Global shares declined today, ending the longest winning streak since February after Chinese trade data pointed to slowing global growth and a massive fall in oil prices led to profit-taking.
Chinese imports were down 20 per cent in September, casting doubt on the strength of domestic demand in the economy, as oil fell over 5 per cent overnight following a report that OPEC continued to boost production.
Those factors cast a shadow over a bumper corporate merger deal, which saw the world's largest brewer Anheuser-Busch InBev acquire SABMiller in a cash and share package worth £68 billion (See: SABMiller agrees to £44 per share takeover bid from Anheuser-Busch InBev).
Bond yields and emerging market currencies too retreated even as prospects of a US interest rate increase this year dimmed pushing the dollar lower and lifting the euro above $1.14 for the first time in a month.
"Many countries ... rely heavily on sales to China so unless this demand picks up in the coming quarters, not only are we going to see below 7 per cent growth in the world's second-largest economy, it's going to decline sharply for many of its trade partners as well," said Craig Erlam, senior market analyst at Oanda in London, Reuters reported.
Commodity currencies also took a hit, with the Australian dollar and the New Zealand dollar down further after the data release.
China's dollar-denominated exports were down 3.7 per cent in September from a year earlier, while imports plunged 20.4 per cent chalking up their eleventh consecutive month of decline, official data showed today.
The development led to a trade surplus of $60.34 billion for the month.
"Chinese exports were better-than-expected and imports were slightly worse, but both continued to decline in year-on-year terms. It was basically a fairly mixed report, but with last week's impressive rally starting to look stretched, mixed Chinese data was taken as bad Chinese data," IG's market analyst Angus Nicholson wrote in a report issued late today.
"Import numbers are very bad news for countries exporting to China and that's focused on emerging markets in Asia and Latin America," Callum Henderson, the global head of FX research at Standard Chartered told CNBC.
The International Monetary Fund has warned that a sharp economic slowdown in China would hit not only the world's second-largest economy but also the rest of Asia-Pacific region hard. (Chinese slowdown will affect entire Asia-Pacific: IMF).