ECB ready to act, says Draghi, as shares move higher on stimulus hopes -as it happened

Here’s where we are so far today. No post-new year fireworks in China but lots of action:

• The Nikkei average in Tokyo has bounced up 7% after losing 11% last week, shrugging off dreadful GDP figures showing Japan’s economy shrank 1.4% in 2015
• A weaker yen has helped, plus the promise of more easing after Shinzo Abe said Tokyo would intervene “where necessary” to influence the forex market
• Other Asia Pacific indices followed suit with Australia up 1.64%, Korea up 1.39% and Hong Kong 2.91%.
• European markets set to open up
• In China CSI300 was down 0.67% and the Shanghai Composite was down 0.81% after reopening from the long new year break.
• Chinese trade plunged sharply in January. Exports down 11% in dollar terms and imports down 16.6%.
• The yuan strengthened against the dollar after the central bank ruled out further devaluation.
• Oil dipped slightly with Brent crude falling 17c to $33.19.

15 Feb 201600.43 EST

Justin McCurry

Japan’s economic revitalisation minister, Nobuteru Ishihara, has all but ruled out emergency government measures to stimulate the economy. Instead, Ishihara called for the quick implementation of a 3.32 trillion yen supplementary budget passed by parliament last month that provides support for child-rearing and nursing care, as well as a handout – intended to boost spending – for pensioners.

Ishihara said Japan’s economic fundamentals were “sound”, adding that it was moving towards a recovery in employment and corporate profits, despite the disappointing GDP figures.

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Thailand grew by 2.8% in 2015, compared with 0.8% the previous year, according to official data today.

But despite the extra growth, the country’s recovery from the turmoil of the military coup in 2014 remains fragile. The state planning agency cut its forecast for 2016 growth to 2.8-3.8% from the 3.0-4.0% range it saw in November.

One of the factors in China’s currency fluctuation (see below) is the amount of money wealthy citizens are removing from the country. Some estimates say up to a trillion US dollars has been taken out in the past year, further weakening confidence in China’s slowing economy and undermining the yuan, which the Beijing leadership wants to be become a fully-fledged international unit.

So, very interesting piece in the New York Times about the outflow and the practice of Smurfing, whereby people remove the annual maximum $50,000 from the country in cash.

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China’s trade data has thrown new light on the oil market, where the slump in prices has been a key downward driver of stock markets in recent weeks.

China’s crude imports dropped 20% in January from record high volumes the previous month, Reuters reports. Crude imports to the world’s second biggest economy in January were also down 4.6% on a year-on-year basis at 26.69m tonnes, or 6.29m barrels per day. But the data was distorted by China taking advantage of low global oil prices last year to add up to 185m barrels to its reserves, Reuters calculated.

So that has taken the edge off crude’s price spike on Friday. London Brent crude was down 17c at $33.19 a barrel at 0430am GMT.

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The markets are loving the idea of more intervention.

The Nikkei is now up more than 6%. Another 5% and it will have regained all the losses of last week in one session.

(Funny that, given how we normally associate finance operatives with conservative, anti-government views, isn’t it? )

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Japan’s prime minister Shinzo Abe has given some encouragement to investors who think he could authorise more government intervention to boost the economy.

He told parliament today that “excessive currency volatility is undesirable”, a reference to the sharp rise in the yen last week that sent stocks plunging.

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He added that Tokyo would take appropriate action in the exchange rate market as needed and he hoped the Group of 20 finance leaders will take appropriate measures to address global economic problems when they meet in Shanghai next week.

The US dollar rose further hitting a session high of 113.87 yen compared with last week’s 15-month trough of 110.985.

In Australia the banks have made a decent comeback after being hurt by last week’s sell-off. The financials sector on the ASX/S&P200 – the big four banks have been as much as one-third of the index’s overall value – climbed 1.4% on Monday. ANZ is up 2.43% while the Commonwealth is up nearly 1%.

It will be a relief for investors after a sell-off in Europe invoked the spectre of the 2008-09 banking crisis.

But they may not be completely out of the woods. A leading UK economist, Sir John Vickers, has warned that the country’s banks face a serious threat from any global economic shock despite the measures taken since the GFC to make them safer.

Calling for banks to hold more capital, Sir John, who led the UK’s inquiry into the banking collapse, said:

A good way to think about it is as an insurance policy. You have to pay a premium to insure your house and you hope nothing bad will happen. But if it does, you are much better off in paying that premium, and for full coverage.

If banks run out of capital, all sorts of havoc could ensue. We want to be in a position where there’s enough of a buffer to take any losses that might occur.

Today’s figures from China and Japan are likely to increase the clamour for more action from the central banks.

Chris Weston, chief market strategist at IG in Melbourne, identified the key “bad news is good news” formula:

Asia has found its mojo. There is nothing like poor data to get the equity bulls excited. Japanese Q4 GDP fell 1.4% quarter-on-quarter annualised, 60 basis points worse than forecasts, with nominal faring slightly better. Consumption remains poor, although if you break down the facts, the shining light is that Capex gained for a second quarter. For those looking at the demand story, China’s January trade data would be particular worrying with exports (in USD terms) falling 11.2% in January and imports falling 18.8% in January.