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Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save FT Reporters 9 HOURS AGOPrint this page0 How hard has China been hit by the trade war? The trajectory of trade talks seems to vary on a daily basis, but the actual impact on China from the long-running tussle with the US will become clearer on Monday with the release of a raft of export data. Analysts expect that the fall in Chinese exports will have accelerated in September as the world’s second-largest economy grappled with both the trade war and slowdowns among key trading partners across Europe and Asia. Economists polled by Bloomberg anticipate that shipments in US dollar terms from China slipped 3 per cent year on year during the month, following a 1 per cent fall in August. Further signs of economic weakness come at an inopportune time for China, in so far as they give the Trump administration scope to ratchet up tensions. Last week, for example, Washington banned Chinese technology companies from buying US-made goods on the grounds of alleged human rights abuses in Xinjiang. Other recent data suggest a slowdown in China’s economy is gathering steam. Official figures showed manufacturing sector activity shrank for a fifth consecutive month in September. However, the minutes from the Federal Reserve’s September policy meeting, released last week, may give China some ammunition as the dispute drags on. Fed economists warned about the rising downside danger to the US economy in the year ahead, with the central bank’s statistical models on the likelihood of a recession in the medium term increasing due to risks associated with the trade war and geopolitics. Daniel Shane Could further bad data be good news for the euro? After the European Central Bank’s kitchen-sink easing package in September, few monetary policy tools remain available for policymakers to stimulate the slowing economy, beset with low inflation and increasingly dreary manufacturing data. But as the central bank reaches its limit, key data points this week on eurozone inflation and German economic sentiment could strengthen the case for fiscal stimulus, which in turn could boost the euro. “Central bank action has failed to help so far,” said Athanasios Vamvakidis, a strategist at Bank of America Merrill Lynch. Inflation expectations remain well below the ECB’s target and analysts predict just a 0.9 per cent year-on-year growth for the core consumer price index in September, for which figures are due on Wednesday. Meanwhile, German economic sentiment indicators, out on Tuesday, are expected to show a further deterioration from already-negative levels. George Saravelos, an analyst at Deutsche Bank, said while there was little to be cheerful about in Europe given the 0.2 per cent growth in the second quarter and no signs of a pick-up in the past three months, European leaders, particularly in Germany, could soon be spurred into action to support the economy with fiscal measures. Until now, investors have priced in a small possibility of German politicians relaxing self-imposed restraints. But an upcoming midterm review by the country’s coalition government could lead to a change in spending policy and, subsequently, a boost for the euro. “The risks are asymmetrically skewed towards positive news on fiscal [easing],” Mr Saravelos said. Deutsche expects the euro to finish the year trading at $1.13, from $1.10 now. Eva Szalay Can this year’s nickel rally keep going? Nickel prices have surged more than 60 per cent this year, following news in August that Indonesia, the largest producer, will ban exports of nickel ore from January. The metal, which is used to make stainless steel, is also critical for electric car batteries — a market that is set to see rapid growth. Yet traders and analysts are wary about the sustainability of the rally, which saw nickel hit a five-year high of $18,850 a tonne in September. It is now trading at $17,650. Traders point to large withdrawals of nickel from warehouses run by the London Metal Exchange. Stocks on the LME have fallen almost 50 per cent since August. The exchange is supposed to be a last resort for consumers of the metal when supplies are short. Some traders say China’s largest stainless steel producer, Tsingshan, may be behind the outflow. One trader said Tsinghan may have already amassed between 70,000 and 90,000 tonnes more than it needs for production. That pile would be worth about $1.4bn, at the midpoint of that range. If Tsingshan were to start to sell the metal back again, the price could quickly collapse, traders warn. The company could not be reached for comment. Another reason for a fall: there is a surplus of stainless steel in China, which is reflected by a weaker premium for prices of nickel in China compared with global benchmarks, according to Helen Lau, an analyst at Argonaut Securities in Hong Kong. Ms Lau notes that the premium for nickel in Shanghai has dropped to the lowest level on record at a $80 discount below the global price. The big rally is “not sustainable” on that basis, she said. Malcolm Freeman, director of Kingdom Futures, goes further, describing the market as “like a pressure cooker about to explode”. Henry Sanderson