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Global stocks bounce back on stimulus hopes: as it happened

European stocks lifted as German government hints at stimulus
Finance Minister Olaf Scholz talks up50bn package to boost Europes largest economy
US joins rally after White House plays down signs of an impending US recession
Struggling Boris bus maker seeks Chinese cash
Roger Bootle:Britain should be more careful playing hardball on US trade
5:09PM
Wrap-up: Greene King steals the show, while hopes of short-term stimulus drive stocks onward
Global stocks bounce back on stimulus hopes: as it happened

Greene King has agreed to a sale to Hong Kong real estate giant CK Holdings

Credit:
Greene King/PA
Making it in just in time for final orders, Greene King managed to almost single-handedly lift the travel & leisure subgroup to become the best-performing sector across Europe today.
Shares in the FTSE 250 pub group closed up 50.98pc, pulling several of its pub sector peers up as well. Greene King shares closed trading at a value of 850p landing right on the planned takeover price, and not far off the all-time high it hit in late 2015.
You can read our full report here: Greene King sold to Hong Kong owner of Superdrug and Three

Weary markets seize some ground


If it hadnt been for that burst of activity at the end, today would have been remarkably quiet, especially given the volatility that has marked trading in recent weeks.
Even a warning from Germanys central bank that, yes, Europes biggest economy is probably heading for recession, wasnt enough to upset the upbeat feeling, with the DAX and CAC both gaining around 1.3pc, and the FTSE 100 not far behind at 1.02pc up.
SpreadExs Connor Campbell writes:

The Bundesbanks warning that Germany appears to be sliding into a recession the central bank is forecasting a contraction in Q3 following the second quarters shrinkage fell on deaf ears this Monday.
Instead of panicking at the Bundesbanks comments, the markets appeared to take this as further evidence the likes of the ECB will be forced to act as suggested by US trade advisor Peter Navarro in an attempt to swerve economic disaster.

Thats all from me today and until Thursday. My colleague Michael ODwyer will be running things in my absence the next couple of days. Join him tomorrow for the latest updates on business, the economy, markets and more!
4:46PM
Trump re-iterates call for 1pc interest rate cut with perhaps some quantitative easing as well
Donald Trump has turned his attention back to the economy (see 3:19pm update), and accused Federal Reserve chair Jerome Powell of a horrible lack of vision. He repeated calls for a 1pc cut, and suggest the central bank should begin a process of quantitative easing as well.
.....The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone! Donald J. Trump (@realDonaldTrump) August 19, 2019
4:41PM
Li Ka-Shing: Hong Kong tycoons firm behind Greene King takeover
Global stocks bounce back on stimulus hopes: as it happened

Li Ka-shing

Credit:
BOBBY YIP/REUTERS
The Greene King takeover is a slightly complicated affair, involving a couple of Cayman Islands shell companies. The eventual holder, however, is CK Assets, which is part of the Cheung Kong business empire of Li Ka-shing Hong Kongs richest man, a real-estate magnate who The Timesnamed entrepreneur of the millenium as the start of the century.
Mr Ka-shing is a hugely well-recognised figure in Hong Kong, where he is often equated with Bill Gates. Last week, his weighed in on the protests in the city, though his equivocating and cryptic response didnt win him much favour with either side. The CK empire is not directly under his control any more, with his son, Victor, running operations primarily.
Incidentally, this isnt the first time Greene King has received a big boost from south-east Asia: in 2016, a Chinese investment firm bought the pub where former Prime Minister DavidCameron and Chinese Premier Xi Jinping had a pint.
4:23PM
Takeover would mean end to Greene Kings fabled dividend
Greene King boss Nick Mackenzie, who took over from long-term boss Rooney Anand in April, can breath a small sigh of relief, with the pressure of promising a consistent dividend off his shoulders.
The pub chain was among the record-holders for dividend payout, with 37 years in a row of dishing out a healthy amount to its investors.
The company is sat on a ?2bn debt pile, but has been managing to grow its sales.
You can read more here:Greene Kings new boss commits to prized dividend
And you can read my colleague Oliver Gills valedictory interview with Mr Anand here:
Most Asian parents want their children to be doctors: Pub boss Rooney Anand calls time on reign at Greene King
Income kings: most consistent British dividend payers
4:16PM
Traders turn the taps on for pub chains after Greene King announcement
Looks like I might have spoken a little soon on the FTSE 250. The mid-cap index is now up 1.2pc, with other pub chains feeling the glow.
Marstons, JD Wetherspoon and Mitchells & Butlers are up 8.8pc, 7.3pc and 6.8pc respectively. Thatll prompt a few celebratory pints tonight, no doubt!
@greeneking going private in ?2.7bn takeover by Hong Kong magnate Lee Ka-shing - shares soar 51%... Chris Johnston (@cajuk) August 19, 2019
big premium offered for Greene King by Hong Kong based real estate group CKA. 850p per share or ?2.7 billion (around ?1m per pub/restaurant) Paul Kavanagh (@PaulJKavanagh1) August 19, 2019
4:05PM
Greene King shares rocket over 51pc up to match offer price
After that takeover announcement, Greene King shares have pretty much gone on a 90-degree upwards trajectory, surging 51pc to match the top premium CK Bidco aims to pay for its shares.
Greene King shares up 51% after it receives a recommended cash offer at 850p a share from CK Noble pic.twitter.com/582MCIOvIF Garry White (@GarryWhite) August 19, 2019
4:01PM
Greene King agrees to takeover
Just in: FTSE 250 pub chain Greene King has agreed to a takeover by CK Bidco, a sub-entity of Hong Kong real estate giant CK Hutchinson, at a premium of up to 51pc on Fridays closing price. If the takeover goes ahead, the company will be delisted. The offers values the pub group at approximately ?2.7bn on a fully diluted basis and implies an enterprise value of approximately ?4.6bn, the groups said.
In its proposal for the takeover, the company said:

The specific attractions of Greene King include its: established position in the United Kingdom pub and brewing market; freehold and long leasehold backed property estate; and resilient financial profile.

Philip Yea, Chairman of Greene King, said:

The Greene King board is confident in the long term prospects of the business but believes this offer represents a good opportunity for shareholders to realise value for their investment at an attractive premium, while also ensuring the future success of Greene King for employees, partners, customers and suppliers. We are therefore unanimously recommending it to our shareholders.

That has put an absolutely rocket under Greene Kings shares, which immediately surged about 12pc.
3:48PM
Full report: Bundesbank warns on German growth
Global stocks bounce back on stimulus hopes: as it happened

An employee in protective clothing works at the German steel producer Salzgitter AG

Credit:
Markus Schreiber/AP
Germanys central bank has warned the country could well be on its way to a technical recession, as its industrial sectorflounders. My colleague Michael ODwyer reports:

Exporters took a pounding from the unwinding of the stockpiling that boosted sales at the start of the year ahead of the UKs planned departure from the EU in March.
Future developments will hinge on how long the present economic dichotomy lasts and which direction it takes once it dissolves, the Bundesbank said. It is unclear whether exports and, by extension, industry will regain their footing before the domestic economy becomes more severely affected.
You can read his full piece here:Bundesbank warns Germany could be about to fall into recession
German industry is in deep recession. Future plans are the worst in seven years.
3:42PM
Premier Oil and Funding Circle lead mid-cap risers
Global stocks bounce back on stimulus hopes: as it happened

A Premier Oil facility in Indonesia

Credit:
Paul Talbot
The FTSE 250 isnt looking quite as bright as its blue-chip brother today, with about a quarter of its stocks in the red, compared to just 10 on the FTSE 100.
The frequently-volatile peer-to-peer lender Funding Circle is the second-biggest mid-cap climber at 5.3pc up, narrowly trailing Premier Oil, which is up 5.16pc. The oil and gas company has been lifted by some positive brokers notes. RBC analystAl Stantonsaid itsTolmount East development in the North Sea looked strong.
At the lower end, Hochschild Mining and KAZ Minerals are leading fallers at around 5pc down apiece. KAZ has been suffering from a downturn in the global market for copper.
3:19PM
Wall Street joins surge at open, recovering damage from bond yield flip
Global stocks bounce back on stimulus hopes: as it happened

Donald Trump (left) and Federal Reserve Chair Jerome Powell

Credit:
Carlos Barria/REUTERS
Stock in New York have opened and steadied, with the countrys biggest stock indices joining their European peers in posting gains in the 1pc1.2pc region.
Donald Trumps awake and tweeting, but the US President is focusing on other some favourite topics (namely, political grudges and border walls), so hasnt said anything new about the economy just yet.
The Dow Jones Industrial Average has climbed enough to have cleared its losses from last Wednesday, when it posted an 800-point loss (its worst of the year) after the US 2yr/10yr bond yield curve inverted.
On that topic: one of Mr Trumps most burning ongoing feuds has been with Jerome Powell, the man he selected to run the Federal Reserve. The President wants interest rate cuts to stimulate the economy by making borrowing more affordable; the Fed wants to keep its powder dry in case there is a downturn.
Trade | Read more from The Telegraph
The trade war can be seen a a proxy battleground for those tensions. Mr Trump has tended to fire his biggest trade war salvos, such as the announcement two weeks that the US would slap a 10pc tariff (now partially delayed) on an extra $300bn of Chinese exports, straight after Fed decisions. Global trade tensions are seen as a threat to growth globally, so Mr Trump seems to believe that by provoking China, he will prompt the central bank into making further cuts.
Mr Powell, for his part, described last months modest 0.25pc cut to interest rates as being a mid-cycle adjustment, disappointing some traders (and the President) who had been hoping for a longer period of easing. Mr Trump has specified hed like to see a full 1pc shaved off.
Well hear more from Mr Powell on Friday: what he says, and how Mr Trump reacts, are likely to dictate next weeks trading.
2:20PM
Wall Street set for rise
Futures trading on Wall Street looks healthy, with the S&P 500 and Dow Jones Industrial Average both set to rise about 1pc at open, and the tech-heavy Nasdaq, which tends to move strongly on trade war news, looking at a 1.33pc climb.
2:09PM
UK families start to worry about job security
British families, who are growing more worried about keeping their jobs, have started to cut back on spending according to new research. Deputy economics editor Tim Wallace reports:

Confidence in major purchases slid rapidly this month, according to IHS Markits household finance index, raising fears over the stability of consumer spending.
This could mean the strongest engine of economic growth is sputtering. So far, record employment and surging pay has kept consumers spending, supporting GDP, even as exports and business investment have struggled.

Thats worrying because consumers have been underpinning the UKeconomy for some time now: defying global trade fears and Brexit uncertainty to delivergrowth though that didnt stop Britains recent contraction.
As a reminder, the UK has seen a weak summer across the pound and major equities:
1:58PM
City broker Shore Capital: Supermarkets may have to
introduce rationing if no-deal Brexit occurs
Global stocks bounce back on stimulus hopes: as it happened

Shoppers could face shortages of some product in the event the UK crashes out without a deal

Credit:
Simon Dawson/Bloomberg
Shore Capital, a city broker and investment company, has released a remarkable piece of research over the dangers posed to the UKs food system by a no-deal Brexit.
Under the title Brexit sleep-walking in the dark?(which Im not convinced is any more dangerous than sleepwalking with the lights on), Shores analysts have looked at the potential ways the UKs food systems could be disrupted by a disorderly exit from the European Union in the face of what they describe as no-deal minister Michael Goves alright on the night approach.
Among their most notable predictions are:
Price movements: An introduction of trade barriers could stop UK products entering the EU until new terms are agreed, driving down the cost of some foodstuffs Britain currently exports, while some imports will become more expensive. This could also depress prices in some countries that export heavily to the UK.
Wastage:This piling up of food could result in wastage in some instances, with limited storage capacity and low demand.
Rationing:The analysts say: should the availability of foodstuffs of any sort be seemingly jeopardised, then we would anticipate the clearing of supermarket shelves quite quickly, adding that this insecurity could lead to rationing which it acknowledges is a remarkable statement
Increased fraud:Food fraud may increase, with a fall in standard and increased demand creating the conditions for deception. The analysts pointed to the horse-meat scandal as an example of how such crime can occur.
In their conclusion, the analysts seem tobe acknowledging how unknowable the situationis:

With so many moving parts and so much uncertainty, all we can do at this stage is throw the cards up in the air and raise some of the patterns as to how they may fall for investors in the UK and European food systems.
1:29PM
Worlds largest cargo ship docks in Europe
Global stocks bounce back on stimulus hopes: as it happened

MSC Gulsun holds the record as the world's largest container ship
The worlds biggest container ship, MSCGulsun, has docked in Europe after its first voyage from China. Industry editor Alan Tovey reports:

The 400 metre (1,312ft) vessel is longer than 36 London buses and can transport 23,576 standard 20ft long shipping containers - known as TEUs (Twenty Foot Equivalent units).
According to owner MSC Mediterranean Shipping, that means the ship can transport 8.35m microwave ovens, 223m bananas or 386m pairs of shoes in a single load.
To carry the equivalent cargo load by road would require 14,000 lorries or 1,350 Jumbo jets.
You can read a full report on the ship, including infographic details of its impressive dimensions, here:Worlds biggest cargo ship longer than 36 buses arrives in Europe
NB: I messed up the link to our Safestore article inan earlier post. Heres the right link. The post has been updated, so should fix if you refresh the page. Sorry about that, and thank you to the storage-enthusiast reader who spotted it!
1:12PM
US commerce secretary: Huawei ban delayed by 90 days
Global stocks bounce back on stimulus hopes: as it happened

US Commerce Secretary Wilbur Ross

Credit:
Adriano Machado/REUTERS
New from the US: Commerce Secretary Wilbur Ross has said that Chinese telecoms and tech giant Huawei has an extra 90 days to conduct some business in the country.
The delay was brought in because some US companies are dependent on the firm, he said, adding: Were giving them a little more time to wean themselves off.
Mr Rosstold Fox Business the US government has also added a further 40 Huawei subsidies to its entity list of proscribed foreign businesses.
Chinas largest tech company, Huawei has landed at the centre of the trade storm between Washington and Beijing. The company has been blacklisted by the US, but its commercial customers wereoffered temporary respite.
12:56PM
Round-up: Safestore, satellites and self-driving cars
Global stocks bounce back on stimulus hopes: as it happened

Waymo and Jaguar Land Rover are in a long-term partnership

Credit:
Nick Dimbleby
Here are some of todays top stories:
Safestore goes Dutch with joint venture in the Netherlands:The self-storage company is to expand into the Netherlands after forming an alliance with European real estate fund Carlyle.
UK seeks Five Eyesalliance on satellite rival to EUs Galileo:Britain is seeking an alliance with its Five Eyes security partners to help launch its own satellite positioning system after being frozen out of the EUs Galileo project due to Brexit.
Google spin-out Waymo rules out building its own self-driving cars:Googles spin-off self-driving firm Waymohas said it won't build a self-driving car from the groundup again because its a distraction.
And heres something you may want to know more about:
The race to make Elon Musks vision of a 700mph hyperloop a reality in Europe

From my colleague Matthew Field:

From mind-reading machines to colonies on Mars, no idea is too ambitious or eccentric forElon Musk.But it is the billionaire Tesla founders concept of a hyperloop to end traffic jamsthat has perhaps drawn the greatest scepticism.
In 2013, he outlined his vision for a magnetic levitation train that would fire passengers in pods at speeds of up to 700mph.
While many dismissed it as a pipe dream, the proposal captured the imagination of a select group of engineers around the world who believed the concept could, one day, become a reality.
Read his full report here
12:23PM
European stocks advance on promise of stimulus; DAX leads risers
All this talk of stimulation is getting traders excited, and thats putting bit more fire under todays European equities rally. The DAX is currently up 1.3pc, with all of Europes blue-chip bourses except Spain posting gains of a point or more currently. The euro is also gaining against most of the worlds top currencies.
Also helping market sentiment this morning, growing signs of the #German government getting closer to announcing a fiscal package. Depending on size/contentand thats a huge qualifierthis could be more meaningful for the European #economy than another round of monetary stimulus https://t.co/In8V6xqSbG Mohamed A. El-Erian (@elerianm) August 19, 2019
One German fiscal stimulus trial balloon a day keeps negative yields away. https://t.co/6z2F0QLLNt Frederik Ducrozet (@fwred) August 19, 2019
Euro and bunds reacting to stimulus headlines
Caveats abound #euro pic.twitter.com/A6AjD0oquj Michael Hewson ?? (@mhewson_CMC) August 19, 2019
Germany says this pretty much every day now. Its the doing it where it falls down..... https://t.co/I9DSxNnOcS Shaun Richards (@notayesmansecon) August 19, 2019
12:17PM
Germany is readying stimulus plan Bloomberg
Global stocks bounce back on stimulus hopes: as it happened

German Finance Minister Olaf Scholz

Credit:
OMER MESSINGER/EPA-EFE/REX
Germanys government is preparing to take action in order to steer its economy away from danger, including a series of stimulus measures that would kick in if Europes largest economy enters a deep recession, Bloomberg reports.
Citing two unnamed sources, the website says: The program would be designed to bolster the domestic economy and consumer spending to prevent large-scale unemployment. It said the government was seeking to introduce incentives similar to those it brought in following the financial crisis, which will be aim at improving energy efficiency in homes, promoting hiring and expanding social welfare payments.
The report offers a bit more meat to what we already knew (see 11:31am update): the German government is increasingly positioning itself to intervene if its economy continues to shrink.
11:57AM
Banks and asset managers back cutting European trading hours
Global stocks bounce back on stimulus hopes: as it happened

The London Stock Exchange

Credit:
Henry Nicholls/REUTERS
A fascinating scoop by Financial News this morning: the business website reports lobby groups are pushing for cuts to the number of hours European stock markets are open, in a bid to make trading less stressful and friendly to parents and women.
TheAssociation for Financial Markets in Europe, a bank lobby group, and theInvestment Association, which represents UK asset managers, are pushing for the change which could involve shaving off an hour at the beginning or end of trading.
An Investment Association spokesperson said the change could play a pivotal role in fostering good mental health and creating inclusive workplaces.
The suggestion is particularly interesting when looked at alongside a Reuters report this morning, which saysthe last five minutes of trading have become the busiest time of day for stock market traders in Europe. Could the stage be set for change?
11:38AM
Corbyn confirms plans to call no-confidence vote
Labour leader Jeremy Corbyn, speaking in Northamptonshire, has confirmed he plans to call a no-confidence vote in Boris Johnsons government. He said:

I will bring a vote of no confidence in the government, and if were successful, I would seek to form a time-limited caretaker administration to avert no deal, and call an immediate general election so the people can decide our countrys future.

It doesnt seem to have had any major impact on the pound so far. Sterlings strength against the euro has been seen as a strong indicator of Brexit sentiment.
11:31AM
Bundesbank: Germany could enter technical recession
Global stocks bounce back on stimulus hopes: as it happened

German Chancellor Angela Merkel (left) and Finance Minister Olaf Scholz

Credit:
Michael Sohn/AP
Last week brought news that the German economy shrank during the second quarter, declining 0.1pc across the three months to June.
The slip was widely expected as global pressures weigh on the exporter-heavy economy, which relies on international buyers for its manufactured goods.
A poll last Tuesday revealed sentiment in the country hadhit its lowest levels since the eurozone debt crisis, falling from 24.5 in July to 44.1 this month.

Hopes of stimulus


The mood improved slightly later in the week, after Bank of Finland governor Olli Rehn, a member of the European Central Banks governing committee, said it would be better for the ECB to overshoot on stimulus than undershoot.
Mr Rehns comments, made in an interview with the Wall Street Journal, follow statementsby Mario Draghi in which the ECB President heavily hinted that a September stimulus package is being developed.
That helped Europes stock markets look a little more upbeat at the end of last week.The good mood was quicklyfed further by a report in German periodicalDer Spiegel, which said the countrys Finance Minister Olaf Scholz was weighing up the option of budgeting for a deficit to allow for spending to stimulate growth. Mr Scholz later put the figure of50bn on his floated stimulus spending.

Output will remain lacklustre


Despite the upbeat turn, Germanys central bank has warned today that the countrys output will remain lacklustre in the third quarter (which we are already halfway through), and said it could continue to fall slightly.
If German GDP does shrink again, the country will have entered a technical recession, following its widely-held definition as meaning two quarters of negative growth.
The Bundesbank says:

While domestic consumption continues to isolate the economy, the jobs market is already showing signs of weakness and confidence in the services sector is also dropping.
Bundesbank sees risk German economy could enter recession. Says that German output will remain lackluster in Q3 and could continue to fall slightly. That would be 2nd straight quarter of contraction, typical definition of a recession, after a 0.1% decline in Q2 2019 (via BBG) pic.twitter.com/h7w5UVfPGh Holger Zschaepitz (@Schuldensuehner) August 19, 2019
11:07AM
Carney:We do not see negative rates as an option here
Bit more of importance from that Mark Carney interview (see 9:37am update): the governor said he doesnt expect Threadneedle Street to push negative rates upon Britains lenders anytime soon. He told Central Banking:

At this stage we do not see negative rates as an option here. I am not criticising others that have used them, but we dont see it as an option
11:02AM
Meanwhile, in Westminster...
Global stocks bounce back on stimulus hopes: as it happened

Former Conservative MP Sarah Wollaston (left) and former Labour MP Chuka Umunna. Both MPs have now joined the Liberal Democrats.

Credit:
TOLGA AKMEN/AFP
There are only a couple of weeks to go until parliament reconvenes, andarguments are raging over the path ahead.
Groups who opposea no-deal Brexit, support a second referendum or areagainst the idea of Britain leaving the EU altogether spent most of last week caught in a a disjointed line dance as they struggled to determine who could lead a temporary government to delay Britains exit.
How likely is a no deal Brexit?
Meanwhile, the government and its supporters are coming under pressure to call a snap general election in order to try to see off any potential delaying action (most likely to take the form ofa confidence vote tabled by Labour leader Jeremy Corbyn). Its also continuing to take a beating over Operation Yellowhammer, its leaked no-deal preparation plan.
At a glance | Operation Yellowhammer
The BBCs Faisal Islam says the Yellowhammer document which Number 10 has tried to play down as being out of date is likely to be recent, citing unnamed former ministers:
Im confident now that this document is from the past month, under Johnson administration. Former ministers do not recognise the 40-60% number at its core - upgrade occurred v recently. So can not see how its possible this was leaked by a member of previous Government... Faisal Islam (@faisalislam) August 19, 2019
Asever, you can follow the latest update on our politics like blog:Brexit latest news: Senior Tories urge Boris Johnson to call snap election to head off no confidence vote

10:42AM
Economist: European inflation should recover
Pantheon MacroeconomicsClaus Vistesen has taken a look at this mornings figures on eurozone inflation. Mr Vistesen suggests a revision to the figures might be coming, based on an apparent disparity involving the readings for the harmonised index of consumer prices (designed to maintain price stability across eurozone countries).He writes:

We are still struggling with the divergence between the EUs HICP services rate 0.5pcy/y in July in Germany and the national rate, which was 1.5pc. A difference in solid fuel price inflation is part of the story, but it cant account for the entire difference. Revisions are still likely in our view. Looking ahead, we think the EZ core rate will rebound to just over 1pcin due course, where it will remain into year-end.
10:34AM
Sainsburys, TUI and Ocado lead FTSE 100 climbers
Global stocks bounce back on stimulus hopes: as it happened

Sainsburys boss Mike Coupe

Credit:
Simon Dawson/Bloomberg
Supermarket Sainsburys, airline TUI and food delivery tech firm Ocado are the three biggest risers on the blue-chip FTSE 100 currently, all up around 3pc.
Sainsburys is the biggest climber currently, following reports that it has begun the search to replace its boss, Mike Coupe. My colleague Laura Onita wrote at the weekend:

The grocer has set the wheels in motion internally for a succession plan, according to two sources.
Three internal candidates have been tipped for the top. They are John Rogers, the boss of Argos, Simon Roberts, its retail and operations director who used to run Boots UK, and Paul Mills-Hicks, the food commercial director.

The supermarket says Mr Coupe has the fullsupport of shareholders and the Board.
You can read Lauras full report here:Sainsburys kicks off search for Mike Coupes replacement
10:11AM
Eurozone inflation hits lowest level since 2016, core inflation stays unchanged
Consumer price index data for the eurozone shows overall CPI fell to 1pc year-on-year, its lowest level in three years, while core CPI stayed unchanged at 0.9pc, as expected.
Costs were pushed up by strong increases in prices for food and services.
That further bolsters the case for stimulus, though Im not sure the European Central Bank needs much more convincing on that front.
Euro area annual #inflation down to 1.0% in July (June 1.6%) https://t.co/lVaUhOsdzo pic.twitter.com/uTp05ENOoQ EU_Eurostat (@EU_Eurostat) August 19, 2019
The power of #QE! Eurozone headline #inflation dropped to 1.0% in July, the lowest level since November 2016. pic.twitter.com/P0kZEhjhi3 jeroen blokland (@jsblokland) August 19, 2019
Incidentally, it looks like Bloomberg (the worlds biggest financial data provider) accidentally released the figures about nine minutes early:
Euro area final HICP released 10 minutes early on @business terminal but not on @EU_Eurostat website, okayy. Frederik Ducrozet (@fwred) August 19, 2019
Looks like Bloomberg jumped the gun on EU CPI numbers... Michael Hewson ?? (@mhewson_CMC) August 19, 2019
10:02AM
Yield curve inversion makes a statement on lacklustre growth
Last week, US bond markets signalled a recession is coming in the clearest way they can: the yield curve on two-year and 10-year bonds inverted, meaning it was (for a few hours) more lucrative to hold shorter-termthan long-term government debt.
It has since flipped back, but the damage has been done.Inversion undercutsa key principle of finance: that by sacrificing the liquidity of your holdings simply put, how quickly you can covert them into cash you should receive a greater reward.
Crucially, a US 2yr/10yr inversion is widely accepted as a signal that a US recession is coming, having preceded all but one downturn in the past five decades.
Inverted yield curves usually spell recession
Its crucial to remember, however, that a yield curve inversion isonly a signal. Sure, it is reliable in indicating a recession is coming, but it doesnt indicate how far away the downturn is. The US economy looks fairly healthy in various ways, while many economies in the rest of the world (yep, Britain too) look worse for wear.
UBS strategistBhanu Baweja writes:

More than weakness in US growth, the inversion of the yield curve makes a statement on lacklustre growth in the rest of the world. Statistically, we find that bunds are causingmoves in US treasuries, rather than the other way around. Substantively, we see few excesses or imbalances in the US economy that may lead to growth collapsing. We think the road to serious US growth worries will likely take the long route through Asia & Europe.
9:48AM
Convatec names new chairman
Global stocks bounce back on stimulus hopes: as it happened

Convatec makesmakes colostomy bags, catheters and wound dressings

Credit:
Peter Byrne/PA
NHS supplier Convatec has named John McAdam, formerly head of chemical firm ICI, as its news boss. My colleague Michael ODwyer writes:

The troubled FTSE 250 company, which makes colostomy bags, catheters and wound dressings launched a $150m (?124m) turnaround plan earlier this year in a bid to respond to tougher competition, price pressure facing NHS suppliers and slower than expected growth in the US.

He adds:

Mr McAdam will assume the role filled by Vodafone grandee Sir Christopher Gent until earlier this year. He will join the board at the same time as new chief executive Karim Bitar, who has spent eight years as boss of Genus, a biotechnology company focused on animal genetics.
You can read Michaels full report here:Struggling NHS supplier Convatec names former ICI chief John McAdam as chair
9:37AM
Carney: Bank of England not seeing eye-to-eye with parts of EU over clearing contracts
Global stocks bounce back on stimulus hopes: as it happened

Bank of England governor Mark Carney

Credit:
WILL OLIVER/EPA-EFE/REX
Mark Carney has undertaken an interview with Central Banking, in which the Bank of England governor saidrisks around bilaterally uncleared derivatives contracts after Brexit have not been fully addressed in some EU areas, including France and Germany.
In (very) simple terms, that refers to issues around clearing, which involves reciprocal payments being tallied and simplified to avoid burdensome and risky daisy-chaining of contacts. It has been a sticking point in Brexit negotiations over financial services.
In the interview, conducted just after the Bank gave its inflation report at the start of this month,Mr Carney said of the lack of conclusive action:

The consequence of that is that there is some risk we have a difference of opinion with the European authorities about the seriousness of this risk that we would like to see addressed more clearly
9:16AM
Heres what analysts are saying about the week ahead
Global stocks bounce back on stimulus hopes: as it happened

European PMI data is set to be released on Thursday.Germany's economy shrank in the second quarter, piling pressure on Chancellor Angela Merkel to unleash fiscal stimulus as manufacturers reel from a US-China trade war.

Credit:
Krisztian Bocsi/Bloomberg
As befits the middle of August, the next five daysare light on scheduled business news, so political news is still likely to drive many market movements.
Add to that the summers low liquidity levels (thats in reference to financial flows, not sunshine in London at least, its has been a bit wet this morning), and you have a recipe for volatility.
Craig Erlam, from trading platform Oanda, sees potential for a correction in the price of gold, which has rallied in recent weeks as investors scramble to avoid risky assets:

Gold remains above $1,500 this morning and is only a little off its highs even as the dollar has recovered and risk appetite improved. While gold bulls are clearly very reluctant to let the momentum slip, the yellow metal didnt rally too strongly during the mid-week freak out although perhaps that's a sign that risk appetite is not the biggest driver right now.

Deutsche Bank analysts have looked forward to Thursdays euro PMI figures. They write:

A reminder that the data for Europe in July confirmed a reversal of the improvement seen in June with the composite reading for the Euro Area dropping back to 51.5. The consensus expects a further modest deterioration to 51.2 with the manufacturing reading expected to fall further into contractionary territory at 46.2.

RBC Europes Elsa Lignos sees this as a crucial week for Prime Minister Boris JohnsonsBrexit stance, as he prepares to visit Germany and France to meet Emmanuel Macron and Angela Merkel, saying (via Bloomberg):

If Johnson is going to perform any kind of U-turn on his negotiating stance, this week would be the one to lay the ground, though it seems unlikely.

SpreadExs Connor Campbell has looked at comments made by Donald Trump and his advisors on the US economy over the weekend:

Investors appeared to take to heart Trumps claim that the US is doing tremendously well, alongside his reassurances that Washington and China are continuing to talk trade-wise.
Perhaps more important, however, were the comments of US trade advisor Peter Navarro. He insisted that the Fed will be lowering rates the central bank is in focus this week with Julys meeting minutes on Wednesday and the Jackson Hole Symposium on Thursday before predicting that the ECB will be engaging in monetary stimulus and China will be engaging in fiscal stimulus.
8:53AM
Pound drops sharply at open of London markets
Global stocks bounce back on stimulus hopes: as it happened

Details of the governments no-deal preparations were leaked

Credit:
Steve Back/Getty Images Contributor
London trading has been underway for about three-quarters of an hour now, and the pound which had been having a pretty middling performance, despite a deep flash drops in the early hours of the morning, now down 0.3pc against the euro and 0.2pc against the dollar.
Sterling had a pretty good run last week, buoyed by hope that opposition parties and rebel Conservatives might be able to form an alliance to prevent a no-deal Brexit.
Brexit-related sentiment is likely to have taken a turn for the worse this morning, however, as markets get the chance to react after details of the governments preparations for a worst-case-scenario no-Brexit outcome, codenamed Operation Yellowhammer, were published in the Sunday Times.
Number 10 appears to have spent most of yesterday briefing against the alleged leaker, and tried to play down the relevance of the documents, which it said were out-of-date. Sky News Tamara Cohen tweets that may not quite be the case:
NEW I'm told that the Sunday Times no-deal dossier detailing food and medicine shortages and border chaos was dated 1 August - and presented at the first XO meeting.

BUT no10 insist that steps taken - decisions, funding etc mean that is not the situation now Tamara Cohen (@tamcohen) August 19, 2019
8:39AM
Europe rises at open
Global stocks bounce back on stimulus hopes: as it happened

Trading on Londons top indices opened more than an hour and half late on Friday

Credit:
TOBY MELVILLE/Reuters
European indices have continue their rally from the end of last week, with the London Stock Exchange managing to open on time (avoiding a repeat of Fridays issues).
The only economic news European markets are bracing for is consumer price index inflation data, coming in at 10am. A poll of analysts and economists by Bloomberg suggests the figure will stay at 0.9pc.
Heres how the continents blue-chip bourses stood as of about 15 minutes ago:
The FTSE 100 was 0.93pc up
Frances CAC 40 was 0.79pc up
Germanys DAX was 1.14pc up
Spains IBEX was 0.89pc up
Italys FTSE MiB was 1.04pc up
As a reminder, you can check the latest prices on top indices, currencies and commodities using the Markets Hub widget above!
7:50AM
Whats coming up in global markets this week?
Global stocks bounce back on stimulus hopes: as it happened

An estimated 1.7 million people defied police to protest in the pouring rain in Hong Kong.

Credit:
Anadolu Agency
Looking ahead, all eyes will be on Federal Reserve chairman Jerome Powell on Friday when headdressesthe Kansas Feds annual Jackson Hole gathering. Investors will be watching to gauge whether another rate cut is on the cards in the US.
Investors will also be monitoring the purchasing managers indexdata from the USand eurozone this week. Analysts are expecting a modest further slowdown in both regions.
In Asia, the focus will continue to be on Hong Kong, where a peaceful protest at the weekend appeared to be the largest in over a month. Organisers had been hoping to diminish tensions after demonstrations that brought Hong Kong airport to a standstill were marked by violence.
7:40AM
Whats lifting markets?
Overnight gains in Asian stocks werehelped in part by Beijings plan to reform its interest rate system and cut borrowing costs.
As well as the strong end to the week for US stocks on Friday, sentiment was buoyed by comments from President Donald Trump on trade talks with China. Treasury yields also continued to recover from the multi-year lows seen last weekwhen an inversion in the yield curve sparked recession worries.
7:22AM
Agenda: Markets look set to rise
Global stocks bounce back on stimulus hopes: as it happened

Federal Reserve chair Jerome Powell is set to speak on Friday

Credit:
JIM LO SCALZO/EPA-EFE/REX
Good morning. Stock markets could rise this morningas hopes of more stimulus from central banks around the world and steps being taken by major economies such as Germany and China soothe investors fears of a sharp global economic slump.

5 things to start your day


1)The Chinese auto giant BYD is exploring a rescue of the troubled Boris bus maker Wrightbus, as the Government comes under pressure from the DUP to save jobs in Northern Ireland.
2)Steven Fine, chief executive of broker Peel Hunt, says acollapse in the quality of City analysis is partly to blame for the failure of blockbuster floats such as Aston Martin and Funding Circle.
3)The mobile operator Three has begun a bid to use its dominance of the 5G airwaves to attack traditional broadband providers such as BT and Sky.
Read More | 5G Series
4)The Serious Fraud Office (SFO) faces a claim for unfair dismissalfrom the former lead investigator on one of its biggest inquiries, amid allegations of gross misconduct in relation to a trip to the pub.
5)Amazon and Facebook have thrown their weight behind Donald Trumps counter-attack on Frances tax on tech giants, which threatens to open a new front in global trade wars.
UK's 'tech tax' | Key facts

What happened overnight


Asian markets rallied overnight following a strong lead from Wall Street and comments from Donald Trump's top economic adviser, who hailed positivetrade talks with top Chinese negotiators.
Optimism that central banks will provide fresh support to head off a global economic recession has also lent much-needed support to regional equities after last week's sell-off, with eyes on an upcoming speech by Federal Reserve boss Jerome Powell for clues about its plans later this week.
Investors were in an upbeat mood after White House chief economic adviser Larry Kudlow said that if talks between deputies from Beijing and Washington went well and we can have a substantive renewal of negotiationsthen we are planning to have China come to the USA and meet with our principals to continue the negotiations.
Mr Trump provided further cause for hope:
We are doing very well with China, and talking! Donald J. Trump (@realDonaldTrump) August 18, 2019
The remarks helped Asian traders overnight build on New York's rally.
Hong Kong led gainers, surging 2.2pcwith dealers also cheered by three days of protests in the city not descending into violence.
Shanghai is up1.8pc and Tokyo added 0.8pc. Singapore,Seoul,Wellington, Taipei and Jakarta also headed into positive territory.
Wall Street shares had rebounded on Friday after a report that Germany's coalition government w
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