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China has released trade figures that show a surprise 3.3% rise in exports in July, despite the escalating trade war with the US. The sharp drop in the yuan this week, beyond the key 7 per dollar mark for the first time since spring 2008, should help exporters although they are now facing fresh US tariffs from September along with weaker global demand.

Exports rose 3.3% in July from a year earlier, the biggest rise since March, customs data showed. Analysts had expected a 2% decline after June’s 1.3% fall. Imports declined by 5.6%, indicating weak domestic demand, although the fall was smaller than the forecast 8.3% and June’s 7.3% drop.

David Madden, market analyst at CMC Markets UK, says:

The softer yuan is helping exports, but the drop in imports highlights the falling domestic demand.

China recorded a trade surplus of $45.06bn last month, down from $50.98bn in June. The country’s trade surplus with the US shrank to $27.97bn in July from June’s $29.2bn. However, it reached $168.5bn in the first seven months of this year, highlighting the imbalances between the two countries that have angered Donald Trump.

Washington raised tariffs on Chinese goods in May after negotiations broke down whereupon Beijing retaliated. A truce was reached in July in the year-long trade war but was shattered last Friday when Trump vowed to slap a 10% tariff on $300bn of Chinese imports from 1 September.

European shares rebounded yesterday and are expected to continue their recovery today, taking their cue from Asia, where a stronger yuan has calmed nerves. The People’s Bank of China fixed the yuan at a firmer-than-expected rate overnight, to limit its decline.

  • Japan’s Nikkei up 0.4% at 20,598.11
  • Taiwan’s TSEC 50 up 1.04% at 10,494.49
  • Hong Kong’s Hang Seng up 0.71% at 26,174.74
  • Shanghai Composite up 0.96% at 2,795.21
  • Australia ASX up 0.82% at 6,642.30

US stocks suffered declines yesterday as some traders piled into the safety of US government bonds, driving bond yields lower. However, they largely recovered by the end of the day and the S&P 500 closed marginally higher, up 0.08% at 2,883.98 while the Dow Jones was slightly lower, down 0.09% at 26,007.07.


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