Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

China Growth Concerns Weigh on Markets


Today's financial recap and tomorrow's financial outlook.

Global risk assets had a weaker tone today, led by substantial declines in commodities. Copper and iron ore - two commodities sensitive to Chinese growth expectations - were the worst performers. Iron ore futures were down 3.8% after reaching a five year low on last Friday. Crude oil also suffered as investors now began to question estimates for Chinese demand. Chinese Finance Minister Lou Jiwei said in comments yesterday at the G-20 conference in Australia that his government would not take any major steps with new stimulus plans, which have been a major supporter of Chinese assets. He did not elaborate what "major steps" included.

Market participants took this to mean that the government was backing away from its recent stimulus measures and the Shanghai Composite (SHCOMP) was down 1.70%. However, they are quick to forget that just five days ago the People's Bank of China (PBoC) injected 500 billion yuan into the banking system and cut its repo rate by 20bps.

US markets were weak this morning in sympathy to the Chinese growth concerns. The S&P 500 (SPX) opened down five points and after a quick bounce in first thirty minutes proceeded to sell off for the rest of the day. The benchmark index went out near its lows, down 0.80% for the session, with all 10 of its sectors negative, led by consumer discretionary stocks. The small cap Russell 2000 (RUT) underperformed by 0.65%, led by declines in energy stocks.

Apple's (AAPL) first weekend of sales of iPhone6 models made a new record, topping 10 million. CEO Tim Cook lamented in the statement that sales would have been higher if there was a greater supply available, but this has been a consistent theme for past releases. The stock was one of the few to close positive today.

Existing home sales for August fell to a 5.05 million annual rate from 5.14 million in the month prior. The slowdown was attributed to a slowdown in investor purchases, now only 12% of total purchases, down from a persistent average of 16%. National Association of Realtors (NAR) stated that the dropoff was due to investors concern over the Fed's first rate hike.

Tomorrow's Financial Outlook

There is a smorgasbord of Fed speeches tomorrow. Presidents Bullard, George, Kocherlakota, and Board Member Powell are scheduled to speak. Bullard has consistently been a hawkish voice in the past year with Kocherlakota his antithesis. Also scheduled is the July government home price index, Markit US manufacturing PMI, and the Richmond regional manufacturing survey. To wrap things up, the US Treasury will sell $29 billion in 2-year notes in the afternoon.

The main catalyst overnight for risk assets is the preliminary Chinese HSBC manufacturing index for September. Although Chinese equities have been more sensitive to changes in liquidity by the government, this will stay a play a role in the price action overnight due to investors' concern on Chinese growth issues today. Similar indices are due out from Germany, France, and the broader eurozone.

The major earnings reports scheduled for tomorrow are Carmax (CMX), Carnival (CCL), and Bed Bath & Beyond (BBBY).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos