A strong rebound in energy prices is the power house for the global rally which kicked off last night over in US, and the same optimism filtered into European markets. WTI is back above the 200 day moving average and this has happened for the first time since 2014. It appears that the bond between the equity and oil market is still firm and they both like to move in tandem.
However, oil has eased off this morning as Iran has confirmed that its oil minister has no intentions to attend the meeting in Doha and this puts the same agenda back on track which is if we are going to see any kind of positive outcome from this meeting. The dilemma will be the same which is if they do agree to output freeze and will they stick to their commitment when they can clearly see that Iran is willing to pump more oil.
Another encouraging piece of news which is boosting investor confidence today comes on the back of the Chinese trade balance data which confirmed that the country is finding its mojo again as export numbers bounced back strongly.
The export number came in well ahead of expectations with a reading of 11.5% for the month of March when expectations were for 2.2%. It signals two clear elements; first of all, global growth may be growing stronger and this despite the fact that the IMF reduced their world growth target yesterday, but increased their growth target for China. Finally, the policies employed by the PBOC are not completely fruitless.
The data also confirmed that China has imported more iron ore during the first quarter and this signals strong growth. This is encouraging news for traders who may try to build more positions in the commodity arena and this may help mining stocks to secure some more gains. Traders are optimistic that the PBOC is finally on a path which they can be proud off and this is despite the fact the bank still has plenty of gunpowder left in its bag to fight the crisis.
Moreover, investors are still hopeful that they will get more favorable news from the Bank of Japan any day now. As the BOJ cannot afford the strength we have seen building in the Japanese yen over the last few weeks. Any sort of stimulus news will act as a steroid for investor confidence.
Later in the day we will kick off with some major economic news. The US core retail, PPI and retail sales data are due at 12.30 GMT. Expectations are that despite weak investor confidence which we saw yesterday, the retail sales number may come in strongly at 0.4% compared to the previous reading of -0.1%. Given the rebound in oil prices, the PPI reading is also expected to show a better number with a reading of 0.3% in contrast to the previous number of -0.2%.
Dark and cold days are over for Tesco (LON:TSCO). The firm has announced another strong quarter with annual pre tax profit of £162 million. This confirms that the firm is tacking its affairs correctly and the strategies it is using are bearing fruit now. Thanks to its remarkable and significant change in its business strategies which enabled the company to generate first sales growth since 2013. Aldi and Lidl created an enormous amount of headwinds for the firm but it’s sheer determination has shown that Tesco can prove that they have the ability to bring back the footfall in their store which helps in its growth.
Today is surely a good day for the CEO Dave Lewis, who has been holding the group together. Tesco’s like for like sales excluding VAT and petrol surged by 0.9% during the final quarter of 2014 in the UK. If we compare this number to the previous quarter, the results are just completely commendable as the firm posted a decline of 1.5%.