This article titled "Disappointing Chinese trade figures fuel fears over global economy – business live" was written by Graeme Wearden, for theguardian.com on Monday 8th August 2016 08.37 UTCAna Thaker, market economist at PhillipCapital UK, reckons Beijing will be spurred into action by July’s weak trade data.
The figures highlighted the weakness we have seen in the global economy and as exports slow, we could see the government and central bank engage in more easing policies to weaken the Yuan and stimulate domestic consumption and output.
A weak Yuan would also have the added benefit of stifling imports and leading Chinese consumers to buy more domestically produced goods - leading to the consumption driven economy the country has been aiming for over recent years.
After a lacklustre spring, Germany’s factory sector bounced back in June with a 0.8% increase in production.
If you strip out energy and construction, the figures are even better - with a 1.5% jump in output.
Shares in the aerospace company have dropped by 1.3% after it revealed Britain’s Serious Fraud Office is conducting a criminal investigation into allegations of fraud, bribery and corruption in the commercial airline business.
Europe’s main stock markets are all rising in early trading:
FTSE 100 hits new 14-month high
The FTSE 100 index has gained 29 points to 6823, its highest level since Jun 2015†.
Mining stocks are among the risers, with Anglo American and BHP Billiton both up around 3.5%.
Traders may be expecting Beijing to launch further stimulus efforts to keep its economy on course, which would boost demand for their natural resources.
China’s appetite for overseas oil may also be waning.
Imports of crude oil in July dropped to their lowest level since January, new figures show, signalling that energy demand has dipped:
#China Crude #Oil Imports Fall to 6-Month Low as Teapot Demand Slows https://t.co/WDab9TqUBW #OOTT #Opec pic.twitter.com/tDQoKFQhXX
— Javier Blas (@JavierBlas2) August 8, 2016
Chinese trade: What the experts say:
Capital Economics’ China economist Julian Evans-Pritchard fears further trouble ahead (Reuters reports).
“Signs of stronger manufacturing activity among many of China’s key trading partners has so far failed to lift export growth.
“The country’s export growth is likely to remain subdued for some time.”
IG analyst Angus Nicholson believes China’s trading partners will be concerned that its trade surplus swelled to $52.3bn last month (via the WSJ)
“I definitely think we could see concern over the surplus...We have a long way to go before we really see a decline in China’s overcapacity.”
Clara Leonard of RBC Capital Markets says the trade figures are a bad start to a busy week of Chinese data:
In China this morning, July trade data was a disappointment, highlighting that world trade growth remain weak....
In China, there will be several other important economic releases this week, including July inflation (Tuesday), industrial production (Friday), retail sales (Friday) and finally new loans and M2.
Chinese exports slide
The week is beginning with worrying news from China.
Chinese exports shrank by 4.4% year-on-year in July in dollar terms, following a 4.8% decline in June, according to fresh figures from the country’s customs department.
It may indicate that Britain’s Brexit vote has hit global confidence, or that the world economy is weakening for other reasons.
Chinese imports were even worse, shrinking by 12.5% year-on-year, the biggest decline since February. That suggests China’s domestic demand is faltering despite Beijing’s efforts to stimulate its economy.
#China's Jul exports, imports fall more than exp, signaling tepid glo demand & China slowing https://t.co/vdmooiilUT pic.twitter.com/mlKrGlV4cz
— Holger Zschaepitz (@Schuldensuehner) August 8, 2016
But it’s not what the markets were looking for, and renews concerns over China’s ability to rebalance its economy and tackle the bad debts lurking in the banking sector.
China July trade (USD)
Trade surplus $52.31b
Exports -4.4% (est -3.5% prev -4.8%)
Imports -12.5% (est 7% prev -8.4%) pic.twitter.com/OUF4H2SpMX
— Haidi Lun 伦海迪 (@HaidiLun) August 8, 2016
Investors have not paid much consideration to Chinese numbers for some time now, as their attention was very much focused on Brexit and the Fed interest rate. However, the number released over in China has made investors wary once again that the situation both at home and abroad is not improving.
I’ll pull together more reaction shortly....
Updated
The agenda: UK bosses pay soars again
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britons are waking up to the news that the bosses of their largest companies have enjoyed another bumper pay rise.
The average CEO (and some of them are more average than others) took home £5.5m last year in pay and other incentives, according to the High Pay Centre. That’s 10% more than a year ago.
Advertising magnate Sir Martin Sorrell needed a particularly large wheelbarrow, as he picked up £70m thanks to a long-term incentive plan.
The report piles more pressure on the City to reform its pay policies, after a summer of shareholder anger against boss pay.
My colleague Juliette Garside explains:
“There is apparently no end yet in sight for the rise and rise of chief executive pay packages,” said the centre’s director, Stefan Stern. “In spite of the occasional flurry from more active shareholders, boards continue to award ever larger amounts of pay to their most senior executives.”
Leading company bosses now typically earn 129 times more – including pensions and bonuses – than their employees.
The prime minister has promised to rein in soaraway salaries. In a shot across the City’s bows, Theresa May last month set out a series of boardroom reforms, including giving employee representatives a seat at the top table. She condemned the “irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses”.
The report should get plenty of attention today, especially as we’re into the August lull.
There’s really not much on the agenda today, apart from
- Chinese trade data (more on that shortly)
- German industrial production figures for June
- Eurozone Sentix confidence survey, at 9.30am BST
And the European stock markets are likely to be subdued:
Our European opening calls:$FTSE 6793 down 1
$DAX 10383 up 16
$CAC 4414 up 3$IBEX 8548 up 9$MIB 16644 up 18
— IGSquawk (@IGSquawk) August 8, 2016
Updated
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