Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The markets are bouncing back today as Chinese policymakers vow to take action to spur growth, and ward off an economic slump.
China’s finance ministry has pledged to slash taxes, to reduce the burden on small firms, as part of a new stimulus drive.
Under the plan, Beijing will cut value-added tax rates for some companies, including in manufacturing, and hand tax rebates to others.
China also plans to step up fiscal expenditure this year, in what looks like a Keynesian push to help companies.
Xu Hongcai, Assistant Minister of Finance, told reporters in Beijing that the government was determined to ease the burden on small enterprises and the manufacturing industry, adding:
The focus is on enhancement and efficiency.
In a co-ordinated move to reassure markets, China’s central bank has promised to make monetary policy more forward-looking, flexible and targeted.
The People’s Bank of China also vowed to keep liquidity “reasonably ample” – which could calm worries that firms could run short of funds.
The country’s state planner has also weighed in. The National Development and Reform Commission (NDRC) said China will strengthen monitoring of its economic situation and improve its “reserve” of economic policies, as it targets “a good start” to 2019.
These moves comes a day after Chinese exporters suffered the biggest drop in overseas sales in almost two years.
Also coming up today
City traders will be watching Westminster closely tonight, to see whether Theresa May can get her Brexit vote through (unlikely).
Hussein Sayed, chief market strategist at FXTM, says the scale of the likely defeat will be crucial for the pound:
If she suffers a loss by a narrow margin, it may be positive news to Sterling, as May can head back to Brussels for more concessions which could be enough to pass the bill in a second “Plan B” vote. However, a loss by a wide margin will make it tricky for Sterling traders as the bill will be rejected due to different ambitions.
Conservative MPs want concessions that are hard to get from Brussels, meanwhile, hardcore remainers want to reject the deal in the hope that they get a second referendum. This may lead to two extreme outcomes: either a hard Brexit or no Brexit at all. However, given all the uncertainty towards such a scenario, investors may sell the currency and assess the situation later, leading to high volatile moves in the Pound.
Plus, we get new eurozone trade figures, and a healthcheck on US manufacturing
- 10am GMT: Eurozone trade balance for November
- 1.30pm GMT: US Empire manufacturing data