China Exports Soar 8.3% in September, Defying Trump’s Tariffs; AUD/USD Rallies, HSI Slides

China’s Exports Soar Ahead of the APEC Summit

Chinese exporters delivered their strongest performance in six months, setting the stage for a high-stakes APEC Summit.

Total exports soared 8.3% year-on-year in September, up sharply from August’s 4.4% increase, while imports jumped 7.4% (August: 1.3%). Economists expected exports to increase by 6% and imports to rise by 1.5%. Notably, exports increased at the fastest pace in six months.

September’s report aligned with the RatingDog Manufacturing PMI, which increased from 50.5 in August to 51.2 in September. The September survey revealed that new export orders rose for the first time since March, thereby boosting production.

The latest trade data suggest manufacturers have effectively redirected shipments, reducing reliance on US demand. Importantly, September’s trade data could face scrutiny from the US administration, which has attempted to dampen global dependence on Chinese goods.

 

The Market Reaction to China’s Trade Data

Markets reacted to the upbeat trade data and renewed US-China tensions, with equities lagging and the Aussie dollar firming. Despite stronger trade data, equity markets remained under pressure amid lingering US-China tensions.

The Hang Seng Index extended its losses from earlier in the morning session as investors remained cautious following Friday’s escalation and the subsequent de-escalation of US-China trade tensions.

On Monday, October 13, the Index was down 2.42% to 25,655 for the morning session. Mainland China-listed stocks also struggled in the morning session. The CSI 300 and the Shanghai Composite Index slid 1.27% and 0.98%, respectively.

In the forex market, the AUD/USD pair was more sensitive to the data, rising from $0.65246 to a post-report high of $0.65292 before easing back. On October 13, the AUD/USD was up 0.83% to $0.65278.

The AUD/USD pair rallied 0.79% to $0.65252 ahead of the trade data, underscoring the Aussie dollar’s sensitivity to trade developments. Australia has a trade-to-GDP ratio of over 50%, with China accounting for one-third of its exports. This exposes the Aussie dollar to key Chinese economic indicators and US-China trade headlines.

What’s Next? Trade Developments and Inflation in Focus

Traders should closely monitor trade developments after the escalation and de-escalation in the US-China trade war.

Renewed trade tensions would likely trigger another flight-to-safety, sending AUD/USD and the Hang Seng Index lower. On the other hand, a further easing in trade tensions could lift sentiment.

While trade developments will be key, upcoming Chinese inflation data will also influence risk appetite. China will release inflation numbers on Wednesday, October 15. Economists expect deflationary pressures to ease in September, potentially fueling demand for risk assets.

However, the upcoming APEC Summit (October 31 to November 1) will be the key event. President Trump and President Xi are to meet amid hopes for a trade agreement. Markets will be watching whether APEC sets the tone for another trade thaw or fresh turbulence.

Discover strategies to navigate this week’s market trends here.