Global Growth Fears Drag Stocks Lower
Weak manufacturing data in Europe and from China set the markets off on the wrong foot at the start of the new year.
Share this:
Weak manufacturing data in Europe and from China set the markets off on the wrong foot at the start of the new year. It is a new year but there is nothing new about the issues concerning the markets. As traders returned to their desks, fears of global economic slowdown wasted no time in showing up as risk off dominated and flows into safe havens increased
Chinese manufacturing activity contracting as the pmi fell to the lowest level in 19 months and weakness in European manufacturing data offered few reasons for investors to cheer. Data continues to show the negative impact of the US – Sino trade war on global manufacturing activity unnerving investors.
UK Manufacturing Rises on Stock Piling
Unlike weaker manufacturing data from Europe and China, UK manufacturing activity surprised to the upside. Manufacturing PMI jumped to 54.1, up from 53.1 in November and significantly ahead of the 52.5 forecast. However, the headline figure is somewhat deceptive. UK manufacturing activity hit a six-month high as firms ramped up stock piling amid growing concerns of a no deal Brexit.
With Brexit uncertainties dominating and traders seeing straight through the UK manufacturing pmi increase, the pound dived over 1% lower. The pound is finding some support at $1.26, however with the Brexit deal back in Parliament next week to be debated, it is doubtful how long $1.26 will hold for. With sentiment across the globe lower on global growth concerns and Brexit uncertainties lingering, there are few reasons to buy into the pound right now.
Flight to Safety
Whilst riskier assets suffered at the hands of investors, a move higher in gold and the Japanese yen indicated a broad flight to safety. The yen rallied to its highest level since early June versus the dollar rallying over 0.8%. Meanwhile gold continued its ascent.
Gold hit a six-month high in trade on Wednesday. It is up some 10% since August and has climbed $50 over the past week. As global growth fears increase, and the chances of further Fed hikes diminish, the appeal of non -interest bearing gold is growing. The markets are currently not pricing in any rate Fed hikes over the coming year, attention will now turn to Friday’s non-farm payroll data. A weaker than forecast reading could feed fears over growth concerns and give fresh legs to gold’s recent rally.
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold forecast: Rising yields become too hot for gold, but the outlook is far from bearish
Gold and silver prices took a plunge today, with the former down 3% and the latter falling some 5% by mid European session, before bouncing off their lows. The losses come after the metals remained largely supported until last week, despite the big dollar rally and surging bond yields as we have seen in recent weeks. But it simply got too much, and the metals succumbed to pressure today.
USD into a Massive Week as Yields Fly and Gold Breaks
It’s a huge week with PCE and NFP, but it’s what’s happening off of the calendar that demands attention with US yields flying to fresh multi-decade highs.
USDJPY Forecast Intervention Fears Clash with Dollar Strength
Recent trading sessions have produced mixed results for the Japanese yen. By the end of last week, USD/JPY had fallen by more than 1.00%, reflecting a modest recovery in the yen. However, the start of this week has seen the pair move slightly back in favor of the U.S. dollar, posting gains of around 0.04%.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.