Risk aversion seems to have taken a break after wreaking havoc in the financial markets last week, allowing US equity indices to close in the green. The Dow 30 index ended 117.65 points higher to 16,516.22 (+0.72%), the S&P 500 index closed 15.01 points higher to 1,938.68 (+0.78%), and the Nasdaq closed 47.9 points up to 4,685.9 (+1.03%).
The S&P 500 VIX, which is considered a gauge of market uncertainty, shed 1.83 points to 22.47 (-7.53%) to indicate a return in risk-taking activity. Investors appear to be taking the stock market selloff in China in stride after the government intervened to boost the yuan in overnight trading.
Chinese trade data boosts Asian stocks
Earlier today, China printed better than expected trade balance results for December, as the surplus widened from 343 billion CNY to 382 billion CNY. Exports rose by 2.3% instead of posting the projected 4.1% decline while imports fell by 4% instead of the estimated 7.9% drop.
Australia’s S&P ASX 200 index reacted positively to this news, rising by 57.17 points to 4,982.30 (+1.16%), since positive output figures from China could shore up production and therefore demand for their raw material commodity products. The China A50 index climbed 33.24 points to 9,599.24 (+0.35%) while the Hang Seng rose 457.24 points to 20,169.00 (+2.32%).
European equities to follow suit?
European equities might also open higher today, following the upbeat momentum from the earlier US session and the current Asian session. Indices already logged in gains yesterday, with the German DAX chalking up 160.36 points in gains to 9,985.43 (+1.63%), the French CAC 40 enjoying a rise of 66.01 points to 4,378.75 (+1.53%), and the Euro Stoxx 50 rising by 41.41 points to 3,068.90 (+1.37%).
Even the London FTSE managed to log in some gains, rising by 57.41 points to 5,929.24 (+0.98%). Data from the United Kingdom turned out much weaker than expected, with manufacturing production down by 0.4% instead of showing the projected 0.1% uptick and industrial production sinking by 0.7% instead of staying flat.
Up ahead, US crude oil inventories data is due and an increase in stockpiles is expected. Yesterday, crude oil prices already tumbled to $30/barrel even after the US Energy Information Administration slashed forecasts for production this year and the next while keeping demand estimates unchanged. Rumors of an OPEC emergency meeting have been dispelled by UAE leaders, putting additional downward pressure on prices.