Spreadex Market Analysis: Global Markets Continue To Decline

AM Analysis – “Asian markets trade down through the night” – Alex Conroy
Asian markets traded down through the night in anticipation of China’s growth slowing. Following the imminent China’s Communist Meeting, President Xi Jinping will expand on his economic vision for China after one year in charge. Optimism was not high among investors with 48 of the 50 Hang Seng companies trading down and the index slipping 0.9 percent. Investors expect a back-lash from early growth friendly policy as the President looks to refine his policies in an attempt to rebalance following the avoidance of the credit crunch earlier this year.

The FTSE is expected to open up this morning after recent favourable company data from G4S, imperial tobacco, etc. Services PMI data expected in at 60.4 rising 0.1 from previous data should help bolster the UK market when it’s released at 9.30.

In the US ISM non-manufacturing PMI is expected to be slightly lower than previous results, forecast at 54.2. Following the recent PMI data should this come in better than forecast it would point to the recovery in the US broadening across all industries suggesting true recovery. Expect an overreaction in the markets should forecasts be beaten.

Twitter yesterday raised the price range for its IPO by 25% to between $23-$25 putting the valuation of the company at $17.4bn including restricted stock units and options. The offering will be valued at $2bn should the top price range be achieved with approximately 13% of the options being sold. Twitter starts trading on the New York Stock Exchange on Thursday.

PM Analysis – “Global markets continued to decline” – Shavaz Dhalla
Global markets continued to decline today as financial stocks weighed heavily on investors’ sentiment. A shock warning by RSA that severe weather in Europe and Canada would result in investors’ full year returns bearing the brunt as well as analysts’ squashing bid speculation surrounding RSA resulted in early losses for the insurance giant. Furthermore, banks also added to the selloff as traders feared that increased regulation would detriment banks’ ability to generate sufficient returns for investors.

Many traders are also betting that the European Central Bank will announce a further interest rate cut in December, hence the slight support in equities as well as the euro hitting a six-week low. Traders are arguing that a falling inflation rate as well as uncertainties concerning the Eurozone area as a whole is enough of an impetus for policy officials to do more to support struggling nations.

However, there is always the argument that more needs to be done from a structural level as there does come a point where loosening measures to pump more liquidity into the markets only goes so far.

[The original articles by Spreadex can be found here.]

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