Global trade pulls markets lower

The FTSE 100 has been pulling back today, following up on a three-day trend which has seen each rally sold into, a sign that the bullish sentiment is waning ahead of a likely rate hike.

A man looking up
Source: Bloomberg

The US dollar has continued to strengthen, in a trend which has now lasted three weeks, helped on its way by a particularly strong jobs report. While the story for the US dollar is very clear in the face of a December rate hike, markets waited for a response today to confirm that good news remains bad for equities. As earnings season comes to a close, the promise of further dollar strength means the next quarter will likely see continued weakness for many international firms.

Today’s OECD report saw global growth revised lower yet again. Initially pencilled in as 3.7%, 2015 growth has now been predicted as 2.9%, with the Chinese slowdown noted as a main determinant of economic slowing. Most worryingly for the OECD, global trade is only expected to grow by 2% this year, which has only happened five times in the past 50 years. These periods all coincided with financial market downturns. No doubt the Chinese slowdown is disproportionately responsible for reduced global trade data, yet it highlights the impact that this one country has in world economics.

Chinese trade is continuing to suffer, with imports down 18.8% and exports falling 6.9% in October. This week finds the focus return to the Asian powerhouse, where inflation, industrial production and fixed asset investments all hope to begin moving in the opposite direction. The fact that we saw very little initial negative movement within the markets show that this has become significantly priced in, and for many the focus is more upon European Central Bank easing and Federal Reserve tightening in December, rather than the continued Chinese slowdown.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.