Strong Data vs Trumps Tech War

Stocks are pointing to a mixed start as investors weigh up moves by President Trump taking aim at Chinese tech, impressive Chinese and German trade data and with nerves showing ahead of the non-farm payroll report after a week is disappointing labour market data.

Trump’s executive order giving US firm 45 day to stop dealings with ByDance’s TikTok and Tencent’s WeChat is the latest move by the White House in an increasingly broad campaign against China dragging on sentiment

Earlier on Thursday Trump also advised that Chinese firms listed on US stock exchanges delisted unless they can provide US regulators with access to their accounts.

These moves are unlikely to be taken lying down by China and could potentially see China blocking US big Tech such as Apple or Microsoft. Whilst tech was always an undercurrent in the US - Sino trade war, this latest move points to the potential start of a more explicit tech war?

Timing is everything and doesn’t bode well for the next US – Chinese meeting over progress in the Phase one trade deal next week.

Chinese exports surge
The attacks by Trump and flaring up of US – Sino tensions have overshadowed the surge in Chinese exports. Trade data from China showed that exports soared 7.2% compared to a year earlier. This is significantly ahead of 0.2% increase forecast and points to the Chinese economic recovery gaining momentum.

German exports jump 14.9%
Upbeat data from Germany is going someway to off set the Trump inspired downbeat mood. German exports rose in June for a second straight month and rose by a convincing 14.9% in June, whilst imports increased 7%. The data adds to mounting evidence that the economic recovery in Germany is on a solid footing and comes following factory orders data yesterday which smashed expectations.

Still no US rescue package in sight
Developments on Capitol Hill will be in focus as the Democrats and Republicans have so far failed to agree on a new stimulus package for America to support it through the coronavirus crisis. The two sides remain far apart on what size the package should be. The summer recess is due to start today.

US NFP in focus
Attention will now turn towards US non-farm payroll data. Expectations are for 1.5 million new jobs to have been created in the US in July. This is down significantly from last month’s 4.8 million. Lead indicators this week from the ADP Payroll report and the employment subcomponent of the ISM non manufacturing report have been disappointing and point to the recovery in the labour market stalling, hampered by a resurgence in coronavirus cases since mid-June.

Dax chart

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.