European stock markets are mixed, with Eurozone peripherals markets moving higher with peripheral bonds ahead of the ECB meeting, indicating that markets are still hoping for further action from Draghi. Oil prices received a boost following a larger than expected draw reported on Tuesday evening by the American Petroleum Institute. The FTSE 100 is also moving higher as the Pound is correcting some of its recent gains and data releases continue to come in higher than expected, with the RICS house price balance unexpectedly jumping to 12% from 5% in the previous month.
The post Brexit slump is at least partially being reversed, but that doesn't mean of course Brexit risks won't cut medium term growth prospects on both sides of the channel. The DAX meanwhile is down on the day as investors turn cautious at levels over 10,700. The mixed European session followed losses on most Asian markets, with the Hang Seng managing to move higher, but Japanese markets in the red as stronger than expected GDP numbers prompt investors to review BoJ easing expectations.
Japanese GDP Increased More than Expected
Japanese GDP was revised higher for the Q2 increasing by 0.7% compared to the original reading of 0.2% growth. Japan's economy, has been hampered by weak exports given the robust yen. Inventories contributed 0.1% to GDP growth, versus the preliminary negative contribution. Private consumption, which accounts for roughly 60% of the economy, rose 0.2%, unchanged from the preliminary estimate.
Chinese reported better than expected trade data for August. The world’s second largest economy revealed that exports declined 2.8% in dollar terms year over year following July's 4.4% decline and beating expectations for a 4% decline. Imports unexpectedly rose 1.5% year over year, reversing a 12.5% fall in July and coming in better than forecast for a 4.9% fall. August's increase was the first on-year rise in imports in dollar-denominated terms since October 2014.
Crude prices are up for a second day, with WTI recapturing the 46 handle. Prices are up despite remarks from a director at Iran's state-run National Iranian Oil saying that Tehran won't be ready to contemplate joining in any production freeze at the OPEC Algiers meeting later this month, as it wants to achieve pre-sanctions levels of production first. This would be above 4 million barrels a day, versus the 3.8 million prevailing output level, which may be achieved by the end of this year or early 2017. Without Iran's participation this month, it is unlikely Saudi Arabia, worried about losing market share, will push through with an output cap.
