European markets opened firmly today owing to better-then-expected import and export figures from China. Both sets of data are encouraging as the improving exports are a sign that demand from the global economy is picking up. In addition, an increase in imports is also an indication that the underlying strength of the Chinese economy is improving which may now slowly extinguish investors’ fears that the economic giant is grappling to maintain their current pace of growth.
However, investors do not seem to be jumping with joy as even such headline figures cannot completely remove the concern that China’s rate of exports are generally seen to be slow. Thus, one month’s worth of positive figures are perhaps an outlier amongst a series of data which indicates that China’s exports market is perhaps still struggling.
Economists are still expecting another range-bound day made worse by low volumes. In addition to the summer holidays, it seems investors are unsure as to how the effects of tapering in the US economy will affect the equity markets. As a results, investors appear to be adopting a ‘wait-and-see strategy’.