German exports registered their biggest rise in almost two years calming down widespread concerns that Europe’s largest economy will dip into recession in the third quarter. The Federal Statistics Office said exports increased by 1.5% on the month, their biggest increase since November 2017. Germany’s export-reliant manufacturers have been suffering from a slowing world economy and business uncertainty linked to a trade war between the United States and China as well as Britain’s planned exit from the European Union. The economy shrank by 0.1% in the second quarter with recent data suggesting manufacturing fared badly in the third, which could well put Germany in recession. Other data published this week has painted a mixed picture of the industrial sector, with output falling more than expected in September although orders rose beyond expectations. German trade surplus widened to 19.2 billion euros from an upwardly revised 18.7 billion euros in the prior month.
Good news arrived yesterday from China too as exports and imports contracted less than expected in October, providing some relief for the economy as Beijing has come the closest ever in the negotiations to reaching a partial trade deal with Washington. China’s October exports fell for the third straight month, down 0.9% from a year earlier. China’s imports shrank for the sixth consecutive month, though the 6.4% drop was smaller than the expected 8.9% and September’s 8.5% decline. Despite the more modest drop in imports, domestic demand appeared to remain weak, with imports of iron ore and copper falling. To boost credit, the People’s Bank of China cut the interest rate on its one-year medium-term lending facility loans on Tuesday, the first cut in almost 4 years. Chinese PMI data will be published tomorrow.
Asian stocks shed some of the previous gains from the six-month highs reached this week as conflicting signals from China and the United States on progress made in trade talks deflated market hopes. Markets also suffered in Europe as Euro Stoxx 50 and German DAX lost 0.35% each while London’s FTSE backtracked 0.24%. MSCI’s Asia-Pacific shares lost 0.4%, having climbed 2% this week. Nikkei touched a 13-month high but then gave up some of the gains to be last up 0.26%. Chinese shares were flat having risen steadily all week. Hang Seng index slipped 0.6% as political tensions continue following the death of a protesting student. Moves in the currency market were more restrained with the dollar trading at a close range of 109.24 yen, after its yesterday’s five-month high of 109.49. The offshore yuan traded at 6.9779 yuan per dollar, slipping away from a three-month high of 6.9530$. The euro was treading water at $1.1052, after a low of $1.10355, its weakest in about a month. The dollar index was flat at 98.117 after hitting three-week highs of 98.236 yesterday.
Crude oil fell as uncertainty on whether the United States and China will agree a long-awaited deal to end their bitter trade dispute grew. The price was further hit by rising crude inventories in the United States. Brent was down 16 cents at $62.13 a barrel after gaining 0.9% in the previous session. U.S. West Texas Intermediate was also losing ground, down 23 cents at $56.92 a barrel after a 1.4% rise yesterday. A deal between the Organization of the Petroleum Exporting Countries and allies, such as Russia, is limiting supplies until March 2020. The producers will meet on Dec. 5-6 in Vienna to review that policy. U.S. crude oil stockpiles rose sharply last week as refineries cut output and exports.