Marketmind: China trade data disappoints, again
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 (NYSE:MCO) 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
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