What's going on?
China’s exports, e.g. car parts, increased in March for the first time in 9 months and investors took the news very positively.
What does this mean?
The headline number sounds great: China sold 11.5% more stuff internationally in March than it did one year ago (the best monthly rise in more than a year). The reality is that March 2015 was so terrible that this improvement is somewhat misleading – nevertheless, the fact that it grew more than economists expected is important. And we can’t ignore how the markets responded, which was essentially to say, “Wow, China must be rebounding!” (Asian stocks rose 1-3% while stocks of western companies that are tied to China also performed well).
Why should I care?
The bigger picture: If China really is recovering, that’s good for a lot of industries. This is the latest positive report – there have been a few others that hint at a recovering Chinese economy. Miners are obvious beneficiaries: the price of commodities like copper and iron ore jumped sharply on Wednesday and, therefore, so did stocks of miners like Rio Tinto and Glencore. But automakers like Volkswagen and Daimler would also benefit (in fact, data earlier this week showed China’s car sales improving). Indeed, any western company that sells to China is probably grinning cautiously (like Apple and Starbucks – to name just a couple).
For markets: Suddenly, things are looking pretty good. Oil is up a lot – that helps energy companies and banks that have made loans to them. China seems to be recovering (although many remain dubious). The lower US dollar is making it easier for American companies to make money (though tougher for European and Japanese ones). There are still things to be worried about (the world might be sleepwalking into a fresh crisis, according to the IMF) – but the overall narrative is a lot better than it was just 2 months.