Japan Japanese mountain

No severe sell-off in Chinese markets after a week’s holiday and a massive rally in Japan has allowed financial stocks to break out of the doghouse and lead Europe’s major indices higher buoyed by HSBC’s decision to stay in the City of London.

Given the growth slowdown in China, signs of rising political discontent in Hong Kong and the change to the UK bank levy, it’s not at all surprising that HSBC have decided to stay in London. HSBC have clearly decided a British exit from the Eurozone would not have enough of an impact on the business to warrant delaying the decision until after the referendum. In all likelihood, the whole discussion of a relocation was just a very public statement of discontent from HSBC over the bank levy.

A bigger than expected decline in Chinese trade data was offset by soothing word over the weekend from PBOC governor Zhou Xiaochuan who played down forex fears. He said the central bank would keep the value of the yuan constant to a basket of currencies while allowing greater volatility versus the dollar. Chinese exports sunk -6.6% while imports declined a whopping -14.4% in January when gains of 3.6% and 1.8% were expected.

HSBC was one of the more modest risers amongst financial shares following the news its staying put in London, though its Asian focus meant it was one of the most stable during last week’s European bank sell-off. British Airways IAG is one of the top risers on the FTSE 100 after a broker upgrade while gold miners Fresnillo and Randgold were propping up the index as the price of gold slid over 2%.

US futures are trading significant higher in line with an improvement in international sentiment, continuing the recovery that began on Friday.

US stock markets are closed for Washington’s birthday, meaning action may be a little slower in afternoon European trading, though ECB president Mario Draghi’s talk at 2pm GMT could spark some movement in the euro.

USA pre-opening levels

NYSE and Nasdaq closed.


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