Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
There’s an autumnal chill in the air this morning, but investors are warming to equities again after an encouraging jump in Chinese factory earnings.
Profits across China’s manufacturing companies have grown for the fourth consecutive month, government figures released over the weekend show. In August alone they jumped 19.1% year-on-year, as the world’s second-largest economy continued to recover from the shock of the Covid-19 pandemic.
This means that industrial profits so far this year are only 4.4% lower than in January-August 2019 — quite a recovery, given the turmoil in the global economy.
Raw material producers, equipment makers and electrical manufacturers all posted particularly solid jumps in profits
The figures suggest that China’s recovery gained momentum over the summer, as Beijing’s stimulus efforts kick in.
This is a welcome sign for the markets, amid fears that Europe’s recovery could fizzle out in the next three months as rising Covid-19 cases.
Stephen Innes of AXIcorp explains:
Profits of China’s major industrial firms remained on the steady path to recovery in August. Indeed robust earnings in China’s colossal production and operations engines provided further evidence of a strong economic comeback.
The data augers well for the China growth story and the outlook for commodity prices.
So, after losing ground last week, European stock markets are set to rebound this morning. The UK’s FTSE 100 is expected to gain over 1%, having flirted with a four-month low on Friday.
Asia-Pacific indices have already posted gains, with Japan’s Nikkei rising 1%, China’s CSI 300 up 0.6% and South Korea’s KOSPI rallying 1.3%.
Also coming up today
Christine Lagarde, president of the European Central Bank, is testifying to MEPs about the eurozone economy today. She may face questions about the strength of the euro, Europe’s faltering recovery, and the prospect of another ECB stimulus package soon.
- 2.45pm BST: ECB chief Christine Lagarde testifies to the the European Parliament’s ECON committee