Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European equities were negotiating with some valuations, which could be an important clue in face of the disappointing indicators of the Chinese economy. These negative data did not cause a significant shock to Asian stocks, resilience which should spread to European markets. Metals were another asset that initiated a rise in the Asian session. Therefore, it is expected that, at least in the early hours, mining shares to extend the climb initiated yesterday, led by Glencore and Antofagasta, two securities listed in London. Against this background, it is not excluded that as noted yesterday, the Indexes of Central Europe present an over-performance against its Iberian peers.
Yesterday, US markets were closed, having celebrated Labor Day. Until a few years before August become a particularly turbulent month, the Labor Day marked the beginning of the return of the main fund managers on Wall Street. In the coming days, investors will focus on the situation in China and future decisions of the Fed. The issues related to Fed should take a slight preponderance in relation to the theme of the Chinese economy. Fed’s apprehension does not relate exclusively to financial markets but also by the impact that rising interest rates in the US might cause in emerging markets and its companies, particularly at this stage. The rise in interest rates would lead to an appreciation of the US dollar and a general increase in US interest rates. This would reinforce selling pressure on commodities. The renewed weakness of raw materials would prolong negative effect on many emerging economies producing commodities. In addition, many emerging countries have issued debt in dollars (according to some estimates outside the United States was issued debt in US currency totaling 9,000,000 M.), so, with the appreciation of the US currency and rising interest rates, debt burden could become too heavy for some countries. In addition, many US oil companies, which have high debts, could be hit not only by the weakness in oil prices but also by the rise in interest rates. The Fed is faced with a dilemma which relates to the possible need to increase interest rates and the desire to further unsettle financial markets and emerging economies.
Despite the alarming data from China, Asian markets closed without major fluctuations (with the exception of the Nikkei). In August, Chinese exports fell 5.50%, while imports fell 13.80%. As the drop in exports was lower than the drop of imports, the Chinese trade balance registered a surplus of 60,000 M.USD. However, these figures are worrying. Exports were the main engine of the economic expansion of China in the last two decades. The Chinese government aims to fund for its economy to replace this model by one which is more based on domestic consumption and private sector. But the decline in imports shows that this goal is not yet near. Domestic demand has been contracting, penalizing the demand for foreign products. The drop in Chinese imports have effects on the economies of other Asian countries. In August, Taiwan’s exports fell 14.80% and Korean’s fell 14.70%. In Japan, GDP slowed 1.20% in the 2nd quarter, less than the 1.80% forecast but still constitutes a worrying sign for the Abe Government.