China moved to stem the heavy selling that has dominated the last few weeks yesterday. However, the move failed to calm markets, with Chinese indices falling yet again.
The further selling came as the Chinese government also downgraded the country’s 2014 growth rate estimate to 7.3 per cent. Many, however, believe the actual growth figures to be significantly less than that.
This comes at the start of a pivotal week for markets, after a weaker than expected non-farm payroll figure on Friday showed that improvement in the US jobs market has started to slow.
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The number could be important when it comes to the Fed decision on interest rates next week.
The Fed has always described itself as data dependent on interest rates, so this weaker number, and the huge volatility and jitters in stock markets, may well be enough to push it to delay the move.
I still maintain that we will be looking at 2016 for the first move in rates. But that depends on Chinese markets.
With US markets closed yesterday for the Labor Day holiday, some big swings could be in store as we approach the open this afternoon.
This obviously depends on how the European markets perform today, however another key factor will be the data due for release overnight.
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All of a sudden China has been reporting numbers, like rail ticket sales, with much more of a positive spin, just to boost morale and to show that not all data is bad.
And overnight, we saw import and export numbers – these statistics are hugely important to China and the performance here could well plunge the markets lower still and cause a huge problem when it comes to the opening of US markets.