China trade data shows economy still expanding, commodities stocks lifted

Oliver Haill Sharecast | 13 Oct, 2017 09:30 - Updated: 09:30 | | |

0cb869

China's exports and imports continue to strengthened, trade data showed overnight, giving a boost to commodities stocks around the globe.

Chinese exports rose 8.1% in US dollar terms in September, up from the 5.6% growth recorded a month earlier but less than the consensus estimate of 8.8%.

Meanwhile imports surged 18.7% to build on a 13.5% gain the previous month, which was revised up from 13.3% and was expected to be roughly repeated in September.

The pick-up in imports has been at least partly driven by a jump in inbound shipments of industrial commodities.

Together this saw the trade balance soften to a surplus of $28.47bn last month from $42bn a month before, although this was less than the $40bn expected by the market.

"China’s imports and exports grew at fastest pace in September than in the previous month suggesting that the economy is still expanding," said Investec.

"What is good news from China is normally good news for the commodities industry."

Indeed, Rio Tinto, Anglo American, Glencore and BHP Billiton were among the few risers on the FTSE 100 on Friday morning.

"Investors cheered the China trade balance data to some extent today," said analyst Naeem Aslam at Think Markets. "The economic data was mixed but investors have paid more attention to the silver lining in this number."

He noted that imports came in much better than the market expectation, however, the export number was little soft compared to the consensus forecast.

"Remember the Central Bank of China has been more focused in changing the structure and it desires its consumption to inflate," he said.

Julian Evans-Pritchard at Capital Economics said the data showed hints of a real pick-up in domestic demand, while the decline in the trade surplus suggests that capital outflows remained even smaller last month than he had initially estimated.

The pick-up in inbound shipments of industrial commodities suggested, Evans-Pritchard said, that domestic demand was strong last month, "perhaps reflecting a final push at the local level to shore up activity ahead of the Party Congress which kicks off next week".

"The upshot is that while today’s figures point to slightly softer foreign demand, domestic demand appears to have strengthened.

"Looking ahead, we expect any further weakening of exports to remain mild given the relatively upbeat outlook for growth in China’s main trading partners.

"In contrast, imports may eventually face a sharper slowdown as support from loose fiscal policy reverses after the Party Congress, with local governments forced to pair back spending in the final months of the year in order to meet budget targets."



More news

09:46 Interserve wins five-year facilities management contract with DWP

Interserve has won a major facilities management contract with the UK government, as chatter about a possible bid for the troubled company grew louder after a succession of profit warnings this year.

08:55 London open: Stocks climb as Trump Trade looks back on

London stocks pinged higher on Friday to wipe out losses from the previous session as the pound was weaker against the dollar after the US Senate approved a budget plan for 2018.

08:34 IHG boasts good growth as development pipeline surges

InterContinental Hotels Group reported a “good” third quarter on Friday, with global comparable revenue per available room up 2.3%, and ahead 2.2% in the year-to-date through the third quarter.

08:17 Dechra Pharmaceuticals trading on track in first quarter

Dechra Pharmaceuticals got off to a solid start across the board, the specialist veterinary medicines group said ahead of its annual shareholder meeting on Friday.

07:54 Smiths Group agrees pension scheme deal with Canada Life

Engineer Smiths Group has agreed a deal to insure £207m of its pension scheme with insurer Canada Life under a buy-in bulk annuity agreement.

07:53 Acacia Mining cash dwindles as revenues hit by Tanzania export ban

A day after a deal was struck to try and resolve its exports and tax dispute with the Tanzanian government, Acacia Mining reported revenue down 40% for the third quarter and a much diminished cash balance.

07:43 Serco COO Ed Casey stepping down to head back to US

Serco said on Friday that its chief operating officer, Ed Casey, is heading back home to the US to take up a role with another company.

07:41 London pre-open: Stocks seen higher after Senate budget deal

London stocks were set for a positive open on Friday following losses in the previous session and the US Senate approved a budget plan for 2018, with investors also likely to continue keeping an eye on developments in Spain.

07:40 IHG reports good third quarter, Acacia Mining revenue falls 40%

London open

07:28 Friday newspaper round-up: Pensions, HBOS, Royal Mail, M&S mortgages

One of the most ambitious IT projects ever undertaken in financial services, to provide individuals with an online “pensions dashboard” covering all the schemes they may have, has been given the go ahead by the government. The Department for Work and Pensions is aiming to bring all the 64m different pension pots in Britain under one roof so that individuals can see all their entitlements in one place. – Guardian