* German business confidence rises * European shares dip unexpectedly, ahead of German and US data * Italian bank Monte dei Paschi continues its refinancing attempt * Ukraine’s biggest bank set to be nationalised 9.59am GMT Over to Greece, and this: Moodys says #Greece's renewed tensions with creditors 'signal delays in second programme review, a credit negative'. 9.49am GMT If the festive mood in the German economy is not enough for you, then head over to our Christmas quiz for a bit more seasonal cheer. 44 out of 50 is the score to beat in my case (which is less impressive than it sounds given I wrote four of the questions.....) Related: Bumper business Christmas quiz 2016 9.46am GMT Economists have mixed views on what the December German IFO index portends for 2017: Encouragement for #German growth prospects in 2017 as #Ifo business climate index climbs to 32-month high of 111.0 in Dec (110.4 in Nov) Germany’s most prominent leading indicator, the Ifo index, closes the year with another improvement. The Ifo index increased to 110.0 in December, from 110.4 in November. The increase was mainly driven by a better current assessment component (116.6, from 115.6). The expectations component remained almost unchanged. The December increase suggests that German businesses are not (yet) afraid of negative economic implications from the new president in the US. Today’s Ifo was the last important macro indicator for the German economy this year. As always, the upcoming Christmas break is a good occasion for a reflective moment. A look at the German economy through the rear mirror. A look which shows an impressive, though slightly slowing growth performance. The German economy has continued its recovery and defied many external risks and turmoil, like Chinese stock market turbulences and economic slowdown, low oil prices, Brexit and continued weakness in many Eurozone countries. The key for economic success has been domestic demand. Strong domestic demand on the back of a strong labour market, low inflation, low interest rates and higher wages, partly fueled by the ECB and refugees. 9.42am GMT THE GERMAN ECONOMY IS IN A FESTIVE MOOD, according to Clemens Fuest the president of the IFO institute. He said: The German economy is making a strong finish to the year. In the manufacturing sector, the index rose. Assessments of both the current business situation and expectations improved. Demand picked up significantly and the order back log grew. More companies plan to ramp up production in the months ahead as a result. In the service sector the mood deteriorated in the run-up to Christmas. The indicator fell to 31.7 balance points in December from 35.0 balance points in November. Service providers assessed their current business situation less favourably. They also scaled back their business expectations slightly. Both indices, however, are significantly above their long-term average. Service providers remain keen to recruit additional staff. 9.04am GMT German business confidence improved in December, with the IFO index rising to 111 much as expected: #Germany Ifo Business Climate at 111 https://t.co/B5HWHFBYiu pic.twitter.com/sKuq73z2By German Ifo a touch strong than expected in December and is consistent with a pick up in annual GDP growth from Q3's 1.7% to around 2.5% pic.twitter.com/6zklDAUiuK 8.42am GMT Ukraine’s largest lender has been declared insolvent, with the country’s central bank saying that nationalisation was the best way forward. Reuters reports: Ukraine declared the country’s largest lender PrivatBank insolvent on Monday and said bringing it under state ownership was the only way to protect the money of 20 million Ukrainian clients and stave off threats to the financial system. The central bank said in a statement that PrivatBank had not fulfilled its recapitalisation programme and 97 percent of its corporate loans had gone to companies linked to the bank’s shareholders. As of Dec. 1, the bank’s capital shortfall stood at 148 billion hryvnia ($5.65 billion). 8.26am GMT Over in Italy, shares in Monte dei Paschi have opened and are down 8.5%, triggering another suspension. 8.23am GMT The Santa rally in markets that we have seen since the start of December appears to be running out of steam a little. Connor Campbell, financial analyst at Spreadex, said: It may be the start of the final week before Christmas, but so far the European markets are looking rather Santa-less this Monday. To be fair, the FTSE has actually had a rather impressive December already, finally climbing back above 7000 last Friday, so it can be forgiven for not drastically building on that level this morning. The index is still flirting with that landmark level, though currently it lacks the kind of momentum that could lead it to a fresh all-time high later in the day. As for the pound, it’s still struggling below 1.25 against the dollar, while against the dollar it has shed 0.2%. 8.11am GMT Defying expectations, stock markets have started the last trading week before Christmas on the back foot. The FTSE 100 has fallen around12 points or 0.18% while Germany’s Dax and France’s Cac have lost 0.2%. Italy’s FTSE MIB has opened down 0.3%. 7.54am GMT Here’s Unicredit’s forecast for the German IFO business confidence index, due in an hour or so: “We expect the Ifo climate index to improve to 111.0 in December after the stabilization at 110.4 in November.” And Mike van Dulken and Henry Croft at Accendo Markets said: On a quiet day for macro data, in focus today will be German December IFO Surveys, all expected to show slight improvement since November with the Business Climate figure attempting to post a fresh 2016 high (albeit by a very slim margin). These figures have obvious importance for the Eurozone given Germany’s position as the powerhouse for the European economy. 7.27am GMT GOOD MORNING, AND WELCOME TO OUR ROLLING COVERAGE OF THE WORLD ECONOMY, THE FINANCIAL MARKETS, THE EUROZONE AND BUSINESS. It’s the last trading week before Christmas, and many investors are already winding down for the festive season. But with thin trading volumes in the markets, there might be some volatile moves to look out for. Will the FTSE 100 hit a new peak, beating the closing high of 7103 reached in April 2015 or the record intra-day level of 7129 in October this year? Will the Dow pass the key 20,000 barrier. Our European opening calls:$FTSE 7029 +0.25% $DAX 11431 +0.23% $CAC 4844 +0.22%$IBEX 9429 +0.17%$MIB 19058 +0.23% As we head into the final full trading week of 2016, having come off a decent December so far for European stocks which have seen a number of significant breakouts, the key question as we head into year-end is whether these gains of the past two weeks are likely to be sustained. Initial impressions look positive, however the elephant in the room remains the Italian banking sector after last week’s announcement by Italy’s largest bank Unicredit to draw a line under its recent problems by announcing a significant recapitalisation plan. Continue reading...
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