China trade shock hits global stocks, commodities
LONDON (Reuters) – Global stock markets and commodities took a hit on Monday after a shock contraction in Chinese trade pointed to deepening cracks in the world’s second-largest economy and sparked fears of a sharper slowdown in global growth.
Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5 percent rise. Exports dropped 4.4 percent, confounding expectations for a 3 percent gain.
The data reinforced fears U.S. tariffs on Chinese goods were starting to hit China’s cooling economy, while softening demand has been felt around the world with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.
Adding to the gloom were weak industrial output numbers from the euro zone, which posted their largest fall in nearly three years.
The index of Europe’s leading 300 shares .FTEU3 fell 0.9 percent by noon in London. Germany’s DAX .GDAXI and France’s CAC .FCHI were down over half a percent and 0.9 percent respectively, with shares in European luxury goods companies and the automotive sector suffering some of the biggest declines.
The falls in Europe followed hefty declines in Asia where MSCI’s broadest index of Asia-Pacific ex-Japan shares lost around 1 percent from Friday’s 1-1/2 month high – its biggest single-day percentage drop since Jan. 2. Chinese .CSI300 and Hong Kong shares .HIS suffered the worst hits.
U.S. futures showed no let-up on the horizon, with Nasdaq e-mini futures NQc1 pointing to falls over 1 percent for tech stocks while industrials YMc1 looked set to open 0.9 percent softer.
The prospect of slowing global growth also roiled commodity markets, with oil prices slipping over 1 percent. Industrial metals copper CMCU3 and aluminum lost ground in London and Shanghai.
Safe-haven trades benefited from the equity pullback with U.S. 10-year Treasury yields falling to as low as 2.6690 percent – their lowest level in a week – while gold prices gained.