Greetings and welcome back to another installment of Money Matters this week. We trust you all had a pleasant weekend.
Last week saw the markets start off on a weak note with ongoing concerns around the global economy. Later in the week though, there was a shift in gears after China posted much stronger than expected import and export numbers. China’s trade data showed imports climbing almost 11% while exports increased just over 5%. With both numbers well over analysts’ expectations, this was enough to have investors asking if this is the turning point for China given that we’ve seen economic growth declining for the past 9 quarters.
Most of the major indices fed off of the news out of China and started climbing higher towards the end of the week, but despite this, overall, they still ended the week down. In summary, the S&P was down almost 1%, the Hang Seng down 1.8%, and the FTSE similarly down 1.8%.
The news on China is still being felt by the markets with a slight ripple effect in Asian markets which were trending higher this Monday just past. More importantly though will be how China can continue to perform over the next few months and whether this means the world’s second largest economy is starting to stabilize.
A few more months of strong data would certainly help that case, but until then, the argument of whether July’s numbers are just a fluke will be open to debate and no doubt keep investors guessing about that turning point we mentioned a little earlier.
The China trade numbers certainly helped several commodity sectors such as copper and iron ore, both of which saw a surge in prices as a result of the surprising demand. Although China is shifting to a more consumption based economy, the manufacturing world still relies on China to drive demand for commodities and we certainly caught a glimpse of that in July. In addition to China showing some signs of strength, certain countries in the Eurozone are also showing that their economies have stabilized, and this would be incredibly welcomed news as the Eurozone has officially been in a recession since 2011.
The Eurozone, similar to China, has several ongoing concerns but as both regions are hoping to stabilize economies, this would be a powerful potential driver for the global economy heading into the second half of the year. That said, investors should expect some volatility to continue for the next few months so be sure to continue to maintain a balanced portfolio.
For Austen Morris Associates’ investors – talk with your advisor about any repositioning to take advantage of markets at this time. For more information about Austen Morris Associates please visit our website.
Darren Cox
Co-Head of Portfolio Management
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com
