Wall Street relief on upbeat Chinese data

Wall Street’s main markets were eyeing a return to all-time highs yesterday after a raft of Chinese data beat expectations, easing concerns about the health of its economy.

Although Europe struggled to join in, MSCI’s 47-country world index was at a six-month high, benchmark bond yields shuffled up and the Australia dollar, which tends to be highly sensitive to China’s fortunes, did the same.

With Wall Street also digesting results from the likes of Morgan Stanley and US trade data, the Euro Stoxx 600 and German DAX inched higher by mid-afternoon, although London’s FTSE struggled as a near 5pc drop in iron ore prices hit its miners.

Moves in Asian share markets had been mostly modest too, in part because they had already rallied hard since the start of the year. World stocks are now up 20pc since late December.

Japan’s Nikkei closed up 0.25pc after hitting a five-month peak while the Shanghai Composite added 0.3pc to score its highest close since last March and extend a red-hot 2019 run that has seen it boom nearly 35pc.

Investors have been counting on better news from China and were not disappointed with first-quarter economic growth pipping forecast at 6.4pc.

The green shoots appearing in the world economy pushed benchmark government bond yields higher. US Treasury 10-year yields were up to 2.6pc and German Bund yields hit a four-week high, although at 0.1pc they are still barely above zero.

In currency markets, the euro edged up a touch to $1.1305, recovering from losses driven by a Reuters report that several European Central Bank policymakers think the bank’s economic projections are too optimistic.

Oil prices were buoyed again as fighting in Libya and falling Venezuelan and Iranian exports raised concerns over tightening global supply.

US crude was last up 43 cents at $64.44 a barrel, while Brent crude futures rose 32 cents to $72.03.

Meanwhile, shares in football giant Juventus had to be suspended as they dropped more than 20pc after the team was knocked out of the Champions League by Ajax. Shares in the Dutch club celebrated with an 8.5pc jump.

Germany sparks eurozone gloom with downgrade

Germany, the eurozone’s biggest economy, has downgraded its economic growth forecasts for the second time in three months, fuelling concerns over the overall state of the bloc’s economic health.

The German powerhouse, which accounts for a third of the eurozone’s economy, now forecasts growth of just 0.5pc for this year, half of what was expected back in January.

A recent revival in German industrial production after it ended the year in recession had cheered sentiment and raised hopes that the country’s manufacturing sector could perhaps be turning the corner.

Economics Minister Peter Altmaier punctured that optimism yesterday with his new forecast for the German economy – not only has the outlook been halved since January, it now stands at less than a third of the 1.8pc that was expected as recently as the end of last year.

A bellwether of how Chancellor Angela Merkel’s Germany Inc is doing is revealed in the latest figures from Volkswagen, the world’s largest carmaker.

In the year to March, VW’s sales fell 2.8pc from the same period last year. Its Porsche luxury brand was worst hit, with sales down 12.3pc.

Data from the European Automobile Manufacturers Association showed that in March 2019 car sales fell 3.9pc to 1.7m units. There was also an ugly set of first quarter numbers from US auto sales as General Motors and Fiat Chrysler both saw 7pc-plus declines in volume. Of course, Europe’s largest economy isn’t just a car plant, but the industry is hugely important and it exports 70pc-80pc of its output, according to investment bank ING.

ING also notes that while direct employment in the car industry is just 2pc of the total, when you add in second and third-round effects some 7-8pc of the economy is linked to it.

Economic consultancy TS Lombard notes that surveys also show German companies are holding inventory levels that are higher than at any time since the eurozone sovereign debt crisis hit, a measure that implies it will take a long time for growth to return.

An economic slowdown in China had been blamed for part of the decline in German exports, along with a new vehicle emissions testing regime and low water levels, although data released yesterday showed that growth in the world’s second largest economy came in better than expected at 6.4pc.

Even if China’s growth slowdown is not as great as expected, there remain plenty of risks for European manufacturers and Germany in particular.

The European Commission has hit back with a list of $20bn of US products that could be targeted for tariffs in retaliation for a list from Washington in a long-running dispute over aircraft subsidies.

Europe and the US are also supposed to be holding talks on averting a trade war between the two in which German cars are in the front line with US President Donald Trump threatening to make sure there are no Mercedes-Benz cars rolling down New York’s Fifth Avenue.

Moneysupermarket.com Q1 Revenues Up 19%; To Pay Special Dividend In May

Moneysupermarket.com Group PLC (MONY.L) on Thursday reported first-quarter revenues of 104.9 million pounds, an increase of 19 percent from 88.3 million pounds in the prior-year quarter. Revenue growth was 12 percent, excluding Decision Technologies.

The company noted that motor insurance benefited from improved conversion, but was partially offset by subdued trading in life insurance as competitors spent more on their customer incentives.

Positive momentum in Money continued, albeit lapping a weak quarter in the prior-year period.

Mark Lewis, CEO of Moneysupermarket.com Group, said, “The reinvent strategy continues with a strong first quarter of trading, notably helping a record number of customers beat the rising energy price cap.”

Looking ahead to fiscal 2019, the Board of Moneysupermarket.com Group said it remains confident of meeting current market expectations. While performance of Home Services was exceptional in the first quarter, the company expects this to moderate through the year.

In mid-February, Moneysupermarket.com’s announced a proposed 40 million pounds enhanced distribution and related shareholder consultation. The company’s board confirmed today that this will be made by way of a special dividend.

The special dividend of 7.46 pence per share will be paid on 21 May 2019 to shareholders on the register on 3 May 2019. Shares will trade ex-dividend from 2 May 2019.