Markets lifted by hopes of economic recovery from Covid-19 slump - business live

A factory of the component maker SMC in Beijing, China. Photograph: Thomas Peter/Reuters

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Markets are starting the new week on the front foot, on hopes that the global economy is recovering from the shock of Covid-19.

New data from China overnight has shown that factory gate prices fell at a slower pace last month. The closely watched producer price index (PPI) dropped by only 2.4% in July from a year earlier, narrowing from a 3.0% decline in June, the National Bureau of Statistics said Monday.

That suggests a pick-up in demand for Chinese-made goods, as markets around the globe reopen.

On a monthly basis, PPI jumped by 0.4% in July alone, partly due to a surge in petroleum and natural gas prices Coal mining and automobile manufacturing prices also turned positive in July, the NBS added — another indicator of rising demand.

Consumer prices across China also picked up in July, lifting inflation to 2.7% from June’s 2.5% rise. Surging pork prices were a key factor as hospitality venues reopened.

ACEMAXX ANALYTICS
(@acemaxx)

China inflation data in July: CPI: 0.6%M, 2.7%Y, core: 0.5%Y, and PPI: -2.4%Y (June: -3.0%Y), #pork prices rose 85.7% on a yearly basis, chart @economics https://t.co/BuDChsgBij pic.twitter.com/I76AH4g2SD

August 10, 2020

These signs of economic revival in China are helping traders to put aside concerns about rising tensions between Washington and Beijing.

Fiona Cincotta of City Index says:

The data adds to mounting evidence that the economic recovery in China is not only solid, but also gaining momentum, boosting optimism that the world’s second largest economy will offer serious support to the global economic recovery.

There’s also lingering relief that last Friday’s US employment report was so upbeat, showing that 1.7m new jobs were created in July.

Investors are also mildly encouraged that President Donald Trump has issued executive orders to provide temporary tax relief and stopgap unemployment benefits for Americans hit by the fallout from the coronavirus pandemic.

Trump is trying to swerve around the deadlock on Capitol Hill over a new package.

His plan lacks detail, and comes with strings attached (and may not even be constitutional), but it might end the standoff between the White House and Congress over fresh aid.

As a result, the FTSE 100 is up 51 points or 0.85% in early trading at 6084, with stocks also higher in Paris, Frankfurt, Milan and Madrid.