Chinese trade data surprises on the upside

Thursday, May 08, 2014

Spot gold prices dropped back below $1,300/oz yesterday, posting a 1.4% decline after Yellen’s dovish testimony in front of the Joint Economic Committee. Stating that a “high degree of monetary accommodation remains warranted”, market participants were encouraged that the Fed would continue to support conditions favourable for economic growth. Both the S&P 500 and DJIA rallied higher, adding 0.56% and 0.72% respectively, while the tech focused NASDAQ trailed lower as investors shifted focus from growth to value stocks. Investors have been encouraged, albeit tentatively, by the economic outlook in recent sessions with the VIX dropping towards 13.40 after spiking towards 13.80 earlier this week.

The bullish sentiment carried over into the Asian session, with most major benchmark indices in the region heading higher. Markets gained traction from a surprise increase in Chinese exports which increased 0.9% y/y in April from -6.6% the previous month. Participants had expected a -3.0% contraction in exports and with the trade surplus increasing to $18.46bn in April the improving outlook saw nickel prices rally above $19,000 as the metal traded towards $19,200/tonne early this morning towards its highest level since March 2012 with tighter fundamentals supporting the rally. 

A busy day for economic data, with market participants anticipating the release of the BOE and ECB base rates before focus switches to US jobless claims later this afternoon. However, the day started off with disappointing German industrial output for March, posting a -0.5% contraction m/m against expectations of 0.2% m/m growth.

Volatility falls on supportive comments from Yellen

SPX Index SP 500 Index SPVIX 2014 05 08 07 41 07

Tech stocks continue their sell-off as NASDAQ declines for a second session

CCMP Index NASDAQ Composite Ind 2014 05 08 07 38 51

Chinese trade balance posts surprise increase on export growth

CNFRBAL Index China Imports 2014 05 08 07 46 10

Events for today

0001

UK

Apr

RICS House Prices

0700

DE

Mar

Industrial Output

1200

UK

May

BoE Rate

1245

EZ

May

ECB Rate

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

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