China trade data disappoints

Exports from China rose by 2.4% y/y in September, missing expectations and much slower than the near 9% gain recorded a month earlier. Imports were nearly flat at 0.3% y/y in September, missing expectations and leading to a trade surplus of USD 81.71bn. Import levels have been lacklustre in 2024 as China’s economy shows weak signs of consumption. Imports of crude oil have declined by almost 3% year-to-date as of September according to customs data while refined product imports have increased by % ytd.

Inflation in India accelerated to 5.49% y/y in September, a sharp pick up from 3.65% recorded a month earlier and ahead of market expectations. On a monthly basis, inflation rose by 0.6%. Food price inflation rose by more than 9% in September while the core inflation print increased to 3.56% from 3.44% previously. The RBI adjusted its policy stance to neutral at its decision earlier this month but the faster than expected inflation print may delay any imminent easing in policy rates.

Today’s Economic Data and Events

• 10:00 UK ILO employment rate 3mths Aug: forecast 4.1%
• 13:00 GE ZEW survey expectations Oct: forecast 10.0
• 16:30 US Empire manufacturing Oct: forecast 3.6

Fixed Income

• US Treasury markets were closed overnight and have opened near unchanged in early trading today. European markets also recorded a quiet trading day.

FX

• The dollar was bid higher against peer currencies overnight with EURUSD down 0.3% at 1.0909, GBPUSD edging slightly lower at 1.3059 and USDJPY up by 0.4% to 149.76.
• Commodity currencies weren’t spared the sell off with USDCAD rising by 0.3% to 1.3796, AUDUSD dropping by 0.4% to 0.6726 and NZDUSD down 0.2% at 0.6096.

Equities

• Equity markets were strong across the board overnight with the Dow Jones up 0.5% and the S&P gaining 0.8%. The NASDAQ added a strong 0.9%. European markets were also broadly positive with a 0.7% gain in the EuroStoxx and a 0.5% rise in the FTSE.
• Chinese equity market responded positively to the latest support measures announced by the finance minister over the last few days. The CSI 300 index rose by 1.9% though the Hang Seng dropped by 0.8%.
• Regional markets were mixed. The DFM added 0.3% alongside a gain of 0.5% in the ADX while the Tadawul fell by 0.9%.

Commodities

• Oil markets responded negatively to the China support measures announced over the weekend with a 2% drop in Brent futures to USD 77.46/b and a 2.3% decline in WTI to USD 73.83/b. Both have extend their losses by almost 3% in early trading today as markets respond to a press report that Israel will not seek to attack Iranian energy infrastructure.
• OPEC revised its oil demand growth forecast for 2024 lower in its October monthly oil market report, now expecting demand to grow by 1.9m b/d from more than 2m b/d previously. The downward revision is mostly related to lower demand forecasts in China and other emerging economies. For 2025, the demand growth forecast was also cut to 1.6m b/d from more than 1.7m b/d previously. As recently as July, OPEC was projecting oil demand growth of 2.2m b/d for this year. OPEC left its non-OPEC+ supply growth forecasts unchanged at 2.4m b/d for this year and 2.1m b/d for 2025.