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China trade rattles markets

A surprise drop in China imports and exports in December spooked cautious investors in overnight trading. The US dollar weakened, shares edged lower and oil and copper pulled back. Higher growth tech stocks were singled out for punishment. However there were positive aspects to the session. Sterling gained ahead of tonight’s Brexit vote, and US financial stocks featured after Citigroup delivered a solid quarterly operating result.

Global markets remain focused on issues that speak to growth prospects. The parliamentary vote on Brexit in the UK is heading toward a “no” on PM May’s proposed deal, and although expected, any ensuing uncertainty could weigh on sentiment.

The preponderance of US bank reports this week may act as a gauge of then strength or otherwise of the US economy during the previous quarter year. Citigroup’s earnings were adversely affected by a weaker result from its risk trading divisions, but the underlying strength in mobile and digital operations saw investors lift Citi’s shares by 4%. JP Morgan, Bank of America and Bank of New York will flesh out the financial picture as the week unfolds.

Futures markets are pointing to a mixed start to Asia Pacific trading. The Nikkei index is vulnerable to a stronger Japanese Yen, and is under opening pressure. The absence of tech listings on the Australian bourse has it commencing trade modestly higher, but an Australian dollar move over 72 US cents could limit enthusiasm.

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