Before the open - 19/08

The Nikkei erased early losses last night as the yen weakened against the dollar, boosting the competitive edge for exporters.

This morning, it was reported that the trade deficit hit a record high in July while import and export growth accelerated. The trade deficit hit a record high of 1.024 trillion yen in July (182.3bn yen deficit in June, 785.6bn yen deficit expected), while exports grew at an annual rate of 12.2 per cent and imports 19.6 per cent (compared to a respective 7.4 per cent and 11.8 per cent in June).

Source: Capital Economics

The best sector on the index was oil and coal, with the subindex gaining 2.5 per cent on the back of rising oil futures resulting from tension in Egypt and Libya.

Chinese shares also erased early losses. The Shanghai Composite slipped in early trading as investors remained cautious in the aftermath of a trading gaffe at Everbright Securities. The mistake resulted in the biggest swing (5.6 per cent) in the index since 2009.

The firm said the mistake occurred on a trade of government bonds with a face value of 10m yuan. A trader mistakently inputted a yield of 4.20 per cent – 25 basis points higher than the yield on the same bond at Friday’s close.

Chinese regulators have banned Everbright from proprietary trading until 18 November.

Chinese property shares were also weighed down by a 14 per cent increase in Beijing and Shanghai new home prices in July. Some 69 of thed 70 cities surveyed by the National Bureau of Statistics saw average prices increase.

The FTSE is expected to open slightly lower this morning after the mixed day in Asia.

There are no key macroeconomic events today.