The UK economy "on the verge of stagnation" while Brexit-related uncertainty hits demand – businesses live | Business

Hello and welcome to our slippery coverage of the global economy, financial markets, the eurozone and businesses.

We have reached the point of the business cycle where bad news is good news. Wall Street has just released its best day in five months as investors bet that a reduction in interest rates is looming on the horizon.

The largest central banker in the United States, Jerome Powell, yesterday applauded the lobby for rate cuts, which promised that the Fed would "do the right thing" to protect the US economy from disruptions caused by trade wars. .

Powell pointed out that "recent developments in trade negotiations" were one of the Fed's main concerns: "

We do not know how or when these problems will be solved.

"We are closely following the implications of these developments for the US economic outlook and, as always, we will act appropriately to support the expansion …"

Read between the lines, and this is taken for an index that the Fed is ready to cut borrowing costs to stave off a recession.

Powell's comments come a day after plant growth in America hit its lowest level in nearly a decade, suggesting that the world's largest economy is cooling down.

The World Bank then quickly reduced its economic forecasts and announced the weakest growth in world trade since the 2009 financial crisis.

You could expect this torrent of gloom to annoy investors. But not yet. Instead, they sniff the prospect of a looser monetary policy and another good amount of good things in the punch bowl.

Shares soared in New York, pushing the Dow Jones industrial average 512 points, making it its second best day of the year.

The broad S & P 500 also jumped more than 2%. Asian equity markets also rallied overnight, as traders regained shares – which seem cheaper after May's losses.

Stephen Innes, an badyst at SPI Asset Management, says Jerome Powell encouraged markets:

Equity investors love cheap money and US stocks had their best day in five months on Tuesday as traders pulled out after President Powell suggested lowering interest rates in the event slowdown in the economy.

Chances were likely favorable to rate cuts from the Fed in 2019, but overnight and before the next FOMC meeting, President Powell has altered the Fed's messaging just enough to not flag the Fed. pbadage of the patient to panic. And although it failed to confirm the markets' excessively dovish expectations, it was music for the ears of American investors who have recently missed good news.

Of course, they will sing a different tone if the Fed a) does not reduce its rate or b) can not stop the US economy from sinking into recession. Problems for another day, maybe.

Also coming today

We will have another insight into the health of the global economy as the latest surveys of the Markit data firm on corporate purchasing managers in the service sector will be released.

The UK services PMI is expected to remain close to stagnation, going from 50.5 to 50.6. The eurozone's PMI could, however, remain safe in its expanding territory (around 52.5). America should pave the way, with a services PMI around 55.

This is a crucial day for retail mogul Sir Philip Green. His Arcadia group could enter the administration unless creditors agree on a restructuring plan to close stores and reduce rents.

In addition, the SMMT will show how many new cars were registered in the UK last month. Car sales fell 4.1% in April and the sector is hoping for a rebound.

L & # 39; s calendar

• 9am: BST: euro area PMI for the month of May
• 9:30 BST: British PMI services for May
• 15h BST: PMI US services for May