Weak trade data from China drags down the Shanghai Composite as the week starts. But markets were pretty steady elsewhere. China trade surplus widened to CNY 298b, USD 45.6b in April, versus expectation of CNY 250b, USD 40.3b. In USD dollar terms, exports fell -1.8% yoy, imports dropped -10.9% yoy. In CNY terms, exports dropped -4.1% yoy, imports dropped -5.7% yoy. It should be noted that imports have been falling for the 18th consecutive months, showing underlying weakness in demands. Meanwhile, the trade data, together with PMIs, also undermines the expectation of stabilization in China's slowdown.
The minutes of BoJ's March meeting showed that "consumer sentiment had shown a somewhat sharp deterioration due to global market turbulence." Regarding inflation, board members agreed that there was improvement but warned that core inflation might start to weaken again. Meanwhile, a government official urged BoJ to improvement communications as "negative rates were "somewhat technical and difficult to understand". And, "the government expected the BOJ to ... make efforts so that the effects of the policy measure would be fully realized."
Elsewhere, Japan labor cash earnings rose 1.4% yoy in March. Japan consumer confidence will be released later in Asian session. German factory orders, Eurozone Sentix investor confidence and Swiss CPI will be released in European session. Canada housing starts and US labor market conditions index will be featured in US session.
Looking ahead, BoE "Super Thursday" is the main focus of the week. There is no chance for a change in policies with before highly anticipated EU referendum in June. But markets will look for adjustments in the central bank's economic projections. Some economists noted that there was clear evidence of faltering growth as indicated with recent economic data. And there is prospect of downward revisions in both growth and inflation projections. Here are some highlights for the week:
- Tuesday: China CPI, PPI; Swiss unemployment rate; German industrial production, trade balance; UK trade balance; US wholesale inventories
- Wednesday: RBNZ financial stability report; Australia home loans; Japan leading indicators; UK productions
- Thursday: Japan current account; Eurozone industrial production; BoE rate decision; US jobless claims
- Friday: Japan tertiary industry index; German GDP, Eurozone GDP; US retail sales, PPI, U of Michigan sentiment