Wednesday, 20 April: Data from Japan overnight showed exports falling for a sixth straight month in March as slowing growth in China continued (China is Japan’s largest trading partner and exports to the region fell 7.1% in March). Exports were reported declining slightly less than expected (-6.8% vs -7.0% expected year-on-year). Other contributing factors to the fall in exports was a lack of demand for electronic goods whilst the strengthening yen also weighed heavily. Japanese electronics are unlikely to get much rest bite as Apple are expected to announce its biggest ever quarterly decline in iPhone shipments in its March quarter earnings report next week. Following a series of earthquakes over the weekend, major manufacturers in Japan closed temporarily, disrupting supply chains around the country with some analysts saying the earthquakes could cause a sharp drop in the country’s factory output of cars and other goods in April. Toyota, Sony and Honda have been closed as a 7.3 magnitude earthquake struck a southern manufacturing hub. The weaker data should add further pressure to the government and the Bank of Japan to do more to stimulate growth, with January’s cut to deposit rates failing to add excitement in the economy. The Nikkei closed +0.2% in Wednesday trading. The index is lower by just over 8% year-to-date. The Japense yen is currently trading flat against the US dollar at ¥109.29.
For the first time since mid-2015 unemployment in the UK has risen in the three months to February. Unemployment rose by 21,000 to 1.7 million in the 3 month period whilst the unemployment rate held steady at 5.1% for the fourth consecutive month. The employment data released this morning also showed the number of people in employment rose by 20,000, the weakest gain since the three month period to June 2015. The EU referendum is still 2 months away, and recently both the Bank of England (BoE) and the International Monetary Fund have said the uncertainty surrounding the vote was hurting investment in the UK. A separate release today from the BoE showed investment intentions among services firms and hiring intentions among consumer services companies were at their lowest since mid-2013.
Continuing with the jobs theme, utility group Centrica, the parent company of British Gas, the country’s largest energy supplier, has today announced they plan to cut more than 600 jobs as they propose to close its Oldbury office near Birmingham. Last year the Group announced they would cut 6,000 jobs as part of a cost-saving drive as weak energy prices took their toll. The firm have said the proposals to close the site was part of a strategy to improve service and reduce costs to ensure competitive prices. The demand for customer services over the telephone has reduced with customers now preferring to contact British Gas online, the company said.
The main markets in Europe all ended the day positively, with the FTSE 100 making a slight gain of 0.1%. The CAC in France and the DAX in Germany traded stronger with gains of 0.6% and 0.7% respectively. In the US, the Dow Jones and the S&P 500 are both in the green. Brent oil has made sharp gains since US markets opened, trading +1.65% at $44.79 a barrel at the time of writing.