There were several high impact news events released in the overnight and early morning trading session that have positively affected market sentiment. We received the latest data courtesy of China’s General Administration of Customs, Australia’s unemployment rate and employment numbers and the statement from the Bank of Japan regarding their monetary stimulus combined with their version of forward guidance. This morning we’ve received the latest export data from Germany.
China’s economic data exceeds expectations
China published much stronger than expected trade data trade in the early morning/overnight session easing fears over a slowdown in the world’s second largest economy. Chinese exports rose more sharply than forecast, by 5.1% in July compared with a year earlier, while imports surged 10.9% resulting in a $17.8 billion trade surplus, the General Administration of Customs said today in Beijing. Shipments abroad compared with the median estimate for a 2 percent increase in a Bloomberg News survey of 45 analysts and June’s 3.1 percent drop. Forecasts ranged from a decline of 4 percent to gain of 8.8 percent.
German exports in June 2013: –2.1% on June 2012
Germany exported goods to the value of 92.8 billion euros and imported goods to the value of 75.9 billion euros in June 2013. Based on provisional data, the Federal Statistical Office (Destatis) also reports that German exports decreased by 2.1% and imports by 1.2% in June 2013 on June 2012. The month-on-month comparison showed opposite developments of exports and imports upon calendar and seasonal adjustment. While exports increased by 0.6% on May 2013, imports decreased by 0.8%. The foreign trade balance showed a surplus of 16.9 billion euros in June 2013.
Bank of Japan will refrain from adding to its stimulus
At the monetary policy meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guidelines for money market operations for the intermingling period: The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of around 60-70 trillion yen. With regard to asset purchases, the bank will continue with its current guidelines and target.
Australia Labour Force – July 2013, unemployment rate remains steady at 5.7%
Australia’s unemployment rate was unchanged at 5.7% in July 2013 in both seasonally adjusted and trend terms. The number of unemployed persons decreased by 5,700 to 705,400 in July 2013 (seasonally adjusted), while in trend terms the number of unemployed persons in July 2013 rose by 5,300 to 706,900.
July 2013 saw the seasonally adjusted participation rate decrease 0.2 percentage points to 65.1%. The trend participation rate remained at 65.2% in July 2013, following a revision to the June estimate.
The seasonally adjusted number of employed persons fell by 10,200 in July 2013 to 11,653,200 persons. In trend terms, employment increased by 1,000 persons to 11,660,000 persons in July 2013. The employment to population ratio, which expresses the number of employed persons as a percentage of the civilian population aged 15 years and over, decreased to 61.4% (seasonally adjusted). The trend employment to population ratio decreased to 61.5%.
Market overview at 10:15 AM UK time
The Nikkei index fell in the overnight/early morning session and closed down by 1.59% after the BOJ meeting and accompanying statement. The Hang Seng closed up 0.31%, whilst the CSI closed down 0.17%. The Aussie index the ASX 200 closed up 1.07%
European markets have made modest gains overall in the morning session. The STOXX index is up 0.02%, UK FTSE is up 0.10%, the CAC is down 0.05%, whilst the DAX is up fractionally at 0.02%. The IBEX is up 0.32% and the MIB up 0.51%.
Commodities prices have risen; ICE WTI oil is up 0.11% at $104.48 per barrel, NYMEX natural is down 0.37% at $3.24 per therm. COMEX gold is up 0.47% at $1291.30 per ounce whilst silver is up 0.95% at $19.78 per ounce.
Looking ahead to the New York open the DJIA equity index future is currently up 0.19%, SPX up 0.18% and the NASDAQ up 0.24%.
Forex in focus
The euro rose 0.2 percent to $1.3357 early in the London session after climbing to $1.3369, the highest witnessed since June 19th. The 17-nation shared currency was little changed at 128.44 yen. The yen has risen 0.2 percent to 96.14 per dollar after appreciating to 96.10, also the strongest level witnessed since June 19th. The euro has strengthened to a seven-week high versus the dollar after a government report showed German exports increased in June, adding to signs that the Eurozone’s largest economy is improving. The euro has strengthened 5.6 percent this year, the best performer of ten developed-market currencies tracked by the Bloomberg Correlation-Weighted Index. The dollar has gained 4.2 percent in the same period, whilst the yen tumbled 7.1 percent.
The Australian dollar jumped 0.8 percent to 90.68 U.S. cents after advancing to 90.89, the highest since July 30th. The Aussie has advanced for a fourth day versus the U.S. currency as traders cut their bets that the Reserve Bank of Australia will lower the benchmark interest rate in their next meeting. The currency fell marginally after a report showed Australian employers cut workers last month. Chinese imports gained 10.9 percent in July compared with a year earlier helping the Aussie ASX 200, the General Administration of Customs said, after unexpectedly falling 0.7 percent in June.
Sterling gained 0.2 percent to $1.5515 early in the London session, after rising to $1.5531 yesterday, the highest since June 21st. Sterling appreciated 0.1 percent to 85.99 pence per euro after reaching 85.79 pence yesterday, the strongest level seen since July 10th. The pound approached a seven-week high versus the dollar after the Bank of England stated yesterday that U.K. inflation won’t slow to its 2 percent target until the end of 2015. The pound has risen 1.7 percent in the past three months, according to the Bloomberg Correlation-Weighted Index that tracks the ten most developed-nation currencies, amid signs the economy is recovering. The euro strengthened 3.4 percent and the dollar has gained 1.8 percent.