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Economic News May 3: All Eyes Turn To New China Economic Data

|Includes:AA, BHP, COPX, RIO, SCO, Vale S.A. (VALE)

With gloomy economic data from the US along with the impact of French and Greek elections to digest, investors are turning their attention to new Chinese economic data. So far, the latest data out of China is not putting investors in a happy mood.

On Thursday, it was reported that China's trade surplus widened to $18.4 billion in April due to much-slower-than-expected imports growth along with weak domestic demand and falling global commodities prices. Experts now expect China to roll out more measures to stimulate the economy after first quarter growth showed that it had grown at its slowest pace in three years.

However, it's worth noting that preliminary data has shown that China's copper imports also fell 18.8% to an 8-month low in April thanks to plentiful supply of the metal already there - meaning China was able to curb its copper purchases on the international market. Hence, investors and traders alike might want to keep an eye on the Global X Copper Miners ETF (NYSEARCA:COPX) - an ETF that attempts to mimic the performance of the Solactive Global Copper Miners Index, a key performance benchmark for the copper mining industry. The Global X Copper Miners ETF (COPX) is down over 5% for the year and 35.4% over the past year.

Disappointing Chinese trade also impacted Australian shares and the Australian dollar which were rising on better-than-expected local jobs data that came out a little earlier in the day. Otherwise, a recent weakening of the Australian dollar was seen as being strongly linked to the Chinese steel sector where companies suffer from wafer-thin profits or losses.

In addition, crude oil futures were slipping slightly as China's imports of crude oil also fell for a second straight month. However, the figures were still higher than a year earlier thanks to demand for stockpiling and refined oil products but investors who want to bet that oil demand will further weaken might want to take a closer look at ProShares UltraShort DJ-UBS Crude Oil ETF (NYSEARCA:SCO) which profits when oil prices fall.

Meanwhile, the US dollar made its 9th day of gains which tends to discourage investments in dollar-priced commodities like crude as a higher dollar makes them more expensive to holders of other currencies. Hence, investors might also want to continue to keep an eye on commodity and mining stocks such as:

  • Alcoa (NYSE:AA)
  • BHP Billiton (NYSE:BHP)
  • Rio Tinto (NYSE:RIO)
  • Glencore International (GLEN)
  • Vale (NYSE:VALE)

Finally, there is the Chinese stock market itself which fell earlier on Thursday only to rebound and end flat. Chinese stocks have been painful for investors over the past year or two - especially in the wake of accounting scandals and uncertainty about the Chinese economy. On the other hand, market reforms, more IPOs and the unattractiveness of Europe right now has investors taking a closer look at Chinese stocks with the ability to protect and even grow margins and earnings - a tall order for many Chinese companies but investors also threw away both good and bad Chinese stocks over the past year or two. This means there are bargains to be had by patient and risk tolerant investors.

Given so much renewed uncertainty with the US economy, Europe and now the Chinese economy, it's a good idea for investors to keep a close eye on our stock predictions for all of the stocks you invest in or trade.