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The Monday Market Minute

  • Global stocks retreat as the weakest China trade data in more than two years signals sharply slowing growth in the world's second-largest economy.
  • Another record China trade surplus with the United States, however, suggests trade talks will gain prove difficult after China notches an 11.3% December surge in U.S. exports.
  • Citigroup kicked off Q4 earnings with a bottom line beat, but missed on revenues as investors look for S&P 500 earnings growth of around 14.5%.
  • Global oil prices slide despite solid China crude imports, with WTI drifting back towards $50 on bets that 2019 demand from the world's biggest energy market will disappoint.
  • U.S. equity futures suggest a sharp pullback at the start of trading on Wall Street, with the S&P 500 called 26 points lower .

Market Snapshot

Global stocks retreated Monday, pulling U.S. equity futures lower, as surprisingly weak trade data from China added yet another level of concern over the health of the world's second largest economy and piled more pressure onto the slow-moving trade talks between Washington and Beijing.

China's export engine, the world's biggest, suffered its biggest monthly drop in two years last month, according to official customs data, with exports falling 4.4% and imports contracting more a much larger-than-expected 7.6%. 

However, despite the fading growth prospects of an economy that drives both regional and global growth, China's trade surplus with the United States swelled to a record 323.32 billion last year, thanks to an 11.3% surge in December exports, a figure that is certain to add an extra dimension of tension into the ongoing trade talks, given that President Donald Trump had vowed to reduce that figure during his election campaign, only to see it print consecutive all time highs when he has been in office.

Some of the world's biggest companies, including Apple Inc. (AAPL) and Samsung Electronics (SSNLF) , have directly or indirectly cited slowing growth in China as the main catalyst for reduced earnings forecasts or weaker-than-expected current quarter earnings, 

"The Chinese economy, it seemed to us, began to slow, maybe, in the second half of the year. And it was on some sort of rational trajectory," Apple CEO Tim Cook told TheStreet's Jim Cramer last week. "We believe, based on what we saw and the timing of it, that the tension, the trade-war tension with the U.S., created this more-sharp downturn."

"But as I've said before, I'm very optimistic that (a U.S.-China trade deal) will happen," he added. "And so that clearly will be good, not only for us, frankly, but I think more about the world in general. The world needs a strong U.S. and China economy for the world economy to be strong."

The MSCI Asia ex-Japan index, the broadest measure of regional share prices, was marked 0.92% lower, although liquidity remained modest owing to a public holiday in Japan which kept markets in Tokyo closed for the Monday session.

European stocks were also weaker by mid-day trading, with the Stoxx Europe 600 falling 0.7%, led by slightly larger declines for trade-sensitive markets in Germany and a 0.82% pullback for the FTSE 100 in Britain.

The U.K. pound traded near a two-month high of 1.2873 Monday as Prime Minister Theresa May made her final plea to lawmakers to support her proposed plan to leave the European Union despite near certainty that it will be voted down in parliament later this week.

May's plan, which had originally been tabled for a vote in early December, was delayed in the face of cross-party objections over the nature of the so-called Irish backstop, a clause in the withdrawl agreement with Brussels that would kick-in if the two sides failed to reach an longer-term arrangement on trade after Britain formally leaves the EU on March 29

U.S. equity futures suggest Wall Street will follow most global markets lower this morning following the China data, with contracts tied to the Dow Jones Industrial Average indicating a 215 point opening bell decline and those linked to the S&P 500 suggesting a 23 pullback for the broader benchmark. 

Newmont Mining Corp. (NEM) said Monday that it's agreed an all-share takeover of Goldcorp Inc. (GG) that values its Canadian rival at around $10 billion.

Newmont said it will pay Goldcorp investors 0.328 of Nemont shares for each outstanding Goldcorp share, a ratio that translates to a 17% premium to the 20-day volume weighted average of each of the company's stock. With the inclusion of debt, the enterprise value of the deal is pegged at around $12.5 billion, with Newmont holding around 65% of the combined entity.

Citigroup (C) kicked-off the U.S. fourth quarter earnings season with earnings of $1.61 per share, well head of the consensus estimate of $1.55, but posted weaker-than-expected revenues of $17.12 billion as trading in its fixed income group slowed.

Investors are expecting S&P 500 profits to grow by around 14.5% from the same period last year, according to I/B/E/S data from Refinitiv, before slowing to just 3.9% in the first quarter of 2019, a figure that would be significantly below the 26.8% growth rate recorded over the same period in 2018.

The defensive tenor of global financial markets Monday failed to lift the U.S. dollar index, which traded at 95.644 and extended its one-month decline against a basket of six global currencies to around 1.83% as investors continue to bet against any 2019 rate hikes from the U.S. Federal Reserve.

The dollar weakness also failed to boost global crude prices, which fell more than 1% in overnight trading as investors shrugged off the 10.3 million barrels of oil imported by China over the final month of the year and instead focused on the dwindling demand prospects in the world's largest energy importer.

Brent crude contracts for March delivery, the global benchmark, were marked 78 cents lower from their Friday close in New York and changing hands at $59.74 per barrel, on pace for their best weekly gain in two years. WTI contracts for February were marked 75 cents lower at $50.84 per barrel.