China’s finance ministry has pledged to cut taxes and boost spending, as it fights a slowing economy
- Latest: German GDP only expanded 1.5% last year
- Introduction: China promises tax cuts and spending boost
- Central bank promises “ample” liquidity
- State planner: We’ll make a good start to 2019
- Shanghai stock markets surges 2%
Elsewhere in the eurozone, shares in Italian banks are sliding after they were told to set aside more capital to cover bad loans.
Reuters has the details:
The European Central Bank has asked lenders it oversees to put aside more money to fully cover their impaired loans by around 2026, Italian newspaper Il Sole 24 Ore reported on Tuesday citing a source.
The report focused in particular on Italian banks, saying the country’s lenders were burdened by the highest amount of impaired loans in Europe.
Germany’s growth pains are part of a wider slowdown across Europe.
Oxford Economics reckons eurozone growth will drop to just 1.5% this year, from 1.8% in 2018 – and a sizzling 2.7% in 2017.
With #Germany flirting with recession in H2 ’18, hopes for a rebound in #eurozone growth dashed. We see EZ Q4 GDP up just 0.2%, thanks to weak industry, and +1.8% for 2018. Growth shd pick up as transitory factors wane, but we see only 1.5% 2019 growth: https://t.co/5xU2bZ0ggI pic.twitter.com/xziTBiaGKT
Here’s some snap reaction to the German growth data:
With 1.5% annual growth in 2018, it looks as if a technical recession in second half of the year was just avoided.
2018 proves to be weakest for German growth for 5 yrs. Wld be unwise to call recession (whole yr growth of 1.5% wld imply modest rebound of 0.2% Q4) but clear eurozone losing momentum on whole.
Real GDP grew 1.5% y/y in #Germany in 2018, the slowest since 2013, mainly driven by slower private consumption growth 1.0% y/y (vs. 1.8% in 2017). Despite the recent weakness, we expect the expansion will continue in 2019 driven by domestic demand.
Why did Germany’s growth rate slide to just 1.5% last year, from 2.2%?
Germany’s finance ministry has blamed a handful of factors, including:
Newsflash: Germany’s economy has grown at its slowest rate in five years, a fresh sign that the global economy is cooling.
Europe’s largest economy only expanded by 1.5% in 2018, down from 2.2% growth in 2016 and 2017.
The German economy thus grew the ninth year in a row, although growth has lost momentum.
German 2018 GDP growth slows to 1.5%, weakest in 5yrs. pic.twitter.com/kcyL2akLCr
Paul Donovan of UBS Wealth Management says China’s pledge to cut taxes is an example of “pom-pom waving cheerleading is likely to become a regular feature of the Chinese economic landscape”.
European stock markets have followed Asia’s lead.
They’re all comfortably higher this morning, clawing back Monday’s losses.
European car shares have jumped by 2.2%, to their highest levels in five weeks, thanks to China’s stimulus pledge.
Britain’s FTSE 100 has jumped by over 50 points, or 0.8%, at the start of trading.
Mining stocks are leading the charge, with Rio Tinto, Anglo American and Glencore all up at least 1.5%. They’ll all benefit from increased demand for commodities if China’s economy picks up.
Beijing is signalling that it is prepared to do whatever it can to avoid a hard landing, says Konstantinos Anthis, Head of Research at ADSS.
News that China is about to implement another round of tax cuts supports the notion that the Asian nation will do as much as possible to support the domestic economy and avoid a steep slowdown.
Stocks have jumped across Asia today, following China’s pledge to cut taxes.
China’s benchmark index, the CSI 300, surged by 2% as investors welcomed today’s stimulus measures.
The smell of China stimulus hopes are wafting through Asian markets today.
Chinese officials are quoted as saying the government will cut taxes “on a larger scale”in 2019, especially for small businesses and manufacturing. There are no details, but the news was enough to reverse yesterday’s sell-off.
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If she suffers a loss by a narrow margin, it may be positive news to Sterling, as May can head back to Brussels for more concessions which could be enough to pass the bill in a second “Plan B” vote. However, a loss by a wide margin will make it tricky for Sterling traders as the bill will be rejected due to different ambitions.
Conservative MPs want concessions that are hard to get from Brussels, meanwhile, hardcore remainers want to reject the deal in the hope that they get a second referendum. This may lead to two extreme outcomes: either a hard Brexit or no Brexit at all. However, given all the uncertainty towards such a scenario, investors may sell the currency and assess the situation later, leading to high volatile moves in the Pound.
#Brexit vote day. Our team clear that deal won’t pass, and as a result #UK out of time. Can’t leave #EU at end March. Beyond that, also means death of muddle-through option. Either much softer Brexit or hard Brexit (or none at all). And politics as we’ve not seen for decades