By
Steve Muchoki
April 16th, 2024
Despite some positive development from China’s April trade data, global stocks still remain lower as investors remain tentative.
The new week is seeing a general decline in global stocks as inflationary pressure continues to creep in. For instance, in Europe, stocks are expected to open lower on Monday, extending last week’s negative trend. Furthermore, shares also declined on Monday in the Asia-Pacific region even though China’s April trade data exceeded expectations. Meanwhile, markets in Hong Kong remain closed for the holidays.
The lower opening for European stocks follows an underperformance of the region’s stocks to conclude last week. This subpar performance directly resulted from the pervasive collapse in the US markets, with Thursday being the worst since 2020.
The UK’s FTSE index began the week 59 points lower at 7,350, while the French CAC 40 declined 164 points to 13,545. In addition, Germany’s DAX 67 also opened 67 points lower at 6,206, with Italy’s FTSE MIB registering 172 points less at 22,925.
Global Stocks by way of China & Japan
In the Asia-Pacific region, investors remain on edge for the market reaction to Chinese exports and imports data for April. This is reflected in regional stock performance as the Japanese Nikkei 225 dipped 2.35%. Meanwhile, the shares of Japanese multinational retail holding company Fast Retailing are at the forefront of Asia-Pacific major market losses. The company’s stock sank by more than 6%. Furthermore, the Topix index was also hit, giving up around 1.69%.
In mainland China, stocks fared higher as the Shanghai Composite flirted with the flatline while the Shenzhen Composite climbed 0.48%. In addition, customs revealed that China’s dollar-denominated exports rose 3.9% YoY in April. This figure comfortably cleared the consensus estimate of a 3.2% rise for the same period. Furthermore, on the import side, China’s dollar-denominated imports remained the same for April compared to the same period last year. Once again, this development exceeded analysts’ expectations which had it at a 3% decline.
The positive Chinese trade data comes amid a renewed outbreak of Covid and subsequent shutdown of operations in mainland China. Seen as the worst outbreak since the pandemic first hit back in early 2020, the situation has elicited a national statement from Chinese President Xi Jinping. On Thursday, Jinping called for the country’s need to adhere to its “dynamic zero-Covid” policy. In a meeting with top leaders, the Chinese president also urged officials to “resolutely fight” detractors of said strict Covid policy. Furthermore, Jinping capped off by warning that there would be economic consequences if China flouted its zero-Covid policy.
South Korea & Australia Stocks
Elsewhere in the Asia-Pacific region stock-wise, South Korea’s Kospi slid 1.44%, while the Australian S&P/ASX 200 declined 1.18%. Commenting on the general decline in global stocks, Steve Brice, chief investment officer at Standard Chartered Wealth Management, said:
“We’ve cautioned about getting too bearish, if you look at indicators … from a market perspective, that bearishness is coming through as well, and that’s usually a buying opportunity.”
In addition, Brice also added:
“I know there’s a lot of challenges out there … in terms of the inflation outlook, but you know, the markets are already pricing in very, very sharp monetary policy tightening. At some point we will find a bottom.”
US Futures
US stock futures dropped on Sunday evening with traders remaining skeptical following last week’s rout. Last week, the Nasdaq Composite lost 1.54%, with the S&P 500 and Dow declining 0.21% and 0.24%, respectively. This marked the sixth straight losing week for the Dow, and fifth straight for the other two leading US indexes.