- China trade disappoints, exports and imports miss forecasts
- Asia stocks go flat, just short of decade peaks
- Major currencies becalmed, dollar tries to hold payrolls bounce
- Industrial commodities in demand, oil slips on supply glut
Asian shares went flat on Tuesday as disappointing Chinese trade data clouded the otherwise upbeat outlook on global growth, leaving currencies and commodities becalmed in summer doldrums.
MSCI’s broadest index of Asia-Pacific shares outside Japan gave up modest early gains to be barely changed, though it was still within a whisker of its recent decade high.
South Korea’s market dipped 0.2 percent while Japan’s Nikkei eased 0.3 percent. China’s main markets were also down a shade in thin trade.
Beijing reported exports and imports both grew much less than expected in July, breaking a run of better numbers from the Asian giant that had fueled optimism on global growth and a rally in industrial commodity prices.
Ratings agency Fitch this week lifted its outlook for the world economy for this year and next.
“The revisions are led by emerging markets and China in particular, whose recovery has been more pronounced than anticipated,” said Fitch chief economist Brian Coulton.
“Data continue to suggest a synchronized global expansion across both advanced and emerging market economies. Spill-overs from the rebound in emerging market demand are reflected in the fastest growth in world trade since 2010.”
On Wall Street, the Dow rose 0.12 percent, while the S&P 500 added 0.16 percent and the Nasdaq 0.51 percent. The Dow has risen 10 sessions in a row and three more would match the all-time winning streak in January 1987.
Volumes were light as the news flow dried up with the U.S. Congress and President Donald Trump on vacation and a bumper profit season drawing to a close.
INVESTORS ALL IN
“Earnings have been strong, liquidity is abundant and the message from corporate CEO’s around the world was loud and clear,” said Chris Weston, chief market strategist at broker IG.
“They are not concerned with Trump, geopolitics or trade restrictions, they see earnings growth as the main game in town and equity investors are aligned with this outlook.”
He noted customers’ cash holdings at investment manager Charles Schwab were historically low at just 11.5 percent of assets. “Traders and investors are all in on this market.”
The same factors have spurred demand for a range of industrial commodities.
Copper futures extended gains after hitting two-year peaks on Monday, while Chinese rebar steel futures surged as much as 7 percent to their highest in more than four years.
Currencies were quieter as the dollar tried to keep a grip on the gains made after upbeat U.S. jobs data last week. Traders are now awaiting U.S. inflation data later in the week but it is widely expected to remain tepid, adding to views the Federal Reserve will maintain a cautious policy tightening stance.
Against a basket of currencies, the dollar was 0.16 percent lower at 93.286 and still not far from the recent 15-month trough of 92.548.
The euro was a shade firmer at $1.1814, while the dollar eased a touch to 110.62 yen.
Oil prices dipped as a rebound in production from Libya’s largest oil field prompted selling and investors worried about higher output from OPEC and the United States.
Officials from a joint OPEC and non-OPEC technical committee are meeting in Abu Dhabi to discuss ways to boost compliance with the deal to cut 1.8 million barrels per day in production.
Brent crude futures eased 20 cents to $52.17 a barrel, while U.S. crude futures lost 16 cents to $49.23 per barrel.