Global stock markets rise as Middle East tensions ease – business live
Stocks venture into positive territory after Donald Trump tweets a military strike against Syria ‘could be very soon or not so soon at all’
It is time to close the blog for the day. We’ll be back tomorrow. Thank you for all your comments and good-bye. Here’s a quick summary of today’s main developments.
Global stock markets are rising after Donald Trump toned down his threats of missile strikes in Syria.
In Europe, stock markets are also pushing higher.
Wall Street has opened higher, on the back of expectations that lower US corporate taxes will boost company earnings alongside easing tensions over the Syria conflict.
Wall Street futures are edging higher, supported by expectations of strong corporate profits as the first-quarter earnings season gets under way and easing geopolitical tensions over Syria.
Analysts are expecting quarterly profits at S&P 500 companies to be 18.5% higher than a year ago, the biggest gain in seven years, according to a Thomson Reuters poll.
The Organisation for Economic Cooperation and Development – the west’s leading economic think tank – has called on governments to use inheritance tax to reduce wealth inequality.
European stock markets have ventured into positive territory, as tensions eased in the Middle East. Donald Trump sent a new tweet, saying a military strike against Syria after a suspected chemical weapons attack on civilians “could be very soon or not so soon at all”.
Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our “Thank you America?”
Here is our full story on IAG’s potential bid for low-cost carrier Norwegian.
Michael Hewson at CMC Markets UK has had a closer look at Norwegian, which has undergone an “explosive growth path” in the past few years – raising concerns that the airline might be overextending itself.
In its most recent numbers Norwegian posted a bigger than expected net loss for the last three months of 2017 of $117m, down from a small profit a year before. Its rising costs in the form of new transatlantic routes has seen its costs rise quite sharply in recent years and expects to grow its capacity by 40% in 2018.
Management plan to expand the fleet of operational aircraft to more than 190 planes by the end of 2019, from about 150 now, which when you consider the company only had 68 aircraft in 2012 is quite a sharp expansion.
British Airways owner (IAG) is considering a bid for Norwegian Air Shuttle.
If IAG would buy Norwegian this would be the fleet of all IAG brands (BA, D8, DI, DY, EI, IB, VY) pic.twitter.com/DgcpGCWmyl
Annual household savings in the UK have fallen to their lowest rate for a decade, according to the Office for National Statistics. The cash-based savings ratio fell to 0.9% in 2017, from 2.9% in 2016, the lowest it has been since 2008.
There are different ways of measuring household savings. The latest national accounts saving ratio recorded an historic low of 4.9% in 2017, the ONS said.
It is 2018 and yet, from a savings perspective, things are as bad in many respects as 2008.
The fact that savings levels haven’t been this low since the global financial crisis exploded a decade ago is a worrying sign. Rising prices have hit disposable income hard. Importantly, these ONS statistics reflect cash in purses and wallets, namely how people really feel about their spending and saving power on the ground.
The Bank of England said this morning that the amount of unsecured credit available to households fell significantly in the first quarter, as lenders tightened their credit scoring criteria for granting credit cards and personal loans.
Meanwhile the availability of mortgages was unchanged in the three months to mid March, and is not expected to change in the next three months to mid-June, according to lenders polled by the central bank.
Norwegian Air has told Reuters that it did not know of IAG’s interest until it saw the press reports on Thursday morning. The airline added that it has not held any discussions with IAG, and that the BA owner’s interest confirms the potential of Norwegian’s business model and its growth prospects.
In other takeover news, Disney will have to make bid to take full control of Britain’s biggest pay-TV broadcaster even if the competition regulator quashes Rupert Murdoch’s £11.7bn for full control of Sky, the UK takeover panel has ruled.
Our media business correspondent Mark Sweney writes:
The deal would greatly expand IAG’s exposure to budget flying.
Norwegian’s shares have been suspended from trading on the Oslo stock exchange, after they soared as much as 28%.
In response, IAG said that it is considering an offer for the low-cost carrier and has acquired a 4.6% stake in Norwegian Air.
It added in a statement to the London Stock Exchange that it has taken no decision to make an offer for Norwegian Air Shuttle at this time and that no discussions have taken place.
IAG considers Norwegian to be an attractive investment and has acquired a 4.61% ownership position in the airline (minority investment).
The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian.
British Airways owner IAG is considering a bid for Norwegian Air, Bloomberg is reporting. The news sent Norwegian shares soaring by more than a quarter. They are now 14.3% ahead while IAG shares are down 1.7%, after falling as much as 3.4%.
Chris Beauchamp, chief market analyst at online trading firm IG, sums up the action so far on financial markets.
‘Steady but cautious’ is the best way to describe stock markets in Europe and the UK this morning. The British cabinet meets later to decide on military action, and the world is awaiting news of possible US strikes on Syria. As a result, it is hard to muster up the courage to keep chasing equities at present.
Oil prices seem happy to consolidate around recent highs, awaiting further developments in the Syria situation. Fundamental news is going to have to do all the heavy lifting if the price is to rally further however – the size and rapidity of the move from last summer’s lows means that positioning is now all on the long side, with little sign of fresh money flowing in to drive the price higher. Ahead of the open, we expect the Dow to start at 24,205, 16 points higher from yesterday’s close.
Theresa May has recalled ministers from their Easter break for a special cabinet meeting on how to respond to what she has described as a barbaric poison gas attack by Syrian government forces on civilians in Douma, east of the capital Damascus.
Ministers will discuss whether to join the US and France in a possible military attack on Syria that would bring western and Russian forces into direct conflict for the first time in the seven-year-old civil war.
They are the guarantors of law and order in the region.
Sterling is flat against the dollar at $1.4173 following its recent rally, to $1.4223 on Wednesday, as traders wait for more data that should help shape expectations of a Bank of England interest rate hike next month.
Britain’s manufacturing and construction sectors posted surprise declines in February, pointing to an economic slowdown in the first quarter of this year. One of Britain’s leading forecasting bodies, the National Institute for Economic and Social Research, is predicting that GDP growth halved to 0.2% between January and March from 0.4% at the end of last year, while several City analysts are expecting an easing to 0.3% growth.
European stock markets are broadly flat, as traders await more news on the conflict in Syria, and on the trade spat between the US and China.
Oil prices have eased slightly but remain high after Brent crude soared above $73 a barrel on Wednesday, the highest since late 2014. Brent is currently trading at $71.91 a barrel, while US crude is at $66.74 a barrel.
Russian stocks and the rouble have recovered somewhat, after heavy sell-offs following the announcement of new US sanctions on Friday and despite rising tensions in the Middle East, with Donald Trump warning of missile strikes in Syria after a chemical attack.
The rouble tumbled 2.5% to a two-year low of 65.06 against the dollar on Trump’s tweet on Wednesday, but has since stabilised and is now trading at 62.33, up 0.4%. Against the euro, the rouble gained 1% to 76.65 after touching 80.50 on Wednesday, a level last seen in March 2016.
House prices in London are falling at the fastest rate in nine years, according to a regional survey from Halifax, Britain’s biggest mortgage lender.
Prices in the capital fell 3.2% in the first quarter of this year compared with the previous quarter, the sharpest decline since the depths of the financial crisis.
Fellow British retailer Dunelm which sells bedding and kitchen equipment, has fared better. The homewares chain reported 4.6% growth in like-for-like sales in the third quarter, driven by a 36% surge in online sales.
Its shares rose 8% on the news.
In corporate news, Carpetright, the struggling UK carpet retailer, said it would seek approval from creditors for a restructuring plan to close 92 of its stores, with the likely loss of 300 jobs, and reduce rent at 113. It has 434 shops and concessions across Britain.
The company also hopes to raise £60m from shareholders through a placing and open offer to reduce debts and fund its restructuring plan. It has issued a series of profit warnings in recent months, one of many highstreet retailers that are struggling as consumers are cautious about their spending.
Britain’s property surveyors have issued the most downbeat assessment of the housing market for five years.
The monthly survey from the Royal Institution of Chartered Surveyors (Rics) showed that in March demand from buyers fell for the 12th month in a row, new instructions from sellers declined for the seventh consecutive month, and prices were flat nationally.
Bank of England deputy governor Ben Broadbent has rejected the idea of a new super-committee charged with overseeing the economy and the financial system. He said merging the monetary and financial policy committees – as proposed by some politicians – would make decision-making too complicated and raise the risk of the kind of mistakes made before the financial crisis.
In the text of a speech he was due to give via video link to a conference at Australia’s central bank in Sydney, he argued for the separation of powers.
Apart from anything else the policymaking process would be far too complicated to hold any one bit of it to account and the all-powerful policymaker would naturally tend to focus on the more verifiable tasks.
A bit like the man who loses his keys in the park but looks for them under the streetlamp “because that’s where the light is” the attention of policy would be directed to the most observable objectives.
And we’re off. Germany’s Dax, Spain’s Ibex and the FTSE 100 index in London are flat while France’s CAC has edged up 0.1%.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Oil prices soared to their highest levels since December 2014, above $73 a barrel last night. Brent crude futures are at $72.30, still the highest in more than three years.
Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!
Last year Russia and Syria did not shoot back against US missiles. But this time the scale of possible attacks by the US and possibly its allies seems larger if Russia fires back, the war front will be bigger.
I don’t think we are heading into World War III but should there be a direct collision between the US and Russia for the first time, that’s the sort of headline that would plunge stock prices.
With nerves already frayed sentiment wasn’t helped by reports that Saudi Arabian defence systems had intercepted a number of missiles fired from Yemen, over the skies of Riyadh, which in turn saw oil prices hit their highest levels since December 2014 above $73.
Source: The Guardian