STOCKS continue to get battered here there and everywhere as China’s growth worries continue to play havoc with the markets. Sure this is “old” news but the continued slowdown is just not showing any signs of easing. Japan’s Center for Economic Research in fact noted that China’s GDP for Q2 is likely to come to only 5% WELL BELOW the 7% the PBoC have aimed for.
One of the prominent news stories was the 30% fall in Glencore’s shares overnight in Hong Kong – down 30%. The China slowdown and fall in commodity prices is playing havoc with Glencore (not to mention the mothballing of the Steel works in the UK which cost 1700 jobs).
It is no wonder the FED decided to hold off raising US interest rates a couple weeks ago. Be rest assured, unless thing stabilise I would not be surprised to hear the FED delay yet again at the December FOMC meeting. In spite of this, the FED are remaining cautiously optimistic as FED member, Williams noted he hasn’t changed his view as yet and expects the FED to raise rates at some point this year. On the flip side, FED member Evans noted that before raising rates, he would like to see more confidence that US inflation is picking up, rising US house prices aren’t at tipping point and stocks settle. In other words there is a lot to play for and as things stand, things are likely to remain on hold. No point in adding fuel to the fire (even though a 0.25% US rate hike is unlikely to have a marked impact overall).
Despite the mini rally in the EUR (fall in the USD), EM currencies continue to get battered. USDZAR has since recovered from over 14 to trade at 13.99 as I write this, as has the CNY and TRY.
For now then expect increased and persistent volatility as investors run for cover and commodity/energy companies look to stay afloat in the face of a Chinese tidal wave.
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