09/02/2018 BBC Business Live

This is Business Live

from BBC News with Jamie

Robertson and David Eades.

Global stock markets plunge again -

as over 1000 points

are wiped off the Dow -

for the second time this week.

Live from London, that's our top

story on Friday 9th February.

The main US indices have dropped

over 10% from their record

at the end of January -

it's the official definition

of a stock market 'correction'.

Plus, clean up or pay up!

The UK and eight other countries

have until the end of the day

to come up with a plan to tackle air

pollution - or face EU fines.

And the markets are all down again,

as expected. This is how they stand

as they open on Friday.

And it's been a jittery week

with continued market

turbulence and worries

about a raise in interest rates.

here to make sense of the past few

days is our economics

editor, Kamal Ahmed.

Don't forget you can

get in touch with us

about anything in the programme.

Just use #BBCBizLive.

Hello and welcome to Business Live.

There seems to be no stopping

the global stock market sell-off.

It was another gut-wrenching day

for investors on Wall Street.

US share prices have plunged again -

the Dow Jones Industrial Average has

wiped out more than 1000 points

for the second week.

Major Asian markets also

suffered sharp losses.

So let's look at the numbers.

What have we got? The nick Owen is

down for that just have a look at

the percentages. -- Nikkei. Down

2.3%. The Dow is down 4%. Whether

you can see any difference, really

as anyone's. The Hang Seng was the

worst of in the Asian markets will

do it looks as though the European

markets will all follow. You will

get the knee jerk reaction as the

markets have been open for 30

minutes. They will settle down and

we will see which way the going.

In a moment, we'll go live

to our team in Singapore but first

Joe Miller in New York looks

at what sparked the sell

off on Wall Street.

After some of the most turbulent

days Wall Street has seen for many

months it looked like the dust had

finally begun to settle,

but then on Thursday volatility

returned with a vengeance

and the Dow Jones recorded

its second worst one-day

points drop in history,

plunging over 1000 points -

in percentage terms

that's just over 4% -

and falling into what's known

as correction territory,

losing more than 10%

of its recent peak.

All 30 shares on America's flagship

index fell in unison,

in part because investors saw US

government debt prices

fall to four-year lows,

that's indicating a broader concern

that interest rate rises

in the coming months might

hamper economic growth.

And now the stock market is on track

to record the worst week

since the financial crisis,

but it's fair to say institutional

investors are not yet alarmed.

Many felt that US shares

were already overpriced and some

would sooner or later be let out

of the bubble.

The White House claims

to be similarly sanguine.

A spokesman for the President

who has often boasted

about the stock market's rise said

he was focused on the country's

long-term economic health

and he emphasised that unemployment

was at record lows.

But it's the Government's

own spending plans that would add

billions to the deficit which risks

adding to the jitters

on Wall Street.

We are going to be looking at what

is happening here and what is

happening in the US later on in the

programme.

Our Asia business correspondent

Karishma Vaswani is in Singapore.

What kind of

Karishma Vaswani is in Singapore.

What kind of the

Karishma Vaswani is in Singapore.

What kind of the day

Karishma Vaswani is in Singapore.

What kind of the day have

Karishma Vaswani is in Singapore.

What kind of the day have you

Karishma Vaswani is in Singapore.

What kind of the day have you been

Karishma Vaswani is in Singapore.

What kind of the day have you been

having?

It has been extremely busy,

but for all the wrong reasons. If

you are an investor in Asian shares

today, it has been a pretty

measurable week. We have seen shares

fall across the board, as you were

talking about earlier. Mirroring the

falls in south-east Asia as well.

All of this prompted by the sell-off

in the United States overnight. Many

Asian investors and traders I have

been speaking to today have said to

me they are not sure where this

volatility will go. Will end in a

couple of sessions or is it a sign

of more things to come in this

general direction, the downward

direction we have been seeing for

the better part of this week?

Do

people feel it is a problem located

very much in the United States or do

they feel there are problems in Asia

itself. For instant squid debt

problems in China, or problems in

Japan.

I think predominantly the

feeling is this started because of a

sense in the United States that the

economy there was actually doing

better than expected and so we are

going to start seeing interest rate

rises at a faster pace than most

people had anticipated. That is

primarily the reason why so many

Asian traders had been saying to me

they are worried about the outflow

of foreign cash. Asia was one of the

biggest beneficiaries of the low

interest rates because it saw a real

inflow of money from overseas when

interest rates were low in the

United States. It helped to pump up

valuations in stock markets all over

the region. Emerging market

valuations. With interest rates

rising in the coming months faster

than most people had anticipated,

there is concern that many will

disappear. That is the reason why so

many are concerned. The issues you

mentioned like the Chinese debt

problem is or was at the top of

peoples minds. Is not new or

something people have not been

thinking about.

Thank you very much

indeed.

Let's return to Europe now -

where it's deadline day

for countries which have failed

to meet the EU's targets

on cutting air pollution.

They are being told -

clean up - or pay up!

Let's show you the details.

The UK and eight other states

are on a final warning.

Today they must say how they intend

to comply with EU regulations

on the quantity of nitrogen dioxide

and other pollutants in the air.

Spit it out.

London reached its annual

air pollution limit

in the first month of 2018.

If that sounds bad -

it's a slight improvement on last

year when it reached

the quota in just five days.

The EU's Environment Commissioner

says 400,000 people will die

prematurely this year because of air

pollution - and enough is enough.

Any countries that fail

to comply with regulations

could face fines or sanctions

by the European Court of Justice.

The UK Government has already

been sued three times

in the British High Court

by environmental lawyers ClientEarth

- most recently late last year.

With me is Andrea Lee,

healthy air campaigner

with environmental law charity,

ClientEarth.

Still beating the drum because, for

all that this is D-Day, this is

eight years worth of waiting for any

penalties and sanctions to be

imposed.

It is astounding how long

the UK Government is taking and

dragging its feet when it knows it

has a moral and legal obligation to

protect people from illegal and

harmful levels of air pollution.

A

number of countries across Europe

have been shameful in neglecting to

uphold their duties on this.

Presumably this is an uphill battle

for you. It would be helpful if

sanctions were applied. If you keep

breaking rules and nothing happens,

you cannot feel that will encourage

member states to change.

The process

started over four years ago. We are

really... It is interesting these

governments have been given a last

chance to rectify these mistakes.

This is not a legal argument but

doesn't it indicate whether eight

countries who have been unable to

meet the targets. The EU has not

imposed the fine is. Are the

standards too much, too quickly?

They are asking too much of us. The

standards were agreed by member

states, August 20 years ago. They

have had plenty of time to get their

acts together. What they have

decided is to continue business as

usual and not thought about how to

protect people.

How far have you got

with this?

We have seen the UK

Government slowly dragging its feet.

Our two previous successes in UK

courts have caused it to create a

quality plans. We are seeing them

introduce clean air zones across the

UK but they do need to do more. That

is why we were in the court earlier.

What happens after Brexit? We only

have a year left when we're meant to

be in the scope of this particular

directive from the EU.

We hope the

UK Government does not use this as

another excuse to not take action.

What we would miss from even the

European Union is the enforcement

the commission gives. The UK

Government has accepted they would

need to create an enforcement body

but it would need to make sure it

can actually force the Government to

act.

Thank you very much.

Let's take a look at some of

the other stories making the news.

The US

Senate approved a budget deal

including a stopgap government

funding bill early on Friday,

but it was too late to prevent

a federal shutdown that was already

under way in an embarrassing setback

for the Republican-controlled

Congress.

The shutdown, which technically

started at midnight,

was the second this year under

Republican President Donald Trump.

The owner of Britain's Daily Mirror

newspaper has agreed to buy

the company behind titles including

the Daily Express, the Daily Star

and magazines such as OK!

Trinity Mirror is to pay $177m

for the publishing assets

of Northern & Shell,

which is chaired by

owner Richard Desmond.

US chip maker Qualcomm has rejected

a revised $121 billion

takeover offer from its Singapore

based rival Broadcom.

It says the latest bid "materially

undervalues" the company and wants

more assurances of a payout

if regulators were to block the deal

Nice to be undervalued at $121

billion, wouldn't it? It seems

anything is overvalued at the

moment. We will have a look at the

markets which have been doing their

bit throughout the week.

Sue Noffke, UK Equities Fund Manager

at Schroders is here.

It has been a tumultuous week. Havee

hit the buffers on the downward

slope?

We have entered correction

territory. This is a correction.

Some might say it was overdue. In

the context of the rises we have

seen, certainly, this 10% is normal

for the markets. It just has not

been normal for the past couple of

years where we have seen very low

levels of volatility and small

levels of weekly or monthly moves.

Is it normal within a week or a

matter of days?

Absolutely. In the

order of 3% and 5% in a day or in a

week. What we have seen is down 10%

in the US within five days.

You look

at this fall over the last five days

and you think, what does this tell

us about the US economy? What will

it tell us about the global economy?

I'm not sure it tells us much about

the global economy. It tells us

about what inspectors have been

pricing in in terms of good news on

the economy, which we know about.

But also their enthusiasm for more

of that good news, more earnings

growth, continued low interest

rates, and really the good times are

here and appetite has increased and

at an all-time high. All of that was

flashing dangerously.

What about in

terms of reaction, how authorities

should react, the central banks?

Should they just let the markets get

on with it or should they think,

there is a problem here, we should

do something about it?

That is an

interesting question. I would be in

the latter camp of letting the

markets play out. What he has seen

at various times in history is that

central banks do come in. They come

in to calm the markets and step in

the measures to support the markets.

We have a new head chairs, who takes

over in March with his first

meeting. That will be the real

question because, before the market

correction this week expectations

have been that the US would continue

to raise interest rates.

Your

message would be, hold on, hold

tight.

The fundamentals have not

changed. What has happened is a bit

of steam has come out from what was

quite a heated situation at the

beginning of the year.

Thank you

very much indeed. Thank you.

Still to come - that

was the week that was.

Stock market turbulence -

a correction or something

more serious?

Our economics editor will be

here to explain all.

You're with Business

Live from BBC News.

In the last hour or so,

the Express newspaper group,

which includes the Daily

and Sunday Express, has been sold

to its rival Trinity Mirror

for £126.7 million.

Earlier, Trinity Mirror's Chief

Executive, Simon Fox told the BBC

that this was a good

deal for readers.

It's a very good deal because by

bringing our two organisations

together we can be stronger,

so by pooling, for example,

our editorial teams together instead

of

duplicating and, for example,

sending the same reporters to the

same football matches, we can be

much more efficient and cover more

matches, more breadth of coverage.

So, it's good for readers, it's good

for advertisers, it's good for our

shareholders, it's good

for our pension funds.

There will over time the job cuts

because we are going to

remove duplication, mainly

in back office functions.

We are bringing two very

similar businesses together

and when you do that inevitably

there is a certain amount of

duplication.

So, there will be some changes.

Obviously we will be talking

to those teams in due course.

But broadly this is very, very good.

This transaction doesn't affect our

regional newspapers at all.

We operate around 100 regional

papers, Manchester Evening News

through to the Plymouth Herald.

And Trinity Mirror as a group

makes over £120 million.

We are absolutely committed

to continuing our

investment in our great regional

titles, both in print and digitally.

The Daily Mirror is not

going to become right-wing.

The Daily Express is not

going to become left-wing.

We've got 100 titles in the group.

They all operate with their own

editors and those editors have full

editorial independence to take

the decisions that are right

for the readers,

so we are quite used to operating

a broad stable of titles.

What is fascinating is you have left

and right, the traditional left view

of politics in the papers and far

more right-wing coming together.

Politically it doesn't seem to make

any sense.

It doesn't seem to make

sense, can you have one owner with

papers of two different political

persuasions? It strikes me as an odd

thing to do.

You have to say to

yourself, he is not being truthful,

the proprietor is not being truthful

if he's reporting one way on one

thing and one way on another thing.

Maybe there is something more

important than the politics and

that's survival, and if newspapers

are going to survive they must find

a way to rationalise, one reporter

instead of two to every football

game.

Rationalisation, that's right.

You're watching business life. Our

top story, global stock markets

plunge again, more than 1000 points

wiped off the Dan Jones for the

second time this week. A quick look

at how the markets are getting on.

One would guess not so well. The Dax

has made a small game, pretty small,

to be fair we have seen a bit of a

recovery since it opened, which was

about 45 minutes ago, the Footsie

down 0.5% and the CAC 40 down just a

fraction. The pound against the

dollar, 1.3973. Let me put that into

context, two weeks ago I think it

was at 1.43, so you've seen about

four cents fat in the last two

weeks, so the pound is on a downward

stretch over the last two or three

weeks. The Footsie is a bit, but it

has been a heck of a week in terms

of the business world. The Bank of

England is signalling a rise of

interest rates sooner than

previously thought.

Meanwhile, spooked investors, as you

have seen, on stock markets in the

US and Asia have caused them to

plummet over the last 24 hours.

Our Economics Editor,

Kamal Ahmed is here.

It has been quite a week, there is

this issue about you've got the

markets and the economy, never the

twain shall meet but they are not

the same thing.

There is a big

signal in the markets about broad

macroeconomic trends and the Broad

economic trend that the markets are

nervous about is the synchronisation

of tightening monetary policy and

the announcement by the Bank of

England yesterday that they want to

become more hawkish on interest

rates and they have really joined

the Fed, which has announced more

interest rate rises in the future,

and the markets are concerned that

as the tide goes out on this vast

monetary easing we have seen over

the last decade since the financial

crisis, the fundamentals of the

market may be solid but there is

always froth on the top and lots of

investors are worried they are

holding the froth, let's get out of

the froth, creating something of the

issue and then there is the

automatic trading behaviour, so

algorithmic electronic trading

chases the dip and under all this

you have actual people trading on

volatility, which is why the

American market particularly has

been affected. Trading on volatility

is drags down the market further

because the trade is about low

volatility, so when volatility goes

up they are on the wrong side and

back and drag down the market.

Someone described this as the tail

grabbing the dog and swinging it

around the room. Solid fundamentals,

frothy top, the frothy top is what

we are seeing, particularly in

America, if you look at the

exchanges on the Europe, the Dax,

the FTSE 100, the CAC 40, much more

gentle.

People have been asking me

if I should be selling and getting

out of this market?

I bumped into

Rupert Harrison, at the Bank of

England doing the interest rate

announcement and the inflation

report and Rupert Harrison, who is

at Black Rock, former adviser to the

Finance Minister of the UK, said he

thought it was lots of retail

investors who went into the stocks

yesterday desperate for returns,

because savings returns were

incredibly low, they see the stock

market is going to a record high day

after day after day, all of these

retail investors go in and I think

you get the retail response.

They

are not a huge proportion of the

market.

Lots of retail via funds

have been withdrawn, we have same

stomachs in net outflows in markets

in America this week and that's

unusual, so there is an outflow in

equity markets as retail fund

investors start pulling out as well.

You mentioned earlier the readiness

to increase the interest rate and at

an accelerated pace, perhaps.

Everyone is interested one way or

the other, obviously. Any sense as

to how fast acceleration that is.

When can we expect this to kick in?

This again is the new normal, we are

talking about small interest-rate

rises in the case of the Bank of

England over the next two years,

maybe three 0.25% increases over

that year, that is unprecedented

historically. The ECB still has

negative interest rates. The big

tension is global growth is touching

4% and monetary policy is set for

recession. This has created a great

tension because people are... Lots

of investors are not sure where the

real value is, corporate earnings

are very good, 80% corporate

earnings are above profit

expectations, but there is froth

there, because you have this easy

monetary policy but act will large

global growth.

Very briefly, is

there anything we have missed this

week because we have been

distracted? Is there any particular

story?

I've probably missed loads of

stories and we won't have time.

I

think we will settle on 10% froth,

as much as you should have.

I'm sure

I miss something every week.

We all

do.

Kamal Ahmed, thank you.

In a moment we'll take a look

through the Business Pages but first

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money, Business Live on TV and

online, what you need to know and

when.

What other business

stories has the media been

taking an interest in?

Sue Noffke is back to look

through the papers.

Shall we focus on the Church of

England investment funds? A much

tougher, or at least publicly, on

issues of diversity, gender, climate

change. I think they had already

mentioned. But they are setting the

moral bar, aren't they?

They are and

they have written to the 350 largest

companies in the UK ahead of the

season four voting, the annual

general meetings, usually from

April. Companies have been given a

heads up as to having to explain

what they are going to do in regards

to voting against various members of

the board.

This is the Church of

England, it's the money they invest

and they've decided basically not to

invest...

It's not as Draconian as

that. It is a heads up, and orange

or a yellow card to say this is a

warning, so they will vote against

the appointment of certain

individuals.

This is a job or be

pushed situation for them. The

eyeballs are on their investment

funds and where they opened their

money and have been for some time,

much better for them to be seen to

taking the initiative.

Exactly, they

engage and have a dialogue with

companies and management on these

issues and if they don't see

sufficient progress, the next step

is to have a vote against, public

voice, and then the next stage is to

collaborate, or disinvest.

Have you

found other funds doing this outside

of the obviously moral?

Yes, it is a

theme that runs through a lot of

people and comes under the name

sustainability, or stewardship. So,

as investors we are stewards of our

clients' capital and we want to be

seen to be doing the right thing by

our clients by having a positive

influence.

Can we talk about hummus?

One of the other, hummus will get

people interested. The price of

Hamas has gone up 12%.

Healthy

snacks

-- the price of hummus has gone up

12%. There has been a drought in

India, the hummus harvest is and

what it would have been. Prices are

up.

It is not all bad. Pea and mint

dips are on their way.

Good.

Thank

you very much indeed.

That's it from Business Live today.

There will be more business

news throughout the day