Market Brief: Stocks Ignore Weak China Trade Data

FX Brief:

• China’s exports to the US declined -10.7% from a year earlier (USD terms), whilst imports from the US fell -26.4%. The broader read saw exports fall -3.2% YoY and imports also decline -8.5% YoY. A trade spokesman said trade will remain complicated and severe, despite much hype about phase-1 of the trade deal circling western media. The Yuan strengthened to see USD/CHF fall to a 1-month low.
• Singapore’s central bank (MAS) eased policy for the first time in three years, by slightly lowering the slope of the SGD currency band whilst maintaining the width and centre of the band. Inflation is expected to remain subdued in the year ahead. The Singapore dollar strengthened and saw USD/SGD fall to a 3-month low.
• FX majors and crosses were mostly rangebound through Asia, with AUD/NZD being the only cross to achieve its typical daily range. GBP/USD is treading water around 1.2600, after posting a 4% bullish range over Thursday and Friday. EUR/USD is also holding steady just off its highs around 1.1030.

Equity Brief:

• Asian stock markets have continued to post solid gains on the backdrop of easing trade tension between U.S and China after a verbal agreement struck last Fri by trade officials from both sides where U.S. President Trump coined as Phase 1 of major trade deal despite no concrete details are put in writing. For now, the U.S. administration will put on hold the 25% to 30% increase of tariffs on US$250 billion worth Chinese imports in exchange for bulk purchases of U.S. agricultural products by China.
• U.S. President Trump has added the Phase 1 trade deal agreement may be signed in Chile where Trump and China President Xi attend the APEC Summit on 16-17 Nov 2019. In contrast, China media outlets have painted a less optimistic tone on last Fri’s trade meeting and even did not mention any trade deal was being agreed.
• Today’s Asian session top gainers are China’s A50 and South Korean’s Kospi 200 where both rallied by 1.30%. Japan stock market is closed for a national holiday today and will resume trading tomorrow.
• Singapore central bank, MAS has eased monetary policy in its biannual monetary policy review as expected for the first time in three years by lowering slightly the slope of an undisclosed Singapore dollar’s policy band after two rounds of tightening in 2018. The Singapore’s STI has rallied only modestly by 0.36% on the backdrop weaker than expected China trade data for Sep; exports fell -3.2% y/y versus consensus of -3.0% y/y/ and imports declined significantly to -8.5% y/y versus consensus of -5.2% y/y.
• The S&P 500 E-Mini futures has continued to hold onto last Fri’s gains as it inched up by 0.17% to print a current intraday high of 2982 in today’s Asia session.

Up Next

• Eurozone Industrial Production for Aug where expectation is set at -2.5% y/y and 0.3% m/m over -2.0% y/y and -0.4% m/m recorded in Jul.

Matt Simpson and Kelvin Wong both contributed to this article