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Global markets spooked as China reports weakest trade for two years

The FTSE and sterling face rocky week as Chinese data drags on markets and Brexit deal vote looms

Caitlin Morrison
Monday 14 January 2019 10:43 GMT
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China demands US stop 'groundless' attacks as trade war tensions surface during Pompeo's Beijing visit

Markets tumbled around the world on Monday after China reported its weakest trading data since 2016, fuelling concerns that the global economy is heading into a slowdown.

China reported its biggest monthly fall in exports for two years, prompting a fall in Asian stocks and subsequently knocking European equities. The FTSE 100 fell 0.5 per cent, and US futures are set to open lower.

Chinese exports fell sharply by 4.4 per cent in December compared with same month one year earlier.

The data was attributed partly to the country’s ongoing trade war with the US, but exports to the rest of the world also fell.

Naeem Aslam at Think Markets said the numbers were “devastating” and “got all the alarm bells ringing once again”.

“If you ever need any evidence that how the trade spat can impact the country's economic health then this number is clearly a major factor here. The lower export number also means that lower jobs which means another direct impact on the economy,” he said.

“Donald Trump may be pleased to see these numbers because it shows that his policies have clearly brought China to its knees. Clearly, Beijing must do something to put a stop to this chaos.

“President Trump may actually beat his chest even more by looking at the fact that China's trade surplus with the US is at a 10-year high.”

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Meanwhile, both the FTSE and the pound are set for a volatile week as the British government prepares to vote on Theresa May’s Brexit deal on Tuesday. All signs point to the deal being rejected, but it is unclear what the consequences of such a result will be, which makes it difficult to predict what direction markets will take.

Hussein Sayed, chief market strategist at FXTM, said investors “seem to be on wait-and-see” mode ahead of the vote, with the pound hovering around $1.285.

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