Global Stocks, Commodities Weaken on Gloomy China Data

Global stocks and commodities were down on Monday after gloomy Chinese export data supported signs of further weakness in the world’s second-biggest economy and triggered worries of a sharper slowdown in global growth.

Europe’s leading 300 equities slipped 0.6 percent to £1,366.24, while Berlin dropped 0.3 percent to €10,847.14 and Paris shed 0.4 percent to €4,758.41, with shares in European luxury goods companies and the automotive industry experiencing some of the largest losses.

Negativity in Europe followed heavy falls in Asia where MSCI's broadest index of Asia-Pacific ex-Japan declined around 1 percent from Friday’s 1-1/2 month high, its highest single-day percentage drop since January 2.

China’s CSI 300 was down 0.8 percent to CN¥3,067.78, while Hong Kong’s Hang Seng stumbled 1.3 percent to HK$26,298.33.

US futures offered no relief, with the Nasdaq 100 futures shrinking 1.1 percent to $6,535.88 for tech stocks.

China’s December trade data were soft, but the figures for the preceding months were surprisingly strong and show exports to the US growing at a decent pace, which may reflect producers trying to front-run any future escalation in tariffs, said Group Chief Economist Neil Shearing.

China reported earlier in the day that December exports fell 4.4 percent to mark its lowest in two years, while imports declined 7.6 percent. The figures missed analysts’ expectations of a 5 percent increase and a 3 percent rise respectively.

The data added to concerns that US tariffs on Chinese goods were beginning to take effect on China’s slowing economy, while easing global demand has been felt with sales of products ranging from iPhones to automobiles decelerating, resulting in profit warnings from tech giant Apple Inc. among others.

Output report from the euro zone also turned out disappointing, registering its largest slump in almost three years.

Gloomy Chinese Data Hits Commodity Markets

The outlook of slowing global expansion also disrupted commodity markets, with oil prices dropping more than 1 percent.

Brent crude futures last stood with 0.6 percent loss to $60.08 per barrel, while US WTI crude futures were down 0.7 to $51.22 a barrel.

Safe-haven trades strengthened from weakness in stock markets with the US 10-year Treasury yields declining to 2.685 percent, their lowest in a week, while gold prices rose. Spot gold added 0.3 percent to 1,292.24, while gold futures advanced 0.2 percent to $1,292.35.

The world’s two biggest economies have been engaged in negotiations for months in an effort to put an end to their trade war, with no signs of major development.

Some analysts expect China’s latest report to drive Beijing to resolve the trade row with Washington, but others said even with the rising probability for both parties to strike a deal; the tariff and trade disruption seems to have already spread throughout the global economy.

Analysts stated that regional trade growth appears to have slowed substantially after front-loading effect diminished.

As a result of the trade dispute, China’s policymakers have already promised to further improve support this year, following a raft of measures last year including fast tracking infrastructure projects and reductions in banks’ reserve requirements and taxes.

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