People shopping on Oxford Street in central London, Britain, December 20, 2018. REUTERS/Henry Nicholls
March 21, 2019
LONDON, (Reuters) – British retail sales unexpectedly kept up a robust pace of expansion last month, after unusually warm weather boosted sales, reinforcing the sector’s role as a bright spot for the economy ahead of Brexit.
Annual retail sales growth slowed only a fraction to 4.0 percent in February after sales volumes grew at their fastest in more than two years in January, the Office for National Statistics said on Thursday.
Economists polled by Reuters had forecast a slowdown in sales growth to 3.3 percent.
Consumer spending has been a source of strength for the British economy at a time when businesses say that Brexit uncertainty is forcing them to postpone investment and a slower global economy is hurting export demand.
On Wednesday Prime Minister Theresa May asked for a three-month delay to Brexit on Wednesday to buy time to get her twice-rejected departure deal though parliament, but the request faced immediate resistance from the European Commission.
Sales volumes in February alone rose by 0.4 percent versus a poll forecast of a decline, after jumping by 0.9 percent in January, while annual sales growth for the three months to February was its strongest in over two years at 3.7 percent.
Falling inflation, a steady rise in wages and the lowest unemployment since 1975 have all boosted household incomes over the past year, though after inflation wages are still below their peak before the financial crisis.
Last year overall British economic growth slowed to its weakest since 2012 and the Bank of England – which is predicted to keep rates on hold later on Thursday – forecasts the weakest growth for a decade this year.
The ONS said that unusually warm weather in February had boosted spending at garden centres and on sporting equipment, sales fell at supermarkets and in clothing stores due to an end of January’s seasonal promotions.
Earlier on Thursday, major British clothing chain Next reported a small fall in annual profit on Thursday, hurt by lower store sales, and forecast another decline for 2019-2020.
Figures from the British Retail Consortium at the start of the month had suggested that annual sales growth at bigger high-street stores slowed in February, with the trade association blaming Brexit.
Separate figures from the ONS on Thursday showed the government broadly on track to meet updated borrowing goals for the 2018/19 financial year, as the strong labor market boosted income tax revenue.
Public borrowing for February, the eleventh month of the tax year, fell to 0.2 billion pounds from 1.2 billion pounds a year earlier, below economists’ average forecast of 0.6 billion pounds in a Reuters poll.
With just one month remaining of the current financial year, government borrowing totals 23.1 billion pounds, down 44 percent from the same point in the 2017/18 tax year, though these figures are likely to be revised further.
Last week Britain’s official budget forecasters cut their 2018/19 borrowing forecast to 22.8 billion pounds or 1.1 percent of GDP from 25.5 billion pounds.
Finance minister Philip Hammond said at the time that if Brexit went smoothly there would be more money for public services in a major multi-year spending review due late this year.
(Reporting by David Milliken and Andy Bruce)
FILE PHOTO: Catherine McGuinness, Chairman of the Policy and Resources Committee of the City of London Corporation, poses for a photograph in London, Britain, January 17, 2018. Picture taken January 17, 2018. REUTERS/Hannah McKay
March 21, 2019
LONDON (Reuters) – Extending Britain’s departure date from the European Union would only be a “sticking plaster” if deep-seated issues are left unresolved, City of London financial district chief Catherine McGuinness said on Thursday.
It appeared that financial services have been “thrown under a bus” in terms of Britain’s efforts to secure a divorce settlement with the bloc, she told a City & Financial conference.
UK financial services minister John Glen told the conference that the sector had every right to feel frustrated with Britain’s failure so far to secure a divorce settlement with just a week to go before Brexit Day.
(Reporting by Huw Jones; Editing by Toby Chopra)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 12, 2019. REUTERS/Staff
March 21, 2019
(Reuters) – European stock markets opened lower on Thursday, as the impact on banks of an accommodative policy message from the U.S. Federal Reserve outweighed any broader lift to sentiment from its abandoning of further interest rate hikes this year.
The pan-European STOXX 600 index dipped 0.3 percent, driven by falls in Paris, Madrid and Frankfurt that contrasted with a strong reaction on Asian markets to the Fed’s statement and news conference.
Germany’s DAX led with a 0.5 percent fall, weakened by a 1 percent loss for bank stocks, which tend to suffer when expectations for future interest rates fall.
Banking shares across Europe had also risen earlier this week on signs of a merger between Deutsche Bank and Commerzbank.
A bright spot were semiconductor makers, boosted by Micron Technology’s upbeat outlook for the sector, which soothed worries about falling demand for smartphones. Infineon and STMicro were both up 2 percent.
EssilorLuxottica’s shares slumped to the bottom of the CAC 40 and the STOXX 600 on new tensions in its boardroom as the top shareholder and executive chairman accused the Franco-Italian group’s executive vice chairman of a power grab.
Investors punished HeidelbergCement, the world’s second-largest cement maker, after its results and Swedish construction group Skanska fell 3.2 percent after it said it would not reach a target for operating margins.
London’s FTSE 100 index was the only index to buck the trend, gaining 0.3 percent as miners benefited from higher copper prices on the back of a weaker dollar.
The market’s internationally-focussed blue chip stocks also tend to gain on falls for sterling, which was suffering again from Britain’s failure to find a clear route out of the European Union before a March 29 deadline.
Among its midcaps, a profit warning from British precision engineering group Renishaw Plc due to a slowdown in Asia drove its shares 14 percent lower.
(Reporting by Agamoni Ghosh and Patrick Graham; editing by Josephine Mason)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 11, 2019. REUTERS/Staff
March 21, 2019
By Huw Jones
LONDON (Reuters) – Stock exchanges in Europe are not harming markets or gouging customers with the fees they charge for data, an industry-commissioned report said on Thursday.
The report from consultants Oxera for the Federation of European Securities Exchanges (FESE) wants to counter accusations from investment funds that “monopoly” bourses were continually hiking fees for market data to lift profits.
Investment firms have called on the EU’s markets watchdog ESMA to review market data fees charged by exchanges, saying they keep on rising despite falling costs of computing and data storage.
Oxera’s report concludes that “economic analysis suggest that the current charging structures for market data are unlikely to have detrimental effects on market outcomes for investors.”
FESE said that while fees have been “challenged by some”, the report showed that aggregate market data revenues have risen by only 1 percent a year, from 230 million euros ($261.2 million) in 2012 to 245 million euros in 2018.
“Costs have remained stable over the last five years,” said Rainer Riess, FESE director general.
Policymakers should be very mindful that any changes do not harm how prices of shares are formed, Riess added.
Investment funds face scrutiny over their own fees charged customers and want to cut costs.
They have to buy data to help show regulators that they are obtaining the best share prices on behalf of investors in a region where many platforms trade the same stocks.
The Alternative Investment Management Association, Managed Funds Association, Britain’s Investment Association and two German funds bodies BVI and BAI, asked ESMA in December to enforce an EU securities law that requires market data to be sold on a “reasonable commercial basis”.
The bloc’s competition officials are also facing pressure to intervene.
In the United States the Securities and Exchange Commission repealed two data price changes last May for public feeds for Nasdaq and New York Stock Exchange listed securities for the first time after complaints from asset managers.
The battle across the Atlantic has led to market participants like Fidelity Investments and hedge fund Citadel to back a new, low cost Members Exchange bourse to compete with NYSE.
FESE said the real issue was not prices but the “often very low quality” of data from off-exchange or “dark” trading platforms.
There has been talk for many years of a “consolidated tape” or a single pipe for gathering share prices from different platforms, like in the United States.
FESE said data intermediaries or vendors were already offering a de facto tape for prices on the bulk of so-called “lit” exchanges, where prices and trades are instantly visible.
(Reporting by Huw Jones, Editing by William Maclean)
FILE PHOTO: The logo of Indonesia’s central bank, Bank Indonesia, is seen on a window in the bank’s lobby in Jakarta, Indonesia, September 22, 2016. REUTERS/Iqro Rinaldi
March 21, 2019
By Gayatri Suroyo and Maikel Jefriando
JAKARTA (Reuters) – Indonesia’s central bank, welcoming the Federal Reserve’s forecast of no U.S. rate hikes this year, on Thursday kept its benchmark on hold to maintain financial stability while tweaking some rules to try to encourage more lending.
Bank Indonesia (BI) held its 7-day reverse repurchase rate steady at 6.00 percent, where it has been since November, as expected by all 20 analysts in a Reuters poll.
The decision came hours after the Fed abandoned projections for any rate hikes this year, sending the rupiah up 0.4 percent on Thursday.
Governor Perry Warjiyo told reporters after the meeting that global developments, including the Fed’s latest statement, “will be more positive for capital inflows to emerging markets, including Indonesia.”
BI was one of Asia’s most aggressive central banks last year, raising the benchmark rate six times by 175 basis points to respond to the Fed’s four rate hikes and to counter outflows that kept the rupiah under pressure for most of 2018.
This year, the rupiah has been generally appreciating due to inflows to Indonesia’s equity and bond markets as major central banks around the world turned dovish.
BI still expected one more rate hike by the Fed through 2020, but sees the rupiah being stable this year, Warjiyo said.
“This is a ‘dovish hold’, said Satria Sambijantoro, an economist at Bahana Sekuritas in Jakarta. “BI signaled its readiness to support credit expansion, with tweaks on some macroprudential policy measures to support liquidity in the banking system.”
BI will raise the guidance for where it wants banks to maintain its financing-to-funding ratio to a 84-94 percent range, from 80-92 percent range, effective July 1.
Warjiyo said the measure, which allows banks to manage a slightly higher liquidity ratio without being penalized, was aimed at getting banks to lend more.
Meanwhile, he said BI had also been adding liquidity to the financial system since December through open market operations, estimating the cash injected so far at 459 trillion rupiah ($32.51 billion).
While banks on aggregate had “more than enough” liquidity, he said smaller banks were facing difficulties to expand lending due to funding constraints.
Warjiyo said the new moves would help accelerate lending growth to the upper end of the 10-12 percent outlook in 2019, without hurting stability.
Even so, BI still sees economic growth this year remaining in a range of 5.0-5.4 percent.
The latest measures announced by BI indicated it “was in little hurry to change interest rates,” Capital Economics said, predicting no change in the benchmark rate this year.
In February, the annual inflation rate cooled to 2.57 percent, the slowest in nearly a decade and just above the lower end of BI’s 2.5-4.5 target range for 2019. Warjiyo said inflation will remain within target until the end of the year.
The Philippine central bank, the second Southeast Asian one holding a policy meeting right after the Fed’s, also kept its benchmark rate on hold, as expected.
(Additional reporting by Fransiska Nangoy, Nilufar Rizki and Tabita Diela; Editing by Richard Borsuk and Ed Davies)
FILE PHOTO: A worker walks past coal piles at a coal coking plant in Yuncheng, Shanxi province, China January 31, 2018. Picture taken January 31, 2018. REUTERS/William Hong/File Photo
March 21, 2019
By David Stanway and Andrew Galbraith
SHANGHAI (Reuters) – Chinese regulators are close to releasing new “green bond” standards that would exclude polluting fossil fuel projects from corporate financing channels designed to lift environmental standards, people familiar with the matter told Reuters.
Beijing has in recent years promoted new green financing methods to help industry pay for its transition to cleaner modes of growth.
But China’s inclusion of “clean coal” in a 2015 central bank list of technologies eligible for green bonds has put the country at odds with global standards, a point of contention for some international investors and many environmental groups.
Two sources with direct knowledge of the situation say China’s central bank, which regulates financial institution debt issuance and whose 2015 guidelines were adopted by other market regulators, has already revised the eligibility list. One of the people said the list is due to be published later this month. The People’s Bank of China did not immediately respond to Reuters’ request for comment.
“If confirmed, ending the policy of financing coal with green bonds would be a much-needed step in the right direction,” said Liu Jinyan, senior campaigner with environmental group Greenpeace in Beijing.
“With no new coal projects taking money from the green bonds market, those funds can actually accelerate China’s energy transition and green development,” she said.
Of the $42.8 billion worth of green bonds issued in China last year, only $31.2 billion would have met global criteria, according to a report published at the end of February by the Climate Bonds Initiative (CBI), a non-profit group backing green bond standards.
The share of what CBI calls “internationally aligned” green bonds has been steadily increasing as China’s institutions move to align themselves more with global markets.
The PBOC’s revised criteria, however, would not apply to green “enterprise bonds”, which are regulated by the National Development and Reform Commission (NDRC), the state planner, and are primarily issued by state-owned enterprises and unlisted companies.
In its “green industry” catalog of approved environmental sectors, the NDRC in February still included the production and utilization of “clean coal”, allowing coal companies to issue “green enterprise bonds” to finance the installation of low-emission technology.
The NDRC did not immediately respond to request for comment.
Green bonds have already financed a number of big coal projects in China. Tianjin SDIC Jinneng Electric Power Co Ltd issued 200 million yuan ($29.81 million) in commercial paper on the interbank market in mid-2017 to finance a low-emissions coal-fired power plant.
Coal-to-chemical plants have also received billions of yuan in financing through green bonds, despite criticism from environmental groups.
Industry experts say the two-tiered regulatory framework – one under the PBOC and one under the NDRC – means some coal-related projects could still issue green bonds, although access to the most active green finance markets would be restricted.
“Many of the international investors and financiers have publicly announced plans to reduce their coal portfolio,” said Herry Cho, head of sustainable finance for Asia Pacific at ING.
She said the NDRC catalog is already “largely aligned” with international standards, and even includes some categories, such as equipment related to renewable energy and resource recycling, that are not yet included in global guidelines.
Shengzhe Wang, counsel at Hogan Lovells in Shanghai, who has worked on green bonds in the U.K.-China Green Finance Taskforce, said it was unrealistic to expect the sudden exclusion of coal from all green financing in China.
“For the time being perhaps we have to put up with, make a compromise with clean coal,” she said.
While that compromise may limit foreign involvement in the market, Peter Corne, managing partner at legal firm Dorsey & Whitney in Shanghai said green financing was still required to help clean up China’s coal sector.
“I don’t think it necessarily means there will be more coal projects because of it, because there has already been a moratorium for quite some time,” said Corne, who follows China’s environmental policies.
“Coal’s not going to go away, and it will greatly accelerate our progress towards achieving emission goals if we do clean up the coal sector.”
(Reporting by Andrew Galbraith and David Stanway; Editing by Sam Holmes)
Turkish lira banknotes are seen in this picture illustration in Istanbul, Turkey August 14, 2018. REUTERS/Murad Sezer/Illustration
March 21, 2019
ANKARA (Reuters) – Fears over renewed tensions with the United States reversed some of the Turkish lira’s overnight gains in early trade on Thursday following a dovish Fed decision that had boosted emerging market currencies late on Wednesday.
The United States could soon freeze preparations for delivering F-35 fighter jets to Turkey, officials told Reuters, in what would be the strongest signal yet by Washington that Ankara cannot have both the advanced aircraft and Russia’s S-400 air defences system.
The lira firmed to 5.4160 against the dollar in the wake of the Fed decision but eased back to 5.4415 after Reuters report, analysts said.
Amid a slowing economy the Fed now sees only one rate hike next year, and announced a plan to end its balance sheet reduction program by September.
“It’s a very positive decision for emerging market currencies including the lira, and we were able to observe its impact on the market, with lira gaining around 1 percent against the dollar,” an Istanbul-based forex trader said.
“However, the report that ties with the U.S. are seen entering a difficult period was the only factor that limited this rise.”
The United States is nearing an inflection point in a years-long standoff with Turkey, a NATO ally, after so far failing to sway President Tayyip Erdogan that buying the S-400 Russian air defense system would compromise the security of any F-35 aircraft delivered to Turkey.
While no decision has been made yet, U.S. officials confirmed that Washington was considering halting steps now underway to ready Turkey to receive the F-35, which is built by Lockheed Martin Corp.
(Reporting by Nevzat Devranoglu; Writing by Ece Toksabay; Editing by Dominic Evans)
FILE PHOTO: Chinese staffers adjust U.S. and Chinese flags before the opening session of trade negotiations between U.S. and Chinese trade representatives at the Diaoyutai State Guesthouse in Beijing, Thursday, Feb. 14, 2019. Mark Schiefelbein/Pool via REUTERS/File Photo
March 21, 2019
BEIJING (Reuters) – China’s commerce ministry said on Thursday that a U.S. trade delegation headed by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit Beijing on March 28-29 for another round of negotiations.
Chinese Vice Premier Liu He will travel to the U.S. in early April for more talks, Gao Feng, the commerce ministry spokesman told reporters in a regular briefing.
(Reporting by Yawen Chen and Beijing Monitoing Desk; Editing by Simon Cameron-Moore)
FILE PHOTO: China’s Ministry of Commerce spokesperson Gao Feng attends a news conference at the commerce ministry in Beijing, China, June 19, 2018. REUTERS/Thomas Peter
March 21, 2019
BEIJING (Reuters) – China’s imports and exports rebounded in the first half of March, Gao Feng, a commerce ministry spokesman said on Thursday, adding that the overall trade performance in the first quarter remained stable.
China’s exports tumbled the most in three years in February while imports fell for a third straight month, pointing to a further slowdown in the economy.
(Reporting by Yawen Chen and Beijing Monitoring Desk; Editing by Simon Cameron-Moore)
FILE PHOTO: Drilling rigs are parked up in the Cromarty Firth near Invergordon, Scotland, Britain January 27, 2015. REUTERS/Russell Cheyne
March 21, 2019
By Henning Gloystein
SINGAPORE (Reuters) – Oil eased away from 2019 highs reached earlier in the session on Thursday, but markets remain relatively tight amid supply cuts led by producer club OPEC and U.S. government sanctions against Iran and Venezuela.
U.S. West Texas Intermediate (WTI) crude futures were at $60.12 per barrel at 0712 GMT on Thursday, down 11 cents, or 0.2 percent from their last settlement. WTI reached its highest level since Nov. 12 earlier in the day, at $60.33 per barrel.
International Brent crude oil futures were at $68.52 a barrel, close to their last settlement after hitting $68.69 a barrel earlier in the session, the highest since Nov. 13.
Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), as well as by sanctions enacted against Iran and Venezuela by the United States.
OPEC’s crude oil output has slumped from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February.
(For a graphic on ‘OPEC oil production’ click https://tmsnrt.rs/2FiS2y3)
The U.S. sanctions are also disrupting supply.
“Venezuelan exports to the U.S. have finally dried up, after the sanctions were placed on them by the U.S. administration earlier this year,” ANZ bank said on Thursday.
Iranian oil exports have also slumped. The United States aims to cut Iran’s crude exports by about 20 percent to below 1 million bpd from May by requiring importing countries to reduce purchases to avoid U.S. sanctions.
The OPEC cuts and sanctions have also tightened supply within the United States.
U.S. crude oil stockpiles last week fell by nearly 10 million barrels, the most since July, boosted by strong export and refining demand, the Energy Information Administration said on Wednesday.[EIA/S]
Stockpiles fell 9.6 million barrels, to 439.5 million barrels, their lowest since January.
Part of the drawdown is due to surging U.S. exports, which stood at a four-week average of 3 million bpd, double the amount this time a year ago, according to the EIA.
The rising exports come amid steep growth in U.S. crude oil production, which returned to its record of 12.1 million bpd last week, making America the world’s biggest producer ahead of Russia and Saudi Arabia.
(For a graphic on ‘U.S. crude oil production & exports’ click https://tmsnrt.rs/2ULQiTd)
(Reporting by Henning Gloystein in SINGAPORE and Colin Packham in SYDNEY; Editing by Tom Hogue and Richard Pullin)