Chinese data catches market off guard

Chinese data catches market off guard

By Tim Waterer (Senior Trader, CMC Markets)

Chinese Trade Balance data caught the market a little off guard today, with the surprising surplus garnering enough positive investor reaction to offset the decline in Chinese import numbers.

Most of the major Asian bourses ascended higher today even with the event risk of US Non-Farm Payrolls data looming large. Traders like what they have seen so far this week on the US economic calendar particularly in relation to the employment market. While the ADP numbers and employment claims data have provided a source of optimism they far from guarantee Non-farm Payrolls success.

While the bar is not set particularly high when it comes to Non-Farm Payrolls expectations, the outcome still may serve as a Litmus Test of sorts given the current elevated levels of financial markets around the globe. A job creation result of 160k or more should be enough to receive a ‘pass’ mark from investors provided there is no jump in the unemployment rate. In any event, I think the key to watch will be how the US Dollar reacts especially if we see a result to the upside, with the US Dollar showing glimpses of becoming more of a risk-on currency as US data improves.

A pleasing headline Chinese Trade Balance number combined with solid gains across other Asian markets helped propel the ASX200 higher today, albeit in a slightly constrained fashion. The major mining stocks provided the feature performance on the Australian market, with gains in the Materials sector more closely resembling the buying mood exhibited on other Asian markets such as the Nikkei and Hang Seng. It seems investors were mindful that a key US jobs report this evening could potentially pose as a hurdle to any further upside moves on the local index over coming weeks.

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