Chinese exports shrank most in seven months as demand weakened Fed minutes show decision to hold in September was close call Share on Facebook Share on Twitter Global equities headed for a four-week low, government bonds rose and the yen rebounded against the dollar after disappointing Chinese data jolted investors whose concerns about the world’s second-biggest economy had eased amid their fixation on U.S. interest rates, Brexit and earnings. The MSCI All-Country World Index fell for a third day as European shares tumbled and U.S. stock-index futures pointed to a lower open. Bonds in Asia, Europe and the U.S. rallied in sync. Emerging markets also weakened, with the yuan trading at a six-year low and Turkey’s lira sliding to a record. Crude oil traded about $50 a barrel, while metals retreated. Perceived investment-grade corporate credit risk climbed to the highest since July 8. “China was a big issue at the beginning of the year and now it spooks investors with some issues resurfacing,� said Philippe Gijsels, chief strategy officer at BNP Paribas Fortis in Brussels. “The problems just add to the uncertainty about the world economy, Fed hiking rates, earnings season, elections and referendums coming up. Brexit is starting to hurt markets too because of the tough discussions ahead; this is getting people a bit worried and it all adds up to typically more volatile period of the year.� The unexpected slide in Chinese exports reminded investors of the tepid outlook for global growth, even as Federal Reserve minutes reinforced the likelihood of tighter monetary policy this year. Pacific Investment Management Co. says it’s time to reduce risk, with the overseer of the world’s biggest actively managed bond fund expecting the Fed to raise interest rates two or three times by the end of 2017. Stocks The MSCI ACWI retreated 0.3 percent at 1:03 p.m. in London. The Stoxx Europe 600 Index dropped 1 percent and most of its 19 industry groups slid, with BHP Billiton Ltd. and Rio Tinto Group leading miners to among the worst losses. Germany’s DAX Index dropped 1.2 percent, dragged lower by carmakers and Deutsche Bank AG. Tesco Plc retreated 2.1 percent after a wide selection of Unilever products disappeared from the U.K. retailer’s online store amid reports of a standoff between the two companies over rising prices in the wake of the Brexit vote. Separately, Unilever dropped 3.4 percent after posting a decline in the volume of goods sold in the third quarter for the first time in more than a year. S&P 500 Index futures slid 0.5 percent, indicating U.S. equities will open lower after eking out a 0.1 percent gain on Wednesday. After the minutes of the Fed’s most recent meeting showed policy makers divided on the course of interest rates, investors will look to data this week, including jobless claims on Thursday, for signs of the health of the world’s biggest economy and the possible trajectory of borrowing costs. The earnings season kicked off this week. While analysts are forecasting a 1.6 percent contraction in third-quarter profits at the gauge’s members, U.S. firms have beaten projections by an average margin of 3.6 percentage points in the past five years. Delta Air Lines Inc. and Wynn Resorts Ltd. report results Thursday. Thai stocks reversed a decline to close higher for the first time since the royal palace said on Sunday that King Bhumibol Adulyadej’s condition was unstable. The SET Index added 0.5 percent, after falling as much as 3.5 percent. After the market closed, an announcement from the palace stated that the king had died. The MSCI Emerging Markets Index slid 1.1 percent to its lowest level in more than three weeks. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong sank 1.8 percent in a fourth day of declines. China’s exports fell 10 percent in September from a year earlier, while imports declined 1.9 percent. Lackluster trade data may increase pressure on the yuan at the same time as new property curbs threaten the nation’s growth rate. Currencies The onshore yuan fell for a fifth day to the lowest since September 2010. The MSCI Emerging Markets Currency Index dropped 0.3 percent to the lowest since Sept. 19, led by a decline in South Korea’s won. The Asian nation’s currency fell 1 percent after the central bank held its key interest rate unchanged. The yen climbed 0.4 percent to 103.82 per dollar. Turkey’s lira depreciated 0.4 percent. Data released on Wednesday showed the nation’s current-account deficit in August was wider than expected, adding to a list of economic and political risks that are weighing on investor sentiment. Bonds Benchmark U.S. 10-year yields slid to 1.75 percent, after climbing to the highest level since June on Wednesday. Odds on an increase in U.S. borrowing costs by the end of the year are around 68 percent, according to fed fund futures, up about six percentage points from a week ago. The yield on similar-maturity German debt fell two basis points to 0.05 percent, and for French bonds, it also fell two basis points to 0.34 percent. The cost of insuring investment-grade corporate debt against default rose for a third day, the longest run since Sept. 27. The Markit iTraxx Europe Index of credit-default swaps on highly-rated companies climbed one basis point to 75 basis points, a three-month peak, according to data compiled by Bloomberg. A gauge of swaps on junk-rated companies increased five basis points to 339 basis points, near the highest since July. Commodities Oil hovered about $50 a barrel after U.S. industry data showed stockpiles grew and as differences emerged within OPEC over how members will share output cuts. West Texas Intermediate crude added 0.2 percent to $50.29, paring its three-day drop to 2.1 percent. Base metals slumped amid concerns over China. Nickel sank as much as 1.9 percent on the London Metal Exchange, reversing earlier gains. While metals have advanced into a bull market this year as the Chinese economy stabilized, signs of an export slowdown are now clouding the outlook for global demand. Gold rose for a second day, and platinum was little changed entering a bear market on Wednesday.

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