Weak China Data Sinks Markets
Chinese February trade data released on Friday showed worse than expected results, sending Chinese markets plummeting and keeping pressure on global markets that had already been receding for most of this trading week.
February dollar-denominated exports dropped 20.7 percent in February, far surpassing expectations for a 4.8 percent drop. The drop in exports was the biggest decline in three years. Dollar-denominated imports fell for the third consecutive month, with a decline of 5.2 percent which significantly more than analyst forecasts of a 1.4 percent decline. China’s trade surplus with the United States was down significantly, from $27.3 billion in January, to $14.72 billion in February. Analysts warned that China’s dismal reporting may have been skewed by unusual data due to the Chinese New Year which could have created a seasonal impact, but caution that the trend is still negative, even when taking the holidays into account.
In a direct response to the data, the Shanghai Composite began to fall, trading down 4.40 percent as of 3:18 p.m. HK/SIN. The Shenzhen Composite was down 3.83 percent. The Chinese benchmarks were some of the few that managed to eke out gains this week during a tumultuous week for global stock indexes. Most Asian indexes were steeply lower, with Japan’s Nikkei 225 down 2.01 percent, Hong Kong’s Hang Seng Index down 1.73 percent, and South Korea’s Kopsi 1.31 percent lower. Australia’s ASX 200 was down 0.96 percent. The losses came after the fourth consecutive down day on Wall Street.
ECB Announces New Plans
In Europe, on Thursday, policymakers contributed to a dismal outlook by cutting growth forecasts and announcing a new round of stimulus which investors worry could be a sign about the fragile state of the global economy. Weak data out from Australia and the United Kingdom this week did little to allay investor concerns. All eyes are now on U.S. employment reports which will be released later today and will give a peek into the country’s overall economic position.