by Chiara Di Cristofaro and Stefania Arcudi
In Germany, new orders in the manufacturing sector fell by 11.7% in July. Tensions on real estate eased in China with the Country Garden case in focus. Euro little moved, crude slows down
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(Il Sole 24 Ore Radiocor) – Concerns about the slowdown in the economy continue to be in the foreground and the European stock markets open lower. After indications of weakness from the services sector in China and Europe, fears are now fueled by the sharp drop in orders from industries in Germany (-11.7% in July, -10.5% a year ago and +7.6% % in June). Rising oil prices also weigh on investor sentiment, after the decision of Saudi Arabia and Russia to prolong the production cuts, given that the cooling of energy prices has so far been the main driver for aiming for lower inflation.
Asian markets contrasted, while tension on the Chinese real estate sector eased after the giant Country Garden, in great difficulty, repaid the coupons in dollars in extremis that expired a month ago and thus avoided default. Tuesday day saw the European stock exchanges still in a cast of plaster awaiting the appointment with the ECB on Thursday 14 September.
The spotlights are on the macroeconomic front: a sharp drop in orders from factories in Germany (new orders fell by 11.7% in July on a month-on-month basis and by 10.5% on a year). In the United States, the Markit Pmi and Ism indices for the non-manufacturing sector for August are expected, they could give some anticipation on the state of the world’s largest economy and suggestions to the Fed on how to behave on September 20th. Money markets are currently pricing in a mere 7% chance of a rate hike again on that occasion.
Oil down, gas prices stable
Crude oil is slowing down, with Brent down 0.14% to 89.9 dollars a barrel and WTI down 0.22% to 86.5 dollars a barrel. Gas is under control (-0.14% to 34.4 euros per MWh). Euro/dollar recovering to 1.073.
Contrasted Asia, tension on real estate eases in China
The Asian stock exchanges closed the session in a mixed way. Markets are focusing their attention on concerns about global economic growth as they await central bank guidance on interest rates. In the spotlight the trend in oil prices after yesterday’s flare-up. Tokyo closes the session up 0.62%. In terms of exchange rates, the Japanese currency trades at its lowest in 10 months against the dollar and is stable against the euro. With negotiations still in progress, Hong Kong (+0.02%), Shanghai (+0.07%), Shenzhen (+0.03%) and Mumbai (-0.08%) moved little. Seoul dropped by 0.74%.
In Hong Kong, real estate stocks rebound, with Evergrande posting a jump of more than 70% on the euphoria of the non-default of Country Garden (+21%), which yesterday paid two matured coupons on bonds in dollars for 22.5 million, close to the end of the 30-day grace period. The narrow escape has bounced all real estate developers, despite the heavy debt loads: from Sunac (+73%) and Shimao (+46%) to Logan Group (+26%), while the Hang Seng Mainland Property Index rises by more than 4%.
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Yuan weak against the dollar
The yuan remains in strong tension against the dollar and around 10.15 local time (4.15 in Italy) breaks through 7.32 in onshore and offshore values despite the efforts made by the Chinese Central Bank. The new highs of the last six months reached by the greenback on a basket of currencies and the yields of US Treasury securities – which rose to their highest values in more than a week – bent the Pboc shield, which again this morning moved to defense of its currency with a central parity on the greenback set at 7.1969, weakening the renminbi by 186 basis points, but much less than the more than 1,100 expected by the markets.
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Stephanie Arcudi
Radiocor editor
Clare Di Cristofaro
Radiocor editor
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2023-09-06 06:56:15
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