FTSE 100 set for flat start to week as China exports slow

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he FTSE 100 index was set to start the week on a cautious note along with the rest of Europe amid concerns over global trade.

Data from China this morning showed export growth slowed more than expected, potentially signalling a weakening pace of demand for its goods from the rest of the world.

Some local economists were putting down the surprisingly weak number to outbreaks of Covid which has slowed down work at key ports in Shenzhen and Guangdong.

Exports in dollar terms fell from a pace of 32.3% in April to 27.9%. While those figures still look huge, it has to be considered that they are comparing against the devastation of a year ago.

China’s exporting manufacturers are now having to cope with higher raw materials prices due to the commodities demand boom, which has impacted on its competitiveness, some say.

Imports to the world’s second biggest economy painted a picture of recovering domestic demand, with a 51.1% gain year-on-year last month. Again, though, that was lower than most economists expected.

The FTSE 100 was being called up 3 points at 7072 on the CMC Markets trading platform, with the Dax in Germany down 24 at 15,668 and France’s CAC 40 down 10 at 6505.

China’s exporters are by no means alone in facing rising raw goods prices. The same problems are being experienced across the world, with the number one economy, the US, being a key sufferer.

All eyes this week will be on inflation in the country, with this week’s consumer prices index in the US likely to show an increase from 4.2% to 4.7%.

If the CPI rises any closer to 5% in the key data release, expect the markets to have a return to wild trading amid fresh concerns about the Federal Reserve’s need to taper its super-low interest rates and QE support for the economy.

For today’s trading, that is not likely to be a factor though, after jobs market figures on Friday came in weaker than expected. The Fed has repeatedly stressed that it will not begin tapering support until the labour market has definitely recovered from last year’s Covid shock.

The jobs data triggered a strong finish to markets on Friday, but traders said the China data and hawkish comments on tapering from US treasury secretary Janet Yellen over the weekend were likely to dampen the Monday mood for stock markets.

In Hong Kong, the Hang Seng index was down 0.6%, the Nikkei was broadly flat and the CSI 300 in Shanghai fell 0.4%.

HSBC’s shares in Hong Kong remained unchanged despite its confirmation of reports that it was splitting the roles of Asia Pacific CEO into two following the retirement of current CEO Peter Wong.

His post will be taken up by David Liao and Surendra Rosha, who will be styled as co-CEOs of the region, based in Hong Kong and reporting directly to group chief executive Noel Quinn.

HSBC stressed the region would continue to be run as a single entity.

Asia Pacific is by far the biggest region for profits and growth for HSBC and the company has been cutting back its operations in the rest of the world to focus investment there.

Quinn said: “We are investing $6 billion in Asia in the next five years and David and Rosha will lead this next phase of our Asia strategy as we focus on expanding and diversifying our presence across the world’s most dynamic region.”

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