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Markets fall after 'terrible' slump in Chinese exports - business live

Discussion in 'Market News' started by Lily, Mar 8, 2016.

  1. Lily

    Lily Forum Member

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    China has stunned analysts by reporting a 25% fall in exports - its worst since 2009


    1.47pm GMT

    The Bank of England is now “embroiled” in the Brexit debate following today’s punchy session at parliament, says our economics editor Larry Elliott.

    Mark Carney described as “entirely unfounded” the suggestion from the pro-Brexit Conservative MP Jacob Rees-Mogg that the Bank was being politically partisan and jeopardising its reputation for “Olympian detachment” by emphasising the pros but not the cons of EU membership.

    Giving evidence to MPs on the Treasury select committee, the governor provided backing for David Cameron by warning that there would be short-term costs to the UK from a decision to leave the EU in June – including weaker investment, lower consumer spending and the relocation of foreign-owned banks to Ireland or continental Europe.

    Related: Mark Carney under fire from MPs for warning of Brexit risks

    1.31pm GMT

    Oil prices are continuing their recent recovery, despite today’s Chinese export data.

    Brent crude has hit a new three-month high, up 1.1% at $41.31 per barrel, having broken though the $40 mark yesterday.

    UBS forecast Brent oil to decline to USD 30/bbl in Q2 with the current upside to fade pic.twitter.com/gAxvPJlly2

    Brent oil is up 46% from its low. A turning point, or just another bull run in a long-term bear market? pic.twitter.com/91D9MDrwEt

    1.12pm GMT

    The 25% tumble in Chinese exports in February continues to loom over the markets.

    The timing of the Lunar New Year may be a factor, but the underlying theme is that China’s new growth targets could soon be in trouble.

    This export slump again underlines the huge challenges that China’s export-driven model is facing and how domestic demand needs to grow to take up the slack in order to maintain the growth momentum.

    If this does not happen, China’s growth is likely to slow considerably and be below the 6.5% target set by the government this week.”

    12.34pm GMT

    Mark Carney’s grilling has ended, after the governor warned that Brexit was the biggest single “domestic risk” to Britain’s economy.

    "It is a material financial stability risk" & "biggest domestic risk 2 financial stability". Governor Carney at Treas Select Ctte on Brexit.

    Carney comes off fence: says Brexit is biggest financial risk facing UK, could amplify housing & macroeconomic risks after Tyrie questioning

    Related: EU referendum: Mark Carney suggests Brexit could lead to banks leaving London - live

    12.10pm GMT

    European finance ministers looked in good spirits this morning, as they gathered for today’s ECOFIN meeting.

    Jeroen Dijsselbloem, who chairs the eurogroup of euzone finance ministers, even indulged in a little light horseplay with Greece’s Euclid Tsakalotos.

    11.55am GMT

    Ouch.

    Porsche (owned by VW) suspends sponsorship of Maria Sharapova. Clearly doesn't want to be associated with someone accused of cheating. Oh.

    11.45am GMT

    America’s small firms have suffered a drop in confidence last month, according to new data from the US.

    Fears over sales growth have hit spending plans, and deterred firms from taking on new staff, according to the National Federation of Independent Businesses.

    NFIB seems unimpressive across the board. https://t.co/x4hPz9PMyz pic.twitter.com/Ba2mimCSwn

    11.18am GMT

    Some theories are just too good to not be true. And here’s a prime example.

    Some experts reckon the iron ore price surged 19% yesterday because China’s horticulture industry wants steel mills to shut down. For five months.

    Literally blue sky thinking. Morgan Stanley on that big iron ore spike: pic.twitter.com/h24BpZm3fO

    10.52am GMT

    By parliamentary standards, the Treasury Committee’s session on the EU referendum is a real punch-up.

    Mark Carney, Bank of England governor, kicked the session off by insisting that that the BoE wasn’t making a recommendation on Brexit.

    Mogg v Carney is box office https://t.co/AkUCF15JBK pic.twitter.com/cG8YsuVov6

    Carney vs Mogg is Finance Twitter's Batman vs Superman

    Related: Mark Carney says Cameron's EU deal supports financial stability

    10.36am GMT

    These charts from Bloomberg show the scale of the Chinese export slump last month:

    10.30am GMT

    Traders are nervous today ahead of Thursday’s European Central Bank meeting, where fresh stimulus measures could be announced.

    Fears that Mario Draghi might disappoint the markets (as he did in December) have pushed the euro back above $1.1.

    European stock markets have started the day on a very shaky footing, with the DAX in particular falling sharply following a surprisingly bad batch of trade data overnight. Despite the incredible rally in iron ore yesterday, the 25% fall in exports and 14% drop in imports for February prove it pays to be apprehensive about the Chinese growth story for now. With China representing the second largest export market for the eurozone, this continued slowdown will no doubt worry ECB members ahead of Thursday’s meeting.

    It is clear markets have learnt their lessons from the December ECB meeting, with euro shorts and DAX longs being closed out ahead of the release. Despite the high likeliness of action from the ECB, there is no guarantee of the direction markets will move and thus traders are unlikely to be as bold this time, after being burnt three months ago. Deposit rate cuts seem the likeliest, yet this is unlikely to appease QE thirsty markets which have proven to be relatively single minded in their view of what represents a satisfactory policy boost.

    10.19am GMT

    After two hours of trading, European markets are steadily in the red following today’s rough Chinese trade data.

    The FTSE 100 is still down around 1%, and there are chunkier losses across the continent where the French CAC and German DAX have both lost around 1.5%.

    “Equity markets are in the red again this morning, with disappointing overnight Chinese trade data showing plunging February exports (-25%) serving to spook investors who are already concerned about the state of global growth.

    The market reaction is in stark contrast to the habitual cheering about bad data implying more stimulus, and the Lunar New Year may explain the big drop.”

    9.32am GMT

    Bank of England governor Mark Carney has just begun giving evidence to the Treasury committee on the UK’s EU referendum.

    Related: Boris Johnson abandons City Hall EU referendum gag after hypocrisy claim - Politics live

    9.26am GMT

    Oxford Economics have just issued a new report on the EU referendum.

    It has found that a vote for Brexit will knock over 1% off the size of the UK economy, and also hit share prices.

    A scenario run on the Oxford Global Model suggests that Brexit would leave the level of UK GDP 1.3 percentage points lower by Q2 2018 compared with our baseline forecast that the UK votes to stay in the EU. A vote to leave would mainly shock business confidence but consumers would be adversely affected too. Exporters in price-sensitive sectors would benefit from a weaker exchange rate.

    Market pricing suggests that sterling could initially fall by around 15% before recovering some of its losses, while the heightened uncertainty would also be expected to drive a sharp drop in equity prices in H2 2016.

    Oxford Economics: "We would attribute a probability of around 70% that the UK votes to remain in the EU."

    9.18am GMT

    The International Monetary Fund is preparing a report on the impact of Britain voting to leave the European Union.

    IMF chief Christine Lagarde announced the plan this morning, and also appeared to reveal that it will warn against Brexit.

    Christine @Lagarde on #BizLive now - on Brexit. "I believe our economic findings will strongly support view it would hurt the UK and EU."

    #IMF report on (negative) impact of #Brexit on both the #UK and the #EU to be published in May, says @Lagarde at @BBCNews. #EUref

    9.04am GMT

    Unions are seeking urgent talks with Npower after the energy company confirmed plans to cut 2,400 jobs.

    “Npower bosses are compounding the anxiety for staff by refusing to meet the unions nationally to discuss this so-called recovery plan, to talk about how to protect jobs and avoid compulsory redundancies. We’re calling for an emergency meeting so we can work jointly on finding a way out of the mess the company currently finds itself in.

    “The workforce will be hoping that the worst is now behind Npower, and that in future employees are the first to know if jobs are under threat.“

    Related: Npower confirms 2,400 job cuts as it makes £99m loss

    8.52am GMT

    The slowdown in London’s prime property market has hit profits at estate agent chain Foxtons.

    ...it is too early to predict how transaction volumes may be impacted by recent changes to the tax regime and the short term political and economic uncertainty caused by the UK referendum on leaving the European Union.

    8.38am GMT

    German factories have surprised analysts, in a good way, by posted a 3.3% jump in production in January.

    “We don’t think that this will start a lasting uptrend.”

    8.23am GMT

    Fashion chain Burberry is defying today’s selloff, though.

    Its shares jumped by 5%, after it emerged last night that a ‘mystery investor’ has been quietly snaffling up shares.

    Burberry jumps as mystery investors builds ~5% stake. pic.twitter.com/62LCXVmGN4

    8.17am GMT

    London’s stock markets is falling in early trading, as traders get another dose of Chinese angst.

    The FTSE 100 fell 60 points, or 1%, at the open to hit 6123 points.

    That shocking slide in exports was joined by at similarly weak, if not quite as alarming, 13.8% drop in imports; combine the two together and it is the kind of ugly reminder of China’s spluttering economy investors certainly don’t need at the moment.

    8.06am GMT

    Here’s some gloomy reaction to the 25% slump in Chinese exports last month, from Reuters.

    XIAO SHIJUN, ANALYST AT GUODOU SECURITIES, BEIJING

    February’s trade data is really poor and that will exert depreciation pressure on the yuan.

    However, the recent lacklustre performance of the U.S. dollar in global markets, together with the Chinese central bank’s determination to keep the yuan relatively stable for now, means that the yuan will not weaken sharply in the near term.

    “China will face a more challenging situation in trade this year than 2015. Both imports and exports in February fell more than our expectations. Exports were largely dragged by a weak global demand from both developed and emerging countries.”

    “Exports were very strong last year in February - up nearly 50 percent - because the Lunar New Year started so late and much of the usual disruption from the holiday was pushed into March. “So there’s a big seasonal effect and the implication is that we’ll probably see a significant reversal and a stronger number next month,

    “Exports were very strong last year in February - up nearly 50 percent - because the Lunar New Year started so late and much of the usual disruption from the holiday was pushed into March. “So there’s a big seasonal effect and the implication is that we’ll probably see a significant reversal and a stronger number next month.”

    8.00am GMT

    China’s alarmingly weak trade data has hit most Asian markets.

    Japan’s Nikkei shed 1%, Hong Kong’s Hang Seng lost 0.7%, and the South Korean Kospi fell 0.75%.

    #China stock markets have recovered earlier losses following horrible trade data on prospects of more proactive govt pic.twitter.com/RB5M9vJHF4

    7.50am GMT

    Fears over China’s slowing economy are swirling again this morning after it reported that exports shrank by a quarter (!) last month.

    “More stimulus is likely to be needed on both the monetary and fiscal front, and that will argue against the yuan stability China craves.”

    Its February trade surplus of $32.59bn was 36% below estimates as exports collapsed down to 25.4% year-on-year.

    Chinese Lunar New Year always skews the February numbers; however, the figure is much lower than expected and such a big miss has created some angst.

    7.33am GMT

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    It’s an edgy time in the markets. Yesterday, we saw the iron ore price surge 20%, and oil rally over $40, a sign of new optimism over growth prospects.

    Related: Brent crude hits $40 a barrel as iron ore prices soar by 19%

    Related: Greece bailout: eurozone inspectors to review reforms

    Big event today- Carney in front of MPs and will be pushed on with eu ref and Bank's contingency plans

    Continue reading...
     

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