Stock markets have rallied today on the back of the better-than-expected manufacturing figures from China. 

Europe

Both the official and the Caixin survey of Chinese manufacturing exceeded economists’ expectations and registered growth on the month. The manufacturing reports, coupled with a sense of optimism in relation to US-China trade talks has boosted European shares. In London, the mining and energy sectors are some of the strongest performers as traders snapped up commodities in light of the Chinese manufacturing reports.

EasyJet shares sold-off sharply after the company warned about ‘weak’ summer sales on the back of Brexit uncertainty. The group said it expects revenue per seat at constant currency to have dropped by 7.4% in the first-half. The airline blamed ‘weaker consumer demand’ and the lack of clarity surrounding Brexit for the downbeat update. On the bright side, the airline’s CEO, predicts that Brexit won’t have a long-term negative impact on the industry, and that the company has contingency plans in place for Brexit.

Sports Direct said it has been contacted by some Debenhams shareholders, and they are in favour of Mike Ashley taking over as CEO of the struggling retailer. The investors in Debenhams are concerned about the share price value being wiped out if the debt restructuring plan goes ahead. Mr Ashley is a major shareholder in Debenhams, and if he want to salvage his original investment in the firm, he would need to sweeten his original offer.  

WPP shares are higher this afternoon after Deutsche Bank upped their rating for the stock to buy from hold. The German bank believes there is limited downside risk in WPP due to the 7% dividend yield.

US

The S&P 500 and NASDAQ 100 have pushed higher today as the manufacturing report from China have lifted sentiment in the US. The major indices have recouped most of the ground that was lost on the back of the sell-off in mid-to-late March. Should the bullish move continue, the indices might retest the 2019 highs.  

The US produced mixed economic announcements today. The retail sales report showed a 0.2% decline in February, while economists were expecting an increase of 0.2%. The ISM manufacturing report ticked up to 55.3, from 54.2. It is encouraging to see that manufacturing activity ticked up, but keep in mind the previous report was the lowest reading since late 2016, so in the grand scheme of things, the sector is still fragile.    

Kellogg announced plans to dispose of Keebler and Famous Amos to Ferrero for $1.3 billion. The move by Kellogg’s is an attempt to refocus on other brands like Rice Krispies Treats or Pringles. 

FX

GBP/USD is pushing higher as traders await the indicative voting by MP s at Westminster. Law makers will be voting on a series of proposals today in an effort to try and map out what they wan from Brexit. It has been reported that the Labour Party will be backing the ‘common market 2.0’ proposal, and there is also talk of popular support for the customs union proposal, and that has helped the pound as it might bring about a soft Brexit. 

EUR/USD is largely unchanged despite the depressing economic updates from the eurozone today. French manufacturing came in at 49.7, missing the 49.8 forecast, and German manufacturing dropped to 44.1, undershooting the extremely low flash estimate of 44.7. Eurozone headline inflation and core inflation dropped to 1.4% and 0.8% respectively, and the slide in the cost of living suggests that demand is declining.

Commodities

Gold is a little higher today on the back of the slight slip in the US dollar. The metal has seen low volatility in the past couple of sessions, and even though there has been some selling pressure on the past month, the wider upward trend is still in place. 

Oil hit its highest level since mid-November over concerns about short supply, and increased demand. The Baker Hughes report showed the number of active rigs dropped by eight in the last week of March. The quarterly drop, was the largest in three years. The firmer Chinese manufacturing numbers spurred on hopes for higher energy demand too.  

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