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Global stocks climb as China data beats expectations

Stock markets mostly rose and oil prices fell. Here’s what you need to know.

stock market

Image via Pexels

Stock markets mostly rose on Tuesday 14 April as better-than-expected Chinese trade data lifted some of the economic gloom wrought by the coronavirus pandemic.

Oil prices fell, despite US President Donald Trump claiming that producers were mulling a global daily output cut of 20 million barrels.

Highest level for gold per ounce

The dollar dropped against main rivals, helping to push gold above $1,700 (R31 000) an ounce – the highest level for more than seven years, according to traders.

“Markets continue to react in an odd way, mostly ignoring all the bad figures that have come their way and focusing on the positives, such as the China figures,” said Chris Beauchamp, chief market analyst at IG trading group.

Asian stock markets kicked off the day with gains after official data showed Chinese exports fell 6.6% and imports slid 0.9% in March on a yearly basis.

But Julian Evans-Pritchard of Capital Economics warned “the worst is still to come” for China’s export businesses, with more economic headwinds likely in the months ahead as major trading partners battle their coronavirus outbreaks.

A “rough leading indicator for the rest of the world”

Investors will now await the release of China’s quarterly GDP figures on Friday, with forecasters predicting a 6.2% contraction.

Shanghai’s main index finished 1.6% higher and Hong Kong returned from a four-day break to close up 0.6% Tuesday, 14 April 2020. Jasper Lawler, head of research at London Capital Group, noted:

“The data coming out of China is a rough leading indicator for the rest of the world. The smaller exports drop is a clue that China’s first-quarter growth figures released on Friday could also surprise on the topside.”

After a strong start, European bourses tailed off approaching the half way stage, while London slipped into a slight loss.

Britain’s economy could shrink by an unprecedented 13% in 2020 in the case of a three-month coronavirus lockdown, according to a scenario published by UK fiscal watchdog the Office for Budget Responsibility.

A huge decline in first-quarter earnings

Trading was halted in Frankfurt for several hours as the Xetra trading system, on which several European exchanges depend, experienced technical problems.

On the corporate front Tuesday, JPMorgan Chase reported a huge decline in first-quarter earnings after setting aside nearly $8.3 billion (R151 billion) for loans vulnerable to the economic devastation from coronavirus shutdowns.

Wall Street opened higher, with the Dow rising 1.3% in the first minute of trading, as US traders also prefered to focus on the relatively good news out of China.

‘Oil uncertainty’

Markets’ focus was meanwhile firmly also on oil. Neil Wilson, chief market analyst at trading website said:

“There is still a lot uncertainty over whether the reduction in output will be enough. The biggest uncertainty for oil is how quickly does demand recover in the medium term? Indeed, this is the central question for risk assets in general”.

Oil producing nations at the weekend thrashed out a compromise to cut output by nearly 10 million barrels per day from May, while Trump said the final figure could end up being double that level.

Oil prices have crashed as the coronavirus outbreak sends demand off a cliff, with a Saudi-Russian price war compounding the crisis. 

© Agence France-Presse