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Market Essentials - Chinese Trade data

Last updated 7/9/2012 7:46 PM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

Overnight equity markets ended lower as the risk aversion trade prevailed as the preferred option. Spanish and Italian borrowing costs moved higher as the EU finance ministers meeting produced little by way of progression post EU Summit. Slowing global economic data continues to weigh on market sentiment as questions are raised to exactly how economies are going to stop the rot and turn things around.

EU Watch

As the EU finance ministers meeting took place, Spain’s borrowing costs spiked back up above the unsustainable 7% level as chatter surfaced about the concerning size of Spain’s bailout figure seemingly too large for the EU to handle. This should have seen renewed urgency by leaders to provide details of how they were addressing the issue immediately; instead markets were left with budget target deadline extensions and comments on the difficulty of the hurdles that are faced.

Asia Watch

Today we will gain further insight into the strength of Chinas economy with the release of its Trade Balance figures for June. Expectations are for a 21.0B surplus figure to increase on last month’s 18.7B, while Imports are expected to remain the same at 12.7% (YoY), Exports are expected to decline from last month’s 15.3% to 9.9%. For economies that rely heavily on Chinese demand, such as Australia, today’s figure will be analysed for shifts in the levels of demand with global trade seemingly slowing and domestic projects taking time to filter through.

NAB Business Confidence numbers will also hit traders screens today with the previous print posting -2 indicating a view of worsening conditions. Markets are expecting the data to produce a similar view with not much improvement form a month ago.

Outlook

Expect risk markets to open up with a slight bid tone not so much because of a positive outlook but more that markets need a reprieve. With Spanish and Italian Bond yields returning to elevated levels and EU leaders regressing in providing solutions, moves higher will be difficult. Range trading will provide the opportunities for traders with support and resistance levels expected to hold barring complete surprises from Chinas Trade data.

Economic Events to watch:

2350 JP            Jun Money Stock, Broadly-defined Liquidity

0130 AU          Jun NAB Business Survey

0500 JP            Jun Consumer Confidence Survey

 N/A CH           Jun Trade

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About The Author

Andrew Taylor's financial markets career started in 1991 in the interbank FX market,where he worked for one of the largest banks in Australia. Andrew then went on to trade on behalf of some of the biggest global banks, working across five of the world's major financial hubs: Sydney, New York, Singapore, Auckland, and Tokyo.

His more than 20 years of experience spans market borders and asset classes, covering global equities, commodities, options and futures. Andrew's wealth of trading experience and ability to communicate with traders of all levels has put him in demand as a first point of contact for clients and the media alike when seeking information and guidance.