“The trade data support our view that, despite turmoil in Chinese financial markets, there has not been a major deterioration in its economy in recent months”, Daniel Martin, senior Asia economist at Capital Economics, said in a note. The Standard & Poor’s 500 index lost 19 points, or 1 percent, to 1,918. Datong Coal Industry Co. tumbled 9.1 percent in Shanghai, heading for a 2.7 percent weekly loss, and Yanzhou Coal Mining Co. slumped 6.2 percent.
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If you believe the latest headlines, China’s trade data for December 2015 was simply excellent: exports rose 2.3 percent compared to December of 2014, and imports only dropped 4 percent. France’s CAC 40 dropped 1.4 percent to 4,252.75. The Dow Jones industrial average gained 117.65 points, or 0.7 percent, to 16,516.22.
Global markets are reacting negatively to a falling currency and volatile stock market in China again, continuing what seems to be a new normal in the first two weeks of 2016.
The Shanghai Composite Index dropped below levels seen in last year’s rout and headed toward a bear market, while the Hang Seng China Enterprises Index of mainland shares in Hong Kong declined to a 2011-low.
Imports decreased 7.6 per cent year on year, receding for 14th consecutive month, but improving from the previous month’s 8.7-per cent, Xinhua report said. The Shanghai Composite yoyo’d in and out of negative territory and closed down 2.4 percent at 2,949.60.
The Australian dollar was also boosted by the Chinese data, with AUD/USD advancing 0.71% to 0.7035. The spot rate is allowed to deviate 2 per cent either side of the daily fix.
The euro also fell 0.35% to US$1.0822, from Monday’s high of US$1.0970. The FTSE 100 of leading British shares was 0.5 percent higher.
Trading has been more stable this week. They project that the final 2015 report will bring the full-year expansion to 6.9 per cent, the slowest annual pace since 1990, and that gross domestic product growth will further slow to 6.5 per cent this year. The S&P/ASX 200 XJO, -0.34% was down 0.3%. The currency had fallen as much as 1% on Thursday after news of explosions in the Southeast Asian country’s capital city of Jakarta, although it recovered slightly after suspected government intervention following a rate cut by the central bank. Trading in foreign exchange markets was subdued.
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Both the safe-haven yen and the low-yielding euro tend to gain in times of market stress because these currencies are often used to fund investment in risky assets, and consequently rise back up when there is a retreat from those assets.
