Oil prices slip as weak China exports highlight trade war impact

Marco Green
December 10, 2019

"We need a deal with China as soon as possible so we can bring an end to the trade war that has put a drag on the USA economy for far too long". China has shown its willingness to boost purchases of United States farm items, such as soybeans and pork.

Asian shares outside of Japan advanced Monday as investors assessed an upbeat U.S.jobs report and an unexpected contraction in Chinese exports.

Imports unexpectedly rose 0.3% from a year earlier, marking the first year-on-year growth since April and compared with a 1.8% decline forecast by economists.

"China is clearly not immune to either the United States trade tariffs, or the lingering slowdown in the broader global economy", said Jeffrey Halley, senior market analyst at OANDA.

USA shares were set to drift slightly lower with Dow and S&P 500 futures both falling less than 0.1%.

China's trade surplus with the rest of the world fell, but was still more than $38bn for the month.

It's unclear how the two nations will be able to iron out a deal if the tit for tat trade tariffs continue.

President Donald Trump agreed to postpone a planned tariff increase in early October following trade talks but penalties already imposed on billions of dollars of goods stayed in place.

Trump has demanded that China commit to specific minimum purchases of US agricultural products, among other concessions on intellectual property rights, currency and access to China's financial services markets.

Market's risk tone stays mostly sluggish with the U.S. 10-year treasury yields taking rounds to 1.84% while S&P 500 Futures losing 0.16% to 3,141. The central bank is expected to highlight the economy's resilience and keep interest rates on hold in the range of 1.50% to 1.75%.

China's official factory activity gauge returned to growth for the first time in seven months in November, with a private survey showing activity expanding at the quickest pace in nearly three years.

US West Texas Intermediate (WTI) crude CLc1 slipped 0.4% to $58.94 per barrel, still not far from Friday's 2.5-month high of $59.85 per barrel.

Oil prices weakened after the disappointing Chinese trade data, with Brent futures LCOc1 down more than 1% at $63.73 per barrel after gaining about 3 percent last week on the news that OPEC and its allies would deepen output cuts.

No major economic data are scheduled for Monday.

Against the Japanese yen, the dollar was last traded at 108.59 yen, flat on the day.

The British pound rose to a new seven-month high of $1.3180 GBP=D3 as investors raised their bets on a Conservative Party victory and majority in parliament in Thursday's general election.

Other reports by Click Lancashire

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