Asian Market Update

Asian shares ended mostly lower on the back of weak economic reports coming out of the Chinese economy which continued to point towards a slowdown in the economy. This brings to an end a massive rally seen in emerging market equities over the last week. Most emerging market currencies were lower during the trading session today on the back of overall strength seen in the dollar in the overnight session and is indicative of institutional selling.

In some negative news for the Chinese economy it was reported today that China’s import fell by an unexpectedly wide margin during the month of September in a new sign of weakness in the world’s second largest economy and is being seen as a huge negative. It is important to state that the Chinese economy has been in a strong downtrend since the beginning of the year and has led organisations like the IMF and the World Bank to cut growth forecasts for the country. According to customs data imports plunged 20.4 percent from a year earlier to $145.2 billion worse than August’s 5.5 percent decline. Exports shrank 3.7 percent which is indicative of the weak global conditions.  Many analyst are now questioning whether or not Beijing can hit its economic growth target this year for about 7 percent.

Many traders and investors would be closely watching the economic reports ranging from inflation and consumer spending coming out of the Chinese economy to understand the extent of slowdown in the economy. Analysts believe the PBOC would be forced to introduce further easing measures in the coming days. Most commodities in Asia were lower on the back of the trade data as it led many traders to question the demand situation from China which would be a huge negative for commodities in the near term.

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