And finally... here’s our economics editor Larry Elliott on this week’s grim markets, and today’s record-breaking GDP figures from the eurozone:

And that’s all for today. Hope you have as good a weekend as possible. GW

ExxonMobil has warned it may write down the value of its US shale assets by up to $30bn (£23.2bn) following a steep drop in global energy prices which has led to the oil giant’s third consecutive quarterly loss.

The US oil and gas producer told investors it plans to reassess its North America gas business over the coming months, which could lead to impairment charges as high as $25bn to $30bn if it changes its long-term strategy.

The rethink will include a string of shale gas assets acquired 10 years ago through an ill-fated acquisition of XTO Energy, which was worth about $30bn at the time, but whose book value is in doubt following a steep collapse in gas market prices due to the Covid-19 pandemic.

Exxon said its shale gas operations were among the assets “at risk for significant impairment”...

More here:

Here’s a chart showing how the FTSE 100 has just posted its second-worst week since March:

Correction: Sorry, got my maths garbled there.

The Stoxx 600 index is down 5.6% this week -- which roughly equals its worst week since March.

Twitter is having a particularly grim day, down 20% after underwhelming Wall Street with its third-quarter results last night.

That’s a surprising reaction in some ways -- Twitter beat forecasts with earnings of 19 cents per share, against forecasts of 6 cents. Revenues were much stronger than forecast too ($936m vs $777m expected).

But, Twitter’s monetizable daily active users were lower than expected (187m vs
195m), which has disappointed investors.

Investors could be forgiven for running for cover, given the drama that awaits us next week.

Not only the presidential election, but central bank action in the UK and US....and an escalating pandemic across the globe

Connor Campbell of SpreadEx sets the scene:

Next week is one of those ridiculously stacked periods that sees 4 or 5 headline stories all jostle for investors’ attention. Of course, there’s the election on Tuesday, the aftermath of which will run well beyond Wednesday due to a) the way mail-in votes are being counted in certain states, and b) the potential resistance Trump will put up if he loses.

Alongside that there’s a likely stimulus-expanding Bank of England meeting at Thursday lunchtime, a post-election Fed statement on Thursday evening, and October’s nonfarm jobs report on Friday. And that’s not to mention the ever-present coronavirus lockdown concerns that have so wrecked the markets in the past few days.

That could give next week a weird feel, with pre-vote jitters and covid-19 fears dominating the first half, and the election aftermath and central bank statements taking the lead in the 2^nd. Any hopes of leaving October’s volatility behind seem highly unlikely, regardless of how things pan out.

This candlestick formation chart shows how European stock markets are about to post their biggest weekly drop since the spring tumble:

The Financial Times points out that Spain has been lagging behind its European partners since the Covid-19 crisis began - a trend confirmed by today’s GDP reports.

The eurozone’s largest economies diverged in their performance — Germany’s economy expanded by 8.2 per cent on a quarterly basis while France grew by 18.2 per cent. Italy reported growth of 16.1 per cent and Spain’s output was up 16.7 per cent.

That left France’s economic output 4.1 per cent below its pre-pandemic level while Germany was down 4.2 per cent and Italy was 4.5 per cent smaller. Spain was harder hit, with a 9.1 per cent gap from pre-pandemic levels — reversing its position as one of the fastest growing economies in the eurozone before the virus struck.

Gustavo Matías, a professor of economics at the Autonomous University of Madrid, said the data “confirms that the Spanish economy amplifies the economic cycle: when the world goes well, Spain does better and when it goes badly, Spain does worse”.

Back in London, NatWest bank is still the top FTSE 100 riser (+5.5%) after surprising the City by returning to profit:

With the election looming, and Covid-19 cases at record levels, Wall Street has opened cautiously.

The Dow Jones industrial average has dipped by 63 points, or 0.24%, to 26,595.

The broader S&P 500 index has lost 0.25%, while the tech-focused Nasdaq has lost 0.75%.

Shares in Apple have slumped by 3.5%, even though it beat sales and profit forecasts last night. There’s anxiety that the iPhone maker didn’t set any earnings guidance for the upcoming holiday season (due to Covid-19 uncertainty).

In a busy day for economic news, we also have some Canadian growth figures to chew through.

Canada’s economy grew by 1.2% in August - a decent pace, but slower than the sizzling 3.1% expansion seen in July. It leaves the Canadian economy around 5% smaller than before the pandemic.

Services drove the recovery, expanding by 1.5% in August, while goods manufacturing only grew by 0.5%.

Statistics Canada also estimates that Canada grew by 0.7% in September, as the summer boom continued to slow.

Mexico has also emerged from its Covid-19 slump.

Growth across the Mexican economy surged by 12% in July-September, a very strong performance -but that still leaves GDP around 8.6% smaller than a year ago.

The record growth across the eurozone last quarter is an encouraging sign, even though the second-wave of Covid 19 will dampen the recovery.

So argues Florian Hense of Berenberg... although he also suspects Italy’s revival will take some time

Q3 is history. Countries across Europe are tightening restrictions to contain the second wave of Covid-19. Economic activity is likely to contract in the Eurozone in Q4.

But the record-breaking 12.7% qoq rebound in Q3 GDP – after a dramatic -15.1% slump relative to Q4 2019 illustrates the potential that the Eurozone economy can rebound fast once the second wave is brought under control again through restrictions, medical progress and – at the latest – the advent of spring.

In this sense, the strong backward-looking result for Q3 GDP supports our cautiously optimistic view for the Eurozone economy and its markets for next year. We expect the Eurozone economy to return to its pre-pandemic level no later than mid-2022. France and Germany will likely recover faster (early 2022), with a chance of reaching the late-2019 level of GDP in late 2021 already. Italy with its deep-seated structural weaknesses may need until early 2023, holding back the Eurozone average.

The eurozone actually grew faster than the US in the last quarter - at 12.7%, versus 7.4%.

[America likes to report ‘annualised GDP’, but on that metric the eurozone expanded by over 50% in the last quarter!]

But that’s partly because Europe suffered a steeper recession, so there was more lost activity to make up, from a lower base.

The big picture is that Europe and the US are smaller, economically, than a year ago.

Barret Kupelian, senior economist at PwC, points out that China’s economy is around 3% higher than in the last quarter of 2019.

He also warns that Europe is slowing:

“The bad news is that Europe is now experiencing a surge in infections. Authorities have responded in a mixture of ways intended to limit contact, which is likely to slow economic activity in the fourth quarter.

“Yesterday’s communication from the ECB strongly hinted at more easing by the end of the year, which shows that the downside risks to the economic outlook mentioned by Ms Lagarde a few months ago are now beginning to crystallise. Even though there are large uncertainties regarding how the epidemiological picture will evolve in the future, a double dip in economic activity in the Eurozone is now looking possible.”

Bloomberg has spotted that eurozone finance ministers have been trying to sound optimistic about growth prospects, despite obvious anxiety over the second wave of Covid-19 cases:

German Economy Minister Peter Altmaier confirmed that the government still expects a slightly less severe contraction this year than previously feared. GDP may shrink 5.5% versus a September prediction for 5.8%. The new forecasts, which include the latest virus restrictions, see growth of 4.4% in 2021.

Spanish Economy Minister Nadia Calvino expressed optimism over the recovery path, even though uncertainty remains high. “The priorities continue to be the same -- working in a coordinated way in Spain and in Europe to tackle the pandemic and continue to support businesses and families.”

In France, Finance Minister Bruno Le Maire put a positive spin on the government’s downward revision to the 2020 outlook. “The economy has a considerable capacity to rebound,” he said on France Inter radio.

“As soon as 2021, we will be able to get growth figures that are good growth figures.

The latest eurozone inflation figures are also out, and show that consumer prices fell by 0.3% year-on-year in October.

It’s mainly due to cheaper energy costs, following the slump in oil prices since the pandemic struck.

Although that’s a boost for struggling families, food prices have risen 2% compared with a year ago.

Robert Alster, CIO at wealth manager Close Brothers Asset Management, warns that the eurozone could enter a new downturn this winter.

That will put more pressure on the European Central Bank to expand its stimulus programme before the year is over, he explains.

“This positive EU GDP data comes against a backdrop of surging virus cases and a feeling of déjà vu.

“Whilst Europe’s two largest economies, France and Germany, report positive growth, they approach winter in the midst of another stringent lockdown. Spain and Italy are also imposing further restrictions. These dark economic clouds are likely to squash any green shoots of recovery in the services sector as fears of a double dip recession take hold. In truth, the current outlook is starting to look at odds with the ECB’s prediction that the Eurozone’s economy will grow back to its pre-crisis level by the end of 2022.

“EU decision makers have a lot to consider in the coming month with policy currently left unchanged and no expansion to the asset purchase programme, as some might have hoped. Markets will be hoping that Christine Lagarde, who’s been keeping her cards close to her chest, is lining up further stimulus in good time for Christmas.”

Bad news: unemployment across the eurozone has reached its highest level in over two years -- despite the pick-up in growth over the summer.

Eurostat reports that the number of people unemployed in the euro area jumped by 75,000 in September, to 13.612 million. That’s an increase of 1.3 million in the last year.

It pushes the unemployment rate up to 8.3%, the highest since early 2018 (August’s data has been revised up too, from 8.1% to 8.3%).

The surge in growth across Europe came as offices, factories, pubs, shops and restaurants reopened, and people took much-needed holidays.

This chart highlights just how fast the eurozone grew in July-September -- dwarfing the recovery from the financial crisis of 2008.

But that still left the eurozone much smaller than a year ago -- after all, that 12.7% growth is from a lower base.

When Harold Macmillan (possibly) warned that “Events, dear boy, events” knocked governments off course, he probably didn’t have a global pandemic in mind.

Or the eurozone (in those days, Britain was trying unsuccessfully to join the EEC, before Charles De Gaulle crushed prime minister Macmillan’s hopes).

But that famous (if apocryphal) quote sums up the problem with today’s GDP figures from across Europe. Although they are impressive, they’re also been overtaken by recent developments - and the threat of months of new restrictions.

But... it’s still useful to see how Europe was faring in the summer, before the second wave of Covid-19 struck:

Now it’s Portugal’s turn to surge back to growth.

The Portuguese economy grew by a record 13.2% in July-September, as it recovered from its worst ever slump in April-June (an unprecedented 13.9% contraction).

But despite this recovery, Portugal’s economy is still 5.8% smaller than a year ago, with its tourism sector suffering badly from Covid-19.

Germany’s economy minister, Peter Altmaier, has told reporters that the record growth achieved in the summer provides a cushion for the future.

But, Altmaier also warns that the full recovery may take until 2o22.

Over to Reuters.....

Economic activity in Germany should continue at a moderate pace, Economy Minister Peter Altmaier said on Friday, adding that a full recovery from the COVID-19 pandemic should occur in 2022 at the latest.

“We have managed to save many jobs during this pandemic,” Altmaier told a news conference after figures showed Europe’s largest economy expanded by a record 8.2% in the third quarter after an unprecedented drop of almost 10% in the previous three months.

These forecast-beating growth figures from France and Spain haven’t cheered investors this morning.

European stock markets have lurched lower, as the second-wave of Covid-19 cases fuels fears of a new downturn.

France’s CAC and Germany’s DAX have both dropped by 0.8%, while in London the FTSE 100 has dipped by 0.2% (not as bad as we feared a couple of hours ago).

UK bank NatWest is the top FTSE 100 riser, up 5%, after returning to profit this morning.

Fiona Cincotta of Gain Capital says the drop in German retail sales has hit sentiment.

France’s Q3 GDP was significantly better than forecast recording a record 18.2% growth in the July – Sept period, after -13.7% contraction in the Q2. Expectations had been for 15.4% growth. However, with France back in national lockdown, these figures are already out of date.

French consumer spending in September declined a worse than forecast -5.1%, much worse than the -1% decline forecast.

German retail sales painted a frightening picture, -2.2% MoM in Sept, down from +3.1% in Aug as rising covid cases, tighter lockdown restrictions and growing concern over the economic outlook dragged on sales.

Eurozone data will remain very much in focus as investors await GDP data from Germany, the largest economy in the Eurozone and from the bloc itself.

Yesterday the ECB highlighted the headwinds faced by the Eurozone economy and said it is ready to increase monetary stimulus in December to cushion the economy.

Austria has also returned to growth, new data show.

But, like France and Spain, Austria’s economy hasn’t yet returned to its pre-pandemic size either.

Reuters has the details:

The Austrian economy rebounded by 11.1% in the third quarter, think tank Wifo said on Friday, citing a rise in consumer demand and a recovery in the service sector, as coronavirus-related restrictions were eased.

The rebound could not fully offset the decline caused by the pandemic, Wifo, which compiles data for the government, added.

When compared to the prior-year period, third-quarter gross domestic product (GDP) decreased by 5.3%.

In the UK, house prices have accelerated again - but a slowdown may be looming as unemployment jumps.

Nationwide has reported that annual house price growth rose to 5.8% in October, the highest rate since January 2015. They jumped 0.8% this month alone, as the current stamp duty holiday continues to drive demand.

But... Robert Gardner, Nationwide’s chief economist, reckons activity will weaken as the Covid-19 pandemic hits the economy.

“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.

Marc Brütsch, chief economist at Swiss Life, also fears France’s economy will disappoint in the final three months of this year:

In a worrying sign, German retail spending fell more than expected in September.

The Federal Statistics Office reports that retail sales dropped 2.2% last month, a bigger fall than expected.

It suggested that household spending is cooling, even before Germany goes into a new ‘light lockdown’ next week.

Spending by consumers and government lifted the French economy back to growth in the third quarter, INSEE explains.

Household consumption expenditure jumped +17.3% in Q3, and was only 2.1% lower than a year ago.

Government expenditure was 0.4% higher than a year ago, and jumped by 15.4% in Q3 alone (the cost of fighting the pandemic and stimulating the economy).

But business investment (Gross fixed capital formation) was sharply down (–5.1% year-on-year), despite rebounding by 23.3% in Q3.

Trade also made a positive contribution to GDP, with exports up 23.2% in July-September and imports only up 16.0%.

All very encouraging.... until you remember that France has just entered a new national lockdown that will slow the recovery sharply.