Rolling coverage of the Bank of England’s monetary policy decision at noon, as Chinese producers cut their prices at fastest rate since 2009. * Introduction: Bank of England decision and minutes * Fears of Chinese deflation hit markets 9.44am BST PETER CAMERON, ASSOCIATE FUND MANAGER AT EDENTREE INVESTMENT MANAGEMENT, RECKONS THAT THE CASE FOR RAISING UK INTEREST RATES IS “FLIMSY”. The UK’s exports are already struggling against the strength of Sterling, a problem that would be exacerbated by a rate rise. Hawks may point to wage growth finally showing signs of life but even this trend slipped into reverse last month and could slow further if the outlook for the global economy darkens. 9.31am BST LAST MONTH, ONLY ONE BANK OF ENGLAND POLICYMAKER (IAN MCCAFFERTY) VOTED TO RAISE INTEREST RATES. Yann Quelenn, market analyst at Swiss online bank Swissbank, reckons other MPC members will sit tight again: “It is likely that the Bank of England will leave its rate unchanged today. We believe that policymakers are not only considering domestic conditions but also global conditions. Markets are currently driven by the next U.S. Fed rate hike, China’s current turmoil and lingering low oil prices. 9.05am BST CHINA’S STOCK MARKET HAS CLOSED IN THE RED, AFTER PREMIER LI KEQIANG WARNED THAT THE COUNTRY’S ECONOMY WAS VULNERABLE TO GLOBAL SHOCKS. The Shanghai Composite index ended the day down 1.45%, ending a two-day rally. Li acknowledged that the economy had “come under quite a number of difficulties and downward pressure” while stressing it remained in a “proper range”, a favourite phrase. But he admitted that “deep-seated problems” were being exposed. 8.46am BST It’s a bad morning for workers at supermarket chain Morrisons, as my colleague GRAHAM RUDDICK explains: Around 900 jobs are at risk at Morrisons after the grocery retailer announced it plans to close 11 supermarkets. David Potts, the new chief executive, has proposed shutting the supermarkets as part of a drive to turnaround the struggling company. Related: Morrisons' store closures threaten jobs as profits slide 8.39am BST HIGH STREET RETAILER NEXT IS COPING PRETTY WELL WITH THE ECONOMIC CONDITIONS. Shares in Next have jumped around 2% to the top of the FTSE 100 leader board, after it posted a 7.1% jump in profits thanks to selling more products at full price. Of this, £11m relates to the wages of those who will be paid the Living Wage Premium (LWP). The remaining £16m is the knock-on effect of maintaining wage differentials for supervisors, junior managers and other more skilled or demanding roles within the business (such as specialist call centre work). Next boss Lord Wolfson warns national living wage will cost extra £27m per year and risks "creating a potentially harmful inflationary loop" 8.23am BST AFTER YEARS OF STEADY SUCCESS, THINGS AREN’T LOOKING QUITE SO GOOD AT JOHN LEWIS AS IT REPORTS A 26% FALL IN PRE-TAX PROFIT TODAY. Group chairman Sir Charlie Mayfield has admitted that trading conditions were tough for John Lewis’s deparment stores and Waitrose supermarkets, where sales fell for the first time in seven years. Related: John Lewis profits fall amid higher costs and competition 8.16am BST UK BUSINESS CHIEFS HAVE URGED THE BANK OF ENGLAND TO LEAVE BORROWING COSTS UNCHANGED AT TODAY’S MEETING, AND AT EVERY GATHERING UNTIL THE MIDDLE OF 2016. The British Chambers of Commerce argues that the economy could be shunted by problems overseas in the months ahead, and needs the cushion of low borrowing costs. “Global uncertainty – including the current situation in China, weakness in the eurozone, and the widely expected rise in US interest rates – could trigger further bumps in the road. Factors outside our own control reinforce the case for the Bank of England to keep interest rates on hold until well into 2016.” Related: Business chiefs urge Bank of England to leave interest rates on hold 8.12am BST TRADING IS UNDER WAY IN EUROPE, AND THE MAIN STOCK MARKETS ARE ALL DROPPING. 8.02am BST OVERNIGHT, BRAZIL WAS STRIPPED OF ITS INVESTMENT GRADE CREDIT RATING, AS THE COUNTRY’S POLITICAL AND ECONOMIC PROBLEMS DEEPEN. Standard & Poor’s downgraded Brazil to BB-plus, the highest junk rating, making it the first of the BRIC economies to lose investment grate status since the financial crisis began. #Brazil cut to junk by S&P. Mkts already priced country as junk. 5y default probability >20% http://t.co/IFyqvEgHuv pic.twitter.com/kGRHzhUIya #Brazil has lost its investment grade rating at S&P, Outlook still Negative as debt keeps rising Greek style. pic.twitter.com/FXVxIoMG5O 7.56am BST STOCK MARKETS IN ASIA HAVE DROPPED BACK TODAY, AMID FRESH FEARS OF CHINESE DEFLATION. The prices charged by China’s manufacturers fell by 5.9% in August, compared to a year earlier, a new survey showed. That’s the biggest fall since late 2009. “The change in the producer prices index is very worrying. It could affect corporate profitability, which in turn could affect consumption and the economy,” 7.35am BST GOOD MORNING, AND WELCOME TO OUR ROLLING COVERAGE OF THE WORLD ECONOMY, THE FINANCIAL MARKETS, THE EUROZONE AND BUSINESS. Today we’ll find out how worried the Bank of England is about the state of of the world economy, and the situation here in the UK. “Given this gloomy outlook, it is unlikely we are to see any more hawks perch on the committee with Ian McCafferty expected to remain the only dissenting voice in favour of a hike. Indeed, it is more likely that the committee will throw cold water over any imminent rate rise.” Our European opening calls: $FTSE 6192 down 37 $DAX 10229 down 74 $CAC 4619 down 45 $IBEX 9934 down 104 $MIB 21941 down 185 Rally ruined already...European #stocks set for down day after US gets jitters about rate rise & poor China producer price data Underlying pre-tax profits down 35pc to £117m for Morrisons, like-for-like sales down 2.7pc for first half of the year John Lewis Partnership profits down 26pc before one-off items. Waitrose sales down for first time in seven years Continue reading...
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