THE CHINESE Purchasing Managers’ Index in August to the lowest since the series began in November 2005, in indicating that the economy is slowing after the government raised interest rates, curbed lending and limited property purchases in an effort to slow inflation. China’s GDP expanded 9.5% from a year earlier in the second quarter, slowing from the 9.7% gain in the first three months as government tightening policies kicked in.
WORSENING economic data may persuade the ECB to cut interest rates. The headline rate currently stands at 1.5% following increases in April and July. Since then inflation expectations have slightly fallen and growth has ground to a halt. The German economy grew by just 0.1% in the second quarter, and France recorded no growth at all. Meanwhile inflation expectations for 2011 and 2012 have fallen to 2.7% and 1.8% respectively.
US STOCK futures fell overnight, signalling the S&P 500 Index may slide for a third day when trading reopens tomorrow after the Labour Day holiday, amid concern the world’s largest economy is weakening.
European shares are expected to extend the previous session’s steep losses today, tracking a slump in Asia and on Wall Street, with investors likely to dump riskier assets following the poor US jobs reports on Friday.
The dollar advanced against the euro, the Australian and New Zealand currencies, extending gains from last week that had come amid concern Europe’s sovereign-debt crisis will worsen. The euro slid 4.2% against the Swiss franc last week, the biggest decline since the 17-nation currency’s debut in 1999. It also slid 2% against the dollar during the same period.
Oil declined for a second day in New York on concerns that the Chinese and US economies are weakening, and that fuel demand will falter in the world’s biggest crude-consuming nations.
GOLD prices climbed above platinum prices as concern about a global economic slowdown boosted demand for a haven and eroded the outlook for a metal used mainly in auto catalysts. COPPER declined for a third day amid stalling US job growth and concern Europe’s sovereign-debt crisis will worsen, fuelling fears that a weaker economy may reduce demand for industrial metals.
Funds increased their bets on agricultural commodities by the most in more than a year on signs of tightening supplies amid adverse weather conditions. Holdings in wheat more than tripled, bullish corn bets reached an 11-week high, and soybean positions jumped to the highest since November 2010.