Asian stocks diverged Monday, but closed mostly higher after government data showed another deterioration in China’s terms of trade, raising the prospects of additional stimulus from the country’s central bank.
China’s exports declined 6.9% in October from a year ago, following a 3.7% drop in September, the General Administration of Customs reported Sunday. That was much worse than the 3% decline forecast by economists.
October imports plunged 18.8% over a year ago, following a 20.4% drop in September. This led to a widening of China’s trade surplus to $61.64 billion from $60.34 billion in September.
October marked the fourth consecutive drop in Chinese exports, adding further evidence of a deep slowdown in the world’s second-largest economy. This has also raised the prospect of additional stimulus measures from the People’s Bank of China, which has already cut interest rates six times since November 2014.
China is scheduled to release key inflation statistics on Tuesday. The consumer price index is forecast to drop 0.2% annually in October. Producer prices are expected to decline 5.8% compared with a year earlier.
Stocks were mostly higher throughout Asia, with China’s benchmark Shanghai Composite Index rising 1.6% to 3,646.88. The CSI 300 Index, which tracks the largest stocks traded on the Shanghai and Shenzhen exchanges, rose 1.2% to 3,840.36.
Hong Kong stocks ended mostly lower, with the Hang Seng Index falling 0.6% to 22,736.77.
Japanese stocks surged Monday, with the benchmark Nikkei 225 Index reaching its highest level since August. The Nikkei climbed 2% or 377.14 points to close at 19,642.74.
European stocks hovered between gains and losses at the start of the week, while US stock futures traded lower ahead of Monday’s opening bell.
Oil prices started the week higher, as investors reacted positively to trade data showing Chinese oil imports rose 9.4% from a year earlier, despite falling 5.7% from a month earlier.
Brent crude for December delivery rallied 48 cents or 1% to $47.80 a barrel on ICE Futures Europe. US benchmark West Texas Intermediate (WTI) advanced 28 cents or 0.6% to $44.57 a barrel on the New York Mercantile Exchange.
Meanwhile, the price of gold stabilized around $1,090 an ounce Monday after plunging by around $50 last week. The US dollar, which typically trades inversely with the yellow metal, was unchanged against a basket of world currencies.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.