Asian shares rise on Chinese trade data

The positive sentiment in global equity markets got a new boost by the presentation of strong Chinese trading data for April. The Asian-Pacific MSCI index rose 0,8 % to its highest level since August 2011. This came on top of New Wall street records. Dow Jones Industrial passed the critical 15 000 mark. This week’s industrial orders lifted the German DAX index as one of the world’s biggest banks, HSBC, presented very strong quarterly results based primarily on cuts in the labour force.

China reported that its export rose 14,7 % in April from a year ago. Imports grew 16,8 % leaving the country with a trade surplus of USD 18,16 billion for the month. These numbers may ease some of recent concerns about weakness in the world’s second largest economy. As a major consumer of commodities strong trading results is crucial for crude and commodity prices. Both copper and oil are trading up this morning. Doubts remain, however, of the accuracy of the Chinese numbers and the real strength of domestic demand in China.

The Reserve Bank of Australia followed yesterday other of the world’s central banks and cut the interest rate. This boosted stocks and imports. The interest cut weakened Australian dollar and has opened the door for parity between Australian and US dollars. The Euro was strengthened by a successful Portuguese bond auction. Euro/USD is trading steady at the 1.3080 – 1.31 levels. USD/JPY at 99,02 is still struggling to break through the 100 yen a dollar mark. USD/GDP is at 1.5479 slightly down from yesterday.

Gold has come under new downward pressure. After losing one percent yesterday gold is slightly up at 1455. Gold backed exchange traded funds (EFT’s) fell to their weakest level since 2009 with investors leaving gold for booming equity markets. Some analysts see the move from gold into other assets as stocks as symbolic for the super cycle of the commodities boom coming to an end. They predict that tough times lie ahead especially for metals.

Gold bulls are not so sure. They point to a recent discrepancy between investors buying precious metals in kind and “paper” metal trading pushed by banking speculations. The rally in equity markets are driven by low interest rates and central banks money printing of. The monetary easing is creating an artificial stock bobble which threatens similar market conditions as during the financial crisis in the autumn of 2008. Investors fear for such a development still make precious metal the best hedge. Gold will therefore most likely recover to at least USD 1700 in a near future.

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