Germany flies into 'perfect storm' as economy suffers contraction

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Germany flies into 'perfect storm' as economy suffers contractionAnalysis: Is Germany sinking towards recession recession?  Jobs market 'reaching its peak' as wages surge and employment jumps FTSE closes 0.33pc higher to 7,250.90, still showing less elasticity than its continental peers US and Asia stocks rallied after Donald Trump delayed China tariffs until December 15 Jeremy Warner: Post-Brexit trade policies in danger of becoming incoherent mess 7:16AM German contraction, train ticket hike and trade wars Good morning. The big news out this morning is that fears have increased that Germany is heading for a recession after suffering a 0.1pc contraction in its economy in the second quarter of the year. The shrinkage means Germany is now lagging the other largest economies in the eurozone, after the second quarter saw Italy flatline and France grow 0.2 percent. As hard data and soft indicators such as surveys of business, investor and consumer sentiment have eroded in recent weeks and months, economists have warned Europe's powerhouse could suffer falling output and even a technical recession - two successive quarters of negative growth. Federal statistics authority Destatis said higher spending by private households and the state as well as increased investments helped support the economy at home. But "foreign trade developments braked economic growth, since exports fell back more sharply than imports compared with the previous quarter," the statisticians added. Elsewhere, markets may be pushed higher today after President Donald Trump delayed tariffs on some Chinese goods, including laptops and mobile phones, until December 15.  The reprieve came after a call between US trade representative Robert Lighthizer and Chinese vice-premier Liu He ahead of tariffs that would have hit $300bn (£249bn) of imports from China on September 1. The two sides plan more talks in the next two weeks, according to Chinese state-run media. 5 things to start your day 1) Confidence in the German economy has crashed to its lowest level since the depths of the eurozone debt crisis, fuelling fears of a recession. 2) Fears are growing that the jobs miracle could be close to its end as unemployment edged up in June, the number of vacancies slid and productivity took its biggest plunge since 2013 Wages and unemployment  3) Today we'll find out how much more a train ticket will cost next year. Inflation figures released later will be used by the rail industry to calculate January’s rises. Increases in annual season ticket prices 4) Hong Kong protests heated up for a second day yesterday and will be in focus again today as one of Asia's key transport hub remains closed.  US senator Ben Cardin warned late last night that Hong Kong could lose the special trade status it has enjoyed under US law if Beijing intervenes directly. 5) Marshall Motors chief executive Daksh Gupta has said that buying a car would not only become more expensive in the event of a no-deal Brexit, but motorists could have a smaller range of vehicles to choose from. “If we don’t get a deal and sterling falls then Britain will become a much less attractive market and less profitable market for manufacturers,” he said. “We’ll probably see fewer cars coming into the UK.”  What happened overnight Asian equities rallied on Wednesday as investors breathed a collective sigh of relief at news the US had delayed tariffs on a swathe of Chinese goods, easing tensions in the countries' bitter trade war. The news provided some much-needed respite for investors, who have come under intense pressure from a range of issues including concerns about the global economy, Hong Kong's protests, the trade war and Brexit. Wall Street's three main indexes surged on the announcement with the tech-rich Nasdaq up two percent, and the Dow and S&P; 500 more than one percent higher. The US gains filtered through to Asia where Hong Kong climbed 0.5 percent. Elsewhere the surge in US stocks lifted MSCI's broadest index of Asia-Pacific shares outside Japan by 0.9%. The Shanghai Composite Index advanced 0.6% while South Korea's KOSPI advanced 0.8% and Japan's Nikkei rose 0.6%. High-yielding, riskier currencies also enjoyed some gains with the Mexican peso and South African rand more than one percent higher, South Korea's won gaining 0.8 percent and the Indonesian rupiah 0.6 percent up. China's yuan, which has plunged in the past two weeks on worries about the trade stand-off - sparking accusations Beijing is a currency manipulator - also bounced. Coming up today Analysts are expecting low-single-digit growth in Prudential’s results for the first half of the year. That’s not the main event — front and centre on Wednesday will be extra details on its plans to demerge its asset management operation (M&G; Prudential) and its plans for Brexit. Also reporting is builder Balfour Beatty, which has undergone a major restructuring in the wake of outsourcing giant Carillion’s sudden collapse. In March, the company announced it has increased profit despite a fall in revenue, and has said that it is aiming at “higher quality” work. Its shares have been feeling the pressure however. Interim results: Admiral, Apax Global Alpha, Avast, Awilco Drilling, Balfour Beatty, CLS Holdings, Hochschild Mining, Lookers, Prudential, Riverstone Energy, Zeal Network Economics: Inflation figures (UK), Sentiment, industrial production, employment and GDP (all Eurozone)


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