Time to wrap up…. here’s the main stories, on the day the eurozone bounced out of its technical recession, and take-up of UK mortgages rose.

Property experts are hailing this morning’s news showing that UK mortgage approvals hit their highest for 18 months in March.

Anthony Codling, analyst at RBC Capital Markets, says rising mortgage approvals are good news for housebuilders:

Given the recent increases in mortgage rates it was comforting to see mortgage approvals rise in March by 1.3% (seasonally adjusted) to 61,300, a level 20% higher than they were one year ago.

We continue to believe that the UK housing market is slowly recovering even in the face of stubborn economic, mortgage rate headwinds, and election date uncertainty.

But, there are also forecasts that the recovery will tail off, as borrowers are facing rising mortgage rates.

Hina Bhudia, partner at Knight Frank Finance, says the recovery in housing market activity continued into March:

At 61,300, mortgage approvals for house purchase are now approaching the 65,000 or so monthly approvals we saw during the three years leading up to the pandemic.

“The market is currently dominated by buyers that really need to move, and that’s unlikely to change in the near-term. Mortgage rates are rising once again, and both Natwest and Santander raised rates on their product ranges this morning.

“That will inevitably cause some would-be buyers to sit out this spring selling season, which should be gathering pace this week. The sun is out and buyers are returning from their Easter break, so we’d usually expect these to be the busy weeks before the summer, however the uncertain outlook for mortgage rates will undoubtedly weigh on activity.

“It’s not just buyers that are frustrated. The lenders are eager to rebuild their businesses after a subdued 2023, however they are constrained by stubborn inflation and the resulting impact on their cost of funding.”

Peter Arnold, EY UK chief economist, warns that mortgage rates are set to edge up further, as the impact of higher swap rates feeds through. That means the recovery in mortgage approvals will continue to cool, Arnold predicts:

“The recovery in mortgage demand continued in March, with approvals for new house purchases rising to 61,325, an 18-month high.

However, the increase in mortgage interest rates over recent months appears to have taken some of the momentum out of the recovery, with the rise in approvals between February and March being much smaller than the previous two months. Net mortgage lending slipped to just £0.3bn in March, from £1.6bn in February, but February’s outturn had been flattered by a temporary slump in repayments.

“With swap rates having climbed further during April, and mortgage rates continuing to edge up in response, the EY ITEM Club expects the recovery in approvals to continue to cool in the near-term.

Canada has joined the GDP party, but its growth figures are a bit of a damp squib.

Canadian growth slowed in February, with GDP rising by 0.2% in February – weaker than the 0.3% expected – following a 0.5% gain in January.

Statistics Canada says:

Services-producing industries (+0.2%) led the growth for a second month in a row, fuelled by gains in transportation and warehousing.

The goods-producing industries aggregate was essentially unchanged as the mining, quarrying, and oil and gas extraction sector expanded while the utilities and manufacturing sectors contracted in February.

Statistics Canada also estimates that Canada’s economy expanded 0.6% in the first quarter of 2024 – which would be twice as fast as the eurozone.

The FTSE 100 share index has touched a new alltime high today, as its rally continues.

The index of major blue-chip companies listed in London hit 8199.95 points for the first time today, above yesterday’s record high of 8189.14 points.

Premier Inn owner Whitbread is the top riser, up 4.6%, after hiking its dividend, announcing a £150m share buyback plan and 1,500 job cuts.

HSBC are also rallying, up 4% after beating profit forecasts this morning.

Fiona Cincotta, senior financial market analyst at City Index, says:

The FTSE 100 is rising on Tuesday and is set to record its second straight month of gains, boosted by upbeat corporate earnings and despite mixed data from China.

HSBC is up 2.5% after the bank posted better-than-expected pretax profits and announced a $3 billion share buyback, offsetting the news that CEO No Quinn will retire. The Asian-focused bank posted a 3% rise in revenue to $20.8 billion, well ahead of the $16.94 forecast. Pre-tax profit was $12.65 billion, down 2% annually, but still ahead of estimates.

Adding to the good news, the British Retail Consortium noted that inflation was easing in the UK as shop prices rose at the slowest pace in more than two years in April. The data adds to signs that inflationary pressures are cooling, which could bring some relief to the Bank of England as policymakers consider when to start cutting interest rates.

Heavyweight miners were in edging higher after Chinese factory activity expanded at the fastest pace in 14 months in April thanks to rising new export orders.

The fast-food restaurant business McDonald’s has missed sales forecasts as boycotts over war in the Middle East hit its takings.

McDonald’s has reported that global sales rose by 1.9% in January-March, missing Wall Street’s forecast of a 2.1% increase.

McDonald’s says that like-for-like sales in its international markets division were slightly negative, falling by 0.2%, as the segment “continued to be impacted by the war in the Middle East”.

CEO Chris Kempczinski says:

Our global comparable sales growth in the first quarter marks 13 consecutive quarters of positive comparable sales growth with 30% growth over the last four years.

As consumers are more discriminating with every dollar that they spend, we will continue to earn their visits by delivering leading, reliable, everyday value and outstanding execution in our restaurants.

McDonald’s has been hit by boycotts across the Middle East and in Muslim-majority markets like Indonesia and Malaysia since October, AP reports, when its Israel franchise announced shortly after the Hamas attack of 7 October that it would be donating free meals to the Israeli military.

McDonald’s took control of this franchise from Alonyal Ltd at the start of April.

The eurozone has bounced back from its shallow technical recession after a stronger than expected performance by its “big four” economies in the first three months of 2024.

After two successive quarters of 0.1% contraction in the second half of 2023, the 20 nations that use the single currency posted growth of 0.3% between January and March, my colleague Larry Elliott writes.

Figures from the European Commission’s statistical agency – Eurostat – showed the eurozone had put in its best growth performance since the third quarter of 2022. Financial markets had been expecting 0.2% growth.

Lower energy prices, falling inflation, rising real wages and the prospect of cuts in interest rates helped to boost activity after a downbeat 2023 in which the eurozone only grew in one quarter.

More here.

The Eurozone economy exited stagnation “with a bang rather than a whimper”, says Moody’s Analytics’ senior economist Kamil Kovar.

Kovar says the “almost normal above-consensus growth of 0.3%” could encourage the European Central Bank to take cautious approach to interest rate cuts:

This confirms that 2024 will mark the long-postponed recovery in euro zone.

However, it was not all cheers, with details showing some weakness beneath the strong headline figure: consumptions was still weak in many places, and only strong construction, driven by warm weather, and increase in net exports ensured the strong number. Still, the ECB hawks will point to the strong GDP number as argument that ECB can take its rates lower gradually.

A June cut will still occur, but a further cut in July just became bit more unlikely.”

Although 0.3% quarterly growth isn’t exactly stellar, it’s the eurozone’s strongest quarterly growth since the third quarter of 2022, early in Europe’s energy crisis.

Bert Colijn, ING’s senior eurozone economist, says the eurozone economy has clearly entered a better phase with economic recovery, low unemployment and more moderate inflation.

Lower energy prices, following the surge in oil and gas after Russia’s invasion of Ukraine in 2022, are helping the economy.

Colijn explains:

The economy is profiting from a more stable energy supply, with costs having substantially eased, resulting in lower inflation. Wage growth, in turn, has accelerated to make up for lost purchasing power, which is currently benefiting consumers.

We have yet to get the details, but judging from what’s happening in France, we see that household consumption led the way

The eurozone is set to grow faster this year than in 2023, predicts Sam Miley, managing economist at the Centre for Economics and Business Research:

This morning’s confirmation of quarterly growth in Q1 has put an end to a short-lived recession in the Eurozone, with the economy having turned a corner since the beginning of 2024.

Prospects are likely to improve further throughout the year, driven by the expectation of interest rate cuts. Further data released this morning showed that inflation has now stood within one percentage point of target for seven consecutive months, suggesting a suitable environment for the European Central Bank to consider adopting looser monetary policy.

Such policy changes will support growth this year. Cebr expects the Eurozone economy to expand by 0.6% in 2024, up from 2023’s growth figure of 0.4%.

Inflation across the eurozone was unchanged in April.

Eurostat reports that consumer price inflation was 2.4% per year, matching March’s reading.

Services inflation did slow, to 3.7% from 4% in March, but food, alcohol & tobacco inflation picked up to 2.8% from 2.6%.

Non-energy industrial goods prices rose by 0.9%, down from 1.1%.

Energy has less of a deflationary effect, though, with prices down by 0.6% year-on-year, from -1.8% in March.

Disappointingly, core inflation fell by less than expected. Inflation, stripping out energy, food, alcohol & tobacco, fell to 2.7% per year in April, down from 2.9%, but ahead of forecasts of a larger fall to 2.6%.

NEWSFLASH: The eurozone has escaped recession, and beaten forecasts for growth at the start of this year.

GDP across the eurozone expanded by 0.3% in January-March, statistics body Eurostat reports.

This means the eurozone’s shallow recession is over – its GDP shrank by 0.1% in both the third and fourth quarters of last year, which was a technical recession.

Eurozone growth has been held back by high interest rates, as the European Central Bank has battled inflation, while the cost of living crisis hit consumer spending.

Euro area GDP was lifted by stronger-than-expected growth in Germany, France, Italy and Spain (as we’ve been blogging since early this morning).

The wider European Union also grew by 0.3%.

Eurostat says:

Ireland (+1.1%) recorded the highest increase compared to the previous quarter, followed by Latvia, Lithuania and Hungary (all +0.8%).

Sweden (-0.1%) was the only Member State that recorded a decrease compared to the previous quarter. The year on year growth rates were positive for nine countries and negative for four.

France got the day off to a good start by reporting growth of 0.2% – which was hailed by its economy minister – before Spain posted a sizzling 0.7% growth. Germany then matched France, with 0.2% growth, while Italy expanded its GDP by 0.3%.

In the UK, mortgage approvals are at their highest level since the chaos of Liz Truss’s mini-budget.

New Bank of England data show that lenders approved 61,300 in March, up from 60,500 in February, which is the highest total since September 2022.

There was also some relief for borrowers; the ‘effective’ interest rate – which is the actual interest paid – on newly drawn mortgages decreased by 17 basis points, to 4.73% in March.

Next stop, Italy – where growth has accelerated at the start of this year.

Italian GDP grew by 0.3% in January-March, statistics body ISTAT reports, comfortably ahead of forecasts of 0.1% growth.

That’s the third quarter of growth in a row, although Italy’s economy was only 0.6% larger than a year ago.

ISTAT says:

The quarter on quarter change is the result of an increase of value added in agriculture, forestry and fishing, in that of industry and in services. From the demand side, there is a negative contribution by the domestic component (gross of change in inventories) and a positive one by the net export component.

Last month, revised data showed that Italy had actually achieved the best recovery of any major European economy over the last four years.

Carsten Brzeski, ING’s global head of macro, has welcomed Germany’s GDP report – saying it proves that its economy can still grow.

Brzeski says:

Just as some German children have been asking their parents whether they remember a time when the economy was actually growing, the first estimate of 1Q GDP growth came in at 0.2% quarter-on-quarter, from a downwardly revised -0.5% QoQ in the fourth quarter.

On the year, the German economy was still down by 0.2% when corrected for working days. There are no estimates for the GDP components but judging by the available monthly data, growth in the first quarter was mainly driven by the construction sector and net exports.

Brzeski is also confident that Germany’s economic cycle has started to turn for the better, after some tough quarters.

He says:

The words ‘optimism’ and ‘German economy’ together in one sentence have been a rarity for a long while. However, for a few weeks now, optimism has returned to the German economy.

Today’s GDP growth data is almost just the natural next step of stronger sentiment indicators and a pick-up in activity since the start of the year.

Here comes the big one, Germany’s GDP report…

And Europe’s largest economy has returned to growth!

German GDP expanded by 0.2% in the first quarter of 2024, the Federal Statistical Office (Destatis) reports, beating expectations of 0.1% growth.

Destatis says this “modest growth” was due to an increase in gross fixed capital formation in construction and in exports, while household consumption fell.

This follows a deeper-than-first-thought contraction at the end of laast year. Destasis reports that Germany shrank by 0.5% in Q4 2023, worst than the 0.3% previously estimated.

Austria’s growth figures are also stronger than expected.

Austrian GDP expanded by 0.2% in the first quarter of this year, better than the 0.1% which economists forecast.

This is the first increase in GDP in a year, after the economy shrank by 1.3% in the second quarter of 2023, by 0.3% in Q3 2023, and then stagnated in Q4 last year.

Growth was driven by private consumer demand, while Austria’s industrial economy remained weak and |”almost stagnated”, think tank WIFO reports, while investment demand declined again.

Separately, inflation in Austria has fallen to an average of 3.5% in April, its lowest level since September 2021.

Just in: Spain’s economy has grown faster than forecast.

Spanish GDP rose by 0.7% in the first quarter of this year, new data from statistics body INS showed.

That’s rather faster than the 0.4% growth which economists had expected – an encouraging sign, especially after France grew faster than forecast (see earlier post).

INS also revised up Spain’s growth in Q4 2023, to 0.7% from 0.6%.

On an annual basis, Spain’s economy grew by 2.4%, mostly driven by “national demand”, with “external demand” contributing 0.2 points.

This stronger-than-forecast growth should cheer Spain’s prime minister, Pedro Sánchez, who yesterday announced he would stay on as PM despite a “harassment and bullying operation” being waged against him and his wife by his political and media enemies.

German carmaker Volkswagen has revealed that its operating profits slumped by a fifth in the first quarter of this year.

Europe’s top automaker was hit by lower sales and higher costs, but is sticking to its revenue and margin targets for 2024.

Arno Antlitz, Volkswagen’s CFO and COO, says the results “show a slow start to the year”, but he insists that new models will help the company this year:

A strong March, the solid order bank and the improving order intake in the past months are encouraging and should already have a positive impact in the second quarter.

We expect additional momentum over the course of the year from the launch of more than 30 new models across all brands.

Volkswagen’s earnings before interest and taxes (EBIT) dropped by 20% to €4.6bn, while sales were down 2%.

French inflation has slowed, despite a pick-up in energy prices.

France’s consumer price index rose by 2.2% per year in April, statistics body INSEE estimates, down from 2.3% in March.

The decrease was partly due to a slowdown in the price rises of food (1.2%) and tobacco (9%), and also to a slight drop (-0.1%) in the cost of manufactured goods.

However, energy inflation rose to 3.8% from 3.4% in March, while services inflation stuck at 3%.

France’s economy minister has hailed today’s news that the French economy grew more than expected in the first quarter.

Bruno Le Maire declared that the government’s strategy was working, after GDP rose by 0.2% in January-March.

Le Maire says:

“To all those who want us to believe that our economy is at a standstill: facts are stubborn. French growth is progressing.

“This is a new sign showing the solidity of our economy,…[the] government’s strategy is paying off.”

This is the second piece of good news to drop into Le Maire’s inbox in a week. Two major credit-rating agencies, Moody’s and Fitch, left France’s rating unchanged last Friday, despite concerns about its large national debt and deteriorating public finances.

Hungary has returned to growth, in an encouraging sign for Eastern Europe’s economy.

Hungary’s gross domestic product grew by 0.8% in the first quarter of this year, new data shows, having previously stagnated with 0% growth in the last quarter of 2023.

Growth was driven by market services, such as real estate activities as well as information and communication, while the industrial sector shrank.

Hotel firm Whitbread, which operates in the UK and Germany, is axing 1,500 jobs in a cost-cutting plan…. and boosting returns to shareholders.

Whitbread has today announced a new efficiency programme which will deliver £150m of cost savings over the next three years.

It says:

The plan we are announcing today will result in the reduction of around 1,500 roles out of a total UK workforce of 37,000.

While these plans are still subject to consultation, we will seek to find alternative opportunities wherever possible through the roles created by this plan and our existing recruitment process that makes c.15,000 hires each year.

We expect to retain a significant proportion of those affected who wish to remain with us and we will be providing dedicated support to our teams.

Whitbread announced the plan alongside its latest financial results, which show revenues rose 13% in the last financial year, while pre-tax profits grew 21%.

Its Premier Inn Germany division grew its sales by 62%, while its losses narrowed to £36m from £50m.

Whitbread investors can look forward to higher returns; the company’s board is recommending a 26% increase in the final dividend to 62.9p per share.

It also plans to start a new £150m share buy-back (exactly the amount it intends to save through cost-cutting!), to run through the first half of this financial year.

Newsflash: France’s economic growth has accelerated in the first quarter of this year, beating expectations.

In an encouraging start to eurozone GDP day, French GDP expanded by 0.2% in January-March, a pick-up on the 0.1% growth recorded in October-December.

Economists had only expected growth of 0.1%, so this may bolster hopes that the eurozone has returned to growth.

Household spending helped drive the French economy, statistics body INSEE says, with final domestic demand bouncing back and contributing 0.4 percentage points to growth.

But foreign trade’s contribution to GDP growth fell to zero, with imports rising by 0.2% and exports up by 0.5%.

There’s big news in the banking sector this morning: HSBC’s chief executive officer Noel Quinn is unexpectedly stepping down after nearly 5 years in the job.

The board has begun a formal process to find a successor, firing the starting gun to find a replacement at Europe’s largest bank.

Quinn is stepping back after leading a series of strategic reviews, boosting HSBC’s investment in its Asian business while cutting back on other markets such as France and the US.

Looking ahead, Quinn explains why he’s stepping down:

“After an intense five years, it is now the right time for me to get a better balance between my personal and business life. I intend to pursue a portfolio career going forward.”

Quinn was appointed CEO in March 2020, after a stint as interim chief executive, and steered the bank through the Covid-19 pandemic. He also faced pressure from major shareholder Ping An to separate out its Asian business.

There’s good news for UK shoppers this morning – prices are rising at their slowest rate since late 2021 this month, with non-food goods actually cheaper than a year ago.

Deep discounts by clothing and footwear retailers put the brakes on inflation, the latest snapshot of high street spending trends has shown.

The monthly bulletin from the British Retail Consortium (BRC) – the lobby group for the industry – found that the battle by store owners to offload summer stock in cold and wet weather meant prices in non-food stores were lower this month than a year earlier.

The BRC said the cost of non-food goods fell at an annual rate of 0.6% in April, while the price of food increased by 3.4%, down from 3.7% in March. Taken together, food and non-food inflation stood at 0.8% in April, compared to 1.3% in the year to March – the lowest level since December 2021.

More here:

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

The eurozone economy is in the spotlight today with new growth figures, and inflation data, being released across the single currency bloc.

Having been held back by high interest rates, and the cost of living squeeze, economists are hoping the eurozone returned to growth in the first quarter of this year.

Analysts predict that eurozone GDP grew by 0.1% in January-March quarter. That would pull the region out of a shallow recession, after it contracted by 0.1% in the third and fourth quarters of last year.

Analysts at Investec are hopeful that we’ll see some growth in the eurozone:

Focus will also be on the inflation outlook in the Eurozone, with flash HICP for April due on Tuesday. This will be released at the same time as Q1 GDP. Recent revisions now mean that the Eurozone was in a technical recession in H2, albeit by the slimmest of margins.

Given that economic data at the start of 2024 has been more positive, we expect the Eurozone exited that recession in Q1, with a 0.1% quarterly expansion in output.

Inflation is expected to remain unchanged at 2.4% in April, while core inflation could slip to 2.6% from 2.9%.

Easing inflationary pressures could leave the European Central Bank free to start cutting interest rates in June – especially if growth were to disappoint…

Also coming up today

Frankly, it could be a monster day for news.

For starters, new post-Brexit charges on imports of EU food and plant products into Britain begin today. Fees of up to £145 will apply to small imports of animal products and plants, such as sausages, cheese and yoghurt, entering the UK from the EU through the port of Dover and through Eurotunnel at Folkestone.

A flurry of big name companies are reporting financial results today; we’ll hear from Whitbread, Glencore, Prudential, St James’s Place and Howdens, while HSBC has just reported a small (1.5%) dip in profits for the last quarter, to $12.7bn.

Over in Europe, Mercedes-Benz, Volkswagen, Adidas and Lufthansa are reporting, while on Wall Street McDonalds, Coca-Cola and Amazon will update the markets.

Mining giant Anglo American is holding its annual general meeting, days after fending off a takeover proposal from rival BHP Group, who are now considering whether to improve their offer…

And in parliament, MPs on the Treasury committee are holding an inquiry into financial sanctions on Russia this morning, while the Environment, Food and Rural Affairs Committee will question supermarket bosses about food price inflation, profits and relationships with producers this afternoon.

The agenda

• 6.30am BST: French GDP for Q1 2024

• 7am BST: German retail sales for March

• 7.30am BST: Hungarian GDP for Q1 2024

• 7.45am BST: French inflation report for April

• 8am BST: Austria’s GDP report for Q1 2024

• 8am BST: Czech Republic GDP report for Q1 2024

• 8am BST: Spain’s GDP report for Q1 2024

• 9am BST: Germany’s GDP report for Q1 2024

• 9am BST: Italy’s GDP report for Q1 2024

• 9.30am BST: Portugal’s GDP report for Q1 2024

• 9.30am BST: UK mortgage approvals and consumer credit data for March

• 10am BST: Eurozone GDP report for Q1 2024

• 10am BST: Eurozone inflation report for April

• 10.15am BST: UK Treasury committee holds opening session of inquiry into Russian financial sanctions

• 1pm BST: Mexico’s GDP report for Q1 2024

• 1.30pm BST: Canada’s GDP report for February

• 2pm BST: US house price index for February

• 2.30pm BST: Supermarket bosses appear at a Efra select committee hearing on food supply chains