S&P futures rose further into record territory, European shares rose to within striking distance of their highest levels in more than a year while bonds fell and the dollar rose as investors cheered a surge in Chinese trade data amid hopes of “phenomenal” tax cuts by Donald Trump, all of which have rekindled the Trumpflation trade.
The main economic release overnight was China’s trade data, which saw China post much stronger-than-expected exports and imports for January as demand picked up at home and abroad, however celebreations of a Chinese trade renaissance may be premature because as Goldman pointed out in a note, “the early Chinese New Year appears to have distorted January trade data (especially exports) on the upside.” Reuters agreed, noting that China watchers warned the long Lunar New Year holidays may have distorted the data to some degree, with companies pumping up production or rushing to build inventories before the break, which can last for weeks.
Concerns aside, China’s imports in January rose at the fastest pace since 2013, fueled by a continued construction boom which is boosting demand and global prices for resources from copper to steel, preliminary customs data showed on Friday. The 16.7% surge eclipsed the consensus estimate of 10.0%. China’s imports from the United States rose 23.4 percent in January, the fastest pace in at least a year, while its monthly trade surplus with the U. S. dipped to $21.37 billion. Led by electronics, China’s January exports climbed the most in almost a year, adding to evidence that Asia’s long trade recession may be bottoming out. January shipments rose 7.9 percent, more than twice as much as expected, after 2016 exports slumped nearly 8 percent.
China had been lagging a recent export recovery seen in Japan, South Korea and Taiwan, dragging on the regional supply chain. Its integrated circuit shipments rose 14.5 percent last month, while exports of mobile phones rose 7.9 percent. That left the country with a initial trade surplus of $51.35 billion for the month, the highest in a year. Customs is due to release updated data for trade on Feb. 23.
This post was published at Zero Hedge on Feb 10, 2017.