Europe
The Athens Stock Exchange plummeted on Monday; its first day of trading in five months but an improving manufacturing outlook meant other European stock markets gained as a destination for funds coming out of Greece.
Greek bank stocks went immediately limit down 30% with the rest of the market not faring much better, down as much as 23% on the open. It makes sense to see these kinds of declines given the Greece’s flirtation with an exit from the Eurozone since the stock exchange was closed five weeks ago. That said, dropping by over 20% in a single day is almost unprecedented for the benchmark stock index of a developed country- and really is an utter pasting. It puts recent moves in China to shame.
The uncertain solvency of Greek banks had investors moving hand over fist to dump the shares as quickly as possible before the Athens Stock Exchange’s maximum loss for an individual issue was reached and trading halted.
The turmoil in Greece is not limited to the stock market; it’s in the economy too. Confidence amongst the country’s purchasing managers in the manufacturing sector dropped to a shocking 30.2 when 46.9 was expected according to Markit.
There was one sign of life in Athens; with Greek consultancy Euroconsultants SA (AT:ERCr) the sole gainer, up over 2.5%. Fortune favours the brave so over the coming days there may be some bottom-fishing in select Greek stocks, perhaps in safe-havens like utilities or exporters who could benefit from a weak euro.
The China manufacturing PMI fell to 50.0 in July from 50.2 in June, consensus was for no change.
UK stocks were again roiled by falling commodities brought on by weak Chinese manufacturing data. BP (LONDON:BP) and Shell (LONDON:RDSa) lower with Brent crude oil and mining companies Anglo American (LONDON:AAL) and BHP Billiton (LONDON:BLT) down alongside copper and iron ore.
There were two notable beneficiaries of crude oil at six-month lows; airlines IAG (LONDON:ICAG) and EasyJet PLC (LONDON:EZJ) were both flying higher, with the former up over 2.5% buoyed by the recently-approved takeover of AER Lingus.
HSBC Holdings PLC (LONDON:HSBA) saw modest gains after the bank beat earnings expectations helped by the sale of its Brazilian unit to Banco Bradesco Sa (NYSE:BBD) for over $5bn.
US
Data indicating sluggish US consumer spending in July coupled with fragility in Greek and Chinese markets meant US markets dropped in early trading on Monday. The initial drop was compounded by a surprise decline in ISM Manufacturing data.
Consumer spending rose by 0.2% in July compared with 0.7% in June while the ISM manufacturing PMI declined to 52.7 when it was expected to remain unchanged at 53.5.
The closer it gets to September when the Federal Reserve could raise interest rates, the more each piece of economic data will be seized upon as a reason to believe the hike will or will not happen. Volatility surrounding data releases could be especially high given the lighter liquidity during the vacation month of August.
FX
The US Dollar strengthened on Monday but there wasn’t too much movement in currencies despite a swathe of manufacturing PMI data that saw improvements in Europe and a slowing in the US.
The Canadian dollar made fresh decade lows versus the greenback, tracking the drop in oil prices sending USD/CAD to just shy of 1.32.
Another daily drop in base and precious metals meant the commodity-sensitive Australian dollar was the weakest on the day, with AUD/USD back beneath 0.73.
Commodities
Crude Oil built on its largest monthly decline since the 2008 financial crisis with steep losses on Monday. Brent crude touched new six-month lows. It’s both demand and supply factors taking their toll; the latest PMI data shows demand from China is likely to slow and Iran has vowed to dramatically increases supplies after international sanctions are lifted.
Copper hit new six-year lows, dropping through the low seen last Monday on concerns of slowing demand from China and a strengthening US dollar.
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