UK returns to a volatile session

Yesterday’s markets

2nd September 2015

  • AUD Cash Rate: 2.00%
  • UK Manufacturing PMI: 51.5
  • UK Net Lending to Individuals m/m: 3.9B
  • EUR Unemployment Rate: 10.9%
  • CAD GDP m/m: 0.5%
  • US ISM Manufacturing PMI: 51.1

Yesterday the UK returned to the market after the summer bank holiday. Markets continued to be bearish as stocks fell after there was yet more negative data from China. Chinese stocks have lost nearly 40% of their value since June, despite attempts by the government and regulators to prop up the market. This in turn has dragged other equity and commodity markets as well, in particular the price of oil.

Sterling remained on the back foot after the UK manufacturing purchasing managers' index (PMI) slowed slightly in August. Analysts highlighted the weakness in exports as a key problem for manufacturing in the UK with a strong Sterling hindering new orders. Meanwhile, there was some positive news from the Eurozone. The regions unemployment level fell to a fresh three year low in July. The unemployment rate was 9.5 percent, the lowest level since June 2011.

US data remained in focus as the debate over the potential “lift off” in rates continues to drag on. US manufacturing put a slight dampener on expectations as  factory activity slowed to a more than two-year low in August. The sharp slowdown in manufacturing, which has been hurt by a strong Dollar and deep spending cuts in the energy sector, was probably an early indication of a fallout from the recent turmoil in stock markets.

Today’s markets

1st September 2015

  • Spanish Unemployment Change
  • UK Construction PMI
  • US ADP Non-Farm Employment Change
  • US Factory Orders m/m
  • US Crude Oil Inventories
  • AUD Retail Sales m/m
  • AUD Trade Balance

Markets will be looking at the release of the US ADP Non-Farm Employment figure as to try and get an idea of where the actual figure on Friday may be seen.  As interest rates are likely to be raised by the US first, markets are still uncertain as to when this could happen and all high-tier data from the US will help try to gauge when this could be.  From the UK the Construction PMI is expected to slightly increase from previous months readings.