Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

China Data And Dollar Volatility Strike Nervy Markets

By CMC Markets (Jasper Lawler)Market OverviewMay 04, 2016 10:10
China Data And Dollar Volatility Strike Nervy Markets
By CMC Markets (Jasper Lawler)   |  May 04, 2016 10:10
Saved. See Saved Items.
This article has already been saved in your Saved Items

UK and Europe

Woeful economic news and weak bank earnings put stock market bears in charge on Tuesday. Weak manufacturing data from China and the UK, downgraded forecasts for UK and Eurozone growth as well as the Reserve Bank of Australia cutting interest rates to ward off deflation all point to a weaker economic outlook.

UK investors have brought with them the mantra of sell in May and go away after returning from the long holiday weekend. The FTSE 100 slid to a three-week low after the slowdown in Chinese manufacturing has prompted weakness in heavily-weighted mining shares. Anglo American (LON:AAL) lost double-digits on the implications for China’s renewed economic malaise on commodity demand. Volatile oil prices and nerves ahead of quarterly results from Royal Dutch Shell (LON:RDSa) meant the oil and gas sector was a drag on the UK benchmark equity index.

Stock markets have recovered all of their losses from the start of the year but sentiment is still damaged from the sell-off. While markets can still push higher, the beginning of May is a seasonal weak point that already appears to be triggering some profit-taking.

More plummeting profits from major European banks including HSBC (LON:HSBA), UBS (NYSE:UBS), BNP Paribas (PA:BNPP) and Commerzbank (DE:CBKG) sparked a sell-off in the banking sector with RBS (LON:RBS) losing over 3.5%.

The drop in HSBC profits was better than expected and has seen shares fare better than counterparts in Europe. Despite the volatility in emerging markets, the relatively faster economic growth in Asia continues to cushion HSBC against the problems facing the investment banking divisions within US and European-focused banks.


US stocks slumped on the open with the Dow Jones losing over 200 points after weak auto sales number added to a weak economic outlook in China, the UK and Europe.

Shares of Apple (NASDAQ:AAPL) opened higher in an attempt to snap an eight-day losing streak that has weighed on the confidence in the tech-sector and wider markets.

Shares of US-listed automakers including GM (NYSE:GM), Ford (NYSE:F) and Fiat (NYSE:FCAU) were mostly lower after a mixed set of auto sales numbers.

Halliburton (NYSE:HAL) shares dropped after it announced a big annual loss caused by massive write-downs of its oil and gas infrastructure. The oil and gas services company said it would cut capex further after officially cancelling its deal with Baker Hughes (NYSE:BHI).

Pfizer (NYSE:PFE) shares traded higher after the pharmaceutical giant beat earnings estimates and raised its full-year guidance, offering some optimism for growth in the company without its scrapped merger with Allergan.


The day started with new multi-month lows for the dollar index and corresponding highs in the euro, British pound and the yen. But dollar losses were reversed after the Fed’s Dennis Lockhart suggesting June was a ‘live meeting’ triggered short-covering at oversold levels.

The weak US first quarter growth figures on top of a cautious statement from the Federal Reserve has seen market expectations for a June rate hike fall to 12%.

Sterling came off its highs after UK manufacturing data saw a surprise contraction in April for the first time in three years. The UK economy remains worryingly dependent on the service sector, which is going to have to work a lot harder to keep UK economic growth afloat. Services as a component of estimated first quarter GDP were strong, but this could change if the much-vaunted Brexit-induced slowdown kicks in closer to the referendum.

The Australian dollar was the biggest FX faller on the day, taking commodity currencies including the Canadian dollar with it after the Reserve Bank of Australia surprised markets with a 25 basis point rate cut.


The price of gold has retreated from a 15-month peak above $1300 per oz while silver has pulled back from $18 per oz. The strength in precious metals was in large part thanks to US-dollar weakness so the reversal in the dollar has been matched in the metals.

News of OPEC member countries ramping up production and a pullback from overbought levels meant the price of oil was weak all day but dollar weakness saw early losses extended.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

China Data And Dollar Volatility Strike Nervy Markets

Related Articles

China Data And Dollar Volatility Strike Nervy Markets

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The inherent concept of such investments means that they are not suitable for the investor seeking income from such investments, and are only suitable for those who have the required experience and understand the market risks. You should carefully consider your investment objectives, level of experience, and seek advice from an independent financial advisor if you have any doubts.
Continue with Google
Sign up with Email