New trade data from China is fuelling fears of global recession. Stock markets in Asia and Europe fell in reaction. A premarket drop for Dow futures points to a tough day for the US stock markets.
Europe’s leading 300 share index, the FTSEurofirst 300 Index (FTEU3), fell 0.7% in early trading. Asia saw declines with the MSCI World Index losing around 1% after highs on Friday. Stocks in China and Hong Kong have suffered the most.
Chinese Imports and Exports Fall
The latest data shows Chinese imports have fallen 7.6% year-on-year. Despite concerns over trade and tariff issues with the US, analysts had hoped for a 5% rise.
China’s exports fell 4.4%, again after analysts expected a 3% gain.
Stephen Innes, head of trading in the Asia Pacific region for OANDA says:
"Weaker than expected trade figures are immediately weighing on commodity and equity markets and associated currency baskets."
The statistics add to concerns over both world trade and China’s economic slowdown. Citi analysts expect further declines for China saying:
“We believe trade growth next year will slow significantly on huge uncertainty and high base.”
Though US President Donald Trump believes trade talks went well. Citi says:
“Significant uncertainty remains as to whether there could be a ‘deal’ after March 1.”
Other analysts hope the trade figures will drive China to find a trade resolution with the US.
Dow Futures Fall Over 200 Points in Premarket Trading
Premarket trading indicates the growing concern over China’s economy and the now 24-day government shutdown.
Quarterly Results from Major Banks May Set the Tone for the Week
The US stock markets are also waiting for quarterly earnings results from Citigroup, and later in the week JPMorgan Chase, Wells Fargo, and Goldman Sachs. Citigroup’s results could set the tone for the rest of the week. However, analysts are expecting Citigroup revenues to drop slightly but that share earnings will beat expectations.
Credit Suisse says:
“Expectations for earnings growth into 2019/2020 remain reasonable, assuming sustained positive GDP growth.”
But, “Bond King” Jeffery Gundlach is increasingly bearish on the US stock market. He has forecasted just 0.5% growth in US GDP for 2019.
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