The shockingly weak Chinese trade data released over the weekend sent Asian equities broadly lower as the week starts. Aussie also tumbled sharply on its close trade tie with China. Trade balance unexpectedly reported a USD -23b deficit in February versus expectation of USD 13b surplus. Exports were very weak and contracted -18.1% yoy overall. Looking at the details, exports to US dropped -11.3% yoy, EU dropped -14.4% yoy, Japan dropped -11.0% yoy, ASEAN dropped -15.0% yoy. Import rose 10.1% yoy during the month. While some decline in export was expected in February due to lunar new year, the export performance was much weaker than generally expected. It's speculated that the weak global demand for Chinese products have triggered concerns to the government and contributed to the recent sharp Yuan depreciation.
At the time of writing, Japan Nikkei HK HSI down -320 pts and Shanghai SSE are down over -1%. The AUD/USD dropped sharply from last week's high and is head back to 0.90 level. Risk aversion is giving the Japanese yen a lift today with the USD/JPY back trading at 103.0, the EUR/JPY at 143.0 and the GBP/JPY at 172.3.
Released from Japan, Q4 GDP growth was revised lower to 0.2% qoq, 0.7% annualized. GDP deflator was revised up to -0.3% yoy in Q4, current account deficit widened to JPY -0.59T in January. New Zealand manufacturing activity rose 6.3% in Q4. Swiss retail sales, Eurozone Sentix Investor confidence, Canada housing starts will be released later today.
Looking ahead, the economic calendar is not too heavy this week. There were some important data out of US including retail sales and PPI. BoJ will also announce policy decisions. But the main focus would likely be down under as RBNZ is expected to raise OCR to 2.75% while Australia will release employment data. Here are some highlights:
- Tuesday: BOJ rate decision; UK productions
- Wednesday: Australia home loans; UK trade balance
- Thursday: RBNZ rate decision; Australia employment; China industrial production; US retail sales
- Friday: BoJ minutes; Swiss PPI; US PPI, U of Michigan sentiment