Here are the top five things you need to know in financial markets on Monday, August 8:
1. China trade data disappoints
China's exports and imports fell more than expected in July in a rocky start to the third quarter, pointing to further weakness in global demand.
China said trade balance for July came in at a surplus of $52.31 billion, better than $47.6 billion expected, with exports down 4.4%, below the 3.0% fall forecast and imports showing a 12.5% decline, far worse than the expected drop of 7.0% seen.
Despite the worse-than-expected data, Chinese stocks held onto gains on Monday with experts suggesting that the data could force the Asian giant’s government and central bank to embark on more easing.
2. Gold slumps to 1-week low amid Fed rate hike bets
Gold prices slumped to a one-week low on Monday, amid resurgent expectations of a U.S. interest rate hike by the end of this year.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.62% to $1,336.10, at 9:55AM GMT, or 5:55AM ET.
The positive read on the U.S. economy from Friday’s jobs report reignited speculation that the Federal Reserve will lift interest rates this year. Fed funds futures are currently pricing in a 15% chance of a rate hike by September. December odds were at around 43.4%, up from 33% ahead of the report.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, surged to a the one-week high of 96.50 in wake of the jobs report on Friday. It was at 96.27 early Monday.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
3. Oil jumps 1% on renewed talk of freezing production
Oil prices rallied on Monday, as renewed hopes for an agreement among exporters to freeze output underpinned the market, although a persistent global oversupply kept gains in check.
Several OPEC members want to revive the idea of setting new limits on oil production this fall in an effort to stabilize the market, according to people familiar with the matter.
However, Russian Energy Minister Alexander Novak said earlier that he sees no grounds for new talks on freezing production yet, but is open to negotiations.
U.S. crude oil futures surged 1.36% to $42.37 at 8:56AM GMT, or 4:56AM ET, while Brent oil jumped 1.15% to $44.78.
4. Global stocks broadly higher
Asian shares posted solid gains on Monday, feeding off a U.S. rally at the end of last week despite mixed trade figures from China and Japan.
European stocks moved higher on Monday, as Friday’s upbeat U.S. jobs data continued to boost sentiment, although weak Chinese trade data limited gains.
U.S. futures also pointed to a higher open on Monday after {{news- 418826||job creation pushed the S&P 500 and Nasdaq to record closing highs on Friday}}. At 8:57AM GMT, or 4:57AM ET, the blue-chip Dow futures gained 39 points, or 0.21%, S&P 500 futures rose 4 points, or 0.20%, while the Nasdaq 100 futures traded up 13 points, or 0.27%.
5. BoJ divided on easing effectiveness, as Abe plans extra budget
A summary of opinions released on Monday showed that Bank of Japan (BoJ) members were starkly divided between those defending unlimited easing and those convinced that the central bank had done enough.
The information surfaced even as Japanese Prime Minister Shinzo Abe announced Monday that an extra budget plan will be submitted to parliament in the fall after last week’s approval of 13.5 trillion yen ($132 billion) in fiscal measures.
Also catching headlines in the background, Japanese Emperor Akihito said Monday that he worried that age may make it difficult for him to fully carry out his duties, remarks widely seen as suggesting he wants to abdicate.