Wednesday, May 31, 2017

BBC News - Sterling recovers after hung parliament prediction

Sterling has recovered after being hit by a projection suggesting the Conservatives could fail to win a majority in the general election.
Previous opinion polls suggested Prime Minister Theresa May's party would increase its majority of 17 seats.
But the projection, published in The Times and based on YouGov research, suggests a possible hung parliament.
After falling 0.5% to a six-week low of $1.2770, sterling has regained ground to be down just 0.14% at $1.2840.
The currency is 0.4% lower against the euro at 1.1446 euros.
The pound has been volatile since the UK voted to leave the European Union last year.
On the day of the referendum - 23 June - sterling hit $1.4883 but then plunged below the $1.35 mark as the result became clear.
It pound fell further in October, hit a low of $1.2047 in January this year and has struggled to stay above the $1.30 level ever since.
The YouGov data suggested that the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining nearly 30 seats.
The Conservatives would still be the biggest party, but would not have an overall majority.
George Saravelos at Deutsche Bank said: "If [Theresa] May is unable to deliver a substantially increased majority, her flexibility to negotiate will not have improved."
Kathleen Brooks at City Index questioned the accuracy of the YouGov findings.
"This was not a poll, rather it is the outcome of a model that has used untested methodology to come up with this hung parliament conclusion," she said. "Other polls are predicting a completely different outcome, so we would use this information with a pinch of salt."
However, Neil Wilson at ETX Capital commented: "This is new territory - markets have been incredibly complacent until now and we might start to see investors price in a Labour win a lot more."
The model is based on 50,000 interviews over a week, with voters from a panel brought together by YouGov.
It was developed by its data science team and London School of Economics professor Ben Lauderdale to estimate the result in individual constituencies.
According to The Times, the estimates were "met with scepticism by Tory and Labour figures".
YouGov's chief executive, Stephan Shakespeare, said the model had been tested during the EU referendum campaign, when it consistently put the winning Leave side ahead.
But he added: "It would take only a slight fall in Labour's share and a slight increase in the Conservatives' to result in Mrs May returning to No 10 with a healthy majority."

Tuesday, May 30, 2017

Reuters News - Greece, Italy uncertainties dent euro, Asian stocks, lift yen

Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, May 29, 2017. REUTERS/Staff/Remote
Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, May 29, 2017. REUTERS/Staff/Remote

Concerns about situations involving Greece, Italy and the European Central Bank kept the euro under pressure on Tuesday.

European geopolitical fears sapped risk appetite, weighing on Asian stocks and lifting safe havens including the yen and gold, though trading was thin with several markets closed for holidays.

For Tuesday, European stock markets were set for a soft start, with financial spreadbetter IG Markets expecting Britain's FTSE .FTSE and France's CAC 40 .FCHI to open 0.15 percent and 0.3 percent lower, respectively, and Germany's DAX .GDAXI to start the day flat.

The euro EUR=EBS slid 0.45 percent to $1.1114 in its fourth session of declines.

James Woods, global investment analyst at Rivkin Securities in Sydney, attributed most of the currency's decline on Tuesday to a German press report saying Athens may opt out of its next bailout payment if creditors cannot strike a debt relief deal.

"The bailout payments are necessary to meet existing debt repayments due in July, so if Greece were to forgo this bailout payment the probability of a default would spike, reopening the discussion around a Grexit from the Euro zone," Woods said.

However, he cautioned against reading "too much into it" without more details or confirmation, adding it was unlikely Greece would forgo the bailout payment at this stage.

Euro zone finance ministers failed to agree with the International Monetary Fund on Greek debt relief or to release new loans to Athens last week, but did come close enough to aim to do both at their June meeting.

Comments by former Italian Prime Minister Matteo Renzi on Sunday in favor of holding an election at the same time as Germany's in September also raised uncertainty and pulled the euro lower.

So did a statement by European Central Bank President Mario Draghi reiterating the need for "substantial" stimulus given subdued inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.2 percent with U.S. and British markets closed on Monday.

China, Hong Kong and Taiwan markets are closed for holidays on Tuesday.

Japan's Nikkei .N225 ended flat, held back by a stronger yen.

South Korea's KOSPI .KS11 fell 0.4 percent as investors took profits following the market's record-breaking rally this month.

North Korean leader Kim Jong Un supervised Monday's test of a new ballistic missile controlled by a precision guidance system and ordered the development of more powerful strategic weapons, the North's official KCNA news agency reported on Tuesday.

South Korea said it had conducted a joint drill with a U.S. supersonic B-1B Lancer bomber on Monday. North Korea's state media earlier accused the U.S. of staging a drill to practice dropping nuclear bombs on the Korean peninsula.

European blue-chip stocks .STOXXE fell 0.2 percent on Monday, with Italy's banking index sliding 3.4 percent, its biggest loss in nearly four months, after two lenders sought help to cover a capital shortfall.
Sterling GBP= retreated 0.2 percent to $1.2809 after British Prime Minister Theresa May's lead over the opposition Labour Party dropped to 6 percentage points in the latest poll to show a tightening race since the Manchester bombing and a U-turn over social care plans.
The dollar declined 0.4 percent to 110.88 yen JPY=.
The dollar index .DXY, which tracks the greenback against a basket of trade-weighted peers, however, advanced 0.3 percent to 97.751.
Markets are awaiting economic indicators including French first quarter gross domestic product, German inflation data for May, and U.S. inflation for April later in the session.
In commodities, oil prices retreated, as concerns lingered about whether the extension of output cuts by OPEC and other producing countries will be enough to support prices.
U.S. crude futures CLc1 slipped about 0.1 percent to $49.78 a barrel.
Global benchmark Brent LCOc1 fell 0.4 percent to $52.09.
Gold XAU= rose 0.1 percent to $1,268 an ounce.

(Reporting by Nichola Saminather; Editing by Kim Coghill and Richard Borsuk)
 Nichola Saminather | SINGAPORE

Monday, May 29, 2017

BBC News - US growth rate revised up to 1.2%

The US economy grew at a faster pace than initially thought in the first three months of the year.
Times Square, New York City
Image captionUS growth was 1.2% in the first three months of the year, but consumer spending decelerated
The latest official figures indicated the economy expanded at an annual pace of 1.2% in the quarter, up from the previous estimate of 0.7%.
The change came after upward revisions to business and consumer spending.
The initial estimate had been seen as a blow to US President Donald Trump, who pledged in his election campaign to raise growth to 4%.
However, the revised figure still represents a slowdown from the 2.1% growth rate recorded in the final quarter of 2016.
Consumer spending improved from the initial estimate of 0.3%, but growth remained tepid at 0.6%, slower than any quarter since 2009.
Ben Herzon, senior economist at Macroeconomic Advisers, said temporary factors, such as lower spending on heating bills thanks to a relatively warm winter, restrained first quarter growth.
"While somewhat stronger than the first report, it was still a pretty weak number," he said. "But don't fret because it's probably transitory."
The report also revised down 2016 estimates for wages and salaries, which could mean consumers have less of a cushion going forward, wrote Scott Hoyt, senior director of economic research at Moody's Analytics, in a note.
But Jennifer Lee, senior economist at BMO Capital Markets, said she's not worried about the weak consumer spending figures, which followed three quarters of 3% or more growth.
"I'm going to put that down as taking a breather," she said. "Those are pretty solid numbers so one quarter is not going to break that overall trend."
A shopper in Washington, DC

Image captionConsumer spending improved in a new report, but the rate of growth was the slowest in years
The better first quarter estimate could bolster the case for the Federal Reserve to increase interest rates at its June meeting.
In meeting minutes released this week, policymakers expressed surprised at weak first quarter economic data, but said they wanted to be sure any slowdown was temporary before taking further action.
But the improvement is unlikely to increase confidence in the economic forecasts that underpin the White House's budget proposal. Those call for 3% growth.
The first three months of the year have a record of lower GDP growth rates than other quarters, which some attribute to the difficulty of accounting for factors such as heavy snowstorms.
Friday's report from the US Commerce Department said there was sluggish investment in business inventories and a $40.3bn fall in corporate profits, as compared to an $11.2bn rise in the final quarter of 2016.
That decline was affected by hefty legal settlements paid by companies that included Volkswagen and US units of Deutsche Bank and Credit Suisse, the Commerce Department said.
In a separate report on Friday, the Commerce Department said that new orders of durable goods, including defence aircraft and cars, were 0.7% lower in April than in March.
Analysts at Goldman Sachs dubbed that report "broadly disappointing" in a research note.
Ms Lee also said the report was worrisome, but she's still anticipating US growth for the year will top 2%.
"We're going to continue just keeping an eye on the jobs data," she said. "At the end of the day, it's consumer spending that's going to drive overall growth."

Friday, May 26, 2017

Bloomberg News - Trump's Travel Ban Remains Frozen After Appeals Court Ruling

President Donald Trump suffered his most significant setback yet in a bitter fight over his revised travel ban as a federal appeals court slammed it as being “steeped in animus.”
The court in Richmond, Virginia, refused on Thursday to lift a nationwide block on Trump’s attempt to ban travel from six mostly Muslim countries on national security grounds. The judges used especially harsh language in a 79-page decision that is certain to plague the president in other courtroom battles over the directive.
The court warned that government missteps in dealing with religion can foster hostility and division and encourage persecution of minorities.
“The risk of these harms is particularly acute here, where from the highest elected office in the nation has come an executive order steeped in animus and directed at a single religious group,” the panel said.
The administration now must decide whether to turn to the Supreme Court and, if so, how quickly. The government could ask the court to take emergency action to let the ban take effect while the litigation plays out. The administration so far has eschewed taking that step during the months-long legal fight.
Trump’s position, however, was strengthened last month when the Senate confirmed his Supreme Court nominee, Neil Gorsuch. Reinstating the ban would require the votes of five of the nine justices, with Justice Anthony Kennedy as the likely swing vote.

Dangerous Times

"These clearly are very dangerous times and we need every available tool at our disposal to prevent terrorists from entering the United States and committing acts of bloodshed and violence,” White House spokesman Michael Short said in an email. “We are confident the President’s executive order to protect the country is fully lawful and ultimately will be upheld."
Omar Jadwat, the lawyer with the American Civil Liberties Union who argued the case, predicted the Supreme Court would agree with the Virginia court in the event of an appeal.
"We have won at every stage so far, and we’ve won because this ban is such a stark violation of our fundamental principals of religious liberty," he said.
Thursday’s ruling is the first of two appeals court decisions focused on whether to uphold temporary injunctions blocking the ban. In both cases, the courts are weighing facts alleged in the lawsuits and determining whether the plaintiffs are likely to prevail. A trial could be months or years away.
A San Francisco-based court, generally viewed as more liberal than the one in Virginia, heard arguments on the same issue on May 15.
As a measure of the case’s consequence, the full appeals court in Richmond, rather than the typical three-judge panel, opted to decide whether a district judge in Maryland properly blocked Trump’s order. By a vote of 10-3, the appeals court upheld the Maryland judge, although several judges did not join fully in the majority’s opinion.
A forerunner of the executive order incited chaos and condemnation when it was rolled out without warning in January. Federal courts soon blocked its enforcement, prompting a re-do. Subsequent controversies have distracted from Trump’s agenda, including his firing of FBI Director James Comey amid the bureau’s investigation into potential campaign ties to Russia.
The case hinged largely on whether Trump’s comments on the campaign trail -- such as calling for a total shutdown on Muslims entering the country -- should be used to determine the motive of the travel ban. The government argued that Trump’s comments as a private citizen -- as well as statements by former New York City Mayor Rudy Giuliani, a Trump adviser -- were irrelevant. The court disagreed.
“We need not probe anyone’s heart of hearts to discover the purpose of EO-2, for President Trump and his aides have explained it on numerous occasions and in no uncertain terms,” the court said, using shorthand for the second executive order.
The court pointed to Trump’s campaign comments including, “We’re having problems with the Muslims.” It said the president has “broad power” to deny entry to aliens but that power isn’t absolute. The judges discounted the administration’s anti-terror rationale for the ban, saying the White House hadn’t detailed the risks posed by those covered by the order and had issued its first decree without consulting national security agencies.
The ruling had a partisan tinge. Judges voting to uphold the freeze order were appointed by Democratic presidents, although one was reappointed by a Republican. The three dissenters were named by Republicans.
A 2015 Supreme Court opinion written by Justice Kennedy has become a pivotal precedent in the legal fight. In a case involving a U.S. citizen seeking to challenge the denial of her Afghan husband’s visa application, Kennedy said courts shouldn’t second-guess immigration decisions "absent an affirmative showing of bad faith." Although Kennedy wrote only for himself and Justice Samuel Alito, the opinion represented the controlling reasoning for the splintered court.
In Thursday’s decision, the appeals court pointed to Kennedy’s opinion and said the Trump administration had acted in bad faith.
In dissent, three judges in Virginia said the appeals court was wrong to consider Trump’s campaign statements. Judge Dennis Shedd added that the “real losers in this case are the millions of individual Americans whose security is threatened on a daily basis by those who seek to do us harm.”
Lower courts have split on whether to consider Trump’s words on the campaign trail. A Hawaii judge who also blocked the order said a “court will not crawl into a corner, pull the shutters closed and pretend it has not seen what it has.” But a Virginia judge said he’s not going to look to Trump’s comments as a candidate and “psychoanalyze the president” for his motives in drafting the ban.
The cases are International Refugee Assistance Project v. Trump, 17-1351, U.S. Court of Appeals, Fourth Circuit (Richmond); and State of Hawaii v. Trump, 17-15589, U.S. Court of Appeals, Ninth Circuit (San Francisco).

Thursday, May 25, 2017

BBC News - UK growth estimate revised down

The UK's economy grew more slowly than first estimated in the first three months of the year, according to official figures.
The Office for National Statistics (ONS) now says the economy expanded by 0.2% in the quarter - slower than its original estimate of 0.3%.
It said the change was due to downward revisions for growth in the UK's dominant services sector.
In the last quarter of 2016, the UK economy had expanded by 0.7%.
The ONS now estimates that the services sector, which accounts for about 80% of the UK economy, grew by 0.2% in the first quarter of the year, down from its initial estimate of 0.3%.
At the end of 2016, this sector had been growing by 0.8%.
The ONS noted that growth in the services industries had been "more subdued" than in recent periods, with a slowdown "in consumer-focused industries, such as retail sales and accommodation".
"This was partly due to rising prices," it added.
Many economists have been expecting the economy to slow as consumers cut back on spending in the face of accelerating inflation.

Tuesday, May 23, 2017

Reuters News - New home sales tumble from near 9-1/2-year high

A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, U.S. October 20, 2014.       REUTERS/Larry Downing/File Photo
A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, U.S. October 20, 2014.REUTERS/Larry Downing/File Photo
New U.S. single-family home sales tumbled from near a 9-1/2-year high in April, but the housing recovery likely remains intact amid a tightening labor market.
The Commerce Department said on Tuesday new home sales declined 11.4 percent to a seasonally adjusted annual rate of 569,00 units last month. March's sales pace was revised up to 642,000 units, which was the highest level since October 2007.
Economists polled by Reuters had forecast new home sales, which account for 9.8 percent of overall home sales, decreasing 1.5 percent to a pace of 610,000 units last month from the previously reported rate of 621,000 units.
New home sales, which are derived from building permits, are volatile on a month-to-month basis. Sales increased 0.5 percent on a year-on-year basis last month. April's sales drop came after three straight months of increases.
Shrinking labor market slack, marked by a 4.4 percent unemployment rate, is improving employment opportunities for young Americans, helping to underpin demand for housing.
The housing market also continues to be supported by historically low mortgage rates, with the 30-year fixed mortgage rate hovering just above 4.0 percent. Luxury homebuilder Toll Brothers Inc (TOL.N) on Tuesday reported a 40 percent rise in quarterly profit, boosted by an increase in home sales.
A survey last week showed homebuilder sentiment rising in May, with builders upbeat about sales over the next six months as well as current sales conditions.
But rising building material costs as well as shortages of lots and labor have left builders struggling to meet demand, keeping house prices elevated. A report last week showed homebuilding fell for a second straight month in April, hitting its lowest level in five months.
U.S. stocks further trimmed gains after the data on Tuesday while prices of U.S. government debt were mostly trading higher. The U.S. dollar .DXY was slightly firmer against a basket of currencies. The PHLX housing index .HGX slipped 0.1 percent, with shares in the nation's largest homebuilder, D.R. Horton (DHI.N), falling 0.1 percent.

In April, new single-family homes sales fell 7.5 percent in the Northeast region. Sales plunged 26.3 percent in the West to their lowest level since October 2015. They fell 4.0 percent in the South and declined 13.1 percent in the Midwest.
The inventory of new homes on the market increased 1.5 percent to 268,000 units last month, the highest level since July 2009. Still, new housing stock remains less than half of what it was at its peak during the housing boom in 2006.
At April's sales pace it would take 5.7 months to clear the supply of houses on the market, up from 4.9 months in March.
A six-month supply is viewed as a healthy balance between supply and demand.
(Reporting by Lucia Mutikani; Editing by Paul Simao)

Friday, May 19, 2017

BBC News - Trump pulls trigger on Nafta negotiations

The US plans to start talks with Mexico and Canada over Nafta "as soon as practicable", the Trump administration said on Thursday.
The letter to congressional leaders provided formal notice of the administration's intent to move forward with a campaign pledge to redo the 1990s trade deal.
Mr Trump earlier threatened to end the agreement, calling it a job "killer".
Thursday's letter said the deal needs "modernisation".
Canada and Mexico are America's second and third largest trade partners after China.
US trade with the two countries has more than tripled since Nafta went into effect in 1994, with more than $1tr goods and services exchanged each year.
But tension has been mounting under Mr Trump, who made tough-on-trade talk a hallmark of his campaign.
In January, he withdrew from the Trans Pacific Partnership.
He has also slapped tariffs on Canadian lumber and took to Twitter to talk about Canadian pricing of dairy products.
And on Thursday, the Commerce Department said it would investigate claims by Boeing that its Canadian aerospace rival Bombardier is unfairly subsidised by taxpayers and has been selling planes below cost in the US.
The Nafta letter from US Trade Representative Robert Lighthizer, who was sworn in this week, triggers a 90-day period, meaning talks would begin in August at the earliest.
It raised a range of issues, including digital trade and environmental practices, but offered little detail.
In recent months, Canadian federal ministers have been travelling frequently to the US to lobby America lawmakers whose states have strong trade ties with Canada on the importance of the cross-border economic relationship.
Canada's Foreign Affairs Minister Chrystia Freeland has also been in close contact with her Mexican counterparts on the Nafta file and will be in Mexico next week.
Ms Freeland said in a statement on Thursday that Canada remains "steadfastly committed to free trade in the North American region."
"We are at an important juncture that offers us an opportunity to determine how we can best align Nafta to new realities - and integrate progressive, free and fair approaches to trade and investment," she said.
Mexico also said it expects a "constructive" negotiation.
Mr Trump faces a political crisis in Washington related to an investigation of ties to Russia.
But the trade measures return him to one of his successful campaign themes, which struck a chord among some voters, who have seen US companies turn to cheaper, overseas workers for jobs once done at home.
US Commerce Secretary Wilbur Ross said in a statement the goal of new Nafta talks is to find a "solution that is both fair and beneficial for all parties".
"Since the signing of Nafta, we have seen our manufacturing industry decimated, factories shuttered, and countless workers left jobless.," he said. "President Trump is going to change that."
Mr Trump's protectionist stance breaks with Republican tradition, sounding closer to concerns voiced by labour unions and left-wing politicians like Bernie Sanders.
But Democrats were quick to say the letter was short on substance.
"The President's vague Nafta letter is a stark contrast with the aggressive promises he made to hard-working families during the campaign," California Democrat Nancy Pelosi, who leads the party in the House, said in a statement.
"For all his rhetoric, President Trump looks to be sorely disappointing American workers on trade."

Thursday, May 18, 2017

BBC News - Retail sales in April beat forecasts with a 2.3% rise

Boxing Day sales
Warmer weather helped retail sales to rise by more than expected last month, according to official data.
Sales volumes jumped 2.3% in April from the month before, the Office for National Statistics (ONS) said, and were 4% higher than a year earlier.
April's rebound contrasted with March, when sales saw the biggest fall in seven years.
"Anecdotal evidence from retailers suggests that good weather contributed to growth," the ONS said.
The stronger-than-expected rise in sales pushed the value of the pound above $1.30 to its highest level since September last year.
David Cheetham, chief markets analyst at XTB, said the figures would "go some way to allay the fears of a slowdown in consumer spending following last month's sharp drop".

'Welcome news'

Due to recent rises in inflation, the amount spent in shops and online was 6.2% higher in the three months to April compared with a year ago - the biggest rise in 15 years.
The ONS did not say whether inflation pressures would continues to affect sales during the rest of the year. "We need a longer series to properly determine a pattern," it said.
The retail sales figures come a day after separate ONS figures indicated that wages were rising slower than inflation for first time since mid-2014.
Keith Richardson, managing director retail sector at Lloyds Bank Commercial Banking, said the retail figures were "welcome news, but it's too early to think that the tide is turning after a dismal first quarter".
Alex Marsh, managing director of Close Brothers Retail Finance, said its data indicated "a particular increase in sales in the furniture sector, which was driven by [Easter] Bank Holiday Monday shopping".
However, he added that inflationary pressures meant shoppers could struggle to buy big ticket items, such as white goods, without stores offering more credit.
Chris Williamson, chief business economist at IHS Markit, also urged caution, noting that the underlying three-month trend showed sales were up by just 0.3%.
"With the exception of the first three months of this year, that's the weakest trend rate since the third quarter of 2014," he said.

Analysis: Emma Simpson, business correspondent

April delivered a boost for retail. We've already had the British Retail Consortium's survey, which saw the strongest sales numbers for years. But the industry body put much of that rise down to the timing of Easter, which was later this year than last.
Shops tend to sell more stuff during the Easter break. The ONS's figures are seasonally adjusted, which means that the timing of Easter shouldn't have been a factor in its own survey this morning. It said warm weather helped deliver growth. The big question is whether this pace of spending can continue.
The squeeze on consumers is now on, with average real wages falling. And it's not getting any easier for retailers either as they deal with the consequences of the fall in the pound and how much of the associated extra costs they'll have to pass on to consumers.