All the day’s economic and financial news, as shares push higher following Donald Trump’s meeting with Japanese PM Shinzo Abe * Latest: EC raises growth forecasts * Schulz warns against Grexit * Markets push higher after Trump-Abe summit * Analysts: Trump must deliver on tax promises * The agenda: New EU forecasts coming up 11.27am GMT During questions on today’s forecasts, Pierre Moscovici warned that the European project would be imperilled if Marine Le Pen wins the French presidency: EU's @Moscovici on Le Pen plans: 'would be a tragedy for the euro, catastrophe for France, in a way the end of the European project' 11.03am GMT The key takeaway from today’s European growth forecasts is that every member of the EU is expected to grow steadily from 2016 to 2018. That hasn’t happened since the financial crisis almost a decade ago. "For the first time since 2008, the Commission's forecast points to economic growth across all EU MS for the entire forecasting period" pic.twitter.com/9sD1MfewNu 10.46am GMT DESPITE THE DEADLOCK OVER GREECE’S BAILOUT, THE EC INSISTS THAT THE COUNTRY’S ECONOMY IS ON THE RIGHT TRACK. Today’s economic forecasts predict that Greek GDP will jump by 2.7%, up from a mere 0.3% last year, and then hit 3.1% growth in 2018. After returning to growth in 2016, economic activity in #Greece is expected to expand strongly in 2017-18. #ECForecast #Greece exceeded its primary surplus target for 2016 (2.0% estimate vs 0.5% target). Now must conclude 2nd review, keep programme on track. 10.36am GMT TODAY’S EC FORECASTS ALSO PREDICT THAT FRANCE’S BUDGET DEFICIT WILL DROP BELOW THE OFFICIAL TARGET OF 3% OF GDP THIS YEAR, ONLY TO SWELL OVER IT AGAIN IN 2018. That suggests it will be hard for the next president to boost government borrowing, without sparking a row with Brussels (although if Marine Le Pen wins, and pulls France out of the euro, these targets won’t apply anyway). France (again) at risk of non-compliance with EU fiscal rules in 2018. #winterforecast pic.twitter.com/jce9WnD8mA 10.24am GMT The EC also predicts that Britain’s inflation rate will hit 2.5% this year, as the weak pound pushes up the cost of living. 10.13am GMT THE EC HAS ALSO ADMITTED THAT THE BREXIT VOTE HAS HAD LESS IMPACT THAN PREVIOUSLY THOUGHT. It is now less gloomy about growth this year -- raising its forecast from 1% to 1.5% in 2017 (before slowing to 1.2% in 2018). “The impact of the vote by the U.K. to leave the EU in the referendum held on 23 June 2016 on growth has yet to be felt.... Recent momentum is projected to largely continue in the first quarter...[but] ease notably thereafter.” LATEST: Effect of Brexit on Britain's economy will be less than previously forecast, EU says https://t.co/4Y1HNkXf8T pic.twitter.com/WGQOuBN8n7 10.08am GMT NEWSFLASH: THE EUROPEAN COMMISSION HAS UPPED ITS GROWTH FORECASTS FOR THE EUROZONE OVER THE NEXT TWO YEARS. In its new Winter Forecasts, the EC now predicts eurozone GDP will rise by 1.6% this year, up from 1.5% previously. It also expects growth to accelerate to 1.8% in 2018, up from 1.7%. EU raises economic forecast despite 'exceptional risks' from Brexit and Trump - AFP All EU countries' economies set to grow in 2016, 2017 and 2018: https://t.co/bLtrZLBg40 #ECforecast pic.twitter.com/iPvxnfFiPQ 10.00am GMT MARTIN SCHULZ, GERMANY’S SOCIAL DEMOCRATIC PARTY’S CANDIDATE FOR CHANCELLOR, HAS GIVEN POLITICIANS IN GREECE FOOD FOR THOUGHT - AND SOME GLEE – THIS MORNING BY WARNING THAT TALK OF A GREEK EXIT FROM THE EU MAY SUIT THE LIKES OF PRESIDENT TRUMP BUT WILL ONLY ENDANGER EUROPE. “Anyone flirting with the idea of Grexit risks breaking Europe apart. This may be in the interest of [US president] Donald Trump or [French National Front leader] Marine Le Pen, but it is certainly not in the interest of Germany and Europe. It is extremely dangerous.” “It is a very strong message to Schäuble that his [yearning] for Grexit could lead to the dismemberment of Europe. It’s also a message to the euro zone that it should sit and think seriously about which way it wants to go because policies right now are like shifting sands, no one knows what is going to happen from one day to the next. Europe has to decide whether it is going to move to the far right or return to the principles of democracy.” “Grexit is a football being kicked around between Dr Schäuble and Mrs Merkel. Schäuble is determined to kick Greece out and Merkel is determined not to make a decision until she really must.” 9.30am GMT THE US DOLLAR HAS HIT A TWO-WEEK HIGH AGAINST THE JAPANESE YEN THIS MORNING. President Trump played golf with Japanese Prime Minister Shinzo Abe, with bonhomie replacing currency wars. That set the stage for a risk-friendly start to the week, with USD/JPY tracking higher and equities in a buoyant mood across Asia. The more dollar-positive and risk-friendly mood is rooted in the terrifying flakey earth of President Trump’s promise last week that he will announce something phenomenal on tax policy in the next two to three weeks. With soundbites coming so far ahead of details, markets are unable to avoid over-excitement but of course they (we) are vulnerable to disappointment if the detail doesn’t live up to the expectations that grow so easily. In turn, that means market confidence is pretty fragile, too. 9.23am GMT Here’s another sign that investors are in a confident mood: VIX gauge of Wall Street volatility - so-called "fear index" - posts 3rd straight weekly close below 11 for first time since Nov 2006. pic.twitter.com/3o2klQtwJ9 9.01am GMT ZING! BRITAIN’S FTSE 250 INDEX HAS HIT ANOTHER ALL-TIME HIGH. The index, which contains medium-sized companies too small for the FTSE 100, is up 0.2% this morning at 18,748 points. When FTSE 100 was up post-Brexit, commentators said "that's all exporters, FTSE 250 is better gauge of UK economy". And now this: https://t.co/RSQSB1eLWs 8.53am GMT Some UK news - the troubled Co-operative Bank is up for sale, four years after being rescued by a group of hedge funds. Related: For sale: Co-op Bank looks for buyers 8.43am GMT MINING FIRMS ARE LEADING THE CHARGE THIS MORNING, AS TRADERS BET THAT ROBUST ECONOMIC GROWTH WILL KEEP COMMODITY PRICES HIGHER. Glencore, Anglo American, BHP Billiton and Rio Tinto are all up over 2%. This has pushed London’s FTSE 100 higher, and the mining sector to its highest since August 2014. EU movers: ArcelorMittal +5.5% BHP Billiton +3.4% Anglo American +2.9% Glencore +2.5% Rio Tinto +2.1% Rexel -0.7% 8.25am GMT KATHLEEN BROOKS of CITY INDEX says the markets are looking for Donald Trump to deliver on his campaign pledges this month. Trump is, without doubt, a key theme of 2017, however, in the past week I have noticed a few changes in the way he is impacting financial markets. Firstly, the tweeter-in-chief might be losing some of his potency. The markets are starting to get used to his Twitter outbursts, and even after retailer Nordstrom was singled out for his ire last week, its shares actually rose after it received the ‘Trump treatment’. Secondly, the markets are now focused on 28th February, when Trump will give his first State of the Union address to Congress and is expected to lay out his taxation and infrastructure plans. Big things are expected, infrastructure spending could the be the hardest to get past Congress, so if Trump rolls back on some of his spending rhetoric to try and win the support of Congress then the financial markets may not be so impressed. With Trump’s affirmation of the One China policy and hope of a stable approach to Asian foreign policy, markets can focus on fiscal policy. US equities continue to rally in expectation of Donald Trump’s tax reform and a successful two-day Japan-US summit in Washington. This optimism, however, is being offset by rising geopolitical concerns following North Korea’s successful missile test on Sunday whilst a weaker Dollar in Asian trading weighs on the foreign earnings heavy FTSE 100. 8.10am GMT GLOBAL STOCK MARKETS ARE RALLYING AT THE START OF THE WEEK, DRIVEN BY OPTIMISM THAT US PRESIDENT DONALD TRUMP’S TAX CUTTING PLANS WILL BOOST GLOBAL GROWTH. Relief that Trump’s meeting with Japanese prime minister Shinzo Abe passed off pretty well over the weekend has also helped to push share prices higher in Asia. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3 percent, with resource-related stocks in Australia leading the gains. Markets in Taiwan and Singapore scaled their highest levels since mid-2015. Pres. Trump and Japanese PM Abe meet, shake hands in the Oval Office https://t.co/rG1oCqyhkf pic.twitter.com/njJ13Qi3s1 “This positive lead from the U.S. coupled with improving trade sentiment provides the backing for a positive Monday for Asian markets,” Jingyi Pan of IG said in a report. The Trump-Abe meeting and Trump’s “One China” commitment “could allay some of the trade concerns in Asia and set free into the market more bullish bets,” said Pan. “While it remains to be hashed out, President Donald Trump’s mention of a ‘level playing field’ on currency valuation also appears to reflect an amicable turn after the U.S. president accused his visitors of currency manipulation.” 7.46am GMT GOOD MORNING, AND WELCOME TO OUR ROLLING COVERAGE OF THE WORLD ECONOMY, THE FINANCIAL MARKETS, THE EUROZONE AND BUSINESS. It feels like a cautious start to the week, with not much in the economic calendar. #Wholesale prices in January 2017: +4.0% on January 2016 #prices #inflation https://t.co/eFBWtecP9j pic.twitter.com/TfMYOlLINc “Now is not the time to turn the clocks back to financial instability,” “We will not agree to demands that are not backed up by logic and numbers.” Continue reading...
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