Weaker US flash manufacturing PMI drags markets lower

Tuesday, March 25, 2014

Wall Street posted a weaker session yesterday after the March preliminary Markit US manufacturing PMI reading came in below expectations of 56.5 at 55.5. Investors pulled out of growth stocks in particular as the tech heavy NASDAQ erased 1.18% off its value while the broader S&P 500 closed 0.49% lower. The USD also faced selling pressure as the dollar index slipped below 80.00 yesterday on growth concerns after last week’s steady gains on Fed comments. Despite pulling back over the past few sessions, US equity markets are still trading near all-time record highs with the S&P 500 having rallied almost 180% since the bottom in 2009. However, momentum seems to quickly lose traction on any approach of these levels and investors will need further reassurance from economic data before committing significant positions. Today, market participants will look forward to US house prices, consumer confidence and the Richmond Fed manufacturing index in the hopes that any positive surprises will shore up equity markets and support the dollar.

The weaker US session carried over to Asian markets as benchmark indices for the region remained under pressure. In Japan the Nikkei closed 0.36% lower and the TOPIX ended the session largely unchanged while over in China both the CSI 300 and Shanghai Composite struggled with direction as investors assessed the growth situation after Monday’s gains. Despite risk appetite increasing in recent sessions, jittery investors remain cautious to geopolitical risks in Ukraine and slowing growth momentum in China and the US which will see volatility and kneejerk reactions dominate the coming sessions.

Three month LME copper futures rose above $6,500/tonne during Asian hours as Monday’s release of a weaker than expected flash manufacturing PMI reading increased the speculation of stimulus measures. Prices have lost almost 7% since the start of the month as concerns of slowing demand in China and a weaker yuan put pressure on the red metal. After dropping 30% m/m in February, Chinese total imports of refined copper may decline further in March as industrial and manufacturing output remain subdued

DXY drops below 80.00 on a weaker US flash manufacturing PMI reading

DXY Curncy DOLLAR INDEX SPOT 2014 03 25 07 32 39

LME 3-month copper prices seem to have settled in a new lower range

LMCADS03 Comdty LME COPPER 3 2014 03 25 07 57 02

 

Events for today

0900

DE

Mar

Ifo Business Climate

0930

UK

Feb

CPI & PPI

1300

US

Jan

Home Prices

1400

US

Mar

Richmond Fed

1400

US

Feb

New Homes

All times UK Local Time

 

Topics: Copper, DXY, LME
More from: Kash Kamal