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Storms clouds gather over Germany as exports slide by over 5%.
German trade data adds to gloomEconomist: Emerging market slowdown to blame
Deutsche Bank slides after shock loss warningComing up: the latest Bank of England interest rate decision
It’s not a great day for Europe’s powerhouse economy. And it could get worse, when VW’s US boss testifies at Capitol Hill this afternoon (from 3pm BST).
Michael Horn will apologise for the emissions scandal, and tell Congress that he was aware of the problem last year, according to his prepared testimony.
Related: Head of VW in US will tell Congress he knew of emissions rigging in early 2014
Brutal morning 4 German business picture…dismal data as exports slump most since ’09, #DeutscheBank post massive loss, VW US showdown
Shares in Deutsche Bank have slid by 2.5% in early trading.
That’s a smaller fall than feared, as traders digest the news that it will lose €6bn in the third quarter of 2015, its biggest quarterly loss in at least a decade.
In a late night announcement that shocked analysts, Germany’s biggest bank blamed huge impairment charges of €5.8bn for the unexpected losses. Forecasts had been for profits of around €1bn.
The charges are related to higher capital requirements for Deutsche’s investment bank and the reduced value of its Postbank division, which is up for sale.
Related: Deutsche Bank shocks with warning of €6bn losses
The disappointing German trade data is pushing down shares in Frankfurt.
Germany’s DAX has shed 51 points, or 0.5%, in early trading.
Another sign that China’s rebalancing is hurting Germany:
August #German trade figs show further slowdown in export growth. #China slowdown offsetting boost from lower euro. pic.twitter.com/gyAoTUn0dT
Pau Morilla-Giner, chief investment officer at London & Capital Asset Management, says the weak economic data from Germany in August is a worry.
Speaking on Bloomberg TV now, he’s explaining that Germany is more exposed to the global economy than its neighbours:
Germany is the canary in the coalmine for Europe.
Holger Sandte, chief European economist at Nordea, agrees that Germany is being buffeted by problems in emerging markets:
“This is a strong fall, the kind you don’t see every day. Weakness in China, Brazil, Russia and other markets is having an impact.”
It’s worth noting that August can be a quieter month for trade, given the summer holidays in Europe.
But still, a 5% drop in exports is certainly unusual.
The slide in German exports in August is bad news for the European economy, argues Bloomberg TV’s Hans Nichols.
“Everyone’s been looking to Germany to be the engine of growth in the eurozone. France is flat, and Germany looks like it may be flatlining.”
“That’s not only a psychological blow but a real economic outlook blow too.”
Germany has just suffered its biggest fall in exports since the dark days of the financial crisis.
It’s another sign that storm clouds are gathering over the eurozone’s largest economy.
*GERMAN AUGUST EXPORTS FALL 5.2% IN MONTH; EST. 0.9% DROP
German Exports Slump Most Since 2009 Recession in Sign of Risks (BBG)
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Given the very low rates of inflation, the Bank of England should keep rates on hold at a record low 0.5%. The meeting minutes, which under the new format are released simultaneously, are expected to show the MPC again voted 8-1 to leave rates unchanged given global uncertainty.
There’s an outside chance that the recent jump in UK wage growth could compel Martin Weale to join Ian McCafferty in voting for a rate rise.
Deutsche Bank expects third-quarter loss of €6.2 billion ($7 billion) and may scrap dividend http://t.co/7LYCV2WeXA pic.twitter.com/S40E0FmRp5
As the International Monetary Fund’s annual talks kick off in Lima, anxiety over global growth is poised to top the agenda
The International Monetary Fund’s annual meeting gets under way against a backdrop of rising concern over the health of the global economy. From the travails of emerging economies to the scale of the Chinese downturn, there is much to debate at the gathering in Lima, alongside tackling longstanding problems such as cracking down on the tax affairs of multinational corporations.