Spreadex Market Update
Weak data from China, impending FOMC meeting AND Greek election provide cocktail of market uncertainty
The biggest news, at least for the morning, will be the market reaction to the latest wave of disappointing data from the stuttering and spluttering China. The headline miss was a fall in fixed asset investment, falling to 10.9% from 11/2% (a 15 year low); this was joined by yet another weak industrial production figure and a marginally better, but uninspiring, retail sales number. This particular cocktail left the Shanghai Composite down nearly 3% on the day, with an added dose of pre-FOMC meeting hitters thrown in to cause an extra bit of risk aversion.
And that is a trend likely to continue until after the Fed’s statement on Thursday; alongside the Greek saga (more on that later) and the Chinese chaos, the US interest rate debate has so far been one of 2015’s defining features, and something that could reach a crescendo by the end of the week. At points a September rate hike looked a near-certainty; now, in the post-yuan devaluation/Black Monday landscape the central bank appears even more split on what its current direction should be. None of which helps investors, of course, whose nerves will likely only increase as the decision gets closer.
Add onto this the Greek election this Sunday (and the potential for yet another Greek leader for the Eurozone to grapple with) and the outlook for the week is uncomfortably uncertain for the markets. In light of all this, the European indices have dealt with the open well; the DAX and CAC just about edged into the green (though the sustainability of said gains is in doubt), whilst the FTSE was up over half a percent following a strong performance from mining stocks like Rio Tinto and Anglo American.
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