European equity markets tracked their Asian counterparts higher on Tuesday after upbeat Chinese trade data fuelled investor optimism that its economy was bouncing back.
The Europe Stoxx 600 added 1.2 per cent at the open, with gains of 0.8 per cent, 1.6 per cent and 0.9 per cent respectively for London’s FTSE 100, Frankfurt’s Dax 30 and Paris’s CAC 40.
The moves came after data showed that Chinese exports fell by much less than analysts had anticipated in March, marking a modest recovery from the previous two months’ figures as the country ended lockdowns aimed at combating the coronavirus. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 1.8 per cent following the report, while the Hang Seng in Hong Kong ticked up 0.8 per cent.
“While the data has not always proven reliable, it suggests that the Chinese economy is starting to stabilise faster than expected,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
However, various analysts warned the respite would be “shortlived”, with a collapse in demand from abroad offsetting the easing of supply side constraints. Analysts at Barclays predicted a 20-30 per cent contraction in Chinese exports in the second quarter — compared to 13 per cent in the first — driven by “an expected growth slump in the country’s major trading partners”.
Meanwhile, markets were looking ahead to a raft of US earnings reports later today and during the week for a further glimpse into the impact of the coronavirus pandemic on the global economy.
Investors will be watching for indications of how the Covid-19 crisis has affected corporate earnings, with large banks and financial companies including JPMorgan and Bank of America scheduled to report first-quarter earnings on Tuesday.
“Markets are understandably a bit edgy ahead of these releases,” said Robert Carnell, head of Asia-Pacific research at ING.
Futures trade tipped the S&P 500 to rise 1.4 per cent when trading on Wall Street begins later in the day. The US stock benchmark fell 1 per cent on Monday.
The daily US coronavirus death toll has fallen for three straight days, while European leaders have begun outlining plans to reopen their economies in response to signs they had overcome the worst of the coronavirus outbreak. Optimism that the pace of the virus’s spread is close to peaking has prompted a rally in US stocks in recent weeks.
Oil prices rose slightly but concerns lingered over whether a record US-backed Opec deal to cut supply would be enough to absorb the global crude glut. Brent crude, the international benchmark, rose 1 per cent to $32.05 a barrel while US marker West Texas Intermediate climbed 0.2 per cent to $22.45.
Elsewhere, Japan’s Topix index added 2 per cent, while South Korea’s Kospi advanced 1.7 per cent and Australia’s S&P/ASX 200 rose 1.9 per cent.
The yield on 10-year US Treasuries was little changed at 0.761 per cent.