Charting the Markets: China's Rising Trade Data Spurs Appetite for Risk
Global stocks are rising for a second session after a six-day losing streak. Chinese exports unexpectedly rose 2.3 percent in yuan terms in December, ending a five-month stretch of declines, suggesting a devaluation of the yuan is helping trade. The 4 percent drop in imports wasn't as bad as the estimate for a 7.9 percent decline and was an improvement from November's figure. Chinese stock investors endured another volatile day, with the Shanghai Composite Index initially rising as much as 1.2 percent before closing 2.4 percent lower. The gauge has yet to register a two-day gain in 2016.
Asian stocks rose for the first time in 2016, ending a 7-day stretch of declines, the longest since August. The MSCI Asia Pacific Index jumped as much as 2.1 percent, the most in a month, after China's trade surplus unexpectedly widened last month. Japan's Topix index was the standout performer in the region, surging 2.9 percent in its biggest gain in four months. Last Friday the Topix's 14-day relative strength index fell below 30, a signal to some traders it was oversold. Asian stocks have fallen 7 percent in 2016, on track for the worst annual performance since 2011.
The yuan's five-day advance in Hong Kong is its biggest on record. The currency has strengthened as much as 2 percent in that period as China steadied its fixing. The nation's central bank has also intervened in the offshore market via state banks this week to crack down on speculators, according to people familiar with the matter. The moves, along with verbal intervention from senior government officials, have erased the discount between the offshore and onshore yuan from a record 2.9 percent last week. The offshore rate is now 0.06 percent stronger.
Commodities received a boost from China's stronger-than-estimated export data, which suggest a weaker currency may provide a much-needed boost for the world's second-biggest economy and largest consumer of raw materials. On Tuesday the Bloomberg Commodities Index sank to a 1991 low. Crude oil's bounce from below $30 has also helped the gauge. Yesterday it fell as low as $29.93, a level not seen since November 2003. Citigroup says the world is now "confronting $20 oil." The Bloomberg Commodities Index has sunk 5 percent in 2016, heading for a sixth year of declines, a record losing streak.
Mark Barton is a presenter on Bloomberg TV. Follow him on Twitter @markbartontv