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.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam