Markets breathed a collective sigh of relief on Friday as both China data and the first of the US bank earnings came out firmly in the green. China trade data recovered with the trade surplus surging to USD32.64 billion and the street ignoring collapsing imports, while new loan growth held steady at +13.7%. Over on Wall Street, JP Morgan and Wells Fargo (NYSE:) both beat expectations and Disney jumped more than 11.0% to show that perhaps the recovery is not Mickey Mouse after all.
Meanwhile, the S&P rose 0.7%, the Nasdaq was up 0.45%, and the Jones jumped a very respectable 1.0%, driven by Disney. Bond yields in both Europe and the US continue to gently rise on the global recovery story with the inverted yield curve panic of recent times a distant short-term memory in the minds of traders.
Over the weekend, Treasury Secretary Mnuchin made upbeat comments on progress with the US-China trade talks, and the joint World Bank/IMF conference also made optimistic noises on the state of the world economy.
This should ensure Asia enjoys a positive start to the week, which will be a busy one both politically and from a data perspective. Asia’s highlights occur on Wednesday with the China GDP and Indonesia going to the polls. Both have the potential to bring volatility to local markets. Japan and Singapore release trade data the same day, ensuring the midweek has a “Big Wednesday” look to it.
The steadily lost ground against major currencies on Friday as risk sentiment improved following China’s trade balance data. The (EUR) led the charge higher, rising to 1.1300 on alleged M&A flows. The single currency was given an additional lift as Wall Street’s positive earnings began to hit the wires, also flowing through to China high-beta currencies such as