Closing summary
- Non-farm payrolls data showed 225k were added to the US economy in January. That was much higher than a Reuters poll forecasting a 160k rise, and December number which was revised up from 145k to 147k.
- Luxury goods group Burberry became the latest company to warn that its business is being knocked by the coronavirus outbreak. Burberry’s finance chief said the virus was having a greater impact on business in Hong Kong than recent anti-government protests. Burberry’s stock price fell as much as 3.2% at the market open but pared losses later in the day.
- Credit Suisse CEO Tidjane Thiam was outsed following what was undoubtedly a tense board meeting on Thursday. It follows a bitter boardroom battle that escalated after a spying scandal that engulfed the Swiss bank last year.
- The Halifax House Price Index came in higher than expected, with prices up 0.4% month-on-month in January to an average of £240,054. That’s compared with Reuters forecasts for a flat reading.
- S&P Global Ratings expects Chinese GDP growth will fall to 5% for 2020, down from previous forecasts for 5.7% growth due to the coronavirus outbreak.
- A quarter of US firms say the coronavirus will hit revenues by 16%, according to a new survey by the American Chambers of Commerce in Shanghai
That’s all from us today. Have a great weekend and we’ll be back on Monday -KM
Naeem Aslam, a chief market analyst at online trading platform AVA Trade, says excitement about the bumper US jobs figures won’t last long:
The US NFP number rocked the markets. Throughout this week, we have seen investors brushing away all ill thoughts about markets and today’s number has put a final seal on this. The bottom line is that the data has confirmed that the US job market is solid and tight.
Having said this, we do have concerns that the positive impact of this jobs report may not last long because the fact that China has delayed its release of economic number, and major warnings coming from Burberry, indicates that investors are likely to see tumultuous time.
Job growth surged in January. The U.S. added 225,000 jobs last month, well above Wall Street expectations. https://t.co/UT5yTyHDB8 pic.twitter.com/ZwjXSk9S55
— CNBC (@CNBC) February 7, 2020
More details on US jobs figures:
The unemployment rate ticked up to 3.6%, versus forecasts for the rate to remain steady at 3.5%.
Average earnings have risen year-on-year by 3.1%, which is higher than estimates for 3.0%.
BREAKING: January's US non-farm payrolls come in at 225k
US non-farm payrolls have come in at 225k for the month of January.
That compares to a Reuters poll forecasting 160k, and is much higher than December’s tally which was revised up from 145k to 147k.
Foxconn, the electronics company that supplies Apple, has begun manufacturing its own surgical masks, allowing Chinese workers to churn out iPhones uninterrupted as the coronavirus crisis continues.
The Taiwanese company’s production lines have been shut down because of the disruption caused by the outbreak, slowing down the supply chain that feeds Apple’s global retail network.
However, in a statement released via the Chinese social media platform WeChat, Foxconn said it hoped to get around the problem by switching some of its own production lines to make masks, for its own staff and to supply the soaring global demand for them.
It hopes to ramp up production to 2m masks by the end of the month. “In this war against the epidemic, every second counts,” the company said.
You can read the full story here:
Mihir Kapadia, the CEO of Sun Global Investments, says the coronavirus could have a long term effect on the stock market:
The short-term rally in global stocks has expectedly began to show signs of slowing as the growing death rate and the economic impact the coronavirus has had has become more understood. Despite the efforts of the Chinese government to contain the virus and its wide spreading impact, the death roll has doubled in a week while more than 31,000 have been infected in what is a sign that the situation is not slowing.
He added:
Investors have wisely been playing a cautious game, but it will take time for any government action to come into effect.
However the fact that much still remains unknown about the coronavirus, and the key question whether it has yet reached his peak, could potentially have a long-lasting effect on the markets even if it is contained and dealt with.
Quarter of US firms say virus will hit revenues by 16%
Nearly a quarter of US companies in China expect their revenues to fall by at least 16% this year due to the coronavirus.
That’s one of the stark statistics from a new American Chambers of Commerce in Shanghai survey released today.
The “mini-survey” polled 127 companies including 20 that derive $500m of their revenues from China alone.
Here are some of the main findings:
Updated
Markets drop and investors await US non-farm payrolls
Thursday’s bounce didn’t last for European stocks. Today, a mix of profit-taking and coronavirus jitters seem to be weighing on markets.
Germany’s Dax is down 0.5% while the French Cac is down 0.3%.
The FTSE 100 is the worst performer in Europe and is down 0.7%.
All eyes are now on US jobs numbers, with non farm payrolls due at 1:30pm UK time.
Happy jobs day everyone. Don’t forget to get in your #NFPGuesses
— Joe Weisenthal (@TheStalwart) February 7, 2020
City watchdog says administrators are trying to sell personal data to claims companies
The Financial Conduct Authority has fired a warning shot at insolvency practitioners (read: administrators) after learning that there have been illegal attempts to sell customers’ personal data after a company goes bust.
Passing on that data may breach key data protection rules like GDPR.
We are aware that some insolvency practitioners and FCA-authorised firms have attempted to sell clients’ personal data to claims management companies (CMCs) unlawfully.
This can happen either before or after a firm has gone into administration and where it is likely claims for compensation will be made to FSCS (Financial Services Compensation Scheme).
The terms, conditions and clauses within a standard contract are highly unlikely to constitute sufficient legal consent for personal data to be shared with CMCs to market their services, and may not be lawful.
Claims management firms have been looking for the next big earner after the deadline for payment protection insurance claims closed last year.
The FCA statement also warned CMCs to “act honestly, fairly and professionally” and in the best interest of customers.
CMCs using such personal data may not be acting in the customers’ interests. CMCs seeking to rely on legitimate interest grounds for processing such data are highly unlikely to meet the requirements of the GDPR.
CMCs that intend to buy and use such personal data must be able to demonstrate how they have considered the fair treatment of customers and how their actions comply with privacy laws.
The statement, which was co-signed by the Information Commissioner’s Office and FSCS, didn’t name individual companies that may be in breach of data rules.
However, it warned that authorities would “take appropriate action” where they identify illegal sales.
Overnight, S&P Global Ratings estimates that Chinese GDP growth will fall to 5% for 2020. That is down from forecasts for 5.7% growth before the outbreak.
And this might be a bold prediction, but S&P is also claiming that the virus could be contained by March 2020.
It claims most of the impact will be felt in the first quarter, but that a recovery will be in place by the third quarter. China should bounce back in 2021 with 6.4% growth compared to previous forecasts for 5.6%.
Shaun Roache, the Asia-Pacific chief economist for S&P Global Ratings, said:
We expect the effect to be more drawn out than in SARS given the longer time to reach peak infections and the more vigorous policy response, especially travel restrictions, in this episode.
Household consumption will take the main hit, especially spending on discretionary goods and services as individuals avoid public spaces to minimise the risk of infection.
One of our readers got in touch with concerns about our post on Halifax house price data for January.
He made the point that “better than expected” made it sound like higher costs for housing was a positive result, full stop.
I agree that it’s more accurate to say “higher than expected” so I’ve made that change. Thanks for making the point, Keith.
Burberry’s finance chief Julie Brown has said the impact of the coronavirus on the business has been more significant than recent protests in Hong Kong.
Footfall at the 44 stores that are still open in mainland China have dropped by up to 80%, with customers staying home amid the outbreak.
Speaking to the FT (£) this morning, she said:
It is more serious in Hong Kong than the protests
The story confirms that none of Burberry’s staff have been diagnosed with the virus.
Credit Suisse CEO Tidjane Thiam ousted
One story is rocking the banking world this morning and that’s the surprise resignation of Credit Suisse CEO Tidjan Thiam.
It follows a bitter boardroom battle that escalated after a spying scandal that engulfed the Swiss bank last year.
With my hands full with the blog today, the banking reigns have been handed to my capable colleague Mark Sweney. He reports:
The bank’s board announced on Friday morning that it had “unanimously accepted” the 57-year-old’s resignation and that Thomas Gottstein, the current head of Credit Suisse’s home business in Switzerland, will take over as chief executive. The board also gave its full support to the chairman, Urs Rohner, to complete his term until April 2021.
Thiam and Rohner have been in conflict since it emerged that the Zurich-based bank had hired a corporate espionage company to follow Iqbal Khan, the former head of the bank’s wealth management division, shortly after he left for a position at rival UBS. Credit Suisse insisted it was a one-off incident but then months later admitted a second executive had been tracked by private detectives.
The full story is here:
UK house prices higher than expected in January
The Halifax House Price Index has come in higher than expected, with prices rising 0.4% month-on-month compared to Reuters poll for a flat reading.
On an annual basis, January house prices were 4.1% higher than the same time last year to reach an average of £240,054.
But Russell Galley, a managing director at Halifax, warned against overblowing the results:
A number of important market indicators continue to show signs of improvement. We have seen a pick-up in transactions with more buyer and seller activity consistent with a reduction in uncertainty in the UK economy.
However, it’s too early to say if a corner has been turned. The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year, but was delayed by economic uncertainty. So while housing market activity has undoubtedly increased over recent months, the extent to which this persists will be driven by housing policy, the wider political environment and trends in the economy.
Updated
You can read the full Burberry release here:
European markets are back in the red after a bounce yesterday:
- FTSE 100 down -0.2%
- French CAC 40 down -0.1%
- German DAX down -0.3%
- Spain’s IBEX down -0.25%
Burberry’s London-listed shares are down 3.2% at the start of trading, making it the worst performing stock on the FTSE 100.
Luxury goods maker Burberry hit by coronavirus outbreak
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Luxury goods group Burberry has become the latest company to warn that its business is being knocked by the coronavirus outbreak, which has forced the company to temporarily close more than a third of its 64 stores in mainland China.
Its remaining outlets in the country are running with reduced hours and have suffered a significant drop in footfall.
In an unexpected update this morning, the British fashion house said the outbreak was having a “material negative effect on luxury demand”, adding:
We are taking mitigating actions but the benefit in the current year will be limited given the proximity to our March year end. We also intend to continue our key growth initiatives in preparation for a recovery in luxury demand. We will provide a retail trading update following our financial year end.
Burberry assured that while it can’t predict “how long this situation will last”, it was still confident in its strategy.
We are extremely grateful for the incredible effort of our teams and our immediate thoughts are with the people directly impacted by this global health emergency.
It comes just days after rival luxury group Capri Holdings – which is behind brands including Michael Kors, Jimmy Choo and Versace – warned that the disruption could hit revenue by around $100m (£77m). It said estimates “could materially change if the severity of the situation worsens”.
Later today, we are expecting US non-farm payrolls for January. Investec estimates are for the US economy to have added another 180k jobs, which would be an increase from the disappointing 145k logged for December.
The agenda
1.30pm GMT: US non-farm payrolls for January, plus average earnings
Updated
