U.S. stock futures indexes are down sharply this morning and are set to open lower as uncertain economic data from China and Japan continued to worry investors. Oil prices have pulled back fractionally as investors cover short positions and take profits following an 8% rise in the previous session.
SPY was down 2.5% (and falling) as U.S. markets are expected gap down at the opening.
Here is the current market situation from CNN Money
European markets are sharply lower today with shares in Germany off the most. The DAX is down 2.76% while London's FTSE 100 is off 2.50% and France's CAC 40 is lower by 2.32%.
It's another stormy day for stocks across the world after twin surveys showed China's manufacturing sector in the grip of its worst slump in several years. China's official Purchasing Managers' Index fell to 49.7 in August from the previous month's reading of 50.0 - the weakest showing in three years, while the Caixin China manufacturing PMI showed a final reading of 47.3 in August, the lowest since March 2009. The figures detail an even sharper slowdown in the world's second-largest economy, reinforcing fears that have triggered heavy global market selloffs.
Econintersect: CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 6.9% year-over-year year-over-year (reported up 1.7% month-over-month). There is considerable backward revision in this index which makes monthly reporting problematic. CoreLogic HPI is used in the Federal Reserves's Flow of Funds to calculate the values of residential real estate.
TOKYO (AP) — Global stock markets fell sharply Tuesday and Wall Street was set to open lower as gloomy economic data from China and Japan augured further uncertainty for investors after a brutal August.
KEEPING SCORE: Britain's FTSE 100 dropped 2.2 percent to 6,110.61 and Germany's DAX sagged 2.5 percent to 10,003.60. France's CAC 40 lost 2 percent to 4,558.76. U.S. markets also looked set to start on a weak footing, with Dow futures down 1.9 percent and S&P futures 2 percent lower.
CHINA MANUFACTURING: An official index of Chinese manufacturing fell to a three-year low last month in another sign of slower-than expected growth in the world's No. 2 economy. The manufacturing index based on a survey of factory purchasing managers fell to 49.7 points in August from 50.0 in July, indicating a contraction.
DETROIT (Reuters) - Fiat Chrysler Automobiles NV on Tuesday led off major automakers reporting U.S. August sales, posting a stronger-than-expected rise of 2 percent, boosted by SUV and pickup truck sales.
While the market's attention overnight was focused on China's crumbling manufacturing and service PMI, data which was already hinted in the flash PMI reports earlier in August, the real stunner came not from China but from South Korea, which last night reported an unprecedented 14.7% collapse in exports, far worse than the -5.9% consensus estimate, and more than 4 times worse than July's 3.4%.
The number is critical because not only do exports account for about half of South Korea's GDP (with Samusng alone anecdotally accountable for 20% of the country's GDP), but because it also happens to be the first major exporting country to report monthly trade data. That makes it the perfect barometer of global trade flows, or as the case may be, the canary in the global trade coalmine. It also confirms what we reported just one week ago when we said that "Global Trade Is In Freefall".
The carnage in Korean trade is unmistakable in the following Barclays chart:
Putting South Korea plunging trade in context, this was the worst m ...
Overnight, China decided to take steps to reduce "macro financial risks."
And by that they mean "do something quick to help ease pressure on the yuan" and by extension, on the PBoC's rapidly depleting FX reserves.
To that end, starting October 15 banks will have to hold the equivalent of 20% of clients' FX forward positions with the PBoC, where the money will sit, frozen, for a year, at 0% interest.
Obviously, that will drive up the cost of taking speculative positions which the PBoC hopes will help narrow the gap between onshore and offshore yuan and bring down volatility, although the degree to which this will help fill the CNY-CNH spread looks like an open question.
"It's a move to ease the reduction in foreign-exchange reserves," Tommy Ong, managing director for treasury and markets at DBS Bank Hong Kong, tells Bloomberg. "It will also remove lots of speculative trades that aim at short-term gains as the reserves have a minimum lock-up period of one year," adds Stan Chart's Becky Liu.
Here's a bit of color from FX strategy desks via Bloomberg:
Andy Ji, Singapore-based currency strategist at CBA:
This is typical FX control, as it limits the FX forward positions
PBOC has intervened before in the forward market, but imposing the 20% limit on outstanding forward position will require less intervention effort
Spread on CNY and CNH may not substantially narrow on this move alone, as global demand on dollar remains high and China economic grow remains slow
The 2012 Nobel Prize in economics was awarded to Alvin E. Roth and Lloyd S. Shapley for their work on matching problems. Two-sided matching problems, like assigning jobs to workers or dorm rooms to students, can be complicated enough. But sometimes the matching problem can be even more difficult. It may be that an item supplied by Alice is useful to Bob, but Bob has nothing of value to give to Alice. If, however, the item supplied by Bob is valuable to Charlie, then there is the potential for a matching chain. Charlie gives something to Alice, Alice gives something to Bob, and Bob gives something to Charlie. Such chains can by themselves be very complicated, and work must be done to identify chains that provide the most benefit. The first Nobel laureate mentioned above has done considerable work designing matching mechanisms used in kidney exchange. But why is all of this necessary? Why isn't there simply a market with prices?
LONDON/BEIJING (Reuters) - Shares in British hedge fund manager Man Group Plc fell more than 6 percent in early trade on Tuesday following a report the head of its China unit had been taken into custody as part of a probe into the country's recent market volatility.
Today's Gold Prices: USD 1141.90, EUR 1012.23 and GBP 744.10 per ounce.
Yesterday's Gold Prices: Bank Holiday in UK
Friday's Gold Prices: USD 1,125.50, EUR 998.23 and GBP 730.99 per ounce.
Gold was marginally higher yesterday and closed at $1135.50 per ounce, up $1.10. Silver was 0.3% higher and closed at $14.64 per ounce.
Gold rose 3.5% in August as stocks globally saw sharp falls on growing concerns about the Chinese and the global economy. Silver was 1% lower for the month of August and also acted as a hedge from falling stock markets globally.
Asset Performance in August @ Finviz.com
Internationally, stocks had their worst month in the last three years. In one of the most volatile trading periods since the financial crisis, August saw $5.7 trillion erased from the value of stocks worldwide and no major stock market was left unscathed.
The S&P 500 was down a significant 6.3% and the Dow Jones Industrial Average ended the month 6.6% lower, while the Nasdaq was down 6.9%. At one stage losses were much higher but a sharp bounce toward the end of the month meant the declines were that as bad as they looked like they would be.
LONDON/BEIJING (Reuters) - China's giant manufacturing industry contracted while British and euro zone growth eased in August, rattling markets and reinforcing expectations interest rates may fall again or stay near zero for longer.
LONDON (Reuters) - Oil prices fell sharply on Tuesday after official data showed China's giant manufacturing sector, one of the main engines powering the world's biggest energy consumer, contracted at its fastest pace in three years.
Just like the last time when Chinese flash PMI data came out at the lowest level since the financial crisis, so overnight when both the official Chinese manufacturing and service PMI data, as well as the Caixin final PMI,s confirmed China's economy has not only ground to a halt but is now contracting with the official manufacturing data the lowest in 3 years and the first contraction in 6 months, stocks around the globe tumbled on concerns another major devaluation round by the PBOC is just around the corner (especially following the unexpected strenghtening in the CNY in the past week which has cost China even more billions in reserve outflows) with the drop led by the Shanghai Composite which plunged as much as 4% before, the cavalry arrived and bought every piece of SSE 50 index of China's biggest companies it could find, and in a rerun of yestterday sent it to a green close, with the SHCOMP closing just -1.23% in the red. So much for the "no interventions" myth. We wonder which journalist will take the blame for today's rout.
Despite the latest attempt by Chinese authorities to smooth the drop, Asian equity markets traded lower as the rout in global stocks continued which saw US stocks post its worst month since May 2012 (S&P 500 -0.8%). Nikkei 225 (-3.8%) traded in negative territory in the wake of weak CAPEX (5.6% vs. Exp. 8.8%) figures, while ASX 200 (-2.1 %) is dragged lower by weakness in large banks. JGBs traded higher following the stellar 10yr JGB auction where b/c was at its highest in a year. RBA kept official cash rate unchanged at 2.00% as expected.
In Europe, stocks traded lower since the open in Europe (Euro ...
BRUSSELS (Reuters) - U.S. law firm and class action specialist Hausfeld launched a platform on Tuesday to help pursue claims against Google, posing a potential headache for the world's No. 1 Internet search engine amid its regulatory troubles in Europe.
(Reuters) - Two of America's biggest public pension funds have come together to oppose an amendment of bylaws at Bank of America Corp that would allow Brian Moynihan to continue as both chief executive and chairman of the No. 2 U.S. bank by assets.
Happenstance has brought me today to a house on the Austria-Germany border, just south of Salzburg. That puts me about 3 miles from the German town of Berchtesgaden, on the German side of the border. Adolf Hitler's home, the Berghof, was just outside the town, on a mountain in the Bavarian Alps. To the extent that Hitler had a home, this was it, and it was the place where Hitler met with many notables, particularly before the war began.
JAKARTA (Reuters) - Global economic growth is likely to be weaker than earlier expected, the head of the International Monetary Fund said on Tuesday, due to a slower recovery in advanced economies and a further slowdown in emerging nations.
BEIJING/SHANGHAI (Reuters) - Activity in China's factory sector shrank at its fastest rate in at least three years in August as domestic and export orders tumbled, increasing investors' fears that the world's second-largest economy may be lurching toward a hard landing.
LONDON, (Reuters) - Euro zone manufacturing growth eased last month, despite factories barely raising prices, adding to the European Central Bank's woes as it battles to spur expansion and inflation, a survey showed.
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