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Asian Woes Dampen Global Sentiment

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Contrasting data from the world’s two largest economies has done nothing to calm an already nervous market. Friday’s Non-Farm Payroll figures out of the US provided a vote of confidence in the global recovery and a welcome boost to global sentiment.

Expectations for new jobs in the US economy were easily exceeded as the February figure came in at 175k against a consensus of 160k, most importantly rising for the third month in a row.

That was the end of the good news for the near-term global economic sentiment. China quickly dampened investor outlook with the publication of surprisingly weak trade data on Saturday. Imports into China in February rose 10.1% (year on year), more concerning however was the export figure. Analysts that had predicted a rise of 7.5% in exports were met with a shocking 18.1% fall. This swings China from a trade surplus to a trade deficit situation. Even when allowing for the timing of the Lunar New Year these figures are indicating an increasingly slowing Chinese economy and call into question the already ambitious target growth rate of 7.5% for 2014.

Japan added to the woes out of Asia this morning, posting a disappointing GDP figure. Annualized growth was anticipated to hit 1% but could only manage a poor 0.7%. Further bad news came from Japan in the form of a current account deficit expansion, at just under $15.5bn this was the largest shortfall for Japan in almost 30 years.

Unsurprisingly, the Asian markets took a hit. Japan’s Topix fell almost 1% while in Hong Kong the Hang Seng gave up 1.8%, China’s CSI 300 also hit a 9 month low. The broad Morgan Stanley Capital Index of Asian shares posted a 1.4% loss.

Caught between positive US Jobs data and troubling Asian data the European indexes this morning are lost for direction. Most major exchanges have opened flat or insignificantly higher. The data calendar doesn’t present anything exciting over the next 24 hours, baring something unforeseen currency and equity markets are likely to have a lacklustre days trading.

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