China’s export data for October showed a decline of 1.1% compared to last year, falling short of the expected growth of 3%. This drop could suggest economic troubles in China, with potential effects on the global economy. Economists are watching closely to see how this data might impact global market attitudes and actions from central banks. These numbers could lead to changes as countries evaluate their economic conditions and monetary policies.

Impact On International Trade

The drop in China’s exports raises concerns about the country’s economic recovery and its effects on global trade. Analysts are examining these changes to understand their influence on worldwide trade relationships. China’s exports unexpectedly decreased by 1.1% in October 2025, signaling softer global demand. This trend follows last week’s US ISM Manufacturing PMI report, which showed a contraction at 48.7. Hence, we can expect markets to adopt a more cautious stance. Currently, the impact is felt in commodity markets, indicating a slowdown in industrial activity. For example, copper prices have decreased by 4% over the past month, nearing $3.40 per pound, and we anticipate further declines. As a result, we recommend short positions on commodity-linked currencies, particularly the Australian dollar against the US dollar. For equity traders, we suggest buying put options on major market indices like the S&P 500. This is a cost-effective strategy for protecting against potential market downturns. With volatility low, as indicated by the VIX around 14, options are more affordable. The weak data from China could push the VIX back toward 20 in the coming weeks.

Market Reactions And Historical Context

Reflecting on 2022, we saw a similar situation when weak Chinese export data led to global growth concerns and declines in cyclical stocks. At that time, markets heavily reliant on global trade, like Germany’s DAX index, performed poorly. We expect this trend may occur again. The missed exports impact companies with significant revenue from China, particularly in the European luxury and German automotive sectors. Therefore, we advise caution with these stocks and suggest looking for opportunities to buy puts or create put spreads on related ETFs. This data supports our expectation of a consumer slowdown. Unlike the responses seen during 2020-2021, central banks today have limited ability to stimulate the economy due to ongoing inflation above target levels. The Federal Reserve reports core PCE at 2.8%, restricting their capacity to cut rates preemptively. This lack of support means we should brace for a longer period of market weakness. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now