Afternoon summary
Time to recap
China’s fall into deflation territory has accelerated, after consumer prices fell 0.5% per cent in November, the sharpest decline in three years.
The drop in prices highlighted weakness in China’s economy, and pushed China’s CSI 300 share index down to a near five-year low today. Hong Kong’s Hang Seng also dropped, down around 1%.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, points out that signs of fragility are now starting to be felt in the service sector.
Streeter adds:
With global growth expected to slow further in 2024, there will be little support coming from overseas, while the property market’s woes keep consumer confidence subdued. The clamour for a big bazooka of stimulus is growing to restore vigour to the economy.
Authorities also have their eye on debt laden local authorities which pose another risk to financial stability. Hopes are being focused on the Central Economic Work Conference later this month for more medicine to try and put the economy on the road to better health.’’
A senior International Monetary Fund official has warned that the world economy is on the brink of a second cold war that could “annihilate” progress made since the collapse of the Soviet Union.
Gita Gopinath, the IMF’s first deputy managing director, said the accelerating fragmentation of the world economy into regional power blocs – centred around the US and China – risked wiping out trillions of dollars in global output.
She said:
“If we descend into cold war two, knowing the costs, we may not see mutually assured economic destruction. But we could see an annihilation of the gains from open trade.”
In the UK housing sector, average asking prices fell by almost £7,000 last month, as sellers tried to compete to find a buyer.
Tenants in Britain last month were hit by the highest increase in rents for any November in at least a decade, estate agent Hamptons reported.
On Wall Street, shares in department store chain Macy’s have jumped almost 19% after reportedly becoming the target of a $5.8bn takeover offer.
Energy firm Occidental Petroleum has agreed to buy CrownRock, a major privately held energy producer that operates in the Permian Basin, for $12bn.
In the City…Hipgnosis Songs Fund, which owns the streaming rights to artists ranging from Beyoncé to Neil Young, has sold a chunk of its song rights at a steep discount to raise cash.
Analysts have predicted that mining company Anglo American could become a takeover target after warning of weaker than expected production last week.
And travellers have been warned that festive getaway traffic will probably peak earlier than normal this year as Christmas Day falls on a Monday.
Here’s our news story on Gita Gopinath’s warning that the fragmentation of the global economy could knock GDP by 7%.
Updated
