Today’s Chinese flash PMI report has the potential to be the biggest market moving event of the week. concerns about the health of China’s economy have been growing for some time and intensified on the poor import and retail sales numbers released earlier this month. The Hang Seng, the S&P/ASX, AUD, copper and other China sensitive markets have been trading sharply lower to start the week on indications from the G-20 meeting over the weekend that no new fiscal stimulus is planned to boost the economy. Today’s flash PMI then, may give traders their first indication of whether the economy is continuing to slow into September, stabilizing or bouncing back. Which side of 50, commonly seen as the dividing line between expansion and contraction, the report falls on could have a big impact on market direction as well. A positive report could help markets dependent on Chinese demand to shrug off the early weakness while a poor number could intensify the selloff. The weakness in Asia Pacific markets has carries right through European and US trading. In the US a number of momentum markets retreated significantly today particularly stocks that cater to customers in China. Alibaba fell 3.7% and dropped under $90.00, sending Yahoo down 5.5%. Other Chinese internet plays took a hit including Baidu down 4.6%, Weibo down 5.9% and JD.com down 4.8% Other big decliners on the day included Frist Solar down 5.1% and Tesla Motors down 3.5%. Tomorrow brings more flash PMI reports. The European results may not have a big impact as the ECB is well aware of how much pressure it is under to do something and asset purchases are supposed to start next month. The US report may have a bigger impact as it would indicate if US momentum has carried through into September and is keeping the Fed’s feet to the fire on potentially raising rates. A number of Fed speakers tomorrow may also influence trading. Economic News Significant announcements released overnight include: US existing home sales 5.05M vs street 5.20M Italy industrial sales (1.3%) vs previous (0.3%) Italy industrial orders (0.7%) vs previous (1.3%) Upcoming significant announcements include: 11:45 am AEST China flash manufacturing PMI street 50.0 3:00 pm AEST Singapore consumer prices street 1.1% 7:45 am BST France GDP update street 0.1% 8:00 am BST France flash manufacturing PMI street 47.0 8:00 am BST France flash service PMI street 50.1 8:30 am BST Germany flash manufacturing PMI street 51.2 8:30 am BST Germany flash service PMI street 54.6 9:00 am BST Eurozone flash manufacturing PMI street 50.6 9:00 am BST Eurozone flash service PMI street 53.0 9:30 am BST UK house purchase loans street 42.9K 1:00 pm BST Hungary interest rate decision 2.10% no change expected 8:30 am EDT Canada retail sales street 0.5% vs previous 1.1% 8:30 am EDT Canada retail ex auto street 0.0% vs previous 1.5% 9:00 am EDT US house prices street 0.5% 9:45 am EDT US flash manufacturing PMI street 58.0 10:00 am EDT US Richmond Fed street 10 vs previous 12 FOMC members Bullard, Powell, George and Kocherlakota speaking
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