Marketmind: China trade data disappoints, again
Reuters
Published Aug 08, 2023 20:02
Updated Aug 08, 2023 23:17
A look at the day ahead in U.S. and global markets by Alun John.
U.S. equity markets saw their first positive day in August on Monday, but then along came Chinese trade data.
Nasdaq and S&P500 futures are both back in the red, European shares are down, and Hong Kong stocks took another kicking.
Italy's 40% windfall tax on banks' net interest income, and Moody's Monday downgrade of several U.S. banks were not helping investor sentiment either.
China's imports and exports fell much faster than expected in July, data on Tuesday showed, with imports down 12.4% year-on-year, missing a forecast fall of 5% in a Reuters poll and off a 6.8% decline in June.
Exports contracted 14.5%, steeper than an expected 12.5% decline.
Parsing the export data, David Chao, global market strategist at Invesco, says the miss was driven by lower prices rather than lower volumes, and that Chinese export volumes remain surprisingly robust.
Though, he says, "looking at other export-related data such as export orders, the outlook appears weak."
As for imports, that's a simple case of deteriorating domestic demand, the latest of many signs of Chinese consumers' nervousness.
Even Chinese imports from Russia fell year-on-year in July, the first fall since Feb 2021.
Hong Kong's Hang Seng Index bore the brunt of the losses, down 1.8%, while the Australian dollar was the biggest faller in G10 currencies, down 0.8%. The Aussie is often treated as a liquid proxy for Chinese assets.
The other thing that got people talking in morning trading in Europe was Italy's new windfall tax.
The country's right-wing government had repeatedly criticised banks for failing to pass onto depositors the higher cost of money, but took action only after the latest round of record earnings reported by banks at the start of August.
An index of euro zone banks sank by as much as 3.4%, the most since the banking chaos of mid March, with Italian lenders BPER Banca tumbling 7.4%, Intesa Sanpaolo (BIT:ISP) plunging 6.8% and FinecoBank Banca Fineco skidding 7.2%.
Banks are also top of mind for U.S. investors after Moody's, late on Monday, lowered credit ratings of several small to mid-sized U.S. banks and said it may downgrade some of the nation's biggest lenders.
Moody's cut the ratings of 10 banks by one notch and placed six banking giants, including Bank of New York Mellon (NYSE:BK), US Bancorp (NYSE:USB), State Street (NYSE:STT) and Truist Financial on review for potential downgrades.
Tuesday looks quiet on the U.S. data front, but traders are bracing for the big one - Thursday's CPI data.
Get The App
Key developments that should provide more direction to U.S. markets later on Tuesday:
- U.S. trade balance (June) and NFIB Business Optimism Survey (July)
- Fed's Harker and Barkin speak
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.