Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
In the UK all eyes today are on the services sector, with the closely watched services purchasing managers index (PMI) up at 9:30am to give the first reading on how the majority of the economy performed at the end of 2018.
The problems facing the British economy are well known by now: Brexit uncertainty, weaker consumer spending, and long-term productivity struggles. With only two more readings to go before the UK leaves the EU on 29 March, economists will be keen to see how businesses are coping with the strain.
Beyond the UK, Apple lost almost a tenth of its value in a single trading session, as investors finally had the chance to catch up to its downgrade on Wednesday night.
The selling pushed Apple’s market capitalisation – only a few months ago more than $1 trillion – below Google owner Alphabet. And US stocks, not helped by weak manufacturing data, were dragged down in its wake: the S&P 500 lost 2.5%, the Dow Jones industrial average fell by 2.8%, and the tech-heavy Nasdaq lost 3%.
It was an “aggressive sell-off” in the US and beyond because of the broader implications of slower growth, particularly in China, said Craig Erlam, senior market analyst at Oanda.
This naturally feeds into investors deep-rooted fears about the global economy this year and so the impact of the warning stretched well beyond Apple and its suppliers and even, it would seem, into the FX market where the yen was heavily bid.
What a day then, for Jerome Powell, the Federal Reserve chair, to make his first public comments of 2019 – a year when markets are forecasting no rate hikes from the US central bank. Powell will join his predecessors, Janet Yellen and Ben Bernanke, on a panel discussion after non-farm payrolls data gives a snapshot of the US labour market.
Fritz Louw, a currency analyst at MUFG, said:
We fully expect the overall tone of [Powell’s] comments to indicate a willingness to change course given the emerging evidence of a slowdown in economic activity. Chairman Powell will be fully aware that the tightening of financial market conditions in November-December has played a role in hitting sentiment and hence the Fed can be very influential in changing those conditions.
Still, a big sigh of relief can be heard from China this morning as the waves from Apple’s revenue forecast downgrade calm – although Japanese stocks still sold off after coming back from a holiday. Chinese stock markets have bounced back from steep losses to gains of 2.1% on the Shanghai stock exchange and 2.4% on the CSI 300 index which includes Shenzhen.
- 9am GMT: Eurozone services PMI
- 9:30am GMT: UK services PMI
- 9:30am GMT: UK mortgage approvals and consumer credit
- 10am GMT: Eurozone inflation
- 1:30pm GMT: Non-farm payrolls
- 3:15pm GMT: Jerome Powell speech