Asian market opened on a soft foot as weaker-than-expected China manufacturing PMI over the weekend re-enlightened concerns over slower pace of growth of world’s second largest economy against the backdrop of rising trade risks.
June’s Purchasing Manager Index (PMI) came at 51.5 – that is below previous month’s reading of 51.9 and also below consensus forecast of 51.6, showing early sign that trade tension has started to affect business decisions. As the effect of US tariffs kicks in in July, the outlook is further dampened by weaker demands and rising political uncertainties.
Shanghai Composite lost 0.7% in early morning trading hours, and the rest of Asian markets were mostly in red too. Hong Kong market is closed for public holiday. Singapore’s STI lost nearly half a percentage point as risk-aversion sentiment dominates the trading atmosphere. In the near-term, 3,200 and 3,300 remain at strong support and resistance levels.
Dollar index retraced from its recent peak as euro regained strength after the EU reached consensus on migration deal. Technically, EUR/USD has found strong support level at the 1.1560 area – a level that has been tested many times over the past weeks.
For second half of 2018, market sentiment remains fragile against the backdrop of slower pace of growth in Asia amid rising trade uncertainties. The outlook remains clouded due to concerns that trade risk will start to affect business decisions and further dampen demand. Cash and cash-like have re-gained favour from market participants, who prefer to adopt a more defensive strategy ahead of rainy days.
Market Calendar – China Manufacturing PMI June 2018
By Margaret Yang in Singapore
CMC Markets is an execution-only service 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. CMC Markets is regulated by the Monetary Authority of Singapore.