Chinese factories shrink again, ahead of eurozone growth report – business live – The Guardian, Theguardian.com

In another blow to Hong Kong – and the rest of the global economy – China apparently doesn’t believe it can agree a trade deal with Donald Trump.

Bloomberg has the story:

Chinese officials are casting doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a “phase one” agreement, Bloomberg News reported.

In private conversations with visitors to Beijing and other interlocutors in recent weeks, Chinese officials have warned they won’t budge on the thorniest issues, according to people familiar with the matter. They remain concerned about President Donald Trump’s impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.

This has worried investors, sending stocks down across the globe. A protracted trade war is bad news for growth, at a time when most advanced economies are slowing.

In London, the FTSE 100 has lost 0.8%, or 60 points, dragged down by mining stocks and Royal Dutch Shellfollowing its slump in profits this morning).

Neil Wilson(@ marketsneil)

spot where the China trade news crossedpic.twitter.com/ssoQ9UGwoJ

October 31, 2019

Hong Kong’s economy has also been hurt by the ongoing trade war between the US and China.

Here’s the AFP newswire’s take:

Hong Kong on Thursday confirmed it had plunged into its first recession since the global financial crisis as months of seething pro-democracy protests and the US-China trade war exact a heavy toll on the financial hub.

The semi-autonomous Chinese city has been upended by nearly five months of huge, often violent, pro-democracy demonstrations with little end in sight as Beijing and city leaders adopt a hardline approach.

Clashes between protesters hurling bricks and petrol bombs at police wielding tear gas and rubber bullets have become a weekly occurrence, hammering the city’s once-solid reputation for stability and safety.

The unrest has hit the city’s tourist and entertainment industries hard, compounding economic woes that were already being caused by the global trade war.

Figures released by the government on Thursday showed gross domestic product plunged 3.2% in the third quarter compared with the previous period, when it saw a 0.4% drop.

That means the city is experiencing a technical recession, with two back-to-back periods of contraction.

It is the first time the city has witnessed a recession since early 2009 at the height of the financial crisis.

Hong Kong’s economy was already facing strong headwinds at the start of 2019 as it was hit by the US-China trade war, battering a city that is hugely reliant on the world’s two largest economies.

Anila Chowdhry(@ AnilaDhami)

Hong Kong has slid into a recession for the first time since the global financial crisis in the third quarter, advance estimates show. It’s largely due to on-going anti-government protests, and the protracted U.S.-China trade war.# HongKong# recession

(October) , 2019

The Financial Times points outthat several economists predict the recession could intensify in the next few quarters:

Iris Pang, an economist at ING, an investment bank, forecast that the economy would shrink in all four quarters next year.

Hong Kong’s slump into recessionhas been driven by a sharp slide in retail sales and tourism.

The sight of riot police clashing with demonstrators, tear gassings, and masked protestors throwing petrol bombs has led to a hefty fall in tourist visits.

Shops have been forced to close, dragging retail sales down. Businesses have reined in investment plans and hunkered down, leading to a drop in activity.

Bloomberg Next China(@ next_china)

JUST IN: Hong Kong crashes into a recession as protests hit the economyhttps://t.co/0j1c4W3FXZpic.twitter.com/v2H8w4cs0Q

(October) , 2019

The protests began against an extradition bill to mainland China, which has now been withdrawn, but have now turned into a wider pro-democracy movement.

Hong Kong’s embattled leader Carrie Lam warned on Tuesday that growth could be negative for 2019 as a whole, and pledged to “tackle the violence head on”.

Hong-Kong based economist Carlos Casanova fears the region’s economic problems will drag on into next year:

Carlos Casanova(@ carcasall)

Hong Kong GDP contract by a whopping -3.2% YOY (-2.9% QOQ) in Q3, down from 0.5% YOY (-0.4% QOQ) in Q2. The economy has officially entered a recession and we are looking at negative growth in 2019. This weakness is likely to continue into 2020. Stay tuned for more.

(October 31, 2019

The slump in Hong Kong’s economy in the last quarter is much worse than expected, says Bloomberg’s Tracy Alloway:

Tracy Alloway(@ tracyalloway)

Hong Kong’s third quarter GDP comes in * MUCH WORSE * than expected at -2.9% year-on-year versus an estimate of -0.3%. Recession is here.https : //t.co/AZVLqubj1lpic.twitter.com/evsuSorVC6

(October) , 2019

Newsflash: Hong Kong has fallen into recession for the first time in a decade, as the ongoing pro-democracy protests hurt the economy.

Hong Kong’s economy shrank by 3.2% in the third quarter of 2019, according to new figures from the Census and Statistics Department. That’s an extremely sharp contraction, and follows a 0.4% drop in GDP in April-June.

Hong Kong’s government says the economy has entered a technical recession, and that the “severe impact” of “social incidents” this year caused this deterioration.

It also predict that private spending and investor sentiment will continue to be affected by the increasingly violent clashes between demonstrators and police.

As this chart shows, this is Hong Kong’s first recession since the financial crisis a decade ago.

Danske Bank Research(@ Danske_Research)

🇭🇰Hong  Kong has fallen into a technical recession

Real GDP fell by 3.2% in Q3, nearly as much as in Q1 2009 during the financial crisispic.twitter.com/hAJapgm0OU

(October) , 2019

More to follow …..

Oil giant Shell has also been hurt by the global slowdown, and the drop in crude prices.

My colleague Jillian Ambrose explains:

Royal Dutch Shell has reported a 15% slump in profits for the last quarter amid lower oil market prices and a weaker global economy.

The fossil fuel giant made $ 4.8bn (£ 3. 65 bn) in the last three months compared with $ 5.6bn in the same period last year and warned that it might miss its targets to reduce debt and pay back shareholders …

Oil analysts expect company profits to be weaker across the industry for the last quarter after global oil prices fell to an average of $ 62 a barrel in the last quarter, from more than $ 75 a barrel a year ago, due to worries over whether a sluggish global economy might hit oil demand.

Shell’s chief executive, Ben Van Beurden, said weak macroeconomic conditions and a challenging outlook for the global economy and oil market prices “would inevitably create uncertainty” about the pace of Shell’s financial goals.

The details of today’s PMI reports from China are pretty worrying, says economist Trinh Nguyen.

She points out that orders and employment levels have fallen across manufacturers and service sector companies this month.

Trinh Nguyen(@ Trinhnomics)

Ouch! China manufacturing PMI contracts further to 49 .3 from 49 .8 and services slowed too to 52 .8 from 7.

This is very bad news b / c we got rising CPI & deflated PPI & that limits the space for the PBOC to help.

But on the other side, positive for some trade resolution 👈🏻

(October) , 2019

Trinh Nguyen(@ Trinhnomics)

Details for the state manu PMI is rather grim:

New orders fall, employment in contraction but less, new export orders falling more, imports WORSE, output prices WORSE (we know from PPI falling), inventories reduced (this’ll help later when orders rise).

Help needed but how? ***pic.twitter.com/iMMa6XeNqJ

(October) , 2019

Trinh Nguyen(@ Trinhnomics)

Details for non-manu (services) PMI:

New orders contracting
Output prices CONTRACTING
EMPLOYMENT flat but contracting

😬🥶pic.twitter.com/b (WXGmro)

(October) , 2019

This latest decline in China’s factory activityshows that the trade war is “biting” and hitting exports, says Neil Wilson of Markets.com.

So if negotiations between Beijing and Washington stumble again, it could cause greater economic problems and alarm the markets.

Wilson writes:

We hearing slightly less optimistic noises on the trade war front. US demands for China to buy set levels of agricultural products are threatening to derail trade negotiations.

China doesn’t want to commit to what the US wants and this could prove problematic to finalizing the phase one agreement. Crossing the wires now the China foreign ministry has hit back at comments made by US Secretary of State Mike Pompeo, who launched a pretty fiery attack on Communist China in a speech.

Failure to get the phase one deal over the line would be negative for risk appetite and raise expectations for the Fed to ease again.

Chinese factories also reported that they’re cutting staffing levels.

Eunice Yoon(@ onlyyoontv)

# Chinamanufacturers continue to struggle. Factory activity shrank for 6th month in row. Oct PMI fell to 49 .3 v. 49. 8 in Sep (and worse than est. 49 8). Manufacturers also shed jobs: sub-index for employment at 47. 3 in Oct v. 47 .0 Sep.

(October) , 2019

Growth across China’s service sector companies has also weakened this month, in another worrying sign.

The non-manufacturing PMI, which monitors the health of services firms, dropped to .8 from 53 .7 in September.

That’s indicates a slowdown, and is closer to the 50 – point mark showing stagnation.

Jeroen Blokland(@ jsblokland)

The drop in (# China) ‘s Non-Manufacturing# PMIis starting to look slightly worrying. Down to 52 .8 from as high as 54 .9 one year ago.pic. twitter.com/e4kPC8MqF1

October 31, 2019

ACEMAXX ANALYTICS(@ acemaxx)

China’s manufacturing PMI, chart @ BloombergTVhttps://t.co/YOyJSve2UMpic.twitter.com/zV6gMpcPs6

(October) , 2019

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There are signs of economic weakness in China this morning, andEuropemay soon add to the Halloween gloom.

Chines factory activity shrank for the sixth straight month in October, new official figures show.

The official Chinese Purchasing Managers Survey for the manufacturing industry, released overnight, fell to just 49 .3, from 49. This is the sixth month running in which the factory PMI has slipped below the 50 – point mark.

It’s another sign that China’s economy has weakened, after more than a year of trade conflict.

As Stephen Innes of Axitrader puts it:

The data was horrible as trade tensions, and a slow recovery in domestic demand continued to weigh on the manufacturing sector.

Last night, the US Federal Reserve cited the US-China trade war as a key risk to America’s economic expansion, as it cut interest rates for the third time this year.

This pushed Wall Street to fresh record highs at the close of trading, as we blogged last night:

We also learned yesterday that America’s economy slowed slightly in the last quarter, to an annualized rate of 1.9% (or almost 0.5% quarter-on-quarter).

Europe would love such a performance, though.Eurozonegrowth data, due this morning, may show that growth slowed to just 0.1% in July-September, from 0.2% in April-June.

Although France grew by 0.3%, there are fears that a German recession and a stagnating Italian economy is holding the eurozone back. We find out at 10 am.

Howard Archer(@ HowardArcherUK)

Early evidence of# Eurozone# GDP# growthin third quarter emerging (preliminary “flash” estimate is out on Thursday). Data out so far show Q3 growth of 0.3% q / q in# France, 0.4% q / q in# Belgium& 0.2% q / q in# Austria. Very real likelihood (# Germany) saw modest Q3 q / q contraction

(October) , 2019

The markets are expected to be calm this morning, as investors digest last night’s Fed cut, and strong results from two tech giants.

Apple posted record revenues for the last quarter, raking in $ 64 bn, driven by strong demand for the iPhone and for wearable technology.

Facebook also best forecasts, with revenues surging 29%. Despite steady criticism of the social media giant, it grew its monthly used base by 1. 65% to 2. 45 billion.

IGSquawk(@ IGSquawk)

European Opening Calls:# FTSE7329 -0. 03%# DAX12922 0. 09% #CAC ( 0. (%) # MIB22701 0. 24% # IBEX9279 -0. 06%# STOXX3621 0. 03%

(October) , 2019

In the City, Lloyds Banking Group has taken yet another PPI provision of £ 1.8bn, and oil giant Shell has posted a 15% drop in profits due to the lower crude price (more on both stories shortly …)

The agenda

• 10 am GMT: Eurozone inflation for October
• 10 am GMT: Eurozone third-quarter GDP (first estimate)
• 11 am GMT: Italian third-quarter GDP
• 12. 30 pm GMT: Canadian GDP report for August