• Trade data from China below market expectations
  • Equity markets remain firm, JAP225 adds another 0.5% to the rally
  • Oil is slightly down after the API report, still above the key support of $55.70

The Asian session was not particularly dynamic as investors seemed to be assured by Wall Street where a weaker European trade on Tuesday had only a short lived impact nad main indices (US500 and US30) managed to stay close to the highs. As a result Wednesday brought even more gains to Japan as JAP225 (Nikkei225) gained nearly 0.5% and Australian AUS200 added just above 0.5%. China was weaker with CHNComp (Hang Seng China) down 0.35% but that was well deserved given weaker macroeconomic data. 

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Trade surplus in China remains large but has been declining steadily since 2015. Source: Macrobond, XTB Research 

Trade balance for October showed a lower than expected surplus again both in USD (38,2 bilion) and CNY (254 bilion) terms as exports dwindled and imports remained very robust. Exports growth slid to 6.3% y/y from 7.5% y/y in September while imports growth was at 16.8% y/y. Even though on a 12-month scale exports growth increased (from 2.3% y/y to 3.5% y/y) imports growth showed a completely different dynamics at +14.3% y/y (up from 12.9% for 12 months ending in September). That could suggest that a credit impulse in China is finally delivering on a long awaited shift in growth structure but at the same time a shrinking surplus will be withdrawing from GDP growth. Trade surplus for the past 12 months ending in October was the smallest since January 2015. 

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OIL.WTI remains well in the upward trend. Source: xStation5 

Oil is currently among the markets that are on the red side after the API report showed a smaller than expected US inventory draw yesterday. Oil inventories declined by 1.56 mb against a consensus of 2.7mb and gasoline inventories actually increased by 0.52mb while a draw of 2.25mb was expected. However this looks like a small profit taking and OIL.WTI remains in the upward trend with the key zone around 55.70 now serving as a support. Traders will be looking for the DOE report today at 3.30pm BST.