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The optimism of investors diminished after China reported record trade surplus in 2018

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The optimism of investors diminished after China reported record trade surplus in 2018, which will further weigh on the trade talks with the US. The official government data showed that China’s surplus with the United States increased by 17% YoY and reached 323.32 billion USD. Thus, the Asian country should provide more commitments to the US trade representatives to convince President Donald Trump to end the trade war.

The markets are waiting nervously the vote on Brexit deal in the UK on Tuesday. The British Prime Minister Theresa May is making a last-ditch attempt to persuade MPs to back her Brexit deal as Tuesday’s key Commons vote looms closer. She will use a speech on Monday to warn that Parliament is more likely to block Brexit than let the UK leave without a deal.

Meanwhile, the US government remains partially shut down for the longest period in the country’s history.

Asian markets recap

Asian stocks ended the first session of the week on a red territory amid disappointing data on China’s trade surplus, which has diminished the mood of investors. The stock exchange indices dropped after the Chinese government data on imports and exports in December showed an unexpected decline, deepening worries about slowing economic growth in the world’s second-largest economy.

On the Chinese exchanges, the continental index Shanghai Composite decreased by 0.71% and ended the session at 2,535.77 points. Hong Kong’s benchmark Hang Seng fell by 416 points, or 1.56%, to 26,255.05 points. The official government data showed that China’s surplus with the United States increased by 17% YoY and reached 323.32 billion USD in 2018. This is the highest figure since 2006, since the start of statistical reporting. Exports to the US grew by 11.3% YoY last year, while the US imports to China increased by 0.7% YoY. China’s total trade surplus for 2018 amounted to 351.76 billion USD. Last year, the exports rose by 9.9% from 2017, while imports jumped by 15.8% over the same period. Despite these figures, China’s overall surplus for the past year was the lowest since 2013.

Shanghai Compositge

In South Korea, the index Kospi fell by 0.53% to 2,064.52 points. The shares of Samsung Electronics, the world’s largest smartphone maker, declined by 1.11%, while the stocks of the microprocessor manufacturer SK Hynix declined by 4.61%.

In Australia, the local index S&P ASX 200 failed to keep its earlier growth and ended with a fall of 0.02% to 5,773.40 points.

European markets mid-session recap

German stocks are declining at the beginning of the week, feeling the disappointment of investors from the data on China’s trade surplus. The index DAX 30 decreases by 0.57% to 10,825.62 points at 09:00 GMT. The stocks of automakers are performing without a single direction with Volkswagen increasing by 0.25%, Daimler dropping by 0.3% and BMW decreasing by 0.1%. The chemical giant BASF and pharmaceutical company Bayer register a more serious decline by 0.5% and 1.0% respectively.

DAX 30

French stocks are also down in mid-session on Monday. The index CAC 40 decreases by 0.6% to 4,752.75 points. The stocks of Renault are up by 0.3%, while Citroen and Peugeot register minimum declines. the aircraft manufacturer Airbus is performing strong, registering an increase of 1.32% at 09:00 GMT after the company named Jean-Marc Nasr as president for Asia-Pacific.

British stocks opened weaker on Monday after China released weak trade data and Theresa May’s Brexit deal still appeared doomed on the eve of a key parliamentary vote. The benchmark FTSE 100 is down by 0.45% to 6,889.25 points. The sportswear retailer JD Sports rallied 8% as it shook off high street gloom to forecast an annual profit at the upper end of market expectations. The stocks of Premier Oil fell by 9.3% after confirming that it was considering bidding for Chevron’s assets in the North Sea. The Sunday Times newspaper had earlier reported that the company could launch a capital raising to pay for the assets, estimated to be worth around 1.5 billion USD.

Wall Street pre-market recap

Wall Street stock index futures were sharply lower on Monday on the back of ongoing concerns over an economic slowdown in China as we well as the longest government shutdown in US history. At around 04:30 a.m. ET, Dow futures fell 177 points, indicating a negative open of 195.95 points. The futures on the S&P 500 and Nasdaq were also down, hinting for negative open of 20.81 points and 59.90 points respectively.

The latest earnings season is starting Monday with Citigroup set to update investors before the bell.

On the data front, there are no significant releases to note.