Spreadex Market Update
Bank of England’s Chinese fears and weak US open weigh on markets
Even though the reasons for this decision are fairly obvious, investors still appeared to be sobered by the confirmation from the central bank that ‘risks to the growth outlook were skewed moderately to the downside’ across August due to the price-eroding pressure of China. And though the Bank remained confident in the UK recovery, stating that it expects to see ‘healthy domestic expansion’, investors still took to heart the latest reminder of the markets’ current bogeyman, causing the FTSE, DAX and CAC all to slide to session lows.
Matters then weren’t helped by a US open that had seen all the futures gains of the morning dissipate by the ringing of the Wall Street bell. The main culprit behind the Dow’s lost lustre, beyond general China woes, was a better than expected jobless claims figure. At 275k to the 279k forecast the improvement wasn’t vast, but was still notable enough to push the potential September rate hike to the forefront of investors’ minds.
Whilst tomorrow likely won’t be as market-moving as last Friday’s US jobs report, it still brings with it more than a few items of note. Of course, first on the agenda will be the state of the Asian session, and whether the Shanghai Composite and the Nikkei can avoid further declines. An afternoon speech from the MPC’s previously hawkish Kristin Forbes could hopefully provide more insight into the Bank of England’s state of mind, whilst the start of the ECOFIN meetings should provide some clarity on the EU’s feelings about China (and Greece). Finally, PPI and consumer sentiment figures from the US will (in theory) provide the latest indicators of the Fed’s likely decision next week.
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