It was another broadly disappointing session for Asian equity markets as traders absorbed that news from China that the government was seen as broadly unwilling to deliver any additional stimulus measures in the near term. However there was a degree of optimism served up in the shape of the HSBC PMI manufacturing estimate – some had expressed concern that this could fall below 50 noting contraction in the sector but this didn’t materialise. As a result, Chinese equities found some support although this could well prove short lived – concerns over rising unemployment continue to weigh and there’s now a general absence of key economic releases from Beijing until the month end.
Futures markets are suggesting Wall Street will take its lead from the bulk of Asia, with some meaningful losses set to be posted at the open. Shortly after the opening bell there’s a US manufacturing PMI reading due for release but again if the market wants reassurance here it has to fall into the goldilocks zone – anything too hot will fuel speculation of a quicker rate hike by the Fed, whilst anything too cold will raise concerns about the broader state of the economy. For now however we’re calling the DOW down 28 at 17145 and the S&P down 5 a 1989.