A sharp decline in exports of 25.4% points to continued weakness in the global economy, and while some of the decline may well be down to the timing of Chinese New Year, the fact that the number missed expectations by such a long way does raise concerns that global demand could be much weaker than people realise.
Imports also fell sharply, down 13.8% but they did improve on the January numbers, but they also missed expectations.
This sharp decline in economic activity over the past month rather belies the recent rebound being seen in commodity prices, and puts this weekend’s retail sales and industrial production data firmly in the cross hairs. A similarly abysmal showing on these numbers will inevitably raise expectations of further easing measures from Chinese authorities.
The biggest fallers are the mining stocks unsurprisingly given recent strong gains with Anglo American (LON:AAL), BHP Billiton (LON:BLT) and Glencore (LON:GLEN) leading the fallers. Worldpay Group (LON:WPG) is also sharply lower despite posting a net profit of £19m in its first results since its IPO last year.
On the plus side German economic data showed a marked improvement in January rising 3.3% after a 0.3% decline in December, reinforcing the nature of a multi-speed Europe.
Burberry (LON:BRBY) shares are shrugging off the China gloom on reports that the company might be on the radar as a takeover target, after an unnamed investor increased their stake close to the 5% threshold that requires disclosure under transparency rules.
Tesco (LON:TSCO) shares are also higher after the latest Kantar report showed that its decline in sales was starting to slow. Sainsbury’s (LON:SBRY) continued its progress as the outperformer in the sector as sales showed a gain for the eighth period in a row.
US markets look set to follow in Europe’s footsteps this morning with a lower open, despite eking out gains in yesterday’s session, as commodity prices slip back in reaction to this morning’s Chinese economic data.
Comments from Fed officials Brainard and vice Chairman Stanley Fischer appear to point to some divisions on the FOMC as to the current risks facing the US recovery. Ms Brainard focused on the downside risks to the US economy from international cross currents, while Stanley Fischer was much less dovish saying that he could see the first stirrings of inflation.
These divisions look set to dominate the debate amongst Fed officials as they go into blackout mode ahead of next week’s meeting.
The Dow Jones is expected to open 118 points lower at 16,956
The S&P500 is expected to open 14 points lower at 1,987.76
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