in the day. This in turn dragged the FTSE back below 6800, despite the chunky gains made in the oil and mining sectors, while also helping cement the 0.3% and 0.6% growth seen by the DAX and CAC respectively.
3.03pm GMT
Ahead of Wednesday’s Autumn Statement from new UK chancellor Philip Hammond, Royal London Asset Management has called for measures to boost growth. Trevor Greetham, head of multi asset at Royal London, said:
Now is the time to reset fiscal policy and the focus should be on boosting nominal growth to offset Brexit uncertainty rather than trying to deliver ‘austerity-lite’.
Going for growth should reduce the debt burden over time as the government can borrow money in the gilt market at a cost of 1-2 per cent per annum and invest in an economy with long term growth potential of four. The government should counteract the lack of private sector investment since the financial crisis by improving transport infrastructure, housing and power generation while continuing to support research and new technology.
2.56pm GMT
A rise in the oil price on hopes of an Opec deal next week to limit production has helped push US markets higher in early trading. The post-election rally has continued, boosted by the expectation of infrastructure spending and other measures to boost the US economy.
The Dow Jones Industrial Average is currently up 51 points or 0.28%, just 15 points below its record high. Meanwhile the Nasdaq index of technology companies has already reached a new peak, up 0.56%.
2.36pm GMT
The pound has just jumped by over one cent against the US dollar....and it’s not quite clear why!
After a slow start, sterling suddenly jumped by over 1% to hit $1.25, from $1.234 this morning.
Pound rallies towards $1.25: Yes, rallies. Do not adjust your set. https://t.co/3kyOE021sj pic.twitter.com/uoEfxNvVXI
Related: May hints at transition deal on Brexit to avoid 'cliff edge' for business
Sterling jumped by a full cent in a few seconds just after 1325 GMT on Monday, with dealers at several major banks saying there had been no clear driver of the move in a currency still smarting from a so-called “flash crash”a month ago.
2.10pm GMT
Influential MP Andrew Tyrie is highly unamused that the Bank of England is considering hiking the UK’s deposit protection scheme back to £85,000, less than 18 months after cutting it to £75,000.
“The announcement today of another change to the deposit protection limit – there have been about seven in the last decade – is a recipe for yet more uncertainty.
“Each change will have carried a cost. It’s extremely valuable for the level of deposit protection to be well known for long periods. This allows savers and small businesses time to adjust. Stability is what is needed. That is what can entrench public confidence in depositor protection, the most valuable commodity of all.
“The absurd situation, in which the UK is left vulnerable, at the discretion of the European Commission, to frequent changes in our deposit scheme, must be brought to an end. Brexit should give the UK the opportunity to set its own level of protection. We should take it.”
1.44pm GMT
Francois Fillon’s plans to shrink the French state by cutting 500,000 jobs will surely alarm France’s unions, and could be fiercely fought.
Cutting unemployment benefit and raising the retirement age will also be controversial, should Fillon become the next president.
The financial markets want stability and they want trust.
With Fillon they would get stability and trust.
Fillon's sweep: Juppé (red) ahead in Seine-Saint-Denis (lefty Paris outskirts) + south-west stronghold, Sarko (yellow) in Réunion + Corsica pic.twitter.com/dcbYZFzfhm
Nicolas Sarkozy crashed out of the primaries with only 20.6% of the vote. Shortly after his defeat he called on supporters to throw their weight behind Fillon.
Among those who responded to the call were former prime minister and presidential candidate Edouard Balladur, and Sarkozy supporters Brice Hortefeux and Rachida Dati, as well as fellow first-round loser Bruno Le Maire.
Related: France’s 'Fillon miracle' forces beaten rivals to rethink their loyalties
1.08pm GMT
The US stock market is expected to open calmly in 80 minutes time, as the Trump effect wears off:
US Opening Calls:#DOW 18889 +0.12%#SPX 2187 +0.22%#NASDAQ 4820 +0.25%#IGOpeningCall
12.44pm GMT
Francois Fillon hasn’t got the Republican nomination sewn up quite yet.
Having won yesterday’s first round contest, he must now beat Alain Juppe in a run-off next Sunday. That shouldn’t be a problem, given Fillon’s strong showing in the primary:
I see that <looks at paper> Fillon is winning the <looks at paper> French Republican primary which can only mean <strong opinion here>.
François Fillon, who beat his former boss Nicolas Sarkozy to join Alain Juppé in the second round of voting for France’s rightwing Republican party’s presidential candidate, is a social conservative who likes drinking tea, driving classic cars and cutting state spending.
The 62-year-old Paris MP’s campaign slogan to slash half a million public sector jobs over five years is inspired by his heroine, Margaret Thatcher.
Related: Who is François Fillon – the man who ended Sarkozy's dream?
12.21pm GMT
Europe’s big three stock markets are all pushing higher as lunchtime approaches.
The confirmation that Angela Merkel is set to run for a fourth term as German chancellor in next year’s election, combined with a Marine Le Pen-damaging victory for Francois Fillon in the first round of France’s right-wing primaries, has given life to the euro this morning.
The Eurozone currency finds itself up 0.2% against the dollar, just about lifting it away from last week’s sub-€1.06 lows, while it has had more success against the pound, taking back nearly half a percent.
#Euro, #DAX and #CAC rise as investors cheer #LePen-damaging primary win for #Fillon and 4th term aim for #Merkel...https://t.co/tx8URSSctD
#France's 10y yields drop, outperform other Eurozone markets, as Thatcherite reformist Fillon front runner in France's 2017 pres election. pic.twitter.com/4nsLpxLlYH
11.26am GMT
Newsflash: The Bank of England is considering raising the maximum bank deposit guaranteed in the UK to £85,000, from £75,000.
The move is prompted by the pound’s slump against the euro since June’s EU referendum, from €1.30 to €1.16.
Taking into consideration the developments in financial markets following the UK’s referendum vote to leave the European Union on 23 June 2016, including with respect to the GBP/EUR exchange rate, the PRA considers that a structural shift in the exchange rate has occurred.
We’re consulting on restoring the protection limit for money deposited with firms we regulate to £85,000. Read more: https://t.co/gcxX6z9SlL
Possible good news from a lower UK Pound £. Although this is not something for a type of Hokey Cokey dance... https://t.co/pWQRixLTTC
11.12am GMT
Antonio Barroso of Teneo Intelligence also thinks Francois Fillon would beat Marine Le Pen in a straight race to become French president.
Barroso says Fillon’s victory over Alain Juppe and Nicolas Sarkozy in Sunday’s Republican primary is bad news for Le Pen:
While left-wing voters would find it more difficult to support Fillon than Juppe in a second round, he is a less toxic candidate than Sarkozy; it is also likely that he would moderate his stance on economic issues between the two rounds in order not to scare off centrist voters. Fillon’s biggest strength is that he would be able to limit the potential flow of traditional conservative voters towards the FN [National Front].
In sum, the former PM would probably be able to deploy the necessary ambiguity to build a coalition of voters that could defeat Le Pen.
10.46am GMT
The euro has gained almost half a cent against the US dollar this morning, as European political drama overtakes Donald Trump as the main issue on the trading floors.
The single currency is trading at $1.063, up from $1.0585 on Friday night. That ends 10 days of straight declines following the US election.
#Merkel on the 2017 race: “this election will be difficult, like no election before - at least not since the German reunification.”
François Fillon on #Brexit: you cannot leave the common house, avoid the charges, but benefit from the roof, the rooms and the cover (28/6)
François Fillon on #Brexit: no reason for UK to have financial passport and eurozone shd handle clearing for single currency... june speech.
François Fillon said British MEPs and civil servants should not take part in votes and decisions while Brexit is being negotiated.
The clearest message I received over the last two weeks was that opinion polls and historical voting patterns which suggest a le Pen victory is unlikely, won’t do much to ease pre-election nervousness. Market participants can see the shift in the voter mood and the sharp swing in support for M Fillon can be seen as yet another surprise for opinion pollsters.
Uncertainty will weigh on the Euro for months to come.
10.22am GMT
City analysts are warning that Wednesday’s autumn statement will not be a game-changer, given the UK’s financial problems.
George Palmer from Waverton Investment Management hopes that Phillip Hammond will announce new infrastructure spending plans.
George Osborne’s Budgets and Autumn Statements were defined by a general intent to cut deficits, budgets and taxes on the entrepreneur. If Hammond is going to stimulate an economy that is entering a period of uncertainty it is unlikely that he will be able to cut all three. He has already abandoned the prospect of balancing the books and Wednesday 23rd will give us an idea on tax cuts.
In line with Mr Trump’s promises of improved infrastructure (not just walls) to provide growth and jobs, the expectation is that Mr Hammond will similarly spend the windfall of expanded deficits and unbalanced budgets on some sort of infrastructure. And arguably, there is capacity to do so – the lack of investment (excluding the Olympics) since the Financial Crisis means its share of GDP has been falling steeply (as this chart shows):
Given the size of the UK’s debt pile, in addition to poor economic forecasts any expectations of Trump style spending are misplaced and he is likely to opt for a rather conservative budget in comparison.
Sterling has seen a soft start to the week as Hammond’s talking down of the UK’s post Brexit economy over the weekend has done little to support the battered currency; we are expecting to see more volatility in the lead up to and during the course of the Statement on Wednesday.
The size of Hammond’s fiscal arsenal has been somewhat limited by new estimates forecasting a £100bln black hole in the UK’s finances due to slower growth and limited international investment attributed to the UK’s decision to leave the EU.
Despite the government ditching the pledge to balance the books by 2020, this lack of fiscal rigour will prevent Hammond, and any future governments, from enacting wider-reaching fiscal reform such as lifting the 1% public sector pay rise cap and revitalising public services.
9.55am GMT
And She’s off! Theresa May is telling the CBI conference that capitalism is the best hope for people struggling in the UK.
But she’s also challenging business to do more to help Britain, through long-term investment, helping communities and creating jobs for the next generation.
We believe in free trade, capitalism and biz says PM May #cbi2016. But we need to adapt and change. Asks biz for help pic.twitter.com/vcNowlnOVP
9.40am GMT
The CBI’s annual conference is up and running, and Theresa May should give the keynote speech in a few minutes.
Our Politics Live blog has all the details:
Related: May signals plan to put workers on company boards being watered down - Politics live
9.39am GMT
Britain’s government is signalling that it may pull a sharp u-turn over plans to put workers on company boards.
The Sunday Times reported yesterday that Theresa May is considering ‘watering down’ the plan, which was one of her early pledges when she replaced David Cameron in July.
“Theresa May has talked about an economy that works for everyone - that includes workers, employees, consumers, the supply chain businesses - so we will put forward a series of ways in which those voices can be represented on boards.
“We will publish those plans. We will have options. We are working with business.
End of workers on boards idea -'we will look at different ways' says Biz sec Greg Clark - olive branch to biz from govt as May heads to CBI
If Mrs May says #Brexit means Brexit, surely workers on boards means workers on boards? https://t.co/y1iPAtiTSP
9.25am GMT
Italy’s stock market has shed 1% in early trading as traders anticipate that voters will reject constitutional reforms in next month’s referendum.
#Renzi is holding a referendum in 2 weeks: what's the probability of a YES vote? My take on @Bruegel_org https://t.co/n0NWP3v8jd #italy pic.twitter.com/oEIgmdjzUu
#Italy #referendum polls continue to give no reasonable lead. Although around 25% undecided #Renzi worried. pic.twitter.com/wmyzTJP7zr
8.48am GMT
Social networking platform Facebook has given the UK economy a fillip, by announcing plans for a new headquarters in central London.
Related: Facebook will hire extra 500 UK workers for new central London HQ
8.39am GMT
Trump spent the weekend entertaining potential cabinet member at his New Jersey golf club.
“We’ll to have to take a view as to whether these people are pro free trade, or not as anti free trade as Trump sounded on the campaign trail, and what we’re likely to get in policies such as fiscal expansion and the dollar.”
8.26am GMT
After 12 days of shock, the City may have adjusted to the prospect of Donald Trump becoming the next US president.
The reflationary trade, or as some like to call it “Trump trade”, probably led some big name bearish investors, who were calling the end of 8-year bull market to reconsider their judgments.
Since Trump won the elections on November 9, the dollar index gained 3.6%, the Dow Jones traded at new record highs, and yields on U.S. 10-year treasury bonds rallied 25%. The shift in market sentiment was based on hopes that a Trump presidency means businesses’ profits skyrocketing due to sharp cut in taxes, more capital expenditures, and finally some inflation supported by aggressive government infrastructure spending.
8.05am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Related: Philip Hammond dashes hopes of big windfalls for struggling families
A study of 187,000 households across the UK found that policies including cuts to universal credit and the four-year benefit rate freeze, coupled with rising rents and higher inflation, would see low-income working families typically lose £48.90 a week by the end of the decade.
The findings have alarmed councils and charities worried that the growing financial burden on low-income families will raise poverty and homelessness levels.
Related: 'Just about managing' families to be £2,500 a year worse off by 2020 – study
Related: Sarkozy defeated in primary for French right's presidential candidate
Related: Divisive and conquered, Sarkozy bows out of a race that has a long way to go
A very quiet session in Asia and feel today may also be dull as we have no data of note this morning..
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