This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
By early afternoon in New York, the Dow Jones was down by close to 200 points or 1.2% at 16,176, with large declines also seen in the other leading stock index benchmarks: the S&P 500 fell 1.12% and the NASDAQ 100 dropped 0.85%.
The stock market retreat was sparked by data earlier today from China showing its manufacturing sector beginning 2014 in a contractionary phase, with the Chinese manufacturing PMI slipping below the 50-mark that denotes the difference between growth and shrinkage in the mid-month ‘flash’ reading for January.
The effect of this news has been exacerbated by a similarly disappointing result from the flash PMI for the US manufacturing sector, which softened to a level of 53.7 in January from 54.4 for the equivalent reading last month.
Corporate quarterly reporting continues to be a mixed bag, with earnings growth tempered by some high profile disappointments on the revenue front, including McDonald’s today which announced weaker than expected sales for its fourth quarter.
Jobless claims for last week were a solid 326,000, beating expectations, but rising 1000 from the previous week. The four-week average shows improvement and boosts hopes that January’s employment situation will show a marked improvement from December’s low base.