European markets close sharply higher
Better than expected Chinese trade data which prompted hopes the world’s second largest economy was beginning to stabilise set the tone for a positive day for investors. A rise in US crude inventories, which contributed to a 1% fall in oil prices, did not dampen the mood, while better than expected results from US bank JP Morgan gave further support to the market. Weak US retail sales also helped, dampening fears of an immediate rise in US interest rates. The final scores showed:
- The FTSE 100 jumped 120.5 points or 1.93% to 6362.89, its highest level since 2 December last year
- Germany’s Dax rose 2.71% to 10,026.10
- France’s Cac closed up 3.32% at 4490.31
- Italy’s FTSE MIB added 4.13% to 18,165.59
- Spain’s Ibex ended 3.21% higher at 8820.7
- In Greece, though, the Athens market dipped 0.83% to 548.83 on continuing concerns about an agreement between the country and its creditors on its bailout
On Wall Street, the Dow Jones Industrial Average is currently up 150 points or 0.85%.
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.
Updated
It is not just oil which is giving the market a lift. Joshua Mahony at IG said:
Confidence is coursing through the veins of financial markets today, as the worries seen at the turn of the year disappear into the rear view mirror. If yesterday was all about oil, today’s big mover was the US dollar which finally found a buyer after over two weeks of selling. European and US stock markets are clearly in a jubilant mood, with buyers remaining in control since the opening bell. The relative disregard from US markets at the release of the joint worst retail sales figure in over a year, spells out the buoyant mood of markets today.
The Bank of Canada maintained its headline interest rates steady today, in line with expectations. Certainly there will be significant relief at the BoC at the recent revival in crude prices, which will help ease the burden of monetary policy.
Meanwhile the FTSE 100 has reached its highest closing level since 2 December. Tony Cross, market analyst at Trustnet Direct, said:
There can be little doubting the fact that London’s FTSE-100 has posted a solid day of gains during Wednesday’s session, realising its first triple digit gain in a month and finding intra-day highs not seen since early December 2015. Commodity prices continue to march higher and that is very much dictating the pace for the markets – the Dow Jones non-ferrous metals index is up another 6% already and the miners are scattered across the top of the board, but once again Standard Chartered is worthy of note. The bank’s exposure to commodity traders has been something of a millstone, but as underlying prices rally, the stock is back in vogue and today’s 10% gain is certainly impressive.
The recent strength of the oil price - today’s fall notwithstanding - has been based mainly on hopes that the weekend’s producer meeting will agree a freeze, along with signs of a slowdown in US output. But, says Capital Economics:
There have not been any game-changers in the fundamentals of the oil market itself. Admittedly, US oil production has started to fall. But the declines are small. US oil output was down by about 1.7% year on year in February. What’s more, both the key pillars which have underpinned the recent rally could quickly unwind.
Indeed, there is no guarantee of a deal at the weekend. Saudi Arabia has said that it will not participate in a production freeze unless Iran agrees to join as well and Iran has steadfastly committed to increasing its output to pre-sanctions levels. As it happens, we think some sort of compromise agreement is still likely, even without Iran’s full participation. But given that very few of the countries attending the meeting on Sunday have either the capacity or intention to increase output anyway, freezing production at the current very high level should at best put a floor under prices.
Updated
Oil prices have slipped further after a much bigger than expected rise in weekly crude inventories, but still remain well above $40 a barrel. Brent crude is currently down 1.6% at $43.96.
[BREAKING] US DoE Crude Oil Inventories (Apr 8): 6634K (est 1000K, prev -4937K)
— Livesquawk (@livesquawk) April 13, 2016
Distillate stocks also rose by more than forecast:
US DoE Distillate Inventories (Apr 8): 505K (est 200K, prev 1799K)
— Livesquawk (@livesquawk) April 13, 2016
But gasoline inventories fell back:
US DoE Gasoline Inventories (Apr 8): -4237K (est -1500K, prev 1438K)
— Livesquawk (@livesquawk) April 13, 2016
The enthusiasm for the Chinese export figures has outweighed a host of bad news for stock markets, says Connor Campbell, financial analyst at Spreadex:
The reasons to abandon the day’s super-surge began to stack up this afternoon, yet the markets remained resolute in their Chinese export-inspired jubilance as the day continued.
First Opec cut its demand forecasts for 2016, slashing estimates by 50000 barrels a day with the potential for more revisions to come. Then there was yet another poll outlining the damage that would be dealt in the case of a Brexit, news that was swiftly followed by the announcement of falling retail sales in the US.
Adding to the mounting bad news was a report from Reuters stating that US regulators believe JP Morgan (which rose by 3.5%% this Wednesday after revealing a better than expected first quarter loss), Bank of New York Mellon, Bank of America, State Street and Wells Fargo do not have sufficient ‘living wills’ in place to deal with another financial crisis. Along similar lines the IMF warned that the European banking sector (namely those institutions found in Greece, Italy and Portugal) would be unable to deal with a repeat of the 2008/09 recession, stating that ‘a more complete solution to the [region’s] banks’ problems cannot be further postponed’.
Yet despite this string of scary dispatches from around the world the global indices were in remarkable good health this afternoon. The Dow Jones, boosted by the growth from JP Morgan, edged up 130 points, hitting 17850 and fresh 2016 highs in the process; the FTSE, meanwhile, climbed 120 points to 6360, enjoying the freedom given to it by its China-inspired breakout. Over in the Eurozone the Dax, perhaps intimidated by that looming 10000 mark, slightly underperformed its regional peers, the German index settling for a 2.3% rise compared to the more explosive 3% growth seen by the Cac.
Updated
Wall Street opens higher after Chinese data
The US market has followed other global markets higher after the positive Chinese export data, better than expected results from JP Morgan and the oil price holding onto much of its recent gains.
The weak US retail sales have also helped sentiment, suggesting that the Federal Reserve may be reluctant to raise interest rates again in the near future after December’s increase.
So the Dow Jones Industrial Average is up 122 points or 0.7% while the S&P 500 is 0,6% higher and Nasdaq has added 1%.
European markets have seen their gains accelerate, with the FTSE 100 up 1.7% to its highest level since early December, while Germany’s Dax is 2% better and France’s Cac has climbed 2.7%.
More on the weaker than expected US retail sales. Rob Carnell of ING said:
Even when you take some upward revisions into account for February, this is yet another soft retail sales release, and makes an April rate hike look far-fetched.
Consensus was hoping that despite the likelihood that the headline retail sales figure would be depressed by very weak auto sales in March, rising gasoline prices would provide some offset at the headline level, and a pick up in underlying sales would prop up the core figures. This did not happen. Indeed, the headline fell by 0.3% month on month, much worse than the 0.1% increase expected, and core figures were also weak, with the control group for sales which strips out most of the volatile components, rising only 0.1% month on month.
Moreover, when you take into account that these figures are dollar amounts, and not adjusted for inflation, which most likely rose in March as a result of higher energy prices (data released tomorrow), then it looks as if real consumer spending will barely register 1.0% growth in the first quarter of 2016, and real GDP for the same period will be equally soft.
All of which makes it seem highly unlikely that the April FOMC meeting will deliver a further rate hike on top of the December 15 hike. Indeed, some expectations that the April meeting might be used to flag a possible June hike also look stretched following this and other recent soft activity data. We expect some softening in the rhetoric of Federal Reserve speakers in advance of this month’s meeting, so a “no change” will not be a surprise for markets.
The IMF’s warning on the state of the European banking system is directed at countries on the periphery of the eurozone, and Italy in particular, writes Phillip Inman:
Total losses attributed to European banks in the last financial crash were around €1tn, so a repeat of the devastation caused in 2008 could be withstood by just calling on shareholders to sacrifice their equity.
If the crash cost more than €1tn, banks can call on the €8tn of debts to bondholders, which could be cancelled in part or in their entirety, freeing up cash from interest payments to safeguard depositors. This is a substantial extra buffer. No wonder officials in Brussels, European Central Bank head Mario Draghi and the UK’s regulator, the Bank of England, feel confident a taxpayer bailout will never again be required.
So it might seem odd that the International Monetary Fund has sounded a warning in its latest financial stability report about the parlous state of the European banking system...
But the IMF is not talking so much about the UK as Italy and other countries in the eurozone periphery. Italy has propped up a forlorn bunch of regional banks that have done little to tackle loans that will never be repaid. Zombie businesses that spend all their spare cash on interest payments, denying them the funds for investment, litter the Italian manufacturing sector, which remains vast...
It is estimated that bad loans in Italy account for more than a third of the €900bn total, which means that a €6bn rescue fund put forward by Rome is desperately inadequate.
So the IMF is less interested in the aggregate figures for European bank funding and more concerned about the weakest link, which experience tells us can set off a chain reaction, bringing good banks down with the bad. For that reason the IMF should be applauded.
More here:
Updated
IMF warns of risks of new financial crisis
A day after cutting its global growth forecasts, the International Monetary Fund is talking about the risks of a new financial crisis. Larry Elliott writes:
The International Monetary Fund has highlighted risks of a new financial crisis, warning that global output could be cut by 4% over the next five years by a repeat of the market mayhem witnessed during the 2008-9 recession.
The IMF used its half-yearly Global Financial Stability Report to call for urgent action on the problems of banks in the eurozone, a third of which it said faced “significant challenges” to be sustainably profitable.
“In the euro area, market pressures also highlighted long-standing legacy issues, indicating that a more complete solution to European banks’ problems cannot be further postponed,” the Fund said. It said there needed to be a comprehensive strategy to deal with €900bn of non-performing loans (NPLs) on the books of eurozone banks, adding that banks also needed to be closed in order to deal with excess capacity.
“The hardest hit banking systems within the euro area in February have been those of Greece, Italy, and to a lesser extent, Portugal, along with some large German banks, reflecting some or all of the following factors: structural problems of excess bank capacity, high levels of NPLs, and poorly adapted business models.”
Noting that threats to global financial stability had increased since its last health check in October, the Fund said: “The main message of this report is that additional measures are needed to deliver a more balanced and potent policy mix for improving the growth and inflation outlook and securing financial stability. In the absence of such measures, market turmoil may recur.”
It added that there was a risk that investors would demand high interest rates and that tougher financial conditions would create a “pernicious feedback loop” of fragile confidence, lower growth and inflation, and rising debt.
The full story is here:
Updated
Five US banks do not have credible plans for crisis - regulators
Five of the top eight US banks do not have credible plans for winding down their operations during a crisis without being bailed out with public money, according to a report from federal regulators. Reuters reports:
The “living wills” that the Federal Reserve and Federal Deposit Insurance Corporation jointly agreed were not credible came from Bank of America, Bank of New York Mellon, J.P. Morgan Chase, State Street and Wells Fargo.
The requirement for a living will was part of the Dodd-Frank Wall Street reform legislation passed in the wake of the 2007-2009 financial crisis, when the US government spent billions of dollars on bailouts to keep big banks from failing and wrecking the US economy.
“The FDIC and Federal Reserve are committed to carrying out the statutory mandate that systemically important financial institutions demonstrate a clear path to an orderly failure under bankruptcy at no cost to taxpayers,” FDIC chairman Martin Gruenberg said in a statement. “Today’s action is a significant step toward achieving that goal.”
None of the eight systemically important banks, which the US government considers “too big to fail,” fared well in the evaluations. A bank has to fix deficiencies only if the two regulators jointly determine its plan does not have the potential to work.
The FDIC alone determined that the plan submitted by Goldman Sachs was not credible, while the Federal Reserve Board on its own found Morgan Stanley’s plan not credible. Citigroup’s living will did pass, but the regulators noted it had “shortcomings.”
The Fed and the FDIC said they were continuing to assess plans for four foreign banks - Barclays, Credit Suisse, Deutsche Bank and UBS.
The weaker than expected US retail sales figures could give the Federal Reserve pause for thought on interest rates, said Dennis de Jong, managing director at UFX.com:
Consumer spending remains a core component of the US economy, so all eyes will be on these latest sales figures from Main Street.
Last year, economists heralded the resilience of US consumers as a rare bright spot against a backdrop of turbulent financial markets and weakening global demand, so they will be discouraged by this below expectations performance.
These lingering doubts over retail’s strength may force the Fed to give second thought to the rumoured interest rate hike, which some had speculated could come sooner rather than later.
Updated
US retail sales in surprise fall
A drop in car purchases caused an unexpected drop in US retail sales in March, according to the Commerce Department.
Retail sales fell 0.3% after being unchanged in February, and compared to forecasts of a 0.1% rise.
Core retail sales - excluding automobiles, gasoline, building materials and food services - edged up 0.1% in March, the same as an upwardly revised figure for February.
Brexit would damage UK economy, lead to rate cuts - Reuters poll
A vote by Britain to leave the European Union would damage the UK economy, according to the majority of economists surveyed in a Reuters poll.
Thirty one of the 35 economists polled said the impact of leaving would be negative, but there was a roughly equal split about whether remaining in the EU would be positive or neutral.
A vote to leave was also likely to lead to a Bank of England rate cut, the majority of the economists believed.
Opec lowers forecasts for 2016 demand
Opec has predicted that global demand for oil will be less than previously expected in its latest monthly report.
The oil producers group cut its forecast for 2016 demand by 50,000 barrels a day as consumption slows, and said there could be further downward revisions.
Meanwhile it pumped 32.25m barrels a day in March, up by 15,000 barrels from the previous month.
The report indicated excess supply of 790,000 barrels a day in 2016 at current levels, up from 760,000 suggested last month.
The figures come ahead of a key meeting of producers in Doha at the weekend, which will discuss a freeze in output at January’s levels to try and tackle the supply glut.
The oil price has been fairly unmoved by the report, with all eyes on the weekend meeting. Brent crude is down 1% at $44.19 a barrel, in line with its earlier performance.
Lunchtime summary: China and JP Morgan cheer markets
Time for a quick catch-up
Stock markets in Asia and Europe have rallied today, after China beat expectations with an 11% surge in exports in March.
Augustin Eden, research analyst at Accendo Markets,. sums up the morning:
“Mid-way through the European session, equity markets are holding firm with the UK’s FTSE 100 benefiting from a good set of Chinese trade data - that helping the miners and other EM-focused stocks. Does this mean better times ahead? We must be careful when answering such a question, but with Chinese copper imports having surged by 36% in March, the near-term outlook seems trade positive.
So as we stand....
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The FTSE 100 index is on track for its highest close of 2016. It’s currently up 90 points in London, led by natural resource companies and financial stocks. Traders are optimistic that the worst of the commodity slump may be over, if Chinese firms are faring better than feared.
- JP Morgan has reported a 6.6% fall in profits, better than feared. Its shares are likely to rally when Wall Street opens.
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UK supermarket chain Tesco is under pressure. Its shares have slumped by 5.5%, despite posting its first sales rise in three years, after CEO Dave Lewis warned that the market is challenging and uncertain.
A Chinese hard landing is the number one fear in the City, according to a new survey from Moodys’s.
The rating agency found that a third of investors believe China’s slowing economy is the biggest risk, followed to deflation in the euro area.
Investors are also worried about a rise in support for European populist parties and Britain’s EU referendum.
Anke Rindermann, an associate Managing Director at Moody’s, hopes that a Chinese economic crisis can be avoided:
“It is clear that a slowing Chinese economy is a major concern among market participants. However, rather than a hard landing we expect a continuation of slower GDP growth at around 6% as Chinese authorities continue to use policy measures to avoid a sharp economic slowdown.”
Wall Street is expected to open strongly in two hours time:
Banks are pushing U.S. futures higher, as JPMorgan reports first-quarter results https://t.co/08CwPomlhv pic.twitter.com/rMeJLIWU3x
— Bloomberg (@business) April 13, 2016
JP Morgan’s shares are up almost 3% in pre-market trading, as Wall Street welcomes its financial results.
Bank of America and Citigroup are up around 2% in the pre-market too.
JP Morgan: profits down, but better than feared
JP Morgan has reported a 6.6% drop in profits in the last quarter, down from $5.91bn to $5.52bn.
As feared, the Wall Street bank has suffered a fall in revenues from trading and investment banking.
But the results look a little better than expected. JP Morgan has posted average earnings of $1.35 per share, down from $1.45, but ahead of forecasts of $1.26 per share.
JP Morgan Q1 markets trading revenue -13% to $5.718B, investment banking revenue -19% to $2.417B. Declines drive profit down 6.7% to $5.52B,
— Jamie McGeever (@ReutersJamie) April 13, 2016
It has also set aside over $400m to cover bad losses in the energy sector.
That follows the recent slump in the oil price, which is causing some energy companies serious financial distress.
Big jump in JPMorgan's loan loss reserves: pic.twitter.com/ELy7sVG3S9
— Tracy Alloway (@tracyalloway) April 13, 2016
Updated
It’s nearly time for JP Morgan to kick off the US bank reporting season, by revealing how well (or badly) it performed in the last three months.
Analysts predict that earnings and revenues both fell during the quarter, as investment banking has suffered from lower trading volumes and fewer major deals recently.
And the banks always have the capacity to surprise us, as Jeremy Cook, economist at World First, points out:
Getting ready for Bank Earnings season pic.twitter.com/RA906dIBcx
— World First (@World_First) April 13, 2016
Greek bonds under pressure
Beneath the optimism in the markets, worries over Greece’s bailout are resurfacing.
Investors are concerned by Athens’ ongoing failure to reach a deal with creditors over issues such as pension reforms.
So prices on Greek bonds have fallen sharply this morning. And this has driven up the yield, or interest rate, on Greek two-year debt to 12.5%, from 11% yesterday.
That’s a 10-week high, and implies a higher risk of Greece defaulting.
Talks between Greece and its bailout creditors over the country’s next economic reforms efforts are now suspended until next week. If a deal isn’t reached eventually, Greece won’t have the funds for debt repayments in July.
And Alexis Tsipras, Greece’s prime minister, has now arranged to meet with French president Francois Hollande - a key ally - next week.
Italian bank shares have risen sharply this morning, up around 6% on average.
The €5bn bank rescue deal agreed over the weekend is bolstering confidence in the sector.
But caution is needed -- Italian banks still hold around €196bn of bad debts, so €5bn will only be a sticking plaster if the eurozone crisis flares up again.
Major Italian banks rise at average 6.02% pic.twitter.com/4DDe9gk6qR
— Advisory Desk (@advdesk) April 13, 2016
Shares surge on hopes that commodity crunch is over
There’s no stopping the FTSE 100 index right now. The blue-chip index is up 95 points at 6337, its highest level since last December.
Mining stocks continue to surge, thanks to new optimism about China’s economy following March’s 11% jump in exports. Shares in Anglo American are up 7% and BHP Billiton has gained 6%.
Banks are benefitting too. Standard Chartered, which has a big exposure to Asian markets, has jumped by 10% to the top of the FTSE leaderboard.
Joshua Mahoney of IG says the City is hoping that the worst could be over for commodities.
For the commodities rout to be over a resurgent China is required, and the impressive trade data released overnight provided exactly the assurance we were looking for.
While it may be too soon to conclude that the worst is over for China, this revival in exports helps restore confidence as investors pile into commodity stocks once more.
David Cheetham of City broker XTB.com reckons Tesco is on the right path, despite this morning’s stock market drubbing:
A 0.9% rise in like-for-like sales for Q4 2015 is arguably the highlight of this solid report, and marks the first quarter of comparable sales growth in over three years....
More work is clearly needed before investors can hope for a return to anywhere near the previous levels of stock price, but this morning’s report shows that the current strategy is beginning to bear fruit and the continued attempts by Mr. Lewis to streamline the business and dispose of unwanted segments indicate that the firm won’t be resting on it’s laurels as they strive to return to former glories.
Tesco is now the worst-performing share across Europe’s main stock markets, after it warned that the supermarket sector remains tough.
#Tesco worst performer on Stoxx600... pic.twitter.com/hs49LRJodH
— Caroline Hyde (@CarolineHydeTV) April 13, 2016
Here’s our full story on Tesco’s results:
Updated
European stock markets are rallying hard, on the back of today’s Chinese trade data.
The Italian, German and French markets have all gained around 2%, a strong move, amid hopes that the global economy may be picking up.
Tony Cross of Trustnet Direct calls it “a rather impressive start”.
Commodities remain very much in focus – we’ve seen base metals soaring in the last few hours helped by upbeat Chinese import data and even if oil prices are coming off the boil a little, the bulls are still winning out at least for now.
But investors may be getting carried away.....
The 11% surge in Chinese exports in March sounds impressive, but manufacturers are actually still shipping fewer goods abroad than on average, as this tweet shows:
Note: China's improved exports more of a base effect; absolute level still below trend - pic.twitter.com/kF6N2RVePS
— SoberLook.com (@SoberLook) April 13, 2016
If the FTSE 100 stays at this morning's levels, it will hit its highest close this year.
— Riva Gold (@GoldRiva) April 13, 2016
News that Chinese exports rebounded in March has “more than revitalised the market’s spirits”, says Conner Campbell of SpreadEx:
Whilst it is too early to claim that talk of a Chinese economic slowdown has been overstated (imports did shrink by 7.6% over March, and there is still the Q1 GDP and industrial production data to come on Friday), the announcement of an 11% rise in the country’s exports has had a miraculous effect on the European indices this Wednesday morning.
Tesco shares hammered after CEO's caution
Tesco is missing out on today’s rally, despite reporting its first sales increase in three years.
Shares in the supermarket chain have slumped by 4%, after CEO Dave Lewis warned that hitting analyst profit forecasts for this year would be a “big achievement”.
That’s not what the City likes to hear.
Lewis’s caution has taken the shine off today’s results, which showed a 0.9% jump in sales and a small rise in operating profits.
Dave Lewis in an unsurprisingly good mood this morning. Admits he is "extremely pleased" with @Tesco FY figs but insists job not done
— Luke Tugby (@LukeTugby) April 13, 2016
Updated
London stock market hits highest level of the year
Shares are rallying across Europe at the start of trading, as China’s trade figures boost confidence.
In London, the FTSE 100 index has hit its highest level of 2016.
The blue-chip index has gained 63 points, or 1%, to 6302 points. That’s quite a recovery since the turmoil of January and February, when it fell to 5,500.
Mining stocks are leading the way, on hopes that demand for commodities like iron ore, copper and zinc may be picking up.
Augustin Eden, research analyst at Accendo Markets, explains why shares are rallying:
In March, Chinese exports went up by 11.5% (in US dollar terms), the most in a year and an impressive recovery from February’s 25% slump.
That’s sure to indicate that China’s still making stuff, so should be a good thing for companies that produce materials - like miners – today.
Other European markets are also romping ahead.
Strong open for European stock markets this sunny morning:
— Sara Sjölin (@sarasjolin) April 13, 2016
Stoxx 600: +1%
FTSE 100: +0.9%
CAC 40: +1.6%
DAX 30: +1.4%
Premier Foods shares slump after takeover battle collapses
Mixing Ambrosia custard and Bisto gravy with Schwartz’s dried spices would challenge the most daring fusion chef.
So perhaps we shouldn’t be surprised that an attempt to merge the companies behind these brands has also failed.
McCormick, the US food group, told the City this morning that it’s walking away from attempts to acquire Britain’s Premier Foods, which produces Mr Kipling cakes alongside Ambrosia, Bisto and Batchelors soups.
Premier Foods had resisted McCormick’s advances, angering shareholders such as Standard Life.
And the City is reacting -- Premier Foods share just plunged by 30% at the start of trading!
Here’s the story:
The rebound in China’s exports shows that pessimism over the global economy is overdone, argues Marcel Thieliant and Mark Williams of Capital Economics:
China’s trade data for March point to healthy growth in import volumes and add to growing evidence that the extreme gloom of a few weeks ago about the state of the domestic economy was misplaced….
However, they also point out that the data is muddied by the impact of the Chinese New Year, so we shouldn’t get too carried away.
Asian markets surge after Chinese trade data
Asian markets are rallying hard, following news that Chinese exports surged 11% in March.
The Shanghai stock market jumped by 2%, as investors hailed the better-than-expected trade figures.
Japan’s Nikkei closed 2.5% higher, while Australia gained 1.5%.
Some investors are calculating that China’s new growth figures, due on Friday, might beat expectations.
Economists had forecast that annual growth to slow to 6.7% in January to March, from 6.9%. Perhaps that’s too pessimistic?....
Updated
China exports rise at fastest pace in a year in March
There’s relief in the markets this morning after China posted surprisingly good trade figures.
Chinese exports rose by 11.5% percent on-year in March, in dollar terms, the biggest jump since February 2015.
That’s a significant recovery from the 25% slump seen in February - when the Lunar New Year disrupted trade.
Imports in March shrank by 7.6%, less than expected, after a 13.8% slump a month ago.
And this means China’s trade surplus decreased to $29.9 billion, the least in a year.
This beats analyst forecasts, and suggests that China’s economy may be avoiding the kind of ‘hard landing’ that would shake the global economy.
Jasper Lawler of CMC Markets explains why traders will be encouraged by China’s trade data:
The surge in exports adds to the improving outlook for China indicated by moderating producer price inflation and a rebound in business confidence data.
The pickup in exports was likely supported by the devaluation of the yuan at the start of the year which made Chinese goods relatively cheaper than domestic options abroad.
Standard Chartered Bank economist Shuang Ding is more cautious, though:
“Even with this rebound, first-quarter trade is still quite weak....We cannot be very definite about a turnaround.”
Updated
The agenda: Tesco, JP Morgan and the IMF
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s a big day for corporate results.
UK supermarket chain Tesco is publishing its full-year results today. At first glance, it appears that CEO Dave Lewis’s turnaround plan is bearing fruit, with profits up and sales returning to growth.
. @Tesco posts FY op. profit £944m (+1.1%) = beat vs analyst consensus of £936m
— Caroline Hyde (@CarolineHydeTV) April 13, 2016
#Breaking Tesco is back in profit and has posted its first quarterly UK sales growth for three years
— Press Association (@PA) April 13, 2016
And then JPMorgan Chase will kick off the US reporting season around noon BST. That’ll show how Wall Street is coping with the current environment of record low interest rates and financial volatility.
Over in Washington, The International Monetary Fund will release its Global Financial Stability Report at 2pm GMT. That’ll highlight the key threats to the world economy.
Yesterday, the Fund caused a stir with a warning about Britain’s EU referendum, alongside a raft of growth cuts:
Wednesday's Guardian front page:
— Nick Sutton (@suttonnick) April 12, 2016
IMF raises stakes with warning Brexit would hit global growth#tomorrowspaperstoday pic.twitter.com/7kAfPhZUd1
Wednesday's Times Business:
— Nick Sutton (@suttonnick) April 12, 2016
World economy in danger of stagnating, IMF warns#tomorrowspaperstoday #bbcpapers pic.twitter.com/b0C938AytO
And Greece could be in the spotlight again, after failing to reach a deal with its creditors over economic reforms this week.
We’ll be tracking all the main events through the day....
