Morning Minutes

Selloff Continues With China Trade Data and Rising Rates In Focus




Investor’s fearful mood didn’t improve over the weekend. Continuing from where they left off last Friday, equity markets around the world have started the week in full reverse with Tokyo plunging 2.5%, London losing 1.8% and Frankfurt falling 1.5%. US index futures are also falling sharply with Dow futures down 1.3% and NASDAQ futures down 2.3%.

China sensitive markets have been hit particularly hard today following the release of trade numbers that showed a significant slowdown in export growth, even though it wasn’t quite as bad as investors had feared (3.9% vs street 3.2% and previous 14.7%).  With fears of a Chinese economic slowdown increasing, markets sensitive to China have been crushed overnight including a 3.8% plunge for the Hang Seng, a 1.2% drop for Australia’s S&P/ASX, and a 1.0% drop for the Australian Dollar. Worries about Chinese resource demand have been weighing on commodities with copper falling 2.8% and WTI crude oil dropping 2.6%.

Meanwhile, with concerns about potential runaway inflation continuing to increase, the US 10-year treasury note yield has decisively blasted through 3.00% on its way to the 3.15%-3.20% area. This has sparked another rally for the US Dollar which is up at least 0.2% against the Loonie, Euro, Yen and Pound. The greenback is also up 1.1% against Gold, but it is the cryptos that are getting really crushed with Bitcoin and Ethereum plunging 4.8% and 6.4% respectively, indicating that capital continues to flee risk markets.

It’s a lighter week for economic news with the main events being Chinese and US inflation numbers Wednesday-Thursday. US earnings season downshifts to smaller and mid-sized companies but several seniors in Canada are expected to report this week including Suncor tomorrow, Manulife and Sun Life on Wednesday (plus Disney in the US), and Canadian Tire plus Canada Goose on Thursday.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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