Risk-on flows seen after Chinese data

Summary:

• Pound little changed on the week despite Brexit news
• Stocks and Oil gain after China expands credit
• FTSE closes in on 2019 highs 

There’s been a clear move higher in risk assets in recent trade after the release of some data from the Far East suggests that China continues to provide ample levels of stimulus to its economy. The FTSE has added over 30 points this morning to trade back near last week’s close and the market appears well set to add to this going forward and push up to trade at 2019 highs. As the dust settles on another week dominated by Brexit headlines that has resulted in nothing changing other than the can being kicked further down the road, the pound is little changed on the whole. Any upside benefits gained in avoiding a no-deal have been mitigated by the heightened levels of uncertainty being prolonged further and until something tangible changes on this front there’s little to suggest any chance of significant appreciation in the pound.

The pound is little changed at the end of yet another tumultuous week for Brexit. Source; xStation

Stocks and Oil jump as China expands credit

The March M2 money supply rose by 8.6% Y/Y vs 8.2% expected while new yuan loans came in at 1.69B vs 1.20B expected. Compared to levels seen in recent years these figures aren’t actually that elevated, but they do represent a pick-up compared to the latest numbers and suggest the world’s second largest economy is scaling back on its deleveraging efforts in a bid to bolster growth. In itself this data could be described as only mildly supportive of risk assets but the clear positive market reaction reveals how both equities and crude oil retain a heightened sensitivity to good news at present, while looking through any negatives - a pleasing scenario for Bulls.