Asian markets reacted badly to the news that the Fed could taper its quantitative easing policy by the end of the year, with Asian stocks excluding Japan dropping 3.5 per cent – the biggest daily loss since late 2011.
This wasn’t aided by an unexpected contraction in the flash HSBC China Purchasing Manager’s Index from 49.2 in May to 48.3 in June – the weakest since September. As China’s biggest export market, the Australian dollar fell to a three-year low of AUS$0.9237.
Bernanke’s announcement yesterday prompted a sell-off in US treasuries, with five year yields jumping to their highest levels since August 2011. The US dollar, meanwhile, grew stronger on the news - ahead of housing and manufacturing reports out today - rising by 0.6 per cent against the yen from yesterday to ¥97.12. US stock markets closed decidedly lower with the Dow down 1.35 per cent and the S&P 500 down 1.39 per cent.
Markit Manufacturing and Services PMI for Germany (0828) and the EU (0858)
UK retail sales, one per cent month-on-month and 0.3 per cent year-on-year increases expected (0930)
CBI Industrial Trends Survey (1100)
US initial jobless claims (1330)
Markit Manufacturing PMI for the US (1358)
EU Consumer Confidence index (1500)
CB Leading Indicator for the US (1500)
Existing Home Sales for the US (1500)