Stocks in the US fell overnight, prodded by weaker housing data and concerns surrounding a slowdown in China while the Alibaba frenzy subsides. Existing home sales fell unexpectedly for the first time in five months. They were down by 1.8% in August after having risen 2.4% in July, as fewer first time buyers entered the resale market on tighter credit conditions.

Slow-down?

Concerns surrounding a slow-down in China weighed on investor sentiment after a swathe of data came in weaker early on in the month, pointing towards a weak manufacturing print this morning. The downbeat tone in markets was exacerbated following comments from China’s Finance Minister over the weekend, that investors should not expect major changes in government policies even as the economy faces growth concerns. Most global indices fell yesterday, with Asian markets like the Hang Seng and Shanghai composite sliding sharply while US markets took the lead from Asia. The S&P500 and the Dow fell 0.8% and 0.6% respectively. Following a launch which saw it raise some $25bn for the largest IPO in history, shares at Alibaba fell more than 4% after rising some 38% on their first day.

Currencies

In the currency markets, the dollar traded mostly weaker against the majors with the exception of the Australian dollar. The Aussie dollar tumbled against the backdrop of a slowdown in China, where manufacturing activity is expected to show a decrease again this morning. A slowdown in China’s manufacturing marks low demand from an economy which Australia relies on heavily for commodity exports. The unit has now fallen close to 88.5 cents of a dollar with support lying at the 0.8820 level, or the low of 2013. While the Euro managed to pull back against the dollar from its lowest levels in 14 months, the pressure remains on the single currency, with manufacturing and services PMI data expected to show a slowdown in activity in September, from releases today.

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