Asia shares stumble over weak China trade

Tuesday, 10 February 2015 00:13 - - {{hitsCtrl.values.hits}}

Reuters: Asian shares wobbled on Monday after dismal Chinese trade figures fuelled concern over a slowdown in the world’s second largest economy, while solid US jobs data were a mixed blessing as they raised chances of a US interest rates hike mid-year. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.6% while US stock futures also shed 0.4%. Japan’s Nikkei share average bucked the trend and rose 0.4% on the back of a weaker yen. Financial spreadbetters also saw a weaker opening for European shares, with Germany’s DAX and France’s CAC 40 both expected to fall up to 0.8%.

Data published on Sunday showed China’s trade performance slumped in January, with exports falling 3.3% from year-ago levels while imports tumbled 19.9%, far worse than analysts had expected. The data highlighted deepening weakness in the Chinese economy. “The trade data is ugly, which points to a weaker economy ahead,” said Wang Mingli, strategist at Guoyuan Securities in Shanghai. “Even if there are fresh stimulus measures, they’re aimed at aiding the economy, not the market.” The Australian dollar, often used as a proxy for bets on the Chinese economy because of the country’s trade links to China, fell 0.4% in early trade to $0.7775. The poor China trade figures took some of the shine off robust US payroll gains of 257,000 in January. Hourly wages also rebounded, increasing 12 cents last month for a 2.2% increase from a year earlier, the largest such gain since August. The data was strong enough that traders brought forward their expectation of the Fed’s rate hike, with money market futures fully pricing in a rate increase by September, compared to around October before the data. The prospect of an earlier US rate hike is weighing on many assets that have benefited from low interest rates in the United States while boosting US bond yields and underpinning the dollar. The US dollar’s index against a basket of six major currencies held onto most of its 1.1% gain on Friday and stood at 94.519, not far from an 11-year high of 95.481 hit last month. The euro remained vulnerable as new Greek leader Alexis Tsipras rejected the bailout, setting himself on a collision course with European partners. In his first major speech to parliament since storming to power last month on Sunday, Tsipras listed a range of proposed reverses of reforms imposed by European and International Monetary Fund lenders. The euro traded at $1.1335, up slightly in Asia but still not far from last week’s low of $1.1280. The yen hit four-week lows of 119.23 to the dollar on Friday on the back of rising US bond yields. It last stood at 118.82. Oil prices steadied on Monday as falling US oil rig counts and conflict in oil producer Libya were balanced by a slump in Chinese imports, pointing to lower fuel demand in the world’s biggest energy consumer. Brent oil futures gained 0.3% to $57.99 per barrel, clinging on near a six-week high of $59.06 touched on Friday. Gold rebounded slightly from a three-week low of $1,228.50 touched on Friday as share prices eased. It last stood at $1,237.54 per ounce.

Oil dips after weak Chinese trade data

Reuters: Brent crude prices slipped on Monday as a slump in Chinese imports pointed to lower fuel demand in the world’s biggest energy consumer, outweighing falling US oil rig counts and signs of healthy US growth. China’s trade performance slumped in January. Exports fell 3.3% from a year earlier while imports tumbled 19.9%, highlighting a deepening slowdown.

Global benchmark Brent crude oil for March was down 25 cents at $57.55 a barrel by 0845 GMT after rising as high as $59.06 earlier in the session. US crude was up 15 cents at $51.84 a barrel, having hit a session high of $53.40. While overall Chinese crude import figures remained high, analysts said signs of a slowdown were weighing on prices. “Opportunistic buying waned in January as a combination of weak demand, high inventories and tight credit conditions impacted import demand,” ANZ bank said on Monday. “When China stops filling up its SPR (strategic petroleum reserves), it would definitely put a bearish note to prices,” said Daniel Ang of Singapore-based Phillip Futures. Preliminary Chinese January customs data came in at 27.22 million tonnes of crude imports, though estimates from Thomson Reuters Research and Forecasts put the final figure at about 30 million tons. Falling U.S. oil rig counts and signs of strong U.S. economic growth helped offset the impact of the Chinese data on oil prices, which have dropped more than 50% since June. “It’s still the same pattern (as last week),” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt. “Markets are ignoring the bearish news and rather trade on the bullish news.” Brent rose more than 9% last week, its biggest weekly rise since February 2011. The North Sea oil futures contract has climbed more than 18% in the past two weeks, its strongest showing since 1998. The number of US oil rigs fell to its lowest level since December 2011, a sign of the pressure of tumbling prices on oil producers to curb spending. Stronger-than-expected growth in US jobs in January also helped support oil, as non-farm payrolls increased 257,000, outstripping Wall Street forecasts.

Gold gains on weaker Asian shares, still near three-week low

Reuters: Gold edged higher on Monday, as Asian equity markets fell on disappointing Chinese economic data, but the metal failed to make much headway from a three-week low in the previous session due to worries over US interest rates. Spot gold had gained 0.3% to $1,236.38 an ounce by 0346 GMT as Asian shares slipped after dismal

Chinese trade data that raised concerns about a deepening slowdown in the world’s second-largest economy. Bullion hit a three-week low of $1,228.25 on Friday, before closing the session down 2.5%, after strong US jobs data that stoked expectations of a hike in interest rates. “The small bounce we are seeing today is probably because of the drop in equities but it may not hold,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. “The bigger factor influencing gold prices is still the timing of the interest rate hike in the United States.” Data on Friday showed US job growth rose solidly in January and wages rebounded, a show of economic strength that put a mid-year interest rate increase from the Federal Reserve back on the table. The US central bank has held benchmark borrowing costs near zero since December 2008, and some believe the jobs data has raised the prospect it would push rates higher, despite inflation running below its 2% target. Higher interest rates could dent demand for gold, a non-interest-bearing asset, and boost the dollar. Investor sentiment in bullion has taken a hit recently. Hedge funds and money managers cut their bullish bets in gold and silver futures and options for the first time in six weeks during the week to 3 February, U.S. Commodity Futures Trading Commission data showed on Friday. In the physical markets, Chinese premiums rose to $4-$5 an ounce on Monday, from less than $4 in the previous session, as last week’s sharp decline in prices attracted some buyers. But traders were not confident of support from the top consumer over the next few days due to the upcoming Lunar New Year holiday. Chinese consumers typically purchase gold for gift-giving ahead of the new year holiday on 19-20 February, but buying is likely to slow during and just before the holiday itself, traders said. “With Chinese New Year nearly here, the buying activity would have mostly concluded so don’t expect much seasonal support from the Chinese at this point,” said Howie Lee, an analyst at Phillip Futures in Singapore.

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