UK construction sector hits 6.5 year high, while Asian markets tumble

Fears over emerging markets, the US economy, and the prospect of another debt ceiling battle in Washington all hit shares hard in Asia. UK construction activity jumps. Nikkei falls 4.2%. Wall Street opens a little higher after Monday’s rout…

 


Powered by Guardian.co.ukThis article titled “UK construction sector hits 6.5 year high; Asian markets tumble – business live” was written by Graeme Wearden, for theguardian.com on Tuesday 4th February 2014 16.32 UTC

Haldane: EM turbulence caused by countries pushing ‘individual’ policies

Andy Haldane, one of the Bank of England’s brightest and most senior officials, has waded into the emerging markets turbulence by warning that certain countries are pursuing ‘individual’ policies rather than caring about the wider financial system.

In a speech delivered in Oxford this afternoon, Haldane said leaders and policymakers had failed to co-ordinate policies in a better way.

Reuters is there, and reports:

Turmoil in some emerging markets reflects a failure of advanced and developing economies to learn from the financial crisis and coordinate economic policies in a better way, a senior Bank of England official said on Tuesday.

“Individual countries act in their own best interests without taking into account the broader best interest of the financial system as a whole,” said Andy Haldane, the BoE’s executive director for financial stability.

“What is going on with the head-to-head combat is people pursuing policies of individual countries,” Haldane said in a speech at the University of Oxford.”What is at stake is the system as a whole,” he added.

The comments come just a few days after India’s central bank chief, Raghuram Rajan, said international monetary co-operation has broken down as the Federal Reserve tapered, or slowed, its bond-buying stimulus programme – despite the recent upheaval in emerging markets

Haldane’s comments are being interpreted as an nudge to the Federal Reserve too:

Look who’s back — Stephen Hester, the former chief executive of Royal Bank of Scotland, has just been appointed as the new CEO of insurance group RSA.

He’ll succeed Simon Lee, who quit in December as the insurer posted its third profit warning.

Running RSA will be a challenge, given the recent discovery of problems at its Irish division. But I guess it’ll be less hassle than cleaning up Fred Goodwin’s mess, being lambasted by the media over the Libor scandal and PPI misselling, and apologising for RBS’s tech problems.

Hester might even get to keep a few bonuses, having surrendered most of his during his time at RBS….

A couple more interesting points from George Osborne – asked whether the UK recovery is sustainable, he told the Lords economics committee that potential risks include “the weakness of some eurozone countries”, adding that some US economic data in the last couple of weeks has been “a little bit soft”.

The chancellor added that it’s “also worth having on one’s radar the problems in some emerging markets”, as a problem in an emerging market can cause ructions in other parts of the financial system.

Osborne also indicated he had little time for the ‘secular stagnation’ theory being pushed by former US Treasury secretary Larry Summers (with whom Osborne had an entertaining dust-up at Davos).

Updated

UK chancellor, George Osborne, is being questioned by the House of Lords economic affairs committee now — he’s started by telling their lordships that Britain is leading Europe on shale gas, and denying that the government isn’t showing leadership over the issue.

It’s being streamed live here.

 

Our politics liveblogger Andrew Sparrow is tracking all the action here: George Osborne questioned by Lords eocnomic affairs committee: Politics live blog

Here’s a flavour:

Q: If shale drilling takes off, will that have an impact on gas prices?

Osborne says he thinks it will have some impact. But it won’t be as dramatic in the US, he suggests. He says the gas market in the UK is more open, and so the gas price in the UK tracks the world price. But if the gas price overall came down, Britain would benefit.

Just in — US factory orders fell by 1.5% in December, which is actually a better result than expected.

The decline was mostly due to a big drop in transportation orders – strip that out and orders were up by 0.2%, which may calm fears of a US slowdown (although no promises!)

Shares moved a little higher on the news, with the FTSE 100 now up 8 points and the Dow Jones 60 points higher, or 0.4%.

Reuters correspondent Blaise Robinson reports that the emerging market wobbles have made some investors appreciate the virtues of good old Europe:

Over on Wall Street, shares are inching higher in early trading as investors try to put yesterday’s heavy selloff behind them.

The Dow Jones index is up 39 points at 15413, +0.3%, with the other indices also slightly higher.

Hardly a bounce-back, though after the biggest one-day fall in seven months — investors may be sitting tight having seen the Asian selloff earlier today, where the Nikkei slumped 4.2% and the Hang Seng fell over 2% into an official correction (10% off its recent peak).

New Microsoft boss takes Wilde swing

Microsoft’s new chief executive, Satya Nadella, wins instant brownie points by quoting Oscar Wilde (sort of), in his letter to staff this morning

Here’s a flavour:

What do we do next?

To paraphrase a quote from Oscar Wilde — we need to believe in the impossible and remove the improbable.

This starts with clarity of purpose and sense of mission that will lead us to imagine the impossible and deliver it. We need to prioritize innovation that is centered on our core value of empowering users and organizations to “do more.” We have picked a set of high-value activities as part of our One Microsoft strategy. And with every service and device launch going forward we need to bring more innovation to bear around these scenarios.

Next, every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this.

Finally, I truly believe that each of us must find meaning in our work. The best work happens when you know that it’s not just work, but something that will improve other people’s lives. This is the opportunity that drives each of us at this company.

Many companies aspire to change the world. But very few have all the elements required: talent, resources, and perseverance. Microsoft has proven that it has all three in abundance. And as the new CEO, I can’t ask for a better foundation.

[end]

• – the actual Wilde quote is “Man can believe the impossible, but man can never believe the improbable” (see Collins Dictionary)….

….Not to be confused with Conan Doyle’s “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth“.

Updated

Satya Nadella becomes Microsoft CEO

The long search for Microsoft’s next chief executive is over – with the software giant announcing that (as rumoured) Satya Nadella will take the helm.

Nadella had been running Microsoft’s cloud and enterprise computing division, and will succeed Steve Ballmer to become only the third CEO in the company’s history. In another switch, Bill Gates is shifting from the chairman’s role to become ‘technology advisor’ — meaning he’ll spend more time with the company’s staff.

Nadella faces a tough task, given Microsoft’s loss of influence as the technology world in the post-PC world.

In a video message, Gates said Nadella is the “tough leader” the company needs.

In it, Gates declares that “The opportunity for Microsoft is greater than ever before”, from making Office more interactive to perhaps building a new Cloud platform to connect to “all sorts of different devices”.

Speaking of the Anglo Irish Bank trial, here is a mural of the busted financial institution’s uncompleted HQ that never was, down in Dublin’s docklands.

The painting comes complete with images of the tapes that recorded some Anglo executives laughing, joking and even singing about how Irish and German taxpayers were going to rescue themselves and their bank from the abyss.

This anti-Anglo Irish Bank image close to the iconic Ha’penny Bridge on the river Liffey is a 15 minute stroll north towards the criminal courthouse where some of the other Anglo Irish executives stand trial tomorrow morning (from Sean O’Neil and Henry McDonald).

The price of Brent crude oil has dropped through the trading session, as this week’s disappointing US and Chinese manufacturing surveys suggested weaker demand for energy.

Brent is currently down 0.4 of a cent per barrel at $105.6.

Updated

BP sounds alarm on Scottish vote

After reporting falling profits this morning, BP has also waded into the issue of Scottish independence by warning that the issue raises “big uncertainties”.

Speaking to the BBC this morning, Bob Dudley said he was concerned by the “question mark” over whether an independent Scotland would keep the pound. He said:

“We have a lot of people in Scotland. We have a lot of investments in Scotland. My personal view is that Great Britain is great and it ought to stay together.”

Last week, Bank of England governor Mark Carney warned that an independent Scotland would have to give up some control over fiscal policies if it wanted to keep using sterling.

Updated

Over in Ireland, a petrol bomb attack was launched at the company once run by the country’s former richest man, Sean Quinn, last night – a day before the start of a huge trial into the collapse of Anglo Irish Bank.

The attack brought down telephone and broadband links around the headquarters in County Fermanagh, cutting of around 200 people (there’s a photo here).

Our Ireland correspondent, Henry McDonald, reports:

Ireland’s one-time richest man Sean Quinn is one of 800 people who is scheduled to give evidence in Dublin at one of the biggest financial crime trials in European history.

Ex-billionaire Quinn became bankrupt after borrowing billions from the now defunct Anglo Irish Bank when he started to play the global property casino.

Quinn’s gamble spectacularly backfired after the world property crash left him owing billions and resulted in him losing control of his other businesses.

The case against three senior Anglo Irish Bank executives begins on Wednesday morning at Dublin’s Central Criminal Court and could last up to six months (here’s our preview)

Ahead of what will eventually be a momentous day when Sean Quinn finally gets called to the witness box, the former tycoon has other worries today about his old business base in Co.Fermanagh.

Two petrol bombs were thrown close to the headquarters of the former Quinn family business on the Ballyconnell Road in Derrylin close to the border with the Irish Republic. The damage done last night has cut off phone and broadband coverage in the rural area where Quinn was once king.

The petrol bomb attack is the latest in a string of incidents where properties belonging to the Quinn family were damaged.

Last month, a bus was set on fire at the entrance to three of its businesses in Rakeelan, Ballyconnell, across the border in County Cavan.

In December, a fuel tanker was set on fire after being driven into the former headquarters of the Quinn Group in County Fermanagh, Northern Ireland. It was renamed Aventas last November.

HMcD

Updated

Two small earth tremors in 2011 haven’t deterred shale gas firm Cuadrilla with pushing on with its fracking activities in the picturesque Lancashire countryside.

Cuadrilla announced this morning it would dig up to eight wells at two sites in the county – at Roseacre Wood, near Elswick, and to the west of the delightfully named village of Little Plumpton.

From our environment desk, Adam Vaughan reports that Cuadrilla is promising to be a good neighbour as it blasts the bedrock with high-pressure fluids to release gas.

However, Friends of the Earth’s north-west campaigner, Helen Rimmer, said:

“These plans will be met by stiff opposition from local people rightly concerned about having the UK’s first attempted multiple-well fracking operation under their feet.

Cuadrilla claims to be a good neighbour, but it still hasn’t cleared up the mess from the botched fracking operation that caused earth tremors only a few miles from one of the proposed sites.”

 

Here are the key quotes from the FCA’s Martin Wheatley to MPs this morning, on its investigation into allegations that foreign exchange rates have been rigged by traders:

“I would be surprised if we got to conclusions within this year. I hope that we will next year.

“We are still in the investigation phase … The allegations are every bit as bad as they have been with Libor,”

FCA: FX rigging ‘every bit as bad’ as Libor

Back in parliament the head of the City watchdog, Martin Wheatley, has told MPs that claims that foreign exchange traders collaborated to fix currency bench markets are just as serious as the Libor rate-rigging scandal.

Wheatley said the Financial Conduct Authority was taking allegation of FX benchmark-rigging very seriously, calling them “every bit as bad” as the Libor affair. He said the allegations had cast doubt on the reliability of foreign exchange rates, and also said the regulator is probing other benchmarks…..

However, he wouldn’t give clear details about how the FCA investigation was proceeding — and indicated we might not get results until 2015, or even later.

 

 

Many major banks have suspended foreign exchange traders since the news broke last autumn that the daily ‘fixes’ (which determine the official exchange rate between currencies) could have been manipulated.

HSBC and Citigroup both suspended traders last month.

After yesterday’s 326-point tumble, the Dow Jones industrial average is expected to stagger back off the mat with a small rise when trading resumes later today.

David Madden, market analyst at IG, says the Asian tumble and the prospect of another US debt ceiling fight continues to cast a shadow over the City.

Stocks are offside, but holding up relatively well considering the massive selloff in Japan overnight as fears over emerging-market exposure echoed around the world. Traders are treading lightly, not wanting to get stung if there is a sudden exodus from equities into cash or bonds.

The US debt-ceiling deadline is approaching again and, as on the past two occasions, dealers are anticipating downgrade speculation and a slide in stocks.

BP is still suffering from the Gulf of Mexico disaster, and the oil titan’s asset-stripping programme may be topping up the compensation pool but is it is taking its toll on production levels. Ocado’s deal with Morrisons helped to increase the former’s revenue, but was not enough to stop it delivering a loss for 2013.

The FTSE 100 is currently down 27 points, but there are deeper losses in Germany where the DAX has dropped 100 points, or 1.1%.

The Treasury Select Committee is grilling the Financial Conduct Authority’s John Griffith-Jones and Martin Wheatley about the regulator’s performance since taking over from the FSA. My colleague Sean Farrell is following events:


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