Double take
Virgin returns
Virgin Money, the 'challenger bank' which pulled its plans to float in London amidst last month's market turbulence has performed a rapid volte-face and said it is now pushing for a listing before the end of this month. Citing an improvement in market sentiment, the bank, which was formed by the acquisition of assets held by the government following the bailout of Northern Rock and Bradford & Bingley, is now aiming to raise around £150m which will value it in the £1.5bn-£2bn range. Virgin estimates it had a 4.5 per cent share of the new mortgage market in the third quarter.
Eurowoe
Growth fears
The eurozone's economic woes appear to worsening by the month. After several deteriorating economic surveys set the scene, the European Commission has downgraded its growth forecasts for the eurozone for next year to 1.1 per cent, from the 1.7 per cent growth forecast six months ago. Most worryingly, the latest forecasts almost halved the predicted growth rate for the engine of the eurozone's economy, Germany to 1.1 per cent and slashed the prediction for France from 1.5 per cent to 0.7 per cent. Inflation looks likely to remain well below the Central Bank's 2 per cent target with the Commission forecasting consumer price inflation of 0.5 per cent this year and 0.8 per cent in 2015.
US exports shrink
Deficit widens
Withering growth in emerging markets coupled with the ongoing troubles in the eurozone are threatening to hold back the recovery in the world's biggest economy. The US economy's trade deficit widened unexpectedly in September, hitting $43bn, as exports from the US slipped by $3bn to $198.6bn and imports only rose by $100m to $238.6bn. Wall Street analysts had been forecasting little change to the deficit from the previous month. The trade gap with China, whose growth is slowing, rose to a new record of $35.6bn.
Oil slick
Saudi cuts
The price of black gold is falling as fast as that of the yellow metal as the world's commodities continue their slide. The price of futures contracts for crude oil this week slipped well below the $80 a barrel level after Saudi Arabia cut its prices for sales into the US. This was seen by some as a tactical strike by the largest member of Opec in a longer-term battle as it seeks to counter competition from locally produced shale oil in the US and maintain its market share. The tactic is unlikely to hurt Saudi in the short term but could make prices uneconomic for higher cost rival producers. Opec meets later this month amid speculation that some members will call for a limit to supplies in a bid to shore up the falling price.
Alibaba boom
Results shine
Chinese shoppers are increasingly turning online, a trend which is playing into the hands of the dominant provider of e-commerce in the burgeoning economic superpower. Alibaba, whose recent US listing broke all manner of records, posted a 54 per cent rise in revenues in the three months to September to RMB16.8bn, or $2.7bn. This prompted renewed excitement for its shares, pushing them to a new post-float high and confounding those who suggested that its float was an overpriced symptom of market topping out. Growth is being boosted by the rapid uptake of smart phones in China, which is feeding through to mobile commerce.
At your service
UK slows
Further evidence that the UK economic recovery is losing some momentum came from the dominant service sector this week. The latest Purchasing Managers Index survey for the sector showed a score of 56.2 for October, down from 58.7 in September and the weakest reading since May 2013. The sector is still expanding rapidly, any score over 50 indicates growth, but the slowing pace adds to the sense of the UK's 'escape velocity' beginning to wane. On the other hand, PMI data from the services sector in Europe remains anaemic with France's service sector shrinking at its fastest pace in four months and German service sector growth at a seven-month low.
