Binary Options Daily Analysis–Weak Chinese Export Data Sends Western Markets Tumbling


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Asian markets ended Friday mixed, following Wall Street’s advance on Thursday. The Nikkei rose .5% to 9514, although it was well of its high of 9614 hit earlier in the morning. In Korea, the Kospi slumped 1.2% after the central bank unexpectedly raised interest rates. The Hang Seng fell .8%, extending its losing streak to 7 days, and the Shanghai Composite rose fractionally.

After the close, China reported export data showed growth was lower than expected, adding to concerns that the global economic recovery is weaker than hoped.

European markets fell sharply, closing at their lowest level in three months. The FTSE sank 1.6% to 5766, the DAX fell 1.3%, and the CAC40 tumbled 1.9%.

The bearish tone continued in the US, as the Dow dropped 172 points to 11952, its first close below 12000 since March. The Nasdaq lost 1.5%, and the S&P decline 1.4% to 1271.

Dow Drops more than 170 Points[/B

Semiconductor stocks fell, after Intel was downgraded by Macquarie.

Steel stocks rallied, led by AK Steel which gained 3.6%, after Morgan Stanley said it expects the sector to recover in the near term.

Treasuries and Commodities

Bonds rose as investors fled to safety. 10-year notes gained 7/32, pushing the yield down to 2.97%, and 30-year notes rose 18/32 to yield 4.18%.

Oil fell sharply, dropping $2.64 to 99.29 as Saudi Arabia increased output despite OPEC’s refusal to raise production quotas. Gasoline futures shed .7%, but natural gas rose 1.8% to 4.757.

Metals closed lower due to concerns about global demand. Gold fell $13.50 to 1529.20, silver tumbled 2.9% to 36.327, and copper dropped 1.3% to 4.056.


The US Dollar rallied as the market shifted to risk-off mode. The Euro led the declines, dropping 1.2% to 1.4346 on growing uncertainty over Greece’s bailout. The Pound and Australian Dollar both fell .9%, and the Canadian Dollar declined .7% to .9800. The Yen was the sole gainer, edging up .2% to 80.21.

Economic Outlook

China’s exports are seen as a significant barometer of world trade, since a very significant amount of global production takes pace in China. Weakness in exports in a broad indicator that growth is not picking up as hoped. Coupled with the recent round of weak US economic data, it is clear that growth in the second quarter has met a significant obstacle.

Import prices rose for the 8th straight month, rising .2%, even as analysts had expected a decline.

No significant economic or earnings reports are due on Monday.
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