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Daily Analysis – Weak Chinese PMI Data Hits Equities

ByBinary Options Strategy
Published 12/08/2011, 05:47 AM
Updated 05/14/2017, 06:45 AM
NDX
0.12%
DE40
0.50%
HK50
2.64%
FTNMX301010
0.76%
P
0.00%
Equities

Negative PMI data from China pressured Asian shares, as factory growth fell to its lowest level in nearly 3 years. In China, the Shanghai Composite fell .7%, and the Hang Seng slumped 2.1%. Australia’s ASX 200 declined 1.7%, as materials stocks sank on the Chinese news, and the Kospi dropped 2.4%. Japanese markets were closed for a holiday.

European markets continued to drop, and a weak German bond auction spooked investors. The auction had an incredibly low bid-to-cover ratio of .65, as the government failed to sell the entire amount planned. The DAX fell 1.4%, the CAC40 lost 1.7%, and the FTSE shed 1.3%.

Selling pressure mounted in the US, with the Dow closing down 236 points to 11258. The Nasdaq fell 2.4% and the S&P 500 lost 2.2%. Financials fell after the Federal Reserve said it would conduct stress tests on the 6 largest US financial companies to weigh the risk of a worsening European debt crisis. The 6 banks all fell more than 3% on the news.

Dow Jones Indu Average Index

US Markets Continue to Fall

Deere rallied 2.9% after raising its guidance for 2012 and reporting strong earnings. Pandora Media shares tumbled 11.3% after issuing a weaker than expected outlook.

Currencies

The Dollar rallied strongly against the major currencies, as the Euro closed down 1.3% to 1.3335, and the Australian Dollar tumbled 1.6% to .9687. The Pound fell .8% to 1.5515, and the Canadian Dollar lost .9% to 1.0478. The Yen fell .5% to 77.35, and the Swiss Franc dropped .7% to 1.0867.

Economic Outlook

The reality that even Germany is having trouble raising money is a strong warning sign for the markets, although Germany’s bond yields are close to record lows.

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