FTSE 100 – Investors troubled by Chinese trade data as oil prices pull back

• Chinese imports fall by 12.4%, exports decline 14.5%
• Pullback coincides with quiet summer trading
• Key support in UK100 may be seen around rising trendline from pandemic lows

It’s been a rough start to the week for stock markets, with trade data from China not helping to lift the mood at a time when we’ve already been seeing a little more risk aversion.

August is typically viewed as a quieter month for financial markets and it would appear this year is no different. Investors more broadly remain very buoyant but that clearly hasn’t been reflected in this month’s performance so far.

The trade data from China was undoubtedly disappointing as it once again showed sluggish demand both domestically and externally, which is consistent with what we’ve seen elsewhere. But while we’ve seen plenty of evidence of this in recent months, imports and exports were well short of expectations.

The economy is quite clearly in need of a boost and I’m just not convinced it’s going to come, not in the forceful and widespread manner it has in the past. Authorities are more likely to engage in smaller, targeted measures that won’t provide the confidence boost investors, or households can really get behind. The sluggish recovery looks set to continue.

FTSE pulls back further amid economic concerns

The index has recovered a large portion of the losses from earlier in the day but remains in the red.

UK100 Daily

Source – OANDA on Trading View

Overall, trading over the last few sessions has been quite choppy, a consolidation after the sell-off a week ago. It ran into some support around 7,400, a level that has been notable as support and resistance over the last couple of years.

The key level is arguably just a little further below though, just above 7,300 around the rising trend line from the pandemic lows. We saw it rebound off here a month ago and a break below here could suggest we’re witnessing more than just a corrective move.

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