Yet another down day on Wall St that was emulated in Asia overnight. Dragging on sentiment is China trade data showing a plunge to its first deficit since early 2014 with markets cautious about how to interpret the key data points ahead of a potential Fed rate hike.
Accendo Markets Analyst, Mike Van Dulken commented – “On the one hand China’s trade data bolsters belief in economic transition towards a more service oriented economy, a surge in imports helping serve higher domestic consumption. On the other hand, it may all be down to the commodity price rebound and exports slowdown may cast doubt about the strength of global demand for what it produces.”
Things got off to an inauspicious start this Wednesday, investors perhaps not willing to show their hand until after the Spring Budget later today.
Spreadex Analyst Connor Campbell noted – “Growth forecasts (which are likely to be revised from 1.4% to 1.9% for 2017) and the Brexit war-chest (expected to come in at a sizeable £60 billion) should be the most pertinent items in Philip Hammond’s big red box market-wise, the latter especially relevant to a worryingly weary pound.”
Sterling picked up where it left off yesterday, digging itself further into 7 week lows against the dollar and the euro. The pound has some way to go before it dives past the nadirs struck against both in mid-January, though currently there are no signs of a major revival either. As for the FTSE, the UK index appears to be back in one of its stagnant periods, opening flat-ish just above 7330; it could, however, receive a pick me up (or indeed a knock down) dependent on what surprises Hammond has in store this afternoon.
The Eurozone was just as dull this morning, the DAX and CAC failing to budge after the bell. Focus this Wednesday is so firmly on the UK’s Spring Budget that the Eurozone indices may find it hard to do much of anything as the day progresses, instead saving their energy for tomorrow’s ECB-dominated afternoon.
Data-wise, we are limited to a smattering of US releases, including ADP Employment Change which is viewed by many as a warm-up for Friday’s Non-Farm Payrolls jobs report. Consensus sees it falling back from January’s 6-month high, but remaining strong at 189K. Other releases include Non-Farm Productivity which is seen a touch higher, Unit Labour Costs are seen eking lower, while Wholesale Inventories expected to remain negative as Wholesale Trade Sales are forecast to sharply fall.