MILAN – China is slowing down but stock markets are hoping that this will lead to new stimuli from Beijing, capable of relaunching the economy. The latest data signal a sharp correction in trade in May, discounting the difficulties of the economy in the post-Covid phase: the surplus drops to 65.81 billion dollars from 78.40 billion in May 2022 (90.21 billion ad April) and from the 92 billion expected by analysts, to the lowest since February. According to Chinese Customs, exports slip by -7.5% per year. Also supporting the mood is the possibility that the Fed will take a breather in hiking rates.
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China’s May surplus collapses
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Profit-taking on Tokyo, closing sharply lower: -1.8%
The EU markets are off to a weak start
Weak and uncertain start for the European stock exchanges, with only Madrid showing a positive sign. Worries about worsening economic conditions are weighing on sentiment again ahead of next week’s key central bank meetings. Industrial production in Germany increased by 0.3% in April compared to the previous month; the figure is lower than the expectations of analysts who were aiming for a 0.6% increase. In addition, the data showed that Chinese exports fell to -7.5% in May. In the first trades in London the Ftse 100 index lost 0.24% to 7,609.90 points, in Frankfurt the Dax dropped 0.04% to 15,985.25 points and in Paris the Cac40 dropped 0.14% to 7,199. 26 points. Madrid did well at +0.56% at 9,361.10 points, while Milan scored -0.08% at 27,015 points.
Spread little moved at 178 points
The spread between the ten-year BTPs and the equivalent German Bunds opens at 178.5 points, little moved compared to yesterday’s closing. The yield drops to 4.131%.
Turkish lira loses 5%, new low
The Turkish lira loses more than 5% and reaches a new historical low against the dollar. The Istanbul currency, backed by the Turkish central bank ahead of May’s presidential and legislative elections, trades around one dollar to 22.77 Turkish lira.
China’s May surplus collapses
China records a sharp correction in trade in May, discounting the difficulties of the economy in the post-Covid phase: the surplus drops to 65.81 billion dollars from 78.40 billion in May 2022 (90.21 billion in April ) and from the 92 billion expected by analysts, to the lowest since February. According to the Chinese Customs, exports slipped to -7.5% per year (to 283.5 billion) to the lowest levels of the last three months, compared to estimates of -0.4% (+8, 5% in April). While imports, with the drop in domestic demand and raw material prices, dropped by 4.5% (-7.9% in April and -8% by consensus), to 217.69 billion.
Weak and mixed futures on Wall Street
Weak and mixed futures on Wall Street despite closing higher overnight. Negative economic data from China weighed even as investors are growing expectation of a pause in interest rate hikes at next week’s Fed meeting and the possible arrival of new stimulus from Beijing. Futures on the Dow Jones mark a +0.04%, those on the Nasdaq register a -0.03% and those on the S&P 500 increase by 0.07%.
Australian economy, growth at its lowest for a year and a half
The Australian economy expanded by 0.2% in the first quarter of 2023 compared to the previous quarter, below market forecasts for a 0.3% increase and after a revised 0.6% increase up in the fourth quarter. It was the sixth consecutive period of economic growth, but the weakest rate in a year and a half, as household consumption increased less than in the last six quarters due to persistent cost pressures and high interest rates. On an annual basis, the economy grew by 2.3%, a slowdown compared to the 2.7% of the fourth quarter and +2.4% below expectations.
German industrial production rises by 0.3%
Industrial production in Germany grew by 0.3% in April compared to March. This was reported by the Destatis statistics office. The figure on an annual basis grew by 1.6%.
The price of oil still slightly down
Oil prices slightly down this morning on the commodity markets: Wti for delivery in July is trading at 71.28 dollars a barrel with a drop of 0.64% while Brent for delivery in August changes hands at 75, 78 dollars a barrel with a decrease of 0.67%.
Profit-taking on Tokyo, closing sharply lower: -1.8%
Tokyo Stocks finished the session sharply lower as investors jumped into profit-taking as the index hit its 33-year high. The reference index Nikkei marks a drop of 1.82% to 31,913.74, with a loss of 593 points. In terms of exchange rates, the yen appreciated slightly against the dollar to 139.10, on expectations of a pause in the monetary tightening by the American Fed, and to 148.70 against the euro.