Weak China trade data hammers Aussie, weighs on Europe shares

By Reuters

Apr 13, 2015 06:48 AM EDT

A shock fall in Chinese exports hammered the Australian dollar on Monday, though expectations of fresh economic stimulus from Beijing helped Asian stocks higher

Chinese shares, which have been rallying on expectations of further steps to boost the economy, hit seven-year highs on Monday even after data showed exports fell 15 percent in March while imports contracted at their fastest rate since May 2009. Economists had forecast a 12 percent increase in exports.

The Australian dollar fell nearly 1.5 percent after the data from China, which is the main market for Australia's exports of natural resources.

The Aussie AUD= was last down 1.4 percent at $0.7567, its weakest since April 2.

Adding to the gloom for the Aussie, the World Bank also cut its 2015 growth forecasts for developing East Asia and China.

"All of that provides quite a negative picture for the Aussie, particularly as the data we had overnight was very much driven by a decline in exports, which is going to be seen as quite a negative factor for the region," said Ian Stannard, head of European FX strategy at Morgan Stanley in London.

The Chinese data also weighed on sentiment in Europe. The pan-European FTSEurofirst 300 share index .FTEU3>, which touched its highest level since 2000 on Friday, edged lower.

In Asia, MSCI's main index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, heading back toward its highest since September, reached last week.

China's CSI300 index .CSI300 closed 1.8 percent higher while the Shanghai Composite.SSEC rose 2.2 percent.

"We continue to expect more monetary easing for a variety of reasons, and the trade data offers further support for this," Oliver Barron, analyst at China-focused investment bank NSBO said in a note to clients.

Tokyo's Nikkei 225 index .N225 ended flat in choppy trade as investors took profit on gains in major stocks such as Toyota Motor Corp (7203.T) after the index hit 20,000 last week.


The euro EUR= was down 0.4 percent at $1.0563, a four-week low. Data on Friday from the Commodity Futures Trading Commission showed speculative investors' short euro positions, or bets the single currency will weaken, were only slightly below the previous week's record high [IMM/FX].

The European Central Bank is one month into a 19-month asset-purchase program, helping weaken the euro.

The dollar index .DXY, which measures the greenback against a basket of currencies, edged up. The U.S. currency was up 0.1 percent against the yen at 120.36 yen JPY=.

Sterling GBP= hit a fresh five-year low, under pressure from Friday's weaker-than-expected UK industrial output data and concerns about political uncertainty after next month's British general election.

In fixed income markets, Italian yields held firm before an auction that kicks off the busiest week of euro zone debt sales in almost a year. Italy's 10-year yields DE10YT=TWEB were flat at 1.23 percent.

The ECB program has pushed euro zone government bond yields lower, with German 10-year yields DE10YT=TWEB hitting a record low of 0.14 percent last week. Germany will sell 10-year bonds later this week.

Crude oil prices rose as traders bet a slowdown in U.S. drilling would contribute to higher prices. Brent crude LCOc1 were last up 58 cents at $58.46 a barrel.

The stronger dollar helped push gold XAU= lower for the fourth session in five. It last traded at $1,204.90 an ounce.

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