PMI Services Sector Numbers Confirm China Slowdown; Yellen’s Testimony to the JEC later today
May 7, 2014 6:38 am
Equities in Europe slide this Wednesday morning while traditional safe-havens such as government bonds and even gold track higher as worries about the ongoing crisis in Ukraine, bloated equity valuations which do not match up with earnings and weakness in China all dent market sentiment.
Overnight, a retreat on Wall Street caused jitters across Asian markets, with financial participants expressing their disappointment over the S&P500’s failure to break above last month’s record high of around 1893.
Economic data out of the US in recent days show an economy thawing from a cold winter period with renewed signs of life, however, market participants are holding back from making bold moves on the general lack of clarity of upcoming Federal Reserve monetary policy.
Later today, market participants will be keeping an ear out for what Federal Reserve chairwoman Janet Yellen says at her testimony to the congressional Joint Economic Committee on Wednesday. It’s likely that Yellen will stick to the rhetoric of accommodative policy mixed with bullish remarks concerning the US economy but the market will want more information regarding when she believes the Fed will raise interest rates.
In Asia overnight, market participants shun equities on the poor performance on Wall Street with eyes on Yellen for more. Regionally, the BOJ’s meeting minutes weighed further on the Japanese stock market but helped the yen currency as it showed little desire by policy-makers at the central bank to add further stimulus to the economy there.
China stocks also suffered following the release of the HSBC PMI services sector data which slipped from 51.9 in March to 51.4 in April – again, reaffirming the slowdown in the huge services sector in the country which is worrying when taken together with the manufacturing PMI.
The slowing momentum here seems to be leading to market worry about policy-makers in China letting the country produce sub-par growth and about China’s prospects in general. Traders are worried that the services sector could fall into contraction mode (below 50) in coming months and that policy-makers will sit and watch instead of act.
In forex markets, the euro is holding its recent gains versus the US dollar, currently at around $1.39 as market participants wait for the ECB policy meeting on Thursday, while sterling continues to show strength versus the dollar ahead of the BOE’s meeting, also on Thursday. For Wednesday, there’s little on the data agenda with eyes on Fed’s Yellen for more clues over upcoming US monetary policy.
Equities in Europe slide this Wednesday morning while traditional safe-havens such as government bonds and even gold track higher as worries about the ongoing crisis in Ukraine, bloated equity valuations which do not match up with earnings and weakness in China all dent market sentiment.
Overnight, a retreat on Wall Street caused jitters across Asian markets, with financial participants expressing their disappointment over the S&P500’s failure to break above last month’s record high of around 1893.
Economic data out of the US in recent days show an economy thawing from a cold winter period with renewed signs of life, however, market participants are holding back from making bold moves on the general lack of clarity of upcoming Federal Reserve monetary policy.
Later today, market participants will be keeping an ear out for what Federal Reserve chairwoman Janet Yellen says at her testimony to the congressional Joint Economic Committee on Wednesday.
It’s likely that Yellen will stick to the rhetoric of accommodative policy mixed with bullish remarks concerning the US economy but the market will want more information regarding when she believes the Fed will raise interest rates.
In Asia overnight, market participants shun equities on the poor performance on Wall Street with eyes on Yellen for more. Regionally, the BOJ’s meeting minutes weighed further on the Japanese stock market but helped the yen currency as it showed little desire by policy-makers at the central bank to add further stimulus to the economy there.
China stocks also suffered following the release of the HSBC PMI services sector data which slipped from 51.9 in March to 51.4 in April – again, reaffirming the slowdown in the huge services sector in the country which is worrying when taken together with the manufacturing PMI.
The slowing momentum here seems to be leading to market worry about policy-makers in China letting the country produce sub-par growth and about China’s prospects in general. Traders are worried that the services sector could fall into contraction mode (below 50) in coming months and that policy-makers will sit and watch instead of act.
In forex markets, the euro is holding its recent gains versus the US dollar, currently at around $1.39 as market participants wait for the ECB policy meeting on Thursday, while sterling continues to show strength versus the dollar ahead of the BOE’s meeting, also on Thursday. For Wednesday, there’s little on the data agenda with eyes on Fed’s Yellen for more clues over upcoming US monetary policy.
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