HONG KONG: Most stock markets and emerging currencies rallied, while oil bounced from 12-year lows in Asia on Wednesday following upbeat Chinese trade data that provided some much-needed respite from a volatile start to 2016.
After more than a week of sharp losses fuelled by worries over China’s economy, news that the country’s exports had picked up in December provided some added incentive to buy after a strong lead from Europe and New York.
The rise in overseas shipments, from a fall in November, indicated authorities’ weakening of the yuan currency against the dollar was beginning to filter through.
A spokesman for China’s Customs said in a statement that “foreign trade of private enterprises shows vitality.”
And overall global trade contracted last year, Bloomberg News reported, meaning China’s export performance was relatively strong.
“China actually outperformed the rest of the world in exports, with its share in global exports rising,” it cited Larry Hu, head of China Economics at Macquarie Securities in Hong Kong, as saying in a report ahead of the data.
While the trade news sent Shanghai stocks higher initially, they ended the day 2.4 percent in the red again having already slumped almost 15 percent this year.
However, Hong Kong was up 1.7 percent in the afternoon and Sydney, where several firms with strong trade links with China are listed, closed 1.3 percent higher having ended in the red every previous session this year.
And Tokyo finally ended on a positive note after dropping for six straight sessions, gaining 2.9 percent.
Dealers were also buoyed by the central People’s Bank of China’s decision not to lower its yuan fixing against the dollar. Its weakening of the rate was one of the catalysts for last week’s global rout.
Oil prices recover
In a sign of easing tensions the rate in Hong Kong that banks charge each other to borrow the yuan nosedived to just over eight percent Wednesday from the previous day’s record near 67 percent.
The rare upbeat mood followed healthy gains in Europe and the US, where a positive start to the corporate earnings season provided some support.
The Nasdaq rose 1.0 percent, the S&P 500 was up 0.8 percent and the Dow put on 0.7 percent, while London, Paris and Frankfurt all climbed 1 percent or more.
Global markets have been in free fall since the beginning of the year on worries about the impact of a growth slowdown in China—a key driver of world growth—on other economies.
But Evan Lucas, a markets strategist in Melbourne with IG, said: “A small floor is emerging in indices.
“Oil remains the biggest story in the current market. The supply issues are well documented, however, the part that is leading this second leg lower is Chinese demand, or lack of it.”
Crude fell briefly below $30 a barrel in New York Tuesday for the first time since December 2003 but they have since picked up after a private report showed US supplies eased last week.
However, the commodity remains under pressure from a supply glut, weak demand and a global slowdown—especially in China—while key producers in the OPEC cartel continue to pump at near record levels.
In morning trade Wednesday, US benchmark West Texas Intermediate was up 1 percent and Brent gained 0.9 percent.
On currency markets the confident mood saw investors seek out higher-risk investments.
The crude-reliant Malaysian ringgit rose 0.6 percent against the dollar, while Australia’s dollar was up 0.4 percent and the Indonesian rupiah gained 0.3 percent. South Korea’s won gained 0.5 percent.
The greenback also rallied against the yen, having fallen more than 2 percent since the start of the year.