Mixed news from the US: while orders for capital equipment climbed in May, demand for US-made goods slipped 0.8%, more than expected, according to the Commerce Department. The consensus was for a 0.5% drop.
Manufacturing remains a chunky 12% take of the US economy but cheaper oil prices and slower car sales has hit production and factory output. The news had negligible effect on the greenback, or other major currency pairs. Sterling was up 0.08% at 4pm at $1.2925 while the euro was down -0.06% at $1.1336 despite an earlier $1.1370 high.
Little action all-round, then. Watch for the release of the Fed minutes at 1800 GMT which should give more clarity on future US interest rate direction. The FTSE 100 closed up 10 points at 7,367.60 with Tesco climbing almost 3.5% to 167.10p.
- UK FTSE 100 7,367.60 +0.14%
- Dow 21,466.38 -0.06%
- S&P 500 2,430.41 +0.06%
- Nasdaq 6,132.63 +0.37%
- Nikkei 225 20,081.63 +0.25%
- DAX 12,448.76 +0.10%
- CAC 40 5,180.33 +0.10%
- Gold 1,221.10 +0.16%
- Oil WTI 45.42 -3.51%
Oil prices crash as Russia rules out output pressure
A big bearish swing for oil today. WTI crude was down -3.57% after Russia made it clear it would not fall into line on more OPEC-led oil production cut quotas.
Oil prices have been rising steadily the last week – the best bull run since 2012 – helped by more modest shale production numbers from the US.
Production from Libya and Nigeria is also on the rise. However the revised attitude from Russia is re-shaping opinion: will OPEC continue to deepen production cuts? The stronger dollar meanwhile may act as a cap on prices.
On the other side, more continued geo-political tension on the US-North Korea front may act as some price support in the meantime. Quite a lot of competing pressures from multiple fronts.
Brits less productive – again
More worries for UK productivity. According to the Office for National Statistics hourly output slipped 0.5% in the first quarter of 2017. That’s close to pre-financial crisis levels; it’s also the first quarterly slip since the last three months of 2015.
Labour productivity fell in services but rose in the manufacturing industries says the ONS; services productivity fell 0.6% while manufacturing productivity grew 0.2% on the previous quarter.
Productivity matters hugely – low productivity means a reduced tax yield and an economy more vulnerable to economic weakness generally.
Vantiv swoops on Worldpay
Finally, US credit card payments Vantiv has snapped up UK payments provider Worldpay for $10bn, despite competing offers from JPMorgan.
JPMorgan could still make an offer for Worldpay; it has until 1 August to make a move. The Vantiv deal is a cash-and-stock arrangement and values Worldpay at close to a 19% premium of its Monday share price, though Worldpay shares fell sharply earlier today after hopes of a bidding war ebbed away.
Vantiv has been shopping for other companies recently. Last year it paid $425m for a Canadian payments operator, Moneris Solutions Inc.
Breaking news: PSA Group, the maker of Citroën and Peugeot, is to pay €1.3bn for Opel. The European Commission says the sale does not raise competition issues.