Strong Data vs Trump's Tech War
Fiona Cincotta August 7, 2020 7:58 AM
Investors weigh up moves by President Trump taking aim at Chinese tech, impressive Chinese and German trade data and with NFP nerves
Stocks are pointing to a mixed start as investors weigh up moves by President Trump taking aim at Chinese tech, impressive Chinese and German trade data and with nerves showing ahead of the non-farm payroll report after a week is disappointing labour market data.
The attacks by Trump and flaring up of US – Sino tensions have overshadowed the surge in Chinese exports. Trade data from China showed that exports soared 7.2% compared to a year earlier. This is significantly ahead of 0.2% increase forecast and points to the Chinese economic recovery gaining momentum.
Upbeat data from Germany is going someway to off set the Trump inspired downbeat mood. German exports rose in June for a second straight month and rose by a convincing 14.9% in June, whilst imports increased 7%. The data adds to mounting evidence that the economic recovery in Germany is on a solid footing and comes following factory orders data yesterday which smashed expectations.
Developments on Capitol Hill will be in focus as the Democrats and Republicans have so far failed to agree on a new stimulus package for America to support it through the coronavirus crisis. The two sides remain far apart on what size the package should be. The summer recess is due to start today.
US NFP in focus
Attention will now turn towards US non-farm payroll data. Expectations are for 1.5 million new jobs to have been created in the US in July. This is down significantly from last month’s 4.8 million. Lead indicators this week from the ADP Payroll report and the employment subcomponent of the ISM non manufacturing report have been disappointing and point to the recovery in the labour market stalling, hampered by a resurgence in coronavirus cases since mid-June.
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