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Positive China Trade Data Buoys US Equities

By: Minyanville
Posted: 9/9/2013 4:50:00 PM
Referenced Stocks: RH

The overnight news flow was dominated by positive economic data out of China. China's August trade balance showed larger growth in exports than expected and a decline in import volume. China's trade surplus expanded to $28.52 billion from $17.82 billion. Export growth saw the biggest jump in aluminum and steel products. China's consumer price index fell to an annual rate of 2.6% from 2.7% in the month prior. Japan's final estimate of 2Q GDP expanded to an annual rate of 3.8% from the first estimate of 2.6%. The Japanese Nikkei (INDEXNIKKEI:NI225) was up 2.48%.

US equities started off the day positively and continued higher with no apparent catalyst. The S&P 500 (INDEXSP:.INX) broke out of a short-term uptrend channel, continued into horizontal resistance at 1670, and closed above its 50 day moving average. News reports surfaced around the middle of the day that Russia was offering a deal where Syria would forfeit and destroy its chemical weapons in exchange for no military strikes on the country. US government officials were skeptical over the validity of the Russian statement on Syria.

Material and emerging market shares led the day's trading. Materials were no doubt buoyed by the continued strength in the Chinese trade data. The July consumer credit report showed a seasonally adjusted gain of $10.43 billion in the month, down from a $11.92 billion rate in the month prior. Gains were seen in auto and student loans.

Two M&A deals went through today. Ares Management and the Canada Pension Plan Investment Board acquired high end retailer Neiman Marcus for $6 billion. Additionally, Molex was purchased by Koch Industries for $38.50 per share in cash.

Tomorrow's Financial Outlook

The August NFIB small business optimism outlook index will be released tomorrow morning. Analysts estimate that the index will rise to 95.0 from 94.1 in the prior month. The other economic data point is the government's July JOLTS job openings, a stale employment data point given Friday's August payrolls report. The Treasury will auction off $31 billion in 3-year notes at 1 p.m. ET. Lastly, in the evening, President Obama is scheduled to give his report on the US's evidence of Syrian chemical weapons use.

Important economic data is due out overnight from China. The country will release its August industrial production, retail sales, and fixed asset investment data. The last data point is most important due to its heavier weighting in China's GDP. Other economic data due out is Italy's GDP and Canada's August housing starts.

The sole earnings report scheduled is from Restoration Hardware Holdings ( RH ).

Twitter: @Minyanville