Markets in US closed sharply lower on Monday the 22nd September 2014. Data on US economy released during the day indicated worse performance than expected. National Association of Realtors (NAR) reported that the existing home sales unexpectedly declined in August for the first time in five months. NAR explains the drop by the fall in all-cash purchases of homes for investment purposes. Investors are concerned about slowing global growth. The S&P 500 (SPX) closed 16.11 points, or 0.8%, lower at 1,994.29. The Dow Jones Industrial Average (DJI) dropped 107.06 points, or 0.6%, to 17,172.68. The Nasdaq Composite (RIXF) fell 52.10 points, or 1.1%, to 4,527.69. On the second day of trading Alibaba shares fell 4.3%. Apple shares closed slightly higher as the company reported over 10 million iPhone 6 sales over the first weekend, a new Apple record. Shares of Sigma-Aldrich Corp. soared 33% after German Merck & Co. Inc. ( MRK ) said Monday it will pay $140 per share for the life-science and technology company. It constitutes a 36 percent premium over the one month average closing price and values the company at around $17 billion.
Today a number of economic indicators are due both in Europe and North America. At 9:30 CET Markit’s Flash Purchasing Managers’ Indexes for Germany for September will be released. The Flash Composite Purchasing Managers’ Index, as well as Flash Manufacturing and Services PMIs are expected to decline marginally. Markit’s Flash PMIs for Eurozone for September will be published at 10:00 CET. The Flash Composite PMI for Eurozone is expected to remain unchanged at the level 52.5, while advance readings for Manufacturing and Services PMIs are expected to decline marginally. Later in the day at 14:30 CET Canada Retail Sales MoM data for July will be released and the forecast is 0.5%, down from previous month’s 1.0% rate. Canada’s Retail Sales figure excluding auto sales is expected to remain unchanged. At 15:45 CET Markit’s Flash Manufacturing PMI for US for September will be released and the consensus expectation is 0.1 increase to 58.
Amid concerns about slowing Chinese economy after August data that showed slowing growth, China’s Finance minister Lou Jiwei had restated country’s intention at the G-20 meeting over the weekend to not take any stimulating policy measure due to changes in any individual economic indicator. HSBC Holdings Plc and Markit Economics reported that the preliminary purchasing managers’ index called flash PMI for China for September rose to 50.5 from a reading of 50.2 in August. After data of previous month had indicated slowing growth, economists had predicted the PMI would fall to 50. The unexpected rise of the preliminary gauge of Chinese manufacturing pushed Asian stocks higher from a four-month low. Australia’s main index ASX 200 rose 0.98% after closing 1.29% lower yesterday. MSCI International All Country Asia Pacific index excluding Japan edged 0.2% higher after dropping 1.2% on Monday over worsening economic outlook for China. Japanese markets are closed for a holiday. Shanghai Composite Index SSEC gained 0.6% after a 1.6% drop yesterday.
US dollar retreated to 108.74 yen per dollar on Tuesday after hitting six year high at 109.46 last week. The euro was at $1.2852 having dropped to its lowest since July last year at $1.2814. The Australian dollar rose slightly to $0.8893 after dropping for 0.6% yesterday on concerns over slowing Chinese economy. As the HSBC’s and Markit’s higher preliminary reading for China’s Manufacturing PMI for September compared with previous month’s figure was released, commodities rebound on expectations of increased demand. Brent for November settlement rose 0.5 percent from a one week low after it fell $1.42 to $96.97 yesterday on ICE Futures Europe exchange in London. The volume of all futures traded was about 16 percent below the 100-day average. WTI for November delivery rose as much as 0.7 percent to $91.48 a barrel in electronic trading on the New York Mercantile Exchange.
Gold for immediate delivery rose for 0.4 percent to $1,219.34 an ounce, and traded at $1,218.44 by 11:21 a.m. in Singapore, Bloomberg reports. Yesterday it fell to $1,208.40, the lowest since Jan. 2. Investors are assessing whether the increased physical demand at lower price levels and increased demand from China and India in the fourth quarter before the wedding season and festive period will offset the pressure on the metal that improving US economy and stronger dollar exert. The expert forecast is negative and gold is expected to remain bearish.
Article written by IFC Markets
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