Morning Minutes

Soft PMI Numbers Send Markets Sinking




Sentiment across global markets has turned bearish ahead of the weekend with investors reacting negatively to Flash Manufacturing and Service PMI Reports. Numbers out of the UK, Germany, France and Japan consistently came in below expectations, with Japanese Flash Manufacturing PMI dropping back under 50 into contraction territory.

Coming off of a wave of hawkish central bank news and commentary related to interest rates and the ongoing battle against inflation, these numbers appear to have increased concerns that higher interest rates may be starting to drag on the global economy.  This appears to be impacting commodities and resource currencies in particular with WTI Crude Oil down 1.5% and back underneath $70.00/bbl, Copper down 1.7%, the Australian Dollar down 1.25% and the Canadian Dollar down 0.6%.  

In Asia Pacific trading overnight, Hong Kong fell 1.7%, while Tokyo and Sydney both dropped about 1.4%. In Europe today, the Dax is down 1.0% while the FTSE is down 0.5%, with the latter being cushioned a bit by stronger than expected UK retail sales.

US index futures are down 0.4% to 0.7%, unable to build on yesterday’s flat to up 1.0% day for major US indices. US Flash Manufacturing (street 48.5) and Flash Service (street 54.0) reports are due at 10.00 am EDT today.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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