A poor reading from a gauge of Chinese manufacturing piled more pressure on the country’s volatile stock market on Friday. China’s currency devaluation is at the heart of the rout in global markets so another drop in Chinese stocks translated to a huge gap lower in Europe’s benchmark indices.
China’s Manufacturing PMI fell to the worst since the financial crises but better than expected European equivalent data, led by a firming expansion in German manufacturing helped UK and European shares bounce off the lows in early trading.
It’s been a long hard week, the stock market rout is all over the television and sentiment is overly bearish so its nearing a time for a relief rally.
A risk going into the weekend is any further developments in Greece after Prime Minister Tsipras resigned as Prime Minister. The weekend could see the Syriza party announce it is splitting to form a new hard left-wing party. Tsipras may be looking forward to recruiting some more moderate MPs to replace those who have been voting against him but the risk is that the Greek people vote the same way they did in the referendum, namely for less austerity, even if it means no more euro.
US stocks look set to tank on Friday’s market open as bearish sentiment builds following the worst day in 18 months when the Dow dropped over 300 points to a nine-month low.
The Nasdaq was pummelled down 2.8% as prominent high beta names in the tech space dived with Twitter (NYSE:TWTR) shares falling over 5%, at one point dropping below the IPO price of $26. Again, after such sharp declines, some investors may decide to dip their toe in the water on Friday. Nasdaq 100 futures have hit 4340, a price that has three times supported the index since April.
Shares of HP (NYSE:HPQ) are expected to open as much as 4% lower after another quarterly decline in revenues thanks to waning demand for PCs, especially as purchases were delayed ahead of the release of the new Microsoft (NASDAQ:MSFT) Windows 10.
Futures suggest the:
S&P 500 will open 7 points lower at 2,028 with the
Dow Jones expected to open 76 points lower at 19,914 and the
Nasdaq 100 29 points lower at 4,456
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