European shares rose today after China announced that it will cut its benchmark interest rate to 4.35 percent, a hint that Beijing may be expecting a further slowdown in their economy.
The Chinese central bank also cut the ratio of Chinese currency that it expects its banks to hold. Last year China’s growth fell to 7.4 percent, and the government have since put measures into place to ensure growth does not fall below 7 percent this year.
European shares reacted well to the news as investors saw the chance to gain cheaper credit in China. The FTSE rose 1.3 percent this afternoon before cooling down to a steady 1.1 percent (1617GMT), with the German DAX up 3.08 percent. Brent crude also rose 0.8 percent to $48.46 per barrel.
The changes will come into effect on Saturday.
Google’s parent company Alphabet has reported a profit rise of nearly 50 percent, in its first full set of results since its creation.
Net income rose $2.74 billion to $3.98 billion on the year, with growth largely attributed to mobile searches and YouTube users.
Google created Alphabet in August, in a bid to simplify the structure of its diverse businesses, which include the secretive Google X.
The company also announced plans for a large share buyback, causing shares to shoot up 11 percent in after hours trading.
The results show Google’s continued strong performance in a difficult market, where advertising on sites is becoming increasing blocked and strong competition is faced from the likes of Facebook and Twitter.
Sundar Pichai, chief executive of Google Inc, commented:
“Search traffic on mobile phones have now surpassed desktop traffic worldwide. However, our value proposition to markets of all sizes is simple. Google can help you show the right ads to the right people at the right moment.”
Alphabet Inc (NASDAQ:GOOGL) is currently trading up 1.39 percent, at 681.14 pence per share.
The European Central Bank has announced that it will will “re-examine” its quantitative easing programme at its December meeting, and left the key interest rate at 0.05 percent.
Europe has suffered a string of weak economic data of late, with consumer prices falling by 0.1 percent in September, leading to speculation that the bank’s stimulus programme has been ineffective. It has recently embarked on a scheme of bond purchases at €60bn per month designed to bring eurozone inflation back up.
ECB head Mario Draghi said at a conference in Malta today:
“The asset-purchase plans are proceeding smoothly and continue to have a favourable impact. However, the degree of monetary policy accommodation will need to be re-examined at our December meeting.”
He also commented that falling commodity prices and emerging market concerns are weighing on the Eurozone’s economic prospects.
The FTSE 100 suffered some volatility immediately after Draghi’s speech, but has now settled up 0.51 percent (1635GMT).
UK retail sales grew by 6.9 percent from the same month last year according to the Office for National Statistics, their strongest monthly growth for nearly two years.
A 2.3 percent growth in food and drink sales linked to the Rugby World Cup boosted the figures, which also included back-to-school buying from the August bank holiday.
Sales volumes grew 1.9 percent on the month, higher than economists predicted. According to the ONS, retail sales are likely to boost Q3 GDP by 0.1 percent.
The figures were also helped by falling prices, with inflation for retail prices down by 3.6 percent on the year, one of the biggest falls since 1988.
Online retail platform eBay (NASDAQ:EBAY) saw profits fall slightly in the third quarter, in the first full set of results released since it’s split from subsidiary Paypal.
The company saw revenue fall by 2.4% to $2.1 billion, down from $2.15 billion last year. Net income fell to $539m from $673m a year earlier. However, the figures beat analysts’ expectations and sent shares surging up around 9% in after-hours trading.
eBay split from its faster-growing PayPal business in July; since then, Paypal has replaced it on the S&P 500. eBay said in a statement that they are seeing a negative impact from changes in Google’s search practices.
eBay’s president and chief executive, Devin Wenig, told analysts that the company still has a “lot of work to do,” but said that its third quarter results “are a step in the right direction.”
China’s President Xi Jinping is expected agree to contribute to Britain’s first nuclear power plant in a generation later, when he meets with David Cameron on the second day of his UK state visit.
China is likely to cover around 30 percent of the cost of the building of a nuclear power plant at Hinkley Point in Somerset, due to open in 2025. The plant will be built by French energy firm EDF, in conjunction with a consortium led by Chinese state-owned nuclear company CGN.
bbc.co.uk
Whilst the government believes that 25,000 jobs will be created and enough energy to power six million homes, leading Britain towards nuclear power remains a controversial decision.
The question of whether to invest in nuclear power has dogged a succession of governments over recent years; Margaret Thatcher vowed to build 10 new plants whilst she was power, yet only managed one. Concerns over Britain’s reliance on unsustainable energy such as fossil fuels has continued to rise, however, leading the current government to decide that nuclear power is the way forward to secure affordable and low carbon electricity in the future.
Whilst nuclear plants are notoriously expensive to build, the input from China on Hinkley Point will dramatically ease the government’s burden. Once built, it is estimated that nuclear is the cheapest long term option, with a carbon footprint as small as that of offshore wind plants; and more reliable.
Critics of the plan have been quick to highlight the question of sustainability of nuclear power, however. There is no question that uranium is still a finite resource; the International Atomic Energy Agency estimated in 2008 that uranium supply would last for 100 years at current consumption levels, which was just 6 per cent of the world’s energy consumption. Increasing the use of nuclear energy will only decrease the length of time it will last, leaving the next generation with the same crisis.
Similarly, the question of safety is one that is often raised, and to which the answers are mixed. There have been several high-profile disasters emanating from nuclear power plants; most recently at Japan’s Fukushima plant in 2011. Radiation from Uranium has been known to cause illness, death and cancer in the long term, making any malfunction of the plant a wide-ranging and catastrophic event. Furthermore, the same plants which make nuclear energy can be used to manufacture nuclear weapons, leading to concerns that nuclear energy will be used by countries as a cover for nuclear weapon creation.
However, since Chernobyl, one of the earliest disasters, the nuclear industry has made very significant safety improvements, now having a very good track record with national safety authorities and the international regulatory bodies. In the UK, we are unlikely to suffer either a serious earthquake or a tsunami, both of which were causes of meltdowns at other plants, and therefore making our country one of the safer places to begin using nuclear energy.
Despite opposition, the building of Hinkley Point nuclear point seems poised to go ahead with Chinese investment. Liu Xiaoming, Chinese ambassador to the UK, described the deal as positive, with it being “in the best interests of Britain, and also in the interest of partnership between China and UK”. By building a relationship with China, Cameron’s government will have managed an impressive feat; £24 billion worth of investment for the future of Britain.
Leaders from European institutions have begun discussions in Athens over Greek compliance with bailout terms, in order to ascertain whether to release the next payment.
Discussions over the 86 billion euro bailout, which was finally agreed in July, created a media storm and played havoc with global markets. Under international pressure, Greek Prime Minister Alexis Tsipras accepted the terms of the agreement and is currently pursuing drastic budget cuts.
The International Monetary Fund must be satisfied with reforms that have already been passed, as well as plans for the future, before the next 3 billion euro payment will be sent. In total, Athens will have to implement a total of 48 ‘milestones’ to satisfy creditors and receive the total loan amount. Should this week’s discussions prove positive, another payment could be released as early as the beginning of next week.
The first phase of reforms, though sparking dissent from Greek people, were relatively simple compared to what may come next. Reforms under discussion include taxing farmers, raising tax for private education and merging pension funds, which is likely to mean further cutbacks; civil servants and private sector workers have called a nationwide strike on November 12th as a protest. However, Greek Labour Minister George Katrougalos backed the reforms, telling Antenna Television that:
“A basic element will be a national pension for all, funded through taxation. We estimate the burden for the national pension will be 7 percent of GDP, now it is 9.5 percent of GDP.”
Whilst Greece has largely been out of the public eye since the bailout was agreed, the country’s public sector finances have continued to go downhill as some capital controls remain in effect. State revenues were 18 percent below their target for September, with the government’s primary budget surplus falling to its lowest level since February.
Britain’s headline public borrowing fell to £9.4 billion in September, according to figures released today by the Office for National Statistics.
Economists had forecast a drop to £10.1 billion, down from £11 billion in September.
Income from corporation tax has were the strongest on record, showing that the government’s clamp down on tax avoidance may be beginning to take effect. However, the figures also showed that the government’s total expenditure rose to its highest level since records began.
Chancellor George Osborne has vowed to focus on debt reduction since his appointment to the post, and aims to run the country on a budget surplus by 2020. Whilst for the first six months of the 2015/16 tax year public sector net borrowing was 13.9 percent lower than the year before, Osborne still has a long way to go to meet his target; public finances deteriorated in August to their worst level in three years.
Osborne is due to publish updated budget forecasts on Nov. 25.
French bank Credit Agricole is expected to pay a fine of £516 million to settle charges of breaking US sanctions in the Middle East.
The settlement, which is due to be finalised later this week, follows an investigation by the US into European banks transactions with Iran and other countries under sanction. Rival bank BNP Paribas paid an $8.9 billion fine earlier this year for similar allegations.
Credit Agricole stands accused of transferring billions of dollars to accounts held by entities such as Iran, Sudan and Cuba between 2003 and 2008.
According to a source, most of the bankers involved in the wrongdoing have already been dismissed from the bank.
The fine will be part of a deferred prosecution agreement, meaning that it will not have to plead guilty to any charges as long as it meets the requirements of the agreement.
Indian steel company Tata Steel has announced restructuring plans that may lead to the loss of 1,200 jobs at its plants in Scunthorpe and Lanarkshire.
Nine hundred jobs will go at the firm’s plant in Scunthorpe, with the other 270 from Scottish plants.
This news comes as another serious blow to the UK steel sector, following on from yesterday’s news that Caparo Industries has gone into administration risking the loss of 1700 jobs.
In the 1970s, more than 200,000 people were employed in the UK steel sector; this has since dropped to 30,000. According to unions, one in six of those jobs is now under threat.
The industry blames cheap Chinese imports for a collapse in steel prices, a topic that Prime Minister David Cameron has vowed to discuss with Chinese premier Xi Jinping on his current state visit. According to Reuters, China’s steel exports rose drastically to 11.25 million tonnes last month, exacerbating the crisis further.
Gareth Stace, Director of UK Steel, told the BBC that “we must … see a commitment from all parts of government at the highest level to ensure the sector’s survival in the UK. The Prime Minister can demonstrate that he is prepared to lead this commitment by stepping in this week and pressing the Chinese Premier about the dumping of under-priced steel, which is one of the major factors killing our industry.”
The recent strength of sterling has also contributed to the current steel crisis, making products more expensive for export customers.
The price of steel has fallen significantly since 2010, prompting speculation that the steel crisis may be here for the long haul. Industry leaders are calling for government intervention in order to save thousands of jobs and prevent the steel industry collapsing in the UK.
