The FTSE 100 is trading lower by just over 30 points this morning after gapping down on the open, following some softer than expected trade data from the Far East. The pound is also on the defensive and trades back below 1.22 against the US dollar
Biggest slump in Chinese exports in 7 months
During the Asian session, trade balance data from China showed an unexpected 10% y/y decline in exports, with the figure coming in far below both the forecast and previous readings. Whilst concerns surrounding the level of growth in the world’s second largest economy dominated and dictated flows in financial markets at the start of the year, the ongoing narrative of a Chinese slowdown has moved to the back burner for much of the past 6 months. However the latest data release has seen some worries re-emerge and alongside the recent developments in the Brexit saga, sentiment in global stock markets has been soured somewhat.
Miners lead the FTSE lower
Many of the worst performing stocks on the FTSE100 this morning are the ones with the greatest exposure to the Chinese economy, with miners in particular under pressure. BHP Billiton (LON:BLT), Rio Tinto (LON:RIO) and Anglo American (LON:AAL) are all lower by more than 3% compared to last night’s close. The decline in sentiment has proved supportive for Gold prices, with the precious metal looking to move away from its recent lows around $1250/oz. This is also reflected in stocks with Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) both rising firmly higher in early trade.
Crude oil inventories to complete oil reversal?
It’s a relatively light economic calendar for the day, with the main release arguably coming this afternoon with the latest department of energy crude oil inventory data. After an impressive recent run higher of more than 15% since OPEC announced an agreement to curb output, the past two sessions have seen lower closes for the price of oil. Yesterday, comments from OPEC secretary general Barkindo that he was unsure who would cut first out of OPEC and non-OPEC parties were followed shortly after by a speech from Russian President Putin in which he stated that a freeze in output rather than a cut may be appropriate. When taken together these developments have raised doubts over the ease with which coordinated action to support the price of oil will be carried out, and led some to believe that this may not go as smoothly as previously thought. Last night saw the less widely-viewed API inventory data released showing the biggest increase in six months and a similar build this afternoon could apply more downward pressure to the oil price.