Business Irish

Wednesday 26 October 2016

Markets rally as Kenny heads to World Economic Forum

Peter Flanagan and Donal O'Donovan

Published 20/01/2016 | 02:30

Swiss special police officers observe the surrounding area from the roof of the Davos Congress Hotel yesterday. Photo: Reuters
Swiss special police officers observe the surrounding area from the roof of the Davos Congress Hotel yesterday. Photo: Reuters

Global stocks and commodities rallied yesterday, as the weak GDP data in China spurred expectations that the world's second-biggest economy may introduce more aggressive stimulus measures.

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However, the sell-off in sterling increased, threatening Irish exports to its biggest market, after Bank of England Governor Mark Carney signalled that he would keep interest rates at an all-time low for the foreseeable future.

While China's GDP growth slumped to under 7pc for the first time since 1990, that had the opposite effect to what might have been expected, with equity markets across Europe, the US and Asia all surging.

Germany's Dax Index gained 1.5pc, while London's FTSE 100 added 1.7pc. China's Shenzen composite gained 3.6pc.

"It looks like the hangover from this awful start to the year is finally clearing," said Justin Urquhart Stewart, co-founder of Seven Investment Management in London.

"The slowdown in China is nowhere near as bad as markets feared, plus officials have the ability to intervene and stimulate growth."

The sense that Chinese authorities might increase their measures to grow the economy there also helped rally the oil markets.

Brent Crude climbed more than 3pc to touch $30 a barrel after falling sharply since the start of the year.

The market turmoil will provide the backdrop to this year's World Economic Forum in Davos, which starts today. World business and political leaders ascend to the Swiss skiing resort from tonight for the annual meeting.

Taoiseach Enda Kenny, who is due to arrive in Switzerland tonight, will participate in a panel discussion 'How to reboot the global economy?' as well as holding bilateral meetings with political and business leaders.

This year's formal theme for the event, The Fourth Industrial Revolution, features think-ins on the implications for work and society of emerging technologies, including artificial intelligence, that could wipe out millions of jobs globally.

In reality, the agenda will be dominated by three connected crises: the refugee situation, tensions between Saudi Arabia and Iran in the Middle East and the impact of China's slowdown on global trade, including oil.

Enda Kenny's diary will be dominated by a number of business meetings.

The Taoiseach is due to meet president Mauricio Macri of Argentina, Sheryl Sandberg of Facebook and senior executives from Microsoft, Google and PayPal.

Irish Independent

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