Closing summary

The German, French and Spanish stock markets are down again today, amid a fourth wave of coronavirus infections, while the UK’s FTSE 100 index has edged 0.2% higher to 7,283 and Italy’s FTSE MiB is 0.3% ahead at 27,016.

On Wall Street, the Nasdaq is trading 1.15% lower while the S&P 500 has lost 0.6% and the Dow Jones has slipped 0.26%.

The US economy grew at an annualised rate of 2.1% in the third quarter, up from the 2% estimated previously, but this represents a sharp slowdown from the previous quarter’s 6.7% growth, with consumers spending less. Durable goods were much weaker than expected. On a brighter note, initial jobless claims fell to 199,000 in the week to 20 November, the lowest since 1969. Tonight, we’ll get the Fed minutes.

Here are our main stories today:

Thank you for reading. We’ll be back tomorrow. Take care - JK

The US Federal Reserve’s preferred inflation measure, the core personal consumption expenditures (PCE) index, rose to an annual rate of 4.1% in October from 3.6% in September, as expected.

US October PCE core inflation 4.1% vs +4.1% expected https://t.co/GurauIAMgX

— ForexLive (@ForexLive) November 24, 2021

On Wall Street, shares have slipped as expected after poor results from US companies, a mixed bag of US data and growing Covid worries in Europe. The Nasdaq is down more than 1%, while the Dow Jones opened 0.6% lower and the S&P 500 lost 0.5%.

Over here, the FTSE 100 index has given up earlier gains and is trading flat while Europe’s main indices are a sea of red.

Updated

Fiona Cincotta, senior financial markets analyst at City Index, has looked ahead to the Wall Street open, and the barrage of US data.

US stocks are set to open slower on the back of disappointing earnings from a number of big retailer names, after a mixed bag of US data and amid growing Covid concerns in Europe.

On the one hand, Q3 GDP was revised up in the second estimate to 2.1%, from 2% thanks to stronger than initially estimated consumer spending. However, this was still short of forecasts of an increase to 2.2%. This is still down sharply from 6.7% in Q2 amid a resurgence of Covid, supply chain disruptions and labour shortages.

Alongside a slightly disappointing GDP print were weaker than forecast durable goods sales. Durable goods sales unexpectedly contracted in October to -0.5% month-on-month, down from -0.4% in September and well short of the 0.2% increase forecast.

On the other side of the coin, US jobless claims figures were impressive falling to a level not seen since 1969. The significant drop in jobless claims is offsetting weak data elsewhere because we know that the Fed is watching the labour market very closely. The Fed wants to see improvements in the labour market recovery in order to raise rates and today’s data is certainly a step in that direction. However it is worth noting that this huge drop could in fact be due to seasonal swings.

Looking ahead there is still plenty more data for investors to sink their teeth into with Michigan confidence and Core PCE data due [at 3pm]. Core PCE is expected to show inflation at 4.1% with a high reading expected to prompt bets of a sooner move by the Fed.

The minutes from the latest Fed meeting are also due and whilst these could shed some light on the transitory inflation theme, it’s important to remember that the meeting happened prior to the 6.2% consumer price index print.

And the latest on the supply shortages.

Keeping shelves stocked is “harder work than ever before”, the UK boss of Lidl has said as shortages of drivers, warehouse workers and food processing staff put pressure on grocery supply chains, reports our retail correspondent Sarah Butler.

Christian Härtnagel, chief executive of the German discount chain’s British arm, said problems with availability of products in stores had eased in the past 10 to 12 weeks and “the worst times are behind us” but “daily hard work” was still required to ensure there were no gaps on shelves.

He said the company was constantly having to seek new ways to work around problems, by simplifying ranges and other measures, as a combination of the pandemic, Brexit and trade disruption continued to affect businesses.

And here is our story on David Cameron lobbying a Lloyds Banking Group director over the lender Greensill Capital, which has since collapsed.

David Cameron lobbied a director of Lloyds Banking Group, whom the former prime minister had given a peerage, to reverse the bank’s decision to withdraw support from Greensill Capital, which it later did.

Cameron appealed to James Lupton, a Conservative peer who had served as party treasurer and donated more than £3m to the Tories, to urge the bank not to withdraw funding from Greensill’s supply chain financing of NHS pharmacies.

After his lobbying of Lord Lupton in January, the bank reconsidered its decision and agreed to continue providing financial support to Greensill, according to the Financial Times, which first reported the story.

Here’s the latest on the fate of Bulb, from our energy correspondent Jillian Ambrose.

Bulb Energy could be in the hands of an administrator within hours after the regulator applied to the courts for an advisory firm to run it after its collapse on Monday.

Britain’s seventh-largest supplier is expected to become the first energy company to be placed into a “special administration” process so it can continue to provide gas and electricity to its 1.7 million customers through the winter after going bust on Monday.

The provision for a special energy supplier administrator was first set in legislation in 2011 but has never been used, in part because previous supplier collapses have been small enough in scale to find a new buyer relatively quickly.

Energy industry sources believe it could take “somewhere between six weeks and six months” for the fallout of the Bulb collapse to be resolved by the administrator and a team of banks, which are due to be appointed in the coming weeks.

The energy regulator, Ofgem, has proposed that the global advisory firm Teneo take over the running of Bulb while the fate of gas and electricity customers is decided. A court hearing is expected to take place later on Wednesday before an appointment is confirmed.

Ofgem urged Bulb customers not to worry and said they would “see no disruption to their supply, their price plan will remain the same and any outstanding credit balances, including money owed to customers who have recently switched, will be honoured”.

Returning to the US GDP figures, they show that the economy slowed to a modest annual rate of 2.1% in the October-December quarter, slightly better than its first estimate, but down sharply from 6.7% in the second quarter. Economists are predicting a solid rebound in the current quarter as long as rising inflation and a recent uptick in Covid cases do not derail activity, AP reports.

The small increase from the initial GDP estimate a month ago reflected a slightly better performance for consumer spending, which grew at a still lacklustre 1.7% rate in the third quarter, compared to a 12% surge in the April-June quarter. The contribution to GDP from business inventory restocking was also revised up.

The economy’s weak summer performance reflected a big slowdown in consumer spending as a spike in Covid-19 cases from the delta variant caused consumers to grow more cautious and snarled supply chains made items such as new cars hard to get and also contributed to a burst of inflation to levels not seen in three decades.

While Covid cases in recent weeks have started to rise again in many parts of the country, economists do not think the latest increase will be enough to dampen consumer spending, which accounts for 70% of economic activity.

The expectation is that the economy in the current October-December quarter could grow at the strongest pace this year, possibly topping 8%.

For the whole year, the expectation is that the economy will grow by around 5.5%, which would be the best showing since 1984 and a big improvement from last year, when the economy shrank by 3.4% as the country struggled with lockdowns.

So far, the improving economy this year has not boosted the approval ratings of President Joe Biden because the US, with one of the most rapidly recovering economies, is also caught up in a global supply chain squeeze that is driving prices higher for everything from new cars and gasoline to the cost of food and airline tickets.

Biden this week nominated Federal Reserve Chairman Jerome Powell for a second four-year term to head the central bank. Powell and other Fed officials had earlier in the year insisted that the spoke in pries was being caused by temporary factors, such as those snarled supply chains.

However, recently the central bank has stressed that if the price increase persist it will be ready to start raising interest rates sooner than expected to slow growth as a way of dampening inflation pressures.

Updated

US jobless claims at lowest level since 1969

More good news for the US economy: Initial jobless claims fell by 71,000 to 199,000 in the week to 20 November, the US Labor Department said. This was much better than the 260,000 expected by economists.

This is the lowest level since November, 1969 when it was 197,000. The previous week’s level was revised up slightly, by 2,000 to 270,000.

Good news for the #economy:
Weekly initial jobless claims for the US came in at 199,000--the lowest since 1969 and comfortably better than the median forecast of 260,000.
The big question for the labor market remains the scope for increasing labor force participation.#employment pic.twitter.com/bYfh084iEU

— Mohamed A. El-Erian (@elerianm) November 24, 2021

Updated

US economy grows 2.1% in third quarter

The US economy grew at an annualised rate of 2.1% in the third quarter, a tad higher than the 2% pace estimated a month ago, according to the US Commerce Department’s Bureau of Economic Analysis. This comes after 6.7% growth in the previous quarter, due to a slowdown in consumer spending.

BEA explains:

A resurgence of Covid-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country. In the third quarter, government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased.

The U.S. economy grew at a 2.1% annualized rate in Q3, up from a 2.0% pace initially estimated a month ago. https://t.co/dZQYed7p8x

— BEA News (@BEA_News) November 24, 2021

Updated

Here is our full story on the CBI industrial trends survey. Britain’s factories are struggling to meet the record demand for their goods as severe supply constraints put a brake on production lines, the latest snapshot of industry has shown, writes our economics editor Larry Elliott.

The CBI said manufacturers were running down their stocks of finished goods to meet the strongest order books since records began in 1977.

Ofgem to appoint special administrator for Bulb

Here is the latest on Bulb, one of the UK’s biggest energy suppliers with 1.7m household customers, which went bust on Monday.

Britain’s energy regulator Ofgem has submitted a court application to appoint a special administrator for Bulb, and told Bulb customers not to worry.

The regulator said:

Ofgem has applied to the court to appoint a special administrator to run Bulb Energy Limited. Customers of Bulb do not need to worry.

If a special administrator is appointed, they will see no disruption to their supply, their price plan will remain the same and any outstanding credit balances, including money owed to customers who have recently switched, will be honoured.

The Department for Business, Energy & Industrial Strategy said:

Energy regulator Ofgem, with the government’s consent, has made an application to the court. We do not comment on ongoing court proceedings. The Special Administration Regime is long-standing, well-established mechanism to protect energy consumers and ensure continued energy supply when a supplier fails.

A Bulb Energy logo on a smartphone screen.
A Bulb Energy logo on a smartphone screen. Photograph: Pavlo Gonchar/SOPA Images/REX/Shutterstock

US stock futures are also down ahead of the tsunami of US economic data at 1.30pm GMT, suggesting declines of 0.2% to 0.3% when Wall Street opens later.

On the stock markets, the main European indices have turned negative again, while the FTSE 100 in London is still in positive territory, just about.

  • UK’s FTSE 100 up 0.1% at 7,274
  • Germany’s Dax down 0.5% at 15,856
  • France’s CAC 40 down 0.1% at 7,035
  • Spain’s Ibex flat at 8,807
  • Italy’s FTSE MiB flat at 26,932

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, says about the CBI survey:

Demand for goods still is increasing rapidly, leaving manufacturers struggling to keep up. Admittedly, the total orders balance overstates just how much demand increased in November, because it is not seasonally adjusted and nearly always falls in October, before bouncing back in November.

Nonetheless, our seasonally adjusted version of the total orders balance rose 11 points in November to reach its highest level since records begin in 1977. Unfortunately, the relationship between the total orders balance and the official measure of manufacturing output is quite weak, because manufacturers are asked to compare orders to “normal levels”, and right now manufacturers cannot fulfil all orders.

Even so, manufacturing output probably still has scope to rise further in Q4, as formerly-furloughed staff are recalled and as manufacturers invest to enhance productivity. Even if orders weaken next year, perhaps as restocking demand fizzles out, production will be supported by the large work backlogs that have accumulated this year.

Meanwhile, resilient demand is enabling nearly all producers to hike their selling prices. Indeed, the output price expectations balance rose to +67—its highest level since May 1977—from +59 in October, consistent with core producer output price inflation rising to nearly 8.0% in January, from 6.5% in October. Core goods CPI inflation, therefore, still looks set to rise further over the next six months, helping to push the headline rate above 5% in the spring.

Orders in the manufacturing sector are further above "normal levels" than at any time in the last 44 years, according to November's CBI Industrial Trends Survey. Component shortages, however, are preventing manufacturers from meeting all this demand for now, as this chart shows: pic.twitter.com/LUlOSPSm8P

— Samuel Tombs (@samueltombs) November 24, 2021

Updated

Former bank of England rate-setter Andrew Sentance, a well-known hawk, and Victoria Scholar, head of investment at interactive investor, tweet:

Manufacturing orders and output surging and inflation at highest since late 70s. Yet the #MPC sits on its hands, keeping interest rates at record low levels. A reality check is needed at the @bankofengland! https://t.co/BsLoD6h9fJ

— Andrew Sentance (@asentance) November 24, 2021

Updated

CBI: Factory orders surge to record, inflation also climbs

Factory orders jumped this month, with growth hitting its highest level since at least 1977, according to the CBI. However, price expectations among manufacturers also climbed to a 44-year high, the business group’s monthly survey showed.

The findings are likely to add to concerns at the Bank of England over mounting inflationary pressures ahead of its next meeting on 16 December.

The CBI’s survey showed manufacturers’ monthly orders book balance jumped to 26% in November from 9% in October, marking the highest reading since the series started in April 1977. The balance deducts firms saying orders fell from those reporting order growth.

Anna Leach, the CBI’s deputy chief economist, said:

It’s good to see strong order books and output growth in the manufacturing sector holding up as we head into winter.

But intense supply side challenges continue to put pressure on firms’ capacity to meet demand.

The CBI’s measure of price expectations for the next three months climbed to 67% from 59% in October, the highest since May 1977. Stock levels of finished goods dwindled to the lowest on record, reflecting global supply chain bottlenecks and strong demand, as the economy rebounds from the pandemic slump.

“Follow the science”: I was at the opening of AstraZeneca’s shiny new £1bn research & development centre in Cambridge yesterday, which was unveiled by Prince Charles. The Discovery Centre (or DISC) houses 16 labs and 2,200 scientists, making it the biggest science lab in Britain along with the Francis Crick Institute in London.

I’ve tracked AstraZeneca’s progress since 2014 when it fended off a hostile £69bn takeover approach from Pfizer.

Updated

Mulberry shares jumped as much as 24%, and are still more than 22% higher, after the British handbag maker reported a return to pre-pandemic sales levels. It said its UK factories had allowed it to avoid the supply chain disruptions that have dogged some fashion rivals.

Here is our full story:

Britain is facing a Christmas booze shortage unless the government does more to ease the ongoing shortage of HGV drivers, a group of 48 wine and spirits companies have told the transport secretary, my colleague Rob Davies reports.

In a letter to Grant Shapps, businesses including Pernod Ricard, Moët Hennessy and the Wine Society said rising costs and supply chain “chaos” had held up wine and spirit deliveries, raising the risk that supermarkets will run dry and festive deliveries arrive late.

Members of the Wine and Spirit Trade Association (WSTA), which coordinated the letter, have reported it is taking up to five times longer to import products than a year ago, with two-day orders taking more than two weeks to process.

Freight costs have increased by about 7%, the WSTA said, as delivery firms have had to raise HGV drivers’ wages to retain them, causing particular difficulty for small businesses that struggle to compete on salaries with larger rivals.

French business confidence improves

It’s a different story in France, where business confidence has improved, with the business climate index from Insee rising to 114, well above the long-term average.

Charlotte de Montpellier, economist for France and Switzerland at ING, sums up the findings:

The improvement of the business climate shows that the French economy remains relatively well positioned in November, even if this is mainly due to the service sector, which is a major risk given the evolution of the pandemic. Inflationary pressures are stronger than ever.

The increase is notable in both the industrial and service sectors. In the industrial sector, the increase is mainly due to growing order books, and mainly orders from abroad. In the services sector, the business climate is at its highest level since December 2000. The effects of the recovery are clearly being felt, with the balance of opinion of business leaders on activity over the last three months rising sharply to its highest level since 1990.

French business confidence
French business confidence Photograph: Insee

Carsten Brzeski, global head of macro at ING, says the risks of stagnation or even recession for Germany at the turn of the year have clearly increased.

Over the last few days, Germany has already introduced some stricter restrictions but is still far away from the Austrian situation. This could change soon. Not only has Austria been a very good leading indicator for what will happen in Germany in terms of infections and government measures, this morning’s news that the SPD, Greens and FDP have come to a coalition agreement could also bring change.

Germany’s reaction to the fourth wave has suffered from a power vacuum, with the caretaking government not wanting to decide on stricter measures and the incoming government not ready yet, and possibly not really wanting to start a new era with tighter restrictions. The expected press conference of the leaders of the probable new government this afternoon could shed some light on potential next restrictions and measures.

Returning to the economic outlook, the German economy was already suffering from ongoing supply chain frictions, higher inflation in general, and higher energy and commodity prices in particular. Industrial production actually shrank both in the second and third quarters, despite filled order books and low inventories.

German business confidence worsens

Sentiment in the German economy has worsened, according to a closely-watched survey from the Ifo research institute in Munich.

The ifo business climate index fell from 97.7 points in October to 96.5 points in November, the lowest level since February, and marking the fifth month of declines.

Companies were less satisfied with their current business situation, and became more pessimistic about their prospects, amid supply bottlenecks and the fourth wave of the coronavirus.

Clemens Fuest, president of the Ifo institute, says:

In German manufacturing, the index fell as companies assessed their current business as considerably worse. Their expectations, by contrast, brightened somewhat, especially due to developments in the automotive industry. Supply bottlenecks in intermediate products and raw materials still have a grip on the manufacturing sector and a majority of companies plan to raise prices.

Sentiment in the service sector deteriorated noticeably. Skepticism grew substantially, especially as regards expectations. The last time the expectations indicator saw such a heavy decline was in November 2020. However, service providers were less satisfied with their current situation as well. The fourth coronavirus wave caused expectations to plunge especially in the tourism and hospitality industries.

The index slid in trade because of greater pessimism in companies’ expectations, although they rated their current situation as somewhat improved. The mood in retail continues to suffer due to supply problems and prices are more likely to increase over the coming months.

The business climate in Germany’s construction industry worsened slightly. Following the continuous upswing of recent months, expectations have turned more pessimistic. Companies judged their current situation to be somewhat better.

Updated

Johnson Matthey shares have largely recovered from their earlier 8.3% fall and are now down 1.6% as investors are reassessing the company’s prospects.

Nicholas Hyett, equity Analyst at Hargreaves Lansdown, has sent us his thoughts.

The announcement earlier this month that Johnson Matthey would be exiting battery Materials raised questions about the group’s long-term future. That’s resulted in a £314m impairment in these results. But elsewhere there’s evidence that, in the here and now, the group’s core businesses are going from strength to strength.

With automotive factories back up and running the group’s seen sales of its automotive catalysts boom – unsurprising in a world that’s increasingly focussed on reducing emissions wherever possible. The group’s started pitching for work on the new, and even tighter Euro 7 emissions standards, which should mean more complex catalysts attracting a higher share of overall automotive construction spend.

There’s also been significant progress in the natural resources business, driven by platinum recycling, as increased demand boosted prices and volumes. Given a large portion of recycled platinum comes from old auto-catalysts the group’s long standing and financially powerful “circular economy” continues to tick along nicely.

However, he added that there are only hints about what the group’s long-term solution to the end of the combustion engine age is.

Electric cars don’t need catalysts and clean air accounts for over half of operating profits, throw recycling of old auto-catalyst into the mix and the total exposure to automotive market is huge. There are some signs of progress in the hydrogen and industrial catalyst markets, but planned sales of the advanced glass and health businesses make the group more dependent on automotive rather than less. With capital coming back to shareholders through buybacks rather than being reinvested in new “growth areas” we worry about whether management has a solution to the electric car threat. It may be some years away but it can’t be ignored.

Updated

Johnson Matthey makes loss after electric battery exit

Johnson Matthey, one of the UK’s biggest chemicals companies, has warned that its decision to pull out of the electric battery materials market will cost it £314m.

This drove it to a loss before tax of £9m in the six months to 30 September, compared with a profit of £26m a year earlier. Sales rose 23% to £8.6bn as the company benefited from higher precious metals prices and underlying operating profits more than doubled to £293m, ahead of pre-pandemic levels.

Robert MacLeod, the chief executive, is stepping down after eight years in the role, and will be succeeded on 1 March by Liam Condon, an Irishman who heads up crop science at the German chemicals firm Bayer.

Johnson Matthey warned that the supply chain crisis, especially the shortage of semi-conductors, was hitting production for its car and truck customers, while precious metal prices had also declined. This means full-year profits will be lower than expected. The news sent its shares down more than 8% in early trading. The firm said:

Demand remains strong in many of our end markets. However, supply chain volatility especially the shortage of semi-conductors is affecting production for a number of our auto and truck customers. Global auto production is now forecast to decline 5% for our fiscal year which is a 14% reduction since our trading update in July.

Consequently, precious metal prices have also declined, largely because of the lower demand from the automotive industry. We are also experiencing acute temporary labour shortages in the US that are adversely impacting our Health business.

The firm makes most of its money from producing catalytic converters to clean exhaust emissions from petrol and diesel cars.

Britain’s hopes to grab a slice of the fast-growing market for electric vehicle batteries was deal a blow by Johnson Matthey’s decision to exit a fortnight ago. The company explained that it was too far behind rivals who are already making batteries at gigantic scale.

Updated

Samsung has said it will build a $17bn (£12.7bn) semiconductor factory in Texas, amid a global shortage of chips used in cars, phones and other electronic devices.

The plant just outside of Austin would be the South Korean company’s biggest US investment and is expected to be operational in the second half of 2024.

Samsung had also considered sites in Arizona and New York for the factory, which will be much bigger than its only other US chip plant, also in Austin.

Samsung said the new facility would boost production of high-tech chips used for 5G mobile communications, advanced computing and artificial intelligence, and also improve supply chain resilience.

The Financial Times has a great scoop: it’s reporting that David Cameron lobbied Lloyds Banking Group to reverse a decision to cut ties with the ailing lender Greensill Capital, appealing to a board member whom he had ennobled while prime minister.

Cameron lobbied Lloyds in January, the FT said, citing people familiar with the matter, when he contacted Lord James Lupton, a director of the bank who had previously been a Conservative party treasurer, and succeeded in persuading the bank to carry on doing business with Greensill.

Lupton, Tory treasurer from 2013 to 2016, has donated more than £3m to the Conservative party and was appointed to the House of Lords in 2015, sparking accusations of cronyism against then-prime minister Cameron from rival politicians.

Wednesday’s International FINANCIAL TIMES: “Biden’s bid to tame oil prices with 50m barrels from reserves falls flat” #TomorrowsPapersToday pic.twitter.com/aruqDnMwVC

— Allie Hodgkins-Brown (@AllieHBNews) November 23, 2021

The scandal surrounding Greensill, which has since collapsed, has spread throughout Westminster with allegations the lender was given preferential treatment.

On the stock markets, the FTSE 100 index has pushed 37 points higher to 7,304, a 0.52% gain. Germany’s Dax is up 13 points at 15,950, pretty much flat, while France’s CAC has gained 0.5% to 7,079 and Italy’s FTSE MiB is 0.66% ahead at 27,116.

Mulberry sales return to pre-Covid levels

The British handbag maker Mulberry said sales had returned to pre-Covid levels, up 34% to £65.7m in the six months to 25 September. It made a half-year profit before tax of £10.2m versus a loss of £2.4m a year earlier, partly boosted by a one-off profit on the disposal of a Paris lease. The company cut its workforce last year when sales suffered badly during Covid lockdowns.

Mulberry has just launched “The Lowest Carbon collection”, crafted from the world’s lowest carbon leather and using a local supply chain. It has also launched a resale programme “Preloved Bags” to boost its sustainability credentials.

New bags include the Sadie, a satchel with a Typography lock, and the Billie bag, with a “youthful crossbody slouchy silhouette”. Mulberry has been trying to connect with younger customers.

Amid a global supply chain crisis, Mulberry is confident, as its two Somerset factories supply half of its handbags. Thierry Andretta, the chief executive, says:

The bold decisions we have taken with regards to focussing on our UK production capabilities, means that we are well placed for the festive trading period and beyond.

A guest wears a red Mulberry bag during Paris Fashion Week in 2019.
A guest wears a red Mulberry bag during Paris Fashion Week in 2019. Photograph: Edward Berthelot/Getty Images

Updated

Lidl targets 1,100 UK stores by 2025

The German discount supermarket chain Lidl is ramping up its expansion in the UK as it reported a 12% rise in revenues to £7.7bn in the year to 28 February, despite the pandemic. It made a profit before tax of £9.8m compared with a loss of £25.2m in the previous year.

Lidl has raised its store target to 1,100 by the end of 2025, creating up to 4,000 new jobs. It opened 55 stores over the year, taking the total to 880, and says it is on track to reach 1,000 stores by the end of 2023, its previous target.

The company said it had repaid more than £100m in business rates relief it received during the pandemic, mirroring moves by other supermarkets that performed well during the crisis, unlike other businesses.

Christian Härtnagel, the chief executive of Lidl GB, said:

We continue to see tremendous opportunity in the market and that is why today we are announcing our new target of 1,100 stores by the end of 2025.

People queue outside Lidl supermarket in Streatham on 29 March, 2020
People queue outside Lidl supermarket in Streatham on 29 March, 2020 Photograph: Hannah McKay/Reuters

Updated

Turkish lira weakens, markets eye US GDP, Fed minutes

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

The Turkish lira has weakened again this morning towards a record low that it hit against the dollar yesterday, after the Turkish president Recep Tayyip Erdoğan signalled that he would not be deterred by rising inflation from cutting interest rates further.

The lira is down 2% against the dollar at 12.95 after closing at 12.7 on Tuesday, when it fell as low as 13.45. It has lost more than 40% of its value this year.

The Turkish president, who had declared himself an “enemy” of high borrowing costs, defended the four percentage point cut in interest rates this year to 15%. He said it would spur investment, increase job prospects and boost economic growth.

However, amid concerns that his unorthodox management of the economy was likely to deter investment and increase inflation above the 20% level recorded in October, investors took flight.

Some banks across the country stopped currency transactions yesterday, fearing that the steep fall in the lira’s value could spark a run on reserves, according to local newspaper reports.

There was also speculation that the government had laid plans to impose strict capital controls to prevent further withdrawals should the economic situation worsen.

With the US closed on Thursday for the Thanksgiving holiday, we will get a tsunami of economic announcements today, including the second estimate for third-quarter GDP and culminating in the release of the latest Federal Reserve minutes.

Michael Hewson, chief market analyst at CMC Markets UK, says:

While the minutes aren’t likely to deliver too much in the way of surprises they could act as a decent insight into the deliberations of the FOMC into the decision-making process when it came to deciding the amount of the initial taper. While the initial reduction of asset purchases was widely expected, an initial monthly reduction of $10bn in Treasuries, and $5bn in mortgage-backed securities, it will be interesting to find out how many FOMC members wanted to go faster.

This will be especially pertinent given how the committee was evenly split on raising rates next year, when it last met. We already know that there a number of Fed officials who are uneasy at the pace of price rises, and there does appear to be significant disagreement about how persistent some of these price pressures are. Today’s minutes could show where these divisions are, with today’s economic numbers giving added fuel to the argument for a faster taper when the Fed meets next month.

Before that we get to see the latest revision of US Q3 GDP which is expected to see a modest upward adjustment to 2.2%, from 2%.

In Asia, stock markets were mixed, with Japan’s Nikkei falling 1.6% while Hong Kong’s Hang Seng edged 0.2% higher.

European stock markets are expected to open higher, bringing some respite to Germany’s Dax which has fallen for four days amid a fourth wave of coronavirus infections, while the FTSE 100 index in London posted a modest gain for the second day this week.

The Agenda

  • 9am GMT: Germany Ifo business confidence for November
  • 11am GMT: UK CBI Industrial trends survey for November
  • 1.30pm GMT: US GDP for Q3 (second estimate)
  • 1.30pm GMT: US Durable goods orders for October
  • 1.30pm GMT: US Jobless claims
  • 2.30pm GMT: UK Bank of England policymaker Silvana Tenreyro speaks
  • 3pm GMT: US Core Personal Consumption Expenditures index for October (forecast: 4.1%)
  • 7pm GMT: US Federal Reserve minutes

Contributor

Julia Kollewe

The GuardianTramp

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22, Jan, 2021 @3:20 PM

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Dow Jones, Nasdaq hit record highs after service sector rebound – as it happened
US Congress certifies Joe Biden as next US president hours after Capitol siege

Julia Kollewe

07, Jan, 2021 @3:38 PM

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US job market weakens in December, fuelling hopes of more stimulus – as it happened
US economy sheds jobs for first time since April, especially in hospitality sector

Julia Kollewe

08, Jan, 2021 @2:50 PM

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Pound edges higher against the dollar while oil rises on Iran sanctions - as it happened
Sterling still struggling on fears of a no-deal Brexit but recovers some of Monday’s losses

Nick Fletcher

07, Aug, 2018 @1:46 PM

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Wall Street hits record high, as Iran tensions send oil price up - as it happened
Bank of England warns that Brexit risks are rising, but investors are cheered by prospect of US interest rate cuts.

Graeme Wearden

20, Jun, 2019 @8:22 PM