Comment: Dispiriting Housing Numbers for China, Indian Markets Continue to Rise
May 19, 2014 8:58 am
A soft start for European equity markets after data overnight sparked concerns that China’s slowing property market may sap growth further in the world’s second largest economy. Latest flare-up in tensions between Ukraine and Russia give the market another reason to take some cash off the table.
All major European benchmarks are in the red, pressured by losses in Asian markets overnight with the Shanghai Composite off 1%, while the Hong Kong’s Hang Seng declined over 0.4% amid worries about cooling house price data.
Prices for new homes in China climbed in 44 of 70 cities tracked by the Chinese government last month, compared with 56 cities in March – in total, home prices in Beijing rose just 0.1% from March, the smallest increase since September 2012.
The worry here for market participants is that with the housing market driving the advances in China’s economy over the years, a housing slowdown triggers a wider concern that the economy may now be in full-swing slowdown mode and there seems little resolve by policymakers in the country to act just yet, accepting that weakness is warranted as the government transitions China.
China itself as an economy may be able to handle its slowing growth fundamentals but neighbouring nations certainly are finding it tough. For example, in Australia, miners that export heavily to China led the sell-off which left the S&P/ASX 200 index down 1.3 % and the Aussie dollar off 0.1% to $0.9348 against the USD.
Meanwhile, India’s Sensex index is up 1%, setting another record day of gains while the rupee is at its strongest in 11 months as market participants continue to welcome the election of Narendra Modi as the country’s new PM.
Across other assets, highly-rated sovereign bond yields remain near multi-month lows with UK gilts and German bunds up a touch this Monday morning. Meanwhile, gold prices are up around $4 to $1,297 and the Japanese yen gaining 0.1% against the US dollar to Y101.39. Elsewhere, the euro climbed against most peers, up 0.2% against the greenback.
Geopolitical tensions remain high – clashes in Ukraine’s east continued over the weekend between government forces and pro-Russian rebels, who have declared an independent state. With the Ukrainian presidential election scheduled for May 25, markets are worrying the tensions will rise ahead of the elections as rebels who want to vote in eastern parts of Ukraine say they want to join Russia, which is seen as illegal by Ukraine and Western powers.
Looking ahead to the session, the economic data menu is virtually empty for Monday, which will leave investors focussing on China data and geopolitical tensions for most of the trading session, at least until the US markets open, which could provide some direction. Tuesday sees the UK print producer prices and consumer price inflation data.
A soft start for European equity markets after data overnight sparked concerns that China’s slowing property market may sap growth further in the world’s second largest economy. Latest flare-up in tensions between Ukraine and Russia give the market another reason to take some cash off the table.
All major European benchmarks are in the red, pressured by losses in Asian markets overnight with the Shanghai Composite off 1%, while the Hong Kong’s Hang Seng declined over 0.4% amid worries about cooling house price data.
Prices for new homes in China climbed in 44 of 70 cities tracked by the Chinese government last month, compared with 56 cities in March – in total, home prices in Beijing rose just 0.1% from March, the smallest increase since September 2012.
The worry here for market participants is that with the housing market driving the advances in China’s economy over the years, a housing slowdown triggers a wider concern that the economy may now be in full-swing slowdown mode and there seems little resolve by policymakers in the country to act just yet, accepting that weakness is warranted as the government transitions China.
China itself as an economy may be able to handle its slowing growth fundamentals but neighbouring nations certainly are finding it tough. For example, in Australia, miners that export heavily to China led the sell-off which left the S&P/ASX 200 index down 1.3 % and the Aussie dollar off 0.1% to $0.9348 against the USD.
Meanwhile, India’s Sensex index is up 1%, setting another record day of gains while the rupee is at its strongest in 11 months as market participants continue to welcome the election of Narendra Modi as the country’s new PM.
Across other assets, highly-rated sovereign bond yields remain near multi-month lows with UK gilts and German bunds up a touch this Monday morning. Meanwhile, gold prices are up around $4 to $1,297 and the Japanese yen gaining 0.1% against the US dollar to Y101.39. Elsewhere, the euro climbed against most peers, up 0.2% against the greenback.
Geopolitical tensions remain high – clashes in Ukraine’s east continued over the weekend between government forces and pro-Russian rebels, who have declared an independent state. With the Ukrainian presidential election scheduled for May 25, markets are worrying the tensions will rise ahead of the elections as rebels who want to vote in eastern parts of Ukraine say they want to join Russia, which is seen as illegal by Ukraine and Western powers.
Looking ahead to the session, the economic data menu is virtually empty for Monday, which will leave investors focussing on China data and geopolitical tensions for most of the trading session, at least until the US markets open, which could provide some direction. Tuesday sees the UK print producer prices and consumer price inflation data.
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