Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s a worrying time for the markets, thanks to political dramas burning across the globe.
With an impeachment inquiry into Donald Trump, the deepening Brexit crisis, ongoing pro-democracy protests in Hong Kong, and no end to the US-China trade war, there’s plenty to concern investors.
Yesterday we saw four profit warnings from FTSE 100 firms, with IAG, Imperial Brands, Pearson and Carnival all admitting earnings are below forecasts.
And overnight, we’ve learned that earnings at China’s factories contracted in August.
Industrial profits fell 2% in August, year-on-year, to 517.8 billion yuan (£58.9 billion), the National Bureau of Statistics reports. That’s a blow, as profits had risen by 2.6% in July, and indicates that China’s factory sector is struggling under the weight of US tariffs.
NBS also reported that industrial profits in January-August have fallen 1.7% to just over 4 trillion yuan.
This comes a week after Chinese factory output growth hit a 17-year low, and fuels concerns that the global economy is weak.
Shane Oliver, chief economists at AMP Capital, tweets:
Shane Oliver
(@ShaneOliverAMP)#China China Aug industrial profits -2%yoy, revenue +3.2%yoy
Consistent with soft growth pic.twitter.com/PMeGCNpu9U
Faced with such a slowdown, Beijing may be forced into new stimulus measures to ward off a hard landing.
As Nomura analysts told clients today:
“Given strong growth headwinds and elevated U.S.-China trade tensions, we expect the economy to worsen before getting better and believe Beijing will likely ramp up its policy stimulus.”
Also coming up today
One of the Bank of England’s interest-rate setters, Michael Saunders, is giving a speech this morning.
We also get new consumer confidence data from the eurozone and America, plus fresh US durable goods orders.
The agenda
- 8am BST: Bank of England policymaker Michael Saunders speaks in Barnsley
- 10am BST: Eurozone confidence data
- 1.30pm BST: US durable goods orders for August
- 3pm BST: University of Michigan survey of US consumer sentiment
