Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Sentiment among German exporters has taken a big hit, according to a survey. In October, the Ifo institute’s export expectations index fell to 13.0 points from 20.5 points in September, the lowest value since February. The institute said supply problems of materials used to make German goods (such as chips) are affecting exports.
Expectations have slipped in the electrical and electronics sector, though they remain high, but the mood is bleaker in the chemical, car, and textile and leather industries.
South Korean carmaker Hyundai missed analysts’ forecasts as the global chip crisis took its toll on car exports. It warned that it would take a long time for chip supplies to get back to normal levels.
The French car parts maker Faurecia has also been hit by the semiconductor shortage which has prompted its customers to scale back production, and posted a more than 10% drop in third-quarter sales.
In China, another property developer has defaulted, adding to worries about the sector caused by the debt crisis at Evergrande Group. Modern Land said it missed a debt payment due to “unexpected liquidity issues,” after Fantasia Holdings Group defaulted on maturing dollar bond in early October.
Evergrande, China’s second-biggest property developer which has a debt mountain of about $305bn, managed to avoid a costly default last week as it stumped up the money to pay a bond interest payment at the last minute.
An investor told Reuters that developers are defaulting “one by by one”.
The question is always, who’s next?
Oil prices remain high after Brent crude hit a three-year high of $86.50 a barrel yesterday. Prices have more than doubled from about $40 a barrel a year ago because of a sudden rise in post-pandemic energy demand, while supply remains tight. Brent has slipped to $85.95 a barrel this morning while US crude is at $83.63 a barrel, down 0.16%.
Higher crude has pushed up UK petrol prices to their highest level on record, in a blow to hard-hit households and small businesses. The average daily price for a litre reached 142.94p on Sunday, and could rise further in the coming weeks.
EU energy ministers are holding an emergency meeting in Luxembourg today to discuss their response to the spike in energy prices.
On Wall Street, the Dow Jones and S&P 500 set new all-time highs yesterday, as Tesla broke through the $1trn valuation for the first time, after the US electric car pioneer received an order for 100,000 of its vehicles from the rental company Hertz.
Asian markets were mixed with Hong Hong’s Hang Seng index losing 0.76% and China’s CSI 300 down 0.36% while Japan’s Nikkei advanced nearly 1.8%. European stock markets are set to open higher today.
The Agenda
- 11am BST: CBI retail sales survey for October (forecast: 13)
- 2pm BST: US house price index for August
- 3pm BST: US Conference Board Consumer confidence for October
- 3pm BST: US New home sales for September
