Dax, Us Stocks Shrug Off China Weakness
Stock indices were higher around the globe on Tuesday morning, after Asian markets showed resilience in the face of weak trade data out of China and signs of advancement for Germany’s economy.
By Peter Martin
Tuesday, September 8, 2015 - 00:00
More weak data for China was released last night: the Chinese merchandise trade balance was 368.03 billion Chinese yuan ($60.24 billion), a trade surplus that was higher than expected, but behind that lay a 14.3% fall in imports and a 6.1% decline in exports (both year-on-year changes). It is the decline in imports that is a concern for the global economy, suggesting as it does a slowdown in the Chinese economy. Fears over the Chinese economy have contributed to a 40% drop in the country’s stock market since the early summer, but this latest piece of bad news actually resulted in a bounce in stock prices, with market participants speculating that more stimulus from the Chinese authorities could be on the cards. The Shanghai composite index climbed close to 3%, while the Hang Seng rose 3.3%.
It has also been a strong trading session in Europe, with the German DAX jumping more than 2% and the French CAC 40 and UK FTSE 100 both up more than 1.5%, with German trade data looking encouraging. German exports climbed 2.5% in July to a record high. Imports also rose, increasing 2.3%, and despite this the seasonally-adjusted trade surplus widened to €22.8 billion, a new record high, evidence of the benefits of a weak euro on the export-heavy German economy. Germany is the economic powerhouse of Europe and these positive signs bode well for third-quarter eurozone GDP.
Second-quarter eurozone GDP, meanwhile, was revised higher in eurostat’s second estimate . Seasonally-adjusted GDP was up 0.4% in the second quarter, up from a preliminary estimate of 0.3%. Though this was a slower pace of growth than the 0.5% seen in the first quarter, GDP was a respectable 1.5% higher than the same quarter in the previous year. EUR/USD rose 0.1% to 1.1180 by 09.30 ET.
Following one of the worst weeks for the US stock market so far in 2015, Wall Street was closed on Monday for the Labor Day public holiday. That the negative Chinese economic data did not precipitate a sell-off in Asia no doubt came as a relief to US market participants, and stock prices opened up sharply on Tuesday, as risk appetite returned. Shortly after the opening, the Dow Jones was up 314 points or 1.95% at 16,416, while the S&P 500 rose 1.78% to 1955.3. The NASDAQ 100 performed even more strongly, gaining 2.3% to 4281.5. The size of this change has naturally had a strong effect on the chances of the index finishing up for the day, based on the price of binary options trading on NADEX. The binary option for the NASDAQ 100 to finish up was trading with a bid/offer of 88.9/95.0 within half an hour of the opening bell.
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