Complicated global outlook has markets on edge

Share Markets:

STOCKMARKET selling continued on Friday, with global bourses losing ground on concerns about the growth outlook in China and disappointing US manufacturing data.

The Dow fell 3.1%, the S&P 500 fell 3.2% and the Nasdaq fell 3.5% on Friday.

In Europe, fresh Greek exit fears weighed on European stocks, with the Euro Stoxx down 3.2%, following a decline of 4.3% in the Shanghai Composite earlier in the session.

Further selling is expected on the Australian stockmarket today.

Interest Rates: 

US bond yields fell on stockmarket losses and after the US manufacturing data disappointed investors.

St. Louis President Bullard (a dove) was optimistic on the economic outlook, but undecided on a September hike.

Foreign Exchange:

The US dollar index fell to a two-month low on Friday on global growth concerns and diminished expectations the Fed will start hiking interest rates in September.

EUR/USD rose from 1.1235 Friday morning to 1.1389, and is trading just below that level this morning. Grexit chatter resurfaced with expectations the snap election could benefit the left.

USD/JPY fell from 123.41 on Friday morning to trade at 121.97 at the time of writing.

The Australian dollar lost ground against the US dollar and the other major currencies as global growth concerns and lower commodity prices drove risk aversion.

AUD/USD had a bumpy session, falling from 0.7340 Friday morning, to trade at 0.7309 at the time of writing. NZD/USD rose from 0.6627 on Friday morning to trade around 0.6683 this morning.

AUD/NZD fell from 1.1069 on Friday morning to 1.0940 this morning.      

Commodities:

The oil price weakened on concerns about a slowdown in global demand, amid expectations supply will continue to increase. A decline in Chinese manufacturing data on Friday weighed on the copper price.

Australia:

There was no data to report.

China:

The Caixin manufacturing PMI fell to 47.1 in the preliminary reading for August, the lowest since March 2009.  It adds to concern over a sharper slowdown in China.

Europe:

The Eurozone composite PMI rose from 53.9 to 54.1. Strong German readings balanced weaker readings from some other countries.

The Eurozone PMI is above 50 signalling expansion in manufacturing activity.

Eurozone services activity continued to expand, with the services index rising to 54.3 in August, from 54.0 in July.

Japan:

The manufacturing PMI rose from 51.2 in July to 51.9 in August, suggesting a rebound in activity in the third quarter. It is a positive sign after the economy contracted in the June quarter. 

United States:

The US manufacturing PMI fell from 53.8 to 52.9, the lowest since October 2013 and disappointing expectations. The employment sub-index fell to a June-2014 low.

The strong dollar, global uncertainty and slowing momentum were factors.


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