Improving eurozone economy tests tapering patience

European inflation – consumer prices were up +1.5% in August – and a better jobs picture yesterday gave more leeway for European Central Bank president Mario Draghi to commence a stimulus withdrawal program. Today, eurozone (and UK) manufacturing purchasing managers index (PMI) data emerges which may give Draghi more headroom. 

The eurozone economic recovery has been all the more impressive – European stocks yesterday re-bounded from multi-month lows – given the surging performance of the common currency, making exports less competitive.

Overnight the euro slipped -0.13% to $1.1894 while the pound was buying $1.2916 at close to 7am this morning – better news given the negative sentiment from EU Brexit negotiator Michel Barnier yesterday which piled more pressure on the pound. Watch later for US non-farm payroll numbers plus the ISM Manufacturing index, both market-moving reports. 

• UK FTSE 100 7,430.62 +0.89%
• Dow 21,948.10 +0.25%
• S&P 500 2,471.65 +0.57%
• Nasdaq 6,428.66 +0.95%
• Nikkei 225 19,650 45 +0.02%
• DAX 12,055.84 +0.44%
• CAC 40 5,085.59 +0.58%
• Gold 1,292.70 +0.02%
• Oil WTI 47.07 -0.04%

Rio Tinto sells coal operation to Yancoal

We start with news that Rio Tinto has offloaded its Coal & Allied Industries operation to Yancoal, controlled by China’s Yanzhou Coal. Rio Tinto was paid $2.45bn cash for the deal. It’s understood there is additonal royalty payments linked to the price of coal.

Meanwhile it’s thought that Rio Tinto boss Jean-Sébastien Jacques may be considering a move from Rio’s London HQ (though there is a joint HQ in Melbroune) to Sydney, rather nearer the miner’s main assets and clients. 

Will Jean-Sébastien Jacques back a Rio Tinto Oz move? PA

VW launches UK scrappage incentive

Joining other major car makers – Ford, Hyundai, BMW and Vauxhall – VW UK is to offer trade-in discounts of up to £6,000 on its range of Audi, Seat and Skoda group vehicles. 

The scheme though will be limited to any diesel vehicle – not petrol – that was registered before 2010 and has emissions standards less than Euro 5. German motorists are getting up to €10,000 incentives to trade in in comparison. 

Meanwhile new regulations on emissions testing commence in the UK today. "These demanding tests," says the Society of Motor Manufacturers and Traders, "will give consumers emissions performance information that is far closer to what they experience behind the wheel.”

VW to offer UK trade-in discounts in wake of 'dieselgate': PA

SSE margins continue to rise

Its emerged that the UK’s second biggest energy supplier, SSE, has grown margins every year since 2013 – news that will infuriate consumer lobby groups concerned that UK consumers are getting a poor electricy and gas deal.

Ofgem’s retail market report deployed data that the energy suppliers use themselves,  absorbing reported revenues, costs and depreciation to build an accurate profits picture. 

"All suppliers," said Ofgem, "showed a year-on-year decrease in profit margins across both domestic and non-domestic supply, with the exception of E.ON, SSE and npower on domestic supply, and Centrica and E.ON on non-domestic supply." Full report here.