Global equities retreat on Chinese slowdown fears

Thursday, August 20, 2015

Asian equity markets remained under pressure and extended sharp losses overnight as the Hang Seng index plunged over 450 points (-2.05%) towards 22,650. The Nikkei index followed the downtrend and slid lower by nearly 1% to retest the 20,000 level. The Shanghai Composite index retreated sharply by 3.4%, towards 3,600 following persistent concerns over a slowdown of the Chinese economy. In Japan, exports rose 7.6% y/y in July, beating analysts’ expectations of a 5.2% rise, while imports dropped by 3.2% y/y during the same period.

Hang Seng index continues its sharp decline

HSI Index (Hong Kong Hang Seng I 2015-08-20 08-58-13

The gloomy macroeconomic picture for Chinese economy has spread concerns across the other global equity markets. European equities opened lower this morning with the DAX, CAC, IBEX and London equity benchmark indices retreating between 0.4% and 0.7% in early trade. Germany’s PPI was flat in July while the y/y figure was reported at -1.3% in line with analysts’ expectations. Furthermore, the German parliament approved Greece’s bailout programme with a comfortable majority for Merkel despite that there has been significant opposition within her party. The euro climbed higher to retest 1.11 against the USD.

EURUSD trades around 1.11

EUR Curncy (Euro Spot )  Daily 20 2015-08-20 08-56-34

The minutes from the US Federal Reserve meeting in July, failed to provide any surprises for the markets. It was reported that one member was ready to increase US interest rates but he was willing to wait for further economic data to confirm the recent judgement. The interesting part is that most US Federal Reserve members confirmed that the economic conditions for a possible rate increase had not yet been met, although they were moving closer…   

Today, market participants will be keeping an eye on the release of the UK’s retail sales data as well as US weekly jobless claims, existing home sales in July and Philadelphia Fed business index in August. The USD index has been hovering around 96.50 against a basket of currencies.      

 Events for today:

0700

DE

Jul

PPI

0930

UK

Jul

Retail Sales

1330

US

w/e

Jobless Claims

1500

US

Jul

Existing Homes Sales

1500

US

Aug

Philadelphia Fed Business Index

1500

US

Jul

Leading Index

1530

US

w/e

EIA Nat Gas

 

All times UK Local Time

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