Markets To Begin In Green Following Positive Sessions In China And Europe
Stocks are on track start today's session solidly in the green, following positive sessions in China and Europe. But unlike the strong finish for Chinese stocks, Japanese stocks ended the Tuesday session down in a big way in response to further weakness in Chinese data.
China's August trade numbers weakened for a second straight month, and the country revised its 2015 GDP growth pace modestly lower. Chinese exports dropped -5.5% from the year-ago period in dollar terms, which follows the -8.3% drop in July. Imports were down -13.8% in dollar terms following the -8.1% drop the month.
Recent explosions in a major port facility and factory closures ahead of a major parade could explain some of the export weakness, while a lower tab for oil imports likely accounts for part of the inbound trade softness. But the trade weakness reconfirms the unfavorable growth backdrop for China's economy, whose 2014 growth pace was also revised lower (+7.3% vs. +7.4%) despite a host of recent monetary and fiscal stimulus measures.
On the home front, we have a light data docket this holiday-shortened weak, with the focus squarely on next week's Fed meeting. The internals of Friday's jobs report show enough momentum in payroll gains, the unemployment rate and wages to warrant lift-off.
As regular readers know, I have long advocated for the Fed putting the issue behind it (and the markets) by ending the suspense and focusing instead on communicating its long-term trajectory for interest rates. A growing segment in the market is of the view that the Fed will put off lift-off at this meeting given recent China-inspired volatility.
We will see what happens on the 17th, but a delay to the first rate hike will add to uncertainty about the economic outlook, in my view.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report