Sterling soars as Brexit deal hopes rise: as it happened

Pound jumps sharply against euro and dollar as Boris Johnson meets with French President Emmanuel Macron
Sterling has declined over past months as traders fears of a no-deal Brexit increase
France and Germanyboth beat expectations in a closely-watched economic survey this morning, but analysts warned eurozone sentiment is at a six-year low
Mr Johnson should remind Macron of these three economic truths over lunch
Ambrose Evans-Pritchard:We mustnt leave trade hostage to Channel choke-point
Wrap-up: Pounds star turn does FTSE no favours
Sterling soars as Brexit deal hopes rise: as it happened

What the pound and euro would undoubtedly look like if they were people
Undoubtedly, theres been some good money made on the currency markets over the last week. Short interest in the pound dropped last week, and anyone who cashed out a bet against sterling should be feeling smug now.
The pound is riding high against other currencies marginally up, and probably worth a few euros if youve waited until the last minute to take a trip to the continent this summer.
Theres not much reason to expect the euphoria can last, however:people have jumped on Boris Johnsons supposed 30-day deadline to find alternatives to the Irish backstop, but Angela Merkel has played those comments down today.
The practical situation remains unchanged: the UK is heading for a no-deal exit unless either 1) There is a radical idea that can maintain the Single Market without introducing a border on the island of Ireland, or 2) One side backs down.
Mr Johnsons visits might be good politics, but while negotiations remain intractable, theyre only a spectacle and that makes the pounds gains likely to be illusory as well. Nonetheless, it was enough to send the FTSE 100 scuttling today.
Thats all from me today. Join us again tomorrow for the latest news on business, economics and markets. Remember to follow Telegraph Business on Twitter for the latest news.
FTSE leads European fallers
With markets now closed across, the FTSE 100 unable to pull itself back over a 1pc knockdown.
In France, the CAC 40 lost 0.87pc, while Germanys blue-chip DAX fell by 0.47pc.
Stock indices shift to losses as US PMI data turns outlook sour
That US PMI data landing just 15 minutes after trading began on Wall Street was enough to knock equities in New York and Europe into the red. Heres how things lookedabout 15 minutes ago:
Sterling soars as Brexit deal hopes rise: as it happened

The FTSE 100 not helped one by sterling having a day in the sun is off more than 1pc.
US 2yr/10yr yield curve re-inverts
An inversion in the yield curve between two- and ten-year US bonds was last weeks big event on the markets, sending equities to their worst day of 2019.
The swap a reliable recession indicator was only temporary (though long enough to do plenty of damage), and the rate quickly turned positive again. It looks like that PMI data has been enough to send it back under, however.
Inverted yield curves usually spell recession
If the US economy isheading downhill, we may well see the curve dip into the red a few times before it can hold the drop for any length of time.
US 2s/10s yield curve turns negative again. Inversion fuels fresh recession fears. Holger Zschaepitz (@Schuldensuehner) August 22, 2019
NB: the next tweet should say inverted, not invested.
The widely-followed 2-10s yield curve had just invested in the US ... again. This is in reaction to PMI numbers that came in below consensus expectations (for both manufacturing and services) and, earlier, confirmation that the weakness in manufacturing is a global phenomenon. Mohamed A. El-Erian (@elerianm) August 22, 2019
Explained | What is an inverted yield curve?
Pounds climb shows desperation for good news
Sterling is holding its gains currently, up 1pc against the euro and 0.9pc against the dollar. SpreadExs Connor Campbell sees the rally as a sign of desperation for good news:

Reacting as if there had been actual progress made, the pound showed its desperation for good news as it leapt around 1pcagainst both the dollar and euro. Cable crossed $1.223 for the first time since the end of July, while against the single currency sterling found itself teasing 1.1045.
Tech round-up: Facial recognition tech under the microscope, N26 takes its card to the US, DeepMind in deep water
Sterling soars as Brexit deal hopes rise: as it happened

It was recently revealed that facial-recognition cameras are used in Londons Kings Cross area

Here are some of the biggest tech stories from today:
EU exploring new laws to curb indiscriminate use of facial recognition:The European Commission is planning new limits onfacial recognition technologyto curb itsincreasing use to monitor citizens.
Monzo rival N26 launches in America after UK success:Monzo rival N26 has officially launched in the US as it continues to draw 1,000 customers every day in the UK after having entered the market last year.
And heres something you may want to know more about:
With ?1bn in debt and its founder placed on leave, is Googles DeepMind in trouble?

Hasan Chowdhury and James Cook have looked at the problems facing one of the UKs most prominent tech ventures. They write:

DeepMind has been hailed as one of the greatest British success stories of the modern age
But when Google announced that it had bought the London-based artificial intelligence lab in2014for ?400m, few people had heard of the company or its two founders, Demis Hassabis and Mustafa Suleyman.
Today, DeepMind is supposedly on the way to creating an artificial general intelligence that will work like the human mind does, and is believed to be one of the most prestigious AI companies on Earth.
But the road to success hasnt been easy. This week, it emerged that its enigmatic co-founder Suleyman has been placed on leave for reasons that remain unknown.
You can read their full report here
Sports Direct eyes smaller auditors after getting cold shoulder from Big Four
Sterling soars as Brexit deal hopes rise: as it happened

Sports Direct boss Mike Ashley

Nick Ansell/PA
Retailer Sports Direct is in talks with several smaller accountancy firms, after its efforts to secure a Big Four auditor failed. My colleague Harriet Russell reports:

The retail chain, founded by billionaire Mike Ashley, isscramblingto avoid a possible suspension of its shares from the London Stock Exchange if it fails to find a new adviser.
The company has tapped a number of mid-tier firms about a possible tender process, after the Big Four accountancy firmsPwC, Deloitte, KPMG and EY were understood to have turned down the work.
You can read her full report here:Sports Direct taps smaller firms for help in race to find an auditor
Fall in order growth sends US manufacturing sector into contraction for first time since 2009
Sterling soars as Brexit deal hopes rise: as it happened

The US automotive sector appears to have suffered most heavily

Luke Sharrett/Bloomberg
That 49.9 estimate for US manufacturing shows the US manufacturing sector will shrink by the tiniest margin during August, for the first time since September 2009.
IHS Markit said:

The decline in the headline PMI mainly reflected a much weaker contribution from new orders, which offset a stabilization in employment and fractionally faster output growth.

It looks like global pressures may have taken their toll as well, with the fastest reduction in export sales since August 2009. IHS said:

Survey respondents indicated that a drop in sales often cited a soft patch across the automotive sector, alongside a headwind to manufacturing exports from weaker global economic conditions
US PMI shows unexpected slowdown
US purchasing managers index data is out, with a dramatic miss for the services sector, whilefigures suggest Americas manufacturing sector is contracting. Here are the numbers (a score above 50 indicates growth):
Manufacturing:49.9 (survey: 50.5, previous 50.5)
Services:50.9 (survey: 52.8, previous 53)
Composite:50.9 (previous 52.6)
U.S business activity growth eased in August, amid a slower rise in service sector output. The Flash U.S PMI slipped to 50.9 (52.6 - July), with overall new business rising at the slowest rate since October 2009. More here: IHS Markit PMI (@IHSMarkitPMI) August 22, 2019
IHS Markits Tim Moore said

The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector
Round-up: Eurozone sentiment falls, bingo giant Mecca heads for the web, John Laing wails over lack of wind
Sterling soars as Brexit deal hopes rise: as it happened

Mecca is one of the UKs biggest bingo chains

Jeff Gilbert
Here are some of the days top stories:
Eurozone economy struggles as confidence slumps to six-year low:The ailing eurozone economy struggled to regain its momentum in August as the global economic malaise sent confidence tumbling to its lowest level in six years.
Mecca owner moves online as bingo goes off the boil:Mecca Bingo owner Rank Group has accelerated its push into online gaming in a bid to revive its fortunes as the popularity of bingo continues to wane.
John Laing halts renewable investments because it is not windy enough:The infrastructure investor is putting on hold fresh investment in renewable energy projects in Europe and Australia because of a lack of wind.
US shares rise at open
Shares on Wall Street have opened up as expected, somewhat stronger than futures trading indicated.
Sterling soars as Brexit deal hopes rise: as it happened

Bloomberg TV
Edward Moya of SpreadEx writes:

US stocks are struggling for direction as investors await Fed Chair Powells Jackson Hole speech on Friday. In the past, central bankers have used the Wyoming summit to announce major policy shifts and many are expecting Powell to walk back some of his commentary from last months post-rate decision press conference where he said the rate reduction was merely a mid-cycle adjustment." Some analysts believe Powell could emphasize the risks to the global economy and leave the door open for a half a percentage point cut.

Mr Moya pointed to escalating trade war tensions and events in Hong Kong that have occurred since we last heard from the Fed. He adds:

Regardless of what Powell does, he will be criticized. If he takes back his mid-cycle adjustment comment and signals more cuts and QE could be on the table soon, it will look like he has fallen to President Trumps pressure. If Powell refrains in signaling more easing is coming, he will risk having the bond market overreact and crush Treasury yields, possibly raising the argument we could see negative yields eventually in America.
Wall Street set for flat open
Markets in New York will open in a minute, and are set for a flat but narrowly positive open.
That will likely push trading volumes up in London: Telegraph Moneys Investment EditorTaha Lokhandwala has looked at why:
Wait until America wakes up when you should trade to make the best returns
London Stock Exchange trading volumes on an average day
Trump tweets...
...the US President has weighed in on the global bond market.
Germany sells 30 year bonds offering negative yields. Germany competes with the USA. Our Federal Reserve does not allow us to do what we must do. They put us at a disadvantage against our competition. Strong Dollar, No Inflation! They move like quicksand. Fight or go home! Donald J. Trump (@realDonaldTrump) August 22, 2019
Before offering some more context, heres the key thing to understand, courtesy of Yale School of Management economics professor Howard Forman:
In fact, if the federal reserve lowers the federal funds rate, it would expect that the 30 year bond yield would INCREASE due to inflationary expectations. You need better advisers. (((Howard Forman))) (@thehowie) August 22, 2019
Heres more on the 30-year bond sale (which maybe didnt go quite as well as Mr Trump suggested), and heres our big read on how the bond market ended up in this mess:
Rock-bottom interest rates, 100-year debt and negative yields: why has the bond market gone haywire?
Pound top performer among global currencies
That acceleration puts the pound top among Bloombergs basket of major global currencies currently, gaining strength against all its peers.
Sterling soars as Brexit deal hopes rise: as it happened

Thats good news for holidaymakers, but worse for importers, who make up a big chunk of the FTSE 100. The blue-chip index is currently off 0.6pc, despiteEuropean stock exchangesbeing broadly flat.
Sterling surges
The pound has surged in the past few minutes, with markets apparentlywelcoming ongoing talks between Prime Minister Boris Johnson and his counterparts in Berlin and Paris. Its up more than 1pc against the euro today, and 0.9pc against the dollar.
Thats brought it to levels not seen since June but still a fair way below where it stood before Mr Johnson entered Number 10 in the middle of last month.
Heres how it looked up to today since the start of July:
What this mornings retail figures tell us about the UK economy
Sterling soars as Brexit deal hopes rise: as it happened

UK consumers have maintained high levels of activity despite political uncertainty

Simon Dawson/Bloomberg
Economics correspondentTom Reeshas taken a look at this mornings CBI retail figures.
Are resilient British shoppers starting to tighten their belts again?

The buoyant jobs market and decade-high wage growth have boosted retailers this year but the CBIs gauge suggests that sales have started to tumble.
Sales volumes fell at their fastest rate since 2008 in August as sentiment among retailers also slumped to a post-financial crisis low.
Howard Archer at the EY Item Club warned the sales slide is a blow to hopes that consumer spending can help the economy return to growth in the third quarter. He added that shoppers have been by far the most resilient sector of the economy during a difficult first half.
However, one word of caution. The trend shown in the CBIs gauge has decoupled from the official ONS data, which has remained solid, and surveys tend to overestimate drops during times of political turmoil. If the official retail sales plunge at a similar rate, the UK economy could be in for another woeful quarter.

Heres how that split looks: this graph shows the ONSs actual retail sales changes (excluding fuel, year-on-year) versus the CBIs own scoring system. They appear to be becoming increasingly detached.
Sterling soars as Brexit deal hopes rise: as it happened

Premier Oil bubbles up as it prepares to sell off assets
Sterling soars as Brexit deal hopes rise: as it happened

A Premier Oil facility in Indonesia

Paul Talbot
Premier Oil is one of the FTSE 250s biggest risers currently, up 5.6pc after posting sales growth of 40pc. My colleague Michael ODwyer reports:

Premier Oil managed to turn a profit in the first half of the year as sales grew almost 40pc to $871m (?717m) but an asset sell-off is on the cards as it seeks to bring its debt under control.
The FTSE 250 company reported a first half pre-tax profit of $119m against a $25m loss in the same period last year but analysts at Barclays downgraded the shares, saying that free cash flow generation is not rapid enough to stop debt refinancing risks becoming a headwind.
Premier hit trouble oil prices slumped earlier this decade and was forced to undertake a major refinancing. It is still saddled with more than $2bn in debt.
In a bid to further shore up its balance sheet, it is trying to sell assets in Mexico, where it made a significant oil discovery in 2017.
US jobless claims lower than expected
Weekly jobless claims figures from the US are out, at 209,000 against expectations of 216,000 and a revised figure for the week before of 221,000.
Thats further vindication for Federal Reserve chair Jerome Powell, who haswarned investors against automatically expecting more interest rate cuts,insisting it is not on a preset course despite fears of an impending recession.
Heres our full read on that:Federal Reserve tells markets not to expect automatic rate cuts despite rising recession fears
ECB minutes: Five key takeaways
Sterling soars as Brexit deal hopes rise: as it happened

ECB president Mario Draghi (right) with former IMF managing director Christine Lagarde, who is set to replace him

The European Central Bank has released the full minutes from its July meeting. We already know a lot of what was discussed, because Mario Draghi held a press conference shortly after they central bankers finished their discussion, but the minutes reinforcesome of the key messages.
As ever, the minutes a dense and fairly long read, so here are five key points:
1) The ECB is prepared for a highly accommodative stance of monetary policy for a prolonged period of time in the face of a global slowdown and to support inflation.
2) Centrals bankers see employment gains and rising wages as likely to offer continued support despite pressures on industry and trade.
3)The slowdown that began last year is lasting longer than expected, with the ECB noting: While the absence thus far of signs of the expected recovery in the second half of the year was worrying, reference was made to unchanged positive fundamentals.
4)Members back a package of measures to tackle issues, though some nuances were expressed about the design and the individual elements.
5)Despite supporting monetary changes, members said government spending also needed to change, noting: With fiscal policy using available space and accelerated structural reforms, monetary policy would be less at risk of being overburdened and would be able to deploy available instruments more effectively.
HSBC and Standard Chartered call for peaceful resolution to Hong Kong tensions
Sterling soars as Brexit deal hopes rise: as it happened

Secondary school students in Hong Kong joined a rally this morning

Banking giants HSBC and Standard Chartered have weighed in on eventsin Hong Kong, calling for a non-violent end to tensions over a controversial extradition law that have led to massive demonstrations in the city. Banking editor Lucy Burton writes:

HSBC, set up in Hong Kong to support international trade between China and Europe in 1865, said in the advert it was deeply concernedabout the recent events.
We strongly condemn violence of any kind and the disruption caused to the communities in which our customers, staff and shareholders live,it said.
The banking giant added that maintaining the rule of law was vital to Hong Kongs unique status as an international financial centre. That is why we fully support the ambition to resolve the present situation peacefully.
You can read her full report here:HSBC and Standard Chartered speak out against Hong Kong violence
Macron: We need an answer on backstop in 30 days
Sterling soars as Brexit deal hopes rise: as it happened

French President Emmanuel Macron (right) and Britains Prime Minister Boris Johnson walk into the Elysee Palace after addressing the press

Daniel Cole/AP
Emmanuel Macron has said the EU needs visibility on the Irish backstop within30 days, echoing the effective deadline floated by German Chancellor Angela Merkel yesterday. He said no full new plan can be found within that time period that would be very different from the thrice-rejected withdrawal agreement.
Mr Johnson said there are all sorts of ways of maintaining the integrity of the Single Market withinfrastructure on the frontier. He pointed to a report by MPs including Nicky Morgan and Greg Handsthat suggests:
Sanitary checks away from the border
The introduction of cross-border shared economic zones
The establishment of a trusted trader programme
The third suggestion has already been specifically rejected by the EU.
The two leaders have now headed inside the Elysee Palace for lunch.
Johnson and Macron make statements ahead of lunch
Sterling soars as Brexit deal hopes rise: as it happened

Boris Johnson (right) and Emmanuel Macron

Boris Johnson and Emmanuel Macron just appeared together ahead of their lunch in Paris.
Mr Macron said the two countries relationship is immutable, and pointed to commitments and shared goalsbetween the countries that extend beyond Brexit.
The French President said it is for the UK alone to choose how it exits the European Union, and called the Irish backstop an indispensable guarantee of stability.
Mr Johnson said I think we can get a deal, but repeated his pledge to bring the UK out of the EU at the end of October regardless of the outcome of negotiations.
He said whatever happens with Brexit, both countries would work together to deepenour economic interpenetration. He pointed to British Steels provision of material for Frances TGV rail system.
In conclusion, as they say in France,plus ca change...
Questions happening now.
EY economist: Retail figures are significant blow to hopes of consumer support
The sharp drop in sales and sentiment is worrying for the UK economy (which, lest we forget, contracted in the second quarter), as strong consumer spending habits have been underpinning growth for some time.
EY Item Club economist Howard Archer said:

The CBI distributive trades survey points to sharply weakened retail sales in August, thereby dealing a significant blow to hopes that consumers are continuing to spend at a reasonable pace and can help the economy return to growth in the third quarter.
Admittedly, actual retail sales have recently tended to be stronger than indicated by ths CBI's survey and latest actual data from the ONS show retail sales held up pretty well in July.
Nevertheless, the serious weakness of the August CBI survey showing the sales balance at the lowest level since December 2008 at 49% is concerning.

There are reasons to be sceptical about the findings however, especially as this type of forecasting tends to be more negative than the actual results. CBi economist Alpesh Paleja has had a look at the gap:
2 Coverage may be an issue, with retail surveys having a far smaller size than the ONS data. But given that surveys are all telling the same story, this seems to be a less plausible reason for the gap this time round Alpesh Paleja (@AlpeshPaleja) August 15, 2019
CBI retail stats: The three key charts
Here are the key graphics from the CBIs retail report for August.
1) This is how retail sales have fallen.Its the biggest drop in new orders and sales for Britains retailers since the financial crash, more than ten years ago.
Sterling soars as Brexit deal hopes rise: as it happened

2) This is how the drop translated on a sector-by-sector basis.Non-store sales bucked the negative trend, another indication that Amazon Prime Day is increasingly producing a summer internet sales spike.
Sterling soars as Brexit deal hopes rise: as it happened

3) And this is how sentiment has fallen.Businesses are wrestling with severe uncertainty over the global economy and Brexit, which is prompting many to delay spending and investment decisions.
Sterling soars as Brexit deal hopes rise: as it happened

Correction: Previous CBI figure was May, not July
Apologies, the previous CBI retail release was in May, not July. Ive corrected an earlier post (11:08am) to address this.
CBI: Sentiment is crumbling among retailers
Sterling soars as Brexit deal hopes rise: as it happened

Sentiment among retailers fell sharply

Philip Toscano/PA
Commenting on those sales figures, and the CBIs parallel survey, which showed a widespread increase in negative sentiment among UK companies, CBI economist Anna Leach said:

Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.
It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures.

The average sentiment response from companies on their business situation fell from +6 to 14.
Shock drop in UK reported retail sales
Retail figures just in from the CBI show a mega drop in retail sales during August with a 49 reading against a baseline of 0, against Mays figure of 16 and analysts expectations of 16. Thats the biggest slump in over a decade.
The CBI says:

Whilst retail sales volumes and orders both fell at their fastest since December 2008 in the year to August, sales were only slightly below average for the time of year, and to the least extent in four months.
The survey highlighted that conditions have further deteriorated, with investment intentions for the year ahead staying negative for the sixth consecutive quarter, albeit to the least extent over this year so far. Employment also fell for the eleventh straight quarter in August.
CBI: Retailers expect the sharpest deterioration in business conditions since February 2009 in the coming months, according to the latest quarterly survey

"Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks"$GBPUSD RANsquawk (@RANsquawk) August 22, 2019
more or less down at 2008/9 lows, though tbf it's the first really nasty UK consumer related number

UK CBI Retailing Reporting Sales Aug: -49 (exp -15; prev -16)
- CBI Total Distributive Reported Sales Aug: -35 (prev -11) econhedge (@econhedge) August 22, 2019
Brexitnomics: What Boris Johnson could say to Emmanuel Macron over lunch today
Sterling soars as Brexit deal hopes rise: as it happened

Boris Johnson met with Angela Merkel last night

Krisztian Bocsi/Bloomberg
After a cordial meeting with German Chancellor Angela Merkelyesterday,Prime Minister Boris Johnson might well expect a more frosty reception from French President Emmanuel Macron at the Elysee in Paris today.
Their meeting will start atnoon, with both leaders expected to make brief comments to the press before. They are not set to release a joint statement afterwards.
Deputy economics editor Tim Wallacehas taken a look at what the PM might bring up over his dejeunerto try and win the French leaders support for his Brexit approach.
You can read his full piece here: Boris Johnson should remind Macron of these three economic truths over lunch
The five key problems facing the German economy
Last Wednesday, German GDP figures figures showed Europes largest economy contracted in the second quarter. That fall puts Germany halfway to a technical recession defined as two quarters of negative growth. Since then, weve had some heavy hints that the German government is looking into ways it can stimulate the economy.
But how did things get like this? My colleague Tom Rees has taken a look at the cocktail of issue facing Germany. He writes:

Its export-reliant economy avoided a technical recession two consecutive quarters of falling GDP by a whisker last year but could fail to escape for a second time.
You can read his full explanation here:How trade war and no-deal Brexit fears are weighing down Germany's struggling economy
NMC Health shares surge after reports of takeover
Sterling soars as Brexit deal hopes rise: as it happened

NMC Health is based in Abu Dhabi

Despite its downbeat appearance, the FTSE 100 is being sharply pulled up Abu Dhabi-based healthcare provider NMC Health.
The companys share price has surged over 26pc up after Reuters reported two groups, including one backed by Chinese equity giant Fosun, have made competing bids for a 40pc stake in the company.
The company announced earlier today it has beaten half-year expectations, with revenues of $1.24bn versus a predicted $932m.
Chief executivePrasanth Manghat said:

Our ability to perform strongly in a challenging environment testament to NMC's strategy of developing niche, differentiated verticals in our core markets that provide the best possible care for our patients.

Despite the climb, the company is still down on the year, having shed nearly 30pc before the jump today. It has suffered particularly recently after being an unintended victim of hedge fund Muddy Waters Researchs drive-by on Burford Capital.
Jefferies analysts are sceptical about the rumoured sale, writing that shakiness in other parts of NMCs operations mean even if the stake is sold at a market premium we would view this development with caution.
European stocks take turn for the worse
That neutrality was never likely to last, and Euro stocks are now broadly down although Spain is enjoying a bounceback from some recent underperformance.
Sterling soars as Brexit deal hopes rise: as it happened

Bloomberg TV
Sterling holds flat ahead of Johnson/Macron meeting
The pound, which has had a bit of a rollercoaster run in recent weeks, is looking (un)decidedly flat ahead of PM Boris Johnsons meeting with French President Emmanuel Macron later today.
You can follow the latest political updates here:Brexit latest news: Boris Johnson set for showdown in Paris as allies say meeting with President Macron will be a discussion
Ill bring you the reaction from the markets here.
Iron price continues to sink as analysts say theres further to fall
Sterling soars as Brexit deal hopes rise: as it happened

A transportation vehicle carries small steel blooms in a storage yard at Liberty Steels Thrybergh mill in Rotherham

Chris Ratcliffe/Bloomberg
Tumultuous summer markets have played havoc with commodity prices, pushing gold up to recent highs and pushing oil dramatically down despite Saudi Arabias best effortsto prop its price up.
Another victim has been iron, which after soaring earlier this year amid a drop in supply, has seen a major fall from grace as global manufacturing slowdown cuts into demand.
Liberum analysts Richard Knight and Ben Davis say:

The July Chinese data dump confirmed the out-of-cycle rally in Chinese property construction has likely peaked and along with it,ironore demand.

Theyve created this graph, showing the downturn in Chinese demand for pig iron:
Sterling soars as Brexit deal hopes rise: as it happened

But it might not be all bad. Deutsche BanksJonathan Jayarajan writes:

We expect evidence of a retightening in both iron ore and steel markets as the high demand season arrives from September, which should then be supportive for prices
European markets flat, FTSE falls slightly as Ocado weighs
Stock markets on the continent, which broadly opened downbeat this morning, are now almost totally flat, with the Europe-wide STOXX 600 about 0.1pc down.
The FTSE 100 is currently down about 0.35pc, with Ocado draggingmost heavily among blue-chips following news of a fire at one of its sites in Kent this morning. The company said:

A small fire was reported at Ocado Groups customer fulfilment centrein Erith yesterday evening. The fire occurred just outside the building in a hopper containing waste packaging. The London Fire Brigade was in attendance and the fire has now been extinguished. No part of the material handling equipmentwas involved.

My colleague Michael ODwyer has a full report on the incident:
Ocado reports second small fireat one of its robot warehouses
PMI figures show continued services/manufacturing split
With the individual numbers pulled apart, the trend remains the same one we have seen across recent months: led by Germany, the eurozones manufacturing weakness is being counterbalanced, for now, by continue services growth.
Preliminary PMI estimate from Markit for the Euro Area shows a continued services/manufacturing split. Composite PMI for August was 51.8, consistent with c. 01%-0.2%q/q GDP growth with services at 53.4 & manufacturing output at 47.8. Rupert Seggins (@Rupert_Seggins) August 22, 2019
The broader picture, its fair to say, is pretty gloomy:
Eurozone growth remained muted in August amid ongoing manufacturing struggles. Flash PMI registered 51.8 (51.5 - Jul), still one of the weakest seen for 6 years. Exports were down for the 11th straight month and jobs growth was the weakest in over 3 yrs. IHS Markit PMI (@IHSMarkitPMI) August 22, 2019
?? Reversal of July manufacturing #PMI dip is good news, but risk of another #GDP contraction in Q3 remains alive. #Germany remains a two-speed #economy and with continued stalling #employment #growth. Aila Mihr (@aila_mihr) August 22, 2019
So what do the figures mean? Despite beating estimates, the continued gloom will do little to shake the European Central Bank from its barely-disguised plans to stimulate the eurozone next month, with interest rate easing to encourage borrowing and other measures expected.
Minutes from the ECBs governing council (due just after noon) mayshed more light on what we can expect, butECB President Mario Draghi already strongly hinted at plans last month so it might be more of the same.
IHS Markit analyst: German remains at risk of recession
IHS Markits Andrew Harker says Europes largest economy still faces the danger of a technical recession (two consecutive quarters of negative growth) as companies outlook turnsever sourer:

France was a relative bright spot in August, seeing manufacturing return to growth alongside a further solid expansion of services activity. The same cant be said for Germany, however, where new orders fell to the greatest extent in over six years and firms were pessimistic around the future path for activity. The risk remains, therefore, that the euro areas largest economy will have fallen into technical recession in the third quarter.
Eurozone sentiment lowest since 2013
In its full report on the results, IHS Markit said sentiment in the eurozone has hit a six-year low.

Sentiment was down to the lowest since May 2013, with confidence weaker across both monitored sectors. Softer optimism was recorded in France and the rest of the eurozone, while German firms were pessimistic about the prospects for business activity for the first time in almost five years.

Heres how the German and French results from earlier look:
?? Flash PMI numbers for Germany suggest weakness has persisted into Q3. Headline index recorded 51.4 (50.9 - July), but new orders fell at fastest rate since April 2013, while business confidence was negative for first time since Nov 2012. Read more: IHS Markit PMI (@IHSMarkitPMI) August 22, 2019
?? Flash France PMI shows stronger growth, with headline index rising to 52.7 in Aug (51.9 - Jul). Manufacturing returned to expansion, while services activity increased at the fastest pace in 9 months. More: IHS Markit PMI (@IHSMarkitPMI) August 22, 2019
Eurozone beats PMI expectations after Frances strength lifts bloc

The eurozone, as might be expected following data from France and Germany earlier this monring, has also beaten expectations:
Manufacturing:47 (survey: 46.2, previous 46.5)
Services:53.4 (survey: 53, previous 53.2)
Composite:51.8(survey: 51.2, previous 51.5)
Still plenty of cause for concern in German figures as manufacturing continue to slide
Sterling soars as Brexit deal hopes rise: as it happened

The German manufacturing sector slumped for the eight month in a row according to the figures

Despite the expectation-beating figures, theres still plenty of negative sentiment in the full IHS Markit/BME PMI report, which showed an eight consecutive month of decline in Germanys manufacturing sector.
The majority of businesses survey expected a downturn in the next year the worst reading in about nine years. In its report, IHS Markit said:

Concerns about demand was one of several factors alongside heightened uncertainty, weakness in the car industry and geopolitical tensions behind a decrease in business confidence in August
German PMIs surprise to the upside but details still look grim overall.
"For the first time in almost five years, the number of firms expecting output to fall over the next 12 months exceeded those predicting a rise, with sentiment the most negative overall since November 2012." Frederik Ducrozet (@fwred) August 22, 2019
The manufacturing drop was not as bad as expected, but still showed a continued slump in the country, which has seen its exporter-heavy economy stung by global fears.
German companies brace for recession as orders crumble, BBG reports. German manufacturing shrank for 8th month in Aug, barely offset by services, acc to IHS Markit. Overall business confidence declined & orders fell for 3rd time in 4mths. PMI at 51.4, close to lowest in 6yrs. Holger Zschaepitz (@Schuldensuehner) August 22, 2019
Its also hard to be sure how reliable the PMI data is, given it has recently indicated growth despite the Germany economy contracting.
The problem with the Markit Composite PMI for Germany is that it has suggested growth for periods we know the economy has contracted...So what does 51.4 actually means? Shaun Richards (@notayesmansecon) August 22, 2019
As a reminder, the countrys economic outlook has taken a sharp turn for the worse.
That negative twinge might take the edge off Frances strong results this morning, which Emmanuel Macron will undoubtedly be feeling happy about as he prepares to meet with Boris Johnson.
Pantheon Macroeconomics Claus Vistesen says: the PMI data send a clear signal that the French economy is standing tall in the middle of an overall EZ slowdown driven by weakness in Germany and Italy. He added that the German PMI data was more optimistic than other measures that the country is not heading for a recession.
German PMIs also beat expectations
German data is in! Europes biggest economy has joined neighbour France in posting better-than-expected results. This might improve sentiment around the euro today, but upcoming ECB minutes are still the crucial thing to watch.
Manufacturing: 43.6 (survey: 43, previous 43.2)
Services: 54.4 (survey: 54, previous 54.5)
Composite: 51.4 (survey: 50.6, previous 50.9)
BREAKING! #Germany's Manufacturing #PMI unexpectedly rose in August. PMI now at 43.6. jeroen blokland (@jsblokland) August 22, 2019
Ocado reports fire in factory
Retail Week report Hugh Radojev tweets:
Fire occurred outside the warehouse building "in a hopper containing waste packaging" and has now been extinguished Hugh Radojev (@hradojev) August 22, 2019
Thats the second fire to afflictthe grocery delivery firm in a year. Ill bring you more as details emerge.
Brace for a slight delay...
...were having a small website update at 8:30am, so an update with German PMI data might be slightly delayed. Apologies for that while youre waiting, get an eyeful of our lovely new homepage.
Could Frances strong performance spill over to Germany?
Given the two economies close ties, good news for France means we might expect Germany also to beat expectations. As a reminder, Europes biggest economy is not in the best shape currently, so how its manufacturing sector has performed will be especially worth watching.
All eyes on the German PMIs thi
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