China Slips On Export Data, ECB Says Economy Will Stall, FOMC Statement Imminent

China Slips On Weaker Than Expected Trade Surplus

Chinese indices slipped on weaker than expected trade surplus data. The trade surplus for China came in at +$34 billion, slightly missing the $35 billion projected by economists, even as tariff threats spur activity. The miss was due to stronger than expected dollar-denominated imports that more than offset stronger than expected exports.

On the export side of the equation shipments out of China surged more than 15.5% versus an expected 11.% while on the import side activity surged 21.4% versus an expected 14%. The reason for the increases is simple, with tariffs scheduled to begin and more threatened to come businesses at all levels of the supply chain are scrambling to fill orders before prices go up.

The mainland China Shang Hai Composite closed with a loss of -0.22% after trading higher earlier in the day. The Hong Kong-based Heng Seng also showed weakness after the data but was able to close with a gain of 0.31%. The Japanese Nikkei led advancing indices with a gain near 1.85%, buoyed by the US midterm election, but others in the region were not so strong. The Korean Kospi and Australian ASX both closed with gains near 0.5%.

The ECB Economic Bulletin Says Growth Will Stall

As if slowing and slower than expected economic growth wasn’t enough to weigh on market outlook now the ECB says growth will stall in coming years. The news was reported in the EU’s Economic Bulletin and increases odds the ECB will tone their policy tightening rhetoric. The ECB is planning to end bond purchases next month and possibly raise rates next fall, but the data and the outlook no longer support this view. The EUR/USD held steady on the news as traders await the FOMC policy statement this afternoon.

Equities markets were mostly lower on the news, but the losses were minimal. The DAX was trading near -0.25% at midday, the CAC near -0.15%, after weaker than expected German trade data increased fear of slowing economic growth. The UK FTSE was able to show a small gain, near 0.35%, but it too was overshadowed by the downturn in the economic outlook.

Traders Focus On FOMC, Post Election Rally Stalls

In the US, the post-election rally stalled in early trading as market participants focus on today’s FOMC policy announcement. Futures trading indicated small losses for all three major indices with tech leading the way. The tech-heavy NASDAQ Composite was showing a loss near -0.50% in the premarket session with the Dow Jones Industrial Average and S&P 500 close behind.

On the earnings front a weak outlook from Wynn has gaming and in particular, Macau stocks moving lower. The entertainment giant warned that revenue in the coming quarters could be weaker than expected as it sees a downturn in activity at its Macau property. Shares of the stock, WYNN, were down about -15% on the news.