China Down On Weak Trade, EU Market Down On Growth Fears, US Market Down On Global Weakness
China Falls On Weaker Than Expected Trade Data
Asia markets led the globe lower on Monday morning as weaker than expected trade data raises fears of a global economic slowdown. The Chinese import/export data both missed by large margins raising the possibility China’s government would continue to loosen economic policy in an effort to stabilize growth outlook.
Chinese export data came in at a tepid 5.4% versus the expected 10.0%. This is the lowest level in eight months and evidence of slowing and weak global demand. On the import side, imports rose a mere 3.0% versus the expected 14.5% and evidence of slowing activity within the worlds largest emergent economy. The import data, notably, is the lowest level of imports to China in nearly 8 years. The slowdown comes in response to elevated trade fears and impact of tariffs currently on the back-burner.
The Australian ASX led declines with a loss near -2.3% as the commodity sensitive index comes under pressure from slowing growth outlook. The Japanese Nikkie came in a close second as automakers, a proxy for the US/China trade battle, led the index lower. The Korean Kospi closed with a loss near -1.05% while the Shang Hai and Heng Seng both closed with losses near -1.00%.
Growth Fears Weigh On EU Markets
In the EU mounting growth fears related to the US/China trade standoff have the indices moving lower at midday. The German DAX and French CAC were both looking at losses near -0.70% while the UK FTSE was posting a less aggressive -0.10%. Traders in the region are looking toward a key vote on Tuesday that could decide the future of Brexit.
UK lawmakers are set to vote on Theresa May’s deal with the US on Tuesday. The deal has come under a lot of scrutinies as many within Britain’s inner circles feel the deal is not in the UK’s best interest. The vote could be postponed and, if so, would bring another aspect of uncertainty to an already uncertain event. If postponed, lawmakers may be signaling a desire to renegotiate, again, a deal with the EU better suited to the UK’s long-lasting independence. The problem facing traders is that the deadline for Brexit is less than four months away and negotiation to this point has been slow and tedious.
Meanwhile, at the urging of a delegation of Scottish representatives and lawmakers, the EU high court has made a ruling on the Brexit. According to an opinion issued by the European Court of Justice, the UK can terminate its Brexit plans without the need to ask permission. This means, should UK lawmakers fail to reach an agreement on a deal with the EU, the UK will be able to end Brexit proceedings before the March deadline and return to EU-as-normal.
US Market Down On Global Woes
In the US, futures were indicated to open flat to slightly lower on Monday morning as mounting global worries weigh on economic and earnings outlook. The Dow Jones Industrial Average, the S&P 500, and NASDAQ Composite were all trading a hair below flat in the early, Monday pre-opening session and in danger of precipitating a major market sell-off. This week will be important for the indices as they are trading near key support levels that, if broken, could lead to another 20% decline equity values.
This week traders will be focusing on the data and the central banks. On the data front US markets are bracing for PPI, CPI, and retail sales while on the central bank front the ECB is meeting Wednesday and Thursday. The bank is not expected to raise rates but is expected to end its QE bond purchase program and give an indication of policy outlook for the next year.
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