Recent trade data out of China is once again behind early declines in stocks today. The Benchmark Dow Jones Industrial Average is down nearly one percent in early action. Overnight, China announced that its trade surplus with Washington was the highest in a decade.
Further Evidence of a China Slowdown
According to an article from cnbc.com, China’s surplus grew 17 percent from a year ago to hit $323.32 billion in 2018. This was reportedly the highest reading since 2006 and the actual figures may be even worse than the data shows because China uses various methods of calculation.
Chinese exports to the U.S. reportedly rise by 11.3 percent while imports from the U.S. to China only managed a slight rise of .7 percent.
According to businessinsider.com, the value of Chinese imports and exports fell heavily in 2018, adding fresh concerns about the health of the world’s second-largest economy. The article cited China’s General Administration of Customs as reporting that the value of exports tumbled 7.6%. Estimates were reportedly looking for a rise of 5%.
The latest disappointing data is weighing heavily on stocks, commodities and currency baskets in early action.
The ongoing trade war with China is clearly having an impact on both countries and the situation could potentially get a lot worse if an agreement is not made soon. The latest worries over the Chinese economy come at an already-challenging time. The U.S. Government remains shutdown as Democrats and the Trump administration refuse to budge on their respective positions regarding funding for a wall along the U.S. southern border. There are also fresh concerns over Q4 earnings as reporting gets underway. A key vote on Brexit set for Tuesday also has the potential to fuel market volatility.
Market Reaction
The gold market is moving higher as risk aversion takes hold and investors look for perceived safety. Spot gold was last trading higher by $5.13 per-ounce at $1292.23 in early action. Although the market has thus far only made one serious attempt at breaking through key upside resistance in the $1,300 region, prices have not strayed far in recent sessions. The bulls may be simply waiting for the right opportunity to make the next push higher and concerns over China and a global slowdown could act as a major catalyst.
The market remains in “buy the dips” mode until proven otherwise. The bulls will, however, need to extend the rally soon or the market could potentially see a larger pullback on some significant profit-taking.
Gold Price Chart
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