Chinese trade figures steer markets, yen rallies

AP and AFP

LONDON/HONG KONG–Solid Chinese trade data underpinned most global stock markets Thursday, though Japanese shares underperformed for the second day running as the yen rallied again.

China’s exports and imports both increased in July, beating expectations and easing concerns over the slowdown in the world’s second-largest economy. Exports were up 5.1 percent from a year earlier, while imports jumped 10.9 percent.

Bigger-than-expected gains in imports outpaced those of exports, causing the overall trade surplus to fall 29.6 percent year-on-year to $17.8 billion. “The report has boosted investor optimism that the Chinese economy may be at least stabilizing in the near-term,” said Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ.

In Europe, the FTSE 100 index of leading British shares was up 0.4 percent at 6,534 while Germany’s DAX rose the same rate to 8,296. The CAC-40 in France was 0.5 percent higher at 4,057.

Wall Street was poised for modest gains with both Dow futures and the broader S&P 500 futures up 0.2 percent.

There’s very little economic news later, aside from weekly jobless claims. And with the corporate and economic news drying up over the coming weeks, there’s a sense that markets may drift.

“The relative absence of fundamentals between now and the weekend break combined with the fact the summer holiday season is very much in full swing could leave markets struggling to find much fresh momentum,” said Mike McCudden, head of derivatives at Interactive Investor.

The number one focus in markets is on the U.S. Federal Reserve and when it might rein in its monetary stimulus program. Anything that impacts up on those expectations could well affect markets. Over the past few years, the Fed has helped keep interest rates super-low in order to spur growth. Much of the money has found its way into financial markets. Stocks have been a beneficiary as investors seek out returns that outpace bonds. The chiefs of the Federal Reserve’s Chicago and Atlanta branches both said that the central bank could begin tapering its US$85 billion a month quantitative easing program in September, but stressed that economic growth needed to hold steady or improve. In Asia, markets mostly bounced back Thursday after sharp declines in the previous session, as China posted upbeat trade figures that bolstered the outlook for the world’s second-biggest economy. But Tokyo dropped 1.59 percent, or 219.38 points, to 13,605.56, after a 4.0 percent plunge on Wednesday triggered partly by renewed concerns over a potential tapering of the U.S. stimulus program. The losses came as the yen gained ground against the dollar after the Bank of Japan issued an upbeat assessment of Tokyo’s efforts to counter growth-sapping deflation, as it left its vast monetary easing program unchanged. Shanghai ended flat, edging down 1.88 points to 2,044.90, as China’s imports and exports both showed an unexpected jump in July. In other markets Sydney gained 1.07 percent, or 53.5 points, to 5,064.8, Seoul added 0.3 percent, or 5.64 points, to 1,883.97 and Hong Kong climbed 0.31 percent, or 67.04 points, to 21,655.88.