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Spreadex Market Update

Monday, January 04, 2016 - Morning Market Update
Connor Campbell - Market Analyst at Spreadex

China starts the New Year in style with havoc-causing halted trading

A disappointing Chinese government-released manufacturing PMI at the end of last week (coming in at 49.7 to the 49.9 forecast) was joined by a worse figure this Monday, the Caixin PMI arriving at 48.2 against the 48.9 anticipated. Immediately this got 2016 off to a shaky start, causing the blue-chip CSI300 index to plunge 7%, triggering China’s trade-halting circuit breaker (the first time the measure has had to be used) around an hour and a half before the regular close. 

Understandably this hasn’t been great news for the European markets on their first full day of New Year trading. With copper collapsing by nearly 3% the FTSE immediately began to drown under the weight of its mining stocks, falling over 2% as the likes of Rio Tinto, BHP Billiton and Anglo American haemorrhaged points. It’s the kind of aggressively negative landscape that doesn’t leave a lot of room for nuanced reactions to data, meaning the UK’s own manufacturing PMI (expected to see a slight increase from 52.7 to 52.8 month-on-month) may struggle to make much of an impact.

There wasn’t any joy to be found in the Eurozone either. If anything, the region was even worse, the DAX and CAC cliff-diving in tandem to hit 3% and 2.6% declines (and 3 week lows) soon after the bell. For what it is worth (and that might not be very much) the Eurozone sees its own wave of manufacturing data this Monday, Spain (potentially this year’s mini-Greece) already slightly missing estimates at 53.0 against the forecast 53.1.

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