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World stocks shrug off slowing China trade growth to hit record

Published 08/08/2017, 08:13 AM
© Reuters. A trader works on the floor of the NYSE in New York
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By Nigel Stephenson

LONDON (Reuters) - Global stocks inched up to a new record high on Tuesday, shrugging off weaker-than-expected Chinese trade data that clouded an otherwise bright outlook for global growth.

Wall Street was expected to open flat to marginally lower, according to index futures, after slight falls on European bourses and modest gains in Asia.

Chinese imports and exports both fell well short of forecasts last month and growth in overall trade, while still a healthy 8.8 percent, was its slowest this year.

Trade in Germany, Europe's powerhouse economy, slowed abruptly in June - another sign that demand may be starting to flag just as central banks contemplate scaling back stimulus.

However, MSCI's all-country world index (MIWD00000PUS) ticked up to set a new record high at 480.87 points. It was last up less than 0.1 percent at 480.83 points.

The index, which tracks shares in 46 countries, is up for a 10th consecutive month and is on track for its longest monthly winning streak since 2003.

Shares across the globe have been hitting record highs in record low volatility, supported by a benign environment for global growth.

Ratings agency Fitch this week lifted its outlook for the world economy for this year and next.

"Data continue to suggest a synchronized global expansion across both advanced and emerging market economies. Spill-overs from the rebound in emerging market demand are reflected in the fastest growth in world trade since 2010," said Fitch chief economist Brian Coulton.

The pan-European STOXX 600 index (STOXX) was last down less than 0.2 percent, with miners (SXPP) among the losers as the Chinese data weighed on copper prices.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) proved relatively resilient, inching up 0.2 percent and back toward decade highs.

South Korea (KS11) dipped 0.2 percent, while Japan's Nikkei (N225) eased 0.3 percent and China's main markets (CSI300) (SSEC) edged up 0.1 percent. Hong Kong's Hang Seng (HSI) closed up 0.6 percent.

In currency markets, the dollar dipped for a second consecutive day after rising sharply on Friday following stronger-than-expected U.S. jobs numbers, which some analysts said bolstered the case for the Federal Reserve to raise interest rates further.

However, many in markets remain unpersuaded the Fed, having raised rates twice this year, will hike again in 2017.

St Louis Fed President James Bullard said on Monday the central bank could leave rates where they are for now because inflation was not likely to rise much.

The dollar hit a 14-year high in early January in anticipation of U.S. President Donald Trump implementing his pro-growth campaign pledges. Those expectations have faded.

The dollar index, which plumbed 15-month lows last week, was down 0.1 percent (DXY). The euro gained 0.2 percent to $1.1811 while the yen rose 0.4 percent to 110.34 to the dollar .

Sterling was up 0.1 percent at $1.3045 .

German 10-year government bond yields, the benchmark for borrowing costs in the euro zone, held close to their lowest in more than a month at 0.46 percent , supported by expectations that any withdrawal of European Central Bank stimulus would be gradual.

This view was boosted on Monday by data showing industrial output in the euro zone's biggest economy unexpectedly fell 1.1 percent in June from a month earlier.

Brent crude oil, the international benchmark, dipped 11 cents to $52.26 a barrel (LCOc1). An industry source familiar with the matter told Reuters Saudi state oil company Aramco will cut allocations to its customers next month by at least 520,000 barrels a day. [O/R]

"Support is coming from a stabilizing U.S. rig count, falling U.S. inventories and the Saudi cut in exports," Ole Hansen, head of commodity strategy at Denmark's Saxo Bank, told the Reuters Global Oil Forum.

"But against this we still have robust production growth from the United States, Libya and Nigeria."

Copper fell 0.2 percent to just below $6,400 a tonne after Chinese year-on-year imports of the metal fell.

© Reuters. A trader works on the floor of the NYSE in New York

Gold rose 0.6 percent to $1,265 an ounce as the dollar weakened.

(Additioonal reporting by Wayne Cole in Sydney, Jemima kelly, Abhinav Ramnarayan and Christopher Johnson in London, graphic bt Nigel Stephenson; Editing by Alison Williams)

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