Global markets dove overnight and futures on US stock indices
headed lower after the Federal Reserve hinted that it could end
quantitative easing within the year and Chinese manufacturing data
Before the opening bell,
(INDEXDJX:.DJI) futures were down 0.64% at 14,951. Futures
contracts on the
(INDEXSP:.INX) sank 0.81% to 1,610.50 and
(INDEXNASDAQ:.IXIC) futures fell 0.89% to 2,930.00.
The government reported today that initial claims for unemployment
insurance unexpectedly rose sharply last week to 354,000, from
336,000. Economists expected just 340,000 claims.
Later this morning the June US manufacturing PMI number is due out.
The index is expected to rise to 52.7 from 51.9, indicating that
the sector's growth strengthened. Also out later today is existing
May home sales at 10:00 a.m. Eastern time. Economists expect
existing homes to have sold at a seasonally adjusted annualized
rate of 5 million, up from 4.97 in April.
Commodity futures also tumbled overnight. Gold fell over 5% to
$1,303.50/ounce. WTI oil futures are down 1.6% at $96.69/barrel.
The dollar strengthened against the euro, yen, and emerging market
currencies. Most major stock indices in Europe and Asia declined
Markets were already shaken this morning on concerns that the Fed
would pull back on its asset purchase program before the end of the
year or possibly end it completely by mid-2014. In Chairman
Bernanke's press conference, he emphasized a brightening economic
picture, and said that the unemployment rate could fall to its 6.5%
threshold by year-end. Despite the good fundamentals, the global
sell-off emphasizes markets' addiction to the Fed's liquidity
Against this backdrop, HSBC's flash Chinese manufacturing PMI
unexpectedly fell to a nine-month low of 48.3 in June, down from
49.2 in May. Numbers below 50 signal that the sector is in decline.
Hongbin Qu, HSBC's chief China economist, said weak export demand
was partly to blame. Exports decreased at a faster rate than in
"Manufacturing sectors are weighed down by deteriorating external
demand, moderating domestic demand and rising destocking
pressures," he said.
One bright spot was Markit's eurozone flash composite PMI, which
showed that the manufacturing and service sectors' deterioration
eased to the slowest rate of decline in over a year. The index rose
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