G20 leaders gathered in Osaka have voiced concerns over trade tensions. Reuters reports:

The bitter US-China trade war and signs of slowdown in the global economy have overshadowed a two-day Group of 20 summit that kicked off in Osaka, western Japan, on Friday with a session on the world economy and trade.

Yasutoshi Nishimura, Japan’s deputy chief cabinet secretary, who was present at the meeting, said the G20 heads discussed ways to address common challenges such as promoting free trade and jump-starting stalled talks on reforming the WTO.

“There are downside risks to the global economy as trade tensions escalate. Against this background, the G20 leaders agreed on the need for the group to drive global growth,” Nishimura told reporters after the session on Friday.

But that was as far as they could agree, as US President Donald Trump’s “America first” policies and aversion to multilateralism test the solidarity of the G20.

Figures this morning confirmed the UK economy grew by 0.5% in the first quarter of 2019, following 0.2% growth in the final three months of 2019.

But “payback” is coming in the second quarter, according to Howard Archer, chief economic advisor to the forecasting group, the EY Item Club:

The UK economy has clearly suffered a serious slowdown since the first quarter and we suspect GDP could very well contract slightly in the second quarter.

There has clearly been payback in the second quarter from the stockpiling that occurred in the first quarter while an additional hit came from car manufacturers bringing forward their summer shutdowns to April (to limit any disruptions should a disruptive Brexit have occurred at the end of March).

Consumers have also clearly taken a breather in the second quarter after their first quarter splashing out

The Item Club is forecasting that annual growth will slow to 1.3% in 2019, from 1.4% in 2018, before picking up to 1.5% in 2020. That forecast is based on the assumption that the UK leaves the EU on 31 October with a deal.

Without a deal, the UK economy grows by just 0.3% in 2020...

Craig Erlam, senior market analyst at currency firm Oanda, puts the latest bitcoin moves into context:

The wild ride continues in the world of crypto, with bitcoin brushing off what would be a devastating 24 hours for any other asset, tumbling 25% in that time, to rebound more than 10% at the time of writing. I say this because this market moves so rapidly that it’s probably out of date by the time I’ve finished writing this sentence.

When it comes to bitcoin, nothing surprises me so predicting whether we’ll end the day back at new highs for the year or in the red is pointless. What is clear is that the Facebook story has re-energised the space in a remarkable way and reminded us of what we were seeing on a daily basis in late 2017. Suddenly $20,000 isn’t looking too far away but as we learned early last year, $3,000 isn’t either.

President of the European Commission, Jean-Claude Juncker, has a chat with President Trump during the G20 summit in Osaka:

But the biggest smiles were reserved for Turkey’s President, Recep Tayyip Erdoğan:

The mood among investors in Europe has picked up, as traders hope that progress will be made in Osaka tomorrow when the leaders of the world’s two largest economies meet to discuss trade.

The latest scores:

• FTSE 100: +0.3% at 7,425

• Germany’s DAX: 0.5% at 12,330

• France’s CAC: +0.3% at 5,508

• Italy’s FTSE MIB: +0.3% at 21,170

• Spain’s IBEX: +0.3% at 9,175

• Europe’s STOXX 600: +0.3% at 383

Andrew Kenningham, chief Europe economist at Capital Economics, agrees the rise in core inflation will not deter Draghi and his colleagues on the ECB’s governing council:

The limited breakdown available shows that core inflation (excluding food, energy, alcohol and tobacco) rose from 0.8% in May to 1.1% in June.

While Eurostat does not provide any further breakdown of services prices, the French statistical official attributed much of the increase there to higher transport prices, and state-level data suggest that much of the increase in German inflation was due to higher prices of package holidays and airfares, reflecting the larger number of public holidays in June this year. Much of this may be reversed in July.

None of this changes the big picture, which is that underlying price pressures remain well below the ECB’s near-2% target. With the eurozone economy having slowed again in Q2, and business surveys still soft, we think core inflation will remain close to 1% for the foreseeable future. The ECB governing council will therefore signal in late-July that further policy easing is on the way.

Although the headline rate of eurozone inflation was steady at 1.2%, core inflation - stripping out volatile energy and food prices - rose to 1.1% in June from 0.8% in May.

However, economists said the rise in core inflation will not deter Mario Draghi, president of the European Central Bank, who dropped heavy hints last week that ECB policymakers are ready to pump fresh stimulus into the eurozone economy.

Bert Colijn, senior eurozone economist at the Dutch bank ING:

Core inflation has been bouncing around on Easter timing effects and the recovery from 0.8 to 1.1% should more realistically reflect the current underlying inflation environment. Even though wage growth continues to increase at a steady pace, reflecting the improved labour market environment, businesses continue to be reluctant to price through those higher costs to the consumer.

The inflation outlook therefore remains sluggish. With energy base effects pushing down the outlook for the coming months, headline inflation will continue to face downward pressures. On top of that, businesses have indicated softer expectations for selling prices on the back of economic uncertainty. The improved core inflation figure will therefore be easily brushed aside in the discussions about fresh ECB action: it’s coming.

A breakdown of the UK growth figures shows there were some revisions in the detail since the first estimate.

Growth in the services sector was revised up to 0.4% from 0.3%, while construction output was revised up to 1.4% from 1%.

Production on the other hand was revised down in the second estimate, to 1% growth from 1.4% in the first estimate.

All in all it left the headline rate of quarterly growth at 0.5% in Q1.

Over in Osaka, the head of the International Monetary Fund, Christine Lagarde, struck an upbeat tone after meeting world leaders.

The IMF warned earlier this month that the the tit-for-tat tariffs between the US and China would cost $455bn (£357.5bn) in lost output next year.

Julian Evans-Pritchard, senior China economist at the consultancy Capital Economics, says that any trade war truce struck between the US and China at the G20 is likely to be short-lived:

Trump and Xi will meet tomorrow and may agree to hold off imposing new tariffs for the time being. While this would be a positive outcome for China’s economy and markets in the short-run, any gains will probably prove fleeting with a renewed escalation in trade tensions still likely further down the road.