European stocks rise following positive Chinese export data

European stocks edged higher and oil prices rebounded, as investors tracked the lifting of lockdowns that have paralysed economic activity across the globe.

The region-wide Stoxx Europe 600 benchmark rose 0.7 per cent in morning trading while the Frankfurt’s Xetra Dax gained more than 1 per cent.

“The strongest economies are starting to emerge from lockdown and that’s a big positive,” said Fabiana Fedeli, global head of fundamental equities at DWS, adding that investors have started scouring the market for “laggards which are slightly wounded but not mortally wounded”.

London’s FTSE 100 climbed 0.7 per cent after the Bank of England announced its decision to hold interest rates steady. The pound rose 0.2 per cent against the dollar following the rate decision.

Oil prices reversed morning earlier losses on Thursday, with West Texas Intermediate, the US marker, up 9 per cent at $26.29 a barrel, while global benchmark Brent crude was up 7 per cent at $31.81 a barrel.

“Traders will be bullish in news of new shut-ins, although these are to be expected, and prices will be gaining on every new announcement of production curtailments,” wrote Bjornar Tonhaugen, head of oil markets at Rystad Energy. “It’s the old art of trading, bread and butter for many.”

Wall Street looked set to open higher, with S&P 500 futures pointing to gains of 1.6 per cent.

The gains for European bourses came after April trade data showed a surprise rise in Chinese exports of 3.5 per cent compared with the same month a year ago. Economists had expected a fall of nearly 16 per cent.

A private survey of Chinese business activity released earlier in the day underscored weakness in the country’s economy as its services sector contracted for a third consecutive month in April due to the pandemic.

The Caixin-Markit services purchasing managers’ index also showed the second-sharpest fall in export orders and the fastest rate of job shedding on record for China’s services industry.

Some analysts pointed out that the extent of the Chinese economy’s recovery from the coronavirus crisis was still unclear.

Zhong Zhengsheng, chief economist at CEBM Group, said the “second shockwave for China’s economy brought about by shrinking overseas demand should not be underestimated in the second quarter”.

China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks closed down 0.3 per cent.

Elsewhere in Asia, Hong Kong’s Hang Seng and Japan’s Topix benchmark slipped 0.3 per cent while Australia’s S&P/ASX 200 fell 0.4 per cent.

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